Kip’s re-vision
Mayor Kip Holden’s vast master plan—the $989 million bond proposal for capital improvements—came 3,071 votes short of passing. It was a gut-wrenching defeat for supporters, but a victory for people who didn’t want to see another tax added to a growing list of household bills during tough economic times.
About four months away from a new vote, Holden’s game plan has begun to emerge. Rannah Gray, the consultant who oversaw the 2008 campaign and is doing so again this year, called the result “heartbreaking.”
“We can’t let that happen again,” she says.
As the city’s leadership prepares for another round of discussions regarding the upcoming bond issue, there is great uncertainty as to how it will fare. Can the bond issue do well alone on a ballot? Will the mayor be able to exclude the bedroom communities who overwhelmingly voted it down? Will the Metro Council allow another all-or-nothing vote for the proposal’s components? Are there enough frustrated supporters willing to hit the pavement?
For now, those questions remain unanswered.
Last year’s ballot included the presidential race. For the moment, the only thing voters will see when they enter the booth on Nov. 14 is the bond issue. Historically, the fewer items on the ballot, the fewer residents show up. Even the March special election for Senate District 16 had only an 18.7% turnout.
Critics as well as supporters are unsure who will show up to vote and what biases they will be bringing with them. Last year, the city had just begun to recover from Hurricane Gustav and was watching as the global recession started to envelop the economic picture. In addition, the Capital Region is traditionally anti-tax.
The Metro Council on July 22 is scheduled to address Holden’s request to create a special Capital Improvements District that would exclude Baker, Central and Zachary from voting on the bond issue. “I don’t think it was an earth-shattering decision,” Gray says. “We’ve heard from those parts of the parish that they wanted that right [to pass their own bond issues].”
Holden and his supporters also must address whether the bond will appear on the ballot as one item or in pieces. There was opposition last year from people who wanted to pass the infrastructure and public-safety projects, but not the economic development items—Audubon Alive and the River Center expansion.
Opponents such as former Metro Council member Lorri Burgess challenged the city’s spending priorities, saying it has “a large population who can’t even afford to put a roof on their head, and now we’re going to put a tax on them to pay for a hotel they can’t even stay in. … We want to be the next great city, but how great are you when your children can’t even eat? I’d like you to go back to your wine parties and talk about that.”
Gray, however, says that it is difficult to motivate voters to show up and vote for the practical things. “You can’t motivate people to go out and build a prison,” she says. “You package these things together and explain that it is comprehensive so we don’t have to come back to you repeatedly to raise your taxes.”
One act that Holden might be holding is the new grassroots organization, Progress Is Baton Rouge. Led by Jamie Griffin, who is leaving Raising Cane’s at the end of this month; Derek Fitch, Cyntreniks’ vice president of development; and Todd Teepell, the group of young professionals has begun talking about the issue. Gray says their public education efforts might help target what she calls “chronic voters”—those who go to the polls no matter what’s on the ballot.
Gray says the administration will be more vocal this time, too. “You have [city-parish chief administrative officer] Mike Futrell, who helped refine it,” she says. “You have [former city-parish CAO] Walter Monsour, and then you have [mayor pro tempore] Mike Walker and others stepping up.”
Between a small ballot, possible challenges from the Metro Council, the pinch that city residents might already be feeling on their wallets and those staunchly opposed to funding the plan’s riverfront development, Holden and his supporters will be seriously challenged.
Gray says they’ll be pushing the issue hard. “The message we have to make sure people hear is that this is taking charge of your economic future. This is a recession-buster.”—Olivia Watkins
Bleeding progress
It isn’t the worst-case scenario the LSU System proposed earlier in the year. But it’s not much better, either.
On July 9, LSU released details on budget cuts for the 2009-10 fiscal year, which included cuts to the Student Recreation Center on the Baton Rouge campus, salary cuts at the Paul M. Hebert Law Center and entire research lab closures at the Pennington Biomedical Research Center.
Most notably, some staff members will be required to take furloughs, and employees throughout the entire system will not receive merit pay raises.
