Monday Business Briefing: The ‘Tale of Two Cities’ edition, with one Louisville rockin’, the other struggling
Welcome to the March 17 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.
We debuted last week at Z’s Oyster Bar and Steakhouse with Craig Greenberg, founding partner of 21c Museum Hotels.
This week, Louis Waterman will tell us about professional soccer coming to Louisville. It’s free, and you can register here.
This is the “Tale of Two Cities” edition of Monday Business Briefing — one Louisville thriving while one Louisville struggles.
At the same time new businesses are coming, the University of Louisville — the academic institution, not the sports school — is having one of the worst weeks in recent history.
• Might as well lead with the good news, especially since we hear a big announcement may be on the horizon. Sources tell us Portwest, a large work-clothing company based in Ireland, is launching in Shepherdsville, though opinions vary on whether it’s the entire company coming, or just its United States operations. We called and emailed Portwest, but got no response.
The Portwest website indicates the U.S. will be a distribution center only:
With global distribution from bases in the UK, Ireland, Poland, Dubai and now the USA, manufacturing facilities in Bangladesh and China, and customer support staff in 74 countries, Portwest is uniquely placed to deliver the quality improvements and cost reductions at every stage of production and distribution that our customers have come to expect.
That said, if you look on a map, you’ll see Portwest’s headquarters village of Westport is in an isolated section of the Irish Republic, almost 150 miles west of Dublin. Our sources say the company is a huge player in making fire-resistant work clothes, with 10,000 SKUs and 1,000 styles.
The company just opened operations in Dubai in January. So, we believe the expansion to the U.S. is simply part of the company’s global growth. Portwest received preliminary approval for up to $1 million in tax credits from the Kentucky Cabinet for Economic Development’s Kentucky Business Investment Program. The Kentucky project is valued at $4.4 million and will bring 100 jobs to Bullitt County paying an average of $17 per hour, according to KCED documents.
• More good news. Nicklies Development is redeveloping a complex of buildings at Baxter Avenue and East Breckenridge Street. The buildings are at the west side of a retail and restaurant strip, which includes Molly Malone’s and runs east to Wicks’s Pizza at Highland Avenue.
Oddly, we reported this 16 months ago. Which shows you how long deals have to gestate.
From the original MBB post in August 2012:
Nicklies Development, with Nicklies planning to convert the square-block brick complex into lofts with first-floor retail. As a housing development, it makes sense, attractive because it’s a block south of the Baxter Avenue restaurant row running to Highland Avenue, and maybe two miles from the downtown financial district. We’re interpreting this as further proof of an urban population drift.
We didn’t then, nor do we know now, how much space will get redeveloped. Charlie Nicklies, broker on the Baxter Avenue project, did not respond to calls for comment. In 2012, we were told about 43,000 square feet were in play. Note the total space in the Nicklies promotional graphic at the top of the page states about 17,000 square feet will be redeveloped.
What makes this notable is the project is a pivot for Nicklies Development, a major force in every real estate segment from commercial to residential, with dozens of retail projects from Westport Road to Dixie Highway. But all in suburban commercial zones well outside the urban core. Is that changing?
• Now, to the Mr. Hyde aspect of this Jekyll and Hyde local economy. This had to be one of the worst weeks in a long time for the University of Louisville — the actual school, not professional teams division and commercial real estate development companies, which are doing quite well. U of L officials’ contention they’re building a university comparable to top schools even in the state took a body blow this week when the Washington, D.C. Liaison Committee on Medical Eduction, which oversees medical school accreditation, put the medical school on probation.
(The LCME is sponsored by the American Medical Association and the Association of American Medical Colleges.) We knew it was coming, but U of L media relations execs were proactive, sending out a news release.
The school has two years to make changes in nine “areas of concern” identified in a April 2013 report by the LCME, including findings that teaching methods and evaluations were lacking … among lots of other problems. Both The Courier-Journal and Business First quoted med school President Dr. Toni Ganzel as saying the probation is due to a narrow range of concerns.
