Daily Report

This Afternoon's Headlines / Thu, March 21, 2013

State, IBM finalizing deal to bring development center to B.R.

Daily Report confirms the state is in the 11th hour of finalizing a deal that will bring an IBM development center to downtown Baton Rouge. The agreement, expected to be announced next week, comes after more than a year of negotiating a package with the blue chip computer company that includes incentives, promises of a trained workforce, and a new office building with adjacent shops, condos and parking overlooking the Mississippi River. Sources say the deal will mean at least 800 jobs for the Capital Region, and involve a tie-in with LSU that will result in the expansion of programs at the university—particularly in computer science. The deal will also include BRAF's for-profit real estate company, Commercial Properties, which will develop for IBM an office building and adjacent mixed-use development on the Lafayette Street site that formerly housed The Advocate. The state, sources say, will not be funding the non-office portion of the real estate development. Attempts to reach LED's Stephen Moret for comment were unsuccessful. Baton Rouge was competing with Lincoln, Neb., for the deal, which city leaders say will be a game changer for the local economy. "Anytime we get a signature company that locates in Baton Rouge and attracts people from around the U.S., it says to the rest of the country that this city is ready to take on all the business opportunities it can," says Mayor Kip Holden, who, when asked, commented generally about the implications of the deal but would not confirm it. —Stephanie Riegel Read the full story here.

LSU presidential choice used to dealing with politics

Louisiana's practice of requiring a two-thirds vote by the Legislature before raising tuition is "quite interesting," says F. King Alexander, the California State University Long Beach president who hopes to lead LSU. In California, the Legislature needs the same margin to pass any budget, which Alexander says basically guaranteed that his university wouldn't have a working budget at the beginning of each of the last four fiscal years. Alexander says Louisiana higher ed leaders are dealing with the uncertainty of having much of their state funding based on contingencies that may not materialize. "We've always had that in California," says Alexander, after visiting LSU today and meeting with officials for the first time since being named the lone finalist to be president of the LSU System and Baton Rouge campus on Friday. "We've had as many as seven budgetary scenarios going into one year." He says CSULB went from 44% of its budget being funded by the state to 23%, adding that he looks forward to meeting with Louisiana legislators and Gov. Bobby Jindal—who, Alexander notes, was at Oxford University two years after he attended. "I think it's the job of a [university] president to educate legislative leaders," he says, "to understand the impact of various policies. … You need to work one-on-one with these individuals." —David Jacobs Read the full story here.

Holden rips Marcelle's annexation idea

Metro Councilwoman C. Denise Marcelle's interest in annexing certain areas outside the city limits is a bad idea, according to Mayor Kip Holden, who says it would be cost-prohibitive and doesn't make sense. "She rarely talks to us," Holden says of Marcelle, who is increasingly at odds with the mayor politically. "She paddles her own boat without sitting down at the table and understanding that we have a budget to take care of Baton Rouge, and we have to work within the constraints of that budget." At last week's council meeting, Marcelle said she is working with the Parish Attorney's Office to determine what is involved in expanding the city's boundaries into certain unincorporated areas of the parish—specifically, Towne Center and Gardere. Marcelle says her proposal would be a way of increasing the city's property tax revenues, since unincorporated areas are not subject to municipal taxes. But Holden says annexation would also mean the city is responsible for providing more services, which at this point is not practical, he says. "We have a top-rated fire district," Holden says. "For us to provide free fire protection to Gardere would jeopardize that rating and would be cost prohibitive." Holden says he will oppose any such effort, at least for now, adding that Marcelle "has to take a broader perspective of what is going on." —Stephanie Riegel

Georges says 'Advocate' has all the resources, people it needs to compete

While sources say employees of The Advocate are on pins and needles as they await word on what the pending sale of the family-owned newspaper will mean to them, the man who may soon be their boss has at least some reassurances for them. "In my opinion that place has all the resources and all the people that it needs to compete," says New Orleans businessman John Georges, who last week signed a letter of intent to acquire the paper. "There are some great people who work there." Georges, who was at LSU's E. J. Ourso College of Business this morning for the kickoff of Lemonade Day Louisiana, says if and when the sale is finalized, he will do the same thing at The Advocate that he has done at all the companies Georges Enterprises has acquired over the years. "When we acquire a company, we enhance them," he says. "We make them competitive by giving them the resources they need to compete." Many publishing companies around the country are selling or closing their newspapers because of declining circulation and revenue, which is the result of increased online competition. But Georges says newspapers are like any other business and can be profitable if resources are used correctly. He declines to discuss specifics of his business plan for the paper, citing a confidentiality agreement. The deal is expected to close by June 1. —Stephanie Riegel

