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January 18, 2013 • Vol. 35, No. 3 • $2 • 20 pages


ROLLING THE DICE Mississippi gambles on technology developments some deem to be too risky

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MBJ FOCUS: Banking & Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lending a hand to small businesses


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January 18, 2013

Mississippi Business Journal



My favorite adaptive reuses


Council eases path to operation for Hattiesburg breweries

BY CLAY CHANDLER I STAFF WRITER The Hattiesburg City Council has removed one of the last major hurdles that two breweries had to clear before they could get their product on shelves. The council altered the city’s land use code to allow breweries in Hattiesburg’s downtown district. The old code would have allowed breweries, but would have also mandated they provide things such as parking areas similar in size to other downtown retailers. John Neal, owner of Southern Prohibition Brewery, said the altered land code “just makes thing a lot easier on us.” “Now we don’t have to have a whole bunch of parking that would be expensive to build and that we just wouldn’t have needed,” he said. “We’ll have people come and tour the brewery, but nothing that would have justified having 50 parking spaces.” Neal said he hopes to have Southern Prohibition beer on retail shelves by April. His 20-barrel brewery will sit in a renovated furniture warehouse. Gordon Creek Brewery, which will be right down the street from Southern Prohibition, is scheduled to start brewing next month, according to the Hattiesburg American newspaper. Neal, who also owns craft beer bar the Keg and Barrel, said his operation will be a little different from the handful of breweries that have sprang up since July 1, when state law changed to allow the maximum alcohol content in beer made and sold in Mississippi to rise from 5 percent by volume to 8 percent by volume. “We’re going to can our beers, which is kind of a new thing for the craft beer industry,” Neal said. “It protects the beer from light, gets it colder, and is generally just easier for the consumer to handle.” Neal said business at Keg and Barrel is up 30 percent since July 1. He’s added 45 parking spaces and built an outdoor bar since then, he said. “I fought hard for the ABV law, but I had no idea it would have this dramatic of an effect on not just us, but everybody connected to craft beer.”

This week I plan to work in a building that once housed an office supply store, have coffee in a building that was once a dry cleaners and read a book in a place where I once bought underwear. All of these buildings have something in common other than my frequent use of them. They are all examples of something known as adaptive reuse, a term that is generally defined as using a building for some other use than that for which it was designed. Adaptive reuses are more common in areas that have undergone change, especially change that is a part of the fourth stage of the neighborhood life cycle, those stages being growth, stability, decline and renewal. I have spent most of my life in Jackson, Miss., a city that has changed significantly over the past 40 years. The demographics of the city vividly illustrate the change. The 1970 census reported a population 153,968 residents. Jackson’s population growth topped out around 1980, when the census recorded 202,895 residents. The 2010 census shows a population of 173,514, 79.4 percent of whom were African American. Non-Hispanic whites were 18 percent of the population in 2010, down from 60 percent in 1970. Over the years, Jackson’s commercial/retail center moved from downtown to the suburbs. Many residential and commercial neighborhoods have been changing, some declining, but some exhibiting impressive signs of revitalization and renewal. The Fondren area is Jackson has become a model for revitalization. Taking a stroll around Fondren is an exercise in viewing adaptive reuses. Fondren describes itself as “Jackson’s most diverse, progressive and thriving urban district.” I have also heard it described as funky and eclectic. Jane Jacobs, author of The Death and Life of Great American Cities, would have loved both of those observations for she

said, “…city areas with flourishing diversity sprout strange and unpredictable uses and peculiar scenes. But this is not a drawback of diversity. This is the point... of it.” Downtown Jackson is also experiencing revitalization, much of which features adaptive reuses. The King Edward Hotel in now more than a hotel, as it offers residential living on some of its floors. Similarly, the Standard Life Building, formerly an office building, is now Standard Life Downtown Flats. These are just two of the conversions to residential in downtown Jackson. The Downtown Jackson Partners’ website at lists a wide variety of current projects, many of which are adaptive reuses of existing buildings. And then there is the Millsaps Avenue Arts District, where up-and-coming artists commingle with established artist icons such as Andy Young of Pearl River Stained Glass. Mix in residential neighborhood revitalization and the scene is one of houses becoming studios and industrial buildings becoming multiuse venues. Now that I have set the stage, I now offer 10 of my favorite adaptive reuses in Jackson. They are in no particular order. 1. 509 East Capitol Street. This is building in which my office is located and which is the home of the Mississippi State University School of Architecture Fifth Year Program. It was once an S.H. Kress store and later an office supply store. 2. Eudora Welty Main Branch, JacksonHinds Library System, 300 North State Street. It was once the Sears store. Yes, they sold boys underwear. 3. Central High School, my alma mater, is now the headquarters of the Mississippi Department of Education. 4. The Everyday Gourmet in Fondren was once “Mr. Whittington’s” gas station. 5. Mississippi Republican Headquarters, 415 Yazoo Street, was once The Hough Home,

a residential boarding house for women. Its Phil Hardwick residents were usually fresh out of high school or college with jobs in state government, banks and insurance agencies. 6. Cups, 2757 Old Canton Road, is the flagship of this growing coffeehouse collection of 11 cafes. It attracts artists, doctors, lawyers, students and international visitors for coffee or tea, view the art or listen to live music. “This is where Belhaven, Fondren and Woodland Hills meet,” according to the Cups website. It was once a dry cleaning establishment. 7. 121 Millsaps Avenue, a large former industrial/commercial building is now the centerpiece of the North Midtown Arts District. It is the home of the North Midtown Arts Center and many artists are using it for their commercial business or studio. 8. Hal & Mal’s, 200 Commerce Street, is a well-known restaurant, brewery and music venue. It was once the GM&O freight depot building. 9. The Fairview Inn, 734 Fairview Street, is the city’s only AAA four-diamond small luxury hotel. It features a restaurant, the library lounge, a bed and breakfast operation, venue for receptions and more. It was built in 1908 and used as a residence. 10. Robert Parker Adams, Architect offices, 219 North Lamar Street, also known as “The Dog” was the Greyhound Bus Station. There you have a snapshot of some adaptive uses in my town. I encourage you to pause and take at look at your community to find and appreciate its adaptive reuses.

Phil Hardwick is coordinator of capacity development at the John C. Stennis Institute of Government. Pease contact Hardwick at


Senate committee approves charter school bill Legislation to expand charter schools in Mississippi is once again moving forward, as the state Senate Education Committee approved Senate Bill 2189 on a split vote last week. The action came after Lt. Gov. Tate Reeves met privately with committee members last Monday evening. The bill was released last Tuesday morning. "This is just kind of picking up where we left off in the 2012 session," Senate Education Committee Chairman Gray Tollison, R-Oxford, said. The bill would give districts rated "A'' or "B'' a veto over whether charters can locate there, while "C'' and

lower-rated districts wouldn't get a veto. Many House members favor allowing C-rated districts to have vetoes as well. Students would be allowed to cross district lines to enroll in charter schools. Charter schools are public schools that agree to meet certain standards in exchange for freedom from regulations. Proponents say they can improve achievement in Mississippi. "I don't know of anybody who has ever thought charter schools would be a panacea, but they do provide parents with options," said Forrest Thigpen, president of the Mississippi Center for Public Policy, a conservative-leaning group that has

pushed for charter schools. Opponents fear they will skim motivated students and money from traditional schools. "The public school system does well," said Sen. David Jordan, D-Greenwood, a retired teacher and opponent of charter schools. "The only thing wrong is you don't have the resources you need." A separate seven-member board would approve charter schools and oversee them, with three members appointed by the governor, three members appointed by the lieutenant governor and one member appointed by the state superintendent.

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Hosemann to fight to keep 16th section lease oversight By CLAY CHANDLER I STAFF WRITER

Secretary of State Delbert Hosemann plans to spend at least part of the 2013 legislative session opposing a measure that would take 16th section land lease oversight from him and give it to individual school boards. Hosemann, in his role as the state’s land officer, oversees the management and the leasing of Mississippi’s 640,000 acres of Hosemann 16th section lands. Of the state’s 152 school districts, 107 own 16th section land. Hosemann’s office and the Mississippi Forestry Commission manage the timber on the parcels. One of Hosemann’s priorities after first being elected in 2007 was to publish on the secretary of state’s website the 16th section leases. It was unclear last week if the legislation Hosemann plans to oppose would end that practice. During a speech to a group of business leaders in early January, Hosemann said his office, since 2008, had increased 16th section revenue by $17 million, from $54 million then to $71 million in 2011. School districts in North Mississippi, Hosemann said, get $20 million to compensate for their not having 16th section land. Timber revenues since 2008 have risen $12 million annually, Hosemann said. His office also audits oil and gas payments districts receive from energy companies either exploring for or extracting the fuels. “It’s a $91-million business, and it needs to be run like a business,� he said. To ensure that, Hosemann said his office needs to retain oversight of 16th section leases and timber management. Removing that authority would lead to secret lease deals made out of the public light, which could drive up education costs, he said. Oversight of the 16th section leases has been an issue going back almost four decades. Former Secretary of State Dick Molpus said in the 1980s that the practice had “a history of poor judgment, neglect, nepotism and outright fraud.�

Molpus said then that he hoped that the revenue generated from 16th section land leases could pay for the bulk of public education in Mississippi. That has not happened. Revenue from 16th section land leases, according to Hosemann’s figures, generate about $70 million annually, which is far less than the more than $2 billion the state spends on public education. Authority over the leases were with individual county boards of supervisors until the late 1970s, when it was given to individual school boards with overall supervi-

One of Hosemann’s priorities after first being elected in 2007 was to publish on the secretary of state’s website the 16th section leases. sion by the office of the state land commissioner. When that agency was abolished in 1984, that authority shifted to the secretary of state. Legislation stripping Hosemann of oversight authority had not been filed as of last Tuesday. During his speech to business leadership, Hosemann did not name the legislators who planned to file it. He also would not name them during an interview last week in his Capitol office. Sixteenth section land in Mississippi was designated for the benefit of the state’s public schools in 1804, when the state was still a territory. Thomas Jefferson established the idea that the 16th section, or 640 acres, of every township be set aside to benefit public schools.

