Savannah Business Journal
Georgia General Assembly Begins 2012 Session Today; Deal Including $46.8 Mil More for Port Deepening
Last Updated on Monday, 09 January 2012 14:19 Written by Lou Phelps Tuesday, 03 January 2012 01:03
By Lou Phelps, SBJ Staff Report
Jan 9, 2012 – The Georgia General Assembly begins its 2012 session today. And, one of the first items on everyone’s agenda will Governor Nathan Deals budget proposal for Fiscal 2013.
The Governor will deliver his budget message Tuesday morning at the Georgia Chamber of Commerce’s Eggs & Issues event.
Deal will reportedly propose merging or eliminating some state agencies to save money, acknowledging that his plan will probably include some layoffs. Proposed for elimination are the State Personnel Administration which manages all human resources functions for State employees. That department’s duties would move to the Dept. of Administrative Services.
He is also going to recommend shutting down the State’s Aviation Dept. and selling off State-owned aircraft.
Also, the state’s Safety Inspection Program would move from the Dept. of Labor to the Dept. of Agriculture.
According to Rep. Ron Stephens of Savannah who is chairman of the House Economic Development & Tourism Committee, and a member of the House Appropriations Committee, the Governor’s budget will include the $46.8 million in additional commitments being sought by the Georgia Ports Authority for the Savannah River deepening project.
While the Army Corps of Engineer’s final report is not due until late June 2012, with final approval by the Dept. of Defense not expected until the 3rd Qtr, if the deepening is approved, construction would begin soon after approval, and certainly within Fiscal 2013 that runs until June 20, 2013. Therefore, increased funding from Georgia is needed now.
Stephens says the ‘inside word’ is that the deepening is going to be approved, and he therefore supports the State adding an additional $46.8 million to its previous commitment of $136 million for its share of the total project. The Federal Government will fund the balance.
The increase is apparently due to anticipated increases in the cost of the total project, according to both Stephens and State Senator Buddy Carter who sits on the Senate Appropriations Committee, though GPA has not officially outlined cost increases.
As to the rest of the Governor’s budget, not a lot of information has leaked out yet. Deal asked all agencies to cut their current Fiscal 2012 budget by 2 percent, and present a Fiscal 2012-2013 budget request that has an additional 2 percent cut except for Medicaid, Quality Basic Education, Equalization and State Schools budgets which were exempted from both cuts.
Understanding the Budget Process
The Georgia Constitution requires that the State Government operate under a balanced budget which means that the state cannot incur a deficit and cannot borrow money for operating funds - no expenses can be incurred for which funds are not available.
And, no state funds can be spent unless they re authorized in an appropriation bill approved by the General Assembly and signed by the Governor. Generally, the only borrowing permitted is for the funding of major capital outlay projects through the issuance of bonds, and the annual debt service payments cannot exceed 10 percent of the prior year's treasury receipts.
There are four phases in the budget process:
First, departments submit formal budget requests. Second, the Governor makes spending recommendations to the General Assembly through a Budget Report. Third, the General Assembly passes an appropriation bill. And, fourth, the appropriated funds are spent under the direct control of the Governor's Office of Planning and Budget (OPB).
To finalize a budget, three revenue steps occur: projection of the amount of tax receipts, fees and other revenues that will be collected by the state's general treasury during a twelve-month fiscal year period; determine if there is any surplus from funds that were appropriated in prior years, but not spent – available for re-appropriation. And third, the projection of other funds from sources such as Lottery income, the Indigent Care Trust Fund, the Tobacco Fund and the Midyear Adjustment Reserve.
The first phase of the budget process - the official requests by each department or state agency to the Governor – has been completed. Those requests had to be submitted to the Governor by September 1.
A series of meetings with the Governor were then held in October and November, during which each OPB budget analyst briefed the Governor on agency requests and made preliminary recommendations based on his or her analysis of the requests. The Governor then formulates his tentative recommendations.
Revenue estimates were then finalized in early December, and final budget recommendations were made. Late in December, the Governor's Budget Report is printed, detailing his recommendations to the General Assembly. But it has not yet been released to the public.
