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K E N T U C K Y ’ S BU S I N E S S N E W S S O U RC E F O R 2 7 Y E A R S APRIL 2012 $4 .50

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On The Road to Growth Kentucky’s $11.3 billion travel and tourismindustry has a ‘unique’ plan to meet pent up demand.Page 20

LANE ONE-ON-ONE: MARY PAT REGAN

President, AT&T Kentucky

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THE LANE REPORT • LANEREPORT.COM APRIL 2012 1

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Kentucky’s Business News Source For 27 Years Volume 27 Number 4

APRIL2012

lanereport.comKentucky Business News Online

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20 COVER STORY ON THE ROAD TO GROWTH

Kentucky’s $11 billion travel and tourism industryhas a ‘unique’ plan to meet pent up demand

24 AVOIDING FUTURE SHOCKWith utilities’ help, Kentucky business and industryinvest in energy efficiency to keep costs competitive

26 AN INVESTMENT WITH A YIELDFor those spending more than $60,000 annually on power, efficiency upgrades look like a wise strategy

28 COST COMPETITION FOR CARE PROVIDERSKentucky firm markets software tool allowingprice comparisons for healthcare bargain hunters

30 ‘AN EXTENDED BOTTOM’Kentucky construction contractors compete hard for jobs; manufacturing, multi-family housing show improvement

32 AMERICA’S BEST-RUN BANK?Steady growth and a conservative approach leadRepublic Bancorp to the top of a national listing

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Departments4 Perspective

6 Fast Lane

12 Interstate Lane

13 Kentucky Intelligencer

14 On the Boards

15 Corporate Moves

35 The Lane List

36 Spotlight on the Arts

38 Exploring Kentucky

40 Prep Line

42 Passing Lane

44 Kentucky People

16 Lane One-on-One: Mary Pat Regan Kentucky President, AT&T

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On the Cover Kentucky’s travel and tourism industry had an estimated economic impact of $11.3 billion in 2010., and 2011 is believed to have been better. A mild winter resulted in what state officials say were the best three-month period in history.(Lane Report photo illustration)




4 APRIL 2012 LANEREPORT.COM • THE LANE REPORT

THE circus in Wisconsin’s state Cap-itol last summer, with its profane and obscene signs and threatening

behavior from unionized public employees, begs an analysis by hard-working citizens and overtaxed voters. Thousands of unionized government workers (some bused in from Chicago and Nevada) descended on Wisconsin’s Capitol to protest proposed collective bargaining reforms designed to limit government costs.

In the face of a two-year state deficit of $3.6 billion, the governor proposed that state employees begin to pay something into their own pension and health insurance plans just as most of their private-sector neighbors do. The reforms were approved by lawmakers and signed into law by the governor. Big Labor then mounted a bare-knuckle attack on the governor in the form of a recall election.

The Milwaukee Journal -Sentinel summed up the results of the enacted reforms this way: “The governor did bal-ance the budget … reduce the struc-tural deficit significantly … put a lid on property tax increases; he did give schools and municipalities more con-trol over their budgets.” The analysis sounds like a good report card, espe-cially coming from a newspaper that had opposed the governor’s efforts.

While Kentuckians would not desire the protests and trashing of the state Capitol as occurred in Wisconsin, we know that reform must come. In Wis-consin, teachers abandoned students and classrooms for weeks and a group of state senators fled to Illinois to escape voting on the reforms and thwart majority rule.

Wisconsin is not unique and its cri-sis is not an isolated case. If public-sec-tor col lect ive bargaining i s not reformed, other cities and states strapped for money from overspend-ing and over-promising may expect the same type of scenario to show up in their city halls and state capitols. In an economy dominated by long-term unemployment and general decline, America can no longer afford to have taxing and spending decisions made by public-sector union contracts without effective opposing argument.

Elected officials often yield to the demands of union contracts that the government cannot afford. One impor-tant reason is that union officials funnel a large portion of compulsory union dues and fees (often collected for them by the government) into efforts to influ-ence elections. Thus, many elected offi-cials fear angering unions even in the face of critical financial shortfalls. This helps explain why states with the heavi-est tax burdens and worst long-term debts, often due to bloated public employee pension funds and benefits, are those with the most unionized work-forces. In many cases, it truly is the “tail wagging the dog,” with union negotia-tors basically setting budgets and fiscal policies. When there are insufficient funds to meet union demands, unions push for tax increases.

Too often, the union leaders act as the dominant partner in negotiations while the elected officials act as hired help. A number of mayors and governors around the country are working hard to solve the problems of union contracts containing unaffordable and costly sala-ries and benefits, from Republican Gov. Chris Christy of New Jersey to Demo-cratic Gov. Jerry Brown of California.

In New Jersey, Christy, a Republican, and state Senate President Stephen Swee-ney, a liberal Democrat, have offered use-ful examples for states. These two leaders pushed through the legislature require-ments for public workers to begin con-tributing to their health insurance and increased their contributions to their pensions. Senate President Sweeney is also a leader of the state’s ironworkers. He realized that New Jersey had to get a handle on its gold-plated pay and bene-fits to state employees or the private sec-tor, which hires people like ironworkers, would be squeezed out.

Courage from elected officials will be essential to the task of changing the paradigm on how public-employee union contracts are handled. Costs must be controlled in the budget with-out constant tax increases. Many, many fine and devoted people employed by government work hard, are good at what they do and deser ve good incomes and benefits. Their wage and benefit packages should compare favorably with private-sector packages, and with comparable costs to the worker and employer. ■

FACING REALITYStates must address issue ofcollective bargaining reform

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A compilation of economic news from across KentuckyFAST LANE

DHL is investing $47 million to expand its Americas hub facility at the Cincinnati/Northern

Kentucky Airport (CVG) to meet the growing demand of international ship-ping customers.

A groundbreaking ceremony was held on March 14 for the project, which will entail building a new 193,000-s.f. sort facility that will be connected to the existing main sort facility at CVG. The new building is expected to be operational by Novem-ber while other improvements to exist-ing buildings and the purchase of material handling equipment will be completed by March 2013.

The expansion is expected to cre-ate approximately 280 new jobs over the next 12 months.

The CVG hub connects the United States to a global network spanning Asia, Europe and the Americas. Pro-cessing more than 2 million interna-

tional shipments a month, the CVG hub handles freight bound for the Western Hemisphere, and connects more than 100 service centers and five international gateways in the United States to more than 220 countries around the world.

With the current expansion, DHL will have invested $105 million in CVG since estab-lishing its U.S. international hub there in 2009. Staffing has also grown from 1,600 in late 2009 to approximately 2,000.

ERLANGER: DHL TO HIRE 280 TO OPERATE NEW $47M SORT FACILITY AT CVG’S EXPANDING INTERNATIONAL HUB

GENERAL Electric held an official grand opening last month for its newest factory at Appliance Park in Louisville, the sec-

ond GE facility open in the span of six weeks at the manufacturing complex. (A new facility to produce the company’s GeoSpring hybrid water heater opened in February and was the first new factory to open at Appliance Park since 1957.)

GE Chairman and CEO Jeff Immelt was joined by Gov. Steve Beshear and more than 1,000 GE employees to celebrate the new facil-ity, which will manufacture GE’s French-door bottom-freezer refrigerator. The new line is one of 11 new products that will be launched by GE Appliances by 2014 and is a result of GE’s $250 million investment in bottom freezer technol-ogy and an $800 million investment to upgrade Appliance Park in Louisville.

The refrigerator plant will eventually sup-port 600 new local jobs.

According to a new study, commissioned by GE and conducted by independent consulting firm Tripp Umbach using 2010 data, GE contributes – directly and indi-rectly – $1.6 billion to the commonwealth. According to the study, GE helps support more than 12,000 jobs in Kentucky, with nearly 5,000 direct employees. GE has sev-eral Kentucky facilities in addition to Appliance Park, including GE Aviation engine manufacturing, testing and distribution centers; a GE Energy repair services center; and a medical equipment manufacturing facility under GE Healthcare.

LOUISVILLE: NEW REFRIGERATOR LINE WITH 600 JOBSPART OF $800 MILLION GE APPLIANCE PARK UPGRADE

LEXMARK International is forging ahead with its strategy to expand its presence in software, investing a

total of $212 million to acquire three software companies.

Brainware Inc., ISYS Search Soft-ware and Nolij Corp. will all be inte-grated into Perceptive Software, a stand-alone business within Lexmark. Brainware CEO Carl Mergele, ISYS CEO Scott Coles and Nolij President John Collins will all report directly to Scott Coons, president and CEO of Perceptive and a vice president of Lexmark.

Virginia-based Brainware has an intelli-gent data capture platform, Brainware Dis-tiller, that extracts information from paper and electronic documents, validates the extracted data and passes it to customers’ data management systems, enterprise resource planning and/or financial man-agement systems. ISYS is an Australian company that is a global leader in high-performance enterprise search and univer-sity information access solutions. Nolij, headquartered in Massachusetts, provides web-based imaging document manage-ment and workflow solutions for the higher education market.

“Our recent acquisitions enable Lex-mark to offer customers a differentiated, integrated system of solutions that are unique, cost effective, and deliver a rapid return on investment,” said Paul Rooke, Lexmark’s chairman and CEO. “The methodical shift in our focus and investments has strengthened our man-aged print services offerings and added new content and process technologies, positioning Lexmark as a key solutions provider to businesses large and small.”

LEXINGTON: LEXMARK ADDSTO SOFTWARE BUSINESS BY BUYING THREE COMPANIES

DHL executives joined state and local officials last month to celebrate DHL’s $47 million expansion of its Americas Hub at Cincinnati /Northern Kentucky Airport. Pictured are (l-r) Dan Tobergte, president/CEO, NKY Tri-ED; Travis Cobb, vice president of DHL Americas Hubs, Gateways and Network Control; Lt. Gov. Jerry Abramson; Candace McGraw, CVG CEO; Stephen Fenwick, CEO DHL Express Americas; Gov. Steve Beshear; Ken Allen, global CEO, DHL Express; Mike Parra, senior vice president - network operations, DHL Americas; Charlie Dobbie, executive vice president - global network operations, Aviation & IT, DHL Express; and Mark Mallory, mayor of Cincinnati.

GE’s new French-door refrigerator includes a number of new features, such as a hands-free autofill system to fill containers, a hot-water dispenser and an advanced filtration system that removes harmful pharmaceuticals from water and ice.

GE

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BOWLING GREEN■ Beginning this fall, Western Kentucky Uni-versity will be offering a master’s in recreation and sports administration with a concentration in sport media and branding. The new offering, which is part of a partnership with the universi-ty’s school of journalism and broadcasting, will be a two-year online program that WKU officials say fills a niche in the sport management field that hasn’t been met by other programs across the United States.

CAMPBELLSVILLE■ Campbellsville University has announced plans to start a program for registered nurses to earn their bachelor of science degree in nurs-ing. Beverly Rowland, associate professor of nursing at Campbellsville, said the mission of the RN to BSN completion program is to offer a higher level of nursing education through a curriculum tailored to working adults. Classes will be offered online in asynchronous classes, giving students the ability to attend on their own schedule.

ELIZABETHTOWN■ A 119-year-old soda fountain that was once part of the Schmidt Museum of Coca-Cola Memorabilia in Elizabeth-town sold at auction last month for a staggering $4.5 million to an anony-mous bidder. Originally built in 1893 for the World’s Fair in Chicago, the fountain was valued in the auction cata-log at $125,000. “We thought that maybe it could go for as high as $1 mil-lion,” said Larry Schmidt, organizer of

the auction. “But this is incredible.” The museum started in the 1970s from the Schmidt family’s private collection of Coca-Cola items and even-tually grew to 80,000 items. Last year the family announced plans to close the museum and sell its contents. To date, The Coca-Cola Co. has pur-chased more than 170 items, some of which are now on display at the company’s World of Coca-Cola attraction in Atlanta.

FORT THOMAS■ KLH Engineers has opened a new office in downtown Lexington, the fifth location for the Fort Thomas-based firm. The Lexington office will be managed by KLH senior principal Robert Lonnemann and will initially operate with a staff of eight, with plans to grow that figure to 14 in the near future. In addition to its offices in Fort Thomas and Lexing-ton, KLH also has locations in Dayton and Columbus, Ohio, and New York City, and employs a staff of more than 120.

FRANKLIN■ Atlanta-based Premier Transportation has opened a new transporta-tion and maintenance facility in Franklin that will bring up to 100 new employees over the course of the next year. Premier Chairman and CEO Michael Medici said the new location will provide transportation services for the new Tractor Supply Co. distribution facility in Franklin and other area companies and will also allow the trucking company to expand its service offerings to customers from Nashville and throughout south-central Kentucky. Franklin-Simpson Industrial Authority Gary Broady noted that with Premier, Hammond Transportation and Franklin Express all having operations in the area, the community is quickly becoming a center for the trucking industry. “These three companies employ several hundred people and provide tremendous service to the numerous industries and distribution facilities located in our area,” Broady said.

LEXINGTON■ DiamondRock Hospitality Co. has sold the Griffin Gate Marriott Resort in Lexington as part of a $262.5 million transaction involving the sale of three hotels in its portfolio to Inland American, a real estate trust company. The other hotels included in the transaction were the 521-room Renaissance Waverly in Atlanta and the 492-Renaissance Austin in Austin, Texas. With 409 rooms and approximately 16,000 s.f. of meeting and ballroom space, Griffin Gate ranks as Lexington’s largest hotel.

BUSINESS BRIEFS

THE Northern Kentucky region saw 28 companies decide to locate or expand in Boone, Campbell and Kenton counties in 2011, creating 2,839 new jobs and an economic impact

of nearly $500 million. Those figures outpace those of prior years, in which the region has averaged 22 new/expanding com-panies, according to the statistics released by the Northern Ken-tucky Tri-County Economic Development Corp. (Tri-ED).

Tri-ED Chairman and Kenton County Judge-Executive Steve Arlinghaus noted the role of the advanced manufactur-ing sector in Northern Kentucky’s 2011 economic develop-ment success, citing the expansions of Messier-Bugatti, Mubea, Linamar and ZF Steering.

Northern Kentucky Tri-ED is now also measuring a new benchmark through the ezone, a division of Tri-ED, which is the amount of capital investment raised/invested in companies in the region through the Kentucky Cabinet for Economic Development and private sources. The average, over the last 10 years, has been $7.8 million. In 2011, the combined investment doubled to $15.3 Million. (This benchmark is not included in the impact study for annual data consistency purposes.)

“There is a strategic focus in Northern Kentucky to encourage entrepreneurs and innovation,” said Dan Tobergte, president and CEO of Northern Kentucky Tri-ED. “We have significant momentum through initiatives like UpT-ech and are working to make private investment easier and to build on our results in this area.”

N. KENTUCKY: REGION EXCEEDS YEARLYAVERAGE FOR BUSINESS DEVELOPMENT

OW E N S B O R O leader s have announced a

$44 million redevelop-ment project planned for downtown Owens-boro that will add a new hotel and move more than 200 corpo-

rate headquarter jobs into a new downtown office.Boardwalk Pipeline Partners, a company that handles

the transportation and storage of natural gas, plans to move its Owensboro operations into a new two-story office building on the former site of a car dealership. In addition to the Boardwalk move, the project will locate a new 120-room full-service convention-class Holiday Inn hotel on the west side of a newly planned convention center.

Project developers Jack Wells and Matt Hayden, of River-front Jam LLC, also plan to incorporate residential and retail development along the city’s riverfront and the west Second Street area.

The $44 million private investment is the latest project announced as a result of the market-based downtown plan, which was approved by Owensboro-Daviess County govern-ments in 2009, resulting in $120 million in publicly funded infrastructure and amenities to reinvent downtown Owens-boro as a walkable, mixed-use urban center. Official ground-breaking ceremonies were held last month for a new $20 million Hampton Inn and Suites hotel and the $48.4 mil-lion convention center.

OWENSBORO: $44M HOTEL AND OFFICEPROJECT PART OF DOWNTOWN PLAN

Schmidt M

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FAST LANE

LEXINGTON■ The University of Kentucky has formed a “master alliance agreement” with Nicholasville-based animal nutrition company Alltech Inc. with plans to collaborate on a host of agricultural, medical and biological research projects that could also help grow the state’s economy. Alltech officials estimate that the new agreement will help generate annual fund-ing for research activities of $2.5 million within the next year, growing to more than $5 million annually by the end of the third year of the partner-ship. In addition, the alliance also is expected to help UK enhance gradu-ate training and support for post-doctoral fellowships.

■ The Bluegrass State Games, a nonprofit program that promotes amateur athletics through an annual event held each summer in central Kentucky, generated a total economic impact of nearly $7 million last year, according to a study released by the Bluegrass Sports Commission. Based on the study results, more than 16,000 participants and 70,000 spec-tators participated in the 2011 event. The economic impact of an event is drawn from the spending by attendees on things such as hotels, food, gas, shopping and other entertainment options due to their participation in the event. The event, now entering its 28th year, is the signature event of the Sports Commission.

■ Kentucky Ale beer has expanded its dis-tribution network to now include Chicago, where distribution will be handled by Chi-cago-based River North. In addition to the Chicago market, Kentucky Ale, which is produced at Alltech’s Lexington Brewing Co. facility in downtown Lexington, is cur-rently distributed in Kentucky, Ohio, Wis-consin, Georgia, Tennessee, Massachusetts and Indiana. The company also has a distri-bution network in China.

LEXINGTON/LOUISVILLE■ Lexington technology solutions provider SIS has formed a partner-ship with Louisville IT training company Tandem Solutions that will enable the two companies to provide project-specific hardware, soft-ware and training to its customers. SIS’ new Tier 3 data center facility in Lexington will be used to provide comprehensive hosting and cloud offerings, including virtualization, business continuity, security, storage management and application support as well as systems monitoring and management, while the Tandem Solution training center in Louisville will be used for local outreach programs and to host events for the information technology community.

■ UKHealthCare and Louisville-based Norton Healthcare have part-nered to create a new non-for-profit membership corporation that will focus on developing collaborations with hospitals across the state. The Norton Healthcare-UK HealthCare Partnership for Quality will initially focus on improving population health in the areas of cancer care, stroke and heart disease.

