Your slice of the pie
With the stimulus bill signed, sealed and delivered, the pockets of Washington are starting to slice up the pie—to your benefit. Of course, you’ll want to consult your financial advisor or accountant, but here’s a general breakdown of what you could receive to help you “stimulate” the economy:
Fame and fortune
Each year, Business Report and Junior Achievement team up to honor the top businesses and individuals of the year, including inductees into the Business Hall of Fame. The 2009 winners are Hillar Moore Jr. and A. Hays Town [posthumously] for the Hall of Fame; Bobby Yarborough of Manda Fine Meats is the Businessperson of the Year; Darian Chustz of Baton Rouge Coca-Cola Bottling Company is the Young Businessperson of the Year; Kleinpeter Farms Dairy was named Company of the Year [more than 100 employees] and D. Honore Construction is the Company of the Year [less than 100 employees]. This year marks the 26th anniversary of the annual awards banquet. For more information about the banquet to be held at the Crowne Plaza Hotel on April 23, go to batonrouge.ja.org or call Junior Achievement at 928-7008.
Money-back guarantee
Billions in Troubled Asset Relief Program capital could be headed back to Washington, D.C.
President Barack Obama’s $787 billion stimulus package now restricts TARP recipients from paying top earners a bonus equal to more than one-third of their annual pay, but it also frees them from keeping TARP capital. Bigger financial institutions were already grumbling publicly they’d like to return the money.
“We just need to dig ourselves a nice foxhole and stay in it,” MidSouth Bank President Rusty Cloutier says. “A lot of banks in Louisiana were going to take this capital and expand, and now they’re being told that’s what you’re not supposed to do. They changed all the rules, but it’s a good thing they let us give the capital back.”
Cloutier says it’s on MidSouth Bank’s agenda to discuss whether to keep the $20 million it accepted last year.
Bob Taylor, CEO of the Louisiana Bankers Association, says several banks are reconsidering the capital. “It’s not surprising,” he says. “We knew from the start that the contract with the government could change at any time.”
Cloutier agrees the problem is government’s retroactive—and possibly new—restrictions, and not the bonus restriction that mostly applies to bigger institutions. If banks return the capital, he says the bigger question is who will buy the assets of hundreds of banks expected to fail this year.—Anna Thibodeaux
Siege mentality
Out
Dinner at swanky restaurants
Luxury cars
Seasonal “it” designer handbags
Family vacation to the Caribbean
Laphroaig 31-year-old Scotch
In
Candlelit, home-cooked dinners
Fuel-efficient used cars
Discount designer handbags from last season
Family trip to Orange Beach or Destin
Glenlivet 12-year-old French Oak Reserve
Remember when you were a child and your parents [or your grandparents] told you to clean your plate—or else? Remember how they repeated the motto, “Waste not, want not,” as they rinsed spaghetti sauce from aluminum foil, folded the foil neatly and put it back in the drawer? That’s kind of like what American consumers are going through right now. Sort of.
Households in bigger cities might be feeling the pain of corporate layoffs, but Baton Rouge isn’t hurting too badly. Despite that, it seems Capital Region residents are spending like their last paycheck came yesterday. It’s not uncommon to see a news conference from city and business leadership encouraging residents to spend because Baton Rouge is “not participating in the recession.” But ask almost anyone on the street, and they’ll tell you they are being more cautious.
LSU sociology professor Jeanne Hurlbert agreed. “There is clearly a siege mentality,” she says. “A lot of people are worried, and a lot of people are changing their spending behavior.”
National reports show that consumer spending is down. What that means for business is that luxury items are no longer a priority. To introduce a new American motto, saving is the new spending.
On a day-to-day basis, consumer habits seeing a decline are things like eating out, Starbucks and ordering top-shelf alcohol. As early as July 2008, Wine & Spirits Daily reported almost half of the restaurant and bar professionals they surveyed were claiming fewer cocktails ordered per person. And 22% of the same group said of the drinks that were purchased, consumers were opting for less-expensive brands.
Entertainment has seen a sharp drop over the last year, too. Walt Disney Co. reported a 32% decline in profits. The fall in earnings, they said, was due in large part to the decrease in DVD sales. With options like Netflix and Blockbuster home delivery of DVDs, consumers are finding it easier to entertain themselves without heading to the movies or spending upwards of $20 on a DVD.
Even bigger purchases were down last year. And while it is likely that a large part is because of the average consumer spending less, it also might be closely tied to the biggest spenders having less to spend. A recent Northwestern University study found those people who made their income primarily from nonemployment related sources were those people who had the most to lose in the new economy. “High-exposure high incomes” were the ones suffering—relative to their standard of living. Meaning, there are fewer dollars floating around the upper crust to lay down on Aston Martins and Ferragamo handbags in 2009. While this result seems logical, the Northwestern study finds this is the first incidence of such results for high-income households in more than 25 years.
