(Editor’s note: This post was updated at 8:30 a.m. with corrected figures for the projected TIF district revenue. Also, the original version incorrectly stated that Bullitt County Tourism officials were the source for a tip about a new bourbon center.)
Welcome to the Dec. 9 Monday Business Briefing.
This is your private business intelligence briefing, with Insider Louisville staff and contributors vetting tips collected during the past few days, hours and minutes before we post at 7 a.m.
As we prepare for our short-burst networking format Insiders Meetup this afternoon at Vincenzo’s, we’ll have multiple topics for discussion. They include rising tensions in NuLu over what, exactly, is the right sort of business to enhance the retail, arts and restaurant district, and which threaten its future.
• Five years ago, NuLu consisted of a few businesses and a lot of abandoned buildings in a standoff with Wayside Christian Mission’s complex of shelters. Then Gill Holland and Augusta Holland showed up with a band of investors. Now, NuLu has the hottest urban blocks in Louisville. On Friday, IL broke the story about the first AC Hotel in the United States being planned for the lot on the northwest side of Market and Shelby Streets. That $30 million project fits perfectly into NuLu, say Holland and other investors.
But sources say another project is planned, a project getting a very chilly reception from all the people who’ve invested millions in East Market Street Business District. The family who owns Hunt Tractor property at 1000 E. Market Street is proposing a Family Dollar store on the far east end of NuLu.
Family Dollar, based in Charlotte, N.C., is a deep discounter, a publicly traded Walmart competitor with more than 7,000 stores in 45 states and the District of Columbia. Seven thousand stores of the most basic concrete construction … a strip-center design as an anchor in a historic preservation area.
One could argue national credit tenants such as Family Dollar were bound to discover NuLu, which has high traffic counts, low property prices, and is surrounded by thousands of homes in Butchertown and Phoenix Hill. But the arrival of small, locally owned boutiques such as Red Tree, Scout and Canoe marked the retail turning point for the street.
Moreover, this is an area where several businesses owners, including Decca restaurant at 812 E. Market, have spent millions stabilizing and reconstructing 19th Century buildings, using construction methods and designs to ensure they stay true to Victorian designs.
IL will have a more detailed post later this week.
For the moment, we have a comment from Gill Holland:
While we like seeing empty lots be put into service, we do not think a Family Dollar is the highest use for this property. This property is the gateway to the historic Highlands from the city, and the gateway to our sustainable, small business, local food and arts district NuLu from the east side. This property could be used as the central transportation hub downtown needs, or a Nucleus satellite business incubator office building with retail on the ground floor. We worry a chain store like this will have a negative down-side to all the hard work our locally owned and operated “Mom and Pop” stores have put in over the years. There is great future potential of that site that will never come to fruition by having Family Dollar take it now. We also think the changing nature of this area may not have been properly taken into account by the folks locating this store, because it does not seem to us the best spot for a Family Dollar. So we would invite the CEO, Mr Levine, to come for a visit himself and we will show him around!
• We’re sure it’s merely a cruel coincidence. But the same weekend the Courier-Journal started pushing digital as the remedy to newspapers going undelivered in the winter storm, Gannett Blog creator Jim Hopkins has a Wall Street Journal-quality post dissecting McLean,Va.-based Gannett Company Inc.’s colossal failure in transitioning to digital.
This isn’t an opinion piece. As is his wont, Hopkins – a former Courier-Journal and USA Today business reporter – pans Gannett financials and leaked documents for gold.
And Hopkins finds some nuggets including:
* Chain-wide, digital revenue did rise last quarter. But SEC docs show the growth rate declined during 2013 as digital subscriptions hit the saturation point. (Gannett execs do not break out individual newspapers in financial reports.) Digital revenue was 29 percent in the first quarter, 20 percent in the second, and 12 percent for Q3, Hopkins reports. Rising after Gannett started launching paywalls two years ago, the paywalls have yielded smaller and smaller revenue increases. Digital’s contribution rate to company-wide results only clung to 30 percent last quarter because overall revenue fell, he found.
* In the Oct. 21 quarterly earnings teleconference with Wall Street analysts, Gannett CEO Gracia Martore confirmed Gannett had sold fewer than 100,000 digital subs nationwide, or about one-third of a forecast 300,000 for 2013. “If sales remain tepid, the company will be saddled with three million aging subscribers and no clear path to replacing them,” Hopkins writes.
* Of course, analog advertising revs are decreasing at more than 5 percent per quarter as advertisers flee to digital. Hopkins goes into great detail about how Gannett executives missed the digital boat circa 2005 as Google and Facebook, then Twitter, pulled away advertising dollars. Hopkins documents how Gannett hired a chief digital officer, who fled after one year. But not before issuing an internal memo ripping Gannett’s paywall strategy:
“I do not believe a paid content/paywall strategy will work for newspaper companies,” he says, in his 1,700-word overnight letter to employees. “I think the industry is going about it all wrong.”
There’s far too much interesting data gleaned from financials and insider memos to encapsulate here. The question remains, will Gannett’s older newspaper audience invest in the slate and wireless devices they would need to access Gannett’s apps? And if they do, what stops them from wandering off to local Internet news sites? A must read if you’re interested in the news business.
• Last week Business First reported Wichita, Kan.-based Galichia Hospital Group would be managing the Kentuckiana Medical Center in Clarksville which recently emerged from bankruptcy protection. While, BizFirst reported about the investment the new group would be making in the hospital, it overlooked a more interesting story about the origins of the hospital and the impact the reorganization had on a number of physicians in Louisville and Southern Indiana.