■ Residential real estate sales in Kentucky’s two largest cities saw signifi-cant growth in February, according to the latest statistics released by the Lexington-Bluegrass Association of Realtors (LBAR) and the Greater Louisville Association of Realtors. Single-family residential sales in Lexington in February 2012 increased 28 percent over February 2011, while condo sales increased 22 percent for the same time frame. In Louisville, sales of single-family homes and condos in February 2012 combined to create a 25.9 percent increase over February 2011.

LOUISVILLE■ Donald Demuth, Ph.D., associate dean for research and enterprise at the University of Louisville School of Dentistry, has received a patent for a novel bio-chemical discovery that could lead to a new way to treat gum disease. Demuth, who is collaborating with UofL chemistry professor Frederick Luzzio on the research, is working with the Office of Technology Transfer at UofL to find an industrial partner to license and commercialize the technology.

BUSINESS BRIEFS

THE University of Kentucky Gatton College of Busi-ness and Economics honored the success and achievements of three of its graduates last month as it

inducted Amitabh Chandra, Ruth Cecelia Day and Donald C. Rogers into its Alumni Hall of Fame.

Chandra (Class of 2000, 2001), is an econo-mist and a professor of public policy at the Harvard Kennedy School of Government. A research Fellow at the IZA Institute in Bonn, Germany, Chandra’s research focuses on productivity and cost-growth in healthcare and racial disparities in healthcare and has been widely published and cited. He is an edi-tor of the Review of Economics and Statistics, Eco-nomics Letters, and the American Economic Journal, and was previously an editor at the Journal of Human Resources.

Day (Class of 1985) is vice president for administrative services at Landstar System Inc., a multibillion-dollar transportation ser-vices company headquartered in Jacksonville, Fla. A CPA for more than 24 years, Day also serves on the UK Accounting Advisory Board and is a UK Barker Fellow.

Rogers (Class of 1965, 1967) is chairman of Rogers Petro-

leum Inc., a company he founded in 1980 that has grown to become one of the largest con-ventional and renewable fuels, lubricants and convenience store companies in the South-east. Rogers, whose company is headquartered in Morristown, Tenn., is a past president of the Tennessee Oil Marketers.

A total of 75 men and women have been inducted into the Gatton Hall of Fame since its formation in 1994.

LEXINGTON: UK COLLEGE OF BUSINESS INDUCTS THREE INTO HALL OF FAME

LOUISVILLE-based Churchill Downs Inc. has partnered with a New York gaming and entertainment company to purchase a racetrack in Lebanon, Ohio, that will be

developed into a $225 million video lottery terminal facility with up to 2,500 VLTs and a harness racetrack.

Through a joint venture agreement, Delaware North Companies Gaming & Entertainment and CDI have formed a new company, Miami Valley Gaming & Racing to manage the development and operation of the VLT facility and racetrack. Miami Valley Gaming intends to acquire the harness racing licenses and assets held by Lebanon Trotting Club Inc. and Miami Valley Trotting Inc. for $60 million.

CDI President and COO Bill Carstanjen said the acquisi-tion “fits well with our strategy to grow the company through both acquisition and development of new gaming facilities.”

Plans call for construction of the new facility to begin this year, with completion scheduled for fall 2013.

The development will create approximately 700 new jobs and is expected to bring $24 million a year to the area.

Delaware North Companies Gaming & Entertainment and CDI will each own a 50 percent interest in the new ven-ture and will have equal representation on its board of man-agers. Collectively, Delaware North Companies Gaming & Entertainment and CDI plan to contribute up to $90 million in equity with the rest of the development funded with debt.

LOUISVILLE: CHURCHILL TO DEVELOP OHIOVIDEO LOTTERY/HARNESS RACETRACK

Ruth Cecelia Day

AmitabhChandra

DonaldC. Rogers

Alltech/Kentucky Ale photo

DonaldDeMuth





FAST LANE

LOUISVILLE■ SHPS Inc., a Louisville-based company that is one of the country’s largest independent providers of benefits administration, health and wellness services, and collaborative care software, is selling its human resources subsidiary to ADP, a New Jersey company that specializes in human resource outsourcing, payroll services and benefits administra-tion. SHPS President and CEO Rishabh Mehrotra said the move allows the company “to focus 100 percent of our business on healthcare at a time when a rapidly changing marketplace has greater opportunities than ever before.” According to local reports, approximately 840 SHPS employees in Louisville – almost half of its work force – will become ADP employees, though around 650 of those employees will continue to work out of SHPS offices as ADP employees. The acquisition will increase ADP’s Louisville work force to about 1,000.

■ Louisville is one of nine new markets being added by Greyhound Express, a divi-sion of Greyhound that offers nonstop premium bus service between major cities. Last month, Greyhound Express rolled out 260 new city pairs across the eastern United States, creating a network of more than 600 potential city pairs. The company is now

offering service to and from Nashville and Cincinnati from Louisville. Express buses offer free Wi-Fi, power outlets and reserved seating.

■ Bellarmine University has announced plans to begin offering a master of science in taxation degree, designed for practicing accountants and attorneys, financial planners and recent accounting graduates. The 30 credit-hour program will launch this fall, with all classes being held in the evenings and on Saturdays, and can be completed in as little as a year.

■ In its third acquisition so far this year, Louisville-based insurance company Neace Lukens has acquired Arison Insurance Services, a full-service brokerage firm also headquartered in Louisville. With a focus on health, life, dental, vision, disability, and Medicare supple-ments, Arison’s offerings will complement Neace Lukens’ established

employee benefits practice and help the organiza-tion deploy additional services to its existing and prospective clients across the state. Once the acquisi-tion is complete, Neace Lukens will expand its offices in Louisville, Lexington, Pikeville and Bowl-

ing Green and will add Pineville to its network. Neace Lukens, founded in 1991, has more than 150 licensed agents and more than 600 employees operating in 22 offices throughout Kentucky, Ohio, Indiana, Illinois, Michigan, Tennessee, Arizona, Georgia, Arkansas, Florida and South Carolina. Financial details of the acquisition have not been released.

McLEAN/MUHLENBERG COUNTY■ Oxford Mining Co. has laid off 121 workers in McLean and Muhlen-berg counties, according to a report published by The (Owensboro) Mes-senger-Inquirer. According to Oxford officials, the lay-offs were a result of the termination of a contract between Oxford and Henderson-based Big Rivers Electric Co.

NICHOLASVILLE■ MediVet-America, a Nicholasville company that specializes in vet-erinary stem-cell technology and regenerative medicine, has entered into a distribution partnership with Butler Schein Animal Health that will result in the addition of more jobs at MediVet in the coming months. Ohio-based Butler, one of the leading animal health distribu-tion companies in the nation, will sell and distribute MediVet’s stem-cell kits and equipment to more than 26,000 veterinary clinics nationwide. With Butler’s sales staff numbering nearly 400, MediVet anticipates that demand for its products will increase and expects to add five to seven sales jobs and 10 to 20 manufacturing jobs to its existing 12-member work force.

BUSINESS BRIEFS

SEVENTEEN high-tech Kentucky companies will share $6.2 million in state funds as part of a program to sup-port and attract technology-based small businesses.

Through the state’s competitive Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Matching Funds program, Kentucky matches all or part of federal SBIR-STTR awards received by Kentucky-based companies or those willing to relocate operations to Kentucky.

The companies and research initiatives receiving the awards include:

• 3H Co. (Lexington) – $232,212 to develop technology to capture and store carbon dioxide underground that can reduce greenhouse gas emissions from coal-fired power plants and reduce energy loss during the coal capture process.

• Advanced Genomic Technologies (Louisville) – $500,000 to develop laboratory animal models that can be used to pattern sporadic Alzheimer’s disease in humans.

• AllTranz Inc. (Lexington) – $150,000 to develop pharma-ceutical products to treat a variety of neurological disorders.

• Amelgo (Covington) – $100,000 to support the devel-opment of effective non-antibiotic dry-off agents for the dairy industry to reduce disease outbreaks in cows.

• AMT nano (Lexington) – $90,000 to assist in develop-ing multi-functional micro robots for use in medical devices, aerospace and defense applications, and other micro-electri-cal mechanical system projects.

• ATI Inc. (Lexington) – $98,748 to develop aluminum alloy weld wire for products ranging from armored military vehicles to commercial lightweight bikes.

• Bexion Pharmaceuticals Inc. (Covington) – $500,000 to support further development of BXQ-350 for glioblas-toma multiforme (GBM), one of the most common and aggressive brain cancers in humans.

• customKYnetics Inc. (Versailles) – $494,458 to develop an electrical stimulation device for individuals undergoing orthopedic rehab and those with neuromotor disorders.

• Invenio Therapeutics Inc. (Lexington) – $434,480 to develop a therapy for acute myeloid leukemia patients that offers higher potency, lower toxicity and fewer side effects than current treatments.

• NaugaNeedles (Louisville) – $500,000 to develop high-aspect-ratio atomic force microscopy probes.

• nGimat (Lexington) – $750,754 to develop advanced energy storage nanomaterials for use in advanced lithium-ion automotive batteries for electric vehicles.

• Orthopeutics LP (Lexington) – $359,400 to develop and commercialize nonsurgical solutions to treat degenera-tive disc disease and repair damaged tendons and ligaments.

• ParaTechs Corp. (Lexington) – $459,478 to further develop and commercialize a non-surgical assisted-reproduc-tive technology for mice used in biotechnology discovery and development.

• Regenerex (Louisville) – $500,000 for further develop-ment of a bone-marrow cell-processing procedure to help induce patient tolerance following kidney transplantation.

• Tier1 Performance Solutions (Covington) – $396,000 to develop software to support NASA design projects.

• Transposagen Biopharmaceuticals (Lexington) – $500,000 to develop a method to create mutations in the genome of lab rats that can produce models that mimic human diseases in studies to develop new therapies.

• W-Z BioTech (Lexington) – $150,000 to develop a non-surgical medical device to manage heart failure in congeni-tal heart defect patients.

STATE: KY MATCHES $6.2M IN SBIR-STTRFUNDS FOR 17 SMALL HIGH-TECH FIRMS



FORD Motor Co.’s i n v e s t m e n t i n Kentucky ranks as

one of the top 15 cor-porate investment projects in the coun-try, according to Trade & Industr y Develop-ment, a leading maga-zine dedicated to site selection.

The project was selected from among hundreds submitted from across the coun-try to make the top 15

in the corporate investment category. Criteria for judging included the number of new jobs created, number of current jobs retained, unemployment figures, income level of the region and plant closings.

Ford announced in late 2010 an investment of $600 million to transform the company’s Louisville Assembly Plant (LAP) into the company’s most flexible high-volume plant in the world – resulting in a second shift and 1,800 new jobs at the plant. In the fall of 2011, Ford announced a new contract, which workers ratified, that will bring a third shift and another 1,300 jobs to LAP, raising the total new-job count to 3,100.

LOUISVILLE: FORD’S $600M INVESTMENT AMONG TOP U.S. CORPORATE PROJECTS

OWENSBORO■ Owensboro Grain Co. is building a new glycerin refinery in Owens-boro that will provide pure glycerin for the cosmetics market. (Crude glycerin is a byproduct of the biodiesel process.) The highly automated plant, which represents a $15 million to $20 million investment, is scheduled to be operating by summer 2013 and will employ 10 to 12 workers with an average salary of $50,000.

PADUCAH■ The chief executive officer of Dippin’ Dots, a Paducah-based novelty ice cream products com-pany, has resigned as part of a bankruptcy agree-ment to keep the company from being liquidated. Regions Bank, which Dippin’ Dots owes nearly $12 million, Dippin’ Dots founder and CEO Curt Jones was discouraging acquisition offers that would lessen his control over the business and said it would not loan the company any more money until Jones was removed. With Jones’ resignation, an agreement has been reached to keep the company operational until a sale takes place. Jones’ attorney told The Paducah Sun the resignation could put him in a position to buy the company.

WESTERN KENTUCKY■ The state government has awarded an emergency contract to repair and reopen the Eggners Ferry Bridge over Kentucky Lake by Memorial Day in order to alleviate any negative impact on summer tourism, which is a significant part of the area’s economy. The bridge, which carries U.S. 68 and KY 80 across Kentucky Lake between Marshall and Trigg counties, has been closed since Jan. 26, when a cargo vessel struck and tore away a 322-foot-long span of the 80-year-old bridge. The $7 million contract to repair the bridge has been awarded to Hall Contracting of Kentucky Inc. of Louisville.

BUSINESS BRIEFS

Ford Motor Co. is investing $600 million to make the company’s automotive plant in Louisville its most flexible, high-volume plant in the world.

Ford photo



INDIANA■ Roll-Royce is investing $42 million to build a new advanced manu-facturing facility in Indianapolis that will produce components for air-craft engines. The new facility is expected to be operational by 2014 and will create more than 100 new jobs.

■ Amazon.com Inc. plans to locate a new ful-fillment center in Jeffer-sonville, Ind., that will create up to 1,050 new jobs by 2015. The Jeffer-sonville facility is slated to open this fall and will be Amazon’s fifth fulfillment center in Indiana.

■ Employment Plus Inc., a full-service staffing, recruiting and human resources provider, has announced plans to expand its Bloomington headquarters and add more branches across the state, creating up to 307 new jobs by 2015. Employment Plus has more than 100 locations in 17 states and recently opened four new branches in Indiana as part of its expansion.

■ DECA Financial Services, an account receivables management firm for government agencies and corporations, plans to expand its Fishers, Ind., headquarters, creating up to 270 new jobs by 2015.

OHIO■ The Beach Waterpark, a popular tourist attraction located in Mason, Ohio, just north of Cincinnati, announced last month that it would not reopen for the 2012 season. The park’s management attrib-uted the decision to “a challenging competitive and economic climate and changing patron entertainment habits.” The park, which opened in 1985, had operated in the red for the past several years.

■ Cincinnati-based Convergys Corp. has signed a definitive agree-ment to sell its information management business to NEC Corp. for $449 million in cash. Following the acquisition, the IM business and organization will be integrated into NetCracker Technology Corp., a subsidiary of NEC.

TENNESSEE■ After announcing last summer that it was looking to market itself for a potential sale, The Krystal Co., an 80-year-old hamburger chain founded and head-quartered in Chattanooga, Tenn., has been sold to Argonne Capital Group, an Atlanta-based private investment firm. Krystal owns and franchises 360 res-taurants in 11 states throughout the South and has more than 6,000 employees. Officials said the company will remain headquartered in Chattanooga and will continue with new store developments planned for 2012 and beyond.

■ Oxford Diagnostic Laboratories is opening a new lab in Memphis that will create 65 lab processing, medical technology and management positions. The company is the service laboratory division of Oxford Immunotec, a global company that focuses on developing new tests for diseases based on its patented T-SPOT technology.

■ Kyowa America Corp., an automotive supplier that specializes in plas-tic injection molding, is opening a new facility in Portland, Tenn., that will create 160 new jobs. The new facility is expected to open by late summer.

WEST VIRGINIA■ Toyota is investing approximately $45 million to increase the annual production capacity of its six-speed automatic transmission produced in Buffalo, W. Va. The company is adding about 80 new jobs to support the expansion, raising total employment at the Buffalo plant to approxi-mately 1,200. In addition, Bodine Aluminum, which provides transmis-sion cases and housing parts to the West Virginia plant, will also increase capacity to support TMMWV and will add some 25 new jobs.

BUSINESS BRIEFS

VOLKSWAGEN Group of America announced on March 22 that it will

be hiring an additional 800 workers at its plant in Chatta-nooga to help meet growing customer demand for the new U.S.-produced Passat.

“These 800 new positions are a combination of produc-tion and support functions,” said Hans-Herbert Jagla, Volk-swagen executive vice presi-dent of human resources. “We will use this opportunity to hire many of our current Aerotek contract employees. So, Aerotek will be recruiting to fill full-time contract production positions that will open up as a result. We will also be hiring additional supervisors, quality engineers, and professionals in a number of area.”

The job expansion news comes on the heels of an announcement earlier this year in which the company said it would be adding 200 more workers at the Chattanooga plant.

The Volkswagen plant in Chattanooga currently employs more than 2,700 people. According to independent studies, the Chattanooga Volkswagen plant is expected to generate $12 billion in income growth and an additional 9,500 jobs related to the project.

“We have made a commitment to this market, both in terms of products and investment, “ said Jonathan Browning, presi-dent and chief executive officer of Volkswagen Group of America Inc. “Our original commitment to invest $4 billion into the U.S. market continues to grow, with a parts depot announced last week and now another further commitment to employment here in Chattanooga. Quite plainly, we need more Passats to meet the market demand, and I’m glad that we can respond so quickly by adding staff in Chattanooga.”

The plant has been working daily overtime to meet the market demand.

TENNESSEE: VW TO HIRE 800 TO HELPMEET GROWING DEMAND FOR PASSAT

Business news from Indiana, Ohio, Tennessee and West VirginiaINTERSTATE LANE

SUPREME Industries, a manufacturer of customized truck bodies, is investing more than $7 million to expand its operations in Goshen, Ind., where the com-

pany is headquartered and operates the largest of its seven manufacturing sites.

The expansion project involves refurbishing and equip-ping multiple facilities used in the truck and bus production located on the company’s 100-acre Goshen campus.

Supreme, which currently employs 630 people in Goshen and more than 1,600 nationwide, plans to add 350 new jobs in Goshen by 2015 as a result of the expansion.

Founded in 1979, Supreme is known for building and distributing specialized commercial truck bodies and buses, including armored trucks, dry-freight and insulated cargo vans, service vans, shuttle buses and trolleys. Today, the com-pany, which supplies more than 1,000 customers worldwide, has operations nationwide, including seven manufacturing facilities and a service and distribution center. In 2011, the company reported revenues of $301 million.

INDIANA: SPECIALTY VEHICLE COMPANYEXPANSION TO CREATE 350 NEW JOBS

The Volkswagen plant in Chatta-nooga, the world’s only LEED certi-fied Platinum factory, opened in May 2011. The plant produces the popular Passat sedan.

