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Providence Business News

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updated daily Jan. 28-Feb. 3, 2013 Vol. 27, Number 43

$2.00 ©2013 Providence Business News Inc.

FOCUS: HOSPITALITY PBN looks at a Newport festival, R.I. B&Bs and the Renaissance hotel.

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STORIES START ON page 18

Speed bumps ahead for the health-benefits exchange? By Richard Asinof Contributing Writer

When the first six states – Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington – were granted conditional approval by the Obama administration on Dec. 10, 2012, to operate their new state-run, health-

insurance exchanges, Rhode Island had not yet filed its application. Later that week, Christine Ferguson, the executive director of the R.I. Health Benefits Exchange, told Ferguson

business leaders the new online marketplace for health insurance may not be fully up and running by Jan. 1, 2014, the start-up deadline. Both facts appear to be in sharp contrast to where the Ocean State stood a little more than a year ago. On Nov. 29, 2011, Rhode Island became the first state in the nation to receive $58 mil-

lion in the second phase of federal grants to help build the new exchange’s infrastructure. With that grant, Rhode Island had received a total $64.8 million in federal funding to build its exchange. At that time, federal officials hailed Rhode Island as being “at the forefront of health care innovation.” See Exchange, page 8

Politics

Big year for ‘big business’ By Patrick Anderson panderson@pbn.com

PBN PHOTO/BRIAN MCDONALD

NO PLACE LIKE HOME? GoGo Cast President David Paolo, a Rhode Island native, helped bring the company to the state despite policies he thinks do little to foster business growth. However, the digital-media company has managed to thrive since that time.

Creating a climate for job growth By Rhonda Miller miller@pbn.com

GoGo Cast Inc. President David Paolo says Rhode Island deserves its national reputation for being unfriendly to business. Unlike some others who felt the same, however, his company has managed to stay and grow in the Ocean State. As state leaders confront Rhode Island’s “business-unfriendly” reputation, the success and frustrations of small businesses like Cranston’s GoGo Cast – and others who weren’t so fortunate or patient – highlight the stakes in finding the right solutions.

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Paolo says his digital-media company came to the state and is succeeding in spite of what he agrees is a negative business climate. The company has 1,000 high-definition television screens in stores and pharmacies that bring advertising to 25 million viewers per month, Paolo said. GoGo Cast has a seven-year exclusive North American contract with GTECH Corp. for digital advertising for their lottery locations, Paolo said. “We’re currently in the middle of deploying 150 screens to Houston for the Texas Lottery” and another 150 in Dallas. See Small Biz, page 24

Main street

Landscaper building path to success. PAGE 10

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Gov. Lincoln D. Chafee’s proposed state budget for next year puts big business in the spotlight. It would slash the state’s corporate tax rate, paid for exclusively by large companies, while scaling back Rhode Island’s biggest big-business, tax-break program. Although Chafee proposed something similar in his first budget two years ago, that plan also included a variety of tax changes affecting a broad array of activities and industries. The fiscal 2014 budget, by contrast, has no broad-based tax increases and leaves tax structure and programs for individuals and small businesses largely untouched. Outside of the handful of large corporations expected to lose out on tax breaks, the new budget is bound to be more popular than the sales tax increases that were rejected by the legislature after a revolt by business leaders. Across the border in Massachusetts, Gov. Deval L. Patrick is taking a dramatically different approach, hiking personal income taxes 1 percentage point while cutting the state sales tax 1.75 percentage points. (The combined plan raises taxes $1.9 billion.) “The theory is you want to reduce the rates so it helps everyone, and I think we do want to move in that direction,” said Mark Higgins, dean of the University of Rhode Island’s College of See Corp. Tax, page 30

Inside: Newsmakers News Briefs BizBest Sales Moves

4 9 10 13

Calendar People in the News Editorials Mackay’s Moral

26 27 28 28


PAGE TWO

Page 2 Jan. 28-Feb. 3, 2013 www.pbn.com

Providence Business News contacting us

Inside this issue

400 Westminster Street, Providence, RI 02903

Lawmakers look for skills-gap answers

Main phone: 401-273-2201 Subscriptions Services: 855-813-5805 President & Publisher Roger C. Bergenheim Publisher@pbn.com

Summit brings together legislators, business leaders and higher education officials for the latest in a series of efforts to kick-start Rhode Island’s ailing economy and reduce unemployment. 5 Dining Out: Upgrades on the menu for Rhode Island’s hospitality industry.

Even in a city known for its restaurants and political dealing, The Procaccianti Group sees a need for a meeting place where Providence politicians and business leaders can hash out a few deals over drinks. 18 Newport Winter Festival bringing visitors and their dollars into city during off-season. 18 LIST: Boutique Hotels

22

NEWSMAKER R.I. Sen. Joshua Miller, a Cranston Democrat and owner of several Providence bars and restaurants, talks about the state of the hospitality industry, as well as the work of the Health and Human Services Committee, which he heads. 4 MAIN STREET Brito’s tackles variety of jobs, from patio designs to commercial work.

Advertising

6

FOCUS: Hospitality A relatively small, but critical, part of the state’s hospitality industry is the colorful palette of bed-and-breakfasts. 18

10

COLUMNS & FEATURES Calendar 26 People in the News 27 Q&A 27 Editorials 28 Mackay’s Morals 28 Op-eds 29 R.I. & MASS. NEWS BRIEFS 9 PBN.COM WEB BRIEFS 11

680-4848

COURTESY JOHNSON & WALES UNIVERSITY

Cooked to order at JWU Chef Joseph Leonardi, executive chef at the Somerset Club in Boston, conducts a two-hour demonstration to Johnson & Wales University culinary students on Jan. 16. Leonardi returned to his alma mater for the event as the 168th distinguished visiting chef and was honored at a luncheon. Joining him during the demo was Celia Cordeira, rear, a junior in the culinary-arts program, who received a $2,000 scholarship in his name.

Executive poll

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EDITORIAL

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Copy Editor Justin Sayles Staff Writers Patrick Anderson

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(Government, Manufacturing, Real Estate/Development)

Rebecca Keister

680-4828

(Hospitality & Tourism, Education/Workforce and Non-

Executive sleeping

profits)

Rhonda Miller

680-4822

(Energy/Environment, Entrepreneurship, Financial Ser-

How many hours of sleep do you get on an average weeknight?

Would you ever consider allowing employees to nap while on the job?

Somewhere between 5 and 8 hours 70.3%

Never 59.5%

Researcher Lindsay Lorenz 680-4838 Contributing Writers Richard Asinof rasinof@fullchannel.net

At least eight hours 18.9%

I’d have to think about it 24.3%

(Health Care)

vices)

production

Less than 5 hours 10.8%

Production Director Darryl P. Greenlee Production Artist Christopher Medeiros

Yes, some research says it’s a positive idea 16.2%

Have you ever fallen asleep in your office?

How often do you have dreams about work?

Never 75.7%

Sometimes 62.2%

Here and there 21.6%

Often 24.3%

Yes, quite a few times 2.7%

Never 13.5%

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The Providence Business News Executive Poll is a weekly survey of 70 business leaders throughout the state, representing small and large companies in a variety of industries.

POSTMASTER: Please send address changes to 400 Westminster Street, Providence, RI 02903.

Index to This week’s Featured companies (add)ventures

30 Cook & Brown Cuban Revolution

Adele Turner Inn Alexion Pharmaceuticals Amica Mutual Insurance Co. Annie Brownell House Belle View Inn Betaspring Blue Cross & Blue Shield of Rhode Island Brick Alley Pub Brito’s Landscaping Services LLC Brown University Cabot Creamery Capitol Grille Care New England

6

Hyatt Regency Newport

6

18 CVS Caremark Corp. 11, 30 International Tennis Hall of Fame 30 9 Discover Newport 18 21 Downtown Restaurant Group 18 L’Epicureo 18 Economic Progress Institute 3, 23 Marketing and Events Inc. 5, 30 Employment Policies Institute 3 Mass. Clean Energy Center Mass. Department of Encompass Insurance Co. 9 23 Energy Resources Escobar’s Farmhouse Inn 21 20 Mass. Executive Office of Labor and Workforce Development 10 Family Service of Rhode Island 23 Mass. Executive Office of 21 Public Safety and Security GoGo Cast Inc. 1 21 GTECH Corp. 20 23 Hotel Viking

1 Neighborhood Health Plan of Rhode Island 20 NetCenergy

20 Newport County Convention & Visitors Bureau 18 Newport County Inns and Bed and Breakfasts Association 18 21 Newport Marriott 20 20 6 Newport Storm Brewery 23 18 Pilgrim Screw 9 Providence Renaissance Hotel 6

Rhode Island Medical Imaging

Siena 6 9 South County Tourism Council 21 24 8 Swipely Inc.

