Monday Business Briefing: Doc sheds light on KentuckyOne struggles; a Louisville Forward departure; hotel deal may benefit Yum! Center; and more
Welcome to the Oct. 17 Monday Business Briefing, your private business intelligence digest from Insider Louisville.
Internal document points to performance struggles within KentuckyOne system
Some KentuckyOne Health facilities in Louisville, such as Jewish Hospital and University of Louisville Hospital, in the first quarter failed to meet targets in various metrics, including patient satisfaction, profit and number of infections suffered by patients, according to a document obtained by Insider Louisville.
The document shows that at least Jewish Hospital was not profitable in the first quarter, and that University Hospital’s profit was more than 8 percentage points lower than last year. Both hospitals also were significantly behind their targets. Meanwhile, Frazier Rehab Institute had improved its fiscal results over last year, but it also was trailing this year’s target.
The document further showed that both Jewish and University hospitals were struggling to keep infections under control and to retain employees.
KentuckyOne spokesman David McArthur told IL via email that the system “has made significant progress with year-over-year improvements in our financial performance. We continue to work in collaboration with physicians, nurses, employees and the community to achieve our performance objectives.”
“We are confident that this financial performance and excellence in patient care will continue for Jewish Hospital and all facilities and services at KentuckyOne Health, and will not be impacted by the planned financial obligations to UofL,” McArthur said.
In the last week, UofL and KentuckyOne have taken to the public sphere in a dispute over secrecy, poor performance, reputational damage and millions of dollars the university says the system owes it.
Gregory C. Postel, interim executive vice president for health affairs at the university, had told KentuckyOne CEO Ruth Brinkley in a letter on Oct. 4 that the health system owes the university $46 million. Postel also wrote that actions taken by the health system were “seriously hampering” the operations of the James Graham Brown Cancer Center, including the ability to hire a new director. The letter was first reported by The Courier Journal.
Last week, KentuckyOne issued a public statement in which it said the university, among other things, had failed to provide details on the allocation of tens of millions of dollars it received. UofL Board of Trustees Chairman Larry Benz said he was “disappointed” with that response, describing it as “inappropriate.”
A local health care industry expert said he worries about the dispute producing prolonged negotiations or litigation.
Dr. Peter Hasselbacher, emeritus professor of medicine at UofL and president of the Kentucky Health Policy Institute, told IL that operating and academic affiliation agreements between the parties “are complicated and full of contingencies. They will not be easy or inexpensive to unwind.
“Renegotiation will require more cooperation than has previously been exhibited,” Hasselbacher said. “Both sides are already assigning blame.”
KentuckyOne, part of Colorado-based Catholic Health Initiatives, was created by the merger of the former Jewish Hospital & St. Mary’s HealthCare and Saint Joseph Health System. KentuckyOne has a joint operating agreement with University Hospital, for which it controls 90 percent of income and loss.
Almost since its inception, the nonprofit health system —which employs about 12,300 — has been plagued by financial difficulties, racking up losses of about $300 million in fiscal years 2010 to 2014, according to IRS records.
University spokesman Gary Mans told IL that “a number of significant events” have led the university to notify the health system it was breaching two agreements between the two parties.
“It is our hope that utilizing the mechanisms set out in both agreements KentuckyOne Health will be able to cure these breaches and we can continue to move forward in our partnership for meeting the health care needs of the people of Kentucky and beyond,” Mans said via email.
Louisville Forward loses another employee to private sector
Colleen Abate, economic development manager at Louisville Forward, is leaving Louisville-Jefferson County metro government.
Abate confirmed Saturday afternoon in a text message that her last day as a staff member at the city’s economic development arm is Friday, Oct. 21.
According to metro government’s website, she supported Louisville Forward’s talent attraction, economic development of the business services cluster, and development of international businesses.
Abate, who is departing for a job as a financial planner, said she will join ARGI Financial, which has offices in Louisville.
“It’s been an amazing experience. I have gotten to work with exceptional individuals and companies,” she told IL in a phone interview. She declined to say why she decided to make the switch to the private sector.
Abate is the second Louisville Forward employee to leave during the past few weeks. John Gant, the department’s director of economic development, left in late September to work as director of industry partnership at the Institute for Product Realization at the University of Louisville. —Caitlin Bowling
New Main Street hotel development could help pay for Yum! Center
A proposed dual hotel development along Main Street will do more than add hotel rooms downtown. It could also help pay for the KFC Yum! Center, if the Louisville Metro Council approves tax incentives for the project, according to staff at Louisville Forward, the city’s economic development arm.
Steve Poe, founder of Louisville-based Poe Companies and developer of the Aloft downtown, plans to build two hotels at 101-105 W. Main St., and is seeking tax incentives known as a TIF, for tax increment financing, from the city. The incentive package Louisville Forward staff proposed would give Poe a maximum of $6.35 million in local tax breaks during a period of 20 years.
Although Poe Companies will pay reduced local property taxes as part of the agreement, it will still have to pay state property and sales taxes on the development at First and Main streets.
Here’s how it benefits the KFC Yum! Center: The hotel project would be situated in the arena’s TIF district, a boundary set around the KFC Yum! Center. Eighty percent of the state tax revenue collected within those boundaries goes toward paying off the bonds used to build the $238 million arena. The remaining 20 percent in tax revenue is held in the state’s general fund.
During the first full year in business, the development will generate at least $1.2 million in new sales tax revenue, which is expected to go into the TIF district, Poe said, adding that the hotel project is anticipated to generate $31 million in tax revenue for the arena TIF district over 20 years.