VW p

hoto



A sampling of economic development dataKENTUCKY INTELLIGENCER®

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

0

20,000

40,000

60,000

80,000

100,000



AGRICULTURE■ Donald Durs has been named marketing manager for Monty’s Plant Food Co., a Louisville manufacturer of plant and soil enhancement products.

ARTS■ Jennifer Humphreys has been named director of development for The Speed Art Museum in Louisville.

AUTOMOTIVE■ Shigei Terashi has been named president and chief operating officer of Toyota Motor North America Inc. Terashi will retain his posi-tion as president of Erlanger-based Toyota Engineering and Manufacturing North Amer-ica Inc.

BANKING/FINANCE■ Addam Lewis has been named vice president and retail market manager for First Security Bank, working for the Owensboro-based company out of its Lexing-ton office.

■ Joel Stone has been pro-moted to vice president of the Fifth Third Bank of Kentucky.

■ Tracy King has been pro-moted to vice president-i n v e s t m e n t s a t T h e C u n n i n g h a m F i n a n c i a l Group in Louisville.

■ John L. Gohmann has been named as PNC Bank’s regional president for Lexington and Central Kentucky.

■ Lexington-based Ameri-can Founders B a n k h a s announced the following pro-m o t i o n s : David Verville – vice presi-dent, portfolio manager; Law-rence Weth-erby – v ice p r e s i d e n t , c o m m e r c i a l lender; Ann Renee Camp-bell – assistant vice president, loan process-ing manager; and Andrew Miller – assistant vice president, marketing officer.

■ Phil Campbell has been promoted to vice president-information systems auditor for Louisville-based Republic Bank.

EDUCATION■ Lisa Sons has been named director of the educational talent search program at East-ern Kentucky University.

■ Karunarathna “K.B.” Kulasekera will join the Uni-versity of Louisville School of Public Health and Informa-tion Sciences as the chair of biostatistics and bioinformat-ics. Kulasekera comes to the position from Clemson Uni-versity, where he has served as a professor and graduate pro-gram coordinator of mathe-matical sciences.

FOOD/SPIRITS/HOSPITALITY■ Jason Koval has been named director of investor relations for Louisville-based Brown-Forman Corp.

■ Kimberley Bennett has been named director of the Jim Beam Heritage Center in Clermont.

GOVERNMENT■ Steve Conrad has been named chief of the Louisville Metro Police Department. The Lou-isville native comes to position from Arizona, where he was the Glendale chief of police.

■ John T. Ward has been named executive direc-tor of the Kentucky Horse Racing Commission.

■ Jerry F. “Freddie” Lewis Sr. has been named executive director of the Kentucky Office of Mine Safety and Licensing.

■ Robert F. Scott has been named director of Kentucky’s Division of Abandoned Mine Lands. Scott succeeds Steve Hohmann, who was named commissioner of the Kentucky Depart-ment for Natural Resources earlier this year.

■ Audrey Tayse Haynes has been appointed secretary of the Kentucky Cabinet of Health and Family Services.

HEALTHCARE■ Jacob Bast has been named chief operating offi-cer of St. Elizabeth Physi-cians, in Crestview Hills.

■ Dr. James Mumford has been named medical director of Passport Health Plan.

INSURANCE■ Humana Inc. has promoted Thomas J. Liston to presi-dent of the company’s retail segment.

LEGAL■ Ross D. Cohen and Peter L. Thurman Jr. have been named partners at Bingham Greenebaum Doll LLP. Both Cohen and Thurman are based in the firm’s Louis-ville office.

MEDIA■ Dr. David Keeling, professor and head of the department of geography and geology at Western Kentucky University, has been appointed as the North American editor of the Journal of Transport Geography.

TECHNOLOGY■ Devin Herper has joined Lexington-based SDFblue LLC as director of security and com-pliance.

■ George McGourty has been appointed chief sales officer for Paducah-based Com-puter Services Inc. (CSI)

TELECOMMUNICATIONS■ Verizon Wireless has pro-moted Marion Nolan to asso-ciate director for strategic sales in Kentucky.

OTHER■ Greg Hydes has been named vice president of oper-ations planning at Lexington-b a s e d C L A R K M a t e r i a l Handling Co. Hydes will over-see the transition to and opening of CLARK’s new fac-tory in Mexico.

■ Lexington-based Office Suites PLUS has announced the following appointments: Ryan Harris – director of real estate; Gina L. Whitis – director of accounting; and Seth T. Newton – director of information technology.

Donald Durs

New leadership for Kentucky businessesCORPORATE MOVES

DEPARTURES■ William F. Pollard is stepping down as vice presi-dent and dean of the col-l e g e a t Tr a n s y l v a n i a University, effective July 31.

■ John Bendoraitis, presi-dent of Erlanger-based Comair, has resigned to accept the position of chief operating officer for Frontier Airlines.

■ William B. Drake Jr. has stepped down from his position as president of Midway College, where he has served since 2002.

■ Harold Workman has announced plans to retire as president and CEO of the Ken-tucky State Fair Board, effective Dec. 31.

■ University of Kentucky Provost Kumble Subbaswamy will be leaving his position to become chancellor of the University of Mas-sachusetts at Amherst, effective July 1.

AddamLewis

Tracy King

LawrenceWetherby

DavidVerville

AndrewMiller

Ann ReneeCampbell

PhilCampbell

LisaSons

Karunarathna Kulasekera

JacobBast

Dr. JamesMumford

WilliamPollard

MarionNolan

GinaWhitis

SethNewton



AMERICAN BAR ASSOCIATION■ Robert L. Brown, a partner in the Louisville law office of Bingham Greenebaum Doll LLP, has been named mem-bership officer-elect of the American Bar Association’s Section of International Law.

BANK OF THE BLUEGRASS■ Lynne Walker McNees has joined the advisory board of Bank of the Bluegrass & Trust Co. McNees is president of the International SPA Association.

BIG SANDY COMMUNITY AND TECHNICAL COLLEGE■ April Preece, of Lovely, and Justin Roark, of Salyersville, have been appointed to the board of directors of Big Sandy Community and Technical College.

BLUEGRASS SPORTS COMMISSION■ The Blue-grass Sports Commission has added the following indi-viduals to its board: Darren Bilberry, assis-tant commis-sioner of the K e n t u c k y High School Athletics Asso-ciation; Sally H a m i l t o n , commissioner of general ser-vices for the L e x i n g t o n -Fayette Urban County Gov-e r n m e n t ; Cindy Jaco-belli, director of athlet ics a n d r e c r e -ation at Cardi-n a l H i l l Rehabilitation Hospital; Dan McBride, associate athletics director for exter-nal relations at Eastern Kentucky University; John Nicholson, executive director of the Ken-tucky Horse Park; and Bryan Pettigrew, senior vice president of the National Thoroughbred Racing Association.

BLUEGRASS TOMORROW■ T. Bruce Simpson Jr., an attorney with the Lexington firm of McBrayer, McGinnis, Leslie & Kirkland, has been elected to the board of direc-tors for Bluegrass Tomorrow.

CENTER FOR RURAL DEVELOPMENT■ Michael Calhoun, special assistant for alumni relations at Georgetown College, has been appointed to serve on the exec-utive committee of the board of directors for The Center for Rural Development.

COMMERCE LEXINGTON■ The follow-ing individu-als have been named to the e x e c u t i v e board of Com-merce Lexing-t o n I n c . : Chair – Jeri Isbel l , Lex-mark International; Chair-elect – Danny Mur-phy, University of Kentucky College of Law; Immediate Past Chair – Harry T. Richart III, PNC; Treasurer – Laura Boison, U.S. Bank; General Counsel – Kenneth R. Sagan, Stites & Harbison; and Secretary – Robert L. Quick, Commerce Lexington Inc.

COVINGTON BUSINESS COUNCIL■ Mark Calitri and Bob Berendsen have been named to the board of directors of the Covington Business Council. Calitri is director of sales for the Holiday Inn Riverfront in Cov-ington. Berendsen is the owner and operator of Berendsen & Associates, a firm that repre-sents creative illustrators and photographers around the world.

KENTUCKY COMMISSION ON COMMUNITY VOLUNTEERISMAND SERVICE■ The Kentucky Commission on Community Volunteerism and Service has elected Daron Jordan as commission chairman and DeAnna Brangers as vice chairwoman.

KENTUCKY HUMANITIES COUNCIL■ Brian T. Burton and Mary Elizabeth Ham-mond have been appointed to serve on the Kentucky Humanities Council. Burton, of Lex-ington, is an investment adviser with PNC Bank. Hammond, of Paducah, is executive director of the Paducah/McCracken County Convention and Visitors Bureau.

KENTUCKY SPORTS AUTHORITY■ Douglas R. Hall, Wade Houston Sr., Janna M. Clark and Stephen N. St. John have been named to the Kentucky Sports Authority. Hall, of Louisville, is executive vice president with Evergreen Rehabilitation. Houston, of Prospect, is the executive vice president of Houston-Johnson Inc. Clark, of Elizabethtown, is sports and sales director for the Elizabethtown Tourism Bureau. St. John, of Pikeville, is general manager of the East Kentucky Exposition Center.

LEXINGTON-FAYETTE URBAN COUNTY AIRPORT BOARD■ Chuck Ellinger has been appointed to the Lexington-Fayette Urban County Airport board. Ellinger is an attorney and also serves on the city council of the Lexington-Fayette Urban County Government.

LOUISVILLE ARENA AUTHORITY■ Timothy M. Mulloy has been appointed to the board of directors for the Louisville Arena Authority. Mulloy is CEO of Peritus Public Relations in Louisville.

LOUISVILLE BAR ASSOCIATION■ Jennifer Y. Barber has been appointed to serve on the Louisville Bar Associa-tion’s board of directors. Bar-ber i s an a t torney wi th Bingham Greenebaum Doll’s Louisville office.

MADISONVILLE COMMUNITY COLLEGE■ Cheryl D. Moore, clinical laboratory coordi-nator for Trover Health System, has been appointed to the board of directors of Madi-sonville Community College.

MICROSOFT ADVISORY COUNCIL■ Tim Arthur, chief information officer for Nich-olasville-based Alltech, has been selected to serve on the Microsoft U.S. CIO Advisory Council.

NATIONAL ASSOCIATION OF HOME BUILDERS■ Chuck Kavanaugh, executive vice presi-dent of the Home Builders Association of Lou-isville, has been named as the 2012 president of the executive officers council for the National Association of Home Builders.

NATIONAL INSTITUTE ON ALCOHOL ABUSE AND ALCOHOLISM■ Dr. Craig J. McClain, professor of medicine at the University of Louisville, is one of four new members appointed to the National Advi-sory Council on Alcohol Abuse and Alcohol-ism of the National Institute on Alcohol Abuse and Alcoholism.

NATIONAL EQUINE LAW CONFERENCE■ Laura D’Angelo, a partner in the Dinsmore law firm’s Lexington office, has been elected chair of the University of Kentucky College of Law National Equine Law Conference.

PREMIER■ Vicki A. Darnell, president and CEO of Ephraim McDow-ell Health in Danville, has been appo in ted to the national quality improvement committee for Premier, a per-formance improvement alli-ance of more than 2,500 U.S. hospitals and 80,000-plus other healthcare sites.

REGIONAL CANCER CENTER CORP.■ Sherri Black, Campbell Brown and Mary Griffith have been named to the board of directors of the Regional Cancer Center Corp., a community advisory group that provides advocacy and support for the James Graham Brown Cancer Center. Black is the owner of Black Box Inc. Marketing and Advertising in Louisville. Brown is director – Southern Com-fort Americas and vice president of Brown-For-man Corp. Griffith is the former senior associate vice president for communications and marketing at the University of Louisville.

Kentuckians named to organizational leadership rolesON THE BOARDS

JenniferBarber

Vicki Darnell

RobertL. Brown

Lynne WalkerMcNees

SallyHamilton

DarrenBilberry

DanMcBride

CindyJacobellie

BryanPettigrew

John Nicholson

T. BruceSimpson Jr.

MichaelCalhoun

DannyMurphy

Jeri Isbell



Kentucky’s leaders express their opinionsLANE ONE-ON-ONE

Ed Lane: You were appointed president of AT&T Kentucky in early 2009 and oversee regulatory, legislative and com-munity affairs in the state. Could you further elaborate about your job duties and responsibilities?Mary Pat Regan: I have responsibility for regulatory and external affairs teams. The external affairs team works out in the communities and in Frank-fort. It monitors bills that are being moved through the Kentucky General Assembly. Our team defends and pro-tects if there are potential adverse implications to AT&T or our custom-ers. It also runs bills like the moderniz-ing telecom laws that passed in 2004 and 2006. The external affairs manag-ers also have responsibility in the com-munities for volunteer and foundation check presentations.

The regulatory team is responsible for dealing with the Public Service Com-mission, in implementing any laws and providing reports. Basically this team keeps AT&T on the straight and narrow, and in compliance with applicable laws.

EL: One industry trend seems to be for wired telephone systems to bundle with other IT service providers to provide a package of services to compete with cable broadband providers. What are

future trends in this segment of the tele-communications industry? MR: Customers are really demanding ser-vice packages. They want a one-stop shop, so AT&T’s products and services are in response to our customer’s needs. Our competitors are also offering packages.

EL: What is the lowest cost for AT&T’s wireless and landline services in Kentucky? MR: A low-income family can qualify for (government-supported, discounted) Lifeline service available from AT&T. A qualified family gets a credit off its bill.

The least expensive landline plan with the Lifeline credit is $15.90, while the least expensive price for wireless service with a Lifeline credit is $16.74. For anyone, the least expensive wireless option is our prepaid service that allows purchase of $100 worth of airtime that is good for one year; that works out to an effective rate of $8.33 per month.

EL: How are taxes for communications services regulated in Kentucky?MR: Pass-throughs of federal or state levies are governed either by the Federal Com-munications Commission or the Kentucky PSC. AT&T is not considered a utility. Probably the biggest misconception is that AT&T is a utility, and it is not. The commu-nications market is highly competitive.

The PSC does not regulate wireless service, but consumer protections still apply. The PSC has jurisdiction over 15 percent of the landlines that are left. AT&T was first unregulated in 2004, then again further in 2006 (by the Ken-tucky Emerging Technology and Con-sumer Choice Act).

AT&T can set its own rates without getting PSC approval, but the market really drives the price.

EL: Recent Kentucky Senate Bill 12 (formerly SB135) to further deregulate AT&T’s telecommunication services did not pass the Kentucky General Assem-bly. What were the key issues regarding AT&T’s proposal to modify its basic services?MR: The goal of the bill was to modernize telecom law. There are existing laws and requirements that only apply to telecom-munications companies and don’t make sense in the world we are living in today. AT&T wants a basically level playing field and the ability to take investments into products and services that people want. Consumers are looking for wireless broad-band voice service. AT&T’s goal is to invest in both broadband and wireless in the rural communities and give people in rural areas the same opportunities that are available in urban areas.

I think there was confusion about SB12 because the legislation was origi-nally proposed under one number, but that bill was not officially rolled out. AT&T worked with the Kentucky Resource Council, the League of Cities, the PSC, AARP and other groups to get their input on the first language, and also with legislators on issues they may have considered to be problematic. The origi-nal bill as it was first written wasn’t the same as SB12; there was confusion about the bill. Basically, we just ran out of time.

I believe there was concern that AT&T was going to take phone service away from people. If our customers have phone service today, they will have it tomorrow. Look at any other state that has passed this legislation, and no one has lost phone service.

Our Kentucky team definitely wants to bring more investment and jobs to Kentucky. What concerns me is that AT&T Kentucky has to compete for (company) capital against 50 other states (in which AT&T does business). Telecom modernization bills passed in Indiana, North Carolina and Tennessee. When I go to compete for capital invest-ment in Kentucky, it may instead be invested in states where there is a posi-tive business climate and AT&T can invest with certainty. It really gets down to: Do you really want to keep investing

‘KENTUCKY IS USING ALL THERIGHT TOOLS TO GROW ITS ECONOMY’AT&T Kentucky President Mary Pat Regan discusses the company’s services, future growth and planned capital investment in Kentucky

BY ED LANE

Mary Pat ReganAs president of AT&T Kentucky, Mary Pat Regan oversees the company’s regulatory, legislative and community involvement in the commonwealth and works closely with both government and private-sector business lead-ers regarding telecommunications technol-ogy. Regan, whose office is located in Louisville, also directs AT&T’s many civic and philanthropic endeavors in Kentucky. She currently chairs the Greater Louisville Inc. board of directors, is leading the current Lou-isville Metro United Way annual fundraising campaign, and serves on the board of direc-tors for numerous Louisville and Kentucky organizations. In 2011, she was named to Louisville Magazine’s annual list of the 50 most influential people in Louisville. A gradu-ate of the University of Wisconsin, Madison, Regan has served in her current role since 2009. She came to Kentucky from Chicago, where she was executive director of regula-tory affairs for AT&T Illinois.



in a network that people don’t want, or do you want to invest in the future – wireless broadband phones, what con-sumers are demanding.

EL: Last June, AT&T announced plans to invest $525 million into its land lines and wireless networks over the next three years. How will these funds be used?MR: Actually the updated amount is $600 million, and it’s not only for main-tenance of landlines but also for bring-ing 3G and 4G (network services), expanding broadband in rural areas and building cell towers.

The $600 million capital investment is not enough to keep up with the demand for faster data speeds. In 2006, when the telecom law was updated, the iPhone (whose apps generate high data usage) hadn’t even been rolled out yet. So that’s the kind of data explosion tele-com is experiencing.

EL: How significant was AT&T’s strategic relationship with Apple to introduce the iPhone and iPad to its customer base?MR: Apple has been a fantastic product, but no one could have predicted at the time how many people would use it to download movies, books and applications.

The explosion has created an 8,000 per-cent increase in data usage during the last couple of years. AT&T has kept building more infrastructure to boost its service capacity. (The company invested $20 bil-lion in 2011.) That’s why the T-Mobile merger was so critical to AT&T, because there’s only a limited amount of (wireless data) spectrum, and we need that spec-trum to be able to provide the speeds that people want. Data growth is just going to keep escalating. Unfortunately, the T-Mobile merger went sideways. (AT&T officially terminated its $39 billion plan to buy T-Mobile on Dec. 19, 2011.)