In the end, it’s merely a self-fulfilling prophecy, isn’t it? Spend less and there’s less to go around. Fewer dollars in the economy mean fewer jobs. And fewer jobs mean a worsening of the recession. Maybe as a compromise, Baton Rouge residents will still go to the movies on Sunday afternoon, they’ll just sneak in their own candy and bottled water.—Olivia Watkins
Executive Spotlight: Derren S. Johnson
President/owner, Derren S. Johnson & Associates
Hometown: Baton Rouge
Try imagining Meryl Streep in a version of NBC’s comedy series The Office, snickering at Dwight Schrute as he demands his title is assistant regional manager—not assistant to the regional manager. That’s how Derren Johnson sees the dramatic version of her life playing out on screen. Of course, to really portray Johnson accurately, Streep would have to be skilled in walking clients through financial stress and keep a stash of hairspray with her—always. But at the end of the show, or the end of the day, Johnson knows that despite being a woman in a male-dominated field, she is doing what she loves to do. Not a bad role. Maybe someone should send her the script.
Want to find out more about Johnson? Read the rest of her profile Q&A here.
Book Review: The Economist Book of Obituaries
Author: Keith Colquhoun and Ann Wroe
Publisher: Bloomberg Press
Year: 2008
Pages: 409
You’re a pretty fast talker, but you’ll never get out of this one.
You can plead, bargain and beg, but it’s not going to work. You can ask nice, pretty please with sugar and get down on your knees in supplication. But in the end, you’re going to die.
It happens to the best of us, no matter what we do. If you’re lucky, you’ll join the few who are immortalized by The Economist. In their new book The Economist Book of Obituaries by Keith Colquhoun and Ann Wroe, the last two Economist writers to pen obituaries for the publication, you’ll read brief life stories of notaries and others who should just be noted.
In this book, you’ll find the ubiquitous politicians and businessmen, of course. Cyrus Vance is eulogized, as is Claudia Alta. So are Estee Lauder, David Packard of Hewlett-Packard fame, the founders of Club Med and Mensa, a beer man and a Beatle.
Think you don’t have time to read? Pick up this heavy book, open anywhere, and dive in. Each eulogy is two pages in length, which means you won’t be stuck in the middle of a long chapter nor will you feel bad about skipping any parts.
If you have a curious mind, love the unusual, or if you turn to the obits page first thing in the morning, read The Economist Book of Obituaries. This irresistible book will tickle you to death.—Terri Schlichenmeyer
Fast Forward: Re[tired]
In the March 27, 2007, Business Report story “Aiming High,” Port of West Feliciana CEO Roger Richard was hopeful about talks with investors about building a biodiesel plant, ethanol plant, tank farm and manufacturing facility on the nascent port, on the Mississippi River between the now-shuttered Tembec paper mill and River Bend nuclear plant.
Today, with ethanol on the ropes and his other projects failing to materialize, Richard—once ousted from his job as CEO of the Port of Greater Baton Rouge—resigned after the expiration of his contract Jan. 14. Instead, the port commission is opting to work with the West Feliciana Economic Development Corporation.
“I had a two-year contract out there at West Feliciana,” he says. “It’s what I committed to. We all agreed to that. It was no problem.”
There could be something brewing at the port, however, says Mike Smith, president of the Greater St. Francisville Chamber of Commerce. He says officials are awaiting a decision by a company [which he declined to name] looking into taking over the Tembec mill, which closed in July 2007. That was a blow, Smith says, but now he feels pretty good about the mill’s chances for a restart.
“We need a couple of dominos to fall, but once it gets under way with the new mill, we expect things to move rapidly with the development of the port,” he says.
Richard, who’s still involved in a lawsuit with the Baton Rouge port over his termination, says he’s already bored with retirement and is hoping to score some kind of public relations position in engineering, construction or the port industry in which he’s worked for 50 years.
“I hope when I find it, I can give back something to the community for all the good years I’ve had,” he said, “and at the same time provide myself with something challenging and something I enjoy doing.”—Steve Clark
Fortnight Feb. 25-March 10
Feb. 27 – On this day in 2008 – Gov. Bobby Jindal announced the addition of $18.6 million to the Department of Health and Hospitals’ budget in order to fund technology upgrades—in stark contrast to the heavy budget cuts being suggested by the administration this spring.
Feb. 28 – Schools are finally going green, at least that’s what Global Green USA would like for Louisiana. School officials, educators, architects and engineers will gather to discuss green building standards and tips from 9 a.m. to 4 p.m. at LSU’s College of Art & Design at its third Green Schools Workshop. More information about attending is available by calling [504] 525-2121 ext. 186.
