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Coffee Talk
+ Rep Aubuchon:
cut school taxes 40%
The property tax debate will be far from over even after Jan. 29, the day Floridians will vote on a new property tax amendment.
State Rep. Gary Aubuchon, a Republican from Cape Coral, told a group of real estate executives recently that a proposal may be introduced in the upcoming state legislative session this spring to eliminate 40% of the school property taxes and replace them with a 1% to 2% increase in the sales tax. "It stands a chance of passing in the House," Aubuchon says.
Aubuchon acknowledged the proposal would be a difficult sell in the Florida Senate, which has opposed any initiatives by the House to cut school property taxes. But Aubuchon, a Cape Coral homebuilder, says a property tax reduction would help the struggling real estate industry.
+ Bank exec voluntarily demotes himself
George Najmy, president and chief executive officer of Bradenton-based First Priority Bank, approached the bank's board of directors late last year with a rather unusual request: Najmy, the four-year-old bank's founder and up until then its only president and CEO, was willing to give up his job to make room for someone with more experience in dealing with the current foreclosure and risk-heavy banking climate permeating the Gulf Coast. The board took Najmy up on the offer, jointly agreeing to reassign him to an untitled position that can essentially be described as chief marketing officer. "We have a very transparent board," says Brian Sullivan, the boards' vice-chairman, of the mid-December meeting, "and we talked about where the bank was and what needed to be done."
Nonetheless, a bank president and CEO voluntarily giving up his job is a rare act. So rare that Sullivan, the president and CEO of a New York City-based international executive recruiting firm, adds that he can't remember hearing of a similar story, in any industry.
First Priority, Sullivan says, isn't in a Code Red-like dire situation with exposure to risky residential loans and potential foreclosures. But it's not exactly swimming in the good times, either. "We've got the same issues everyone else does," Sullivan tells Coffee Talk. "We have a few big ones out there."
Indeed, according to data from the Federal Deposit Insurance Corp., the bank, with about $300 million in assets, lost $4.8 million in the third quarter of 2007, while its non-performing loans ballooned from $1.4 million at the beginning of 2007 to $16 million by Sept. 30.
Those numbers reflect quite a come down from the bank's first three years, when it was one of the fastest-growing banks out of a long list of community startups in the Sarasota-Bradenton market.
The bank raised $9 million in 2003 and took off in 2005 and 2006, when it grew 73% in deposits and 80% in assets, to $189 million and $225 million respectively. The bank even turned a profit, albeit a small one of $19,000, in its second year.
The growth ended, though, with the fall of the Gulf Coast housing market.
Now, says Sullivan, the bank is focusing on making sure its loan portfolio improves and continuing its efforts to market and promote itself as a top-flight community bank.
On the loan side, First Priority recently hired a new chief financial officer with experience in difficult banking environments and Sullivan says the bank is also conducting an executive search for a new president and CEO. Meanwhile, Najmy, 46, a Brooklyn, N.Y. native, will be the bank's point man for marketing and community relations, a position both he and Sullivan say plays to his strengths.
Still, it's not as if Najmy came to First Priority with no banking experience: He has a degree in finance from the University of Florida and he worked in management for both Barnett Bank and First Union for 15 years before joining First Priority in 2003.
Sullivan, though, says Najmy realized stepping aside would be the best move for the bank. "That's the beauty of George Najmy," says Sullivan. "He's an incredibly self-insightful and self-aware guy."
+ Health care costs
continue getting costlier
The struggles many small business owners face in providing health care to employees will only get worse in 2008, a new study predicts.
According to the report from the National Association of Professional Employer Organizations, more than half of 365 executives and entrepreneurs nationwide that responded to the survey reported their premiums went up as much as 10% for 2008.
In response to that hike, as well as past increases, one in five said they would raise co-payments for office visits or deductibles, while one in four said they would raise premiums. What's more, one in 10 respondents said they would be outright dropping health care coverage for employees this year or next year due to the high costs.
As tough as the health care situation is, it isn't the number one concern among small business owners, according to the survey. That distinction, instead, goes to the long-time staple: Attracting qualified employees.
+ New York ad firm
buys Sarasota company
With some national naysayers lamenting that Florida' glory days are over, Coffee Talk was pleased to hear a big New York advertising firm wants in on the Sunshine State.
Specifically, Eric Mower, founder of a self-named Syracuse, N.Y-based advertising firm with $170 million in billings and 200 employees across New York and the southeast U.S., says he wanted to be in Sarasota. And he started at the top: Eric Mower and Associates announced Jan. 9 it had bought Clarke Advertising & Public Relations, one of largest and most established firms in Southwest Florida.
Mower and Clarke's top executives, Patricia Courtois and Bill Pierson, declined to release the sales figures. Clarke, founded in 1987 by Sarasota entrepreneur Tim Clarke, had more then $20 million in billings in 2007.
"It's a really big day for us," says Courtois, who, along with Pierson, bought the firm from Clarke in 2004. The firm's 20 employees will retain their jobs in the sale, although the company will eventually drop the Clarke name.
Adds Pierson: "We weren't looking to sell, but we were intrigued and flattered by Eric's interest."
Mower tells Coffee Talk he had been aware of Clarke's work and reputation for a few years through his role as a director of the American Advertising Association of America. That includes monitoring Clarke's research into baby-boomer living, buying and spending habits, what the firm calls its Young at Heart program.
Mower got the acquisition process going by placing a cold call to Pierson in July 2006. The ultimate sale took as it long as it did, Mower and Pierson say, because they both wanted to make sure the firm's cultures wouldn't clash.
+ Sherman mauls
management of Bear Stearns
Bruce Sherman, the CEO of Naples-based Private Capital Management, is agitating again.