EL: Do you see a future merger?MR: I’m not privy to that, but I antici-pate as a corporation AT&T will be look-ing at ways of gaining spectrum because it has to have it. But as far as a merger, no new deals have been announced.

EL: When AT&T builds a cell tower, will it share the structure with a competitor?MR: It depends. There are areas where it makes financial sense for AT&T to share the cost, and other competitors may use our facilities. And there are other areas where it makes sense for us to exclusively own our tower.

EL: How does AT&T manage day-to-day technical operations in Kentucky?MR: There are different AT&T organi-zations, and each one reports up to a different manager. I report up into our Washington, D.C., office. My boss’s boss is also in D.C., and he reports to Randal Stephenson (chairman, CEO and presi-dent of AT&T Inc.) in Dallas. The (tele-phone and data) network team reports up through Dallas. The head of each AT&T management group is either located in Dallas, Connecticut or Wash-ington, D.C.

EL: How many people work for AT&T in Kentucky?MR: In June 2011, AT&T Kentucky employed over 3,200 employees. In 2010 , AT&T’s Kentucky payro l l exceeded $194 million and its opera-tions generated more than $197 mil-lion in Kentucky taxes. We also operate 23 company-operated retail locations in the state.

EL: How many customers does AT&T serve in Kentucky, and what is the com-pany’s share of the state’s telecommuni-cations services?MR: That information is proprietary.



EL: There are time periods when custom-ers experience dropped calls or weak sig-nals. What are the primary factors that cause dropped service, and what is AT&T doing to resolve this issue?MR: A cell tower’s capacity could be an issue or a cell tower’s signal may not extend to the next tower. I know for a fact while driving back and forth from Lexington to Louisville there are areas where there’s a drop. We’re identifying areas where the network needs improvement. Part of the capital investment plan is to reduce dropped calls. I am happy to report you can now drive the Bluegrass Parkway (Ver-sailles to Elizabethtown) pretty much the whole way without a dropped call.

EL: How can wireless users help AT&T identify cell phone dead spots in Kentucky?MR: They can call into the customer ser-vice center or call into our offices in Louis-ville. There’s also a free app to identify AT&T’s poor service areas. When you get on the app, it will record the spot where the call was dropped and advise AT&T.

EL: How does the wireless network accommodate communities that have large seasonal increases in wireless demand due to educational facilities, venues for special sports and entertain-ment events, or seasonal tourism?MR: AT&T brings in COWs (cell towers on wheels), or we can bring in other equip-ment. We work with the mobility team on special events to provide adequate services. I’m sure in New Orleans at the NCAA tour-nament, AT&T positioned COWs and gen-erators to boost capacity. AT&T can mobilize where it needs to. If a tornado hits one of our towers, we can bring in a mobile tower while the damaged one is being repaired. AT&T can do that all over the

world. The past year has been the worst weather in the South, and we’ve been mobilizing people and technicians all over.

AT&T was the first private company to be certified for the Federal Emer-gency Preparedness Program. We’ve done a couple demonstrations: The last one was in Atlanta, and it’s very impres-sive how the program can maintain or recover communications services follow-ing natural or man-made disasters.

EL: Who are AT&T’s major wireless and landline competitors in Kentucky?MR: Insight (recently purchased by and now converting to Time Warner), Veri-zon, Windstream, Bluegrass Cellular and the rural carriers. The marketplace is very competitive.

EL: You are active in Greater Louisville Inc., the Kentucky Chamber of Commerce and the Bluegrass Economic Advance-ment Movement (BEAM) as well as a num-ber of not-for-profit and educational entities. How do you rate the performance of GLI and the Kentucky Chamber?MR: I would say that both organizations are really doing a great job. GLI has been very effective with its 55,000 Degrees pro-gram in education, the Ohio River Bridges Project, logistics, and bringing in new Ford and GE product lines. The Kentucky Chamber has been very effective in Frank-fort. (President/CEO) Dave Adkisson has done a fabulous job leading the Kentucky Chamber. Both organizations have a focus on recruiting jobs and investment, and creating a pro-growth business environ-ment throughout the state.

EL: The BEAM mission is to create a super region comprised of the Greater Louisville and Lexington trade areas (and counties

located in between) in which to provide advanced manufacturing opportunities for companies from around the world. When will this initiative become more formalized and active?MR: I attended my first BEAM meeting the other day at the Kentucky Historical Society (office in Frankfort), and one of the issues people focused on is that Ken-tucky doesn’t have enough people with the skill sets needed to attract advanced manufacturing. So it’s important to communicate to students that it’s criti-cal to get a postsecondary degree.

A BEAM report will be coming out later this summer, and there are going to be additional meetings with small groups.

EL: AT&T’s Kentucky headquarters are located in Louisville. Do you have a comment about Louisville Mayor Greg Fischer’s performance?MR: Mayor Fischer is doing a fantastic job. He’s very pro-business, inclusive of every-one in the community, and very focused on compassion and giving back to the city.

EL: Do you have a closing comment?MR: Kentucky is using all the right tools to grow its economy. There’s a great pub-lic-private partnership effort throughout the state. Kentucky business and political leaders all have the same goal: to move Kentucky forward. They may not agree on how to get there, but everyone’s focused in the right direction. Kentucky is a great state. I’ve only been here three years, and I call it home. ■

LANE ONE-ON-ONE

Ed Lane ([email protected]) is chief executive of Lane Consultants, Inc. and publisher of The Lane Report.

Realty Research.indd 1 3/10/12 11:18 AM





TOURISTS go to New York to see Times Square and the Statue of Liberty. Florida has Walt Disney World. Califor-nia, the top state at attracting

travel dollars, has Hollywood, the iconic Golden Gate Bridge and the photo-op-at-every-bend Pacific Coast Highway.

Kentucky Department of Travel and Tourism officials want to make one thing perfectly clear, though: From Wickliffe to Warfield, the Bluegrass State has its own long list of unique attractions blending world-class destina-tions like the Kentucky Derby and Mam-moth Cave National Park with heartland must-sees such as Abraham Lincoln’s birthplace, the Kentucky Horse Park and Shaker Village.

Some of the state’s attractions can be categorized as offbeat curiosities with niche appeal. This year’s 85th anniver-sary of the “invention” of the Hot Brown open-face sandwich at Louisville’s Brown Hotel likely won’t have a measur-able impact on Kentucky tourism. Like-wise for visitation to the Monte Cassino Chapel in Crestview Hills, a 6- by 9-foot

stone structure identified by Ripley’s Believe It Or Not in 1922 as the world’s smallest church.

Combine all tourism and travel, how-ever, and you have the state’s No. 3 sec-tor in terms of overall economic impact.

It was an industry with an $11.3 bil-lion economic impact in 2010 (the most recent statistics available), according to Cabinet for Tourism, Arts and Heritage estimates. Those tourism dollars could represent as much as 7 percent of the state’s $163 billion gross state product.

The 2010 travel and tourism dollar figure, an increase of 5 percent over 2009, includes both direct expenditures such as lodging, meals and shopping by visitors as well as in-state expenditures by people who are employed in the travel and tourism industry.

Cabinet Secretary Marcheta Sparrow in a statement released last May said tourism and travel were the source of 169,258 jobs in the state in 2010, up more than 2,600 from 12 months ear-lier. Those jobs generated more than $2.5 billion in estimated Kentucky wages, and tourism generated $1.188

billion in tax revenues for local and state governments.

State officials are actively working to build the sector.

Earlier this year, the Department of Travel and Tourism launched the “There’s Only One” media campaign to emphasize that the commonwealth is laden with eas-ily driveable destinations that don’t require a $200-a-night hotel room, a $650 plane fare or $75 admission ticket. The department has ear-marked $1.3 million – nearly half its $3 million marketing budget for 2012 – for the campaign, according to Gil Lawson, communications director for the Cabinet of Tour-ism, Arts and Heritage, parent agency of the department.

“It’s a very warm advertising cam-paign (and) has a good call to action,” said Sparrow. “We think it kind of sets Kentucky apart – There’s Only One – things you can’t find anywhere else.

“A lot of states have caves, but no other state has the largest cave system in the world with Mammoth Cave National Park.

“A lot of states have museums, but no place has the world’s largest baseball

COVER STORY

On the Road to Growth

Kentucky’s $11 billion travel and tourism industryhas a ‘unique’ plan to meet pent up demand

BY GREG PAETH

The 98-year-old Belle of Louisville steamboat cruises from Waterfront Park in downtown Louisville.

Marcheta Sparrow, Secretary, Cabinet for Tourism, Arts and Heritage

Young visitors admire an exhibit at the Frazier History Museum in downtown Louisville, which has had more than 1.5 million visitors since opening in 2004.

Louisville Convention and Visitors Bureau photos



bat,” Sparrow said, referring to the 120-foot-long specimen leaning against Louisville Slugger museum in Louisville.

“No one else has Muhammed Ali. No one else has Kentucky Fried Chicken – and the Colonel,” she said, referencing Muhammed Ali Center in Louisville and the global KFC restaurant chain whose roots originated at Harland Sanders’ Corbin service station in 1930. “Lots of communities have things that are one of a kind.”

The state is very conscious of change in the industry, Sparrow stressed, and is concentrating much of its marketing on the Internet and social media, especially influential Facebook.

Also evolving is an effort to satisfy a growing demand for non-“passive” attractions.

“We are still in the development phase of adventure tourism. We’re see-ing a lot of tourism development around that,” Sparrow said in a recent interview. “We’ve had two or three zipline adventures come online in the past year, and there’s a lot of buzz on trail development for horseback riding and hiking and biking. We’re also work-ing hard on what we call ‘blue water trails’ – canoeing and kayaking opportu-nities all across the state.”

Bourbon packs a tourism wallopOne of the 31 “There’s Only One” attractions may be unique for its admo-nition that it should be experienced “responsibly.”

The Kentucky Bourbon Trail, which links six Central Kentucky distilleries for a two-day tour, and its independent Louis-ville offshoot – the “Urban Bourbon Tour” – are part of what the state refers to as “Bourbon Country,” an umbrella term that covers the explosive growth of “bourbon tourism” throughout the commonwealth.

“The Bourbon Trail has so much poten-tial, and it’s becoming so popular. It’s something that is really having an impact in the areas it touches,” Sparrow said.

Interest extends far beyond the state, especially since CNN International in February selected the trail one of “10 Classic American Experiences,” a desig-n a t i on s hared w i th iconic attractions such as a road trip on U.S. Route 66, enjoying jazz in New Orleans, or a grandstand seat for a NASCAR race.

“This is helping to change the face of the Kentucky tourist over-night. We’re becoming known as the Sonoma of the South,” said Eric Gregory, president of the Kentucky Dis-tillers’ Association. The Sonoma refer-ence is to California wine country tourism that has become a multibillion-dollar industry. Interest in the Bourbon Trail

There’s Only OneKentucky is home to many unique places and attractions that can’t be found anywhere else. The commonwealth’s There’s Only One tourism campaign focuses on these 31:

• American Saddlebred Capital of the World – Shelbyville

• Belle of Louisville, National Historic Landmark – Louisville

• Birthplace of Abraham Lincoln – Hodgenville

• Birthplace of Bluegrass Music, Bill Monroe – Rosine

• Birthplace of Jefferson Davis – Fairview • Birthplace of Loretta Lynn – Country

Music Highway – Butcher Hollow• Bourbon Country – Central Kentucky • Cumberland Falls, Niagara of the

South – Corbin • Cumberland Gap National Historic

Park – Middlesboro • Home of the Kentucky Derby,

Churchill Downs – Louisville• Horse Capital of the World –

Lexington• Houseboating Capital –

Lake Cumberland• International Barbecue Festival –

Owensboro • International Bluegrass Music

Museum – Owensboro• Kentucky Derby Museum – Louisville • Kentucky Horse Park – Lexington• Land Between the Lakes National Rec-

reation Area – Golden Pond• Lost River Cave – Bowling Green• Louisville Slugger Museum

and Factory – Louisville• Mammoth Cave National Park –

Cave City• Monte Cassino Chapel – Crestview Hills• Muhammad Ali Center – Louisville • My Old Kentucky Home – Bardstown• National Corvette Museum –

Bowling Green • National Quilt Museum – Paducah • Red River Gorge – Slade • Rosemary Clooney House – Augusta • Sanders Café – Corbin• Shaker Village of Pleasant Hill –

Harrodsburg • St. Mary’s Cathedral Basilica of the

Assumption – Covington• World’s Championship Horse Show –

Louisville

Eric Gregory, President, Kentucky Distillers’ Association

Kentucky industry officials are in the development phase of adventure tourism attractions in the state and plan “blue water trails” for kayaking and canoeing.



that KDA created in 1999 has grown so quickly that distillers in January hired a manager to oversee it, Gregory said.

Gov. Steve Beshear called the industry “a homegrown gem and a bright spot in a struggling economy” at a February news conference unveiling a KDA study of bour-bon production’s impact on the state economy. Louisville Mayor Greg Fischer said bourbon “isn’t just a drink anymore. It’s a culture, a lifestyle and an essential part of our tourism efforts.”

In 2011, 450,000 people visited at least one of the six stops, said Adam Johnson, the new trail manager.

“We’re on an upward trajectory. The numbers for January (2012) were 51 percent over January of last year,” John-son said.

Many visitors express interest in the esoteric art of bourbon making and a con-noisseur’s knowledge of the distinctive fla-vors of each distillery’s inventory. But it’s clear some tourists are just looking for an opportunity to drink bourbon.

“One guy who called from New York said he was planning to bring a motor coach for a bachelor party,” Johnson said.

In 2007, KDA created a promotional passport and promised free T-shirts for anyone collecting official stamps from each trail distillery. Roughly 200 people completed the circuit the first year, Gregory said, but by 2011 that number had exploded to nearly 12,000.

The financial analysis for the distill-ers’ group estimates about 25,000 peo-ple filled passports the past four years, creating an $18.5 million economic impact.

Authored by University of Louisville economist Dr. Paul Coomes, the study reports the distilled spirits industry’s value at about $1.8 billion in 2010 – more than 1 percent of that year’s $163.3 billion “gross state product” and more than twice the 1997 figure.

From 1999 to 2010, bourbon produc-tion more than doubled to 787,000 bar-rels, according to the association, which also likes to mention Kentucky has a bourbon inventory of 4.7 million barrels compared to a population of just more than 4.3 million.

Mild winter bodes well for 2012Although a variety of state sources identi-fied travel and tourism as the No. 3 indus-try in Kentucky, there is less certainty about which industries rank above tourism. One state source pointed to U.S. Department of Labor research indicating the broad cate-gory of “Trade, Transportation and Utili-ties” (364,700 jobs) is the commonwealth’s largest economic sector, followed by “Edu-cational and Health Services” (255,700). However, economic impact figures were not available.

Secretary Sparrow and cabinet spokesman Lawson said they do not have a list of the top 10 attractions in the state.

It’s safe to assume, though, that the biggest event every year is the Kentucky Derby and the Kentucky Derby Festival that leads up to it, Sparrow said. A study released in January by the festival’s orga-nizers said that two-week event has an economic impact of $128 million. No dollar figure was available on the value of the Derby itself.

The economic impact report for 2011 was still being compiled last month, Spar-row said. But despite economic struggles throughout the country, she believes Ken-tucky’s travel and tourism industry will show modest growth for last year.

“From all indications, we think we are probably going to be up a bit, not a great deal,” she said. “We had a really good winter in terms of travel – the best three months of visitation and revenue that we’ve seen in the past five years.”

The mild winter, Sparrow pointed out, was an important factor in the strong numbers for months that are typically the doldrums for tourism and travel.

She was cautiously optimistic about growth for 2012.

“All the indicators look good for the year,” said Sparrow. “I think our tourism industry remains strong in the heart of the country. A visit to Kentucky is very economical. Our tourism attractions

have maintained their attendance; our hotel occupancy has stabilized and grown at a good rate.

“However, the big unknown factor for Kentucky this year is the price of gasoline. We do not know how that will affect our tourism economy.”

The industry tends to thrive on upbeat attitudes.

Mary Hammond, pres-ident of the Kentucky Association of Convention and Visitors Bureaus, also voiced optimism for the 2012 tourist season.

“I saw something the other day that said we have gone from (customer attitudes of) ‘We can’t,’ to ‘We shouldn’t’ to ‘We’re out of here’ with our travel plans,” said Hammond, who is executive director of the Paducah Convention and Visitors Bureau.

For example, she said, preliminary reg-istration numbers for one of the biggest events in her region, the American Quil-ter’s Society show in late April, are running ahead of last year’s pace for an annual event that revolves around Paducah’s National Quilt Museum.

Hammond also stressed the impor-tance of online marketing.

“People are very savvy today because of the Internet and they want to be assured of the quality of the attraction – make sure that what’s advertised is really there,” Hammond said. “And peo-ple are looking for value-added attrac-tions. Everybody wants to make sure that they’re getting something good for their dollars.”

That includes commonwealth tour-ism officials.

In February, they quickly canceled a $180,000-a-year contract to promote travel to Kentucky in the United Kingdom when London-based Gosh P.R.’s website was found to include inaccurate information and suggest a game of “Roadkill Bingo” –

COVER STORY

Mary Hammond, President, Kentucky Association of Convention and Visitors Bureaus

Bourbon tourism in Central Kentucky is an exploding category. The Kentucky Bourbon Trail launched by the Kentucky Distillers Association in 1999 had at least 450,000 visitors to its six official members in 2011.

A bartender performs for visitors at Jockey Silks Bourbon Bar in the Galt House hotel. The bar is among the nine members of the Urban Bourbon Trail in Louisville, which markets itself as the entry to the Kentucky Bourbon Trail.



recording the number of dead animals along the highway – as entertainment for visiting motorists. Gosh compounded its poor decision-making with promotional references to unflattering stereotypes. Tourism Commissioner Mike Cooper resigned his state post after news that Gosh P.R. had paid $735 of his expenses during an unofficial visit to London last June.