Rhode Island Nurseries

3

Rhode Island Marine Trades Association

T.F. Green Airport 11 The Basics Group 23 R.I. Airport Corporation 11 The Procaccianti Group 18 R.I. Department of Environmental Tufts Health Plan 23 Management 9, 11 Tunstall 30 R.I. Department of Health 23 20 R.I. Division of Taxation 30 Union Trust Building UnitedHealthcare of R.I. Economic Development New England 23 Corporation 24 University of R.I. Executive Office of Massachusetts-Dartmouth 26 Health and Human Services 23 University of Rhode Island 1, 5, 26 R.I. Office of Management and Budget 30 Verizon Wireless 26 Rhode Island School of Design 21

9 RDW Group Inc. 11 Renaissance Providence Hotel 18 9 Rhode Island AFL-CIO 3, 5 Rhode Island Business 9 8 Group on Health Rhode Island Coalition Against Domestic Violence 26 23 Rhode Island R.I. Office of the 8 Attorney General Consulting Engineers 26

26

VIBCO Inc. Victorian Ladies Inn

5 18


Providence Business News

Jan. 28-Feb. 3, 2013

small business

Study: minimum wage hike not positive for R.I. By Rhonda Miller

of 2013. The increase will affect an estimated 1 million workers nationwide. For workers struggling to make ends Rhode Island’s 35-cent hike in the meet, the hike in the minimum wage is minimum wage to $7.75 an hour on Jan. 1 won’t necessarily put more dollars a positive sign, but not enough, said into the state’s ailing economy, based Kate Brewster, executive director of the on the findings of a new study by the Economic Progress Institute, a ProvWashington, D.C.-based Employment idence-based organization that works to promote economic security for lowPolicies Institute. and modest-income Rhode “Businesses that hire Islanders. minimum wage workers “The minimum wage is tend to be grocery stores a very important floor for and other low-margin emraises, but even with the ployers,” said Michael increase, we know that a Saltsman, research direcminimum wage worker tor for the institute, which still falls short by $474 he said generally focuses every month” of meeting on policies that affect the housing, food, transportaentry-level workforce. “Oftion, medical and miscelten businesses can’t raise laneous expenses, said prices because sales would Brewster, according to Bruce Vanicek go down.” research done for the inThe study, “Minimum Rhode Island Nurseries stitute’s 2012 Rhode Island Wages: Evaluating New owner Standard of Need report. Evidence on Employment But the organization Effects,” by economist Dathat did the new study, vid Neumark and doctoral the Employment Policies candidate in economics J.M. Ian Salas, both of the University of Institute, argued that the hike in the minimum wage cuts job opportunities California Irvine, was released Jan. 9. Covering fixed expenses and main- overall as the Ocean State struggles taining customer service could result to whittle down its 10.2 percent unemin a cutback of hours for minimum ployment rate, which is even higher for teens. wage workers, Saltsman said. “Rhode Island’s unemployment rate Rhode Island was one of nine states, 1/22/13 for PM teenagers is closer to 27 percent,” plus the BRI_coffee2_10x6.75.pdf District of Columbia,1 that in- 2:55 creased the minimum wage at the start Saltsman said, greater than the nationmiller@pbn.com

‘We can be … more efficient by paying people more money.’

www.pbn.com n 3

Wage/labor Connecticut and Massachusetts have both lower unemployment and a higher minimum wage than Rhode Island. Minimum hourly wage

1992

1997

2002

2007

2013

Rhode Island

$4.45

$5.15

$6.15

$7.40

$7.75

Connecticut

$4.27 $4.77 $6.70 $7.65 $8.25

Massachusetts

$4.25 $5.25 $6.75 $7.50 $8.00

Unemployment rate (seasonally adjusted, 2012 is preliminary)

1992

1997

2002

2007

2012

Rhode Island

8.8%

4.9%

5.3%

6.0%

10.2%

Connecticut

7.0% 3.9% 5.2% 4.9% 8.6%

Massachusetts

8.4% 3.7% 5.6% 4.5% 6.7% Source: U.S. Department of Labor

al rate of 23.5 percent, according to the U.S. Department of Labor. Some Rhode Island industries, such as landscaping, pay more than the minimum wage in order to have a welltrained, dependable workforce. “I’ve been here for 30 years, and in my experience, we’ve always been above the minimum wage,” said Bruce Vanicek, owner of Rhode Island Nurseries in Middletown, which has five farms in the state totaling 500 acres. “To start, we pay about $8.25 to $8.50 an hour,” Vanicek said. “It’s not uncommon for us to have guys work for us for 20 to 25 years. “We can be whole lot more efficient by paying people more money,” he said. “If a guy is only half as productive, what good is that?” Rhode Island AFL-CIO President George Nee said the organization supports the increase as a matter of economic justice and disputes that a higher minimum wage has a damaging impact on the economy.

“You could take a look at Connecticut. Their minimum wage is $8.25. Massachusetts is $8 an hour,” said Nee. “They’re doing a lot better than we are.” But just what “better” means is not a common term in this case. The study by the Employment Policies Institute that found an increase in the minimum wage can decrease employment opportunities for low-wage workers refutes the finding of past studies, Saltsman said. “I think raising the minimum wage is a classic case of a well-intentioned action that has consequences like reducing job opportunities,” said Saltsman. “States that have raised the minimum wage have not experienced a reduction in poverty rates,” he said. There are better ways to boost income, Saltsman said. “We support policies like the Earned Income Tax Credit, which doesn’t have the unintended consequences of an increase in the minimum wage,” he said. n


Page 4 Jan. 28-Feb. 3, 2013 www.pbn.com

NEWSMAKERS

Providence Business News

Needs of businesses should drive state economic policy By Patrick Anderson panderson@pbn.com

Through the ownership of several popular nightspots and restaurants, State Sen. Joshua Miller has been influential in the Providence dining and nightlife scene for years. But since jumping into politics seven years ago, the Cranston Democrat is now as likely to take a stand on hospital consolidation or payday lending as he is nightclub closing hours or farmto-table cuisine. After leading a commission on health care affordability and wrestling with the sale of Landmark Medical Center in the Corporations Committee, Miller this year was named chairman of the Health and Human Services Committee. PBN: What are the biggest issues you expect to tackle on the Health and Human Services Committee this year? MILLER: I think watching carefully now that there is a private hospital entity acquiring Landmark, how that plays out in the marketplace and what changes they make to the hospital. That really has an impact on the system and what needs to be done to regulate a private hospital and how it impacts other hospitals as they go forward. PBN: There were a lot of twists and turns in the Landmark sale. How do you feel now about how that ultimately worked out? MILLER: Saving the hospital is very important to a community that, in a small state, is as far away as you can get from the critical mass of hospitals in Providence. … There are only 14 hospitals in Rhode Island and I think what is important to watch is what the impact of decisions they make is on the other 13 hospitals.

COURTESY R.I. SENATE

EATING BETTER: Sen. Joshua Miller, owner of Trinity Brewhouse and Local 121, says that he is seeing signs of a rebound in the Providence hospitality market. PBN: From what you see, how is Rhode Island doing in the effort to bring health care costs down and transition away from the fee-for-service payment model? MILLER: We’ve made progress, but the results aren’t quite there yet. The commission I chaired on hospital costs and efficiencies, some of those recommendations still should be enacted, like transition away from fee-for-service to a global payment system for results. I have had a bill for the last couple of years that asks for the office of health insurance commissioner to have the ability to have every hospital enter into a contract with every insurer that goes away from fee-for-service. PBN: The Senate president this year has made improving the state’s business-climate rankings a top priority. As a small-business owner, what do you think is the first thing that

should be done to improve the business climate? MILLER: One side to this is that it is like herding cats, looking at all the different entities that have rated Rhode Island so low and their criteria are not always transparent. … Do they know we did pension reform, that we changed our income tax? Those things don’t seem to be totally understood. One thing I have committed to is allowing biweekly pay and working with the Department of Labor and Training on a system where an entire sector of the economy could come and apply for biweekly pay. Rhode Island is one of the only states where employers are required to pay every week rather than every other week. Some companies and industries are getting exceptions, but if you could have a permanent procedure or set of parameters where companies of a certain size could pay biweekly, that would be better. PBN: Is the hospitality industry in Greater Providence back from the recession? MILLER: Statistically, we have demonstrated through meals, beverage and hotel tax receipts that there has been a rebound. And I see that locally.

ing them all the tools they need to grow, giving them as much support as the EDC can give them. … I think my thoughts are consistent with what they are thinking about now. … When you talk about economic development in general, it has to be an advocate for changes that are attractive for businesses that might be coming to Rhode Island and for those within Rhode Island. Tax structure is very important. My biggest expenses in my business are the cost of health care and cost of energy. I was on the EDC board when Fidelity was relocating to Rhode Island and their biggest concerns were the cost of housing for employees, quality of schools and a whole range of issues that had nothing to do with the traditional tools within EDC, but things that the EDC had to advocate for. PBN: What do you think of Providence’s recent proposals for curbing nightclub violence, including increased security requirements? MILLER: I think the flexibility of closing is a good idea, because it can be like a 2 a.m. rush hour if you try to do everything in 20 minutes instead of an hour. But I think it is critical to listen to establishments and what they go through. Every responsible business owner wants to make sure the perception of what goes on downtown at night is positive, and I think it has been. If you are talking about economic development, it is a factor in why small businesses want to locate here. … You can’t put an economic burden on small places started by entrepreneurs with limited resources. n

You can’t put an economic burden on small places started by entrepreneurs with limited resources.