Wampold suit against bank over Renaissance gets interesting

The Renaissance hotel on Bluebonnet Boulevard has been open for nearly a year and a half now, but a federal lawsuit over its early financing efforts is just getting interesting. Since January, a flurry of sealed motions and exhibits have flown back and forth between Baton Rouge developer Mike Wampold and his longtime financial partner, Wachovia Bank, now Wells Fargo & Co. Wampold sued Wachovia in 2010 over a financing arrangement that allegedly delayed construction of the hotel for three years. According to court filings, Wachovia agreed to provide a $42 million letter of credit so Wampold's Bluebonnet Hotel Ventures could issue tax-exempt bonds to pay for development, and also proposed underwriting the bonds. As the parties finalized the transaction, they also signed an interest-rate swap agreement to allow BHV to hedge against variable interest-rate risk in connection with the bonds that Wachovia was to underwrite. The problem is that after the swap, Wachovia never issued a letter of credit, and over time Wampold paid $3.5 million to the bank without being able to secure financing for the project, according to court documents. That halted construction of the hotel, and Wampold says he lost out on numerous investors interested in funding the equity portion of the project, as well as a deal to land a Dickie Brennan's restaurant. —Penny Font Read the full story here.

Ducote misses out on MLB Fan Cave

Louisiana's lone finalist for the MLB Fan Cave competition, Jay Ducote of Baton Rouge, was informed today that he will not be among nine baseball fans who will be living in the MLB Fan Cave in New York City this summer. "It was a bummer," says Ducote, who was among 30 finalists vying for a spot in the MLB Fan Cave. "I'm disappointed. Obviously, it was something that would have been a really cool experience, but the whole ride was pretty cool … and I picked up some really good exposure." But Ducote says his disappointment was also mixed with a sense of relief, as making the MLB Fan Cave would have required him to relocate to New York City for as long as six months. "I was growing more and more nervous thinking about leaving everything I have going on here," says the 225 contributor, Bite and Booze blogger, host of two radio shows, and foodie who's seemingly involved in all things culinary in Baton Rouge. —Steve Sanoski Read the full story here.

Local leaders kick off Lemonade Day

Business leaders joined with Mayor Kip Holden and officials from LSU to announce the kickoff of this year's Lemonade Day Louisiana, which will be held May 4. The national program seeks to empower kids by teaching them the rudiments of setting up a small business, while also encouraging them to save money and give back to the community. "It's a great program to teach kids about doing lemonade stands," says Raising Cane's founder Todd Graves, one of the program's sponsors. "But it's also a way to inspire them." Last year, more than 10,000 children in south Louisiana participated in the program. This year, the organization plans to reach 12,500 kids statewide. To learn more about the program or to register, click here.

News roundup: Huntsman Corp. planning $78M expansion in Geismar … Citizens borrowing plan stalls in Bond Commission … State terminates controversial Medicaid claims processing contract

Rolling on the river: Huntsman Corp. announced today plans to spend $78 million to expand its Geismar chemical facility by the end of 2014. The expansion will increase its output of methylene diphenyl isocyanate—known as MDI, a key component of polyurethanes—by 50 kilotons. State officials estimate the project will create 75 new direct and indirect jobs. The state is providing the Texas firm an incentive package that includes a $1.5 million Modernization Tax Credit, payable over five years. Gov. Bobby Jindal, who joined officials to announce the project, has more details at his website here.

In limbo: State officials have stalled a decision on whether the state's property insurer of last resort should borrow $100 million to help close an anticipated budget gap. The Bond Commission, which includes lawmakers and statewide elected officials, didn't take any action today on the request from the board for the Louisiana Citizens Property Insurance Corp. Gov. Bobby Jindal's top financial adviser, Kristy Nichols, and Insurance Commissioner Jim Donelon disagree with the borrowing plan, saying Citizens has money available to cover its immediate costs.

Upon further review: Commissioner of Administration Kristy Nichols announced today the state is terminating its contract with CNSI for processing of Medicaid claims, effective immediately. "The state will work with the current contractor, Molina Medicaid Solutions, to provide services during this transition and until a new RFP, overseen by the Division of Administration, is completed," Nichols says in a prepared statement. "We have asked the Inspector General to look into this matter and provide assistance. We have zero tolerance for wrongdoing, and we will continue to cooperate fully with any investigation." A company that was competing for the contract, but not selected, had protested the state's awarding the contract to CNSI, claiming the company had unfairly lowballed its bid.

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