Pent-up demand, but watch gas pricesAfter a recession that’s been painful for many Americans, travel and tourism business officials believe there’s pent-up demand to get out of town.

“A lot of people feel that they want to take the vacation that they are due – that they have worked hard for the last four years,” said Kay Berggren, president and CEO of the Ken-tucky Travel Industry Association.

Today’s Baby Boom generation and their children have different expectations than their parents, who “didn’t travel because they saved,” Berggren said. “This generation believes it is their right (to travel). It’s part of who we are.”

Attendance last October at the Ken-tucky Travel Industry Conference in Lexington indicated optimism in the industry for 2012, she said. Nearly 450 people participated, a sharp 41 percent increase from four years earlier when recession doom and gloom limited attendance to 318.

Sparrow’s guarded optimism about the 2012 season mirrors that of the Washington, D.C.-based U.S. Travel Association, which tracks the industry and lobbies on its behalf.

“Recent news generally paints a more posit ive economic picture, although some uneasiness remains,” the association stated in its monthly outlook report for March. “As we head into the spring and the heavy summer travel booking season, all eyes will be on con-sumers’ leisure travel plans. Will rising gasoline prices reverse positive attitudes and intentions developing among would-be travelers? Stay tuned...”

Sparrow said Kentucky doesn’t rou-tinely measure itself against other states’ tourism revenues because it’s difficult to find apples-to-apples com-parisons. States with big populations and big cities and major national parks have a huge advantage. It should be no surprise that California, Florida, New

York and Texas rank one through four in the travel association’s report on travel and tourism spending. But Illi-nois, a state that seems bereft of must-see attractions, edges out Nevada (Las Vegas) for a fifth-place ranking, pri-marily because of business and leisure travel to Chicago, the country’s third largest city.

According to the U.S. Travel Associa-tion, Kentucky ranks 29th in terms of travel-tourism revenue with about $7.3 billion for 2009, the most recent year the association has analyzed. California was the clear No. 1 with $89.2 billion in expenditures while Delaware came in last with $1.4 billion. ■

Greg Paeth is a correspondent for The Lane Report. He can be reached at [email protected].

The annual Kentucky Derby at Churchill Downs is world famous and last year attracted about 165,000 to the track on Derby Day. The first-Saturday-in-May tradition is preceded by a two-week Kentucky Derby Festival.

Kay Berggren, President/CEO, Kentucky Travel Industry Association



COULD changing a few light bulbs and switching off some computers help Kentucky industries and manufactur-ers lessen the potential blow

of rising energy costs?Not exactly, but with coal prices on

the rise, new emissions standards being enacted on power pro-ducers by the federal Environmental Protec-tion Agency, and the price of electricity being p r o j e c t e d t o c l i m b , power usage is being put under the microscope in the state.

“ I f y o u ’ r e s m a r t , you’re looking at the u n c e r t a i n t y o f t h e (energy) rates going for-ward,” said attorney Ken-neth Gish Jr., who is a

Lexington-based member of the Envi-ronmental, Natural Resources and Energy Service Group with Stites & Har-

bison PLLC. “If you’re not thinking about this as a business now, you’re behind the curve.”

Electricity production in Kentucky is 92 percent coal-fired, according to Ken-tucky Association of Manufacturers President Greg Higdon.

That means there’s a strong financial impact as the EPA monitors and administers programs under the Cross-State Air Pollution Rule and the Clean Air Interstate Rule – both of which aim to create a higher standard of air quality by reducing the emissions of greenhouse gasses – that are forcing coal prices higher, which is in turn causing utilities that rely on coal to pass higher rates on to their customers.

“For many years, we led the nation in lowest energy costs,” Higdon said. “Now, in some areas, we’re down to fourth and fifth place.”

Higdon said Kentucky managed to avoid even higher costs when the Ameri-can Clean Energy and Security Act, which would have established a cap-and-trade system for carbon emissions, failed to be enacted into law in 2010. He estimated passage of that bill would have elevated Kentucky’s energy costs to second in the nation, trailing only Texas.

The issue of rising energy costs is not just a concern for Kentucky’s business sector, however, according to Scott Smith, principal with Smith Man-agement Group in Lexing-ton. Smith served as the chief of staff of Kentucky’s Environmental and Public Protection Cabinet from 2004 to 2006 and is cur-rently working with the Energy Efficiency Initiative for the entire state. Utilities – and their customers – are facing costs of “hun-dreds of millions of dollars per facility” in energy transport costs, he said.

“None of this is free,” Smith said. “The costs of complying with the Clean Air Act must be met by the utilities. They’ll still burn coal, but it will just cost more to do it.”

Firms such as the Smith Manage-ment Group are being utilized more and more by companies wishing to improve their energy efficiency. Public utility providers such as Louisville Gas and Electric Co. and the Kentucky Util-ities Co. offer energy analysis programs as well.

“A commercial customer can request an on-site inspection with a trained energy specialist,” said Liz Pratt, public relations specialist with LG&E. “They’ll point out areas where they can make

ENERGY MANAGEMENT

Avoiding Future Shock

With utilities’ help, Kentucky business and industryinvest in energy efficiency to keep costs competitive

BY EDDIE SHERIDAN

Total Energy Production by State2009 (trillion Btu)

1 Texas 11,915 2 Wyoming 10,337 3 Louisiana 7,302 4 West Virginia 3,727 5 Kentucky 2,819 6 Pennsylvania 2,674 7 California 2,605 8 Oklahoma 2,571 9 Colorado 2,483 10 New Mexico 2,412

Source: U.S. Energy Information Administration

Greg Higdon, President, Kentucky Association of Manufacturers

Scott Smith, Engineer, Smith Management Group

Kenneth Gish Jr., Environmental, Natural Resources and Energy Service Group, Stites & Harbison PLLC



improvements that could provide a pay-back of seven years or less.”

Spend money to save much morePratt said the inspection program is offered at no additional cost to LG&E commercial customers. LG&E has also offered a commercial rebate program since 2008 to commercial customers, who can receive up to $50,000 per facility per year for making energy-conserving improvements.

“From our perspective, reducing energy uses offsets demand growth,” Pratt said. “It can also ensure reliable power during peak energy uses.”

The most common energy-saving improvements LG&E inspectors identify during site verifications involve replacing lighting and lighting fixtures with more efficient equipment, such as replacing exit sign lights with LED bulbs, Pratt said. Gish said some offices have begun using lights that avoid waste with motion sen-sors and timers to switch on lighting only when it’s needed.

More efficient means of heating and cooling, improving equipment gearing ratios, and even redesigning the shapes of buildings are other conservation means often mentioned.

“You’ve got to get in and break your program down into small, manageable things,” Smith said. “You’ve got to see there’s value in what you’re doing.”

‘Alternative’ power not a serious optionThe rising price of coal would seem to urge Kentucky’s energy providers to look into alternative sources to provide electricity, but both Smith and Gish said the environmental makeup of the state does not lend itself easily to utilizing generators such as wind or solar.

“We don’t have enough wind and solar in Kentucky to put together a power plant to utilize these ideas,” Smith said.

Due to its relatively low price and abun-dance in quantity at the moment, the use of more natural gas could be on the hori-zon for Kentucky’s energy providers. Fac-

tors of price and availability alone, however, would not necessarily make the use of natural gas a quick fix for the state’s rising energy rates, according to Higdon.

“So many of all the [natural gas] lines are already dedicated to full capacity,” he said. “For it to develop into a viable alterna-tive, we’d have to get out in front and get all the lines laid, but it’s viable.”

In early March, the federal Energy Information Administration reported it expects U.S. electricity generation from coal to decline nearly 5 percent in 2012 as generation from natural gas increases by about 9 percent. EIA forecasts electricity generation from coal will increase by 3.8 percent in 2013, projecting that coal prices to the power sector will fall slightly while natural gas prices increase, and coal regains some of its power-sector generation share.

Gish said the expense involved in converting a coal-burning power plant to one that utilizes natural gas would probably keep many energy providers from attempting the switch.

“I don’t think you’ll see a lot of com-panies converting from coal to natural gas,” he said. “The reality, I think, is you’re going to become less dependent on coal as a fuel source. I think what you’re going to see is some of the older, less efficient facilities go away.”

As the KAM is gearing up for its 2012 Energy Conference, which will be held June 13-14 at the Crowne Plaza in Louis-ville, Higdon is keeping a close eye on energy conservation issues. With manu-facturing producing $28 billion (or 17 percent) annually of Kentucky’s gross domestic product, he wants to make sure rising energy costs do not put the brakes on what is a successful period of manufacturing growth in the state.

“Manufacturing, as a whole, is really growing,” he said. “We’ve got to keep all our costs in line to remain competitive and keep putting out a quality product. It’s not just a competition between states; it’s an international competition.” ■

Eddie Sheridan is a correspondent for The Lane Report. He can be reached at [email protected].

10 Ways to ReduceEnergy Use and CostGreenBiz.com passes along tips from MakeYourBuildingWork.com

1. Assess how a site consumes and wastes energy. Use regular energy audits to determine equipment condition and performance, to show where and how energy is wasted, and to prioritize improvement measures.

2. Use more energy efficient equipment. Replace or eliminate outdated, inefficient equipment. Look for Energy Star labels.

3. Match HVAC and lighting to occupancy. Programmable building controls enable systems to light, heat and cool spaces only when they are occupied.

4. Maintain equipment. Proactively ser-viced and maintained equipment runs as efficiently as possible, especially chill-ers, boilers and packaged cooling equipment.

5. Maximize lighting efficiency. Upgrade to high-efficiency bulbs and fixtures. It uses less energy and generates less heat, reducing costs and easing the strain on HVAC systems.

6. Measure water usage and waste. Con-duct water audits to determine where water is being used and wasted. Fix leaks and install low-flow equipment to reduce consumption.

7. Schedule cleaning during regular hours. Experiment with “day cleaning” to overlap with work hours instead of keeping lights, heating and air condi-tioning on at night.

8. Insulate thoroughly. Target exterior walls, outlets, pipes, radiators, etc. to reduce heat and cooling loss.

9. Meet LEED standards. Build, renovate and operate facilities according to Lead-ership in Energy and Environmental Design (LEED) standards. It will lower operating costs and increase asset value while conserving energy and water; reducing waste sent to landfills; creating healthier, safer worker environments; and reducing harmful air emissions.

10. Make bui ld ing occupants more informed. Educate and engage employ-ees to promote energy conservation and reward wise decisions and behaviors.



EN E R G Y- e f f i c i e n c y improvement projects often can result in con-siderable cost savings, yet tight capital improve-

ment budgets and the prospect of additional “green” mandates mean many facilities managers are delay-

ing investments that would significantly reduce energy consumption.

Yet implementing energy-efficiency upgrades sooner rather than later can make very good business sense for entities that spend more than $60,000 a year on energy bills. Electricity rates in Kentucky have risen 43 percent in the past five years and some experts predict that emerging regulatory requirements will cause rates to dou-ble over the next decade.

Meanwhile, investments in energy efficiency upgrades have provided an average of 18 percent savings over the last decade. Compare that with Treasury Bills, which have yielded between 0 percent and 5 percent in recent years, and with the average

annual return on the S&P 500, which hovers at less than 1 percent over the last decade.

Rising utility costs shorten payback periodsAs long as utility costs continue to rise, the pay-back period for energy-effi-ciency upgrades will continue to con-tract. By using guaranteed savings contracts – “performance contracts” – along with practical financing solutions, the cost of implementing upgrades now can be covered using future energy sav-ings rather than today’s diminished or non-existent capital budgets.

The EPA’s Energy Star website offers several case studies illustrating success-ful use of performance contracts. A popular, effective scenario is one where an energy services provider (ESP) per-forms an energy audit of your facilities, recommends an improvement plan and then guarantees the resulting energy savings, so that the costs of new energy-efficient equipment will be paid either partially or entirely as monthly operat-ing costs out of savings from future

GOING GREEN

An Investment with a YieldFor those spending more than $60,000 annually

on power, efficiency upgrades look like a wise strategy

BY TY VIERLING

91% – Coal-fired power plants*American Electric Power Big Sandy (Lawrence) – 1,097 MWCinergy East Bend (Boone) – 669 MWEast Kentucky Power Cooper (Pulaski) – 321 MW Dale (Clark) – 207 MW Spurlock (Mason) – 1,087 MWHenderson Municipal Power & Light Henderson 1 (Henderson – 44 MWKentucky Utilities Brown (Mercer) – 740 MW Ghent ( Carroll) – 2,226 MW Green River (Muhlenberg) – 188 MW Pineville (Bell) – 38 MW Tyrone (Woodford) – 75 MWLouisville Gas & Electric Cane Run (Jefferson) – 645 MW Mill Creek (Jefferson) – 1,717 MW Trimble (Trimble) – 566 MW Owensboro Municipal Utilities Elmer Smith (Daviess) – 445 MW

TVA Paradise (Muhlenberg) – 2,558 MW Shawnee (McCracken) – 1,750 MWWestern Kentucky Energy Coleman (Hancock) – 521 MW Green (Webster) – 586 MW Henderson 2 (Henderson) – 405 MW Reid (Webster) – 96 MW Wilson (Ohio) – 440 MW* An additional 3.6% of Kentucky power comes from petroleum coke burned in coal-fired plants.

3.1% – Hydroelectric power plantsEast Kentucky Power Laurel (Laurel) – 70MWKentucky Utilities Dix Dam (Garrard) – na Lock 7 (Mercer) – naLouisville Gas & Electric Falls of the Ohio (Jefferson) – 80 MWTVA Kentucky Lake Dam (Marshall) – 197 MW

U.S. Army Corps of Engineers Lake Barkley Dam (Lyon) – 130 MW Wolf Creek Dam (Russell) – 270 MW

1.9% – Natural gas/fuel oil power plants(for peak power demand)Henderson Municipal Power & Light Henderson 1 (Henderson) – 2 MWKentucky Utilities Brown (Mercer) – 967 MW Haefling (Fayette) – 63 MW Tyrone (Woodford) – 62 MWLouisville Gas & Electric Cane Run (Jefferson) – 16 MW Paddy’s Run (Jefferson) – 227 MW Waterside (Jefferson) – 45 MW Zorn (Jefferson) – 18 MWCity of Paris Paris (Bourbon) – 12 MWWestern Kentucky Energy Reid (Webster) – 99 MW

Source: Office of Energy Policy, Division of Fossil Fuels & Utility Services

Where Kentucky Electric Power Comes FromGeneration percentages are for 2004



energy bills. The contract may also include financing through the ESP, which may also provide construction management and long-term mainte-nance services.

Public entities may combine an ESP performance contract with a lower interest rate, tax-exempt lease purchase agreement as a financing option, when the projected savings will be greater than the cost of the useful life of the upgraded equipment and installation.

Harshaw Trane used performance con-tracting to make upgrades at Fort Knox that saved the base more than $10 million in energy costs per year and eliminated a lengthy list of deferred maintenance needs, with most of the changes requiring no up-front capital expenditures.

In some cases, energy savings may even be large enough to generate a pos-itive cash flow that can be used for other projects; in any case, repayment terms can be negotiated to eliminate any increase in operating costs.

Do the mathThe first step is to do the math. Compo-nents of the analysis include:

• Total cost of the upgrade project, including the audit, engineering/design,

equipment, installation, finance options and costs, long-term maintenance service fees and employee education needed to achieve maximum energy savings.

• Opportunity costs of delaying upgrades, including lost energy savings.

• Anticipated payback period in terms of energy savings.

These are complex factors that must take into account the variety of modern technologies available and choosing a qualified ESP is critical.

Contracting with a qualified ESPThe Energy Services Coalition (ESC), a national nonprofit network of energy experts, offers several tips on choosing a qualified ESP, and also offers a sample Request for Proposal (RFP) for identify-ing potential providers. Most important, the ESC says, is to find an ESP that understands your facilities, and that means getting the provider on site to walk through your buildings.

You’ll also need to share data regarding your total annual energy expenditures, peak energy usage times, any quirks in energy demand, total facility square footage (as well as how buildings are laid out), any special air quality requirements, and any con-

cerns or complaints about the facility. Providing information about the energy management expertise of your facility staff will help the ESP deter-mine how much to budget for training and long-term maintenance.

A qualified ESP operating under a performance contract will guarantee the energy savings needed to finance the project under the agreed-up terms, or pay you the difference between the guaranteed savings and the savings actu-ally achieved. You’ll want to set up a schedule for going over results and making any necessary maintenance and employee training adjustments. Even buildings that incorporate the latest energy-efficient technologies will fall short if not operated properly.

Energy-efficiency improvements can bring long-term savings by reducing utility bills, as well future outlays for routine maintenance and emergency repairs, while also improving occupant comfort and productivity. ■

Ty Vierling is energy services leader at Harshaw Trane, an intelligent building technology and energy services provider in Kentucky and Indiana.



SUPPOSE during your routine annual physical, the doctor says it’s time to schedule a colonos-copy. Traditionally, the next step would be to arrange the proce-

dure with a specialist, typically one recom-mended by your primary care physician and who is also in your insurance carrier’s preferred-provider network (PPO).

Instead of this somewhat cut-and-dried process, imagine being able to sit down at your computer and comparison shop for the best price for a colon exam or for dozens of other routine medical procedures. You log in to an online database that not only provides histori-cal data on the prices charged by area physicians for medical procedures, but also lists patient-satisfaction ratings in categories such as staff professionalism, cleanliness and other parameters.

That’s essentially what HealtheReports, a new software tool developed by Lexing-ton-based IF Technologies, provides to

preferred-provider net-works and employers that subscribe to its online ser-vice. According to the company’s founders, Jim Freedman and Mike Issac, the four-year-old compa-ny’s goal was to help patients become better healthcare consumers.

Continually increasing medical costs, which employers pass along to their workers as higher deductibles and larger co-payments, created the need for this software, they said.

“Several years ago we recognized the impending crisis facing the healthcare industry in terms of how out of control costs were,” Freedman said. “We saw that as healthcare costs continued to rise, sooner

or later the individual member was going to have to take more responsibility.

