by Cooper Levey-Baker
We asked market leaders for their 2014 progress reports.
Joe Meterchick, regional president of Central-West Florida, PNC Financial Services
Q. WHAT’S ON THE HORIZON FOR SOUTHWEST FLORIDA?
Our economists say U.S. GDP growth this year should be about 2.4 percent, maybe a little higher, with unemployment down to 6 percent by the end of the year. Southwest Florida is probably on pace to grow at a higher level. People are moving back to this area again, jobs are being created, and that boosts housing. We’ve got great universities and the elderly population; that’s a bright spot for us. Florida in general is acquiring people, the season lasts longer and more people are living here full-time.
We have pockets of foreclosures. Hopefully a lot of that is overcome by the employment gains.
Q. WILL INTEREST RATES GO UP?
It is a great time to be borrowing and the supply is there. Our commercial lending increased almost $3 billion from Q3 to Q4 in 2013, up to $117 billion total. But the demand from businesses remains limited. Our most recent survey of small and mid-sized business owners in Florida found that only 12 percent expect to take out a new loan or line of credit in the next six months. We don’t know how long the rates are going to last, but like anything else at some point they’re going to have to move. The Fed is saying another year or so. If nothing else, they’re talking about it; if you go back a couple years, nobody was.
Q. HOW ARE CHANGING TECHNOLOGIES AFFECTING THE WAY YOU DO BUSINESS?
About 40 percent of our customers use non-branch channels, online or mobile, and 25 percent of our deposits are mobile or ATM. That’s versus 14 percent a year ago.
Elliott Falcione, executive director, Bradenton Area Convention and Visitors Bureau
Q. HOW DO 2014’S NUMBERS LOOK?
The summer season was up about 6 percent from a year ago and we’re expecting the fall season to be up about 4 percent. We’re focusing on diversifying. Our two biggest segments are leisure and sports, and we’re really trying to showcase our niche markets: agritourism [think organic farm and vineyard tours], ecotourism, culinary tourism. That has allowed us to have one of the longest stay averages in the state: 7.2 nights. The state average is 4.1.
Q. WHERE ARE VISITORS COMING FROM?
We’re seeing a stronger influx of Europeans, and we attribute that to working the United Kingdom and German markets hard. There’s good pent-up demand all over Florida and a big part of that demand is due to the ongoing increases in the Visit Florida budget. Visit Florida now has its biggest budget in history, a bigger budget than the state of California’s tourist office. And Visit Florida has offices all over the world. They’re able to create awareness in China, India, Russia and South America.
Q. WHAT DOES MANATEE COUNTY NEED TO GROW TOURISM?
We’re excited to add some bed stock. We’re working hard to pursue a hotel in Palmetto, and we are on the cusp of going out for a competitive process to tell hotel developers we’re ready for a hotel next to the convention center. We’d like to add some more beds in the urban core and in Lakewood Ranch, as well; hopefully 800 to 1,000 rooms added to the community. That’s important because with all these unique sports facilities, we need to have enough beds to accommodate all the athletes and their families on the same weekend.
Q. COULD PORT MANATEE BECOME A CRUISE SHIP HUB?
We are collaborating with [port director] Carlos Buqueras about the possibility of bringing in a cruise ship. It would redefine north Manatee County.
Roger Pettingell, realtor and luxury waterfront specialist, Coldwell Banker Real Estate
“The euphoria of buying doesn't seem to be there."
Q. HOW HAS 2014 BEEN SO FAR?
I sold $62 million last year, and I sold $51 million through July—that looks good to me. Last year, you saw much bigger price increases. Now it’s more flat. I would figure the increases to be more in the 5 percent to 10 percent range, whereas last year it was in the 10 percent to 20 percent range. The euphoria of buying doesn’t seem to be there. When the market turned, you saw a lot of people just crazy jumping into it, and price appreciations were easier to garner because you had gone down so far. It’s just a much more normal market. There’s more of a balance between buyers and sellers. It’s harder to be a realtor in that kind of market, because when it’s slanted to one side or the other, it’s easier to be selling. Now both sides feel they’re right.
Q. WHO’S BUYING?
Our international market has dwindled to mostly Canadians, some English and some Germans. We had broadened out to a bigger population of Europeans in the early 2000s. You saw a lot of interest from people in Spain in the mid-2000s, but it’s more difficult for them to get here now. If you were going to compare us to Miami, where you have this flood of Brazilians and Russians and Chinese, we don’t have that, but we have a strong group of Canadian buyers and Midwesterners.
Q. HOW WILL THE NEW DOWNTOWN CONDO CONSTRUCTION AFFECT THE MARKET?
At first blush, you could say that it looks like it’s being overbuilt; [but] only a certain number are being approved and moving forward. The market’s not strong enough to support all of them coming in at the same time. It’s going to open up opportunities for some of the waterfront homeowners who are ready to be in the downtown area. They can get new construction with the best new amenities and finishes.
Q. DOES THE HIGH NUMBER OF CASH-ONLY INVESTOR SALES CONCERN YOU?
It gets rid of things like short sales and bank-owned properties that give a stigma to the market. You don’t want the blight of unkempt houses in the area. Englewood had a bunch of bank-owned lots for $20,000; that certainly didn’t help us.
