THE BIG STORY
As curious residents flocked to the Mississippi River to gawk at the high water, federal officials considered opening the Morganza Spillway control structure for the first time since 1963, a move that likely would save Baton Rouge from significant flooding but would inundate communities and farmland in the Atchafalaya River basin.
Mayor Kip Holden spoke to a crowded downtown hotel ballroom on May 12, telling residents to stock up on water, food, batteries and prescription medicines as if a hurricane were approaching. He asked residents to check on family members and neighbors, especially the elderly, and urged churches to prepare to dispense water and food.
“Don’t panic, but don’t be complacent,” he says. “And then, my friends, have faith, and pray.”
In the unlikely event of a catastrophic levee failure, about 100,000 people would be impacted, primarily across a large swath of the southwest portion of East Baton Rouge Parish, says Bryan Harmon of the Department of Public Works, adding that the city-parish and the Army Corps of Engineers are preparing for that possibility. He says a levee failure would happen slowly, meaning there would be plenty of warning.
“Today, the river at 43 [feet] is a significant flood,” he says. “A week from now we will have the same thing: a significant flood on the river. If all goes well, it’ll be just like today.”
Some seepage is expected, and neighborhoods within 1,500 to 2,000 feet of the levee, like those in the River Bend area off Brightside Lane, likely will see water, Harmon says. He notes that the drainage system can handle what he calls “minor overtopping”—an inch or two of water sloshing over the levee.
DPW’s Jim Ferguson says the parish’s levees range from “47-ish [feet] to 51,” against an expected crest of 47.5 feet on May 22; the crest would be revised down one to two feet if the Morganza Spillway was opened. Workers were reinforcing low points with sandbags and using inflatable orange “Tiger Dams” that add 15 to 18 inches.
“You are seeing a historic event,” Ferguson says.
Acting DPW Director William Daniel expects the river to remain high for about four weeks. Baton Rouge’s two downtown casinos were preparing to close if and when the river reached 47 feet. The U.S. Coast Guard was considering closing the river to deep-draft vessels from Baton Rouge to Boothville.
“The Mississippi River is the aorta of American commerce,” says Dan Borné, president of the Louisiana Chemical Association.
High-water levels were affecting about a dozen Capital Region chemical plants. Some plants’ docks were underwater, so ships couldn’t unload supplies, while others were having trouble pumping in coolant water.
“We plan a long way ahead in our business,” Borné says. “If the Morganza is opened, it will mean adjusting operations.”
President Barack Obama declared a state of emergency on May 6, opening the door to federal aid. The Louisiana National Guard deployed liaison teams to East Baton Rouge to coordinate efforts in 19 affected parishes.
“We will not get a second chance to get this right,” Sen. Mary Landrieu says. “After hurricanes Katrina, Rita, Gustav and Ike—as well as the oil spill—Louisiana can ill afford another large-scale disaster. Billions of dollars in property is at stake, not to mention the threat to human life.”—David Jacobs
INSIDE: For more information about emergency preparedness and recovery, and the roles they play in Louisiana’s economic development, please see the cover story, which begins here.
The mayor’s mulligan
Metro Council members showed up for their May 11 meeting expecting to get an eagerly awaited first look at the details of a bond proposal that Mayor Kip Holden (right) wants to present this fall to East Baton Rouge Parish voters. Instead, council members were told they’d have to wait a little longer.
Assistant Chief Administrative Officer William Daniel told the council that details of Holden’s third capital improvements package are not complete. The administration has shifted its attention to the rising Mississippi River, which is on pace to eclipse the 1927 flood.
“I guess I’ll give you a high-water mulligan, Mayor,” said District 3 representative Chandler Loupe, who for months has been requesting specifics on the proposal, “but you didn’t give us any time frame.”
Holden says he’s not able to provide a timeline because of “all the unknowns out there” regarding the river. He repeatedly has said the proposal would be the same as bond issues rejected by voters in 2008 and 2009, but without the controversial Alive riverfront tourist attraction.
But the clock is ticking: If the bond is to be included on the Oct. 27 ballot, it must be approved by the council no later than June 8. The deadline is Aug. 10 for the Nov. 19 ballot.—Steve Sanoski
Business Report received 12 awards, including first place for best news coverage, from the Louisiana Press Association, which held its annual awards banquet April 30 in Marksville. In winning for best news coverage, Business Report was honored for its June 29, 2010, issue, which included a cover story on Millennials in the workplace, and its Aug. 24, 2010, issue, which included a cover story on the fifth anniversary of Hurricane Katrina.
