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Coffee Talk
Business Observer Friday, Aug. 1, 2008 13 years ago

Coffee Talk

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+ Divorcee housing;supply meets demandSpouse kicked you out of the house? Forget hotels.+ Attention art lovers:Share your passion and winWhen Susie Harris and her two siblings decided it was time to get out of the art gallery and custom picture framing business earlier this year, they had one major problem: A dearth of interested buyers for their small but popular store in Bradenton, Art Decor International.+ Debt collectors beware,lawsuits are risingIf you're going after someone who owes you money - and in this economy, there is a lot more of that for Gulf Coast businesses - better know the rules. Florida's business climateshines again nationallyFlorida is back in the good graces of C-Suite executives seeking states that have the most pro-business attitudes in the country.+ Bradenton bank rescuedby outside capital - for nowFreedom Bank, one of a few Bradenton-based banks facing corrosive loan problems, has been thrown a $5 million lifeline.

Coffee Talk

+ Divorcee housing;

supply meets demand

Spouse kicked you out of the house? Forget hotels.

JoAnne Holt, a Fort Myers accountant who specializes in family mediation and is a "certified divorce financial analyst," has created a company that can coordinate housing for spouses who are separating.

At Standbyhousing.com, the Web site matches recently divorced people with fully furnished homes they can rent month to month. These homes are hooked up with phone, cable, utilities and all the amenities divorcees need while they manage their marital discord.

Judging by the numbers, there's plenty of marital strife in Lee County. Holt says there are over 2,500 divorces in Lee County each year.

Holt's idea is to match demand with supply. Since the residential real estate downturn began in earnest last year, there's a glut of rental homes on the market. To participate in the program, homeowners pay Holt a $176 annual advertising fee to list their home.

+ Attention art lovers:

Share your passion and win

When Susie Harris and her two siblings decided it was time to get out of the art gallery and custom picture framing business earlier this year, they had one major problem: A dearth of interested buyers for their small but popular store in Bradenton, Art Decor International.

Harris' novel solution was to forgo a sale and instead put the business up though an art lover's essay contest. The winner of the independently judged competition launched late last month will win the contents of the entire business, which includes 5,000-plus unframed prints, more than 1,000 framed prints and a variety of machines and materials, including a glass-cutter, a dry mount machine and an inventory of mat boards and oils.

"You can walk in and run it tomorrow," Harris says of the business, which is down about 20% in annual sales from its 2006 peak of about $400,000. "It really is a great business."

Harris, who works for the U.S. Post Office in Bradenton in addition to her duties at the store, says her family is getting out of the business for health reasons. Harris bought the store three years ago in conjunction with her sister, Marilyn McManis and their brother, Bill Hanch.

"We just decided it was time to move on," Harris tells Coffee Talk. "And with the economy, we just thought this was the best way to do it. This just isn't the time or the market to sell a business."

The contest comes with one catch: There's a $200 entry fee and there has to be at least 900 entries for it to be official. That would give Harris a total of $18,000 - enough to cover the remainder of the store's outstanding debt to vendors and banks. So a new owner would only have forward-expenses, such as rent, utilities and labor.

The winner, however, isn't contractually obligated to continue running the store. Indeed, Harris says the contest winner could even liquidate the store's assets and keep some art for their personal use.

The contest runs through Sept. 21, although Harris says she might extend the deadline if there aren't 900 entries by then. Harris' attorney is setting up a three-person panel that will judge the essays - to be between 100 and 300 words - on creativity, originality and why the writer loves art. The panel will come up with a top 10 and Harris' Ocala-based attorney will choose a winner from that group.

Harris has set up a Web site, www.artloversessaycontest.com, for contest details and people can also visit the store, at 5762 14th St. W. in Bradenton, during regular business hours for more information.

+ Debt collectors beware,

lawsuits are rising

If you're going after someone who owes you money - and in this economy, there is a lot more of that for Gulf Coast businesses - better know the rules.

For example, something as simple as leaving a telephone message can result in a business being sued under federal law. And the worrisome trend for banks and other businesses is that spurious lawsuits are on the rise and the law is on the side of the debtor.

Some businesses are being sued under the Florida Consumer Collections Practices Act and the Federal Fair Debt Collections Act. Essentially, the collectors are violating simple guidelines set out specifically in the statute.

St. Petersburg attorney Guy Coburn of Ruden McClosky has spent years trying to help businesses collect debts from customers.

Coburn's advice to Coffee Talk readers: Read the statutes, understand them and establish a training program for collectors. Have protocols, including answers to difficult questions, the proper people to talk to when collecting a debt and how to identify yourself and the company.

Besides other restrictions in the law, another disadvantage for creditors is that they cannot recover attorney's fees if they win a judgment.

"There's very little downside for a consumer debtor," Coburn says. "For creditors, it's often a big lose or a small lose."

+ Florida's business climate

shines again nationally

Florida is back in the good graces of C-Suite executives seeking states that have the most pro-business attitudes in the country. At least that's the word according to the latest survey from Development Counsellors International, a New York City-based economic development and tourism marketing firm.

The Sunshine State finished tied for fourth with Tennessee in the survey, with 15.2% of the respondents saying Florida was the best, or one of the best, in the country in terms of business relocation factors such as low operating costs and a strong labor market. Florida didn't make the top five when DCI last conducted its "Winning Strategies in Economic Development Marketing" survey in 2005.