PBN: You served on the R.I. Economic Development Corporation board from 2001 to 2006. What would you do to revamp the agency after the 38 Studios debacle? MILLER: I think the emphasis has to be on existing small businesses in Rhode Island and giv-

INTERVIEW

Sen. Joshua Miller Position: R.I. Senate Health and Human Services Committee chairman, owner of Trinity Brewhouse and Local 121, partner at the Hot Club Background: Miller dropped out of the University of Rhode Island as a junior to open the Met Café music venue in Providence with friends in 1975. Since then, he has owned and operated bars and restaurants. After serving on industry groups such as the Rhode Island Hospitality Association, Providence Warwick Convention and Visitors Bureau and Downtown Merchants Association, Miller was elected to the state Senate in 2006. Education: Studied art history at the University of Rhode Island First job: Delivering pizza Residence: Cranston Age: 58

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Providence Business News

Jan. 28-Feb. 3, 2013

www.pbn.com n 5

workforce development

Lawmakers searching for answers to close skills gap By Rhonda Miller miller@pbn.com

Frustrated by the gap between available jobs in Rhode Island and the lack of trained workers to fill them, some state legislators are pushing for action on this stubborn chasm in the workforce. One legislator taking steps to close the “skills gap” is Rep. Joseph McNamara, D-Warwick, who introduced the Back to Work Rhode Island Program Act of 2013 on Jan. 9. “I see neighbors who have talents and are unemployed and collecting unemployment,” McNamara said at an economic summit for House members on Jan. 17 at Rhode Island College. The summit brought together legislators, business leaders and higher education officials for the latest in a series of efforts to kick-start Rhode Island’s ailing economy and reduce the state’s 10.2 percent unemployment rate. “Sometimes people are hesitant about losing their unemployment benefits if they participate in a new job and it doesn’t work out,” McNamara said. “This bill gives them a chance to participate in a job for up to 24 hours a week for six weeks and collect unemployment. They don’t have to go through all the hoops to go back on unemployment after that if they don’t get a job.” The bill states that it is intended to alleviate one investment risk faced by businesses: “In an uncertain economy, employers are hesitant to invest in training if there is a risk the investment will not result in a qualified and skilled employee.” Under the p r o v i s i o n s Rep. Joseph McNamara Warwick Democrat of the bill, the employer must have a full-time position open and “provide the claimant with skill enhancement and job training relevant to the open employment position.” That elusive path to enhancing and updating the skills of Rhode Island workers was addressed by a panel focused on small-business challenges and recommendations. “We have 78,000 unemployed workers in Rhode Island and we need a database to match existing skills with businesses of all sizes,” said Karl Wadensten, CEO of VIBCO Inc. More use of the online EmployRI.org is an available action step, Wadensten said. EmployRI.org, which allows job seekers and employers to match skills with job openings, is part of the onlineresources network used by the state Department of Labor and Training. While skill development is a huge challenge in Rhode Island, Wadensten said businesses are also looking for workers with positive values and characteristics that align with their organizations. Getting those potential employees in contact with employers is important. The challenges facing Rhode Island’s workforce run in a familiar circle when state business, education and legislative leaders convene – from quality of K-12 education to college readiness and 21st-century skills. Improvements in the economy and attracting new business have to begin with K-12 education, said Owen Johnson, co-founder and managing partner of the Providence-based startup ac-

‘I see neighbors who have talents and are unemployed.’

celerator Betaspring, which has mentored 57 new companies since it began in 2009. “The biggest challenge we have in recruiting entrepreneurs is education – the public schools,” said Johnson. “Entrepreneurs want high-quality education for their children.” Rep. Peter Palumbo, D-Cranston, said he has personally found one strength Rhode Island can expand on in education, even though it may be a tiny segment. “Rhode Island College has a program for teachers for certification in autism,” said Palumbo, who has two sons with different levels of autism spectrum disorders. “That’s an important specialty in education and those

teachers are hired immediately.” One of the state’s strong points is its maritime industry and more should be done to train workers and expand that sector, said Rhode Island AFL-CIO President George Nee, who was on the summit panel on workforce-development gaps and opportunities “The state would benefit from a coordinated maritime trades authority for Quonset, Newport and Providence,” Nee said. Rep. James McLaughlin, D-Cumberland, also has his vision set on Rhode Island’s connection to the water as a resource begging for expansion. The University of Rhode Island’s Graduate School of Oceanography is a strong foundation to build upon, he said.

“I’d like to see more underwater research so this nation comes to Rhode Island for ocean expertise,” McLaughlin said. Expanding the emphasis on fisheries and aquaculture would create jobs and strengthen the economy, he said. For lawmakers, the summit was a launching point for ideas that might help close the skills gap and boost the overall economy. The General Assembly has to look at the big picture, said House Majority Leader Nicholas Mattiello, D-Cranston. “We have to create an environment that’s going to help the private sector expand,” he said n

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Providence Business News

6 n www.pbn.com

Jan. 28-Feb. 3, 2013

Restaurants freshen more than menues

Dining Out

but may be to the palate. Chef Anthony Tarro anticipates serving his rustic Tuscan specialties to more of Siena’s regular patrons and new visitors alike. The bistro address at 238 Atwells Avenue has seen other changes through the years going back to when the DiGiglio family operated a butcher shop there. This was followed into the early years of the Providence restaurant boom by L’Epicureo, which was owned by Rozann (DiGiglio) and Tom Buckner. In the early 2000s, the Buckners moved downtown, making way for Siena, which quickly established itself as a mainstay on the Hill’s Restaurant Row. Plans are still in the works for a third Siena location, in Smithfield, to join the original and its East Greenwich sibling

EAT • HO •H U G SIN

Amica

restaurant. Cook & Brown announced its “renovation vacation” before the holidays. The stylish “gastropub” on the Hope Street Restaurant Row underwent a weeklong makeover during the first full week of January. Chef and proprietor Nemo Bolin planned carefully so the demolition and construction schedule would be completed in time for the beginning of Providence Winter Restaurant Weeks. Bolin and his wife, Jenny, invited their customers and friends to keep an eye on the progress of the work at the restaurant’s Facebook page. One Cook & Brown regular was looking forward to the restaurant’s reopening for Restaurant Weeks, while another wanted to be sure the unique ceiling treatments were copied.

FOO D

A bit of patience on our parts will be well worthwhile as some of our favorite local restaurants take a break this winter to freshen up and put on a new look. On Federal Hill, Siena has just completed a makeover literally on the ground floor. The Italian bistro’s iconic, hardwood floors received a facelift over a week in early January. Proprietor Christopher Bruce Newbury Tarro promises a few other renovations as well. Some of the tweaks to the venerable building may not be immediately apparent to the eye

$75,000

Sometimes the inspiration for a makeover comes from outside influences.

CHALLENGE Amica Companies F

O

U

N

D

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The Bolins have established themselves in the forefront of New England seasonal cooking by forging relationships with local farmers, fishermen and food artisans. A fine point to the seasonal menu philosophy is at the bar, with its emphasis on esoteric, old-world wines, crafted cocktails and small-batch beers. One of the first events scheduled in the renovated space will be a trade tasting of sherry wines from Spain. Sometimes the inspiration for a makeover comes from outside influences. In the case of the Cuban Revolution’s Downcity location on Aborn Street, the impetus came from Baltimore. That’s where proprietors Ed and Mary Morabito recently opened the fourth location of their casual Cubanfusion restaurant concept. The new restaurant is located near Johns Hopkins Hospital. Ed Morabito calls Baltimore a “dynamic city” and says he was drawn to the collaborative aspect of the redevelopment of the area around the Johns Hopkins medical campus. It was not so long ago when such a venture was making news here in Providence when the Valley Street neighborhood just off Olneyville Square was undergoing a similar renaissance and the Cuban Revolution was first into that emerging area. The neighborhood is holding its own and the Valley Street Cuban has become a destination spot not only for its Caribbean-modern pub menu but for a vibrant roster of jazz musicians who attract w e e k l y crowds at the venue. My listeners rediscovered the vibe of the location during a live broadcast of my radio show there last November. But the ownership did not forget its roots in downtown Providence. Once the Baltimore location was on its feet, it was time for a freshening up on Aborn Street. In early December, the doors were closed and the murals of Castro, Marilyn and JFK were taken down. Walls were brightened, seating was reconfigured and the restaurant soon had a new look while maintaining its “retro” atmosphere. And the murals are back in their familiar spots overlooking the new banquettes. What we may refer to as “pending renovations” are in the works at another city restaurant. Temple, in the Providence Renaissance Hotel, shut its doors temporarily at year’s end. The hotel’s management company in a news release hinted that a national chain will occupy the space after a makeover. But sources in the restaurant community have said that local management will be turning the space into another location of an existing restaurant concept. The good news is that these restaurants and others undergoing renovations this winter have stood the test of time. The proprietors – some of whom are also the chefs – are able to reinvest in their facilities. It is a sign of their confidence in the community and in us who dine out often and who can’t wait to see what they have done with their places. n

N

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Bruce Newbury’s food and wine talk radio show is heard Saturdays and Sundays locally on WPRV-AM 790, on radio throughout New England and on the TuneIn and iHeartRadio mobile applications. He can be reached by email at bruce@brucenewbury.com. 7.5x10 4C ad.indd 1