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4 â– MBJ â–  January 18, 2013

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January 18, 2013 • • Page 5


Health exchanges are a fact Gov. Bryant must live with


hat does Phil Bryant not understand about elections? The Republican Mississippi governor seems to have completely missed the fact that Barack Obama was re-elected in November. That means the Affordable Care Act is going to be the law of the land for at least the next four years and, most likely, perpetually. Bryant is waging a senseless and counterproductive battle to keep Insurance Commissioner Mike Chaney, a fellow Republican, from implementing a state-run health insurance exchange in Mississippi.

Health exchanges — which are nothing more than an online marketplace where consumers will be able to theoretically shop for the best deals on health insurance — are going to be a fact of life by January 2014. They are mandated under Obamacare. The question is only over who is going to run them — the state, the federal government or a partnership of the two. Chaney has rightfully argued from the start that it would be better for the state to run its own health exchange so it would have more control over its terms. At least four Republican governors elsewhere have come to the same conclusion, but not Mississippi's

Bryant. He has joined with the majority of GOP governors in an act of defiance that is more about politics than good policy. Bryant has undermined the work of Chaney, who was ahead of the curve in lining up Mississippi to run its own exchange. The governor has written a pair of letters to the U.S. Department of Health and Human Services, challenging Chaney’s authority to proceed with creating the health exchange. Bryant argues that only the governor can act on behalf of the state — an assertion that not only Chaney challenges but which has See VIEWS, Page 6

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Starkville mayor seeking a second term

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STARKVILLE — Starkville Mayor Parker Wiseman has announced he is running for a second term. Wiseman, a Democrat, was first elected mayor of the city in 2009. Wiseman says in a statement that his priority in a second term will be advancing Starkville's economic development interest. He says he wants to proactively manage Starkville's infrastructure by planning street, drainage, and sidewalk improvements three years in advance. He says he will continue pursuing a mass transit program, making sure children are ready for kindergarten through the Excel by 5 program and growing the Mayor's Youth Council and the youth summer work program.

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Third candidate in race for mayor of Hattiesburg

>> HOW TO WRITE Letters to the editor are one of the most widely read features of the Mississippi Business Journal, and they give everyone a chance to voice their opinions about current affairs. We’re interested in what you think and we welcome Letters to the Editor for publication. Here are the guidelines: >> Letters should not exceed 300 words in length as a general rule. >> All letters must bear the writer’s address and telephone number. Street addresses and telephone numbers will not be published, but may be used for verification purposes. Letters may not appear without the author’s name. >> Form letters, thank you letters and letters to third parties generally are not acceptable. >> Letters must be typed or e-mailed. >> Letters must conform to good taste, not be libelous and not involve personal attacks on other persons.

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>> CORRECTIONS The Mississippi Business Journal takes seriously its responsibility to provide accurate information, and will correct or clarify articles produced by the editorial department if we have made an error or published misleading information. The correction will be placed in the perspective section. If you see inaccuracies in Mississippi Business Journal news stories, please report the mistake via email at

The field of Hattiesburg mayoral candidates has widened with the announcement of Councilman Dave Ware for the city's top office. The 41-year-old Ware, who is in his second term as councilman, will run as an independent. Ware says goals for his administration would include an accountability system for city employees, through third party evaluators Ware is the third announced candidate for mayor of Hattiesburg. Incumbent Mayor Johnny DuPree and Councilwoman Deborah Delgado, both running as Democrats, have announced intentions to run in the mayoral race. Municipal elections will be held June 4.

Laurel mayor running for council post Laurel Mayor Melvin Mack told The Chronicle in Laurel that he will not seek re-election but will, instead, run for a vacant city council post. Mack plans to run for the city’s ward seven post held by Councilman Trey Chinn. — from staff and MBJ wire services

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A member of the Mississippi Press Association and the Alliance of Area Business Publications



Hey Mr. Palazzo, Storm devastation knows no politics



Veteran Hagel deserves fair hearing


week ago Monday, President Barack Obama nominated former Republican Senator Chuck Hagel as secretary of defense, calling him “an American patriot.” The prior Sunday, Sen. Roger Wicker tweeted that he would “strongly oppose” the nomination. “Chuck Hagel would be a divisive and disastrous nominee for SecDef,” read the tweet. Remarkable that Wicker took such an early, strong position against someone with Mississippi ties. Hagel is married to the former Lilabet Ziller of Meridian. They met in 1982 when Hagel served as a deputy administrator of the Veterans Administration under Ronald Reagan and Ziller served as Congressman Sonny Montgomery’s staffer on the Veterans Affairs Committee. They married in 1985 and are regular visitors to the Queen City and local haunts like Jean’s Restaurant. “He relaxes more in Meridian than anywhere else,” Lil told The Meridian Star. A veteran and volunteer infantryman in the Vietnam War where he earned two Purple Hearts and the Army Commendation Medal, Hagel was “one of the gang” said a former Montgomery staffer. The gang was a group of pro-America military and veterans leaders that regularly joined Sonny for breakfast in Longworth House Office Building cafeteria. Admirably, Hagel resigned his V.A. position after then administrator Robert Nimmo referred to veterans groups as “greedy.” Remarkable, too, that Wicker took his position before Hagel was nominated, before the Senate held any confirmation hearings and before Hagel had any chance to express his views and defend his record. The loudest opposition to Hagel comes from the ever-

more-strident pro-Israel lobby. The strongest opposition, however, may come from the defense lobby. While a proponent of a strong national defense, Hagel is an Eisenhower Republican willing to go after wasteful Pentagon spending. He has called the $525-billion defense budget, which doubled since 2001 (not counting war costs), “bloated.” Bill Crawford As the next SecDef he would oversee what are expected to be significant cuts to military spending. In a statement released prior to the nomination, Wicker somewhat explained his position. “Sen. Hagel’s record of opposing Iran sanctions is troubling,” he said. “His views and positions on the Middle East and Israel are contrary to the Administration’s own stated policies, and there are concerns from members of both parties about this nomination.” Republicans with relevant leadership experience say otherwise — former Secretary of State Gen. Colin Powell, former National Security Advisor Gen. Brent Snowcroft and former Homeland Security Secretary Tom Ridge say otherwise, along with five former U.S. ambassadors to Israel. They add that foreign policy related to Israel will be dictated by Obama, not Hagel. Judging from how he handled this, Wicker appears to be more influenced by the politics of Hagel’s nomination than its merit. As Sonny would have said, Hagel as a decorated veteran at least deserves a fair hearing. Bill Crawford ( is a syndicated columnist from Meridian.

teve Palazzo is the Republican congressman from the 4th District, aka The Coast. He followed Democrat Gene Taylor, who served during Hurricane Katrina and spent much time and effort to get relief for his constituents after the massive storm. People who live on the Coast of Mississippi understand the grief of a storm. They’ve lived it. From Camille to Katrina, residents of the Coast of Mississippi have suffered and stood strong. They know the terror of a monster storm, and they know the Nancy Anderson additional insult to injury that comes with the cleanup. They have fought with insurance companies and government bureaucracies to get the assistance they need, and they expect their politicians to stand strong with them. Steve Palazzo serves this district where I grew up, where I hunkered down in a hallway while the eye of Hurricane Camille blew over. After Katrina, it was Palazzo, serving with the City of Biloxi, who demanded funding from Washington. But when it came time to show support to other hurricane victims, Palazzo said, “No.” He voted against Sandy relief. Let’s give him the benefit of the doubt. Maybe he thought Sandy relief was money for dune construction or money for special beach vacuum cleaners or money for that guy who played on Flipper — the cute one with the “sandy” colored hair. Because surely, surely, a representative from the Coast of Mississippi would stand strong with Hurricane Sandy victims, not only because it is the right thing to do but because he knows his time will come again. Another monster storm will blow through his beloved Coast of Mississippi, and he will need every vote he can muster to help his constituents. Becausewhenthewaterrecedes,andyou’releftstandinginapile ofrubble,itdoesn’t matterifyouhavean“R”ora“D”behindyour name.Itonlymattersthatyouhavearepresentativewillingtostand withyou.IjusthopePeterKingforgetsthisslightbynextsummer!