Other first-place awards went to Executive Editor JR Ball, Managing Editor Scott Gremillion and Art Director Hoa Vu for the May 18, 2010, cover of the Deepwater Horizon oil spill in the Gulf of Mexico, and the Oct. 19, 2010, cover of a man on vacation but unable to disconnect from his personal electronic devices; staff writer David Jacobs for his coverage of the oil spill; photographer Marie Constantin for her Hall of Fame & Business Awards package in the April 6, 2010, issue; and former designer Nathan Calhoun for his Forty Under 40 in-paper promotion.
Second-place awards went to Penny Font and former staff writers Rebekah Allen and Emma James for their coverage of the River Center library debate; photographer Brian Baiamonte for his shot of Rockit Science Agency President Brad BonGiovanni in the June 15, 2010, issue; Calhoun for his Top 100 in-paper promotion; and online editor Timothy Boone and web editor Brandi Simmons for businessreport.com. Former Business Report graphic designer Matt Dawson received third place for staff-generated color advertising, Ball received honorable mention for best regular column, and Business Report received honorable mention for general excellence.
Seventy-nine newspapers, publications, and college/university student newspapers submitted 3,837 entries.
What’s in a name?
After more than two years of speculation, Pinnacle Entertainment has chosen to extend its regional flagship brand by naming its $357 million River Road project L’Auberge Casino & Hotel Baton Rouge.
The Las Vegas-based company opened L’Auberge du Lac in Lake Charles in May 2005; “l’auberge” means “the inn” in French. It also operates Boomtown Casino in Harvey and Boomtown Hotel & Casino in Bossier City.
Pinnacle’s Baton Rouge project has been without a name since late 2008 or early 2009, when the company backed away from Riviere, the casino and hotel’s original name.
“After more than five years of successful operation in Lake Charles, it made sense to extend our iconic L’Auberge brand to Baton Rouge, where residents and guests already associate it with the highest level of quality and service,” says Mickey Parenton, vice president and general manager of L’Auberge Casino & Hotel Baton Rouge.
The facility, which has had its opening pushed back from December 2011 to summer 2012 because of the Mississippi River’s high water level, will feature a single-level, 30,000-square-foot gaming floor with 1,500 slot machines and 51 table games, including a poker room; a 206-room hotel with a rooftop pool; a multipurpose event center with concert seating for up to 1,400 people or banquet seating for up to 800 people; a covered parking garage; and unique dining and entertainment venues overlooking the river.
BUSINESS OF POLITICS
Pushing the boundary
A state Senate committee recently approved legislation that would extend Louisiana’s current three-mile threshold in the Gulf of Mexico, which theoretically would open more territory for fishing and oil exploration. Technically, however, the Legislature doesn’t have the authority to set the boundary; Congress set the standard in 1953.
Sen. Dan Claitor, a Baton Rouge Republican, said Louisiana walked away a loser from that deal, since Texas and Florida were afforded nine-mile boundaries. Claitor’s Senate Bill 145 would grant Louisiana the same nine-mile area. The current boundary “is intrinsically unfair,” he told the Senate Natural Resources Committee. “It prohibits us from benefiting from the resources that are rightly ours and from protecting ourselves as we want.”
The goal of the legislation, he said, is to force a decision on another level of government. “We posture our boundaries so that we have a chance to reclaim what is rightly ours through the courts or potentially get the interest of Congress,” Claitor said.
The state Department of Natural Resources has performed two analyses regarding the extension of the state’s jurisdiction into the gulf. Based on its estimates, Louisiana windfall could be anywhere between $342 million to $480 million. “It’s certainly not a sure thing,” Claitor said. “We have a long road to go.”
Tax break introduced
Taxpayers impacted by last year’s Deepwater Horizon oil spill could receive a break in coming weeks, courtesy of the Legislature. Rep. Damon Baldone, a Houma Democrat, is pushing House Bill 620 to allow an exclusion from state income taxes for lost wages and income related to the oil spill. “You wouldn’t believe how many people are facing bankruptcy. I hear it every day,” he said.
Baldone said he patterned the proposal after legislation that was passed in the wake of hurricanes Katrina and Rita in 2005. The bill would also apply to corporate income taxes provided to a taxpayer by BP as compensation. If approved by both chambers and Gov. Bobby Jindal, the proposed law would be applicable for taxable periods beginning on or after Jan. 1, 2011.
