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Coffee Talk
+ Economic incentives:
Be careful what you get
As is the case with just about every daily newspaper in the country, the Sarasota Herald-Tribune, owned by the New York Times Co., is struggling to survive the economic downturn. In just the past year or so, the employee base has been slashed 36%, from 357 to 262.
But now the paper's financial problems, albeit on a small scale, highlight the inherent dangers - for both sides - when a government entity doles out incentives to a private company to entice it to build where the government wants.
Here's the scenario. While the names are different, the particulars are likely to be familiar to many Coffee Talk readers experienced in the murky world of government incentives. Back in the early 2000s, the Herald-Tribune wanted to move out of its old offices on U.S. 41, just south of downtown Sarasota. Newspaper executives threatened to leave the downtown area and move to a location closer to Interstate 75.
However some city officials wanted the paper, and its employee base, to stay in the downtown area. So a deal was reached in 2004 when the Herald-Tribune and its parent company agreed to build a multimillion-dollar building on Main Street, on an underdeveloped block between the edge of downtown and the more heavily trafficked areas closer to Sarasota Bay.
In return, the city's Community Redevelopment Agency handed out $768,131 to the newspaper, to cover items such as permit fees, impact fees and storm water retention work. The funds were "specific to draw the employer to stay downtown," Sarasota City Attorney Robert Fournier tells Coffee Talk.
Now comes the catch. Since the Herald-Tribune has cut so much staff, which its local attorney, Brenda Patten, says it "will probably not be hiring back," it no longer needs to occupy the entire 72,000-square-foot building. It now hopes to lease out about 15,000 square feet of the space to a new tenant.
The problem is that the CRA agreement with the Herald-Tribune states that in order to receive the taxpayer-funded invectives, the "building must be used by the Sarasota Herald-Tribune or any affiliated business thereof."
So now the newspaper must get permission from the City Commission to rent out space in its own building. That means a new firm could be occupying space in a building built partially with taxpayer money directed specifically to a different company. Further, the city commissioners making the decision are covered during their election campaigns by the newspaper's reporters, raising potential conflict of interest questions for both parties.
Oh what a tangled web in the land of government incentives.
+ Ellert leaves
Fifth Third Bank
After just nine months as president and chief executive officer of Fifth Third Bank South Florida, Kent Ellert has left the bank.
A Fifth Third spokeswoman confirmed Ellert's departure but says only he left to "pursue other opportunities." No other details were available.
Ellert replaced Thomas Quinn in January and was promoted from the position of executive vice president. Before joining Fifth Third last year, Ellert had been regional president for Wachovia.
On Oct. 21, Fifth Third reported a third quarter net loss of $56 million. The bank said non-performing loans and charge offs were "disproportionately" attributable to commercial and residential real estate loans in Florida and eastern Michigan.
+ ForeclosuresDaily falters,
but will continue
It is somewhat counterintuitive that a company focused on foreclosures should be in desperate financial straights. But that is the case for ForeclosuresDaily.com, which has cut its workforce by 90%.
Yet despite earlier reports implying that the Largo-based company was going under, its CEO tells Coffee Talk the business will continue operating.
ForeclosuresDaily sells information on foreclosures and offers classes on how to invest in such homes. It provides a searchable database of Florida and North Carolina foreclosure cases that it updates daily with information from courthouses.
Chief Executive Officer Mike Kane told Coffee Talk the tough economy has forced he and his staff of four to leave their 10,000-square-foot home and look for smaller office space in Tampa. Last year, the company employed more than 40 people. The company has also slowed operations in its seminar division because of the economic downturn and lower consumer confidence.
"People are focusing on putting food on their table and paying their mortgages which has affected their discretionary income to purchase wealth-building products such as ours," Kane says.
The recessionary economy and financial crisis has caused a lack of lending from the banks to ForeclosuresDaily customers. The down real estate market has struck fear in many people, Kane says. However, fortunes are made in up and down markets and the savvy investors are buying right now, but they are the minority, he says.
"I believe we will look back on this era 10 years from now as the best buying opportunity our country has seen in a long time," he says.
Kane founded the company in 2004 with Dave VanHoose and Debbie Johnson. This year, Inc. magazine ranked it as the 35th fastest-growing privately held company in United States.
The biggest CEO lesson Kane has learned thus far? "Cut earlier," he says.
+ Gulf Coast entrepreneur
to run for local office
Alan Zirkelbach, one of the more accomplished entrepreneurs on the Gulf Coast, is making a run in the political arena.
Zirkelbach, who founded a self-named Palmetto-based construction firm in 1996 and is a past runner-up for the Review's Entrepreneur of the Year award, is running for a seat city on the Palmetto City Council. Zirkelbach is one of three candidates running for the Ward 1 At-Large seat, which became vacant when Commissioner Eric Ball decided to run for mayor of the city in Northern Manatee County.
Zirkelbach is running against Robert Rotondo, who owns a Century 21 Realty branch in the city and Charles Smith, who previously served three terms on the council, including one stint as vice-mayor.
Although this is the first time Zirkelbach is running in a citywide election in Palmetto, he isn't a total political novice, having served as chair of the Palmetto Community Redevelopment Authority for several years. Nonetheless, his forte has been in business, where he built up both his construction firm and a manufacturing company he ran from 1988 to 1995.
