The mystery renovation at 4070 Westport Rd. (Click all images to see full size.)

Welcome to the June 24 edition of the top-secret, always confidential Monday Business Briefing.

This is your private business intelligence briefing, with Insider Louisville staff and contributors vetting tips collected during the past few days and hours.

A few of which are NOT double-verified as with our daily reporting.

This is the news about businesses and trends you’ll be reading about in the coming days in the conventional media.

We get accused of starting MBB with too-serious items, the more arcane and technical, the better. Medicaid and bank non-accrual loan ratios.  Not today. Today we’re starting with a tease for a possible story down the line.

• Last Tuesday night at EnterpriseCORP’s Signature Event, a tall, slender young man on crutches entered Bomhard Theatre quietly after the lights went down. He joined an all-star entrepreneur crowd while Executive Director Tendai Charasika was opening the Louisville startup community’s biggest event. But a guy this famous gets noticed, and pretty soon everyone around the IL entourage was whispering, “Is that Kevin Ware?”  The University of Louisville guard was indeed at the event and is apparently interested in technology, specifically wireless applications. Our sources tell us Ware’s adviser traded cards with Tendai. We have our Mark Coomes trying to get the rest of the story. It would be cool if this turned out to be the convergence of sports and tech in this crazy town ….

• Okay, it’s back to the serious business beat. Contrary to the Beshear Administration’s cheery evaluation of Kentucky’s Medicaid Meltdown (“Two thumbs up!”), our insiders agree the wheels are falling off. St. Louis-based Centene Corp. has stated in SEC filings it stands to lose more than $200 million in Kentucky and remains leaving determined to pay the penalty for giving up its Medicaid Managed Care contract early. That penalty would be 10 percent of annual revenue, or $45 million, if Centene leaves before July, 2014.

How bad was it?

This is from the most recent Centene conference call with equity analysts:

After a few months of operation, it became clear that our financial performance was much different than our projection based upon the data provided by the Commonwealth during the bid process. Our analysis concluded that inaccurate and incomplete data led to actuary unsound rates for our health brand. Unlike our experience in other states, efforts to resolve these issues with the regulatory agencies have been unsuccessful. Having exhausted all other paths to resolution, we pursued our only option short of unfairly impacting our shareholders. We’ve filed a lawsuit against the Commonwealth to recover losses associated with the data errors and to recover damages for other actions taken by the Commonwealth that we believe are inconsistent with the contract.

If Centene, which does business here as Kentucky Spirit, leaves, the state will have to transfer its MCO members to Tampa-based WellCare Health Plans or Coventry Cares, based in Bethesda, Md. If that’s the case, it will cost Kentucky about $220 million to move those 140,000 members because Kentucky will have to give WellCare and Coventry a higher reimbursement rate than they were giving low-bidder Centene. And this would be money on top of about $150 million the state had to throw in when it adjusted up reimbursements for Coventry and WellCare last February. Back when Gov. Steve Beshear was running against Sen. David Williams, the Beshear Administration came up with this plan, claiming it would save $430 million. Figuring in the adjusted rates and potential costs related to Centene leaving, we calculate that “savings” is down to $60 million. Now, the ringer in all this is Passport Health Plan. Apparently, Beshear’s Plan B is for Passport to expand out of its current Louisville-centered region and scoop up Centene’s members. It’s starting to become clear why the courts have consistently not just ruled against Kentucky, but lectured state officials for their ineptitude.

Picture 4
West End Summit

• A conversation we keep having more and more frequently is about Louisville’s sexy project deficit compared to other neighboring cities. We make no bones about it … Insider Louisville is pro-business and pro-smart growth. We like to post stories about multi-million investments such as Lifestyle Communities’ new $40 million apartment project off English Station Road. We just don’t have very many. Downtown Nashville has more going on just in the Gulch  – think NuLu with condo towers – than we have in all of Jefferson County. Nashville just opened its new Music City Center convention center. Just a few days ago, The West End Summit project was announced. Two towers will have about 1 million square feet of corporate headquarters, research facilities, retail, restaurants and a hotel. A $300 million project. Cincinnati has Mercer Commons, a $63 million commercial/residential development in previously ghetto-like Over the Rhine. Even Lexington is redeveloping Rupp Arena. All that said, we’re being told at least one huge downtown project is flying far below the radar, with a Whiskey Row hotel still in the works, as well as several downtown urban bourbon distilleries. There are big-ish deals working in Portland, Old Louisville and Germantown. Local officials are still trying to figure out what to do with the Kentucky International Convention Center. Still, we seem to keep falling farther and farther behind …. As one city official said, “We don’t have the capital. Or at least people who are interested in investing that capital here.” Of course, Business First had the big scoop in April about Cordish reviving its $245 million City Center project. But, say our city econ-dev sources, “No one expects that to happen.”