Nancy Lottridge Anderson, Ph.D., CFA, can be reached at, and her website is


Continued from Page 5

been rejected in the past. (Anyone remember former Gov. Kirk Fordice’s unsuccessful effort to stop Attorney General Mike Moore from suing the tobacco industry in the 1990s?) In response to Bryant’s opposition, the federal government has put Chaney’s submission for approval on hold to see whether Mississippi can work out its internal differences. Bryant should back off. He says he distrusts the federal government. He says he thinks a state-run health exchange is the “gateway” for Obamacare to take hold in Mississippi. Obamacare is coming to Mississippi whether Bryant likes it or not. Some of its provisions are already in effect, and more are on their way. — Enterprise-Journal, McComb

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6 ■ Mississippi Business Journal ■ January 18, 2013

Mississippi Business Journal




Fitch to push for financial literacy requirements >> Cost of implementing program a likely obstacle By CLAY CHANDLER I STAFF WRITER

The bill had not been filed as of last Tuesday, but Fitch said “this is the year” that the state should mandate financial literacy for high schoolers. Fitch cited figures her office compiled that said 23 percent of Mississippians spend more money than they make, and 36 percent use no-bank borrowing methods, which commonly come from check-cashing and payday loan businesses.

avert widespread tax increases and decreases in spending for government programs. “They don’t have the knowledge base. We have done our children, our young adults and ultimately our workforce a disservice.” Nationwide, four states require high school students to take a one–semester financial literacy course, with Tennessee being the only southeastern state to do so. In most other states, including Mississippi, financial literacy courses are offered, but only as electives. They are not required for a student to graduate. For the school year the ended in 2012, according to figures Fitch provided, 5,800 high school students in Mississippi chose to take some kind of financial literacy class. The legislation Fitch will back will man-

Comfort Revolution plant having grand opening Monday

from leaders in the public and private sector, Fitch said. She’s optimistic the proposal can gain some traction at the Capitol, because she views financial literacy as an important component of education reform, which will be among the hotter topics of the 2013 legislative session. The reform movement took a big step forward recently when the Senate Education Committee passed the first of what will likely be several charter schools bills. One bill that would not mandate financial literacy, but make it available to all grades in high school, has already been dropped in the House Education Committee. That’s the same committee where the legislation Fitch will support will likely land. Rep. John Moore, R-Brandon, who chairs the committee, said he likes the concept of requiring high school students to take some kind of financial literacy classes. What will likely cause the legislation to encounter some resistance, he said, is the additional cost it would put on school districts. In all, Fitch estimated the program in its first year would cost $5 million to implement, but that would likely drop as textbooks and other materials are bought.

By TED CARTER I STAFF WRITER Sleep products producer Comfort Revolution will officially open its nearly half-million square-foot Belmont plant in Tishomingo County Monday with a 10 a.m. grand opening ceremony. West Long Branch, N.J.-based Comfort Revolution expects to employ about 200 workers over the next three years. The operation, housed in a renovated 432,650-square-foot building at 9 Industrial Park Drive, is the company’s first U.S. factory. The building is former Schnadig Furniture upholstery plant. “We’ve wanted for a long time to produce products in the United States, and we’re eager to get started,” said Comfort Revolution founder and CEO Michael Fux in the company’s early September announcement of the Belmont plant.. It will feature modern equipment including robotic technology, officials said. The plant will make Comfort Revolution products, consisting of mattresses, mattress toppers and pillows using memory foam and the company’s Hydraluxe gel technology, as well as some Sealy-branded products. Sealy became a partner with Comfort Revolution earlier this year, acquiring a non-controlling interest in the company, Furniture Today reports.

The legislation Fitch will back will mandate that students in 10th, 11th and 12th grades take a one–semester course that would teach the use of credit, budgeting, earning, managing an income and financial decision–making. “We have to change the financial culture in Mississippi,” Fitch said. “We can do that if we start with our children.” The problem is not unique to Mississippi. Nationally, according to several financialservices tracking organizations, 77 percent of Americans overall live paycheck to paycheck, having accumulated no savings. “If you stopped 10 young Americans and asked them about the fiscal cliff, they wouldn’t know what you are talking about,” Fitch said, referring to the recent agreement between Congress and President Obama to

date that students in 10th, 11th and 12th grades take a one–semester course that would teach the use of credit, budgeting, earning, managing an income and financial decision–making. Fitch said the culture change she’s after could happen if financial literacy were required in high school. The courses would help with decreasing the state’s dropout rate, decrease consumer debt, increase college savings and ultimately create jobs, she said. The particulars of the proposal were put together after Fitch’s office gathered ideas

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“If you think about it, that’s a small amount to change our financial culture,” Fitch said. It is an amount that will certainly get Moore’s attention. “Anything that adds cost to the classroom is something that we will have to weigh very heavily,” he said. “I told the committee that we would be very hesitant to bring forward anything that adds any kind of cost. The concept is a great one, but if it’s too expensive, it’s just too expensive. That’s the case with a lot of programs.”

U.S. 82 first in state to be named ‘cultural highway’ U.S. Highway 82, which runs from the Mississippi River at the Arkansas line across North Mississippi to the Alabama line, has been named the state’s first cultural highway. Officials say the designation will highlight the tourist attractions along the 181 miles of highway through eight Mississippi counties. — from staff and MBj wire services


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January 18, 2013


Mississippi gambles on technology developments some deem to be too risky


For years, Mississippi has placed a priority on providing assistance to technology companies to create jobs that pay more than average and help improve the economy of the state. But the failure of some of those start-up companies to get off the ground despite major incentive packages from the state raises concerns. Under the administration of Gov. Haley Barbour, the State of Mississippi approved loans and other financial incentives totaling hundreds of millions to six start-up companies involved in green or alternative energy. Whether the state will recoup all that money has been questioned. Harvard Business School senior lecturer Shikhar Ghosh has published research showing that three out of four venture-backed firms in the U.S. don’t return investors’ capital. Solar panel manufacturer Twin Creeks Technology Inc., a firm that was based in San Jose, Calif., and built a plant in Senatobia, has gone out of business after receiving $26 million in incentives from the State of Mississippi. Twin Creeks had promised to invest $132 million and create 500 jobs, but employment never got above 25. Silicor Materials was approved for a loan and grant package totaling $94 million for a proposed silicon metal purification facility in Columbus that was to employ 200 in its initial stage and 750 in a second stage. That incentive package was nullified when the company failed to put $150,000 in an escrow account by Jan. 1 as required in its agreement. Another technology development in the state, GreenTech Automotive, said it was going to invest $1 billion in an automobile plant that would produce two-seater, electric hybrid cars about the size of golf carts. The State of Mississippi loaned $5 million for startup costs. The Virginia Economic Development

Partnership (VEDP) had earlier vied with Mississippi for landing the GreenTech manufacturing plant. “This is an ongoing saga, so only time will tell if Virginia or Mississippi made the right decision with regards to GreenTech Automotive,” said a blog at dated Dec. 27, 2012. “At the moment, though, VEDP is taking some flak for letting a Chinese company based in McLean, Va., open its first U.S. automobile plant for making tiny and cheap electric cars in Tunica County. GreenTech approached the VEDP in Aug 2009 and asked for assistance in opening a plant in Virginia. The economic development project was code named Project GCG (for go clean green).

FILE / The Mississippi Business Journal

Mississippi landed the GreenTech plant to build myCars after the Commonwealth of Virginia balked on funding for the start-up company.

salaries and benefits using technology developed by the Nazis in World War II to turn biomass into sugars to be used to make industrial and food products. HCL CleanTech has since changed its name to Virdia, and says it may not locate any facilities in the state. The HCL CleanTech\Virdia projects did not progress to the point of receiving loan funds. Another technology company that has received the state’s backing is KiOR, a publicly traded company. The Mississippi

Cannon said a lot has been learned in the early production process. “While we have developed and tested our technology in our pilot and demonstration facilities, real-time performance in a commercial scale facility such as in Columbus provides new insight that will be invaluable as we work toward getting this facility fully lined out (up to 100 percent operation) and begin construction on future facilities including our next facility in Natchez,” he said.

“I do hope the Kemper plant works, but it is uncertain at this point and the total cost is certainly unknown. One could argue that we (our economy, etc.) must try projects like this, while others would argue strongly that it is not needed and will be a huge waste of resources. Only time will tell.”