Kentuckiana Medical Center was the brainchild of Dr. Chris Stavens, a cardiologist who was once one of the busiest cardiologists at Jewish Hospital & St. Mary’s HealthCare in Louisville. Stavens left Jewish in 2009 after issues with leadership. He convinced 25 physicians to invest in the new hospital.
Unfortunately, Stavens knew more about the pericardium than he did hospital management and the hospital’s finances hemorrhaged from the moment it opened for business. It was a painful experience for the physicians who invested with Stavens, most notably a Madison, Indiana lung specialist and a Louisville medical oncology group.
Insiders tell us the hospital will likely continue to struggle given fierce competition from Floyd and Clark Memorial Hospitals in southern Indiana as well as the continuing encroachment from Louisville-based Norton Healthcare, which is rumored to be in discussions to acquire Clark Memorial.
So much for the quiet, sunny side of the river over there in Southern Indiana. More as we know more.
• Did we say last week was the pivotal moment for the Louisville Arena Authority? We’re pretty sure we meant to say this week as the long-anticipated Standards & Poor’s Rating Services report on KFC Yum! Center finances still isn’t out. But there’s much more to this story as state and LAA officials are trying to complete paring down the KFC Yum! Center’s tax increment financing district to 2 square miles from 6. Our sources assure us not only will the Kentucky Department of Economic Development officials sign off on the changes, the bond trustee will agree to the changes by December 18.
That’s important because changing the TIF district unilaterally means violating the original bond covenant unless the bond trustee agrees. What no one has reported is the arena authority is in the process of changing the bond trustee. Regions Bank, a smallish national bank based in Birmingham, Ala. is replacing U.S. Bank, a $350 billion in assets giant based in Minneapolis. Why? No one wants to say why ….
If the TIF district can be pared down (the rest of media reported it as fait accompli when the Metro Council, which has no authority over TIFs, recommended the move to state officials) the 2-square-mile TIF district is projected to produce revenue of about $6 million annually during the next two years. Still below the $10 million projected to make the bond servicing work. But almost double the $3.5 million from last year. More this morning.
Editor’s note: Here are the correct TIF revenue projections:
• Last week, MBB told you Head First Media purchased a former church building at 727 E. St. Catherine St. to relocate their recording studios and to provide a community events auditorium. We got confirmation this week from Head First owner Jeffrey Epperson. But he added there’s lots more he’ll be able to talk about at the first of the year. We’re patient. So patient. Here are some Head First sound/film clients from the company website: Nappy Roots, Kevin McCreary (Tantric), Stu Pollard (movie director), Clear Channel, Blue Chip Broadcasting, Sam “Shake”Anderson, Doug Derryberry, Studio Mix, Walnut Street Baptist Church, The Blue Apple Players, My Own Victim, East 146 and many more. Wow.
• Southpointe Commons shopping complex in southeast Jefferson County will begin construction early next year. Southpointe Commons, planned as a festival-style open shopping center, is “scheduled to be completed by 2015,” according to a tip from an ultra-reliable source. This is about a 40-acre tract on the southeast corner of the Gene Snyder and Bardstown Road in Fern Creek. Southpointe Commons was planned back in 2009 by Barrister Commercial Group and is said to be modeled after The Summit Louisville in eastern Jefferson County. TRIO Commercial Property Group has the project listed.
Fern Creek, on the southern end of Bardstown Road near the Bullitt County line, is one of the few suburban neighborhoods that never missed a beat during The Great Recession, with housing values holding steady. This sort of new retail amenity could add to that momentum.
Actual MBB briefs:
• Sources are telliing MBB The Rudyard Kipling will be sold to the owners of That Place On Goss restaurant fame. Ken and Sheila Pyle have been looking for a buyer for the Rud for at least 15 years, our sources say. Now, it looks like the Old Louisville entertainment and dining institution will get a new life ….
• How did we miss this? Kentucky’s former chief trade representative in Japan is leading a business to help states and cities from across the United States secure investment from Japanese companies seeking to expand into the United States. More as we get more.
• BEAM Technologies may be Louisville’s most accelerating startup. The BEAM boys are moving to their own building in Germantown. More as we can slow down Alex, Alex and Dan for a chat.
• Monday Business Briefing has confirmed county officials have a big bourbon tourism complex is on the drawing board in Bullitt County. More as we get more details from sources.
• Look for two major downtown econ-dev announcements/updates this week starting with one today.
• A music venue in Portland? We hear that’s exactly what’s planned for one of the Shine Properties warehouses.
Awards and recognition:
• David Wood, senior vice president at Cassidy Turley Harry K. Moore, is the recipient of the March of Dimes 2013 Commercial Real Estate Achievement Award. The REACH Award honors an outstanding individual in the commercial real estate industry who has made significant achievements both professionally and philanthropically. The award is Louisville’s highest honor for a commercial real estate practitioner. It is presented at an annual event with more than 500 guests in attendance. Since its inception in 2001, the REACH Award has raised over $1 million for March of Dimes.
• Louisville was announced as one of the first 20 cities in America to collaborate with the Lumina Foundation in a mobilization effort to increase the number of local residents with college degrees.
55,000 Degrees, Louisville’s education movement, has been awarded a $200,000 grant by the foundation to further the education initiative’s goal — half of the working-age adults with college degrees by 2020. The grant brings Lumina’s total investment in Louisville to the $1 million mark, adding to the $800,000, multi-year grant awarded in 2010.