New bond rating
Standard & Poor’s recently raised its rating on Louisiana’s general obligation debt to “AA,” up from “AA-minus,” with a “stable” outlook because of the state’s willingness to resolve structural issues in its budget. The move marks the first AA rating for Louisiana by S&P since 1984. Jindal said it “shows that the business world is taking note of our work to expand and diversify the state’s economy while pursuing reforms to make government more fiscally responsible.”
Better ratings, like higher credit scores, typically mean better borrowing terms that save the state money in interest costs. Earlier this year, Fitch Ratings reaffirmed Louisiana’s GO bond rating of AA. The state’s GO bonds are rated AA2 by Moody’s Investor Service.
The upgrade by S&P marks the sixth credit-rating upgrade among the three major agencies that Louisiana has received since the start of the Jindal administration. In a statement quoted by Reuters, S&P’s credit analyst cited Louisiana’s unemployment rate as being below the national average. “We expect the state to continue to address its structural challenges, such as its underfunded pension systems,” the outlook says, “and we anticipate that it will likely continue to make expenditure cuts as needed to ensure balanced operations.”—Jeremy Alford
Louisiana rose 13 spots on a list of the best states in which to do business, according to a survey of 550 CEOs. The state finished No. 27 in the Chief Executive magazine survey, its highest finish since the survey began. The report looks at a range of issues: proximity to markets and resources, industry regulation, tax policies, workforce quality and education resources.
The Associated Press’ Economic Stress Index shows conditions have been getting worse in the Capital Region. The index calculates a score from 1 to 100 based on unemployment, foreclosures and bankruptcy rates. A higher score signals more economic stress. The stress index in East Baton Rouge Parish was 9.38 in March, up 0.2 points from the month before. Nationally, the average stress score was 10.5 in March, the lowest level since December.
Albemarle says it will increase revenue from $2.4 billion in 2010 to about $5 billion in 2015 through mergers and acquisitions. The Baton Rouge-based chemical company disclosed the plans in a presentation to investors. Albemarle may spend $2 billion on acquisitions during the next five years, and the company expects sales from existing businesses will increase by 10% to 13% annually. Albemarle says a commercial plant for making lithium carbonate batteries will open in 2013.
Down but not out
Baton Rouge, which last year was ranked as the second-best midsize city for job growth, has fallen in the 2011 rankings. The Capital Region is ranked as the 45th-best midsize city in the NewGeography.com listings, in the middle out of 90 similar communities. Baton Rouge ranked 198th overall, out of a ranking of 398 cities, down from 15th place in 2010.
The Michaels Organization and Moreno Properties paid $1.37 million for 6.25 acres on West McKinley Street, currently the home of Charity Christian Center, in a deal that closed earlier this month. The land is by Magnolia Mound Plantation, between Nicholson Drive and Highland Road. While the site is near 20 acres along Nicholson that Moreno has owned for several years, there are no plans to tie the two tracts together.
Nearly 52% of the people who participated in a recent statewide poll say state lawmakers have done a “poor” or “not so good” job in office, and 60% say legislators acted in their own best interests during the recent redistricting session. The survey of 600 voters, which was done in April by Southern Media & Opinion Research Inc., found that Gov. Bobby Jindal’s approval ratings were largely unchanged, with a positive rating of 55% and a negative rating of 44%.
Blue Cross and Blue Shield of Louisiana
HOMETOWN: BATON ROUGE
Mike Reitz has led Blue Cross and Blue Shield of Louisiana, the Capital Region’s highest-grossing private company, with more than $2 billion in annual revenue, since 2009. Reitz has been with the company for more than 30 years, but few have been more interesting than the past year, when the federal government began its attempt to overhaul the industry. Even though President Barack Obama signed the Patient Protection and Affordable Care Act in March 2010, implementation is ongoing, and the rules are evolving. Meanwhile, Republicans are vowing to try to repeal the law or take away funding bit by bit, meaning uncertainty surrounding the health insurance industry won’t be going away anytime soon.
We’ve had a dedicated team working on health care reform even prior to the bill’s official enactment. We address the uncertainty by building a high-performing culture that is flexible and nimble enough to adapt to any changing situation, and to move swiftly and thoughtfully when clarity is reached.
A few of the regulations in the act have been more clearly defined [recently], but significant areas such as the individual mandate, essential benefits and the administration of exchanges are still under debate. Clarity on these and other important issues will not be reached until the debate ends, whenever that might be.
Any attempt to repeal the act will certainly not succeed as long as the present administration is in place; however, any number of tactical strategies will be employed to attempt to modify the law.