Pete Walley

Director, Bureau of Long-range Economic Development Planning, Institutions of Higher Learning

“What happened next is disputed, but the VEDP says GreenTech did not provide enough documentation, and was a startup where the principals had no previous background in automotive manufacturing, no demonstration models, no EPA permits, and so on — a lot of questions raised about the project’s viability and financing.” HCL CleanTech, which received $100 million in loan guarantees during a special session of the Mississippi Legislature in September 2011, had said it was going to invest $1 billion in five locations in the state creating 800 jobs averaging $67,000 in

Legislature approved a $75-million loan package for KiOR in August 2010 in return for the company’s promise to invest $500 million in five manufacturing plants creating 1,000 direct jobs. In November 2012, KiOR in Columbus produced its first oil made from wood biomass. KiOR president and CEO Frank Cannon said when the Columbus plant is fully operational, the facility plans to take in 500 tons of biomass a day and transform it into 40,000 gallons a day of oil refined into gasoline and diesel.

KiOR had customers lined up for the fuel to be produced at the plant in Columbus before even breaking ground. “Before construction was commenced at Columbus, KiOR had contracted all of the fuel produced from the facility to Catchlight Energy (a joint venture between subsidiaries of Chevron and Weyerhaeuser), Hunt Refining and the FedEx Corporation,” Cannon said. “KiOR fuels are attractive because they are cellulosic See


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8 ■ Mississippi Business Journal ■ January 18, 2013

FILE / The Mississippi Business Journal

The state offered solar panel manufacturer Twin Creeks an incentive package totalling $26 million. It was expected to eventually create 500 new jobs. It has since closed.


Continued from Page 8

biofuels–renewable hydrocarbon fuels that are made from non-food feedstocks, with a significant reduction in greenhouse gas emissions compared to fossil fuels, and because they have the ability to ‘drop-in’ to our nation’s fuel transportation system, unlike ethanol.” Cannon said KiOR focuses on non-food feedstocks that are abundantly available with supplies that can be sustained at a relatively consistent level for the long-term. “We have successfully tested about 20 different varieties of feedstock. In addition to wood, we can use agricultural and process residues (i.e. stalks, stems and leaves, or husks), and a number of different energy crops grown expressly for biofuels such as switchgrass or sorghum,” Cannon said. “Mississippi is a terrific location for KiOR. The key attributes we have found here are an abundance of biomass, the forestry infrastructure for processing and transporting the biomass, an outstanding workforce and a positive business environment.” Cannon said the company is planning to break ground on a second plant during the second half of 2013 that is to be located in a greenfield site just to the north of the former International Paper plant in Natchez. KiOR’s stock prices have declined from its initial offering of $15 per share when the company went public in mid 2011 to $6.88 in early January. The company reported a third quarter 2012 net loss of $27 million, and a net loss of $23 million in the second quarter. In an interview with in November 2012, Cannon was asked about KiOR’s stock price having declined, along with those of other biofuel companies. When asked why that was, Cannon said, “I don’t really know. The whole sector is down, some more than others. That’s why

I think we need some success… It obviously takes time to develop potentially game changing technologies, and I think we’re at that inflection.” Pete Walley, director of the Bureau of LongRange Economic DevelCannon opment Planning for the Mississippi Institutions of Higher Learning, has long been a proponent of a “green” economy. “Alternative energy efforts, in my opinion, are important not only to help improve the quality of our environment, but to provide alternatives to Bryant the more familiar hydrocarbon based fuels, hopefully with equal or better convenience and cost,” Walley said. “The dilemma is renewable energy sources are not as mature as conventional energy sources and require more development in order to be cost competitive and more readily accepted by energy users. If the expected rewards for developing and marketing an alternative fuel are lower compared to conventional fuels and/or the risks for developing and marketing an alternative fuel are greater compared to conventional fuels, someone has to decide whether to proceed with an alternative energy project.” Walley said normally a private investment group would provide funds to start a business if they believe that they will get their investment funds back plus some additional payments for the use of their investment funds. If the private sector investors think the risk of failure is too great and/or the expected return from the project is too small, they will seek help from some other “investor” whether it is another

private investor, or some local, state or federal government entity. “Some people support the idea that developing alternative energy sources in addition to traditional forms of energy are in the best long-term interest of the public and in the development of the economy,” Walley said. “The problem then becomes that of which projects a government entity is to support with funds provided by the taxpayers of that government entity. There is a rich history of government picks that have produced positive results and an equally rich history of government-supported projects that have failed miserably.” In his long-time observations, Walley has seen that government entities have no more insight or special knowledge into which project to support than the private sector does. “The government entity, however they make a decision to ‘invest’ in an alternative energy project, takes a chance that the project will be successful and will provide a return on its investment,” Walley said. “Obviously, no investor, public or private, is successful on all of its investments. As a taxpayer (‘stockholder’) in the government investment, I must have hope that due diligence has been done for a project and that over the long run, more successes than failures occur.” Another major energy development in the state that has generated a lot of controversy is Mississippi Power Company’s

Mississippi Business Journal


$2.8-billion Kemper Plant that proposes to turn coal into a gas fuel to generate electricity with fewer carbon emissions than coal. But some engineering experts monitoring the construction question whether the technology will work. Walley said similar to other “green” technologies the state has invested in, the government involvement in the Kemper project is spreading the risk of an uncertain technology for an energy project to the ratepayers of Mississippi Power. “I do hope the Kemper plant works, but it is uncertain at this point and the total cost is certainly unknown,” Walley said. “One could argue that we (our economy, etc.) must try projects like this, while others would argue strongly that it is not needed and will be a huge waste of resources. Only time will tell.” Gov. Phil Bryant has said he would prefer that the state not invest in startup companies and that he is steering the Mississippi Development Authority (MDA) away from loaning or giving other incentives to such companies. For information on a public records search regarding green energy startup deals in Mississippi, see the website. The information was made available by the Bigger Pie Forum through a public records’ request from MDA.


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January 18, 2013


PERS report raises points of contention >> Panel wants employee incentives reviewed, two elected PERS board seats eliminated and legislative power over retirement fund’s administrative spending By TED CARTER I STAFF WRITER

A new joint legislative report suggests several state agencies study whether the state can — or should — sweeten incentives used to attract and retain workers. The Joint Legislative Committee on Performance Evaluation and Expenditure Review, or PEER, says the state needs to examine its employee benefit offerings “in preparation for an uncertain future.” With the emphasis on uncertainties ahead, the report urges a close look at what employee benefits are essential to hiring and keeping a quality government workforce and deserve protecting “should economic conditions require significant future changes in the retirement system.” The joint committee chaired by state Sen. Gary Jackson specifically recommended that the State Personnel Board, Department of Finance and Administration and state economist study “the benefits package (including compensation, retirement and leave) used as an incentive to hire and retain a quality government workforce in Mississippi.” The attorney general and the Public Employees’ Retirement System of Mississippi, which administers the defined benefits plan for around 163,000 active participants, should help the state agencies with their in-depth look at what state employee benefits are worthy of keeping during times of fiscal distress, the PEER committee said. Further, the departments should look at how state benefits compare to those offered in the private sector and devise ways to help state policymakers “develop a more level playing field,” the PEER report added. The PEER Committee, created by state law in 1973, has broad power to study and investigate entities funded in whole or in part by public money. The joint committee is composed of seven members of the House of Representatives appointed by the Speaker and seven members of the Senate appointed by the lieutenant governor. In a pair of other recommendations, the PEER report suggests state government clamp down on the autonomy with which the Public Employees’ Retirement System now operates. Those recommendations address the makeup of the PERS governing board and the independence PERS has on spending decisions. Responding to the joint committee’s request for a study of employee benefits, PERS said the study should have wider participation. It should include PERS as well as representatives from state agencies, state universities, public schools and commu-

nity/junior colleges, cities and counties, said Pat Robertson, PERS executive director, in a written response to the PEER report. It’s especially important that PERS take part in the front end of the effort, Robertson said. “Rather than working in isolation, we suggest that PERS be included as part of the proposed study group.” This, Robertson said, would “ensure the full impact of any recommendations regarding future modifications of the retirement system are thoroughly vetted.” Meanwhile, rank-and-file state workers are uneasy about the PEER report’s call for a new look at employee benefits to help the state through fiscal hard times, said Brenda Scott, president of the Mississippi Alliance of State Employees. “People are not too happy,” she said in an interview last Friday. Scott said no one is thinking the study group will propose actual enhancements to benefits, considering the specific order handed the group is to recommend what “elements should be protected should economic conditions require significant future changes in the retirement system.” Scott added she worries that a study group made up of a handful of state agency heads “would push a one-sided point of view” and look to find savings by cutting back on benefits to a state workforce that is the lowest paid in the multi-state region. Full-time employees under the purview of the Mississippi State Personnel Board earned an average annual salary of $34,259 in 2012, the Personnel Board reported in September. The four adjoining states — Arkansas, Tennessee, Alabama and Louisiana — had a combined average of $40,805. A state-by-state breakdown showed Alabama with the highest average at $42,966, followed by Louisiana, $41,883; Tennessee, $40,527; and Arkansas, $37,844. Rank-and-file state and local workers as well as tens of thousands of PERS retirees could lose representation on the PERS board of trustees through a PEER committee recommendation to eliminate those spots and replace them with appointees by the governor and lieutenant governor. The PEER committee theorizes that getting rid of one of the two representatives of state employees and one of the two retiree representatives “would revive public confidence regarding the objectivity of the board.” PEER recommends preference for the replacement appointments go to individuals with expertise in investments or financial management. Proposals for changing the board first surfaced in the list of recommendation by the PERS Study Com-

