Could new troubles fire up Sriracha maker’s move to Philly?

12/17/2013 | Real Estate Blog

A hot prospect for Philadelphia may be even hotter now that a judge has ruled against Huy Fong Foods Inc., the manufacturer of the most popular Sriracha sauce on the market. We posted about the dispute between the chili sauce company and its neighbors in early November (see “One city’s ‘chili’ reception could mean a hot deal for Philly“); the neighbors had a problem with the strong odors coming from the plant, especially in chili mashing season.

Acting on the neighbors’ complaints, Huy Fong’s California home city sued for an injunction, saying that the plant is a public nuisance. Before the ruling came down, Philadelphia Councilman at-Large Jim Kenney invited Huy Fong to relocate here. According to Kenney, Philly would welcome the plant, offensive odors and all.

Just before Thanksgiving, the complaining residents got some good news. The court ordered the company to stop the production processes that cause the smell and to find a way to mitigate the odors. The court opinion stated that the smells “appear as extremely annoying, irritating and offensive to the senses” and agreed that they could constitute a public nuisance.

The residents’ complaints got Huy Fong’s founder and CEO David Tran pretty hot under the collar. Before the ruling, Tran published an open letter that made his position clear: “We don’t make tear gas here,” he said.

The letter didn’t stop there. Tran pointed out that three years ago, when he was looking to expand production, the city had made him an offer he couldn’t refuse: a 100 percent interest-only loan with a balloon payment at the end of the 10-year term. In return, the company agreed to make an annual payment to the city (in lieu of taxes) of $250,000 every year.

As generous as the offer was, it was about the only welcome that Huy Fong got. Soon after operations began, residents in the area started to complain to the city about the odors, and the city started to complain to Huy Fong. In Tran’s letter, he chided the city for not investigating the matter before taking the neighbors’ side against the company. He paid off the loan early.

We’ll continue this in our next post.

Sources: 

Pasadena Star-News, “Defiant Sriracha CEO David Tran says ‘we don’t make tear gas,’ ruling could lead to 200,000 less bottles a day,” Sarah Favot, Nov. 27, 2013

Philadelphia Business Journal, “Sriracha plant to Philadelphia gaining momentum,” Jared Shelly, Dec. 2, 2013

Los Angeles Times, “Sriracha maker ordered to halt shipping until mid-January,” Frank Shyong, Dec. 11, 2013