State law requires that the publication be presented to the General Assembly within five days after it convenes in January. Traditionally, the Governor announces his recommendations in a meeting with the joint committees and also delivers a Budget Message to a joint session of the General Assembly on Thursday of the first week of the session.
How the General Assembly Processes the Governor’s Budget Request
The joint hearing for the General Appropriations Budget Requests are held the week following the first week of the session, with both Stephens and Carter heavily involved. Savannah is well-represented in the budgeting process.
After the Appropriations Hearings, the budget process in the General Assembly begins with the Subcommittees of the House Appropriations Committee. The Subcommittees make recommendations to the Budget Subcommittee, which is made up of the leadership of the House. The House Budget Subcommittee considers all of the subcommittee recommendations and proposes a recommendation to the House Appropriations Committee. The House Appropriations Committee then passes its recommendation to the full House.
The Appropriation Bill is then transmitted to the Senate. The Senate follows the same committee process as the House. Once the Senate has adopted their substitute to the House Bill, they send the bill back to the House for acceptance or rejection.
If the House rejects the Senate proposal, a conference committee is appointed. The Speaker of the House appoints three members from the House of Representatives and the Lieutenant Governor appoints three members from the Senate to serve as conferees. The Conference Committee, through negotiation and compromise, agree on a proposed appropriation to be voted on by both Houses, in theory. The House and the Senate must vote Yea or Nay on the Conference Committee Report. No amendments are allowed.
After an Appropriation Bill is passed, it is sent to the Governor for his signature. The Governor has line item veto power, however he must sign the bill within forty days after adjournment or the bill as drafted by the House and Senate becomes law.
One of the first steps, of course, is projecting revenues, which includes projecting out the current fiscal year will end. To date, the Governor’s office has projected the following. The Fiscal 2013 projections will be released this week, as part of Deal’s budget proposal.
TOTAL REVENUES AVAILABLE:
July 1 2007- June 30, 2008 $19,799,134,318
July 1 2008- June 30, 2009 $17,832,365,614
July 1 2009- June 30, 2010 $16,251,244,424
July 1 2010- June 30, 2011 $18,052,709,014
July 1 2011- June 30, 2012 $18,162,513,870 ( Projected)
Published by SavannahBusinessJournal.com. Copyright 2012. All Rights Reserved.
Published by SavannahBusinessJournal.com. Copyright 2012. All Rights Reserved.
Last Updated on Monday, 16 January 2012 12:34 Written by Lou Phelps Sunday, 08 January 2012 11:56
By Lou Phelps, SBJ Staff
Jan 16, 2012 - CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, and the world’s largest commercial real estate services, has expanded to Savannah.
Last week, the company announced the hiring of Bill Sparks, SIOR, as First Vice President and William Lattimore III as Associate to open CBRE’s new office Savannah which will be a satellite office extension of the company’s Atlanta office.
They are initially renting office space at Thinc Savannah at 35 Barnard Street, Savannah. “It offers us flexibility right now and speed to market,” explained Sparks, but in the future, they will expand to more tradition office space.
Both Sparks and Lattimore join CBRE from Gilbert & Lattimore, a Cushman & Wakefield Alliance member company, in Savannah.
The fourth generation Savannah natives will draw upon their comprehensive commercial real estate and research capacities to spearhead CBRE’s presence in the greater Savannah region from Hilton Head to Brunswick, according to the company.
“We look forward to leveraging the CBRE resources and network to enhance the service we provide in Savannah, and empower our clients,” said Sparks.
Prior to moving back to Savannah in 2008 and co-founding Gilbert & Lattimore, Sparks spent 10 years with GVA Advantis in Atlanta where he provided strategic advisory and brokerage services to a variety of clientele. During his 14-year commercial real estate career, he has completed over 300 commercial brokerage transactions in office, industrial, retail and land services. He is a graduate of UGA, and is a licensed Broker in Georgia and South Carolina.
