Welcome to the May 25 Monday Business Briefing, your private business intelligence digest from Insider Louisville. Happy Memorial Day.
Last year, the Kentucky General Assembly approved legislation to beef up the rules for financial contributions in to political campaigns. It was an effort to put some distance — plausible deniability, if you will — between lobbyists and the businesses and industries that support them, and the elected officials making the laws.
The year-round prohibition on lobbyists contributing to campaigns and the ban on business and other political action committees donating to legislators’ campaigns during the session are “the strongest ethics provisions in the nation relating to campaign finance and the legislative process,” says John Schaaf, counsel to the Legislative Ethics Commission in Frankfort. But they haven’t curbed multimillion-dollar giving — not by a longshot.
The agency last week released its latest report, on business and industry that employ lobbyists during the session and through PACs gave during the 2014 campaign cycle (remember, they can’t give during the session). It’s a fairly reliable indicator of who’s asking for something — and who got something — in Frankfort.
In total, PACs affiliated with businesses and industry organizations contributed nearly $3 million to state legislative races and caucuses during the 2014 cycle.
As usual, the energy sector gave heavily to the 2014 state campaigns. Atmos Energy, a regulated natural gas utility with a heavy interest in the Bluegrass Pipeline, which the Court of Appeals slowed on Friday, through its federal PAC gave $66,250 to state House and Senate races; that includes $12,000 to the four caucuses in both bodies. The Kentucky Association of Electric Cooperatives gave $61,225 to legislative races, while LG&E/KU Energy contributed $58,750. Alpha Natural Resources gave $17,500 while Alliance Coal contributed $16,000. Each of those companies and organizations also employed lobbyists during the session.
AT&T, which earned a big win with passage of a law ending Public Service Commission regulation of landlines, contributed $34,900.
Louisville’s biggest employers also gave heavily last year. Humana, which employs lobbyists in Frankfort, contributed $30,500 to races via its PAC. Ford Motor Co. gave $49,200, and General Electric gave $20,000 to the four caucuses. Together, those companies employ more than 20,000 people in Louisville.
Health care remained a big contributor as well. Here’s a partial list of the health care, insurance and Big Pharma giving:
- Kentucky Hospital Association: $54,650
- Kentucky Medical Association: $46,750
- Merck Sharpe & Dohme (subsidiary of Merck & Co.): $31,000
- Pfizer: $24,500
- Kentucky Pharmacists Association: $20,450
- Wellcare of Kentucky: $20,000
- CVS Health: $16,000 to caucuses
There’s been a rush to spend at the state level as Congress has been mired in seemingly irresolvable conflict. A recent Washington Post analysis found that in 2013-14, spending on lobbying was at least $2.2 billion — in the 28 states where the newspaper could get such data. Overall, the shift from federal to state-level lobbying has been ongoing for a decade or more.
Meanwhile, corporations certainly haven’t abandoned Congress. They report spending about $2.6 billion a year lobbying the legislative branch, which is more than taxpayers spend actually employing the House and Senate every year.
Local stocks: IDSA and SYBT
1. Industrial Services of America (ticker: IDSA): Louisville-based scrap metal and recycling firm IDSA is looking more than a touch rusty to judge from its latest quarterly earnings report. For the first quarter of 2015, the company had a net income loss of $3.1 million. This is not only a pretty big red hole, it’s a lot worse than the quarterly results from the year prior, when the firm had a net income loss of $645,000. IDSA’s revenues also took a hit in the first quarter. The firm chalked up total revs of $18.2 million for the quarter, a big blow from the prior year’s $25.7 million figure.
IDSA blamed its results on deteriorating market conditions for various ferrous and non-ferrous metals in late 2014 and into early 2015.
Investors haven’t been too keen on IDSA, in any case. The firm’s shares are down 36.2 percent over the past three months. It’s also down 8.7 percent down over the past month.
2. Stock Yards Bancorp (ticker: SYBT): It’s good to be the bank — or at least to hold shares of SYBT. The Louisville-based bank firm just upped its quarterly dividend to $0.24 per share, a 4 percent increase. This is the third such dividend increase over the past year and the seventh increase over the past five years.
The new dividend rate will go into effect June 1. This ups SYBT’s annual dividend payout to 2.6 percent. SYBT’s dividends are up 14 percent since May 2014. And the firm’s price-to-earnings ratio is 14.6 percent.
SYBT has been up 2.6 percent over the past month, slightly better than the markets, which are up 1.8 percent. Over three months the bank is up 8.7 percent, while the markets are pretty much flat. —David Serchuk
Here’s the new distillery in NuLu: IL broke the news last month that a new distillery was headed for the former Disney Tire building on East Jefferson Street in NuLu. What we didn’t know then was the group behind the effort. Now we do: Rabbit Hole Distillery, headed by Mike Safai and Kaveh Zamanian, is planning a new operation in the building, which is currently under contract. They haven’t announced the details yet, but on its website, the company touts plans for a “world-class distillery” built in the “heart of Louisville” by fourth generation locals Vendome Copper & Brass Works. They’ll offer public tours, a gift shop, rental spaces and workshops, the site says. Rabbit Hole didn’t return requests for comment.