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Jan. 28-Feb. 3, 2013

Providence Business News

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Providence Business News

8 n www.pbn.com

Jan. 28-Feb. 3, 2013

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The state did submit its application – a 1,000-page document with appendices – to operate the health-insurance exchange on Dec. 12 (two days before the deadline) and on Dec. 20, Rhode Island became the 11th state to win conditional approval to operate its own state-run health-insurance exchanges under the Affordable Care Act. But a year after the Ocean State was roundly praised for its work on health care reform, U.S. Health and Human Services Secretary Kathleen Sebelius offered more measured words, saying PBN PHOTO/RUPERT WHITELEY Rhode Island “has made significant IDEA EXCHANGE: Christine Ferguson, progress,” in developing its exchange. (As of Jan. 23, 17 states and the Dis- executive director of the R.I. Health Bentrict of Columbia had received such ap- efits Exchange, left, speaks with Jennifer proval to operate their own exchanges.) Wood, Lt. Gov. Elizabeth H. Roberts’ chief Ferguson told Providence Business of staff. Ferguson says the exchange will News that Rhode Island has not fallen be running by Jan. 1, 2014. behind the curve because of the lasttor of RIBGH. “We’re also interested in minute submission of its plans. “We learning how the exchange plans to serchose not to submit the final documenvice and attract businesses to it. We are tation until we had run it through a also concerned about the ongoing fundcouple of people to ensure that everyone ing as a self-sustaining entity.” who needed to review it had a chance to Donald Nokes, who is president and do so,” she said. co-founder of NetCenergy as well as When asked to clarify her comments serving as president of the board of dito business leaders at a PBN-sponsored rectors of RIBGH, says the group has Dec. 13 “Employment Trends 2013” prepared more than two pages of quesforum that the exchange may not be tions it plans to ask Ferguson when ready to ramp up to full operation by she is a guest at the RIBGH meeting on its starting date, Ferguson said: “It March 22. “From a business perspecwill be operational. There will be more tive, we’ve been trying to target the isadvanced functionality – such as com- sues that are important to health care parisons of provider network outcomes in Rhode Island,” Nokes said. “We’re – that won’t be available on day one be- now focused on the exchange, and we cause we won’t yet have the data.” want to educate our constituents about According to Christine Hunsinger, it.” spokeswoman for Ferguson, the apparBeyond the close-to-the-deadline filent disconnect in Ferguson’s comments ing of the state’s application and quesis the difference between what it will tions about how fully functional the take to have the exchange up and run- exchange may be at the outset, there ning to meet the federal standards by are other warning signs of speed bumps Jan. 1, 2014, and “the full vision of the ahead. health exchange when it After more than a is completed,” years down month of negotiations, the road. Rhode Island finally signed “It’s an aggressive time a three-year contract for frame to achieve a very $105 million with Deloitte complicated result,” HunConsulting on Jan. 18 to singer said of the Jan. 1 build the core component deadline. “What you’ll see of the exchange, the sysfrom now until [the extems integrator, which change] goes live is a movwill determine the eligibiling of benchmarks and ity of Rhode Islanders usa change in designs and ing the exchange, accordtimelines,” she continued, ing to Hunsinger. About calling it a natural part of 84 percent of the contract Lynn F. Flynn the process. But Hunsingwill be paid for with feder said emphatically that Rhode Island Medical Imag- eral grants to build the exthe exchange “will be up change (about $28 million) ing director of and operational” when it as well as federal funds human resources has to be, and she also re(about $58 million) availjected the idea that Rhode able through Medicaid, acIsland may have lost its leadership po- cording to Hunsinger. The remaining sition. “I would disagree with that as- contract costs will be paid from state sessment,” she said. coffers from the Department of Human Should the exchange not be able to Services (about $8 million) and the Exfully meet its operational deadlines, it ecutive Office of Health and Human could prove problematic for employers. Services (about $5 million). “Considering Rhode Island was The systems integrator is the first given such a huge grant and has been step in a larger effort, known as the working on the project for quite some “Unified Health Infrastructure Projtime, [a delay] would be very disap- ect.” UHIP seeks to centralize inforpointing and an administrative head- mation about Rhode Island’s health ache for employers who are working care system, linking the Office of the diligently to comply,” said Lynn F. Health Insurance Commissioner, the Flynn, director of human resources Executive Office of Health and Human at Rhode Island Medical Imaging, Services, the Department of Health, the which has locations in six Rhode Island Department of Human Services, which manages the state’s Medicaid program, communities. The Rhode Island Business Group and the exchange. Included in this syson Health also expressed concerns tem will be the creation of Rhode Isabout the exchange’s ability to meet its land’s All Payor Claims Database, now deadlines. “We have some concerns that being built by a Maine technology conall such large projects are often subject tractor. UHIP was described in a planning to missing aggressive deadlines,” said See Exchange, page 23 Kate Kennedy, interim executive direc-

‘[A delay] would be very disappointing and an administrative headache for employers.’


Jan. 28-Feb. 3, 2013

Providence Business News

www.pbn.com n 9

Rhode Island & Massachusetts News Briefs

DEM director given Boater of the Year Award by RIMTA PROVIDENCE – R.I. Department of Environmental Management Director Janet Coit was awarded the John H. Chafee Boater of the Year Award by the Rhode Island Marine Trades Association at the Providence Boat Show. According to a news release, the award recognizes and honors an individual who has contributed to the “success of the recreational boating industry” in the state or who has championed the cause to bring recreational boating to the public. In the release, Coit noted the association served on the host committee for the successful America’s Cup World Series held at Fort Adams State Park last summer. This premier tourism event attracted more than 60,000 people to events over a nine-day period, and an estimated 1.9 million viewers who watched the races live on TV. Director Coit also noted that DEM has worked in partnership with the association over the years on numerous efforts to promote safe and clean harbors. The organization has been a key player in the effort to rid Rhode Island’s shoreline of accumulated marine debris through the Project Clean Sweep program. The association advocated for a new law and funding mechanism that addresses abandoned vessels, which Coit said pose a hazard to navigation.

Mass. picks up 7,500 jobs in December BOSTON – The Mass. Executive Office of Labor and Workforce Development reported preliminary December 2012 federal estimates show a gain of 7,500 jobs in the state over the month, for a total of 3,263,400 jobs. The December job gain follows a revised loss of 3,200 jobs in November. According to a news release, the total unemployment rate for December was 6.7 percent, up one-tenth of a percentage point. Over the year, the unemployment rate was down two-tenths of a percentage point from the December 2011 rate of 6.9 percent. The three-month average seasonally adjusted total unemployment rate was 6.7 percent and the sixmonth average was 6.5 percent. Compared with December 2011, jobs are up 51,600. Private-sector jobs are up 50,700 with gains in eight of the ten sectors. Professional, Scientific, and Business Services and Trade, Transportation and Utilities had the largest gains.

$2.8M in refunds to return to bike owners BOSTON – More than $2.8 million in insurance refunds have been returned to Massachusetts motorcycle owners, Attorney General Martha Coakley announced last week. Encompass Insurance Co. of Massachusetts, an Allstate subsidiary, Amica Mutual Insurance Co., and NGM Insurance Co., also known as Main Street America, all recently mailed payments to Massachusetts motorcycle owners under settlements previously reached with the AG’s office. Encompass sent $1.9 million in payments, Amica sent $837,384 in payments, and NGM sent $17,833 in additional payments after already sending more than $700,000 in payments in June 2011 under the same settlement. Combined, consumers have received a total of

10,137 checks from the three carriers within the past two weeks. Average refunds to consumers are around $280. The payments are part of Coakley’s industry-wide investigation into motorcycle-rating practices, the release said. All 17 of the related settlements stem from a complaint the AG’s office received from a consumer who owned a 1999 Harley-Davidson Road King Classic. In each year between 2003 and 2008, the consumer’s insurance company calculated the consumer’s premiums as if his motorcycle were brand new and worth $20,000. According to the release, since 2010, 17 insurance companies have settled with the Coakley’s office, resulting in more than $42.8 million in refunds to motorcycle owners.

Solarize Mass. program looks for power adoption BOSTON – The Mass. Clean Energy Center and the Mass. Department of Energy Resources have announced the launch of the 2013 Solarize Massachusetts program. According to a news release, the program is designed to increase the adoption of solar energy, further reduce the overall cost of solar power – offers residents and businesses discounted pricing for solar. The more people sign up, the greater the savings for everyone. The program is open to all Massachusetts communities, including those designated by the Department of Energy Resources as Green Communities, which meet five “clean” energy requirements and commit to reducing energy use by 20 percent. Individual cities, towns and groups of contiguous municipalities can apply by downloading a request for proposals and applying by Feb. 20 In 2012, 17 cities and towns participated in the program, with 803 residents and businesses signing contracts to install solar electricity systems with the capacity to generate 5.1 megawatts of clean, renewable energy – enough to power the equivalent of 807 average Massachusetts homes annually. Additionally, according to the release, the program was also directly responsible for the creation of 32 new jobs. More information on the program can be found at www.solarizemass.com.

