Food distributor passes century mark with a big bet on green technology
By Judith Nemes
Family-owned Testa Produce is investing big in green technology in hopes of ensuring that its next century in business is just as successful as its first 100 years.
Peter Testa, the company's president and third generation family member overseeing the produce distribution business started in 1912, convinced his brother and other family members to go along with his vision of adding renewable energy and water management systems into a new produce distribution center they built last year in the Back of the Yards neighborhood. The 91,000 square foot facility was constructed on a restored brownfield site that the wholesale produce distributor uses for receipt and delivery of the fresh and frozen fruits and vegetables, appetizers, and other local or organic sourced products it sells to the foodservice industry in Illinois and Wisconsin. Clients include hotels, restaurants, hospitals, corporate dining centers and schools.
The new plant is equipped with 180 photovoltaic solar panels (for electricity) and the first 238-foot freestanding wind turbine installed in Chicago. The turbine is expected to generate more than 30% of the facility's energy needs, says Mr. Testa, 59. The entire plant, including refrigerated and frozen areas, has energy efficient LED lighting. The water management system consists of a retention pond that holds 800,000 gallons of water, bio swales, an internal rainwater-harvesting system and a 50,000 square-foot barreled green roof that slopes down in the front of the building for the “wow factor” when visitors and clients stop by, notes Mr. Testa. The combined water systems are designed to prevent stormwater runoff and reduce the facility's water demand by more than 40%, he explains, adding that so far, the water bill has been almost negligible.
The sustainable features included in the new facility resulted in the U.S. Green Building Council (USGBC) certifying it as the first LEED Platinum refrigerated foodservice facility in the U.S.
Earlier this month, the USGBC's Illinois chapter recognized Testa with one of its annual Emerald Awards it gives to companies in the state for green building innovation. And next week (June 8), the Illinois Chamber of Commerce and Illinois Development Council will honor Testa with an “Edie” Award (Economic Development in Illinois) at a ceremony to recognize a handful of Illinois businesses for significant economic development projects completed in the prior year.
Crain's met up with Mr. Testa to learn the reasons behind the company's green agenda and the financing needed to make it happen.
Crain's: Testa Produce isn't the sort of business you'd expect to seek out the highest green building and energy standards possible, so why are you doing this?
Mr. Testa: It matters to my clients and it matters to me. I've been in the agricultural business for 40 years. I'm familiar with pesticides and the effects they have on the environment and I'm concerned about that. At an early age I wanted to make sure if we do this kind of business, let's be as environmentally friendly as possible, even witih our buildings.
I'm also in a family-run business, so I have to differentiate myself from the rest of the pack of larger companies. I want clients to say they like that I'm using renewable energy, and that I'm a pretty good produce company too. All the fancy bells and whistles won't do squat if you don't execute on your core business.
Crain's: Why did you choose to set the bar so high by going for LEED Platinum certification, which has the toughest standards to meet?
Mr. Testa: My construction people said I couldn't do it, but we've always tried for excellence and I don't believe you can't do something you really want to do. If I'm going to have a 30% electric bill savings each year going forward (by adding renewables), why wouldn't I do it?
Our builders looked at the power we generate to cool our facility and the energy points were very difficult to get (to achieve Platinum status) unless you can figure it out from renewable sources. We wanted to show people that this is possible. Also, I'm not a corporation, so I have the luxury of pursuing these things without board approval. I just had to convince my brother to go along with it.
Crain's: How much money did the company invest in all the green features of the new building project and how did you finance them?
Mr. Testa: Green technology is 10-20% of the cost of a building and ours was closer to 20% because we addded so many features. That cost was about $3-4 million.
Banks don't like to finance green technology because they look at your building as a whole and they initially may discount it so it doesn't add to the appraisal. It was a big leap of faith for the banks to step up and finance this project. As time went on, they realized the green features aren't a detriment, they're a plus because they saw our reductions in water and energy costs.
Crain's: What's the expected ROI on these systems?
Mr. Testa: Those are floating numbers. With the wind turbine, we expect a payback in about 8-9 years if it continues to generate a little more than 30% of the facility's energy needs. The solar panels may take 3-4 years or sooner. The water harvesting can give us a return on investment in less than two years. I thank the mayor for that because he raised the water rates.
We're applying for government grants (to offset costs) even though we know it's a long process and we don't know if we'll get any. You can't count on that as part of the financing mechanism, but if we get any money, we agreed with the bank that we'd use it to help pay down the debt.
Crain's: Lots of business owners say they're waiting for renewable energy costs to come down or hoping for better federal and state incentives. Why did you decide to move forward?
Mr. Testa: Everyone needs to stop waiting for the government to do things for them. The green technology market is underutilized and we could use it to make ourselves self-dependent. Oil and coal are finite resources. Last time I checked the sun is free and right now we have plenty of water.
We're even moving to electric trucks (at Testa) to get us away from diesel fuel, which I would love to get rid of immediately. I have two electric trucks coming in a month. The range is only 100 miles, but I'm only four miles from downtown and those smaller trucks are actually better to get around in that area. I have about 60 trucks on the road and we use close to 1,500 gallons a day, but I won't buy more electrics until we get a longer range.
Crain's: What advice do you have for other Chicago companies that are considering adding green building features in a renovation or new construction project?
Mr. Testa: Do your research. Don't take the first person who comes to you with green technology. Know what things should cost, know where to look for them and know who's going to fix it if it breaks. You don't want to buy something from Germany if it takes an engineer from Germany to fix it.
There's nothing that can intimidate someone about green technology as long as you can read. I was raised in the produce industry, and I certainly wasn't a green expert. You just need to invest a little time, just like you'd do research before buying a car.