While it will up revenues, the yearly contribution won’t make a substantial dent as yearly principal and interest rates are set to rise to $37 million in 2029. Last year, the Louisville Arena Authority, which manages the Yum Center, paid $22.3 million in interest and principal.
Last week, Metro Council’s Labor & Economic Development Committee approved the incentive package. It now will go to the full council for final approval.
Poe Companies’ project will be at least 12 stories tall and include about 300 rooms, a rooftop bar and pool, a full-service restaurant and 12,000 square feet to 15,000 square feet of meeting space. The design also will incorporate the existing cast iron facades into the structure. The cost is estimated at $70 million, according to city documents related to the proposed TIF agreement.
As stated, the project will include two hotel brands — an upscale Westin hotel, with an entrance on Main Street, and a Moxy brand, with an entrance on Washington Street.
“That site has a unique opportunity in that you’ve got frontage on Main Street and Washington Street, and obviously the vibe on Washington is totally different than Main, so we just see that as an opportunity to do two different brands, to serve two different types of customers,” Poe told IL. “We just love both streets. We didn’t really want to turn our back on either one.”
Renderings of the hotels won’t be available until next year, Poe said.
The second hotel, Moxy, is a Marriott brand. Moxy hotels target a “millennial that wants to stay in a cool, hip area, wants a little edginess in their hotel, that doesn’t want to spend a zillion dollars, but they are still a quantity,” Poe said. “It’s very European, and it’s edgier; it’s smaller. The room sizes are smaller. …It tries to focus more on the public spaces where millennials like to hang out.”
Construction on the two hotels could start as early as next summer, and Poe said he hopes to open the hotels around the same time the Kentucky International Convention Center reopens in 2018. —Caitlin Bowling
WLKY: Union workers at Jim Beam strike after failed negotiations
Over the weekend, Jim Beam Distillery workers formed picket lines outside of the Jim Beam Distillery in Clermont, Ky. More than 200 walked off their jobs at the world’s largest bourbon producer.
The strike was called Friday, following rejection of the company’s latest contract offer. Union workers lined State Highway 245 near Beam’s plant.
Keep an eye out for Mirin on Frankfort Avenue
Unlike many restaurant openings in which the anticipation is built up over a series of months, expect Mirin to open with little fuss sometime this month.
The quick-service Asian street food restaurant, at 2011 Frankfort Ave., is the first solo project for chef Griffin Paulin, who opened the now-defunct Asian noodle spot Rumplings with former restaurateur Dustin Staggers.
“He has always wanted to try again basically with his venture of being an owner,” said Michael Macinnes, Paulin’s chef de cuisine. Macinnes has worked at Hillbilly Tea, Lilly’s Bistro and Corbett’s: An American Place.
Rumplings may have closed, but rest assured Paulin knows his way around Asian cuisine and just came off a gig cooking for the second annual Ramen Night hosted by the Crane House Young Professionals.
The menu for Mirin includes two different banh mi sandwiches, three noodle bowls (one pork, one duck and one vegetarian), three bao (filled steam buns), and a handful of other dishes.
“We are really trying to make this focus Asian street food,” Macinnes said, adding that once they make it through the openings, Mirin will start to offering multiple specials each day.
The restaurant will offer teas and Vietnamese coffee. At some point, it also will add a wide variety of sake — options to appeal to the seasoned sake drinker and the novice, Macinnes said.
The interior design is minimalist, he said. The main decor on the walls is kitchen equipment.
How should metro government reuse the Urban Government Center on Barret?
During the next week, Louisville-Jefferson County Metro Government will host three meetings asking for citizen input on how it should reuse the nearly vacant Urban Government Center and its corresponding parking lot.
The urban center is a 12-acre campus with several buildings at and around 810 Barret Ave. The parking lot sits at 814 Vine St. Metro government is moving employees out of those buildings after a mold infestation was found and into the new Edison Center in Old Louisville. All employees will be out by the end of the year, according to metro government.
During the next few months, metro government officials will take proposals for redevelopment, but first, they want to hear what residents, especially those who live in or near the Paristown Pointe neighborhood, would like to see happen with the property. The buildings will need substantial repair, a notice about the meetings stated.
The three meeting times are: 6 to 8 p.m. on Tuesday, Oct. 18; 10 a.m. to noon on Saturday, Oct. 22; and 6 to 8 p.m. on Monday, Oct. 24. All meetings will be held in the first floor conference room at 810 Barret Ave.
The meetings are a continuation of meetings held in August. Develop Louisville staff will recap what came out of those meetings and students from the University of Kentucky School of Architecture will present visual representations of community priorities based on the August meetings. —Caitlin Bowling
Large apartment complex sells to out-of-town company
Maryland-based CAPREIT Residential Corp. has moved into the Louisville market with the purchase of a 256-unit Class A apartment complex off Mud Lane.
CAPREIT bought Avana Southgate Apartments for $10 — technically. However, the company is assuming responsibility for paying off a $18.3 million mortgage, explained Craig Collins, executive director of Commercial Kentucky, who represented former owner LivCor LLC. So, truthfully, the purchase price is $18.252 million
“They have a portfolio that they liquidated,” Collins said of his client. “They are just redeploying capital.”
Mike Kemether of Cushman & Wakefield’s Atlanta Multifamily Advisory Group also represented LivCor. The apartment building was listed for five months and received 15 separate offers.
“Louisville’s on the list for investors all around the country,” Collins said.
Notably, Avana Southgate Apartments are right next to Preston Gardens, a 96-unit apartment complex that Collins and Kemether sold on behalf of Louisville developer Poe Companies in February. That property sold for $8.05 million. —Caitlin Bowling