mission, a special panel appointed by Gov. Haley Barbour in 2011 and whose suggestions have yet to be embraced to any degree by lawmakers. Not surprisingly, the PERS board does not think changes to its makeup are needed. Robertson, in her response to the PEER report, noted the report recognizes that PERS is “well organized for oversight of its investment portfolios” and has access to needed investment expertise. “Therefore, it seems inconsistent to suggest a need for one or more individuals who are not members of the (retirement) system and who have expertise in investments or financial management to be appointed to the board.” PERS, she said, has a veteran chief investment officer and retains an investment consulting firm staffed by experts in investments and financial management. What’s more, Robertson noted, the PERS board has 34 investment management firms to manage the board’s 44 different investment portfolios. Robertson’s response questioned just how taking away the elected representation of workers and retirees would improve public confidence in the decision making of the PERS board. “Since the Legislature establishes the benefits structure, and the PERS board administers the benefits as prescribed by law, a structure of checks and balances already exists that should help to ensure public confidence in the objectivity of the decisions made that affect the system,” she said. In a round of recent interviews, some PERS board members voiced concerns over the push to alter the governing board’s composition. It’s a bad idea, said Virgil Belue, who as retired superintendent of Clinton public schools has represented retirees on the board for 18 years. “It’s the one thing I’d be 100 percent against. The last thing we need is to have political involvement in appointing members of the board.” The governor already has a single appointment and the state’s elected treasurer also serves on the 10-member board. The remaining members are elected to staggered six-year terms by constituents such as employees of state, county and city governments, public schools, colleges and retirees. Belue said he is equally opposed to the governor or Legislature appointing PERS executive director, a post now filled through a vote of the PERS board. “I don’t want to see any politician appointing an executive director,” he said. H.S. “Butch” McMillan, elected to the PERS board by state employees in 2009, acknowledged the loud cry to “put more independent people on the board who have investment expertise.” But he also noted board membership already includes three See

REPORT, Page 11


An agreement by the Public Employees’ Retirement System of Mississippi to release minutes of its Oct. 23 meeting has led the Mississippi Business Journal to withdraw a state Ethics Commission complaint it made against PERS. PERS executive director Pat Robertson initially ordered her staff to refuse the release of the minutes until they could be approved in final form by the PERS board of trustees at its Dec. 18 meeting. Neither Robertson nor her staff would cite statutory authority for refusing public inspection of the records. Robertson relented after receiving legal advice that she had no authority to withhold the unofficial minutes, said Greg Gregory, PERS deputy administrator in the Office of Administrative Services. Robertson, in a letter to the weekly business newspaper, said she has been “made aware that draft copies of a public entity’s minutes are subject to disclosure under the Public Records Act.” Gregory said from now on, PERS will honor any request for minutes from members of the public. Robertson insisted the denial was not an attempt to circumvent Mississippi law but based on a desire to ensure information in the minutes was vetted for accuracy. Had the minutes not been provided, the Mississippi Business Journal intended to seek a hearing before the Ethics Commission on claims the PERS’ records refusal violated both the state’s Open Meetings and Open Records laws. The Ethics Commission could have ordered Robertson to release the information had it found a meeting law violation. A finding of a records violation, however, would have limited the commission to requesting PERS follow the law and release the minutes. According to Mississippi Ethics Commission director Tom Hood, public officials across the state mistakenly think meeting minutes of public bodies can be shielded from public examination until given official approval. The public officials are failing to realize the “purpose of the minutes is to memorialize” what has been discussed and decided at a public meeting, Hood said in an interview late last year. Mississippi Freedom of Information statutes specify that requested minutes must be provided in unofficial form within 30 days of the date of the meeting. Before the 30 days, the notes from which the minutes will be written must be provided. PERS acknowledged the minutes had been distributed to trust board members. The Mississippi Business Journal argued in its complaint that any distribution of the minutes means the rest of the public should have access to them as well. The minutes sought by the newspaper contained details of the PERS Trust Board’s vote to enact a fixed rate as the employer’s share — in this case the state, cities, counties and school districts — of the public employees retirement fund.

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10 ■ Mississippi Business Journal ■ January 18, 2013

Dems vow ‘blockade’ of PERS revamp plan >> House Minority Leader Bobby Moak identified the legislation as the work of GOP Sen. Nancy Collins of Tupelo BY TED CARTER I STAFF WRITER

Proclaiming that a full scale attack on the Public Employees’ Retirement System of Mississippi is soon to be underway at the Capitol, Democratic legislators gathered last Tuesday to pledge a fight to the finish on the issue. “We’re going to be a blockade,” declared House Minority Leader Bobby Moak at the close of a late morning press conference called in response to what the Democratic lawmakers say is soon-to-be-introduced Republican legislation calling for a sweeping overall of the PERS system and its governance. The Democratic lawmakers say they expect some Republican help in repelling the proposed overhaul. A strong dose of legislative self-interest could come into play, they say, noting the bill would eliminate the Supplemental Legislative Retirement Plan — the retirement plan for the Legislature — for lawmakers elected on or after Jan. 1, 2011. Democratic Rep. Stephen Holland acknowledged that stake when he joined fellow 30-year legislator Moak at the press conference. “So guess what? We have a very vested interest in the PERS system — just as all of these people who have committed their lives to public service have in the public employees’ retirement system.” Whether the bill lives or dies is likely up to Republican Lt. Gov. Tate Reeves, who serves as a gatekeeper of sorts on Senate legislation. He indicated a willingness to look at any bills that show promise for fixing the fiscal ills of the defined benefits retirement plan. “Protecting the state retirement system for current and future retirees is critical, and the Senate will review bills related to PERS as they move through the committee process,” he said in an email. Among a number of other changes, Democrats say the GOP legislation would freeze cost-of-living increases for retirees until the $20-billion retirement fund shows


Continued from Page 10

CPAs: Himself, Susan Harris (elected by state employees) and Cecil Hill (elected by employees of the Institutions of Higher Learning). “The other school of thought is that those on the board should have skin in the game,” said McMillan, executive director of the Mississippi Department of Rehabilitative Services. He said he does not intend to run again when his term expires at the end of 2014. State Rep. Ray Rogers, who served as vice chair of the joint committee that produced the PEER report, said the panel does not see expanding membership on the PERS board as a viable alternative to eliminating the two elected members. “I don’t think it was discussed,” Rogers said in an interview last Friday. He said his committee proposed the two

significant improvement toward funding its pension obligations. Specially, the funded percentage would have to reach 70 percent for COLAs to resume. The funded ratios stood at 58 percent on June 30, 2012, down from 62.2 percent at the end of June the previous year. The bill also would tie the COLA to the Consumer Price Index, not to exceed 3 percent annually. The indexing to the CPI would have implications for the so-called “13th check” retirees now receive each year. Moak identified the legislation as the work of newly elected Republican Sen. Nancy Collins of Tupelo. Collins’ office confirmed she is writing a PERs bill, but is tied up with charter school legislation this week and would not be free to talk about PERs until next week. Moak and company distributed a pagelong list of what they said contained the major elements of Collins’ soon-to-beintroduced bill. Moak would not say how he got the rundown on Collins’ legislation, other than to attribute the information to “the Details Fairy.” Collins’ plan, Democrats say, goes far beyond the recommendations of a study commission appointed in 2011 by then-Gov. Haley Barbour. He gave the commission the job of proposing ways to free taxpayers from a $100 annual obligation to a retirement fund running $12 billion short of meeting its pension obligations. Barbour’s 12-member commission proposed changes that would keep 30-year workers on the job to age 62 to gain full retirement benefits. Under the proposals, they could retire at 55, provided they had worked 30 years . On the downside, they would have to go without cost-of-living increases, or COLAs, until they reach 62. Retirement before 55 would still be possible for workers with 30 years of service, though eligibility would be limited to “an actuarially reduced benefit.” non-elected appointees as a way to give “the governor and lieutenant governor more of a say” and to bring more expertise to the board. Responding to the PEER report proposal to force PERS to seek legislative appropriations each year for administrative expenses that include investment manager fees, Robertson said a 1988 opinion from the Mississippi Attorney General affirmed the authority of the PERS board to decide administrative expenditures. “Legislation passed in 1989 further clarified authorization for payment of PERS’ manager fees as an investment expense rather than as a budgeted, appropriated administrative expense.” The PEER committee insists, however, that PERS is a state agency and is subject to the budgetary laws of the state as well as to the Legislature’s constitutional authority to make appropriations.