Cabral named secretary of public safety in Mass. BOSTON – Gov. Deval L. Patrick last week swore in Andrea Cabral as secretary of the Mass. Executive Office of Public Safety and Security. Cabral, the first female in the state’s history to hold the position of sheriff of Suffolk County, brings an extensive background in criminal justice and public safety to the post, Patrick said in a statement. Her career in public service began in 1986 as a staff attorney in the Suffolk County Sheriff’s Office. The governor also announced that Secretary Cabral will lead a proposed working group between his administration and the state’s sheriffs to improve the funding structure for sheriff departments. Under the current system, there is often inconsistency in funding levels due to varied levels of federal inmate revenue, county population and other factors. The working group, proposed as part of the governor’s fiscal 2014 budget, would submit recommendations by July 1. n

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Providence Business News

Teen hiring without headaches Soon, teenagers by the millions will be seeking summer jobs – the vast majority at small businesses coast to coast. An estimated 18 million U.S. teens will work this year, one of the highest totals in the developed world. Speaking as a parent of teens, this is a good thing. But the U.S. Department of Labor’s take on Daniel Kehrer teens seems closer to a line in the My Chemical Romance song “Teenagers” which says “Teenagers scare the living @#$% out of me.” DOL, you see, is rife with rules and regulations on teen labor, and prone to enforcing them with fines and sanctions. For example – and not to pick on Portland – but one recent DOL “enforcement initiative” involving Portland restaurants found violations of minimum wage, overtime and childlabor laws at a whopping 79 percent of the eateries checked. Even kidfocused Chuck E. Cheese locations in San Francisco were fined $28,000 for violating child-labor rules. Whoops! Most rules are common sense, and deal with safety issues. That’s because young workers suffer a disproportionate share of on-the-job injuries. About 160,000 teens suffer work-related injuries or illnesses yearly – about one third of them requiring emergency room treatment. And more than 75 percent of incidents happen in the retail and service industries – not the sectors usually considered more injury-prone, such as manufacturing and construction. Young workers – especially those in their first summer jobs – are at greater risk of workplace injury because of their inexperience. And also because, well, they are teenagers who may hesitate to ask questions and may fail to recognize workplace dangers. (What did that song say?) Familiarize yourself with federal and state laws on teen employment – especially the rules on what types of jobs teens are specifically not allowed to perform. Dozens of private suppliers sell OSHA compliance materials, and there are many safety consultants to choose from, available easily online. But your best starting point is OSHA’s small-business website at www. osha.gov/smallbusiness. Another helpful government site called “TeenWorkers” has a wide range of information on summer-job safety for specific sectors such as construction, landscaping, parks and recreation, lifeguards and restaurants. Under landscaping, for example, you’ll find tips on preventing injury from pesticides, electrical hazards, noise and many others. You’ll find the TeenWorkers site at OSHA.gov/SLTC/teenworkers. n

Bizbest

Daniel Kehrer can be reached at editor@bizbest.com

BRITO’S LANDSCAPING SERVICES LLC

GRASS IS GREENER: Brito’s Landscaping Services co-owner Mike Brito, left, with his son, Jonathan Brito. The younger Brito came onboard a few years ago to handle project management.

Landscaper building path to success Brito’s tackles variety of jobs, from patio designs to commercial work By Rebecca Keister

M

keister@pbn.com

ike Brito, owner and general manager of Brito’s Landscaping Services LLC, believes in letting a higher power guide his future. So when he discovered he had somewhat of a gift for landscape design, after years spent working in heavier construction, he went with it and developed a small business that has brought him success, even in challenging times. “We had our best year ever last year. I don’t know how to explain it but we answer to a higher authority,” Brito said. “[Landscaping] just seemed like an obvious fit for me. I was kind of guided to it, I guess.” Growing up in Bristol, he had a front-row seat to the development of C. Brito Construction Co., the still-standing company his grandfather, Cesar Brito, began in the 1950s after he emigrated from the Cape Verdean island of Saint Vincent, with gas-main installations and expanded in the 1960s with municipal sewer and water systems. Mike Brito’s father, Joseph Brito Sr., eventually took the company over and expanded to include underground utility work. As a result, C.B. Utility Co. was incorporated in 1989 and now is run by Mike’s brother, Joseph Brito Jr. “That’s where I get my background in construction from,” Mike Brito said. “I never really had any formal training. Life brings me down different roads and I followed the one that was in front of me. I came up the ranks and learned that way.” After graduating high school, Brito, 55, worked for his family’s company and some others before meeting his wife, Sally, and settling down in East Greenwich about 12 years ago. At that point he felt himself facing

COMPANY PROFILE Brito’s Landscaping Services LLC Owners: Mike and Sally Brito Type of Business: Landscaping firm Location: 1070 Frenchtown Road, East Greenwich Employees: 7 Year Established: 2005 Annual Sales: WND

a now-or-never situation when it came to starting his own business and he decided to take the plunge. “I felt I better do something on my own if I [was] ever going to and we started this little show,” Brito said. “It’s developed into a pretty passionate thing.” The Britos established Brito’s Landscaping Services LLC in 2005. In the beginning it was just Brito designing and constructing a few walkways. Once he realized he had a talent for the design aspect of the business he expanded to include what now has become full patio design, including fire pits, stone work, kitchen work and entryways for residential clients. The company also performs commercial work through R.I. Department of Transportation contracts for bridge demolitions and closures, including the demolition of the Anthony Road Bridge in Foster last year. No project is too large or too small, Brito said. The company focuses on one project at a time, completing roughly 100 per year, ranging from $800 walkways to $80,000 full installations. He brought his son Jonathan Brito onboard a couple years after starting the company to handle project managements. Sally Brito, who is a certified public accountant, serves as adminis-

trator and bookkeeper. A big part of the company’s success is due to the detailed and dedicated service it provides, said Mike Brito. He uses models, 3-D images and walkthrough videos to illustrate to clients his vision for their beautification project. The rest he credits to the business model the Britos developed eight years ago. “We are a Christian-based company. When I developed the business, I was very strict on doing it for the right reasons. I didn’t want to go in this just to make money. That would have been a horrible motive,” Brito said. “We look at how we’re going to enhance clients’ lives. We don’t just put a fire pit in. We build living rooms that happen to be outside with a fire pit, where families get together and roast a marshmallow. Places where they are going to gather and share joy.” He’s also used a Christian philosophy in building the company’s workforce by recruiting down-on-their-luck individuals and helping them develop a marketable skill, then encouraging them to move on to larger companies where they could further their careers. The Britos also incorporate a strong charitable element to their business, recently donating services to install memorial bricks at St. Peter’s and St. Andrew’s Church in Providence, when the diocese used the bricks to fundraise for a $30,000 fire alarm system. They’ve also donated landscaping services through Green Care for Troops, a nationwide program. Brito would like to expand the business to perhaps include a maintenance division and to focus on growing his residential-customer base. And, “If the business was a little bigger, I’d be able to help a lot more people,” Brito said. n


Providence Business News

Jan. 28-Feb. 3, 2013

www.pbn.com n 11

PROVIDENCE – Air Canada is suspending its twice-daily service from T.F. Green Airport to Toronto effective March 1, R.I. Airport Corporation interim President and CEO Peter Frazier told Providence Business News. Air Canada, which offered the only scheduled international flights out of T.F. Green, had two flights a day to Toronto on an 18-seat Beechcraft 1900. Frazier said that the busier schedule out of Boston’s Logan International Airport offers passengers fare competition and larger aircraft. Frazier added that RIAC plans to look into the airlines that are presently providing Boston-to-Toronto services to see if they might be a good fit to fill the hole left by the Canadian airline. “Air Canada has been a longstanding, great partner with the R.I. Airport Corporation and we look forward to market conditions improving where we might be able to renew the relationship,” said Frazier. Air Canada started providing Toronto service from T.F. Green in October 1997.

R.I. dropout gender gap among highest in nation WASHINGTON – Rhode Island is one of two states with the largest gender gap among high school dropouts in the country, according to a U.S. Department of Education study. The study, released last week, says that the male-student dropout rate in Rhode Island was 5.5 percent in the 2009-2010 school year. For females, it was 3.8 percent. Six out of every 10 dropouts in the state were male. During the 2009-2010 school year, more than 2,100 Rhode Island students quit high school. A year later, neither the gap nor the dropout rate had improved. In the 20102011 school year, there were 2,338 dropouts with an identical gender disparity – males outnumbered females two to one. More than half of the dropouts occurred before students reached grade 11, according to data tables available on the R.I. Department of Education website. The male dropout rate was higher in every state in 2009-2010, the most recent school year available. And while national averages were 3.8 percent male and 2.9 percent female, the disparities were not uniform from state to state. Idaho gender gaps were the lowest at 0.2 percent, while the greatest gaps - 1.7 percent - were found in Rhode Island and Connecticut. The national high school dropout rate was roughly 7 percent in 2010, a decrease from the 8 percent reported in 2009. Deborah A. Gist, the state’s commissioner of elementary and secondary education, declined to comment on the study, but pointed to a state initiative called “Transforming Education in Rhode Island” that focuses on bolstering programs that support student achievement. “When implemented well, these programs can have dramatic effects on the lives of our students, as we have seen at Central Falls High School, where in 2011 the four-year graduation rate im-

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CVS local sponsor of job fair for veterans WOONSOCKET – CVS Caremark Corp. joined forces with the R.I. National Guard and Reserve to sponsor a “Hiring Our Heroes” job fair at the National Guard Armory in Warwick on Tuesday, Jan. 22. According to a CVS release, the job fair helped veterans, active military members and military spouses in finding “meaningful employment opportunities at CVS Caremark.” “Hiring Our Heroes plays a vital role in connecting our nation’s veterans to jobs,” Larry J. Merlo, president and CEO of CVS Caremark, said in prepared remarks. Our servicemen and women, and their families, sacrifice so much for our country. This initiative helps ease their transition from active duty to civilian life, and we are proud to be a part of it.” CVS Caremark is one of nine “Chairman’s Circle” national sponsors of the Hiring Our Heroes initiative. n

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RDW co-founder retires; Malachowski new chair PROVIDENCE – Mike Doyle, one of the founders and chairman of RDW Group Inc., the communications agency, has retired. Doyle was succeeded, effective Jan. 21 as chairman by former Chief Operating Officer James Malachowski. Jim Pontarelli remains president of the firm, which claims 75 employees with offices in Providence, Boston and Worcester, and a local and national client base. Doyle leaves the company, founded in 1986, at a time when it is performing well. It placed seventh on the list of Fastest-Growing Private Companies with revenue of $25 million or above in the PBN 2013 Book of Lists, with growth of 53 percent from 2009 to 2011 and revenue of $30.5 million. Agency clients over the years have included Blue Cross & Blue Shield of Rhode Island, Providence Place and T.F. Green Airport, with the firm specializing in the energy, health care and higher education markets.