Lattimore spent the last year with Gilbert & Lattimore, and for six years, he served as Manager of Coastal Market Graphics, LLC (CMG), a real estate market research company and affiliate of The Lattimore Company, tracking over 1,800 residential developments on the Georgia and South Carolina coasts. Through CMG, he has served and advised over 65 clients including national, regional and local developers, banks and builders, national retailers, investment firms, hospitals and municipalities. He earned his B.S. from The University of Alabama and is a licensed sales associate in Georgia and South Carolina.
“Bill and William bring extensive real estate and research background to CBRE,” commented John Ferguson, CBRE’s Executive Managing Director, Southeast. “As we continue our East Coast Port growth strategy, I am confident in their ability to lead CBRE’s efforts in greater Savannah which is now the 4th largest container Port in the U.S.”
Update on the Gilbert & Lattimore firm
Gilbert & Lattimore, founded in 2008, with offices at 104 W. State Street, Suite 220, in Savannah’s historic district, will remain unchanged and their alliance with Cushman & Wakefield is also unchanged, according to Harvey Gilbert, Managing Partner and Broker-in-Charge.
“The decision by my partner William Lattimore, Jr. to retire from commercial real estate brokerage, opened up opportunities for Bill Sparks and for Bill’s son, William, and this change is very amicable,” said Gilbert.
Gilbert & Lattimore has closed over $100 million in transactions in the first two years of the firm’s alliance with Cushman & Wakefield, another of the U.S.’s largest commercial real estate leaders, Gilbert said.
“The decision by CBRE to enter the Savannah market is a reaffirmation to us,” said Gilbert, “that the major players are attracted to the Savannah market.” To support this, he adds the decision by Colliers to affiliate with Savannah’s Neely Dales several years ago, also a significant local commercial real estate player.
“The port, in particular, has attracted the interest of the major players,” explained Gilbert. “In many ways, the Savannah market is a second or third-tier player, but out port is a first tier player.”
Founded in 1917, Cushman & Wakefield is an international powerhouse in commercial real estate and construction project management, with more than 215 offices in 56 countries, and 12,000 employees on six continents.
Written by Lou Phelps Friday, 06 January 2012 15:51
McDonalds Franchisee Nina Gombles Continues Savannah Investment While Protecting Employees
By Lou Phelps, SBJ Staff
Jan 16, 2012 - For Nina Gombels, owner of six of the Savannah area’s most successful McDonald’s franchises, the decision to tear down her restaurant at Waters Ave. and Eisenhower Dr. was significant.
She bought the store from her Dad back in 2004, who has now passed way – he had been a 37-year McDonald’s franchisee, from whom she learned the business.
”It’s really significant for us…and it’s a tremendous investment,” she explained, talking about the decision to level the Waters Avenue location. “It was really something to see it gone yesterday.” She also is losing three months-worth of sales, while increasing her payroll at other stores.
She has managed to retain all of her employees from the Waters Avenue location during the shutdown. “We transferred them to other locations; we maintained them and we found what would be the most convenient locations within our organization for them,” based on where they lived, Gombels explained. “We worked to insure that they could maintain their positions. No people were laid off.”
The new Waters Avenue store will seat 91 customers inside, feature an inside toddler’s play area – eliminating the outside playground – and maintain the same number of parking spaces. Both an updated design and the double service lanes will be the most significant changes. The old store actually had more parking spaces than were called for by local zoning, based on their prior seating capacity, so no additional parking needed to be included.
The success of her woman-owned company over the past decade has allowed her to pay off the Water’s Avenue investment, and tear it down to bring in the updated generation of McDonald’s design. It’s one of several major investments she has made.
Gombels converted her Derenne Ave. McDonalds to two lanes last May, and converted her store at Ogeechee Rd. and Berwick back in 2007. At Derenne, they have achieved significant improvements in customer service, speed of delivery of food, and an increase in customer volume. There has, however, been some conversion of in-store customers to drive-through, but overall sales are up. With the Waters Ave. store closed, they are also seeing increased sales at Derenne Ave, as well.