The proposals from Barbour’s commission languished in last year’s session, with Capitol observers assessing them as too radioactive for lawmakers to want to touch. That appears not to be the case this year. What Collins wants, said Moak, is “a total overhaul of the system, a total overhaul of the governing board.” Moak said the bill inflicts pain all around. “What the summary tells you is that this legislation not only affects those who come into the system. This affects folks who are in the system now. Most importantly, it affects those retirees who are depending on these checks as their source of income today.” The measure, said Moak, would also open the door to future political meddling by adding seven new appointed members to the PERS board of trustees, with three members appointed by the governor and four by the lieutenant governor. “Once you get your governing board in place you can do just about what you want to,” he said. State Sen. Hob Bryan, another 30-year member of the Legislature, said he is especially concerned by a part of the bill that calls for curtailing the “13th check,” an additional payment retirees receive annually to reflect

Mississippi Business Journal


>> What’s in the Collins’ plan? Here are key elements of what Democrats say is legislation state Sen. Nancy Collins plans to propose for overhauling the Public Employees’ Retirement System o Mississippi: >> Expand the PERS board of trustees from 10 members to 17 members by adding three gubernatorial appointees and four lieutenant governor appointees; >> Allow any active member in state service on or after July 1, 2013, to retire with unreduced benefits after 30 years of creditable service at age 55 or with reduced benefits after 30 years of creditable service before age 55; >> Freeze the cost-of-living adjustment (COLA) for three years and thereafter tie the COLA to the Consumer Price Index, not to exceed 3 percent annually. >> Prohibit any active member in state service on or after July 1, 2013 from receiving a COLA until age 62; >> Suspend the COLA if the funded status of the system is below 70 percent and not resume the COLA until the funded status is at least 70 percent (current funded status is 58 percent); >> Close the Supplemental Legislative Retirement Plan (SLRP) effective Jan. 1, 2011; >> Limit vesting in SLRP to members elected before Jan. 1, 2011; >> Refund contributions of members elected on or after Jan. 1, 2011; >> Repeal statute that requires the PERS Board of Trustees to establish a healthcare plan for retirees when the plan reaches a certain funding level.

cost of living increases. For retirees, Collins’ plan to tie the COLA to the Consumer Price Index “would cut their 13th check over a period of years by 10 percent,” Bryan said. “That’s not the promise that was made and that’s not the right thing to do.”



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January 18, 2013




“The banking industry in Mississippi is strong.”

— Jon Briggs, Chaffe managing director

Serving the state’s quiet wealth

>> New Orleans-based investment banking firm finds familiar market in Mississippi By BECKY GILLETTE I CONTRIBUTOR


THE EXPANSION of investment banking firm Chaffe & Associates from its base in New Orleans into Jackson in 2011 was a natural extension of its business that provides services in three main areas — valuations, merger and acquisitions and financial institutions. “The New Orleans and Jackson markets are similar in that they are populated with private companies, and there are many multi-generation businesses,” said Vanessa Brown Claiborne, president of Chaffe & Associates. “What we find in both Mississippi and Louisiana is quiet wealth. There are a lot of people who have grown their family businesses. They aren’t flashy. Another similarity between Louisiana and Mississippi is that their economies aren’t as volatile as the national economy.” While there are other firms such as CPA companies that provide some similar services, Chaffe & Associates is unique to the state by virtue of being the only investment banking firm that offers a full line of corporate finance services. The company typically works as part of a team that includes the company’s attorney, CPA and the business owner’s financial adviser. “Although our professionals hold designations such as CPA, CFA, JD, business valuation is not a sideline practice to us,” Claiborne said. “It’s our full-time business. Business valuations are done for numerous reasons including financial reporting, shareholder transactions and estate and gift tax valuations, which must be done by a qualified appraiser. “In the sale of your business, the business owner is an expert in operating their busi-


576 Highland Colony Parkway Building One, Suite 210 Ridgeland, MS 391578769 Phone: 601-707-9484

ness. Chaffe is an expert in selling businesses. Business owners need to keep their eye on the ball and not be distracted by the sales process. Chaffe has worldwide contacts to identify the best group of potential buyers of a business, be it a strategic buyer or a private equity group. And Chaffe professionals have the requisite securities licenses to handle these transactions.” Almost all of their clients are private companies, many of them family owned. Claiborne said their referrals come from existing clients and from other professionals. “We know that our work reflects on those referring parties and we take their trust very seriously,” she said. “What sets us apart is that our top-level professionals work on every assignment. There is no question that we are working only for our client and there are no conflicts of interest. Client confidentiality is of utmost importance to private business owners.” John Hammond, vice president, who heads up the Jackson office, said the company brings a unique perspective to valuation of businesses because it is actively advising business owners about buying and selling businesses. “We feel that our perspective in that arena gives us a good point of view on how to value a privately owned business,” Hammond said. “We’ve had a very good recep-

tion in Jackson since opening in 2011. We work with a number of local professionals who do estate planning, merger and acquisition work who have been really interested in knowing a local investment banker to help with valuations. It is a reputationbased business, and we have a very strong reputation for being experts in this field.” Hammond said the economic downturn hasn’t caused a major decline in the need for their services; there a need for valuations no matter what the economy is doing. “Valuations are not recession sensitive,” he said. “Valuations are needed in good times and bad. They are usually done for transition purposes. For example, one owner may want to buy out another owner and needs valuation to help with that transaction. Also, a lot of times when there are pullbacks in the economy, it sometimes causes companies to consider selling their business. We can assist in that process. Or, if companies determine there is opportunity for growth, we can help companies identify attractive acquisition targets.” Hammond said he and other employees in the Jackson office are closely tied to the resources of the New Orleans office. Through the Internet, all of their company databases and resources are available Chaffe & Associates often works with community banks in the state. Chaffe

“Valuations are not recession sensitive. Valuations are needed in good times and bad.”

John Hammond

Director of Chaffe’s Mississippi office

managing director Jon Briggs confines his practice to working with community banks to provide advice on regulatory matters for banks under regulatory orders and those who just need help with policies and processes such as revising loan policies, financial planning and budgeting. The second major area of his practice is mergers and acquisitions. “Community banks are now in a position with more regulatory burdens and uncertainly about what is to come regarding regulatory burdens,” Briggs said. “They are in a position with increased costs and very little opportunity for growth. They are looking at strategic alternatives and some are deciding it might be time to buy smaller banks, or sell or merge with a large bank.” Mississippi has seen more stability in banking than many states experienced during the economic downturn. “In Mississippi, in particular, banks are pretty strong,” Briggs said. “They didn’t have a lot of trouble a lot of banks in Georgia and Nevada had. The banking industry in Mississippi is strong.” The firm, founded in 1982, employs 23 people in both locations. Many of the employees have been working in the field more than 20 years. “We love what we do, and we love working with family businesses,” Claiborne said.

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January 18, 2013

Mississippi Business Journal

Lending a hand to small businesses

Banks can assist small businesses with a variety of services, programs By LYNN LOFTON I CONTRIBUTOR


ANKS CAN be small business owners’ best friends, providing a range of services, advice and a shoulder to lean on. The definition of a small business can vary, depending on how much activity a business runs through a bank, according to Art Stevens, president of retail banking for Trustmark National Bank. “Accounts can trigger based on activity. Lots of banks segment customers by size,” he said. “We consider ourselves more of a relationship bank and encourage customers to bank with whomever they’re comfortable with on the lending side and on the deposit side. “We do separate by activities, but almost every line of business within our bank has products geared toward small businesses, including free checking, business lines of credit and on through insurance and wealth management.” Southeast regional president of BancorpSouth David Barrentine,



who’s based in Jackson, says generally speaking, the market can be segmented into microbusinesses — those with sales of less than $1 million — and small businesses — those with sales between $1 and $10 million. “Another way to look at it is the size of loans needed,” he said. “More than 40 percent of our commercial loans are less than $1 million.” However, he says BancorpSouth believes in tailoring its approach based on the customers’ needs. Therefore, it doesn’t have a rigid definition of a small business. Patrick Garrett, business banking manager with Hancock and Whitney Banks, says his company defines small businesses as those with annual sales of less than $2 million. “We provide our small business clients with comprehensive financial solutions to assist them in meeting

both their short and long-term business and personal goals,” he said. This assistance is accomplished, Garrett points out, by developing a proactive partnership with the business owner. “Bankers are able to understand each business and their unique qualities, and then tailor solutions to assist the business and its owner in meeting current and future needs,” he added. “The proactive nature of this relationship is key in the business owner being able to achieve long-term goals.” On the services side, Hancock and Whitney are able to provide all services, both deposit/cash management and loan/lines of credit, investments and insurance needed by a small business owner through various business life cycles as they assist them in achieving their goals. “Currently, we’re seeing uncertainty in the economy and managing cash efficiently as the major financial challenges facing small businesses,” Garrett said. Barrentine says BancorpSouth strives to provide more than just checking accounts and loans. “We want to understand the challenges See