The online survey tallied the results of nearly 300 top-level executives of companies with annual revenues of more than $25 million.

Two of the three states to finish ahead of Florida on the pro-business side are other Southeast states, while Texas was the overall number one top business state in the survey. Meanwhile, three of the five states deemed to have the worst business climates were in the Northeast, although the clear number one, for the third consecutive survey, was California.

+ Bradenton bank rescued

by outside capital - for now

Freedom Bank, one of a few Bradenton-based banks facing corrosive loan problems, has been thrown a $5 million lifeline. The salvation comes in the form of Community Bank Investors of America, a Richmond, Va.-based private equity firm that specializes in community bank investments. The firm is pumping $5 million into Freedom in exchange for five million shares of the bank's common stock and two seats on the bank's board of directors.

Freedom has been searching for a capital infusion for several months, an effort that has intensified lately as it discovers more non-performing loans in its portfolio and reports more quarterly losses. The bank reported a loss of nearly $8 million in the first quarter of 2008, for example, and bank officials expect to report another sizable loss in second quarter earnings.

But bank officials hope this investment kicks off of a turnaround. "There are many banks that are looking for capital across the country, both big ones and small community ones like ours," Freedom President and Chief Executive Officer David Zuern tells Coffee Talk. "And not all of them have been successful."

Zuern, a onetime top banking regulator for the state of Pennsylvania who was hired to run Freedom Bank in April, is now hoping this successful capital-raising effort has a long reach. The bank will need it, as the deal with Community Bank Investors of America - which bought Bay Financial Savings Bank of Tampa in an unrelated purchase in 2006 - comes with a catch: Freedom Bank is on the hook to raise an additional $15 million from other outside investors for the money to come through.

Overall, Freedom Bank is seeking to raise $20 million to $25 million through a limited stock offering beginning at $1 a share.

+ Correction

A story in the July 25 issue about Transfer Technology International incorrectly stated what the company paid for two patents. It paid 600,000 in common stock, valued at about $60,000, for the two patents. Also, Transfer Technology is in discussions to buy a local inventor's patent for $300,000, but the deal is not yet closed. In the same story, Utek's historic share price was wrongly reported. Shares of a company it held went from 6 cents to $6, not Utek shares.

ECONOMIC SNAPSHOT

CONSUMER DURABLES

What the data shows: Taxable sales of consumer durables include appliances, furniture, home electronics, aircraft, boats, hardware and decorating supplies. The data is for April, the latest available.

What it means: It's little wonder sales of consumer durables such as appliances and furniture have fallen. After all, sales of these items are directly tied to residential real estate. Except for Sarasota, all areas of the Gulf Coast reported lower taxable sales in this category in April than the state on a percentage basis. What's more, rising unemployment and economic malaise means consumers are much more cautious about spending money on big-ticket items.

Forecast: Rising existing-home sales may provide a boost to sales of consumer durables. Prices for existing homes have been falling sharply on the Gulf Coast and that's boosted the number of home sales compared with last year. Still, consumers may continue to hesitate before spending more money in this category.

CONSUMER DURABLES ($ in millions)

Area April sales Annual chng.

Fort Myers $61.5 ‑17%

Naples $41.5 ‑20%

Punta Gorda $15.7 ‑25%

Sarasota $66.6 ‑10%

Tampa $197.4 ‑17%

Florida $1,816.9 ‑13%

Source: Florida Legislature Office of Economic & Demographic Research

Affordable housing ... in Naples?

It's home economics 101: Prices fall and sales rise.

The latest reports on existing-home sales in June show this trend clearly. The most glaring sign of this is the median sales price of an existing home in Naples, which fell a breathtaking 47% from the same period last year. Not surprisingly, sales there rose 29% in June compared with the same month last year.

With a few exceptions, it's the same story up and down the Gulf Coast as sellers resign themselves to lower prices. Brokers report sales are particularly strong on the very low end of the price range as working folks who were previously priced out of the market are now able to afford a home.

By contrast, it appears existing-condo prices have not yet reached levels that will spark sales. Sellers will have to lower their expectations further before a rebound takes place in that sector of the housing market.

Existing single-family homes

June sales Median Price/June

Area 2007 2008 %Chg. 2007 2008 %Chg.

Cape Coral-Fort Myers 558 719 29% $253,900 $172,400 ‑32%

Marco Island 43 49 9% $530,600 $472,600 ‑10%

Naples 203 261 29% $515,000 $350,000 ‑47%

Punta Gorda 218 196 ‑10% $199,000 $141,000 ‑29%

Sarasota-Bradenton 567 591 4% $293,800 $235,500 ‑20%

Tampa-St. Petersburg-Clearwater 2,428 2,346 ‑3% $220,900 $178,700 ‑19%

Existing condos

June sales Median Price/June

Area 2007 2008 %Chg. 2007 2008 %Chg.

Cape Coral-Fort Myers 194 159 ‑13% $276,900 $247,700 ‑11%

Marco Island 57 47 ‑18% $358,300 $441,700 23%

Naples 228 210 ‑8% $302,000 $266,000 ‑12%

Punta Gorda 31 18 ‑42% $150,000 $160,000 7%

Sarasota-Bradenton 226 171 ‑24% $296,900 $255,000 ‑14%

Tampa-St. Petersburg-Clearwater 654 521 ‑20% $165,900 $147,100 ‑11%

Sources: Florida Association of Realtors, Naples Area Board of Realtors

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