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Providence Business News

12 n www.pbn.com

Jan. 28-Feb. 3, 2013

Annual-account filing deadline this week This year, 17 Rhode Island communities will go through the rite of passage known as the revaluation cycle. State law requires a full property revaluation by the tax assessor in each city and town every nine years with James W. Ryan less-detailed updates every three years. These values are important because, absent additional improvements or damage to the property, the values will stay the same for the entire cycle even though the tax rate will change each year. For many of us, that means this spring we’ll learn that the tax assessor, or a company hired by the assessor, has come up with a new tax value for any real estate we own. In most cities and towns, the tax values are supposed to be set at a “full and fair cash value or a uniform percentage thereof not to exceed 100 percent.” Upon receipt of a notice from the tax assessor of the new proposed value, the taxpayer will be given an opportunity to come in and discuss the new value. Then, after the tax bills actually come out, the taxpayer can institute a formal appeal to the town. The taxpayer will then have an opportunity to present evidence to a board of review in an effort to show why the assessor got it all wrong. But what recourse does a taxpayer have if the board does not agree? Unbeknownst to many Rhode Island taxpayers, state law requires that every person and business file an annual account of all “ratable estate” with the tax assessor by Jan. 31 of each year. This accounting is supposed to include both real and personal property. Businesses are more likely to be aware of this requirement because of tangible property taxes that they have to pay on their inventories and other business assets – but not all. Most private citizens pay little heed to these statutes and never know the difference. Most of us have enjoyed the benefit of rising real estate values for many years. Unfortunately, that usually also means the tax assessor ends up increasing the valuation of your real property for tax purposes. When the tax valuation of your property goes up, you the taxpayer have an automatic right to appeal to the town. You also have the right to pursue an appeal in court if you are still unhappy with what the town decides. In order for the taxpayer in a declining market to pursue a tax appeal in court, it is necessary to have filed an annual account in a timely manner. In legal jargon, the filing of an annual account is a condition precedent to the filing of any lawsuit. If you believe that, due to the declining real estate market, the full and fair cash value of your property is considerably less than its current tax valuation, you might be hoping that the assessor will recognize that decline and significantly reduce the tax value of your property. But what if the assessor only agrees

Guest Column

The filing of an annual account is a condition precedent to the filing of any lawsuit.

to a small reduction or, perhaps, even keeps the same value and then the town board of review rubber stamps that decision. If that’s the case and you have not filed an annual account, you could be stuck with the town’s decision and have no recourse in court. The filing of the annual account does not cost anything and it is not very complicated. Most tax assessors make the form available on the town website. Anyone who chooses to file must remember that the form must be filed with the town on or before Jan. 31 (or extended pursuant to the procedures set forth in the statutes) and it must be executed under oath. The annual account is supposed to

D L O S

assist the tax assessor in determining the value of all the taxable property in town in order to formulate the tax roll, which will then be used to set the annual tax rate. But, like many other procedural requirements in the arcane world of tax assessment and tax appeals, none of this works in favor of the taxpayer. In one recent case, the owner of a large office building in downtown Providence contested the tax assessment for several years. The court agreed that the tax assessor’s valuation was off the mark by more than $7 million, but there was one year where the court had no choice but to dismiss the property owner’s appeal because the annual account the owner filed was not signed

! T U O

and, thus, not executed under oath and did not meet the statutory requirements. The result was an unnecessary tax liability of approximately $250,000 for that one year alone. Anyone who lives in one of the communities about to go through the revaluation process and who believes that their current valuation is too high and out of touch with reality would be wise to keep all options open by having filed an annual account by Jan. 31. n James W. Ryan is a partner with Pannone Lopes Devereaux & West LLC and former chief of the criminal division for the R.I. Office of the Attorney General.

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Providence Business News

www.pbn.com n 13

It’s not just a new year, it’s a new, better way Happy New Year! Emphasis on the word new. In case no one has told you, the old way of selling is dead. Problem is people are still using the old way and, even worse, “experts” are still teaching the old way. Of course I realize all of you are the most innovative and creative salespeople on the planet. None of you ever resort to oldsales tactics Jeffrey Gitomer world and none of you ever need a sale at the end of the month. Of course I realize all of you blow away your monthly sales number by the second week in the month. And of course I realize anything I say in this particular writing will only be a confirmation of how great you are. Now that we have that out of the way, let’s begin a realistic look at your approach to sales, your strategy of selling and the tactics you’re using in order to gain a sale, build a relationship and earn a referral. Before I get to the new way, I am going to give you some of the elements of the old way so you can: n Determine whether you are old or new. n Determine whether you are progressive or regressive. n Determine whether you are endearing your customers, or disappointing them. n Determine whether you are attracting prospects or repelling them. n Determine whether this will be a great year for you, or yet another mediocre year of both frustration and lack of earnings. Let me give you the partial list of the old-world elements – that although are not quite dead, are dying by the day and becoming irrelevant to the sales process – and even though you may be doing some of them, I promise that sales are a greater struggle for you and you’re seeking answers that may not be provided by your leadership, predominantly because they still believe the old way works. n Cold calling. n Getting past the gatekeeper. n Getting your phone call returned. n Getting your email read. n Finding the pain. n Preparing your “pitch.” n Using a standard PowerPoint or Keynote slide deck provided by marketing. n Trying to “type” the buyer. n Trying to qualify the buyer. n Overcoming the objection. n Trying to “go around” a lower level person to get to the “real decision maker.” n Fighting “price.” n Closing the sale. n Asking for a referral immediately after making a sale. The worst of all the old-world tactics is trying to use some manipulative “system of selling” in order to walk the prospect through your way of making the sale, versus the prospects way of buying. The Internet has changed the way

sales moves

The Internet has changed the way both businesses and consumers buy.

both businesses and consumers buy. Think about the last time you bought a car. Did you do research on the Internet? Of course you did. Everyone does! You do Internet research for two reasons: one, to get all the facts about making a $30,000 purchase – finding the model, the features and even the color that suits you best. And two, probably the main reason, is that you don’t trust car dealerships or car salespeople. The most laughable part of this process is that the car dealer and salespeople have not changed their sales ways in 100 years. There are still begging, offering cars for a dollar over invoice, switching you from one salesperson to another, and using every reprehensible tactic in order to get you to purchase “today.”

Hopefully this is not you, but I have my doubts. Take a second look at the list above. How many of those elements are you still using? And how many of you are saying, “My boss makes me do them”? Both funny and sad. The new way of selling involves strategies that were employed 100 years ago, but somehow buried, or forgotten, or replaced by manipulative tactics that are no longer relevant or acceptable. The better part about the new way of selling is that it’s comfortable. The best part about the new way of selling is that very few people will be doing it, thereby giving you both the strategic and a competitive advantage. The new way of selling is simply this: Customize your presentation in

terms of how the prospect wins after they purchase. Present in a conversational way. Ask questions that both engage, and prove that you are prepared. Give an idea or two in favor of the customer to prove that you have their best interest at heart. There’s more to it, but that’s a simplistic look at a process that will both redefine how you look at the sale, and redefine how the customer perceives you as a salesperson. Happy, healthy, wealthy New Year! And happy new way of selling! n Jeffrey Gitomer is president of Charlottebased Buy Gitomer. He can be reached at (704) 333-1112 or email to salesman@gitomer.com

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BOOK OF LISTS RECAP

Providence Business News

Ted Howell, Partridge, Snow & Hahn; Alden Anderson, CB Richard Ellis; Mike Hogan, TD Bank

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From Tufts Health Plan, Jim Delisle, Joleen Miller, Brian Pagliaro, and Wendy Manon

Tony Brum, Damon Arpin, David Simmons, Amy Beauchamp and Frank Casale from TD Bank

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Providence Business News

BOOK OF LISTS RECAP

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Page 16 Jan. 28-Feb. 3, 2013 www.pbn.com

BOOK OF LISTS RECAP

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HOSPITALITY

Page 18 Jan. 28-Feb. 3, 2013 www.pbn.com

Providence Business News

City a destination even in winter By Rebecca Keister keister@pbn.com

Twenty-five years ago, the Newport Winter Festival was just a concept drummed up by local businesses, what was then known as the Newport County Convention & Visitors Bureau and a pair of tourism-industry insiders, that the group collectively hoped would put the city on a winter-holiday map. Today, it’s a 10-day celebration of all things the Ocean State has to offer during the offseason with a list of 150 events, sold-out hotels, and special at-

tractions that regularly draw some 30,000 people from across New England. “I would like to tell you it was just our idea but it wasn’t. Businesses said we really needed to do something and they were right,” said David Rosenberg, founder of Marketing and Events Inc., which runs the festival and helped kick it off all those years ago with Evan Smith, now the president and CEO of Discover Newport, which last year rebranded from the CVB name. “The original idea was to let people know that Newport is very much alive

and well. What really has happened over the past 25 years is that we’ve been able to draw an enormous amount of people in the dead of winter when we’re competing with ski and Disney [vacations],” Rosenberg said. The 25th annual Newport Winter Festival takes place Feb. 15 to Feb. 24 during what for many is a school-vacation week. “It’s always aligned with the schoolbreak week to maximize it for family exposure and things to do,” said Smith. See Festival, page 20

COURTESY NEWPORT WINTER FESTIVAL

STARTING YOUNG: A key event in the Newport Winter Festival is the Children’s Fair, which takes place at the Newport Marriott.