National statistics back up Freed-man. Data from the U.S. Census Bureau show personal healthcare expenditures jumped from $1.2 trillion in 2000 to $2.1 trillion in 2009. That continues a trend that began in 1960 of costs either doubling or tripling every decade.

At the same time that healthcare costs are rising, the number of people with insurance is decreasing. In 2009, the U.S. Centers for Disease Control released the National Health Interview Survey, which reported on the preva-lence of health insurance for children, adults and senior citizens.

The findings showed that between 1980 and 2007 the number of adults younger than 65 with health insurance declined 1.2 percent annually for most of those years. (There was a slight increase between 1996 and 1999.) The report also states that fewer adults are covered by health insurance at work, with employer-sponsored coverage declining from 71 percent in 1980 to 62 percent in 2007.

Local price disparity can be 300-400 percentHealtheReports is set to capitalize on a little-known fact among healthcare con-sumers: Price disparities exist among doctors, clinics, hospitals and surgery centers in most major markets across the country.

“Doesn’t make any difference who your insurance company is, what health plan you’re using, what market you’re in or what the procedure is,” Freedman said. “Doctors and hospitals negotiate significantly different prices with health plans and insurance companies for the same procedures.”

According to the trade journal Health Leaders Media, the disparity can be as much as 300 to 400 percent among pro-viders for the same procedure.

So why do such disparities exist? Experts blame it on a variety of factors, including a facility’s market share, loca-tion and reputation.

One of the country’s largest and most highly rated HMOs, Massachusetts’s Tufts Associated Health Maintenance Organiza-tion, has testified about the cost differences among providers. Tufts said, “Our efforts to contain unit cost increases have been constrained by provider market leverage driven by system size, reputation, service uniqueness and geographic location. Our efforts also have been constrained by mar-ket preferences dictating that we maintain as broad a provider network as possible.”

Last year, the 1 million-member Tufts HMO was ranked second on a list of the top 20 private health insurance plans by the National Committee for Quality Assurance.

MEDICAL SERVICES

Kentucky firm markets software tool allowingprice comparisons for healthcare bargain hunters

BY ROBERT HADLEY

Cost Competitionfor Care Providers

Mike Issac, President/Co-founder, IF Technologies

Jim Freedman, CEO/Co-Founder, IF Technologies



An educational video on Humana Inc.’s website sheds additional light on the economic reasons behind the cost disparities among providers (See humana.com/resources/videos/health-care_education/doctors.aspx). Doctors, hospitals and other providers are able to join health insurance networks that enable them to leverage higher patient volume in exchange for offering dis-counts to members of health insurance plans, according to the Humana video. Independent doctors who do not join such networks are unable to offer lower prices because their patient volumes are lower. Doctors who join the insurance network must maintain their medical credentials and accreditation, accord-ing to the video, which enhances the perception of quality care.

No correlation between cost and qualityBut IF Technologies co-founder Issac cautions that quality of care and cost of care are rarely linked.

“Every national study we’ve seen says there’s no correlation between cost and quality,” Issac said. “It’s mostly tied to the negotiating position of the entity.”

According to HealthSpan, a Cincin-nati-based PPO and IF Technology’s flagship client, cost disparities may arise because each procedure is different.

“The reason there’s a range is that you may need more morphine than I do,” said Diane Oliver, sales director for HealthSpan. “I might need an extra bag of blood. It’s not like a com-modity, where you’re buy-ing , say, a bot t le o f ketchup.”

HealthSpan operates in the partially self-funded healthcare industry, where employers negotiate discounted prices with a PPO and use stop-loss insurance to protect themselves from catastrophic claims, Oliver said. This made it was a natural fit for IF Technology’s software, which allows HealthSpan’s customers to comparison shop for medical care from among 100,000 hospitals and 10,000 physicians that belong to its network.

“We’re strong proponents of trans-parency,” Oliver said, referring to the Catholic-owned PPO. “There needs to be more of that in the marketplace.”

Many competitors of the HealtheRe-ports system use the published or list price quoted by hospitals for medical procedures, Oliver said.

“No one pays list price in this indus-try, so it kind of gives a false impression of what the actual cost is,” she said.

Instead, HealtheReports bases its prices on historical claims data, which

has been scrubbed of any personally identifiable information to meet HIPPA requirements.

Because the cost for a given opera-tion may have many components, such as price for the hospital, the surgeon, the radiologist and/or anesthesiologist, Oliver said HealtheReports quotes prices including all of those costs – “the episode of care” – so there are no sur-prises when the bill comes.

Although cost-conscious comparison shoppers may initially benefit from HealtheReports because it allows them

to choose less-expensive providers, the ultimate value may occur down the road when providers begin to compete with each other on price.

“It’s an integral part of consumer-ism,” Oliver said. “How can you be a good consumer if you don’t know what the price tag is? This software, in con-junction with the robust wellness pro-grams HealthSpan offers, allows people to be good consumers of lifestyle.” ■

Robert Hadley is a correspondent for The Lane Report. He can be reached at [email protected].

Diane Oliver, Sales Director, HealthSpan


http://www.humana.com/resources/videos/healthcare_education/doctors.aspx

http://www.humana.com/resources/videos/healthcare_education/doctors.aspx


LIKE their counterpar t s around the nation, Kentucky construction contractors are battling through a fourth lean year. There is less work

and lots more competition to get it. U.S. construction activity today is at least 10 percent lower than it was 12 years ago.

Some improvement will come by year’s end when dozens of contracts for work on the Ohio River Bridges Project in Louisville start going out. It’s a $2.6 billion project that will take five years to complete. Additionally, University of Kentucky Board of Trustees members in February authorized UK President Eli Capilouto’s administration to begin the first project in what will be a $500 mil-lion upgrade of campus housing.

Other projects have kept at least some Kentucky contractors busy the past few years, too. UK last year finished the main, $538 million first phase of its Chandler Medical Center. Only a few blocks down the street, Central Baptist Hospital has a $200 million expansion underway. Pikeville Medical Center held

a topping out ceremony early this month for work on its $130 million expansion. Owensboro Medical Health System’s 477-bed, $385 million hospital project is slated for completion in spring 2013.

Ford just finished spending roughly $600 million to rebuild its Louisville Assembly Plant, which this month begins producing the next generation of the Escape compact SUV, and it is about to put a similar amount into an update of its Kentucky Truck Plant in eastern Louisville. GM is putting $130 million into an expansion and upgrade of its Corvette plant in Bowling Green, where local officials are completing a $150 million capital investment project focused on the downtown.

Those projects during the recession and lingering economic downturn that began in 2007 and 2008 have been invaluable because overall construction activity has fallen sharply.

“I’ve lost more members this year due to business closure than I have the last two years combined,” said Richard

Vincent, executive director of Associ-ated General Contractors Kentucky.

Conversely, however, ACG-Ky was recognized recently as the U.S. chapter with the most growth. Vincent credits it to the fact that contractors are pursuing every angle they can, and ACG-Ky is a strong advocate for the industry in Frankfort.

“We’re still seeing 14 and 16 bidders on a project that five years ago would have had four or five bidders,” Vincent said. Compa-nies are bidding on jobs at break-even cost or even occasionally at a loss so they can keep dollars coming in to keep the doors open.

‘Focused on surviving in 2012’“It’s not limited to a specific division, a specific sector, a specific type of work. It’s across the board,” he said. “We find very, very few companies that are thriv-ing in 2012. They are focused on surviv-ing 2012. It’s tough.”

New York-based McGraw-Hill Con-struction tracks activity across the United States.

“For all of 2011, total (U.S.) con-struction starts slipped 2 percent to $421.4 billion, following the slight 1 percent gain reported for 2010,” McGraw-Hill reported in January. “After the steep declines reported during the 2007-2009 period, when act iv i ty dropped a combined 38 percent, the overall volume of new construction starts has essentially stabilized at a low level during the past two years.”

The December statistics produced a reading of 87 for the Dodge Index – whose scale is based on national con-struction activity in 2000 as 100 – down from November’s revised 89. For all of 2011, the Dodge Index averaged 89.

Before the crash in activity in 2008, the Dodge Index was bouncing around in the 130 to 150 range.

“The pace of new construction starts continues to fluctuate within a set range, showing stability in a broad sense but not yet making the transition to renewed expansion,” Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction, stated for the January report. “Gains for a few project types are being offset by contin-ued weakness for other project types,

CONSTRUCTION

‘An Extended Bottom’Kentucky construction contractors compete hard for

jobs; manufacturing, multi-family housing show improvement

BY MARK GREEN

Pikeville Medical Center is undergoing a $130 million expansion that includes an 11-story medical office facility and parking garage with 900-plus spaces.

Richard Vincent, Executive Director, Associated General Contractors – Kentucky

Pikeville Medical C

enter photo



with the result that total construction is experiencing an extended bottom.”

There are no Kentucky-specific sta-tistics.

According to Kentucky Cabinet for Transportation figures, the state in 2011 completed 18 road projects of $5 mil-lion or more. They totaled just shy of $300 million.

There are 15 major road construc-tion projects scheduled for 2012 total-ing $372 million.

Beginning to see more projects go to bid“Construction contrac-tors are scrambling for work, especially those who work just in the state,” said Steve Sum-mers, executive vice president of Lexington-based Gray Construction and president of Associ-ated General Contrac-tors of Kentucky. “The Kentucky market is still pretty slow.”

Summers’ position at Gray offers perspective. Gray Construction, which specializes in large-scale industrial man-ufacturing projects, had its best year

ever in 2011, which included large proj-ects for Whirlpool in Tennessee, for Cat-erpillar and Siemens in North Carolina, and for Austal USA in Mobile, Ala.

“I consider it still depressed,” Sum-mers said of commonwealth construc-tion industry activity. “Certainly things are still very aggressive in terms of com-petition and in pricing.”

Within the past six to eight months there has been increased activity in proj-ects being put out for bid, he said.

“Nationwide it’s picking up, more in the area of manufacturing than else-where,” Summers said.

In Kentucky, though, many contrac-tors continue to struggle.

“A lot of it is they’ve just fallen back, gone to smaller projects,” Summers said. “They’re doing rehab work, resi-dential-type work. It’s a mixture of things. Several have closed their doors and gone out of business.”

Figures that Vincent provided from an Associated General Contractors of America presentation last month show that construction employment in Ken-tucky improved by 2 percent from Janu-ary 2011 to January 2012. Multi-family housing construction is growing and expected to improve this year and next.

“The construction industry is a resil-ient industry, a resilient profession,” Vincent said. “However, we are compet-ing now with a lot of companies coming into the state, large and small, that are adding that extra layer of competition.”

Government appropriations for capi-tal projects is expected to fall another 6 percent this year as tax revenues fall at the local level across the nation.

“The game has changed a lot the past decade and made it tougher to sur-vive,” Vincent said. ■

Mark Green is editorial director of The Lane Report. He can be reached at [email protected].

Steve Summers, Executive Vice President, Gray Construction

Owensboro Medical Health System, which is licensed for 477 hospital beds, is building a $385 million, state-of-the-art medical center.

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WHY was Republic Ban-corp identified this year as the best performing bank in the United States based on combined

financial performance and capital levels? The answer might seem too simple.

In an age of bank failures, risky loans, upside-down mortgages and con-sumer uncertainty, Louisville-based Republic sticks to its core values and is reaping the rewards.

“I think it’s all about humility, being nice to people and treating people right,” said Republic Bancorp CEO Steve Trager. “It’s making sure that we are accessible and work hard, and there’s really nothing fancy about what we do. We treat people right, and that includes our customers, our associates and the communities that we serve.”

Staying true to the values of his late father and the bank’s founder, Bernard Trager, who passed away Feb. 10 at age

83, the younger Trager said Republic Bank has gained recognition and avoided risky practices and capital loss because of these principles.

Republic Bancorp was founded in 1982 as a small savings and loan bank in Western Ken-tucky and has grown steadily. For the past sev-eral years, Republic has been ranked among the top 10 best-run among all 484 U.S. publicly traded banks in listings published by Bank Direc-tor magazine.

In January, Republic hit the very top of the list in the magazine’s latest rank-ing, which was based on two key met-rics: core return on tangible common equity (ROTCE) and the ratio of aver-age tangible common equity (TCE) to tangible assets.

ROTCE and TCE reflect earnings and capital management success in today’s more difficult, higher-ratio regulatory environment, according to New York-based investment banking firm Sandler O’Neill + Partners, which compiled Bank Director’s stats by looking at data from eight quarters to avoid volatility distortions.

“The ranking is a good measurement of how companies are deploying their capital and those companies that are better at getting a return on that capi-tal,” said Mark Fitzgibbon, the director of research at Sandler.

Trager said he is proud of the accom-plishment and wouldn’t trade his bank’s position for any other. But Republic remains humble and focused, and for him what the national recognition means is that the bank’s chains – which include operations in west-central Flor-ida – can simply continue to take great care of their customers.

“By creating good earnings, I think it comforts the communities that we serve that we have a good future,” Trager said, noting that it takes a long time to build a quality organization but a very short time to make big mistakes. “We are very focused on making sure we limit our mis-takes. If we get too excited about our earnings, some companies that do that lose their focus on doing things the right way ... It’s a new day, we have to continue to do things well.”

Banks with higher capital ratios were making better use of shareholders’

FINANCIAL SERVICES

America’s Best-Run Bank?Steady growth and a conservative approach leadRepublic Bancorp to the top of a national listing

BY ABBY LAUB

Bernard Trager, Founder, Republic Bancorp

Steve Trager, President/CEO, Republic Bancorp



money and were proving to have the strongest business models, strategy and operating skills, according to Bank Direc-tor. Republic Bancorp has $3 billion in assets and scored impressively on its capital ratio and ROTCE.

Shrewd, strategic growth importantDianna Preece, professor of finance at the University of Louisville, said the bank has managed its growth very shrewdly and that has been a key to its success.

“When they do make an acquisition it’s very strategic,” she said. “They get assets at a huge discount and (pay) no premium on the deposits. ... It seems like they’re making really good decisions.”

Trager told Bank Director that Repub-lic hopes to make a “meaningful, large acquisition” in the future and that pre-serving its capital will allow it to accom-plish that goal at the right time.

“It’s nice to know that we can pur-sue opportunity without depending on others to raise capital, because raising capital when you need it is tough,” Trager said.

Staying well capitalized, finding new ways to earn money, maintaining flexi-bility and not trying to grow too fast has paid off for Republic, Preece said,

and the No. 1 ranking was “well deserved.”

Like most Kentucky banks, Republic Bancorp has managed risk well in a changing financial environment, she said. Kentucky banks generally still operate in a traditional conservative manner.

“If you look at the big guys, it’s this con-stant push ... to push the earnings, push the earnings,” Preece said. “So they do a lot of things, like leveraging and all the things you see to cause banks to have significant trouble, that a lot of Kentucky banks don’t do. Many big banks have gone way outside of what banks traditionally do.”

Republic Bancorp also has remained community minded, a priority made part of the culture of the bank by his father, according to Trager.

“He used to always say, ‘What we make here, stays here,’” Trager recalled. “We’ve had several straight record years. As an example, in the last two years we’ve been able to set aside $10 million strictly from earnings to form our Republic Bank Foundation. Assuming we continue to be successful, we are making sure that we’re committed to sharing the success with the communi-ties we serve.

“In this very uncertain environment, I think one of things is that our success can comfort customers we serve because they know Republic’s future is as certain as you can get,” he said. “It’s comforting ... Everything we do is based on long-term planning.”

Challenging the FDIC won admirersAn uncertain economy makes that long-term planning a challenge. Growing lists of federal regulations make bank-ing more difficult, Trager said, but Republic Bank’s size has helped it absorb the extra costs of compliance.

“Yet at the same time we’re not so big that we can’t be responsive to our cus-tomers,” he said. “We found a good size point for ourselves. If you’re really small, some of the costs of technology, the challenge of regulatory environ-ment, make it difficult to compete.”

Ballard Cassady Jr., president/CEO of the Kentucky Bankers Association (KBA), said FDIC regulations have made business tough, and banks need to have some size in order to survive.

“Bankers are willing to abide by what-ever laws (the FDIC) wants them to abide by, but it shouldn’t change week to week,” he said. “Unfortunately it changes week to



week, but Republic Bank has done a ter-rific job of being a very solidly built from the ground up bank.”

Preece believes regulations are only going to get tighter, and banks might have to get used to being satisfied with smaller returns on assets than they

once enjoyed in order to avoid risky behavior or behavior perceived as risky by regulators.

Republ ic Bancorp recently settled with the FDIC over its practice of re fund ant i c ipa t ion loans. Republic was one of the last major financial institutions to stop RALs under FDIC pressure and lawsuits, but Cassady thinks the bank was uti-

lizing a perfectly sound business tactic and just found another way to think out-side the box and stay close to its cus-tomer base.

“I was so proud of Republic Bank tak-ing on the FDIC that I almost busted,” he said. “The refund anticipation loans were a very legitimate business.”

Republic used a computer program to calculate the risk factors involved in an RAL, for the bank and the consumer, Cassady said, resulting in a less than 1 percent loss on the loans.

“They made good money, but the FDIC came along and said, ‘We think it’s unsafe and unsound,’ and they had no proof to back that up, nothing,” he said. “The other banks backed away because of various reasons. They didn’t want the FDIC (objections) to spill over into something else.”

But since Republic had nothing to hide, he said, they were not afraid to tell the FDIC it was wrong.

The KBA “did a friend-of-the-court brief on that suit because we felt so strongly,” Cassady said. The FDIC “couldn’t believe someone would stand up to them. We were so proud of Republic Bank. ... All the bank was doing was funding the tax-payers with lines of credit.”

More acquisition opportunitiesTrager said Republic realizes it is oper-ating in a regulated environment and that ultimately respecting those regula-tions was necessary.

“The FDIC is very important to all banks, and I guess like any entity or any government entity in particular, every-body’s got to be held accountable and subject to challenge,” he said. “But it is very difficult to challenge the FDIC, and that’s not necessarily healthy. Whenever you have an entity that is insulated from challenge, it eliminates accountability and is not necessarily a good thing.”

