PORTLAND — The head of a family-run food processing company that has been in Bayside for more than 80 years said the company will move out of the neighborhood unless it receives city funding to help upgrade the building it leases.

Paul Dioli, chief executive officer of Schlotterbeck & Foss, spoke Monday at a public hearing on annual Community Development Block Grant  allocations. The company applied for $200,000 in matching funds from the city’s physical improvements fund to improve energy efficiency at its plant and improve manufacturing capabilities. He said that although CDBG funds can be used for economic development projects, the city steers the application process toward nonprofits. 

“Being a for-profit company going through this was somewhat challenging,” Dioli said. Neither the CDBG Committee nor City Manager Joe Gray recommended funding for the project.

Bayside is a CDBG-qualifying low- to moderate-income neighborhood. Schlotterbeck & Foss’ employees are also all low- to moderate-income earners, according to the company’s application. Sixty-two percent of those employees live in Portland. The company has 48 temporary and 21 full-time employees.

The company makes condiments and sauces. “Our products are all-natural, organic, vegan,” Dioli said.

He said the company has experienced 130 percent growth in sales since 2004. But he said his lease cost is set to go up dramatically in the next three years. The building at 117 Preble St. was recently purchased by J.B. Brown and Dioli said the owner wants to turn the building into rental office space. 

“I can’t afford the rent,” he said, without the benefit of reduced operating costs that the infrastructure improvements will provide.

“Absent funding, Schlotterbeck will be moving out of Bayside and most likely will not be staying in Portland,” said Dioli. He said that means the company would take with it the $700,000 it spends annually with other Portland businesses and the $2 million it spends annually in Maine.

The city received $1.6 million in CDBG funds for physical improvements this year. The CDBG Committee and Gray are recommending the bulk of it be spent on neighborhood and sidewalk improvement programs. The Bayside Trail is earmarked for $100,000, about $79,000 is recommended for grounds improvements at East End Community School and $60,000 is slated for a new Boys and Girls Club clubhouse at Sagamore Village.

The City Council is scheduled to hold another public hearing and vote on CDBG allocations March 30 at 7 p.m. at City Hall.

Kate Bucklin can be reached at 781-3661 ext. 106 or kbucklin@theforecaster.net.