Jennifer Behrens Schmidt, president and owner, Atlantic & Machining Corp., and president, Sarasota Manatee Manufacturers Association
“Twenty years ago, the massive trend was offshoring, but within the last five to seven years, we’ve started to see reshoring become more of a focus.”
Q. MANUFACTURING EMPLOYMENT IN SARASOTA AND MANATEE HAS RISEN 4.8 PERCENT. ARE ORDERS UP?
Area manufacturers have seen a good, solid year. I don’t think there’s an increase in productivity and production at a breakneck speed, but it’s been steadily improving.
Q. LARGE U.S. COMPANIES ARE CONSIDERING BRINGING BACK PRODUCTION TO THE U.S. FROM CHINA. IS THAT TRUE IN OUR REGION?
We continue to see an increase in domestic sourcing. Twenty years ago, the massive trend was offshoring, but within the last five or seven years, we’ve started to see re-shoring become more of a focus for manufacturers. Companies are recognizing the advantages that come with sourcing domestically. It’s difficult to collaborate on a project when you’re 12 time zones apart, and many of the companies that offshored, especially to the Asian market, suffered serious quality problems.
Q. WITH 255 UNFILLED MANUFACTURING JOB OPENINGS IN OUR REGION THIS FALL, IS FINDING QUALIFIED WORKERS A HUGE CHALLENGE TO GROWTH?
Only now are local, state and federal governments and the schools finally looking at this. Sarasota County Technical Institute opened a precision machining program last school year, and it was their first manufacturing-based training program. The first body
of 16 students who went through the program graduated in June with 81 percent job placement. Local manufacturing companies were thrilled to have a pool of workforce to draw from.
Q. WHAT POLICY CHANGES COULD GOVERNMENT MAKE TO ENCOURAGE MORE MANUFACTURING?
We are the only state in the Sun Belt and one of only a handful in the entire country that charges a tangible property tax on manufacturing equipment. In manufacturing, you have a lot of capital assets and you’re paying tax on that every single year. To make a blanket elimination of that would require a statewide amendment, but local governments can choose to create tax abatements. Sarasota County has a tangible property tax abatement for companies that are looking to expand or grow. That doesn’t help the businesses that are already here, but it’s a step in the right direction.
David Verinder, president and CEO, Sarasota Memorial Hospital
“Sarasota Memorial will see a $150 million reduction in federal revenue through 2022.”
Q. HOW HAS THE AFFORDABLE CARE ACT AFFECTED SMH?
We’ve not seen huge financial issues yet. But one of the promises was you’ll see fewer indigent patients. Parts of the country have seen some improvements, but none of that has come around for Sarasota Memorial. For the first part of this year, our emergency room was still seeing roughly the same percentage of uninsured as the last five years—about 20 percent, or 8,500-9,000 uninsured patients a year. Where we have seen the impact is in quality metrics the act put in place. It has everybody focused on quality in a different way because the Centers for Medicare & Medicaid Services looked at different things—specific infection rates and basic customer satisfaction-type things. The new metrics have allowed us to better benchmark our performance against other hospitals. We’ve put a number of best practices in place to prevent infections and improve the overall patient experience.
Q. DO YOU EXPECT TO SEE COST SAVINGS IN THE FUTURE?
Going forward, it’s going to be very challenging because our payments are going to be reduced through Medicare. When you have a predominately Medicare hospital in an area the age of Sarasota, that’s going to negatively affect us. The theory was you would start having fewer indigent patients and that would offset that, but the math doesn’t hold.
Using whole numbers, say 60 percent of our business is Medicare. I’m going to take a reduction on 60 percent of our business, and we’ll have fewer indigent patients. I’d rather just get to keep my 60 percent.
And Florida, along with a whole host of other states, has elected not to pursue the expansion of Medicaid. Our uncompensated care costs top $87 million each year. If the state expanded coverage, those costs would decrease, because we would see a decline in our number of uninsured patients. But Florida hasn’t expanded coverage yet, so Sarasota Memorial will see a $150 million reduction in federal revenue through 2022, without a commensurate decrease in the number of uninsured. We are certainly going to continue to promote the expansion of coverage to everyone in the state of Florida.
Q. YOU OPENED THE BIG NEW TOWER LAST YEAR. ARE THERE ANY OTHER PHYSICAL IMPROVEMENTS THE HOSPITAL NEEDS?
A new rehab hospital. We have a complete rehab unit in the hospital right now, but that unit is about 30 or 35 years old. We’re going to tear down the Retter building [at our Sarasota campus] and build a brand-new, comprehensive, state-of-the-art rehab hospital. It will take two years to design and build the facility, with completion in 2016.
Q. OTHER CHALLENGES?
There’s a shortage of physicians nationally. One recent study found that Florida faces greater challenges than other states because it averages a higher number of physicians who are 60 years and nearing retirement.
Joseph McKenna, president and CEO, Sarasota Orchestra
“The bayfront can be an economic incubator, a cultural incubator.”