Settlement ultimately made sense for Republic Bancorp and the FDIC. The RALs, Trager said, were a “rela-tively modest piece of our entire tax business, so you’ve got to give up some-thing to get something. We have lots of products at Republic Bank that are performing very well, not the least of which is our tax business.”

Republic is the nation’s largest bank processor of electronic tax refunds, so it is still in a leadership position in the tax sector. It also has made some profitable bank acquisitions from FDIC leads.

The FDIC still “feels pretty good about us and that gives us opportunities down the road,” Trager said. He thinks it is unfortunate so few banks are in a position to pursue their right to chal-lenge the institution.

Preece said RALs are a safe way to make money in her view, but they did present banks using them with a slight public relations issue because they could appear to prey on lower income people desper-ate for a cash advance.

The legal wrangling behind i t , Republ ic hopes to continue its steady, smart growth.

“There are some unique acquisition opportunities because of the challenges that are out there,” Trager said. “We are very well capitalized, so we would like to take advantage of that. ... We’re looking for a (bank with a) portfolio of loans that we can manage and take advantage of our abilities and realize something more valuable than the discount we get to purchase it.”

Being based in Kentucky also makes him optimistic, he said.

“Kentucky is a lot more stable than a lot of other areas around. Being in

Kentucky has helped us,” Trager said. “We hope the federal government doesn’t get in the way of serving our customers, because they can make it challenging at times.”

In fact, the national bank scene could take a cue from what Republic and other banks in Kentucky have done.

The last state-chartered bank to fail was Peoples Bank of Olive Hill in December 1987, said Kelly May, spokesperson for Kentucky's Department of Financial Insti-tutions. Federally chartered Irwin Union Bank failed in 2009 just after moving its headquarters to Louisville and did not have a significant presence in Kentucky.

“I think the world has seen that big-ger is not necessarily better, and you know, it is comforting for customers in Kentucky to be in a position to hold their provider accountable. And when you have a Kentucky bank – a commu-nity bank like us or other Kentucky community banks – and you’ve got a question or concern, you’ve got some-body that you can reach,” Trager said.

“You look at this foreclosure fiasco: Those were all the big banks. Very few of the foreclosures in this state – an incredibly disproportionately low percentage of fore-closures in this state – come from Kentucky community banks because we know our customers. We’re in it for the long haul, and we don’t want to put our customers with products that are not best for them.” ■

Abby Laub is a correspondent for The Lane Report. She can be reached at [email protected].

BANKING SERVICES

Ballard Cassady Jr., President/CEO, Kentucky Bankers Association

Dianna Preece, Professor of Finance, University of Louisville

Headquartered in downtown Louisville, Republic Bancorp has 43 banking centers and is the holding company for Republic Bank & Trust Co., which serves 38 locations throughout Louisville, Lexing-ton, other Central Kentucky communities, Southern Indiana and Nashville, Tenn., and Republic Bank with offices in Hudson, Palm Harbor, Port Richey and Temple Terrace, Fla., and in Blue Ash, Ohio.

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TOP TOURISM DESTINATIONS IN KENTUCKYRanked by number of visitors in 2011

THE LANE LIST

ATTRACTION VISITORS IN 2011 ADDRESS PHONE NUMBER WEB SITE Land Between The Lakes 1,500,000 100 Van Morgan Drive, Golden Pond, KY 42211 (270) 924-2000 lbl.orgKentucky Horse Park 1,000,000 4089 Iron Works Parkway, Lexington, KY 40511 (859) 233-4303 kyhorsepark.comCumberland Gap National Historical Park 900,000 P.O. Box 1848, Middlesboro, KY 40965 (606) 248-2817 nps.gov/cugaLouisville Zoo 850,000 1100 Trevilian Way, Louisville, KY 40213 (502) 459-2181 louisvillezoo.comBeech Bend Amusement Park and Raceway 675,000 798 Beech Bend Road, Bowling Green, KY 42101 beechbend.comCumberland Falls State Resort Park 650,000+ 7351 Ky. Hwy. 90, Corbin, KY 40701 (800) 325-0063 parks.ky.govLouisville Bats Baseball 600,000 401 E. Main St., Louisville, KY 40202 (502) 212-2287 batsbaseball.comNatural Bridge State Resort Park 600,000+ 2135 Natural Bridge Road, Slade, KY 40376 (800) 325-1710 parks.ky.govNewport Aquarium 600,000 One Aquarium Way, Newport, KY 41071 (859) 261-7444 newportaquarium.comFort Boonesborough State Park 500,000+ 4375 Boonesborough Road, Richmond, KY 40475 (859) 527-3131 parks.ky.govMammoth Cave National Park 500,000 1 Mammoth Cave Parkway, Mammoth Cave, KY 42259 (270) 758-2180 nps.gov/macaKentucky Center for the Performing Arts 475,000 501 W. Main St., Louisville, KY 40202 (502) 562-0100 kentuckycenter.orgLake Barkley State Resort Park 450,000+ 3500 State Park Road, Cadiz, KY 42211 (800) 325-1708 parks.ky.govKeeneland Race Track 450,000 4201 Versailles Road, Lexington, KY 40510 (800) 456-3412 keeneland.comLexington Legends Baseball 420,000 207 Legends Lane, Lexington, KY 40505 (859) 252-4487 lexingtonlegends.comBarren River Lake State Resort Park 411,000* 1149 State Park Road, Lucas, KY 42156 (270) 646-2151 parks.ky.govThe Creation Museum 300,000 2800 Bullittsburg Church Road, Petersburg, KY 41080 (888) 582-4253 creationmuseum.orgLouisville Slugger Museum & Factory 210,000 800 W. Main St., Louisville, KY 40202 (877) 775-8443 sluggermuseum.comKentucky Derby Museum 200,000 704 Central Ave., Louisville, KY 40208 (502) 637-1111 derbymuseum.orgChurchill Downs 160,000 700 Central Ave., Louisville, KY 40208 (502) 636-4400 churchilldowns.comMy Old Kentucky Home State Park 100,000* 501 E. Stephen Foster Ave., Bardstown, KY 40004 (502) 348-3502 parks.ky.gov* Estimate because visitors participating in hiking, boating, etc., are unable to be tracked.Source: Individual attraction contacts, websites, Kentucky Department of Parks

Kentucky Horse Park Cumberland Falls State Resort Park

Louisville Zoo Keeneland Race Track


http://www.lbl.org/

http://www.parks.ky.gov/


SPOTLIGHT ON THE ARTS

FOR its 30th incarnation presenting the works of commonwealth artists and crafts-people, Kentucky Crafted: The Market returned to Lexington. As usual, the first two days were for dealers and the final two days were for shopping by the general public.

There were 181 artisan exhibitors this year at Lexington Center. They attracted 258 retail business buyers from 15 states plus visitors from at least 102 counties, 20 states and four countries.

The highest priced item sold at The Market was a piece of furniture for $10,000. Although very few artists created work at retail prices of $1,000 or more, those who did sold. Among the high-ticket sales were furniture, wood carvings, jewelry, paint-ings and quilts. Items sold for $4,500; $2,800; $2,500; $2,000; $1,300; several at $1,000; and a squeaker at $998.

The readers of AmericanStyle magazine voted Kentucky Crafted: The Market the No. 1 event in the nation for the third consecutive year, and four of the past five years. Southeast Tourism Society also named Kentucky Crafted: The Market a top 20 U.S. attraction for the 14th time.

Kentucky Crafted: The Market 2012

Kentucky Writers’ DayCapitol Rotunda, Frankfort10 a.m. April 24artscouncil.ky.gov(502) 564-3757

Thinking Big: Oversized Works by Kentucky ArtisansKentucky Artisan Center at Berea9 a.m.-6 p.m. through April 28 kentuckyartisancenter.ky.gov (859) 985-5448

City StreetsThe Speed Art Museum, LouisvilleThrough May 20speedmuseum.org(502) 634-2700

acCent! Art Quilts of the UKThe National Quilt Museum, PaducahThrough June 12quiltmuseum.org(270) 442-8856

4th International Mystery Writers’ Festival River Park Center, OwensboroParamount Arts Center, AshlandJune 14-17riverparkcenter.com(270) 687-2787

Arts Events Around the State

Above: Folk art is a big seller every year.

Left: There were 181 artisan exhibitors.

Below: Kentucky Crafted: The Market moved to Lexington Center in 2012 after many years at the Kentucky Exposition Center in Louisville.

Visitors from at least 102 counties, 20 states and four countries attended.

Above: Artisans and performers held workshops and entertained.

Left: The four-day event was named a Top 20 attraction in the U.S. for the 14th year by the Southeast Tourism Society.



KENTUCKY TOURISM SHOWCASE



IF you’re searching for a refreshing change of scenery for your compa-ny’s corporate retreats and incentive

programs, consider an escape into Ken-tucky’s great outdoors. From the Appa-lachians in the east to the Lakes Area in the west, the commonwealth has a slew of sites in gorgeous natural areas where attendees can relax in pampering com-fort and focus on goals without the dis-tractions of a city workplace, and superstar employees can revel in an incentive trip with plenty of recreational options. Here are three to consider.

Luxurious Farm DigsTucked in rolling Central Kentucky farmland, the first is a 7,000-s.f. National Register of Historic Places home near Springfield with 14-foot ceilings, a float-ing cherry spiral staircase and impres-sive kudos: BedandBreakfast.com’s “Best B’n’B in the South” and “Top 10 Innkeepers in the U.S.”

Thanks to hosts/owners Todd Allen and Tyler Horton, beautifully restored Historic Maple Hill Manor, circa 1851, is a gracious step back in time set on a 14-acre working llama and alpaca farm. Once a Civil War hospital, this col-umned Greek Revival house offers seven spacious antique-filled guest rooms with big comfy beds and private baths; a splendid, formal 25-seat dining room; and to-die-for full country-gourmet

breakfasts. Pre-arranged lunches and dinners can be indoors or outside on an oversized shaded patio, in a flower gar-den or in an event barn.

“We often host strategic planning meetings and rewards retreats,” said Allen. “If attendee numbers surpass our capacity, we can team up for overnights with comparable properties in the area, such as Springhill Winery and Planta-tion Bed and Breakfast (in Bloomfield) and Rosemark Haven in Bardstown, which serves fantastic dinners.”

Business amenities include wireless Internet access, a meeting room for 30, data ports and AV equipment, team-building murder mystery dinners, and a property buyout option.

Maple Manor’s innkeepers can arrange for guests to stay busy in the area, touring bourbon distilleries; indulging in gourmet-on-the-rails aboard My Old Kentucky Dinner Train; taking bourbon cooking classes; nosing in Civil War museums; playing golf; catching an outdoor musical; sky diving; antique shopping; or cheering home a winner at Thoroughbred racetracks in Lexington and Louisville, both but an hour away.

Or folks can learn about alpaca and llamas, stroll through the farm’s orchard and nature preserve, or simply settle into a rocker on the wide porch and listen to the quiet.

Rustic Forest RetreatHead south to the Somerset area for the second site, a hostelry snuggling up to two topographic treasures: the Daniel Boone National Forest and the South Fork of the Cumberland River.

Just outside Burnside, Eagles View Bed and Breakfast is aptly named, for a canopied deck on this two-story timber-frame structure overlooks both woods and water, as does a steamy hot tub. Owners Debbie and Gary Dunhoft opened the property, the manifestation of a dream, in 2010, when he also began a second post-retirement business, Bait & Hook fishing guide service on Lake Cumberland.

Accommodations in this cliff-top aerie include three spacious bedrooms with lake-view private decks, flat-screen TVs and wireless high-speed Internet. Breakfasts can be customized to meet dietary needs.

“Our views are spectacular,” Gary said. “There’s a lot to do in the area, but often guests just hang out on the decks and enjoy the scenery.”

With nature all around, team-build-ing options abound. Take a six-hour fishing trip on the lake and enjoy your catch at an evening fish fry. Raft, canoe or hop on a horse at Cumberland Falls, hike to Yahoo Falls and play golf at Gen-eral Burnside Island State Park or Eagles Nest Country Club, where a com-puterized lesson can help you swing like a pro.

Water WonderlandFor years, Western Kentucky has been known as an extraordinary outdoor rec-reation destination, thanks to the 170,000-plus-acre Land Between the Lakes National Recreation Area (LBL),

EXPLORING KENTUCKY

Natural IncentivesScenic getaways provide an ideal setting for retreats or family get-togethers

BY KATHERINE TANDY BROWN

Eagles Bed and Breakfast near Burnside, Ky.

Big Bear Camp30 Big Bear Rd.Benton KY 42025(800) 922-2327bigbearkentuckylake.com

Eagles View Bed and Breakfast45 Glen Eagle Dr.Burnside KY 42519 (877) 767-9966eaglesviewbnb.com

Historic Maple Hill Manor2941 Perryville Rd.US 150 EastSpringfield KY 40069(800) 886-7564maplehillmanor.com



and two fishing meccas, Lake Barkley and bass-filled Kentucky Lake. Big Bear Resort, which has hugged the Kentucky Lake shoreline near Benton for the past 64 years, offers a variety of retreat and meeting possibilities that range from rustic to upscale.

The first resort built on Kentucky Lake, this 52-acre, family-owned-and-run property boasts a number of employees with more than 20 years of service and a few generations of guests that have returned annually for 60-plus years. Ideal for corporate retreats and one-day or multi-day meetings, Big Bear offers meet-

ing accommodations in cabins, cottages, chalets, townhouses and condos, some of which are open year-round. A remodeled 1812 log cabin can accommodate 20 to 30 people for a meeting in its living room and can sleep up to 15. Varied-capacity condos also have spacious living rooms in addition to kitchens and sleep-ing quarters.

“We’ve had boat manufacturers hold retreats for their best customers,” said Janet Meier, who owns Big Bear with her husband, Rick. “And we can organize team-building fishing tournaments that emphasize working together. Our fish-ing guides take participants out on the lake and run the tournaments.”

In addition, the family-friendly resort has a swimming pool, beach and 123-slip marina with rentable water skis, tubes, paddle and pontoon boats, jon and fishing boats. A short drive away, attendees and spouses can explore the Land Between the Lakes and spy animals on its elk and bison prairie, gaze at stars in its planetarium, watch farming as it used to be on a working 1800s homestead, and learn about the moonshiners and stills that once populated Golden Pond at its visi-tors’ center.

As at the previous two retreat sites, guests can instead choose to chill. At Big Bear, that translates into watching glorious sunsets over Kentucky Lake and taking in the fresh air. Nature is, after all, the best hostess and planner. ■

Katherine Tandy Brown is a correspondent for The Lane Report. She can be reached at [email protected].

Other Events Around Kentucky•8th Annual Homecoming Event

at Old Friends Equine FarmMay 6Georgetown(502) 863-1775oldfriendsequine.org

•International Bar-B-Q Festival May 11-12 Owensboro (270) 926-6938 bbqfest.com•Chamber Music Festival of the Bluegrass May 26-27 Harrodsburg (800) 734-5611 shakervillageky.org•Kentucky Mountain Laurel Festival May 24-27 Pineville (800) 325-1712 parks.ky.gov/parks/resortparks/ pine-mountain/default.aspx

Maple Hill Manor near Springfield, Ky.



LINEby Kathie Stamps, Meredith Lane and Anne Sabatino Hardy

QUICK CUTSFRANKFORT● Through the years, much debate has taken place in the whiskey industry about the barrel aging warehouses and what effect they have on the finished product. Does a concrete warehouse offer a different taste from a metal clad warehouse? What about the upper floors versus the lower floors? In the fourth release of the Single Oak Project Bourbon Whiskey, Buffalo Trace Distillery experiments with some of these questions by focusing on warehouse placement, using two particular warehouses, to compare taste profiles. As with the other three releases, Buffalo Trace hopes consumers can continue to rate each whiskey they taste online at singleoakproject.com. This feedback will help Buffalo Trace determine which Bourbon connoisseurs prefer most.

LEXINGTON● Coles 735 Main is now open in the former Furlong’s (and Onizim’s) location on the corner of Main Street and Ashland Avenue. The restaurant recently underwent a major makeover, creating a lighter, softer space with a French country vibe. The eclectic menu, designed by Executive Chef and Owner Cole Arimes, features international fare such as Latin, Japanese and French, plus American staples including burgers, steaks and seafood and, of course, Southern fare. Open Mon-

day through Saturday for dinner, the gazebo/bar menu includes small plates ranging from $4 to $12 and the dining room menu has more upscale options, with the highest priced item being $28 for a nice cut of beef. Try one of their craft and seasonal beers, or a glass of Coles’ unique wines – the first restaurant in the state to offer keg wine.

● The former Murray’s Restaurant on Harrodsburg Road is the new site for Josie’s on 68, the second Josie’s location for owner Bobby Murray and fam-ily, of Murray’s fame, who also own the Merrick Inn. Josie’s on 68’s menu is American fare for breakfast, lunch and dinner Tuesday through Sunday.

● Jean Farris Winery was the only winery outside of California to win a double gold award in the cabernet sauvignon class at the 2012 San Fran-cisco Chronicle Wine Competition, the world’s largest competition of American-produced wines. More than 5,000 people attended a public wine tasting to sample the winning wines. The Lexington-based winery also won a silver medal for its 2008 cuvee, a combination of the Mourvèdregrape variety and the cabernet franc, which is grown on the O’Daniels’ farm.

● Rupp Arena is ranked No. 5 in social media power, according to Venues Today, an international industry trade publication that released their first Social Media Power 100 ranking. Researching more than 300 venues in North America to measure social media strength and effectiveness, The Roxy in West Hollywood came out on top, fol-lowed by Denver’s Red Rocks Amphitheatre, Madison Square Garden in NYC and the Staples Center in LA. Rupp Arena rounded out the top five, under the leadership of marketing director Sheila Kenny and team members Matt Johnson and Paul Hooper. Louisville’s KFC’s Yum! Center ranked No. 36.