The cuts are deep and wide. As dramatic as they might seem, LSU System spokesman Charles Zewe says they are smaller than what was originally intended.
“Across the state, it is not as bad as it could have been,” he says. “But when you pile that on the cuts that came in midyear, that is a fairly substantial downturn.”
LSU Chancellor Mike Martin says the cuts were very strategic. “I believe we stuck to our principles to protect the academic integrity,” he says. “We worked very hard to protect jobs.”
Don’t expect the situation to improve in the years to come, Martin warns. Gov. Bobby Jindal has said numerous times that the budget crisis will only worsen over the next two fiscal years.
Zewe says the impact on higher education overall could be devastating. “We could easily be cutting $400 to $500 million out of higher education that year [fiscal year 2011-12],” he says.
The LSU System already is preparing for the next round, Zewe says. At the Baton Rouge campus, Martin says departments will be examining where they can tighten their belts.
“One of two things is going to happen,” Martin says. “Either it’s going to fundamentally push us back in time much lower quality in what we do, or we’re going to have to pass more of the cost onto students and their families.”
Ultimately, the economic impact on the state will be evident if higher education continues to take significant blows.
“We’re saying that, ‘Gee whiz, if you want us to do a better job of educating students and bringing in research and encouraging economic development and all that good stuff that brings industry and hope to Louisiana, it’s not a good idea to cut higher ed,’” Zewe says.—O.W.
C’est organic!
Between Community Coffee, PJ’s Coffee, Café du Monde and River Road Coffees, south Louisiana must be buzzing with caffeine. But River Road Coffees has brewed a new pot for the region’s industry—an organic one.
Earlier this month, the company announced its new, completely organic coffee, called Café de la Terre, in two blends—a regular roast called C’est Bon, and a decaf blend called Décaféiné.
John Melancon, one of River Road’s owners, says the entire process is organic from start to finish. “We worked hard to secure the right bean from the right location,” he says. “You’ve got to make sure everything stays organic—straight up from bean to cup—and that’s not easy.” That means the farm where the beans are grown doesn’t use fertilizer or pesticides, and the beans are cleansed and roasted using organic products.
And while Melancon is staying tight-lipped about the coffee’s specifics, he did say they are planning on expanding the organic flavor options in the future—keeping south Louisiana buzzing as well as “green.”—O.W.
Bravo to…us!
Business Report won four awards at the Alliance of Area Business Publications summer conference June 25-27 in Minneapolis.
10/12 Editor Penny Font received two of the awards—second place for her Feb. 26, 2008, feature on Attorney Mary Olive Pierson and third place for best body of work.
“Font shows great variety in her stories,” said judges from the University of Missouri School of Journalism. “From the profile on the attorney to the story on dueling parishes to the hard-nosed story on capital improvements, this reporter demonstrates good reporting skills and excellent writing.”
Executive Editor JR Ball won third place for best bylined commentary. His Dec. 2 column, “Overhaul or U-haul,” called for the state to rewrite its regressive tax code and unlock guarantees that make almost everything except health care and higher education a sacred cash cow, or face the continued exodus of well-educated residents in their prime tax-paying years. “This column manages to inform, anger and be a call to action, all in one piece,” judges said. “It’s contentious, clear and courageous.”
Art Director Hoa Vu won third place for best overall design. Four issues were submitted for this category. “The colors, typography, logos and flags work together for a sophisticated feel,” judges said. “The issues’ consistency would be comforting for readers. The design staff takes some risks and doesn’t settle for traditional approaches when more creativity is called for.”
ExecutiveSpotlight
Andrew Bascom McCandless
President/Owner
Bascom-Hunter
Hometown: Houma
As a child, Andrew Bascom McCandless and his father had what he called “weekend projects”—plumbing, electrical wiring and woodworking. McCandless loved the types of projects that, working with his hands to create something from scratch, might live on beyond his involvement.
McCandless, 30, has created a lot in a short period of time. In addition to the company he created while attending LSU, he also founded a consulting firm, Bascom-Hunter, that guides firms with business and technology development needs.