BANKING, Page 14

The money’s there, but small businesses put borrowing aside


Bankers say they have the money to lend small businesses but they see owners staying on the sidelines rather than borrowing. Chevis Swetman, chairman of the board and chief executive officer of The Peoples Bank in Biloxi, neatly sums up small business owners’ hesitancy: “Three little words: Fear, uncertainty and doubt.” The Peoples Bank has 16 branches in four coastal counties. Swetman said the bank’s overall loan portfolio is basically flat compared to the end-of-the-year numbers for 2011 and 2012. “What we’re seeing is a lot of money that’s on the sidelines,” he said. “Banks have the money to lend, the question is, do the people want to borrow.” Swetman said that since 2008, bank loans across the nation are down about 5.3 percent. Instead of hiring a new employee or buying a new piece of equipment, Swetman said, owners are making do with what they’ve got for the time being. “People are paying off their credit cards, paying down debt, paying their mortgages, so consumers are doing pretty good. But in order for someone to take a $40,000 or a $100,000 investment, they’re thinking maybe I don’t need that new employee or machine, I can do with what I have. “We have not seen it come around yet that people are interested in really stepping out but we know everybody’s looking.” See

LENDING, Page 14


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Continued from Page 13

small businesses face; what they lose sleep over. We find ways we can help meet those challenges. If going to the bank is a time-consuming chore, we can provide deposit services right in their offices with online banking services designed for small businesses.” Stevens says Trustmark works with the needs of small businesses. “They may struggle with resources and information, and probably have no legal and accounting departments of their own. To the extent we can

be an advisor and help them stay current with trends, we feel we can partner with them and help every way we can,” he said. “We run a fairly robust small business resource on our website that has industry information and articles and blogs from financial writers. This is free internet access for true small businesses where they can transfer and wire money online.” Trustmark finds that more and more small business owners are using that service; one that used to be reserved for larger businesses. BancorpSouth’s Barrentine points out that small businesses needing to add equipment can find financing alternatives. Or

BANKING & FINANCE when larger or more modern facilities might be needed, that acquisition also has financing options. “We help business owners grow their businesses,” he said. “We want to understand the viability of the business and the roll we might play to help achieve goals.” A banker for more than 30 years, he has observed that a shortage of capital and cash flow are often big challenges for small businesses. “Cash flow is the lifeblood of any business, especially small businesses,” he said. “While a small business owner may have a terrific idea, service or product, bills and payroll must be paid, and they roll around quite regularly.”


Continued from Page 13

Ray Wesson, Southern Region president of The First, also sees small business owners in a holding pattern but remains upbeat about the future of lending to them. “As a bank, we remain very positive in our outlook and approach for making loans to small businesses in South Mississippi. The reality is that many small businesses continue to be in a “wait and see” mode with regard to borrowing money and the economy and therefore demand for small business loans remains rather flat.” He said most local banks are “eager” to make credit available to small businesses that need it. “There is certainly more due diliGarrett gence involved in the lending process but credit is available for those businesses that qualify,” Wesson said. Financing to start a new business continues to be very difficult, he said, and SBA backed loans or business loans with solid personal collateral are in many cases the only avenue. “On the other hand, loans to existing businesses with good cash flow and collateral are highly sought after among our local banks. With low rates, it continues to be a good time for small businesses to borrow money,” Wesson said. Janita Stewart, district director of the Small Business Administration’s Mississippi District, said SBA-backed lending in the new fiscal year “continues to rebound.” On the national level FY2012 (Oct. 1-Sept. 30) was SBA’s second biggest year ever in terms of dollars at $30.25 billion in loan approvals, she said. In Mississippi, SBA approved 97 loans for $28.6 million during the first quarter of FY2012, compared to this fiscal year when 96 loans for $29.5 million have been approved. “As the new fiscal year progresses, we look forward to continuing on and working to enhance this healthy pace of small business lending in our state,” said Stewart. Patrick Garrett, retail business banking segment manager for Hancock Bank, sees small business lending prospects remaining positive for 2013. “There is a perception out there that banks are not lending money to small business owners but we continue to do business as usual,” he said. The bank operates about 250 branches in the Gulf South including offices in Mississippi from Hattiesburg to the Gulf Coast. Customers whose companies have annual sales of less than $2 million are considered small businesses. Garrett sees an increase in applications and a “willingness to make decisions from owners to do what is right for their businesses.” Garrett said small business owners are being more cautious as the economy slowly digs out from recession. “In the past two years what they’ve gone through, they understand the importance of understanding cash management and also collaboration with their bankers, CPAs and financial advisers.” Garrett said Hancock Bank takes a “wholistic, consultive approach” to working with their small business customers in assisting them in meeting their short, intermediate and long term goals. “We want to make sure we’re understanding the future needs of the business owner and are able to meet those needs,” he said.

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14 ■ Mississippi Business Journal ■ January 18, 2013

January 18, 2013

Name Address


Regions Bank 1900 Fifth Ave. N., Birmingham, AL 35203 BancorpSouth Bank One Mississippi Plaza, Tupelo, MS 38801 Trustmark National Bank 248 E. Capitol St., Jackson, MS 39201 Cadence Bank, N.A. 17 20th St. N., Birmingham, AL 35203 Hancock Bank 1 Hancock Plaza, Gulfport, MS 39501 Renasant Bank 209 Troy St., Tupelo, MS 38801 BankPlus 202 Jackson St., Belzoni, MS 39038 Merchants and Farmers Bank 221 E. Washington St., Kosciusko, MS 39090 The Citizens National Bank of Meridian 512 22nd Ave., Meridian, MS 39301 State Bank & Trust Company 916 Hwy. 82 Bypass, Greenwood, MS 38930 The Citizens Bank of Philadelphia, Miss. 521 Main St., Philadelphia, MS 39350 The Peoples Bank, Biloxi, Miss. Lameuse And Howard Aves. Biloxi, MS 39533 BankFirst Financial Services 110 S. Jefferson St., Macon, MS 39341 The First, A National Banking Association 6480 Hwy. 98 W., Hattiesburg, MS 39402

Mississippi Business Journal

Pre-tax Return on Assets (year to date)


























































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Name Address


Planters Bank & Trust Company 212 Catchings St., Indianola, MS 38751 Community Bank 300 Jessamine St., Ellisville, MS 39437 Community Bank of Mississippi 323 E. Third St., Forest, MS 39074 Metropolitan Bank 201 S. Jackson St., Crystal Springs, MS 39059 Merchants & Marine Bank 3118 Pascagoula St., Pascagoula, MS 39567 Guaranty Bank and Trust Company 210 N. Hayden St., Belzoni, MS 39038 PriorityOne Bank 220 N. Main Ave., Magee, MS 39111 First Security Bank 295 Hwy. 6 W., Batesville, MS 38606 First State Bank 708 Azalea Dr., Waynesboro, MS 39367 Community Bank, North Mississippi 900 N. Main St., Amory, MS 38821 BNA Bank 205 Bankhead St., New Albany, MS 38652 Community Bank, Coast 677 Dr. Martin Luther King Jr. Blvd., Biloxi, MS 39530 The Peoples Bank 305 E. Jefferson, Ripley, MS 1925

Total Deposits (in thousands)

Pre-tax Return on Assets (year to date)

Date Founded

Total Assets (in thousands)




















































Note: All information came from the Federal Deposit Insurance Corporation (FDIC) website. Banks ranked by total assets. The total assets, total deposits and pre-tax return on assets were as of Jan. 8, 2013. For questions or comments, contact Wally Northway at




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16 â– Mississippi Business Journal â–  January 18, 2013

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>> Laurel native takes a hands-on approach to helping the homeless By LYNN LOFTON I CONTRIBUTOR


HE GROWING number of homeless people in the Gulfport area touched Ted Hearn’s heart. Always active in community events, he became involved with a local soup kitchen, Feed My Sheep, as a board member and food server in the daily lunch line. He also worked with the Salvation Army and helped operate a cold weather shelter for the first time in 2011. “You can tell when God is tugging with you to do something more than what you’re doing,� he recalls. “I was quite happy with what I was doing, and I didn’t want to do anything else.� As he worked in the shelter and soup kitchen, homeless people kept coming to him asking for help. “I felt they were being put before me, but I was not hands on,� he says. “The more I let myself into it, I real-

“The more I let myself into it, I realized these people needed someone to help them, and I really began to understand.�

Ted Hearn

ized these people needed someone to help them, and I really began to understand.� Hearn’s involvement became hands on as he assisted the homeless with transportation, food, tents and learning where to send them for other assistance. He identified the need for a place for these individuals to take showers and do their

laundry. Thus, the Clean and Fresh Operation was born in the fall of 2011. With an all-volunteer staff and using the Gulfport Salvation Army facility, Hearn coordinates this service Mondays, Wednesdays and Fridays. “The operation has grown and we use about 25 volunteers each week to keep it going,� he said.