Hub eyed for power brokers By Patrick Anderson pandertson@pbn.com

PBN PHOTO/DAVID LEVESQUE

STAY A WHILE: Anne Tundermann, owner of Providence’s Annie Brownell House, serves breakfast to two out-of-towners: Victor Rodriguez and Annecy Baez, both of New York City. Tundermann’s bed-and-breakfast has been around for 14 years.

B&B’s serve slice of local charm By Rhonda Miller miller@pbn.com

Rhode Island’s seaside offerings, art and cultural activities and preservation of history bring $5 billion a year into state coffers from tourism. A relatively small, but critical, part of Rhode Island’s hospitality industry is the colorful palette of bed-and-breakfasts, said state Tourism Director Mark Brodeur. Rhode Island has about 200 bed-and breakfasts and inns that provide richness, not just in dollars, but in travel experiences, Brodeur said. The state’s bed-and-breakfasts and inns include 147 in Newport, many of them historic homes with inviting porches and antique furnishings; 30 on Block Island, 27 in South County, including a B&B at a winery in Westerly; and four rooms at an inn on a working dairy farm in Portsmouth. “Every bed-and-breakfast is unique. The bed-and-breakfast traveler is generally interested in the experience, as well as the location,” Brodeur said. “They’re often interested in the heritage aspect of the house and they want to enjoy the local flavor. They want the experience of staying in someone’s home and getting to know the host.” Some hosts are getting to know a new generation of guests, said Cheryl Schatmeyer, president of the Newport County Inns and Bed and Breakfasts Association. She owns the Victorian Ladies Inn and the Adele Turner Inn in Newport. “We’re getting more of the Gen X and Gen Yer’s, people

in their late 20s up to about 40. That’s because they’re always on the Internet and many have never stayed in a bedand-breakfast and just want to try it,” Schatmeyer said. “So the idea of mom-and-pop and lace and doilies in the rooms is changing. They want Wi-Fi in their rooms. They like tables for two.” These younger-generation guests often come from New Jersey or Pennsylvania or other places that make for a convenient, long weekend, she said. And they find Newport an interesting destination, she said. “They say they like the harbor and the beautiful vessels they can go out on, the museums and the wine tastings at vineyards nearby,” Schatmeyer said. “They also come because Newport is a destination for weddings and the wedding party will often take over an inn. It’s a good place to congregate.” One Newport B&B owner has found another type of visitor congregating at his place – osprey watchers. Anthony Zaloumis and his wife, Lorna, own Belle View Inn on Freebody Street in Newport. “We have osprey. They come [nearly] every year. We think it’s the same two and they mate for life. They’re on one of the light posts in the park across the street,” Zaloumis said. “It’s amazing to see the number of people who come to see the osprey, not just people who stay here, but other people who stop by. The osprey have a following.” A Newport native, Zaloumis said the two suites in his See B&B, page 21

Even in a city known for its restaurants and political dealing, The Procaccianti Group sees a need for a meeting place where Providence politicians and business leaders can hash out a few deals over drinks. And the Cranston real estate development and property-management firm thinks it has found just the place at the Renaissance Providence Hotel, which it bought from Sage Hospitality in the final days of 2012. The 272-room Renaissance, a Marriott franchise, is expected to remain virtually unchanged under the deal, but Procaccianti has big plans for the restaurant-lounge known under the previous ownership as Temple. In the next three to six months, Procaccianti intends to renovate, retool and rebrand the restaurant and lounge into a hub for Ocean State power brokers looking for craft cocktails and seasonal food. “Basically, we want to create a meeting place that brings together the Statehouse with the Financial District,” said Procaccianti spokesman Ralph Izzi Jr. “In Washington, D.C., you have a lot of those kinds of places and in Providence I don’t know of one, at least one situated between the capitol and downtown like this.” Procaccianti plans to launch the new restaurant, with a new name, chef and concept, next month, before beginning work on interior renovations. Until that official relaunch, many details of the new project are being kept secret. But what has emerged is that the space, especially the large lounge, will focus on the increasingly fashionable world of “artisanal” cocktails, original mixed drinks that often employ nontraditional ingredients. “A lot of what’s new these days is in the craft-cocktail culture,” said Frank Recupero, partner in Procaccianti’s Downtown Restaurant Group. “In some ways it is bringing the whole farm-to-table aspect of food into cocktails. It is more of a bespoke cocktail, made to order, with infused vodkas and bourbons. It is like bringing elements of the kitchen out behind the bar.” See Renaissance, page 20


Providence Business News

Jan. 28-Feb. 3, 2013

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Providence Business News

Festival from page 18

The festival officially begins on Friday, Feb. 15, the beginning of the Valentine’s Day weekend that offers an additional draw to the city and its many upscale hotels and restaurants. It starts with a series of events, including tours of Fort Adams and Newport Storm Brewery and a chance to make your own perfume at Newport Aromatherapy, among many others. Though many happenings similar to these can be found throughout the event’s 10-day calendar, things really get going once the festival’s signature events start taking place. That begins this year with the 18th annual Samuel Adams Chili Cook-Off, where restaurants, as well as the Newport Fire Department, compete to claim they have the best chili in town. Other featured events this year include a performance by Draw The Line, the endorsed Aerosmith Tribute Show at the Hyatt Regency Newport on Saturday, Feb. 16, the Winter Festival Comedy Show at the Hotel Viking on Friday, Feb. 22, the third annual Chicken Wing Cook-Off at the Hyatt Regency on Saturday, Feb. 23, and a performance by Beatlemania at the Hyatt Regency that same day. Another key event is the Children’s Fair, with Radio Disney at the Newport Marriott on Sunday and Monday Feb. 17 and 18, that features music and live entertainment, as well as balloon

creations, face painting, arts & crafts. There also are wine and beer dinners, a tropical-drink contest at the Gas Lamp Grille, and many other childfriendly options, including a children’s jazz event at Greenvale Vineyards in Portsmouth. “In the early years, which were prechildren for me, we focused more on the drink contests and other adult events and people were saying you need to have more things for children,” Rosenberg said. Much has changed, Rosenberg said, within the event. When it first was held there was some trouble generating community and business interest, though some saw the benefits right away. Brick Alley Pub owner Matt Plumb said his Thames Street restaurant has participated all of the festival’s 25 years. He offers those who purchase a $9 festival button a sample of his famous nachos when they visit the pub and order a drink. Visitors are typically from New York, Massachusetts and Connecticut. There also is a strong interest among Rhode Island residents who come to Newport in the winter to take advantage of thinner crowds and less-expensive lodging. “Probably more Rhode Islanders participate in this than almost any other event year-round,” Smith said. “They look at it as a time when they can enjoy their own city.” n

Renaissance

hours in the transition, but was running again later in the day. Rights to the restaurant’s former name, Temple, remain with Sage Hosfrom page 18 pitality, of Denver, which built the hoWhen it opens, the new Renaissance tel inside the shell of a never-completed bar will hardly be the first or only es- 1929 Masonic Temple for an estimated tablishment in Providence to highlight $100 million. Sage Hospitality spokeswoman Kelcraft cocktails. In fact, most of the restaurants in the city with the best repu- ly McCourt said the company would tations for innovative cuisine take a not comment on why it sold the Renaissance. similarly creative approach to drinks. In the press release announcing the But many of those places are part of the fiercely independent, somewhat purchase, Procaccianti Chief Investment Officer Rob Leven quirky, local culinary said only that the Renaisscene, which doesn’t alsance fit the company’s ways cater to the suit-and“opportunistic approach tie crowd. The year-old to hotel investments in our Dorrance in the ornate, company’s hometown.” first-floor lobby of the The addition of the ReUnion Trust Building naissance gives Procacmay be the most high-end cianti 61 hotels in the of the places known for its country under either its original mixed drinks. management or ownerBy embracing craft ship, including eight in cocktails at the RenaisRhode Island. Unlike the sance, Procaccianti is perrestaurant and lounge, Izzi haps hoping to leverage said there are no plans in the trend against incumplace to change any of the bent business and political Ralph Izzi Jr. staff on the hotel side or favorites like the Capital The Procaccianti Group remodel anything. Grille in the old Unionspokesman At the Renaissance, Station building. Procaccianti Downtown Befitting the craft cocktails, Recupero said the food at the Restaurant Group partner Dino Pasnew Renaissance restaurant would saretta expects the renovation of the be sophisticated, seasonal and locally restaurant this winter and spring to be sourced in a “gastro-pub-meets-mod- fast and cause relatively little disruption. ern-American” format. Like many of the rooms in the hotel, In its Temple incarnation, the restaurant drew most of its customers windows in the restaurant and lounge from the hotel above, but Recupero sees look out on the illuminated Statehouse the new kitchen drawing many more at night. Passaretta said on a recent locals and becoming a destination in its night he was eating there, the view was inspiring. own right. “It was snowing and the view of the When Procaccianti announced the Renaissance purchase Dec. 27, the res- Statehouse in the lights was picturtaurant, which serves the hotel as well esque,” Passaretta said. “You can’t add as its own guests, closed for several that to another location.” n

‘We want … a meeting place that brings together the Statehouse with the Financial District.’