Besides running clean stores, with a high level of customer service, Nina emphasizes that the changes in the McDonald’s menu have also had a very positive impact on her company, including the McCafe coffee line, the smoothies, lemonades and healthier food choices such as oatmeal cereal for breakfast - a healthier morning alternative.
And the changes to the children’s Happy Meal by the McDonalds corporation has also been very positive for her local sales. “Every Happy Meal now provides French fries and apples. It used to be one or the other. The price for a Happy Meal went up, at the most by 10 cents. We reduced the size of the French fries just a little bit,” as well, she explains.
The Water’s Avenue location will be back up no later than March 29, though perhaps a week or so earlier, based on her contractor’s estimates.
Last Updated on Sunday, 29 January 2012 22:48 Written by Lou Phelps Sunday, 01 January 2012 22:38
By Lou Phelps
Jan 30, 2012 - The Memorial Hospital board of directors agreed Wednesday night to agree to change their By-Laws, and provide the Chatham County Commissioners with the power to appoint four of the hospital’s 17-member board of directors, if the Commissioners will agree to guarantee $250 million of the hospitals’ debt.
County officials have stipulated the requirement as part of its terms to guarantee the hospital system’s debt, now under consideration by the Chatham County Commissioners.
Chatham County owns all of Memorial Hospital’s buildings and its land (except for The Provident building), assets that are overseen by the Chatham County Hospital Authority, appointed by Chatham County Commissioners. But Memorial Hospital, for years, has been the guarantor of those loans, and makes all loan payments. No County tax funds are used.
Lenders have required strict financial covenants, such as insuring that the hospital has 90 days operating cash on hand, because of the troubled financial results of the hospital over the past ten years, including a reported loss of more than $16 million in 2010. The financial picture has also meant that Memorial has been unable to refinance the loans, or secure additional borrowing for needed capital improvements and expansion.
Sometime this Fall, the Memorial Hospital Board of Directors voted to ask the Chatham County Hospital Authority to change the methodology – to ask the County to guarantee the loans versus the Hospital Authority. There is no public record of the topic on the Memorial board agendas, however, and it does not appear in the Board’s published minutes. The Hospital Authority voted in public, according to their minutes, to make the request on October 5, 2012. (See related story: Jan 30 - CEN Asks Memorial to Review Open Meeting Law Procedures.)
And, the Chatham County Commissioners discussed the topic in public at their December 12 meeting, though they have deferred any discussion to date on the advice of County Attorney Jonathan Hart.
Hart has advised the Commissioners to more fully understand the implications to the County’s bond rating if they take on the Memorial debt in light of other significant financial obligations the County potentially has ahead. These include possibly guaranteeing loans for a new hotel on Hutchinson Island, and absorbing the operating costs of the new County jail now under construction.
Memorial’s covenants are choking, in their opinion, including a requirement to have 90 days of cash in reserve, a savings account in effect, according to Maggie Gill, current CEO of the hospital, and previously Memorial’s CFO for several years. . Memorial has never missed a bond payment
If the Chatham County Commissioners agree to guarantee Memorial’s loans, the hospital will not have to keep as much cash on reserve. “There will still be a certain level of covenant requirements, but lower,” explained Curtis Lewis after the board’s meeting on Weds. Jan 25.
He estimates that they hospital would be able to free up “from $10 to $20 million in cash that could be used for needed capital improvements,” Lewis explained. Memorial’s emergency room, for example, was built to handle 44,000 patients a year, but last year saw over 96,000. And, the hospital’s security system for both the staff and patients is not up to standard. The hospitals weak financial history has prevented them from securing additional borrowing for needed improvements.
What Memorial is seeking is analogous to the community banking crisis and tightening Federal banking regulations. Community banks are upset that banking regulators are requiring them to have better management practices and keep more money on reserve to weather failed loans, which restricts their loan activities. But many consumers would agree with the changes in light of the large number of Georgia bank failures.