Mall• The commercial real estate world was buzzing this week about two projects. Here’s the first. That new construction in front of Mall St. Matthews is a freestanding building for Jared the Galleria of Jewelry location. The company is based in Akron, and that’s all we know. But apparently it was a very fast deal since no one even sent out any news releases about the new construction, which is on Shelbyville Road. Jared the Galleria is a big jewelry store chain. They have locations in 40 states, with 13 locations in Ohio alone. There must be a lot more money in the jewelry business than we thought. We asked General Growth Properties spokeswoman Dee Snyder about the rumors swirling about new retailers coming. (Swedish fast-fashion giant H & M just announced they’ll open a 27,000-square-foot store at Oxmoor Center.) “Do you have more coups coming?” Her reply was, “Oh yes! Lots!” Stand by.

DSCN0326• The second mystery project is a large white converted farmhouse at 4070 Westport Rd., just east of Trinity High School. The property is owned by Gilmans Point, which includes Ted Mitzlaff and Stuart Ray and Bradford Ray, late of Steel Technologies. Neighbors tell IL that they’ve been assured it will become a flooring company after an extensive, incredibly detailed renovation, which had to follow historic preservation guidelines. But other sources say there’s a totally different operation coming. And the Insiders who know are being uncharacteristically circumspect …..

• It’s really not our story anymore. But everyone is talking about the family feud over Holiday World, a feud that just keeps escalating. The Indianapolis Star has a long story about how members of the Koch family are unceasing in their loathing for one another. The former president tried to suck all the money out of the Santa Claus, Ind. theme park/family business by inflating his salary fourfold … not counting the bonuses he awarded himself. Before he was kicked out. Which makes us wonder what would have happened if the Kochs had followed through on their plans to acquire Kentucky Kingdom and turn it into “Bluegrass Boardwalk.” Beside the inane name.

Actual Business Briefing briefs:

• Sources tell us TNG Pharmaceuticals just came back from a successful trip to Alabama for a capital raise; $700,000 to the former UofL MBA team. The ultimate goal is  to raise $3 million to $4 million. Steve Kaufman wrote about these guys at the end of 2012. TNG Pharmaceuticals developed a vaccine called FlyVax, a vaccine that can prevent horn flies from inflicting infectious bites on milk cows. The group already has raised tens of thousands by winning pitch and business plan competitions. A year ago, the company accepted an offer from Greater Louisville Inc. of discounted rents at Nucleus: Kentucky’s Life Sciences and Innovation Center, plus in-kind services from law firm Frost Brown Todd and accounting firm Strothman & Co. Jenny Corbin, student-turned-TNG CEO, wrangled the deal from GLI. Corbin teammates, Larry Horn, Max Brudner, Cory Long and Terry Tate, all graduated from Louisville’s MBA program in 2011. Very cool.

• Ft. Collins, Colo.-based SIDIS is investing in Louisville-based MobileMedTek, taking a majority stake in the company. MobileMedTek integrates hardware, software and cloud-based computing to develop mobile medical technologies (iPad apps, we’re guessing) which improve patient care. MobileMedTek’s first product, ElectroTek is scheduled to be available in 2014.

cover_for_june_2013• The 2nd edition of the Official Guide to Bourbon Country is coming in September. This is the Greater Louisville Convention and Visitors’ Bureau’s publication dedicated to bourbon enthusiasts who are interested in visiting Bourbon Country … our region and our distilleries. It will include stories about master distillers, food and cocktail recipes from the region’s top bourbon chefs and mixologists, as well as a calendar of bourbon events. The theme for guide No. 2 is “The Trip That’s Worth the Sip.” Though we have to agree with one insider who says, “The Sip That’s Worth the Trip” makes more sense.

• Former Lily’s and Tologono Chef Josh Lococo is opening a new restaurant, say our insiders. When we asked where, several sites came up. More as we find out more.

Jeff Stum, founder of Rooibee Red Tea, has been spotted in discussions with Lil’ Cheezers food truck owners.

The History Channel is coming to Louisville to shoot a segment on historic hotels.

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11 thoughts on “Kevin Ware slides into EnterpriseCORP Signature Event, and Louisville’s sexy-project deficit

  1. You do know that West End Summit has been “being developed” for a over decade, right? I graduated from a Nashville university 10 years ago, and the site was prepped for building at that time. The signs announcing this project were up then. So if – and that is a big “if” – this project is actually being built and being built to the full scope promised, it has been a long time coming. So while I guess the tenacity of the developer should be lauded (Is it Alex Palmer still trying to build this?), it’s not exactly a sexy project that just popped up because the city needs the space.

  2. Dear Staff,

    I am one of the owners of the “Mystery Project” at 4070 Westport Road. The Dr. Norman Lewis house was built circa 1833 and is listed on the National Historic Register. Dr. Lewis was a country doctor who operated his practice on the first floor, while his family lived on the second floor until his death in the late 1800’s. Dr. Lewis purchased the land for his new home from a local tavern owner by the name of Gilman. Gilman’s Point was a roadhouse stop on the dusty trail to Louisville.

    The house sat vacant for over ten years until it was purchased by the present owners. The house is a magnificent example of early Greek Revival Architecture. Our team spent two years working with the City of St. Mathews, Metro zoning, and Historic landmarks to create a design that was low impact on the neighborhood and preserved the historic nature of the building.