LOUISVILLE● Hyatt Regency Louisville is undergoing a $5.8 million renovation, involv-ing a new front entrance, lobby, fitness center and a new restaurant and bar. The front entrance has been moved to Fourth Street, with a canopy for guests who want valet service. The former entrance will continue to be utilized as a motor lobby, where guests have access to self-parking. The lobby’s facelift includes three separate pods for check-in and check-out. Louisville-based Glassworks was commissioned to design an artistic glass wall behind the front desk. The Hyatt Stay Fit Fitness center (at 1,200-s.f., it’s double the size of the previous center), is adjacent to the lobby. The new Sway Restaurant will offer a sea-sonal menu of classic, Southern dishes with a contemporary twist.

SABIO: OLD SCHOOL, NEW FOOD FOR LEXINGTON LANDMARK

DUDLEY Square , once home to the much-loved Lexing-

ton landmark Dudley’s Res-taurant, has undergone a major transformation and now features a new restau-rant, Sabio, inside the his-toric school-house building. Diners may be surprised by the dramatic decorative changes, but if they’ve sam-pled food from Executive Chef Javier Lanza, they prob-ably won’t be disappointed by the dishes. The chef behind Migdalia’s in Paris, Ky., and, for a time, Jean Farris Winery, Lanza’s enthusiasm for food is evidenced in his dishes, and his inspiration is varies widely, from French haute cuisine to Spanish comfort food. “We will be casual fine dining,” said Lanza. “We will have a lot of different things. Some Asian, some Spanish - Paella will be a regular special.” Lanza also is currently planning a garden on the property to provide some fresh, local veg-etables and herbs. Sabio opened April 12.

Kentucky’s source for hospitality industry newsIncluding food, beverage, tourism, meetings and conventions

From chandeliers and recycled cork-bottle chairs to contemporary art and a giant red-lacquered statue behind the bar, the modern interior has a bright, fun vide that is the signature of building owner Bobby Freisberg.

LOUISVILLE GAINS NOTORITY AS A DINING DESTINATION

LOUISVILLE received more evidence of its growing repu-tation as a great place to eat

when it was named one of the “Best Foodie Getaways around the World” by Zagat and one of the South’s “10 Tastiest Towns” by Southern Living magazine. In addi-tion to world-class fine dining res-taurants, programs like Farm to Table have helped connect local farmers to caterers, chefs and school cafeterias; excellent culinary-arts education programs at Sullivan Uni-versity and Jefferson Community

and Technical College have supplied local restaurants with top-quality chefs; and the Healthy Hometown program makes fresh produce available in areas of the city underserved by full-service groceries. Healthy Hometown received the national Childhood Obesity Prevention award.

Proof on Main in downtown Louisville’s 21c Museum Hotel is a favorite bar and restaurant for locals and visitors alike.

Estes PR photo



DOWNTOWN LOU GETS NEWEATERY WITH ANTIQUE FLAIR

LO U I S V I L L E n a t i v e s a n d entrepreneurs

Rob Frey and Amy Hoffmann Frey have partnered with family and close fr iends from Philadelphia to bring a new restau-rant bar concept to downtown Louisville. St. Charles Exchange, slated for an April opening, will breathe new life into the 3,800-s.f., formerly vacant space in one of the oldest buildings in the West Main Street corridor. The 7th Street restaurant will be reminiscent of a 1900s hotel lobby bar, with a menu of innovative interpretations of food classics from the turn of the previous century, along with a lengthy cocktail list. Local contractor Bosse-Mattingly Construction and local archi-tect K. Norman Berry Associates are handling renovations. St. Charles Exchange shares a complex with the St. Charles Build-ing on West Main Street, which was built in 1832 and formerly housed the St. Charles Hotel. Unlike many of the early struc-tures that were damaged by fires, tornadoes and dilapidation, the building has remained unscathed through the decades.

CRAFT EXPERTISE ON TAPAT NEW LEXINGTON BAR

LEXINGTON Beerworks is on North Limestone in the former Limestone Club.

Owners Michael Vincent, Greg Leimer and Jason Wolf have 12 rotating taps of craft beers, ranging from beers made here in Lexington to those from other countries. Try a flight of four 4-ounce tasters, starting at $6. The focus is on American craft beers and there are 100

varieties in bottles. Snack food includes chocolate-covered pea-nuts and chocolate-covered potato chips from Old Kentucky Chocolates and beer cheese from River Rat in Winchester. Lex-ington Beerworks is open seven days a week, with seating for 50 inside and 40 on the two-level deck in the back of the building. Monthly classes are available for those do-it-yourselfers who want advice from an expert home brewer.

QUICK CUTSLOUISVILLE● Tin Roof is soon coming to St. Mat-thews. Scheduled to open in late May or early June in the former Brendan O’Shea’s spot on Shelbyville Road, Tin Roof will be open seven days a week. Company president Bob Franklin is excited to bring “our brand of live music, great food and friendly service” to Louis-ville. The company already has a Lexington location and also operates bars in Tennessee, Alabama and South Carolina. The live music venue is coming soon to Cincinnati and Indianapolis, too.

● The Brown Hotel has been named to Travel + Leisure’s 2012 list of the Top 500 World’s Best Hotels. Each year, the magazine’s Top 500 list allows readers to vote on thousands of hotels through an online voting system. The Brown Hotel was a new addition to the list and was also distin-guished as being top in value with an overall score of 88.56.

● Royal Cup Coffee is the new owner of Con-sumers Choice Coffee, after acquiring 100 percent of the common stock from CCC Presi-dent Bob Patterson and another stockholder. Royal Cup Coffee plans to maintain the CCC headquarters in Louisville and the company will keep the entire sales and service staff, as well as other support functions. Royal Cup Coffee will

also continue supporting several nonprofits and charitable organizations in the Louisville community. Family-owned Royal Cup Coffee has been a roaster partner of Consumers Choice Coffee for more than 25 years.

● Two students of Sullivan University’s National Center for Hospitality Studies won gold medals at the American Culinary Federation competition in Pontiac, Mich. Kelsee Newman and Halie Raymer represented Sullivan Univer-sity’s Baking and Pastry Arts program and brought home the top prizes. Compe-titions play a vital role in culinary arts as they continually raise the standards of culinary excellence. Participation in ACF-approved competitions also earn stu-dents continuing education hours for ACF certification.

● The restaurant development and management team that opened Doc Crow’s Southern Smokehouse and Raw Bar on Whiskey Row in 2011 is bringing a new French bistro to NuLu. Basa owners Steven and Michael Ton, along with master sommelier and veteran restaurateur Brett Davis and attorney Chip Hamm, are opening Bistro Voliere in April on East Market Street. The menu is French comfort food with entrées priced at $20 or less and a cocktail program that includes wine infusions and French aperitifs, for lunch and dinner, Tuesday through Saturday.

NICHOLASVILLE● The 9th annual Kentucky Wine & Vine Fest is May 19 on York Street in downtown Nicholasville. Jessamine County is the site of the first commercial wine vineyard in the United States, started by Frenchman John James Dufour in 1798. The 2012 celebra-tion of Kentucky vineyards and winemaking will feature Kentucky Proud food, live music, a grape stomp, the “run for the merlot” obstacle course and a selection of international wine samples. Participating wineries include Chrisman Mill Vineyards, Nicholasville; Elk Creek Vineyard, Owenton; Generation Hill, Alex-andria; Prodigy Winery, Versailles; Purple Toad Winery, Paducah; Rose Hill Farm Winery, Butler; and Wight-Meyer Vineyard, Shepherdsville. ● The Father’s Cup Café on Main Street in Nicholasville celebrated its grand opening in March. The new business is part of the Downtown Renaissance Project. First-time restaurateur Mary Henderson has a fun mix of artwork and furniture for the décor, accompanied by an eclectic menu of sandwiches, soups, salads, mini pizzas and sides for lunch Monday through Friday. Special-ties include a daily quiche and soup. The café also offers catering.

Rendering of the new restaurant and bar St. Charles Exchange, which will be reminis-cent of a 1900s hotel lobby bar.

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Commentary on KentuckyPASSING LANE

WHAT state has better college basketball than Kentucky? For 2011-12, none.

The University of Kentucky men fin-ished 38-2 and earned their eighth national title, entering the NCAA tour-nament as overall number one seed. Fifth youngest team in the country, they were the youngest team to make the NCAA tournament field.

Coach John Calipari started three freshmen and two sophomores for most of the season, with senior and former Kentucky Mr. Basketball Darius Miller coming off the bench. Freshman Anthony Davis became a national sensation as the most impactful defensive player in the country. He broke the NCAA freshmen shot-blocking record and was named best overall player in the nation.

The Louisville Cardinals had the defi-nition of an up and down season. Ranked in the Top 10 when they played Kentucky at Rupp Arena last New Year’s Eve, they’d fallen out of the Top 25 at the end of the regular season as player after player bat-tled injuries. But then Louisville won the Big East Tournament and four more games in the NCAA behind point guard Peyton Siva to make the Final Four and a rematch in New Orleans with UK that brought the state to a standstill.

Murray State was perhaps the sur-prise team in the country this year, los-ing only one regular season game en route to winning the OVC season and tournament championships. The Racers spent most of the year in the Top 25, and the last two months in the top 10. They were led by first-team All-Ameri-can Isaiah Canaan and won their first-round NCAA game.

What about Western Kentucky? The amazing Hilltoppers had a losing record and fired their coach midway through the year. But after giving interim coach Ray Harper the job permanently, the Toppers won the Sun Belt tourney to also earn a surprising NCAA tournament berth – then won their play-in game with Presi-dent Barack Obama watching.

Matthew Mitchell led his UK women on a historic run this season also. The SEC regular season champs were a two seed in the women’s NCAA tournament, their highest seed since 1982, and made it to the Elite Eight before the season ended. Mitchell was named the SEC coach of the year by the AP, A’dia Mathies was named league player of the year and Bria Goss was SEC freshman of the year. Their fans set a season attendance record.

It was quite a year for basketball in the state of Kentucky, but what else would you expect?—Mary Jo Perino

The State ofBasketball

Above: The University of Louisville Cardinals finished an up and down season by winning the Big East tournament and making it to the Final Four in New Orleans. Right: The UK Lady Wildcats had their best season in 30 years, winning the SEC title and making it to the NCAA Elite Eight.

University of Kentucky men’s basketball team players celebrate on the court in the New Orleans Superdome after winning the school's eighth NCAA national championship April 2 over Kansas by a score of 67-59.

Murray State’s Racers had a fantastic 31-2 season that included hosting Dick Vitale and the ESPN “Game Day” crew.

The WKU Hilltoppers rode a late-season run into the NCAA tournament.



UNIVERSITY of Louisville engineering researchers have created a new eco-

nomic indicator to measure logis-tics and distribution activity in the r e g i o n . T h e y b e l i e v e t h e i r monthly LoDI Index will be a use-ful tool to monitor economic activity and guide business invest-ment decisions.

Akin to the Consumer Confi-dence Index, the LoDI Index will report activity on a 1-to-100 scale intended to gauge potential risk and reward. It launched in April at a value of 58, indicating increas-ing activity.

The tool is named for a n d w a s developed at t h e U o f L -based Logis-tics and Distribution Institute, whose director Sunderesh Heragu developed it along with industrial engineering professor Gail DePuy and doctoral student Erin Gerber of Louisville.

Primary users are expected to be logistics-related businesses and warehouses around Louisville and Southern Indiana. Other potential users could be government, cham-bers of commerce and individuals, said Heragu, who is the Mary Lee and George F. Duthie endowed chair in engineering logistics at the J.B. Speed School of Engineering.

The institute plans to issue the index on the last Thursday of each month and to offer the informa-tion in advance to subscribers. Future plans include broadening the index into a national metric.

The index uses data primarily from the four transportation modes (road, air, rail and river) that are important to the region’s logistics and distribution econ-omy. Organizations that are part o f Greater Louisv i l le Inc . ’s Advanced Manufacturing and Logistics Network have provided data for the model.

Businesses and individuals can find out more or subscribe by con-tacting Heragu at (502) 852-2741 or [email protected].

UofL Launches Logistics Index

THE University of Pikeville-Kentucky College of Osteopathic Medicine ranks 12th among all rural medical schools in the nation, both D.O. and M.D., in U.S. News & World Report’s 2013 edition of Best Graduate Schools.

Founded in 1997, the osteopathic medical school moved from fifth place last year to second in the percentage of graduates who enter primary care, and another U.S. News & World Report listing last year ranked it fourth best in affordability among the 10 least expensive private medical schools in the nation.

“It is gratifying to be recognized and ranked by our peers for excellence in rural medicine and our contribution to alleviation of the shortage of primary care physi-cians in rural areas,” said Boyd R. Buser, D.O., dean of Kentucky College of Osteo-pathic Medicine and vice president of Health Affairs at the University of Pikeville.

The University of Pikeville is nearing completion of a new $34 million home for the medical school.

The Coal Building, named in recognition of an industry that has provided signifi-cant support to the institution for many years, will feature a clinical skills training and evaluation center, state-of-the-art robotic simulation, research and teaching laborato-ries, as well as classrooms, offices and student study spaces. It will also accommodate a larger yearly class size, which is in keeping with the school’s mission to alleviate physician shortages in Kentucky and Appalachia, especially in rural areas.

Of nearly 700 graduates since its first class of physicians in 2001, 60 percent are serving in the Appalachian regions of Kentucky, Tennessee, Virginia, West Virginia, South Carolina, Mississippi, Alabama, North Carolina and Georgia, as well as rural areas of eastern Ohio, western Pennsylvania and New York. Currently, 69 percent of these physicians are serving in primary care.

Pikeville Ranked Among TopU.S. Rural Medical Schools

THEY are international icons to even the casual observer, but Keeneland and Churchill Downs also are two of the top four Thoroughbred race-

tracks in North America in the view of the gaming com-munity. The latest annual Horseplayers Association of North America (HANA) ratings have Keeneland No. 1 and Churchill Downs No. 4.

The HANA Track Ratings are based on an algorithm designed by HANA board member Bill Weaver, a retired engineer. Using studies and empirical data directly correlated to horseplayer value and handle as key factors – including takeout rate, field size, wager variety, pool size and signal distribution – a composite score is tabulated and the tracks are ranked.

For 2012, Keeneland tops the North American rank-ings for the fourth consecutive year.

“With takeout rates of no higher than 19 percent on any bet, a field size of 9.51 horses per race, and an almost 10 percent increase in handle in 2011, Keeneland came out on top,” said Jeff Platt, president of Charlottesville, Va.-based HANA.

“We are so humbled to once again receive this honor,” said Keeneland President/CEO Nick Nichol-son. “This ranking is very important to us for many reasons, especially because we have enormous respect for HANA and its mission to give horseplayers a voice in our industry. It is equally gratifying that we can attain

the top ranking while maintaining the emphasis on the health and well-being of our equine and human athletes, as well as wagering integrity on our racing product.”

The 2012 spring session at Keeneland is April 6-27. Churchill Downs’ spring ses-sion is April 28-July 1.

The full factor sheet is posted at horeplayersassociation.org.

Keeneland, Churchill Downs Are Good Bets, HANA Says

North America’s Best Tracks

1 Keeneland (last year 1st) 2 Tampa Bay Downs

(last year 3rd) 3 Gulfstream Park

(last year 5th) 4 Churchill Downs

(last year 2nd) 5 Oaklawn Park (last year 9th)Source: Horseplayers Association of North America


mailto:[email protected]


KENTUCKY PEOPLE

SOMERSET: FIRST LADY PROMOTES IMPORTANCE OF READING SKILLS

Educators and parents from seven southern and eastern Kentucky counties met with Kentucky First Lady Jane Beshear on March 8 at The Center for Rural Development in Somerset to collaborate improving reading skills in young children. Pictured here are (front row, left to right) Keith Lyons, coordinator of communications, marketing, and promotions for the Collaborative Center for Literacy Development; First Lady Jane Beshear; Jim Tackett, executive director of Forward in the Fifth; and Vickie Slone, Hazard; second row, Debbie Goble and Jennifer Sheens, Prestonsburg; third row, Danna Duff, Hazard; Eunice Waddles and Alisa Huff, Hindman; Patricia Burgan, Harlan; and Donna Singleton, Hazard; and back row, Mindy Ketcham, Tonya Halcomb, and Carla Hinkle, Barbourville; and Pam Miller and Susan Lacey, Campton. Mrs. Beshear was presented a framed print of different photographs of Reading Recovery students throughout the region. The meeting was hosted by Forward in the Fifth in partnership with the Kentucky Valley Educational Cooperative.

LEXINGTON: MULLINEAUX PRESENTEDWITH UK FACULTY EXCELLENCE AWARD

Donald Mullineaux, the duPont endowed chair in banking and financial services in the University of Kentucky’s Gatton College of Business and Economics, was honored on March 1 with the 2012 Kentucky N. Robertson Faculty Leadership Research Award. The honor, which also carries a cash stipend, recognizes notable research achievements by a Gatton faculty member and is named in honor of the UK alumnus who currently serves as chair of the Gatton College Dean’s Advisory Council. Pictured here with Mullineaux (right) is Merl Hackbark, University of Kentucky professor and former interim dean of the Gatton College.

LOUISVILLE: CAUDILL SEED PRESENTEDWITH KY PROUD EXCELLENCE AWARD

Jennifer Mueller, right, of the Kentucky Department of Agriculture, recently presented Caudill Seed Co. President Pat Caudill with the Kentucky Proud “Partner in Excellence Award,” an honor awarded in recognition of the company’s commitment to growth and sustainability of agriculture in the commonwealth. Louisville-based Caudill Seed, which is celebrating its 65th year in business, is a leading seed and supply distributor in the region and has operations Louisville, Allen and Morehead, Ky., as well as in Granite, Okla.

SOMERSET: BUSINESS LEADERS OFFERCAREER ADVICE TO KY STUDENTS

The Center for Rural Development and Forward in the Fifth recently wrapped up a week of live web video broadcasts to middle- and high-school students in 32 south-central and southeastern Kentucky that emphasized the importance of education in preparing for their future careers. Pictured here are (left to right) host Michael Cornett, director of marketing and public relations for The Center for Rural Development and Forward in the Fifth board member; Kentucky Education Commissioner Terry Holliday; and co-panelists Connie Hunt, general manager of The Arena in Corbin, and Dave Mather, executive director of the Small, Rural, Tribal and Border Regional Center (SRTB-RC).




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