Here’s what wasn’t reported. This probation essentially places U of L’s medical school in the same company as the absolute bottom tier of American medical schools. Why? Because exactly two other schools out of more than 140 medical schools in the United States (Puerto Rico is a U.S. territory) are on LCME probation:
- San Juan Bautista School of Medicine in San Juan, Puerto Rico
- Chicago Medical School at Rosalind Franklin University of Medicine and Science in North Chicago
(You can see the complete list of LCME-accredited medical schools here.)
Also unreported is that nearly everyone who has a relationship with U of L medical school has to be informed of the accreditation probation including students applying to the school, as well as medical interns and residents.
Why does this matter? Because whether we’re talking about Boston, San Francisco, Raleigh-Durham, Austin or Nashville, having a top-tier university is key to having a top-tier economy. Now, economic-development types have to start looking at Plan B.
• The big story we definitely did NOT see coming was Courier-Journal reporter Andrew Wolfson’s story alleging U of L paid three top administrative executives hush money when they retired. We reached out to insiders who worked with them and the consensus was, “Why would U of L do this? The three are total Ramsey loyalists, top administrators in the U of L hierarchy, just below Ramsey, Provost Shirley Willihnganz and Dr. David Dunn.”
Michael Curtin was the school’s CFO, which of course is the top financial position — and the guy on the firing line for money issues.
Larry Owsley was vice president of Business Affairs, a guy who’d held top positions at U of L for years under several presidents including John Schumaker.
Vivian Hibbs was the assistant to the president.
What all three have in common was that they have direct knowledge of everything going on at the school, good or bad. According to the C-J story, their retirement packages include language stating they couldn’t testify in court unless subpoenaed. Is there something brewing out there?
• Along those lines, workforce cuts are continuing at U of L partner (for the time being) KentuckyOne Health. KentuckyOne sent out the above note to employees 10 days ago that seems to confirm what sources told us last month … staff cuts will continue into the second quarter of 2014, at least. Sources also told us this weekend a number of doctors have backed out of accepting positions. And multiple sources now tell IL Jewish Hospital Shelbyville will close.
An increasing number of sources are sending emails telling us U of L already has attorneys working on unwinding the agreement with Catholic Health Initiatives, the Denver-based hospital giant that’s KentuckyOne’s parent.
• How much are “top investors” cutting? Greater Louisville Inc. insiders are telling IL that top GLI contributors are walking away. We were able to double-confirm UPS executives cut their contribution by 33 percent to $100,000 per year from $150,000, according to sources.
We asked Mike Mangeot, UPS spokesman in Louisville, for comment as to whether the shipping giant was cutting its contribution completely, and this exchange ensued.
Mangeot to IL:
The assertion that UPS is pulling its contribution to Greater Louisville Inc is not correct. UPS will continue to financially support GLI.
Thx, Mike Mangeot
UPS Public Relations Manager
IL to Mangeot:
Thanks for the reply. My sources … tell me UPS WILL NOT BE a top “investor.”
You’re saying unequivocally they’re wrong. That GLI will remain a top investor at $50,000 per year. (Editor’s note: In fact, the amount was $150,000.)
That’s a lot different than saying UPS will continue to financially support GLI.
Mangeot to IL:
There’s no story here. My previous statement stands.
By the way, your first question asked why UPS was “ending its contribution to GLI,” which is not true. Now you’ve changed your question to one about specific dollar amounts and being a “top investor.” Either way, your “source” is giving you bad information.
IL to Mangeot:
I’m trying to get to the truth. I get follow up questions to try to refine what’s going on. So I can be accurate. It’s how journalism works.
(By the way, I’m going to include this exchange in the post verbatim. Just so you know.)
My source has never given me a reason to doubt the information … 100 percent accurate. If you remember, we’ve owned this story back to 2011. And every post has been on the money including Craig Richard leaving.
If you say categorically UPS will continue to contribute to GLI at previous levels, that’s what we’ll report. We’re not going to get bamboozled by semantics.
And that was the end of that. Mangeot never did talk with us directly. We’re trying to double-verify other top investors that have pulled some or all of their GLI contributions.