A front-page article in the Jan. 8 edition of the Wall Street Journal says the resignation of Bear Stearns CEO James Cayne came partly at Sherman's behest. The move is reminiscent of Sherman's efforts to force the sale of the newspaper chain Knight Ridder in 2006, which in the end failed to create shareholder value.
Private Capital Management, a division of Legg Mason that manages $19 billion for wealthy individuals and institutions, held $790 million in Bear Stearns stock as of Sept. 30, making him the company's fourth-largest shareholder.
The value of Private Capital's Bear holdings in Bear Stearns is down from $1.1 billion Dec. 31, 2006, according to the latest filings with the Securities & Exchange Commission. Sherman, who rarely speaks publicly about Private Capital, could not be reached.
+ Market forces
catch up to entrepreneur
One time high-flying St. Petersburg-based entrepreneur Frank Maggio has hit some low times.
Maggio's custom homebuilding company, First Dartmouth Homes, filed for Chapter 11 bankruptcy late last year. The Dec. 28 filing comes a few months after Maggio shut down eirnMedia, a television ratings company he founded to take on Nielsen Media Research, the giant of the industry.
Maggio didn't return calls seeking comment.
This isn't his first time dealing with business problems: Past ventures that didn't work out include a company designed to deliver filtered water to restaurants in Greater Tampa and an early 1990s attempt to build luxury waterfront condos in St. Petersburg. The latter business flopped due to a combination of inexperience and mistaken timing of the market, Maggio said in 2006 interview with the Review. (See Review, Nov. 10, 2006)
First Dartmouth lived a more up and down existence. In 2004, the company bought lots for 159 homes and 250 condos in Riviera Dunes in Palmetto, on the banks of the Manatee River. That project, put together during the peak of the housing run-up, was successful.
But a subsequent First Dartmouth effort to build another 400-condo project on nearby land in Bradenton in 2006 was littered with problems, including several disputes between Maggio and Bradenton city officials regarding potential incompatibility with surrounding homes.
+ New York's finest
comes to Tampa
If you make a stun gun that competes with the taser, you may need to bring in an established veteran to help you win the shootout, or perhaps the stunout.
That's what happened recently when Stinger Systems Inc., a Tampa-based company that develops electro-stun technology such as the Stinger S-200 projectile stun gun, hired a former member of the elite NYPD organized crime control bureau as the company's executive vice president and national sales director.
But it got more. Ron Bellistri is also a successful entrepreneur.
Bellistri retired from the police force to become a private investigator licensed in New York, New Jersey, Connecticut, Pennsylvania, Florida, Virginia and California. In 1985, he founded Copstat Security, Inc., which he developed into one of the nation's largest security and investigation firms.
With more than 1,500 employees and six offices on the east and west coasts, Copstat's accounts included the Empire State Building, Citicorp, CBS, Yankee Stadium, World Wrestling Entertainment, and the royal families of the State of Brunei and the Kingdom of Morocco.
After 9-11, Bellistri founded and served as CEO of Patriot Associates, LLC, an explosive detection K-9 unit, whose clients included the MetLife Building, Carnegie Hall, the Empire State Building, CBS and Citibank. Bellistri sold Copstat and Patriot Associates in 2004.
Robert Gruder, Stinger's CEO, said that Bellistri was selected based on his reputation in law enforcement as well as his experience and track record in building businesses.
CNL bullish on Tampa
Despite the real estate slowdown, CNL Commercial Real Estate is bullish on Tampa.
CNL, recently partnering with a Denver-based private equity firm, entered the Tampa market by buying Two Harbour Place, a 12-story, 180,000-square-foot office building on Harbour Island in downtown, for $32 million.
CNL Commercial Real Estate is less than a year old but already has $232 million in assets under management. It recently opened an office in Tampa.
"We just saw it as unique property and view this as a great market," Jimmy Johnson, principal and head of the CNL Tampa office told Coffee Talk. "This area will always get our corporate relocations. While we had a setback in 2007, our long-term perspective is very exciting."
And CNL is not stopping there. The company is actively looking at other acquisitions in Florida, focusing on the office and industrial side.
Johnson sees 2008 as a better year for commercial real estate as population and job growth continue in Florida.
"We've definitely seen some softening in the economy and seen vacancy rates tip up," he says. "In '08, we're going to work through that. Things will definitely get better."
AT A GLANCE
Gulf Coast Airport Traffic for november
Nov. Nov. YTD YTD
Total Passengers 2006 2007 change 2006 2007 change
Tampa International 1,592,057 1,551,884 -2.52% 17,228,088 17,586,401 2.08%
Southwest Florida Int. 660,658 651,495 -1.39% 6,917,308 7,360,762 6.41%
Sarasota Bradenton Int. 124,790 118,451 -5.08% 1,289,736 1,421,186 10.19%
St. Pete-Clearwater Int. 31,076 67,279 116.5% 339,053 676,139 99.42%
TOTAL 2,408,581 2,389,109 -0.81% 25,774,185 27,044,488 4.93%
Nov. Nov. YTD YTD
Cargo/Freight 2006 2007 change 2006 2007 change
Tampa International 17,820,657 16,820,798 -5.61% 198,395,073 184,573,769 -6.97%
Southwest Florida Int. 3,349,881 3,155,651 -5.80% 36,829,570 36,012,893 -2.22%
Sarasota Bradenton Int. 42,181 33,808 -19.85% 340,144 467,233 37.36%
St. Pete-Clearwater Int. 5,210,778 4,996,133 -4.12% 52,594,963 55,187,537 4.93%
TOTAL 26,423,497 25,006,390 -5.36% 288,159,750 276,241,432 -4.14%
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