Aug. 19—Peach State Kitchen, the company that has produced frozen packaged meals out of the Bobby Parham Kitchen at the former Central State Hospital campus since January, has declined the option to purchase the facility, the Central State Hospital Local Redevelopment Authority (CSHLRA) learned Wednesday.
The two sides — CSHLRA and Peach State Kitchen — are working to come together on a continued lease that would keep 70-plus people employed locally. The existing lease, signed in March and since amended, expires Oct. 1.
Momentum had seemingly been building toward a sale of the more than 120,000-square foot Parham Kitchen. A sticking point has to do with the remediation credit clause of the lease-purchase agreement. The parties were trying to come together on a figure that would take care of repairs that needed to be done on the building. According to CSHLRA Chairman Johnny Grant, that credit amount was higher than anticipated. A middle ground was then thought to be found. Peach State Kitchen had previously expressed an interest in the Wilkes Building, a smaller building separate of the Parham Kitchen but located nearby. The CSHLRA board held a called meeting last month and voted to include the Wilkes Building in the final deal. The mood among board members at that meeting was downright jovial as the finish line was thought to be in sight.
That turned out to not be the case.
"In my estimation, I thought we had met the intent of the [remediation credit] clause by the reduction in price and additional property that we were offering to include in the final sale, but evidently that was not sufficient for them," Grant told The Union-Recorder after the board's most recent meeting.
The last number The Union-Recorder reported in March as the sale price of the kitchen was $12.75 million. The latest figure in the negotiations was not shared with the newspaper.
Peach State Kitchen CEO Brian Ivy said in a Thursday phone interview that it was a "business decision" to decline the purchase option.
"There's some major issues with the building, especially the older parts," Ivy said.
In doing its due diligence on the Parham Kitchen, Peach State had a civil engineering firm come and look at the facility. According to Ivy, that report came back citing that sections of the floor were "basically weaker than what residential housing is built with by today's standards." He added that flooring beneath about 10,000 square feet of refrigerated space has corroded to the point that rebar is exposed, making the square footage unusable when it comes to moving the heavy loads that the company needs to move.
"We've gotten ballpark estimates between 3 to $6 million worth of renovations that need to be done," the Peach State Kitchen CEO said. "We can't take on that kind of project right now. We're a startup company. It's just not something we feel comfortable doing."
The two sides will continue trying to hammer out a deal that will hopefully keep Parham Kitchen from being vacated twice in the span of about 15 months. The CSHLRA board passed a resolution Wednesday empowering a committee consisting of Grant, Brian Robinson and Bill Jones to negotiate lease terms.
"It's up to Peach State Kitchen on whether they want to stay in Milledgeville and stay operating here," Grant said after the meeting. "We hope they do."
"We've made an offer to continue our lease as-is with the same payments," Ivy told the newspaper Thursday. "We'll commit to next August and reassess. Maybe we're in a different position and we've got some state involvement where they've come in and helped out with it."
Since Peach State Kitchen declined the option to purchase the building, it has been relisted with Fickling & Company, the firm that handles CSHLRA's real estate services. The asking price on the listing is $15 million.
This is the latest in the saga that is the Bobby Parham Kitchen. Once the largest cook-chill facility in the United States, the building, like many others around the CSH campus, was left inactive when the state shut down operations. Tasked with breathing new life into the more viable buildings around the former CSH property, the CSHLRA board a few years ago found a kitchen tenant in Food Service Partners Inc. The building needed work, though, and so it formed an LLC known as the Georgia International Food Center to take out a $10 million loan to fund improvements and equipment purchases for the kitchen. It begs the question of how all that money was spent if issues still exist. Food Service Partners started operations in 2020, but filed for bankruptcy in July 2022, leaving CSHLRA to have to make the loan payments without the building generating any revenue. Some $500,000 was paid toward the loan over the last half of 2022 before Peach State Kitchen, a new venture formed by veterans in the frozen meal sector, moved into the Parham Kitchen and signed the lease in March.
Now operating at more than 70 employees — some hired directly by the company and some through staffing agencies — Peach State Kitchen is churning out 40,000 individual frozen meals per workday. The business is in what's known as the co-packaging industry, meaning it cooks, freezes, and packages meals for national brands that either do not have the capacity to make meals themselves or are at-capacity. Ivy shared that Peach State Kitchen currently does business with four brands that can be found on grocery store shelves.