But McCandless never gave up the tradition of “weekend projects” that his father had started. “I have always enjoyed building and see myself as a builder of things,” he says. “Sometimes I am building a house; other times I am building a business. I find it very gratifying to start with just an idea and then build something that can outlast your involvement in the effort.”
To read McCandless’ full Q&A, click here.
SavingGreen
Sprouting interest
Phelps Dunbar attorney Michael Hunt says the firm isn’t sure how much money it’s saving with all the “green” features of its new office space in II City Plaza.
“We were told, and our assessment bore out the fact, that there would be over time an economic benefit to whatever initial incremental cost there would be,” Hunt says. “It was not just because it had an environmentally beneficial effect.”
Throughout the planning process, Phelps Dunbar worked with Gensler, its architecture firm for the project, to try and attain the highest level of LEED [Leadership in Energy and Environmental Design] for the new office.
To that end, the firm went with a heating and air conditioning system that promotes better internal air quality, lighting and water systems with motion sensors to promote conservation, and environmentally friendly building materials. Phelps Dunbar says each of its offices is equipped with copy machines that can create PDFs, which reduces paper use and eliminates excessive printing, faxing and mailing. Offices also use post-consumer recycled paper and low-energy lighting and appliances.
The Baton Rouge office will be the first Phelps Dunbar space to shoot for LEED certification. Hunt says the firm expects to find out this fall the level of certification it has achieved.
Does having the LEED stamp of approval have any tangible benefit?
“I would have thought not, but there’s been more interest in this than I would have thought,” Hunt says. “We had a thought that for younger professionals, it might have been attractive, that they would appreciate that the firm had taken that step. As it turned out, it’s just as popular for older employees and older professionals.”—David Jacobs
FastForward
Downtown slowdown
Experts often say the lifeblood of a downtown is its residential element. Plans for two residential developments were laid out in an Aug. 13, 2007, Business Report story entitled “Livin’ large.” The Baton Rouge Area Foundation, through developer Commercial Properties, hoped to add 100 additional residential units to downtown Baton Rouge through projects One Eleven and the Brownstones.
While the 12-unit One Eleven was completed last year, the Brownstones, a 70-unit development at Laurel and Fifth Streets, has not gotten off of the ground. Originally set to feature apartments averaging 1,000 square feet with rents about $1,200 a month, the development was halted because of concerns about the economy, says Mukul Verma, BRAF’s director of communications.
“The project at Fifth and Laurel is in pause until we have a truer understanding of the economy’s direction,” Verma says. “Because of the uncertainty, we don’t really have firm plans that can be discussed.”
Concern over the national economy has caused slowdowns on several downtown residential projects, says Davis Rhorer, executive director of the Downtown Development District.
“I believe that the commitment is still there,” Rhorer says. “It’s just when the financing is not there, some things have to be put on hold. That has been an issue with some of the projects I have worked with.”
According to Rhorer, about 2,200 residential units exist in the downtown area [including Spanish and Beauregard towns] with about 70 in the central business district.
But the vision of a vibrant downtown residential community can absolutely become a reality, Rhorer says. The River Park groundbreaking, which includes a four-lane underpass that will connect downtown to 36 acres that are planned for a mixed-use development, marks the most recent project that will build residential development interest in downtown, Rhorer says.
“Downtown living is critically important,” he says. “When people are living down here taking advantage of the retail and service opportunities that exist, you have a dynamic 24-hour lifestyle that we are trying to facilitate.”—Emma James
NonprofitSpotlight
Louisiana Art and Science Museum
Total assets: $6,505,214
Key projects: “Enhanc[ing] the understanding and appreciation of art and science for general audiences and students by presenting unique, educational and entertaining programs that inspire creativity and foster the pursuit of knowledge.”
Expenses: $2,789,042
Revenue and support: $3,377,424
Highest-paid executives:
Carol S. Gikas, President: $111,450
Sam Losavio, Assistant director: $76,621
John Elvert, Planetarium director: $67,704
Pam Sills, Development director: $54,995
2009 Board members:
Thomas J. Adamek
Mike Anderson
Laurie Lipsey Aronson
David J. Bondy Jr.