March 2 – For politics and life outside of Baton Rouge, the acting president and chief academic officer at the American University of Afghanistan, Athanasios Moulakis is presenting his lecture, “What Hope for Afghanistan?” from 3 p.m. to 4:30 p.m. at LSU’s Hill Memorial Library. For more information on the lecture sponsored by the Eric Voegelin Institute and ISI, contact Wanda Ashley at 578-7888.
March 5 – On this day in 2008 – The Louisiana Jump$tart Coalition released a report on how the state stacked up to the national average credit scores. Baton Rouge consumers came in slightly above the state average of 672, perhaps an early sign that the Capital Region wouldn’t be hit as hard by the fast-approaching national recession.
March 5 – Outstanding Baton Rouge projects in commercial, residential and institutional development will be honored by the Baton Rouge Growth Coalition and the Business Report at the 13th annual Good Growth Awards. The awards banquet will be held at 6 p.m. at the Hilton Baton Rouge Capitol Center. More information can be found at growthcoalition.com.
March 9 – On this day in 1933 – Former President Franklin Delano Roosevelt ordered the first special legislation session since 1861, during which Congress passed the Emergency Banking Act—not too far from the stimulus bill which saw numerous incantations throughout the first few weeks of President Barack Obama’s presidency.
Business of Politics
Quiet on the capitol front With the mighty splash Gov. Bobby Jindal made with ethics reform last year, some folks might be expecting a follow-up this spring. So far, it seems quiet. Even internally there aren’t many earth-shattering resolutions [the low-hanging fruit of legislation] to serve as feel-good sequels to 2008’s touted reforms. “There are a few things that we might do internally, but it’s just coming together,” says GOP House Speaker Jim Tucker of Algiers.
But it might be too early for an ethics follow-up, suggests Jim Brandt, president of the Baton Rouge-based Public Affairs Research Council. He says it could be another year or so until the state sees any tangible benefits—or drawbacks—from the new laws. “We don’t have a track record yet for modifying or eliminating any of the reforms,” Brandt says.
Nonetheless, it’s always a good time to discuss campaign finance, which Brandt says Jindal skipped last year. There’s also the possibility of opening up more records to public view in the governor’s office, a concept PAR backed in 2008 and Jindal opposed, leaving Louisiana with the distinction of being amongst the worst states in the nation when it comes to accessing the executive branch.
Quick-draw chatter Stronger gun laws could play a role in this year’s regular session as well, according to a national advocacy group that describes Louisiana’s current gun laws as “weak or nonexistent.” The Brady Campaign awarded the Bayou State two out of 100 points in its annual survey—Louisiana, Kentucky and Oklahoma are tied for the bottom spot.
The group’s new report suggests that most states, like Louisiana, have actually helped feed the illegal gun market and eliminate safety measures.
Louisiana’s score actually dropped this year, which can be directly attributed to the state’s new “take your guns to work” law. Since August, employers have been prohibited from banning guns that are kept in their employee parking lots.—Jeremy Alford
Pinnacle feels the pinch
Pinnacle Entertainment, appearing before the Louisiana Gaming Control Board on Feb. 17, asked for and received a 90-day extension to submit a construction contract for its $350 million casino resort on 560 acres along the Mississippi River south of LSU. The vote was unanimous.
Feb. 18 was the deadline for submitting the contract, but Pinnacle officials told board members the lending market was effectively shut down as a result of the country’s economic situation. Jack Godfrey, Pinnacle’s executive vice president, general counsel and secretary, says the casino industry historically has had easy access to financing for projects, but the current market conditions were “unprecedented.”
Carlos Ruisanchez, Pinnacle’s executive vice president of strategic planning and development, says the company is one of the few solvent casino operators in the industry. Godfrey says the company hopes the lending market returns to some sense of normalcy between now and May 19, when the 90-day extension expires. If not, Pinnacle could be back in front of the board again asking for another extension.—Steve Clark
Evolution of consequences
Louisiana officials are learning the hard way that words have consequences, and ones that hit the state where it hurts—in its wallet. The Society for Integrative and Comparative Biology has canceled its annual meeting scheduled for New Orleans in 2011 as a protest against Louisiana’s passage of the Science Education Act, which, according to proponents, was necessary to provide alternatives to evolutionary theory, global warming and human cloning in the classroom.
In a letter to Gov. Bobby Jindal, SICB President Richard Satterlie wrote that even though New Orleans had been a popular venue for past SICB meetings, the group’s executive committee had voted to move the 2011 meeting to Salt Lake City because of SB 561, which in Satterlie’s words “undermines the integrity of science and science education in Louisiana.”
