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Coffee Talk
Business Observer Friday, Oct. 31, 2003 15 years ago

Coffee Talk (Sara/Mana edition)

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This week's items: Builders contest impact fees How SMH is stopping the bleedingLongboat company disputes claim

Coffee Talk (Sara/Mana edition)

Builders contest impact fees

Already facing an increase in permit fees in Manatee County, builders are gathering strong opposition against new impact fees under consideration in the county.

Expect it to get worse before a final vote.

Counties charge impact fees against new developments so those developments pay for the impact they will have on county infrastructure. Manatee already charges impact fees on development in the unincorporated parts of the county; it is considering an increase to those fees. Commissioners are also considering imposing new impact fees inside the various city limits in the county as well.

But builder groups say the impact fees are neither fair nor appropriate. The impact fees, they say, would make the public revenues from new developments higher than the public costs associated with those developments. The result: development decisions may be adversely affected and existing development gets a kind of windfall benefit at new development's expense.

To prove their point, the Home Builders Association of Manatee County and the Gulf Coast Builders Exchange commissioned a review of the existing revenues and costs associated with county development by James Dewey, a research economist in the Bureau of Economic and Business Research at the University of Florida in Gainesville. His report, presented to the Manatee County commissioners last week, includes the following findings:

"At the local level, I estimate that (a) new housing unit in Manatee County first occupied in 2000, together with all associated commercial, retail, and industrial development, would have paid $13,343 more in taxes, in present value form, than the costs it created if no new development had occurred after 2000, even with no impact fees. I also estimate that a new housing unit in Manatee County, first occupied in 2000, together with all associated commercial, retail, and industrial development, would have paid $1,439 more in taxes to the state of Florida, in present value terms, than the state costs it created if no new development had occurred after 2000. Therefore, impact fees are not required to ensure that new development pays its share of public costs in Manatee County."

How SMH is stopping the bleeding

Facing what may be a $17 million deficit at the close of its fiscal year, G. Duncan Finlay, M.D., chief executive officer of Sarasota Memorial Hospital, said: "I probably should have left last year while people were still clapping."

In remarks at one of the Argus Foundation's Meeting of the Minds luncheons last week, Finlay bluntly explained why the hospital is on track to go from its best financial performance in history (a fiscal 2002 surplus of $27 million) to a deficit: "Our charity and bad debt write-off was $35 million last year. This year, it's going to be in the $60s (million)." Not only that, Sarasota Memorial's admissions for the first seven months of this year are down 9.5% from a year ago. And adding to the woes, Finlay says, are increasing numbers of patients without health insurance. That number, estimated to be about 55,000 in Sarasota County, increased 5% between January 2002 and January 2003, Finlay says.

"The percentage of people uninsured in our region is the same as in Miami," he says. "It's worse than in Tampa and Naples.

"Can we stop the bleeding? We're confident we can," Finlay says. He says one of the steps the hospital has taken to control expenses is eliminate the practice of hiring temporary or agency nurses, freelancers who are hired at premium pay scales to fill in when needed. He says the hospital also recently laid off 45 employees and eliminated 21 unfilled positions.

In addition, Sarasota Memorial hopes to cut its costs for pharmaceuticals by going into a purchasing partnership with Lee Memorial Hospital in Fort Myers. The two hospitals will begin buying their drugs directly from manufacturers instead of from wholesalers.

Worth noting: Finlay says Sarasota Memorial has a strategic objective to open a medical facility in North Port. "But right now we need to get our house in order" ¦ Mental illnesses are becoming an increasing concern. "Yesterday we had 12 Baker Act problems in the emergency room; today we had eight" ¦ On the plus side: Finlay was happy to report Money magazine's ranking of Sarasota Memorial as among the best hospitals in the nation for the treatment of congestive heart failure, heart attacks and interventional cardiology procedures.

Longboat company disputes claim

The timing of a federal civil lawsuit against Infinium Labs Corp. comes at a curious time - just weeks before the company plans to unveil a sleeker new version of its widely publicized Phantom game console. A few months ago, CNN.com called the console a possible competitor to Microsoft's Xbox game console.

Who's We Studios Inc., a Texas developer of interactive Internet Web sites, claims the Longboat Key-based entertainment-and-gaming company owes $1.8 million for development of Infinium's www.phantom.net gaming Web site. The site developer sought an injunction and declaratory relief against Infinium in a lawsuit filed Oct. 20 in U.S. District Court in Tampa.

But wait just a minute, says Timothy Roberts, Infinium's chief executive officer. "Anybody can sue somebody for seven bucks and put any amount they want in there," he says. "We had a dispute over the charge. Who's We is a work-for-hire company. They had 60 days with four or five employees on it. It you look at hourly rates for attorneys, I don't think the numbers add up."

An internal Infinium analysis estimated the Texas company's work at about $30,000, Roberts adds. "They have basically taken an ordinary amount they said we owed them and multiplied it by 20," he says. "It's a frivolous suit."

There may be another reason why the company claims it's owed $1.8 million, Roberts says. "We have a high volume of traffic," he says. "We think this is a ploy to get traffic to their website. Traffic is worth money in free marketing."

On its Internet site (www.whoswestudios.com), Who's We claims the Infinium site captured more than a million unique viewers during the first 24 hours of its debut. "Who's We was able to launch not only a Web site, but the awareness of a new gaming platform," according to the firm's marketing material.

The Longboat Key startup retained Los Angeles-based Morrison Foerster LLP to defend against the claim, with Sarasota-based Merrill Cullis Timm Furen & Ginsburg PA serving as local counsel. Morrison attorney Allen Z. Sussman serves on Infinium's advisory board. The Texas company retained Miami attorney Thomas H. Buscaglia.

"We are doing phenomenal," Roberts says of Infinium's operations. "It's the most exciting time in our business. We're so close to leveraging the final product and service to the consumer. We've aligned all of our partnerships and closed on a tremendous amount of content with triple-A (software) titles."

The latest version of the Phantom console will be unveiled soon.

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