Jeanne C. Comeaux
Victor Gregoire
Barry Kilpatrick
SOURCE: 2007 Form 990, Guidestar.org
Business of Politics
Payout please
Gov. Bobby Jindal approved a fiscal care package for hospitals still reeling from the effects of recent hurricanes and rocking from the escalating costs of treating uninsured patients. House Bill 879 will compensate hospitals more than $212 million for hurricane-related losses stemming from hurricanes Katrina, Rita, Gustav and Ike. Meanwhile, uncompensated care costs to hospitals are an ongoing problem that affects facilities statewide. Uncompensated care takes place when hospitals provide care for patients without insurance or other financial means to pay for their care.
As for whether hospitals in the Capital Region will get a piece of the pie, that might take a while to determine. Charles Castille, undersecretary of the Department of Health and Hospitals, says guidelines are still being drawn up and the payout process will have to be approved by the federal government. “We’re shooting to have everything done by September or October,” he says.
Creative housing
While the budget took up most of the legislative spotlight this year, a bit more light was directed to the ongoing problem of affordable housing. Many lawmakers considered it a critical issue that didn’t receive the attention it deserved this session.
How serious is the challenge? According to Realty-Trac, a national foreclosure database, Louisiana saw more than 1,100 foreclosures in April alone. To find a worse month in state history, you’d have to go back to January 2005.
In short, people are finding it difficult to keep a roof over their head. But Senate President Sharon Weston Broome, a Baton Rouge Democrat, says one of her bills can push the state in the right direction. Her legislation, which was pending the governor’s signature, establishes the State Housing Tax Credit Program to prioritize which projects should receive state and federal assistance.
“I don’t have to tell you that one of the pressing challenges that we face in Louisiana is the shortage of affordable housing,” Broome says, “and I certainly believe the quickest way to build wealth is through home ownership.” The ultimate goal of the program is to stimulate “creative private sector initiatives” and increase the “supply of affordable housing in urban and rural areas,” the legislation states.—Jeremy Alford
Home brew
Mockler Beverage has joined with a Madisonville company to buy Southern Eagle Sales & Service, which distributes beer in metro New Orleans. Terms of the deal between were not disclosed.
Southern Eagle is the primary distributor of Anheuser-Busch products such as Budweiser and Bud Light in the Crescent City as well as beverages from smaller breweries such as Kiln, Miss.-based Lazy Magnolia. Mockler distributes the same beers in metro Baton Rouge, and Champagne has the Northshore territory. “It’s exciting for us,” Tim Mockler says. “New Orleans may not swing the hammer it once did, but clearly it’s a key part of our state, and everyone wants good things to happen for the city.”
Mockler and Champagne are also Anheuser-Busch distributors, so the transition is seamless. Southern Eagle will remain a freestanding operation, with its 240 employees retaining their jobs. Mockler says they’re looking at adding workers and warehouse space to Southern Eagle.—Timothy Boone
Vitter gets loud
U.S. Sen. David Vitter sent a letter to Sen. Chris Dodd, a Connecticut Democrat and the chairman of the Committee on Banking, Housing and Urban Affairs, and the committee’s ranking Republican, Sen. Richard Shelby of Alabama, urging them to hold a special hearing before the start of August. The letter, also signed by Sens. Mel Martinez, R-Fla., and Bob Corker, R-Tenn., asks the committee to review Stanford Group’s alleged Ponzi scheme and the “failures of our nation’s regulatory agencies to intervene to protect the companies’ defrauded investors.”
The letter says the federal oversight agencies’ failure is “shocking,” especially considering that the “Stanford Group Companies have a long history with these agencies.” It also asserts that if any involved regulatory agencies had stepped in earlier it would “have likely saved these investors from the hardships they face now.”
Vitter has been an advocate for the Louisiana victims of the alleged fraud since shortly after Feb. 17, when federal regulators charged Stanford with a “massive” fraud that centered on high interest rate CDs.