Speaking of NuLu: Commercial real estate insiders tell us there are multiple developers — both in-town and out — looking to build big, multifamily/mixed-use projects in at least three vacant spots in the East Market/East Downtown area right now. After more than a year of fighting with preservationists over its $48 million Main and Clay project, Nashville’s Bristol Development Group is looking more than ever like a trojan horse.
IKEA says no to Louisville area — again: Try as it might, Swedish furniture juggernaut IKEA can never quite kill the zombie rumor that it’s planning a new store in Simpsonville, near the thriving Outlet Shoppes of the Bluegrass in that Louisville-to-Lexington sweet spot along I-64. Earlier this week, IL heard IKEA had purchased the land on which the Shelby County Flea Market sits, which is catercorner to the outlets. So we called the flea market owner, Dana Smith, as well as IKEA. Both denied the rumor — and frankly, they’re a little sick of hearing it. IKEA spokesman Joseph Roth told IL he knows there’s interest in the company’s wares in and around Louisville, however — the traffic from here to the IKEA outside Cincinnati proves it. But it’s not enough for the company to build a box anywhere closer to here.
Private Client Services continues growth trend: Louisville-based financial advisory firm Private Client Services has been on a growth spurt lately. Less than a month after announcing an expansion into Southern Indiana via a new partnership with Bennett & Bennett, PCS is welcoming Ashland-based Leif Clarke Wealth Management Inc. into the fold. The firm, with 20 years in the industry, joins PCS’s broker/dealer platform. Leif Clarke, the firm’s owner and CEO, says the partnership will bolster LCWM for an expansion deeper into Eastern Kentucky and into West Virginia. We hear there’s more news coming soon from PCS, so keep an ear out.
Atria Senior Living wins national ADDY award: Louisville’s Atria Senior Living has has won an American Advertising Award, better known in the ad biz as an ADDY. It is the only Louisville firm to win a national award this year. The ADDYs are presented by the American Advertising Federation (AAF). To get to this point, Atria first had to win a Louisville-level ADDY (also known as a Louie), then win again at the district level. Atria is being recognized in the “collateral material, book design” category for its book “Field Notes From an Adventurous Life: A Guided Journal.” The firm hasn’t been told yet whether it won a gold or silver award. The ceremony is June 13 in Las Vegas. —David Serchuk
Earth Friends Cafe re-emerges in New Albany: The team here at IL HQ had a rough go of things after Earth Friends Cafe closed its super-convenient-to-us East Market location last year. Now, the restaurant has re-emerged as the in-houser at Bank Street Brewhouse in New Albany (formerly the exclusive environs of Taco Punk). EFC, as it’s known, is running a lunch menu and Saturday/Sunday brunch, and is about to launch dinner wares, including black bean burgers, falafel burgers and flatbreads. Nom nom.
Driving the Week
May 26: The Vacant Properties Campaign and Metropolitan Housing Coalition are hosting a free public forum on reusing vacant and abandoned properties on Tuesday at 5:30 p.m. at the African-American Heritage Center. Info will include how to choose a property, insurance and finance issues, and what tax credits might be available if you buy. More here.
May 27: NTS Development goes before the Downtown Development Review Overlay committee on Wednesday to make the case for the next phase of the J.D. Nichols Campus for Innovation and Entrepreneurship, anchored by the Nucleus building on East Market and South Floyd streets. While the second structure — a six-story parking garage — in the four-building master plan is under construction at the southeast corner, the DDRO will have to approve plans for a plaza and connecting alleyways at the site. Metro staff are recommending approval. The Nucleus master plan calls for two more buildings on the block, which is owned by the University of Louisville and being developed through a partnership with NTS. It’s part of a massive five-year, multibillion-dollar development campaign that U of L President James Ramsey presented to the board of trustees recently. In March, five companies responded to an RFP with concepts for a second office/research facility at Nucleus. U of L didn’t give a timeline for the next phase.
May 28: Mayor Greg Fischer is scheduled to give his annual budget address to the Metro Council. The Metro budget for 2015-16 is expected to include a few significant new outlays, including $12 million for an affordable housing demonstration project Fischer is calling Louisville CARES — which is designed to show the need for recurring funding for housing catered to low-income residents. The mayor will also ask the council for $2.8 million to purchase 1,000 body cameras for Metro police officers, as well as new in-dash police car cameras and cloud storage for the videos they record. We’re told to expect a couple other new investments, but they keep a tight lid on such details. The current city budget, which ends June 30, is about $750 million.