    Tim Winters was hired as the Architect and is responsible for the magnificent renovation currently under way. Every effort has been made to preserve and document all architectural details of the home. The floors, windows, staircases and facade have all been painstakingly preserved or recreated.

    The Eastlake style front porch that existed on the home was not original and was probably added in the late 1800’s. Unfortunately, there are no photographs or plans for original home. Written history tells us there was a sweeping staircase that led visitors to the second floor main entrance. The new front facade was designed by Mr. Winters to be more appropriate to the Greek Revival period.

    The location will serve as the full time “Showhouse” for Atteberry Smith. Atteberry Smith is a local firm that specializes in Interior Architecture; kitchens, baths, closets, libraries for customers within a 500 miles radius of Louisville. We operate a 60,000 sq. ft. facility off of Poplar Level Road where we manufacture our products. Atteberry Smith was started four years ago and has created approximately 40 new jobs in the Louisville community.

    We plan to move into our new home this fall and would love to provide your staff with a tour of the magnificent “Architectural Treasure” at your convenience.

    With kindest regards,

    Steve Smith
    Managing Partner
    Atteberry Smith

  3. The project was proposed pre-recession. It is full speed ahead now and the larger point that was missed is the tenants of the two towers shown will be leased primarily by two separate subsidiaries of a company formerly based in Louisville. In hindsight I wonder if Louisville should have tried a little harder to keep it, rather than letting it decamp to Nashville where it’s economic impact has been astonishing.

  4. If by pre-recession, you mean like 6 years pre-recession, then ok. It’s first scale-back was in 2007. It’s a great looking project. It’s not really downtown. It’s more “mid-town” Nashville, if you will. I would imagine the traffic caused by this development will be equally astonishing.

    Good for Nashville for getting this project going. But it is not something that is indicative of its booming downtown or need of urban office space. It has been a colossal struggle to get to this point. It will also, probably, be more of a car oriented development that will not be a boost to downtown. I feel like it was a little misrepresented in this article as if Louisville is missing out on a new found building boom.

  5. I assume you haven’t been to Nashville since you graduated from college. If you had you would realize building boom doesn’t quite describe it. Explosion maybe is a better term. You are correct however that it is not technically downtown. It would be like a building boom in Louisville in the area of Phoenix Hill Tavern. Not technically downtown either, but close enough to impact downtown

  6. I’ve been back to Nashville a time or two. The Gulch and the Music Row area have experienced significant growth since I was there full time. As far as private development, though, downtown has seen one office tower added. The only affect on downtown from the West End Summit will be a bigger clog of the Broadway / I-65 interchange area – particularly on Broadway. You can’t walk to lunch or bars downtown. The project contains a hotel, and the Hutton/Hampton/Courtyard are close enough for any visitors on business. I just don’t see the impact.

    In my opinion, comparing the built environment of Louisville and Nashville is a wasted exercise. They share very few similarities. The best way to describe Nashville to Louisville-centrics is that it is like downtown having Hurstbourne Lane running out of it (w/ regard to West End Ave.). The West End Summit is more in the “Hurstbourne Lane” area than the downtown area, if you will.

    Nonetheless, I reiterate that the IL article was misleading with regard to this project. It has been a huge struggle to get it going, even among Nashville’s “boom” time. I don’t know why this website wants to continually cut Louisville down. But if it wants to do so, it could at least use an applicable example.

  7. If by “sexy project” do mean something like Museum Plaza? To be honest, I have mixed feelings about mega-projects like that. Large-scale office towers and mixed-use project have a tendency to soak up capital and market demand for an area, and not leave any for other small or medium sized developments that are just as critical to the success of an urban area; I have heard that some developers expressed relief when it was announced that Museum Plaza had died, because a project that size would have destroyed the downtown development market for years to come. Please understand, I am also pro-growth; I was particularly excited about the Capital Plaza project that was slated to fill the parking lot adjacent to City Hall (which I am assuming has died as well?). But I think that, just because a city doesn’t have a lot of big shiny towers under construction, doesn’t necessarily mean that it’s development scene is dead.

  8. Cruke, you really should make a weekend trip down to Nashville now and check out the progress. N.K. is exactly right here. It’s exploding and adding density fast. Half of Nashville is a construction zone with cranes everywhere. Their new convention center is the nicest one I’ve ever seen. Just google their Urban Planet page and look at what’s going on. It’s going the way of Austin. It would be foolish to ignore it without assessing how we can get Louisville on a similar page.

    While I understand what you mean about Nashville having a different kind of built environment, that doesn’t mean we can’t take something they’re doing and make it work for us. West End Avenue now is nothing like Hurstbourne Lane. Bad comparison. There are massive, urban projects underway all along and around West End Ave and a BRT line like Cleveland’s Health Line in the works for the corridor to East Nashville. West End Summit may have stalled for a while, but it has grown to a three tower project now that Nashville is white hot.

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