Q. ARE PEOPLE SPENDING ON THE ARTS AGAIN?
Our 2013-2014 season was exciting. The economic landscape is improving, and that makes it more comfortable for organizations to continue their cultural and entertainment outreach. The other huge factor was the appointment of our new music director, Anu Tali. And we’ve taken a more strategic approach to our programming. We’re an orchestra here to serve the entire community, not just people who love a certain type of orchestral music. We’re very Main Street-oriented in trying to make the organization friendly to the whole community.
Q. IS THAT AN ATTEMPT TO ATTRACT YOUNGER AUDIENCES?
Whether we like it or not, we live in a world where you can consume things when you want to. Cultural organizations always want people to have social interaction, but the programming profile has to change to connect with different kinds of patrons. The demographic change is accelerating before our eyes, and it was only further compounded by the economic situation.
Over the past five years, participation in our education program has increased 63 percent. This year alone we’re seeing an 8 percent increase, and we now have over 300 students participating in the program.
We also began offering programs that are one hour in length so that people who are busy can attend in a way that works for them. All of our chamber music programs are 75 minutes. We see families participating in ways we hadn’t seen previously. Last season, more than one-third of our ticket buyers purchased for the first time. And our pops series in particular is a great access point for new audiences. This season, pops subscriptions are already up 145 percent since 2011-2012.
Q. ANY BIG NEW OPPORTUNITIES FOR THE ARTS ON THE HORIZON?
The thing that piques my curiosity is the renewed discussion about the potential of the bayfront as a resource for the community. Visit Sarasota County has spearheaded the effort with Bayfront 2020. The bayfront can be an economic incubator, a cultural incubator. One of the challenges we have going forward is this: How do we put together the cultural facilities that we need to present the best of what our community has become?
Roxie Jerde, president CEO, Community Foundation of Sarasota County
Q. ARE PEOPLE BACK TO DONATING AS MUCH AS THEY DID BEFORE THE RECESSION?
We’ve had a terrific run the last couple of years, with an increase in giving, and our portfolio is partly invested in equities, so it’s been nice to have some growth there as well, which means there’s more money for philanthropy. Revenue at the foundation increased from $22.4 million to $40.6 million between 2011-2012 and 2012-2013 and assets increased from $194.5 million in 2012 to $273 million in 2014. We’ve seen not only an increase in funds, but our current donors who care so much have given in extraordinary ways. That has to do with how you feel personally, but also we’re working hard with donors to show the difference their philanthropic gift can have. If they can see their philanthropic investments making a difference and making an impact, they want to give more.
Q. ARE YOU SEEING AN INCREASE IN SMALL-SCALE GIVING?
With Season of Sharing, the average donation is $75. We get $4 contributions to thousands of dollars, and we had an unprecedented $2 million last year, with 3,200 people donating from all different levels. If people see a compelling need, they say, “Maybe my dollar will make a difference.”
Q. WHAT ARE THE BIGGEST LOCAL NEEDS YOU SEE TODAY?
Fifty-one percent of our 42,000 students in Sarasota County are on free or reduced lunch—that’s a stunning statistic for one of the wealthiest counties in Florida. It makes you realize there are a lot of working poor people here. The workers of our community are hardly getting by.
Jack Cox, owner, Halfacre Construction Company
“My biggest competitor was the empty building; it was so cheap.”
Q. HOW HEALTHY IS THE COMMERCIAL CONSTRUCTION MARKET?
Commercial construction follows residential, so if residential is strong, commercial will follow that. It’s usually about a year lag behind.
Residential was really strong last year and it’s flat this year, but the commercial side is starting to pick up. I see next year being kind of flat.
A lot of the big commercial projects that are still going on are tied to government or government funding, rather than just private industry. Even projects at IMG Academy, they’re receiving millions of dollars from the state; and the Benderson rowing project, that’s all state and county funded.
Q. ARE OTHER, LESS WELL-KNOWN INFRASTRUCTURE PROJECTS IN THE WORKS?
Now that property values are ticking up, Sarasota and Manatee are receiving more tax dollars, and that’s driving capital improvement projects. In August, we broke ground on a large infrastructure project, a $26-million road improvement project in Charlotte County. We expect that to be completed in 18 months.
Q. HOW DOES SOUTHWEST FLORIDA COMPARE TO THE REST OF FLORIDA?
There are other areas that are much better. They’re going gangbusters in Tampa. Orlando’s very strong. Miami’s very strong. Our area was hit worse financially than other areas. But the condominium market’s coming back. It’s nice to see three tower cranes in downtown Sarasota. The biggest challenge is our customers’ ability to get financing. The underwriting process on bank loans is excruciating. Most of our customers have used cash. Now we’ve got a couple working with banks and banks are starting to lend again.
Q. WHAT TYPES OF PROJECTS ARE PROMISING?
We’re starting to see some more in manufacturing, large warehouse-type projects. One of the problems is so many buildings became foreclosures. My biggest competitor was the empty building; it was so cheap. We’ve been renovating those buildings to fit customers’ needs, but people are starting to build buildings again now that the inventory–all that stressed commercial property—is off the market.