Political rhetoric clouds the issue. We’ve engaged in health care reform education from the beginning and have repeatedly said the act does not properly address the affordability issue. We are working with other stakeholders in an attempt to find solutions to health care cost drivers—such as overutilization, rising medical costs and fraud—so we can bring costs down.
We make every effort to educate our customers to make informed health care decisions. But all we have is cost data, and it is unfair to make [provider] recommendations on this basis alone. The problem is there has not been agreement in the health care industry on a formula to define quality, and without universal agreement on this subject, our company is reluctant to make recommendations. Now is the time for all health care stakeholders to come together to put into place this missing piece of the puzzle.
To read the full Q&A with Mike Reitz, click here.
Return on investment
Capital Area United Way used to measure its success by how much money it moved to area agencies, President/CEO Karen Profita says.
“Now it’s all about asking ourselves, ‘What kind of lasting change are we bringing to the community?’” she says.
The organization’s philosophical change was reflected in its announcement earlier this month of the distribution of $7.5 million to 45 service agencies providing education, health, basic needs and income programs in the 10-parish Capital Region.
About 160 volunteers spent 3,000 hours over the past nine months evaluating the effectiveness of each agency that receives funds, Profita says. Volunteers visited each organization, which was required to make a formal presentation on its operations, to see how services are provided and review financial documents.
As a result, some agencies that typically receive money didn’t, says Michele Robinson, senior vice president of community involvement, and others received exponential increases.
“This is the second year of a four-year change,” she says, “so you’ll definitely continue to see even more shifts in our funding next year.”
The total pledges for CAUW’s 2010 campaign were $10,002,003. The local chapter estimates $832,262 will go uncollected, and it budgets a little more than $1.6 million for operational costs, putting direct reinvestment pledges at 82%.
On the market
Woman’s Hospital has listed its current campus, more than one year in advance of its move to a new facility under construction at Airline Highway and Pecue Lane.
Beau Box Commercial Real Estate has the listing for the 24-acre site, which has a $19 million price tag. Box says “two different parties” have a high level of interest in the site; he declined to give specifics. The facility includes a 300-bed hospital, a 140,000-square-foot medical office building, a 20,500-square-foot support services building, a mechanical plant and a parking garage with 776 spaces.
Several big deals involving Goodwood Boulevard properties have taken place in the past year, Box says, most notably Starmount Life Insurance’s move into a new headquarters and Gulf Engineers & Consultants’ purchase of the former Union National Life Insurance building for $3.3 million.
“This area is right next to the population center of the parish,” he says.
Stan Shelton, senior vice president for new campus development, says the office building and the parking garage are the parts of the hospital campus with the most value to a new owner.
“It’s got to be pretty expensive to go in and retrofit a 42-year-old hospital building,” he says.
The site could end up being subdivided, and the hospital demolished to allow for redevelopment, Shelton says. Woman’s Hospital isn’t counting on the sale of the current campus paying for the new facility. Any money generated would be lagniappe for the hospital, “so we can be patient and hopefully a good use that will benefit the community will bubble up,” he says.
Woman’s is still on track to open its new campus in fall 2012. Within the next 60 days, Shelton says, the hospital will develop a final date for the opening. “We want to get far enough along so we’re immune to weather issues,” he says.—Timothy Boone
On the ’net
A local Realtor has launched HouseTipper.com, which serves as a Groupon for the real estate and home and garden industries. HouseTipper offers discounts in 20 cities, including New York, Los Angeles, Chicago and Atlanta, offering everything on discounts, from new homes to hardware, says Tigue Bonneval, an agent with Coldwell Banker One who launched the website in December.
“It had been in the works since June 2010,” says Bonneval, who has been in real estate for about 10 years. “We saw an opportunity.”
The soft national housing market made it a good time to launch the program, since real estate offices were looking for incentives to get people to buy property. Because the services offered on HouseTipper are high priced—one current promotion with a Chicago Realtor is $50 for a $2,500 discount off the closing costs of a home—the number of people who buy into any given promotion is small.
“Our tipping point is getting 10 to 15 people to buy a deal,” Bonneval says.
HouseTipper recently expanded into Baton Rouge and New Orleans. Bonneval says strong response from other cities had caused him to stay out of his own backyard. “We got flooded with requests,” he says.
Bonneval and his partners are trying to raise money from angel investors to expand HouseTipper.com further. His goal over the next few years is to have sales teams in place in 50 or so major cities, running different deals every week.
“We saw how these coupon services were doing for restaurants and other things, and that’s discretionary spending,” Bonneval says. “These are real people who want to spend money on housing.”—T.B.