• Our insiders tell us the Brennan House is losing $10,000 per month, with owner Preservation Louisville Inc. floating several ideas to resolve financial issues. One includes selling part of the interior furnishings, though an appraisal wasn’t promising.
A second would be to convince Metro Government officials to take over the home at 631 S. Fifth St. and use it for the mayor’s “residence,” where mayors would receive VIPs and hold meetings. The ideas has been discussed before, said Chris Poynter, spokesman for Mayor Greg Fischer. “It’s an intriguing idea.” Preservation Louisville members did not respond.
The house, which dates back to 1868, is the last of what once was a block full of mansions. It’s one of a handful of freestanding residences left downtown, including what was the The Old House restaurant on Fifth Street and the Hardy House on Second Street.
• When Greater Louisville Convention and Visitors Bureau executives spoke at our Jan. 31 Insiders Meetup, they said one of the challenges to landing more and larger conventions is Louisville’s air access, or lack of.
Louisville Regional Airport Authority officials say that’s nonsense. That Louisville has plenty of flights. We took their word for it … until we stumbled across this chart at right. A lot has changed since 2011, which is the latest verified flight information we could find. Are we still at the bottom of the list of comparable cities?
Actual Monday Business Briefs:
• We’re hearing Commonwealth Bank and Trust Co. now controls the 105-acre Old Henry Crossing property, Old Henry at Bush Farm Road. This was designed to be a business park. But the only tenant we can find is the Jewish Hospital Medical Center Northeast. Commonwealth executives did not return calls for comment.
This is but one property in far eastern Jefferson County in play. Sources said a parcel between 200 and 300 acres belonging to the Archdiocese of Louisville may be sold to a developer. However, Cecelia Price, archdiocese spokeswoman, said the property is owned by St. Joseph Orphan Society, not the Roman Catholic Church. St. Joseph officials did not return our calls.
• Sources tell us the future Michter’s urban bourbon distillery at Eighth and Main streets had contractors crawling all over the facility last week. So the project seems to be proceeding after structural problems with the Fort Nelson Building. They have added more materials and equipment, ladders, and any other sign that indicates they are in a building mode. I’ve been driving by regularly and this seems to be the turnaround point.
• Peerless Distillery just west on Main at 10th Street also appears to be happening. The operations manager told our insider he’d just received the permit to build last Monday, with plans to be distilling by the end of the year.
• During the NuLu Business Association meeting last week, insiders told us there are big plans at the Hunt Property. But no one would give us the details, saying the deal’s not done. But those sources assured us the news would be much better received than the Family Dollar store.
What we do know is, there was an “official” announcement that Feast BBQ, the New Albany barbecue restaurant and saloon, would be moving into the former Cake Flour space at 909 E. Market St. after Cake Flour bolted to the Brownsboro Road area. Oddly, Feast owner Ryan Rogers was at the meeting. And was surprised his “move” was announced when it wasn’t true. Ryan told IL while he likes the property, he hasn’t even seen a lease. That, and the Cake Flour space would take significant updating to be a real restaurant.
• We got a release Friday about CBRE|Louisville selling the Town Fair Shopping Center off North Hurstbourne Parkway for $24.25 million. Town Fair is 234,364 square feet of retail space on about 22 acres at the Interstate-64 exchange. WalMart is the anchor. There are 20 other tenants, including Staples, Michael’s, Hancock Fabrics, GameStop, Rainbow, Payless Shoes and Jason’s Deli.
CBRE|Louisville’s Private Capital Group, led by Brooks K. Mayer, VP, represented the regional investment group that owned the center. The project was purchased by Phillips Edison & Company, a Cincinnati-based public non-traded real estate investment trust.
Town Fair is the third regional shopping center sold recently by Louisville’s Private Capital Group. The other projects are Waterford Park South (93,000 square feet) and River Falls (828,647 square feet), both located in Clarksville.
• Shrout Tate Wilson Engineers, based in Lexington, is opening a Louisville office at 207 W. Market St. The U.S. Green Building Council members are focused on Sustainable and Green design.
• Sons of the American Revolution has hired Solid Light to do the displays for its new museum on Main Street.