Kim Scullin, a representative with the Louisiana Stanford Victims Group, said in an e-mail, “It is imperative to me that we discover how this was allowed to occur for so many years, impacting thousands of middle-class working and retired Americans who tried to do everything right.”—O.W.
ONTHEBEAT
Second place: Baton Rouge added 1,300 jobs in May to rank second nationally in gains. The Bureau of Labor Statistics says only Austin, Texas, added more jobs, with 4,200 more positions than in May 2008. The BLS says just 15 U.S. cities added jobs in May, while 295 posted decreases. Preliminary numbers show the unemployment rate in Baton Rouge was 6% in May, well below the national average of 9.1%.
Liquid cash: Lafayette-based MidSouth Bank has been added to the Russell 3000 index, which measures the market capitalization of the 3,000 largest and most liquid companies in the United States. Rusty Cloutier, president and CEO of the regional bank, says the move will mean more exposure because investment firms buy shares of companies in the index in order to keep their portfolios reflective of the Russell 3000.
All grown up: Raising Cane’s founder Todd Graves is featured in the July issue of Entrepreneur magazine. Graves talks about how he started the chicken tenders chain and how it has grown. Daymon Garner, a Baton Rouge native and a graduate of Episcopal High School and LSU, took the photographs that accompany the interview.
Unwanted: The number of jobs being advertised online in Louisiana is down 13% from last year, according to a report from the Conference Board Help-Wanted Online Data Series. There were 40,400 advertised vacancies in the state during June, compared with 46,600 in June 2008. Nationwide, the number of vacancies advertised online fell by 29%, to nearly 3.3 million.
Repeat? LSU baseball fans are still basking in the afterglow of the Tigers’ sixth College World Series championship, but Baseball America is already looking at what teams will contend for the title next season. LSU is one of the eight teams the magazine says could be back in Omaha, Neb., next year—a group that includes Texas, Rice and Florida.
Honor for Sternberg: Baton Rouge native Marc Sternberg has been named one of 15 White House fellows for 2009-10. Sternberg, 36, is the son of Hans and Donna Sternberg. He opened the Bronx Lab School in 2004, an independent public school that has won praise from the New York Times, The Economist and the Gates Foundation.
On hold: Terra Industries idled production at its Donaldsonville ammonia plant beginning July 1 because of weak demand. The company says it will restart production once market conditions improve. This is the second time this year the plant has idled; the facility re-opened in March after a nearly three-month-long shutdown. About 30 people work at the plant.
Fountain-less: The fountain in the front of Pennington Biomedical Research Center has been shut off as part of a cost-saving measure. Jerry Blanchard, director of facilities management for the center, says the fountain facing Perkins Road and one in the middle of Pennington were turned off in anticipation of the budget cuts the center is facing.
Back to the future
A real estate forecasting service says the Capital Region is one of the 10 best areas in terms of future home prices. Local Market Monitor, which produces the Home Price Forecast for more than 300 cities, says home values should remain level locally over the next 12 months. Officials with Local Market Monitor credit the same factors for Baton Rouge’s stability that have been repeatedly said during the national housing crisis: Home prices in the Capital Region never got out of hand, and economic growth has remained steady.
Alexandria, Monroe and Shreveport-Bossier City also made the top 10 list for future home prices in cities with populations under 600,000.—T.B.
Selling like it’s 2005
A Harvard study on the state of U.S. housing says the median single-family home in Baton Rouge was selling last year for just a little more than it did in 2005. The report from the Joint Center on Housing Studies, which used data from the National Association of Realtors, put the median price for an existing home in the Capital Region at $165,000 for 2008. That compares with $161,200 in 2005, $180,000 in 2006 and $181,100 in 2007. The figures were adjusted for inflation, and 2009 numbers for the area were not available.
Home prices in metro New Orleans fell back to 2003 levels, going from $166,500 in 2007 to $153,100 in the first quarter of 2009. Prices in Shreveport, which peaked at $141,200 in 2006, were down to $138,100 in the first quarter. The study says home prices continued to drop in the first quarter and foreclosures continued to rise despite efforts by the federal government to jump-start the housing market and keep people in their homes.—T.B.