Last Updated on Monday, 06 February 2012 12:49 Written by Lou Phelps Wednesday, 01 February 2012 12:36
By Lou Phelps, SBJ Staff
Feb 6, 2012 – It’s hard to believe that it’s been four years…that four years ago tomorrow, at about 7:25 p.m., local media began to get alerts that there had been an explosion at the Imperial Sugar plant.
It was the first time in recent memory that local emergency groups were called into action for a major disaster in Chatham County, and it was hours before the horrible loss of life and extent of injuries became known.
Tuesday, February 7, 2012 will mark the fourth anniversary of the massive sugar dust explosion that killed 14 workers and injured 38 others at the Imperial Sugar Refinery in Port Wentworth. The loss of life continues to be mourned in the community by family members and co-workers.
Seven months after the explosion, the federal Chemical Safety Board (CSB) board members came to Savannah in September 2009 to discuss the disaster, sharing what they had learned at that point, and providing insight into both what happened that night, and need for changes to OSHA and Federal and State regulations and management of manufacturing plants.
The CSB concluded that Imperial Sugar had inadequately designed and maintained dust collection and sugar handling equipment, and that inadequate housekeeping practices allowed highly combustible sugar dust and granulated sugar to accumulate to explosive concentrations throughout the refinery’s packing buildings.
Today, the Chairman of the CSB, Rafael Moure-Eraso, issued a public statement on the four-year anniversary, saying that the investigation staff keeps “the memory of this tragedy close to us as we continue to advocate for changes in national workplace rules aimed at preventing such accidents in the future. We believe the safety recommendations that followed from our investigation of this accident will go far in saving lives. I am pleased to report that on this accident anniversary all but one of our recommendations have been successfully adopted by their recipients,” he said today.
Specifically, the CSB called on the Occupational Safety and Health Administration, OSHA, to “proceed expeditiously” on its 2006 recommendation that OSHA promulgate a new combustible dust standard for general industry. “We believe such a standard is necessary to reduce or eliminate hazards from fires and explosions from a wide variety of combustible powders and dust,” he explained. “I am disappointed that OSHA has not moved forward on this recommendation. Completing a comprehensive OSHA dust standard is the major piece of unfinished business from the Imperial Sugar tragedy.”
“It is gratifying to be able to report that during 2011 the CSB designated Imperial Sugar’s responses to all five of our safety recommendations to the company as ‘Closed-Acceptable Action.’ Specifically, the CSB recommended that Imperial Sugar develop a corporate-wide comprehensive program to control combustible dust accumulation, develop training materials that address combustible dust hazards and train all employees and contractors, and improve its evacuation procedures. We recommended Imperial Sugar comply with National Fire Protection Association’s (NFPA) recommended practices for preventing dust fires and explosions, and urged the company to conduct a comprehensive review of all of its manufacturing facilities’ adherence to NFPA standards,” he adds.
“We recently received notice from Imperial Sugar’s property insurer, Zurich Services Corporation, that it is providing its risk engineers ongoing training in the hazards of combustible dusts, which we recommended. This will help ensure that hazards are identified during insurance inspections so that the companies can eliminate or reduce the hazard before a catastrophic accident occurs. Additionally a series of safety recommendations to AIB International and the American Bakers Association -- to develop combustible dust training and auditing materials -- also have all been given a status of “Closed-Acceptable Action.”
The CSB recently reissued its call for a dust standard from its investigation into three flash fires that occurred in a series of accidents at the Hoeganaes Corporation iron powder processing plant in Gallatin, Tennessee, taking five lives. But OSHA lowered the CSB recommendation’s priority on its regulatory agenda in recent weeks.
“I continue to advocate for a comprehensive combustible dust standard, and encourage industry’s support. Preventing dust explosions is a necessary investment: prevention saves lives and massive property losses. It is my view that a comprehensive standard will save lives and prevent future combustible dust fatalities.
The CSB is an independent federal agency charged with investigating serious chemical accidents. The agency's board members are appointed by the president and confirmed by the Senate. CSB investigations look into all aspects of chemical accidents, including physical causes such as equipment failure as well as inadequacies in regulations, industry standards, and safety management systems.
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