The new measure gives teachers latitude to discuss the probability of evolution, or redefine it from the original theories of Charles Darwin. For example, teachers could suggest that evolution occurs within the species, not as a means for the creation of species. Critics suggest that the measure allows for religious alternatives, such as intelligent design, to be presented as fact in public school classrooms.
The 2009 SCIB meeting in Boston brought 1,850 scientists and graduate students to that city for five days, according to Satterlie’s letter.—S.C. and O.W.
ONTHEBEAT
Tops in the food biz: Ron Sonnier, president of the ACF of Greater Baton Rouge, was named Chef of the Year at the American Culinary Foundation of Greater Baton Rouge’s annual awards banquet. Manjeet Bhatia of Saffron Spices and author of the cookbook Don’t Say Curry was named Entrepreneur of the Year. Community Coffee was named Purveyor of the Year.
401[none]: The Advocate has temporarily stopped contributing to its employees’ retirement plans. In a memo, CFO Ralph Bender—citing “difficult economic times”—told employees that the board of directors has decided to suspend the company match on 401[k] plans.
Knock Knock, solicit: Board members plan to begin a “silent” campaign in early March to raise money for the proposed Knock Knock Children’s Museum in City Park. Chairwoman Kelli Stevens says organizers will be talking to donors and hope to raise as much of the estimated $15 million cost as possible this year before considering a public campaign in 2010.
GOP savior? New Statesman, a British newsmagazine, has named Gov. Bobby Jindal as one of 10 people who could change the world. The magazine profiles Jindal as the savior of the Republican Party. New Statesman has a pretty good track record; its 2005 list of people who could change the world included a Chicago politician named Barack Obama.
E squared: E. Eric Guirard’s law firm has a different name. Guirard has named attorneys Chad Dudley and Steven DeBosier as partners, and the firm is now called Guirard Dudley DeBosier. A spokeswoman says the move was done to reward Dudley and DeBosier for their years of contribution to the firm and dedication to clients and had nothing to do with Guirard’s potential disbarment.
Regional acquisition: Regions Bank has taken over FirstBank Financial Services and assumed about $285 million in deposits from the Georgia bank. Regions was named as receiver of FirstBank earlier this month, after the Georgia Department of Banking and Finance turned the bank over to the FDIC.
Downtown dreams delayed: Two major downtown state projects are on hold because of budget constraints. The state hoped to build a new office building for Louisiana Economic Development on Fifth Street, and a 4,000-seat amphitheater on the former site of the A.Z. Young building.
Top 10: An analysis of the country’s 88 biggest labor markets found that Baton Rouge had the 10th largest growth over the past year. The Capital Region added 4,000 jobs from December 2007 to December 2008, according to a Bizjournal.com analysis of federal employment statistics.
Rogue state
While the rest of the nation might still be reeling as home foreclosures continue to jump, Louisiana is the exception. The number of foreclosure filings statewide dropped 32.6% in January when compared with a year earlier.
According to RealtyTrac, a company that follows foreclosed properties, one out of every 3,833 homes in the state received a foreclosure filing in January. That’s far below January’s national average of one foreclosure filing for every 466 U.S. homes. Louisiana ranked 42nd out of all the states and the District of Columbia for foreclosures, while Nevada was once again first, with one foreclosure for every 76 homes. Nationwide, foreclosures increased by 18% in January when compared with the year before.—T.B.
No vacancies
The housing downturn has caused rental rates to fall in cities such as New York and Los Angeles, but it hasn’t had that effect in Baton Rouge. Based on surveys of local apartment owners and managers, rental prices continue to increase around the city, says Wesley Moore, an appraiser who tracks the local market. “Vacancies are still around 3%, when the historical norm was 7% or 8% in Baton Rouge,” Moore says. Vacancy rates still remain very low, despite a boom in luxury apartment construction that happened after Hurricane Katrina. Moore said 3,800 apartment units have been built since the 2005 storm, most of them south of Florida Boulevard.
Tight credit markets have made it harder for renters to borrow money or become homeowners without making a down payment. That’s stopped the flow of people moving out of apartments, Moore says. “We’re not out of the woods, but the apartment market is a lot stronger than it would have been otherwise because of all the building,” he says.—T.B.
Saban’s successor
The Highland Road estate that belonged to former LSU football coach Nick Saban is under contract. Quita Cutrer, an agent with Burns & Co. who has the listing for the home, says the closing is set for April 1. Cutrer couldn’t give any further details, but says a local buyer is purchasing the home.
Developer Jim Tanner bought the home for $2.75 million in 2005 after Saban left Baton Rouge for the NFL. Tanner then exchanged the property in December 2007 before buying the house back in April for $2.8 million. In August, Tanner put the house back on the market for $2.995 million. The home, which sits on 5.22 acres, features amenities such as limestone floors, a heated and cooled garage and a guesthouse.—T.B.