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“It’s also grown into providing a lot of small items that people need to exist, such as socks, toilet tissue and toiletries.� He also solicits more substantial items, including clothes and linens. “We got some linens recently as a donation from the Seabee Base, some linens they were discarding,� he said. “When someone says they’re getting rid of something, I just say ‘yes, I want it.’� Hearn, 80, is a native of Laurel and accustomed to organizing operations. After graduation from Mississippi State University, he worked for Sanderson Farms, served in the Army and in the Mississippi Army National Guard from which he retired with the rank of brigadier general. He commanded a group in Hattiesburg, a unit in Jackson and a brigade in Laurel. Upon retiring to Gulfport, he served as executive director of Coast Transit Authority and worked in the building industry. A member of Trinity United Methodist Church, Hearn tries to share his Christian faith with as many homeless people as possible. “I go into the woods to their camps for Bible study and devotionals and to help them know that God loves them,� he said. “You get disappointed when you work with the homeless, but I remind myself that God gets disappointed with all of us.� Hearn and his wife of 60 years, June, are dedicated to this ministry. “The ultimate goal is to get them off the streets,� he said. “Many of them have problems they can’t change on their own. I’m not interested in just being an enabler; I want to make a permanent difference.� Toward that goal, he’s seeing some successes and is using the Celebrate Recovery program as started by the Rev. Rick Warren. Slowly, some individuals are getting off the streets and no one is prouder of them than Ted Hearn. “I’m very concerned that homelessness locally will be worse this year,� he said. “I realize the economy is bad and protracted unemployment is often the cause of homelessness. We continue to see it happening; it’s not getting less. I hope people in other communities will be drawn to serve.�

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January 18, 2013

Mississippi Business Journal



Are you making sales or measuring sales activity? T HE AMOUNT OF TIME management spends measuring sales activity and salespeople (or dumber, the ROI of some investment they made in CRM), is generally wasted effort. The same amount of time could be invested in making millions of dollars worth of sales if the salesperson was just pointed in the right direction, and trained what “to produce” rather than what “to do.” How do you measure sales success? What’s on your sales dashboard? What’s on your manager’s sales dashboard? Most dashboards (big picture numbers) are full of useless information that only lead to depression and posting your resume online under an assumed name. RESULT: You can get another sales job using some other useless dashboard. It’s not only frustrating; it’s also career stifling. Maybe I’m old-fashioned, but I measure sales in 3.5 ways: 1. How many sales did you make? 2. What was the dollar amount? 3. What was the profit? 3.5 What was the source of the sale? All other measurements pale by comparison. There are many sales managers who measure “activity.” Complete waste of time. If you’re comparing a salesperson who makes 100 cold calls a day but zero sales to a salesperson who makes one appointed sales call from a referral and makes one sale, what’s the measurement? Will the manager yell at the guy who made the sale? Will the manager congratulate the salesperson that made 100 cold calls but no sale? The 100 cold calls completed the activity requirement,

but had a zero return, yet his dashboard will show he made 100 cold calls. The manager will say, “Great job Bob! Keep up the good work. It’s all in the numbers, and eventually your numbers will catch up to your activity.” This is not just absurd, it’s also pathetic. And worse, the sales manager will criticize the guy who made the sale because he wasn’t “active enough.” YIKES! I may be old fashioned, but I’m pragmatic, especially about the sales process. Measure sales, not activity. Measure dollars, not activity. Measure profit, not activity. Document sources, not activity. I don’t care about activity, even though activity may eventually lead to results. The real question is: what kind of results? If you have to measure a salesperson’s daily activity, you have hired the wrong salesperson or (worse) the wrong manager. I don’t want activity. I want proactivity. I don’t want activity. I want productivity. I don’t want activity. I want profit. When you understand the difference between activity, proactivity, productivity, and profit, then and only then will you understand the difference between a useless cold call and the power of an unsolicited referral. The cold call is an activity. An unsolicited referral is productivity and profit. A salesperson or a sales manager looking at activity without understanding what the activity actually is, or produces, is basically staring at a black hole — and worse, blaming some one or some thing, rather than taking responsibility to study “What am I doing with my time?” or better “How am I investing my time?” Here are some measurements you can use

to uncover REALITY: • Is this the highest, best use of my time? • Will this produce the best results for the time I’ve invested? • Is there a better method for me to achieve a higher result? Jeffrey Gitomer • Am I frustrated with this activity? • Is this activity producing sales? • Is this activity producing profit? • Is this activity getting to my attitude? • Am I being rejected so often that I’m becoming reluctant to pick up the phone? • When I go home at night, what’s my feeling about my job? • When I go home at night, what’s my feeling about my boss? • When I go home at night, what’s my feeling about my future? The combination of these questions could be the best use-of-time tool ever created. If you know me, you know that other than cold calling, I consider an all-day course on time management to be the biggest waste of time on the planet. “Highest and best use of time,” ties together perfectly, with “productivity,” and has nothing to do with “activity.” Now that I’ve buried activity, time management, and cold calls, it’s time to move on to pipeline. When The Tubes recorded The Completion Back-

ward Principle in the early ’80s, their hit song, “Talk to You Later,” was a satirical comment on how backwards politics was. So, they started at the core and worked forward to society. I created a similar backward principle on accident in the early ’60s. I was running my dad’s kitchen cabinet factory, and the output production goal was 200 cabinet doors per day. Somehow I knew if we didn’t cut and prepare 200 doors a day we could never produce them. So I started with “cutting” rather than measuring activity. Surprise, surprise, once I “measured” 200 doors cut, I ended the day with 200 doors produced. No rocket science there. It’s the same in sales. If your goal is two sales a week, and it takes four appointments to get one sale, then you need eight appointments. If it takes four calls to make one appointment, then the goal is NOT two sales, the mission is 32 calls. Duh. Got activity? Or got sales? Get real. Jeffrey Gitomer is the author of “The Sales Bible”, “Customer Satisfaction is Worthless” “Customer Loyalty is Priceless”, “The Little Red Book of Selling”, “The Little Red Book of Sales Answers”, “The Little Black Book of Connections”, “The Little Gold Book of YES! Attitude”, “The Little Green Book of Getting Your Way”, “The Little Platinum Book of ChaChing”, “The Little Teal Book of Trust”, “The Little Book of Leadership”, and “Social BOOM!” His website,, will lead you to more information about training and seminars, or email him personally at

Women’s Fund awards $346,000 in grants to nonprofits MBJ staff reports

The Women’s Fund of Mississippi is marking its first decade by investing $346,000 in 10 nonprofits across Mississippi for programs that support women and girls. In announcing the 2013 grants, the Jackson-based Women’s Fund said the awards will help provide young women across the state with access to teen-oriented health services, gain financial literacy to build savings accounts and explore career options in such fields as nursing and law. Each organization will receive grants ranging from $10,000 to $41,000 to continue efforts that enhance the economic security of women and girls across the state. Since its formation, the Women’s Fund has invested more than $1 million in Mississippi nonprofits to advance social change and economic self-sufficiency through advocacy and strategic grant-making. This milestone is extremely important because less than 7 percent of philanthropic dollars nationwide go to programs that support women and girls, the organization says.

“The Fund’s 10th anniversary grantees represent organizations that are demonstrating transformative impact and who share in our mission—to improve the lives of women and girls in Mississippi.” said Carol Penick, executive director of the Women’s Fund. The Women’s Fund is using the 10-year anniversary to emphasize its continued commitment to funding organizations and programs across five focus areas — access to evidence-based sex education, access to youth-friendly health services, access to youth leadership programs and access to financial literacy and job training programs. The 10 nonprofit organizations receiving grants are: » Southeast Mississippi Rural Health Initiative, Inc., will increase youth-friendly health services at Hattiesburg High School campus and community clinics. — $ 15,000 » University of Mississippi Medical Center School of Nursing: Midtown Teen Wellness Center at UNACARE, will provide metro Jackson high school students access to primary and preventive health

care. — $41,000 » Mississippi First: Creating Healthy and Responsible Teens, will continue statewide advocacy to implement evidence-based, medically accurate comprehensive sex education in all school districts. — $10,000 » Southern Bancorp Community Partners: Asset Builders Campaign, Coahoma County, will provide credit counseling, financial education, and other asset building services to primarily single working mothers. — $40,000 » CLIMB Community Development Corporation: Workforce Training Institute, Gulfport, will offer job training and personal development programs with evidencebased sex education to improve knowledge, attitudes and behaviors of at-risk women, ages 16 to 19. — $40,000 » Mississippi Council on Economic Education: IDA Program, will use grant funds to provide financial literacy education and successful creation of individual development accounts for 15 young women attending Lanier High School, Jackson. Funds in accounts will be used for post-secondary ed-

ucation expenses. — $40,000 » Mississippi Center for Justice: Fair Lending Campaign, will recruit employers and financial institutions statewide to create new small dollar loan products with reasonable terms that low-wealth women can access through their jobs. — $40,000 » Institute of Southern Jewish Life: Talk About the Problems, will provide leadership development training for middle school students to help resolve conflicts peacefully. This project will also expose young women to the legal field as a career path. — $40,000 » Sunflower County Freedom Project: Freedom Fellowship, will provide core academics, arts enrichment, health, educational travel, and character development for atrisk youth. — $40,000 » Mississippi Office of Nursing Workforce: Mississippi Delta Funding Collaborative, will enhance its multi-dimensional approach to attract diverse, disadvantaged, low income women into health care careers by providing opportunities for career development. — $40,000

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