Zirkelbach, who didn't return calls seeking comment on his political aspirations, has more recently fallen on harder times in his business career. In lockstep with the construction industry slump, revenues at his construction firm fell 42% in 2007, from $48.2 million in 2006 to $33.9 million last year.
And further, a community bank Zirkelbach co-founded in 2003, Bradenton-based First Priority Bank, was shuttered by federal regulators in August. The bank failed due to its high levels of non-performing loans, nearly all of which were connected to the construction and building industry. Zirkelbach served as chairman of the bank's board of directors.
+ Early Halloween scare:
Economist's predictions
It's not even Halloween yet and Robert Allsbrook, the chief economist for Regions Bank, is already scaring the wits out of business owners on the Gulf Coast.
At a stop in Fort Myers recently, the usually optimistic Allsbrook warned of a recession that will be longer and deeper than the last one. "We have not seen the bottom yet," Allsbrook says. A recovery won't happen until 2011.
Because this is a consumer-led recession, Florida won't come out of the recession until well after the nation recovers, Allsbrook says. The top problems as he sees it is consumers are over their heads in debt.
+ Fishkind scary, too.
A two-year recession
The recession that started in the fourth quarter of 2007 will last two years, according to a forecast by Orlando economist Hank Fishkind.
Speaking to clients of Bank of Florida in Naples, Fishkind warned that the economic recovery in Florida might not occur until 2011.
This is one of the most bearish calls by Fishkind, whose forecasts have until now been more optimistic than many of his peers.
Still, Fishkind says he's more optimistic about housing, where sales are now running ahead of housing starts. He says it's ironic that the thing that caused the financial crisis is now recovering. Foreclosures won't rise further because the resets on subprime adjustable mortgages have peaked, he forecasts.
+ Africa is calling.
Is the Gulf Coast answering?
What area is rich in natural resources, has a good workforce and is looking for Gulf Coast industries to partner and do business with?
The Pacific Rim? Asia? Try Africa.
The Pinellas County Economic Development is planning a seminar Oct. 29 in Tampa for local companies doing business in Africa and those interested.
African countries are interested in agriculture, manufacturing and services. There are opportunities for investment as well as imports and exports.
There will be sessions by Gulf Coast companies doing business in Africa, and a focus on business with South Africa. Enterprise Florida, is planning a trade mission to Africa.
To register and for more information, please call Linda Lucas, an economist, visiting professor at the University of South Florida and former professor in Africa, at (813) 974-0978 or via email at [email protected]. You can also register online at http://sbdc.usf.edu/calendareventdetails.asp?eventid=127.
+ Homebuilders groups
take out the 'homebuilders'
Apparently, there's a lot in a name. Just ask Jane Goodwin, executive vice president of the organization formerly known as the Home Builders Association of Sarasota County.
At least the group, an affiliate of the Florida Home Builders Association and the National Association of Home Builders, went by that name for its first 50 years. But as of Oct. 20, the group's new name will be the Sarasota Building Industry Association - mirroring a similar name change made by several other homebuilding lobbying groups in other counties statewide, including ones in Charlotte, Collier, DeSoto, Lee and Hillsborough counties.
In addition to the name change, the Sarasota Building Industry Association is creating a new logo and is setting up a new vision and mission statement for its board of directors. "We would like this to be a new day," Goodwin tells Coffee Talk. "We are really trying to sharpen our skill set."
The name change, says Goodwin, has nothing to do with the thought that having the words "home builders" in an organization's name is a constant dark reminder of the troubles plaguing the industry. Instead, the name change is a move to be more inclusive of the organization's 500 members, of which only 200 or so are pure homebuilders.
Some homebuilding groups on the Gulf Coast, and in Florida, are resisting the name change. The homebuilder's organization in Manatee County, for instance, remains the Home Builders Association of Manatee County. And the Florida Home Builders Association hasn't indicated it has any plans for a name change.
ECONOMIC SNAPSHOT
JULY AUTO SALES
What the data shows: Taxable sales of autos and accessories in July included sales of new and used cars, repair shops, auto-supply stores and taxable sales at gasoline stores.
What it means: Sales of cars and accessories were falling sharply even before September's credit crisis. Surprisingly, auto-sales declines in July were sharper in the Tampa area than anywhere else on the Gulf Coast on an annual percentage change basis. Until recently, Tampa's more diversified economy meant sales held up better than in less diversified areas that are more dependent on construction, such as Fort Myers. Still, all areas of the Gulf Coast registered double-digit percentage declines in auto sales.
Forecast: Headlines about consolidation in Detroit are likely the result of extremely poor sales in September as the financial crisis got worse and more people worried about their jobs. Although the decline in auto sales has been substantial on the Gulf Coast, it may get worse as consumers avoid big-ticket items in uncertain times. Still, winter residents from northern states may help stabilize sales later in the year and any further decline in oil prices would be welcome.
JULY TAXABLE SALES ($ in millions)
Area Auto sales Annual Chg.
Fort Myers $111.5 ‑19.5%
Naples $45.3 ‑18.7%
Punta Gorda $18.6 ‑18.2%
Sarasota $114.5 ‑17.2%
Tampa $492.8 ‑21.1%
Florida $3,517.9 ‑18.6%
Source: Florida Legislature Office of Economic & Demographic Research
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