Providence Business News

B&B from page 18

home, built in 1899 and located across from the International Tennis Hall of Fame, provide income during the summer, like many bed-and-breakfasts across the state. But the window for tourism in Rhode Island is opening wider, said Myrna George, president of the South County Tourism Council. “The bed-and-breakfasts, for years, have been the backbone of tourism in the southern end of the state – for 12 weeks out of the year,” George said. “That has been changing over the past 10 years because we have intentionally moved the shoulder seasons.” George credits marketing efforts in publications such as Oprah Magazine and Yankee Magazine, as well as advertising in European and Canadian markets, as contributing to the extended season, which adds the changing colors of autumn to 100 miles of South County beaches for summer vacations. “We’re not commercialized. We’re authentic and environmentally sensitive and people who enjoy that are responding to our marketing efforts,” said George. Of the 27 B&Bs in South County, Narragansett has 11, South Kingstown has seven, Westerly has five, North Kingstown has two, and Hopkinton and Richmond each have one, she said. Data drives new regional tourism campaigns and bed-and-breakfasts are benefiting, she said. “We just had our bridal show on Jan. 6. We began it based on research of our 11 towns, of how many brides were

HOSPITALITY “Last year I had my best year in all pulling licenses in our … area,” said George. “We decided to support them the time I’ve been running the business. with accommodations and the related Ultimately, I really don’t know why. I guess it’s partly because I have good rebusinesses.” The increasing popularity of desti- views, especially word-of-mouth,” Tunnation weddings is an outstanding op- dermann said. “But the years before last year were portunity for South County and its bedextremely difficult. I only just managed and-breakfasts, she said. “The University of Rhode Island to keep my head above water,” she said. brings people from out of state and “Occupancy did go down then and there many of them choose to be married are property taxes and other expenses here. It’s a very scenic portion of the that just don’t go down.” The location of the Anstate and they have all nie Brownell House near kinds of celebrations,” Brown University and said George. “They feel Rhode Island School of the accommodations suit Design gives Tundermann the celebrations, because a built-in clientele, with there’s a certain charm 80 percent of her guests that surrounds many of tied to the colleges. The our bed-and-breakfasts.” remainder is made up of While bed-and-breakfriends and family of local fasts often have only two residents, international or three rooms or suites, travelers and sometimes George said other attraccouples coming in from tive inns and hotels are New York just to enjoy the not competition, but add slower pace and the offerup to a good selection of ings of Providence. offerings that draws more Cheryl Schatmeyer Some visitors to Rhode people in the long run. Newport County Inns and Island choose a differ“I know my numbers ent pace at Langworthy Bed and Breakfasts are up,” George said. Farm Bed and Breakfast “Tourism is up across the Association president and winery in Westerly, state, even in a challengor Escobar’s Farmhouse ing economy.” The number of bed-and-breakfasts Inn at a working dairy farm in Portsacross the state tends to remain fairly mouth. “The inn was opened to help supplesteady, with two or three closing and another few opening from time to time, ment the farm, because dairy farming is not a lucrative profession,” said StuBrodeur said. Anne Tundermann has owned the art MacNaught, innkeeper at Escobar’s Annie Brownell House on Angell Farmhouse Inn, which has had steadily Street in Providence for 14 years and increasing business in the two years she’s survived the ups and downs of the since it opened. “We’re open year-round and we have national economic crisis and stiff coma lot of repeat visitors. In the summer, petition from large hotels.

‘The idea of mom-and-pop and lace and doilies in the rooms is changing. They want Wi-Fi.’

Page 21 Jan. 28-Feb. 3, 2013 www.pbn.com

even weekdays are pretty full, in addition to weekends,” he said. “We’re part of the growing emphasis on agritourism. It’s all about getting more people exposed to farming, getting kids out there to see how milk is made. It’s been a real drawing point.” Many guests who stay in one of the inn’s four rooms enjoy the close-up look at milking cows and other parts of the dairy operation. But the inn has some special activities for guests who come because of the farm’s business relationship with Cabot Creamery. “It’s for a lot of their executives and salespeople. They get up at 5 a.m. to milk the cows and do the farm chores. Then they come in for a big, farm breakfast,” said MacNaught. “Then they go out about four in the afternoon to milk the cows again. Cabot wants them to really know all about dairy farming.” Whether the bed-and-breakfast has cows, wine, four-poster beds or a nearby beach, they’re all part of Rhode Island’s growing tourism economy, Brodeur said. “Even though bed-and-breakfasts may only be about 7 percent of the state’s total number of rooms, it’s the B&B experience that’s unique and important,” Brodeur said. “We’re finding with our international growth, there a growing interest in our bed-and-breakfasts. A lot of international tourists are interested in architecture and this is one way to experience our architecture firsthand,” Brodeur said. “From the tourism perspective, we think B&Bs will play a big role in Rhode Island’s future.” n

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Page 22 Jan. 28-Feb. 3, 2013 www.pbn.com

Providence Business News

Boutique Hotels (ranked by number of guest rooms) General manager Website

Guest Rooms B No. of suites

Guest room rates C No. of staff

The Hotel Providence 311 Westminster St. Providence, R.I. 02903 (401) 861-8000 Fax: (401) 861-8002

Tom Fitzgibbons www.thehotelprovidence.com

80 18

2

Newport Beach Hotel & Suites Memorial Boulevard & Wave Avenue Newport, R.I. 02840 (401) 846-0310 Fax: (401) 847-2621

Marc Lubchansky www.newportbeachhotelandsuites.com

3

3

1661 Inn and Hotel Manisses P.O. Box I Block Island, R.I. 02807 (401) 466-2421 Fax: (401) 466-3162

4

5

5

2013 rank

2012 rank

1

1

2

Boutique hotel

Restaurant

Amenities

$149 to $499 50

Yes

Pillow-top beds, in-room coffee/tea makers, iron and ironing board, Egyptian cotton linen, hair dryer, in-room safes, room service, free Internet, iPod docking stations, outdoor dining, fitness center, frequent-stay program

71 26

$99 to $1,000 22

Yes

Fitness center, in-house spa, indoor heated pool with whirpool, rooftop hot tub and fire pit, LCD TVs, DVD/CD/MP3 players, refrigerators, microwaves; suites featuring living rooms, kitchens, washer/dryers and bathrooms with whirlpool tubs

Elizabeth Connor www.blockislandresorts.com

68 NA

$160 to $450 75

Yes

Ocean views, whirlpool tubs, fireplaces, champagne buffet breakfast, afternoon wine and nibble hour, island tours

Ocean House 1 Bluff Ave. Westerly, R.I. 02891 (401) 584-7000 Fax: (401) 584-7044

Daniel A. Hostettler www.oceanhouseri.com

62 NA

$495 to $1,200 100

Yes

Gratuity-free property, private bars, feather-top beds with Frette linens, 42-inch LCD televisions, iPod docking stations, Wi-Fi, complimentary transportation within 15-mile radius, five-star spa, fitness center, indoor lap pool, croquet lawn, squash courts

4

Spring House Hotel 52 Spring St. Block Island, R.I. 02807 (401) 466-5844

David Houseman www.springhousehotel.com

50 NA

$200 to $400 50

Yes

Ocean views, two restaurants, function/event space

6

6

National Hotel Water St. Block Island, R.I. 02807 (401) 466-2901 Fax: (401) 466-5948

Julie Fuller www.blockislandhotels.com

45 NA

$119 to $379 75

Yes

Private baths, TVs and telephones in all rooms; a full-service restaurant serving breakfast, lunch and dinner; seven retail shops located in hotel

7

7

Bristol Harbor Inn 259 Thames St. Bristol, R.I. 02809 (401) 254-1444 Fax: (401) 254-1333

Lloyd Adams www.bristolharborinn.com

40 D NA

$89 to $249 16

Yes

Waterfront inn with conference and special-event center, offers shopping, spa, casual and fine dining

8

NL

Newport Bay Club & Hotel 337 Thames St. Newport, R.I. 02840 (401) 849-8600 Fax: (401) 846-6857

Tim Roche www.newportbayclub.com

36 36

$79 to $599 night 25

No

Suites and townhouses in one- and two-bedroom units, fitness room, gift shop, free Wi-Fi, computer office

9

8

Castle Hill Inn 590 Ocean Drive Newport, R.I. 02840 (401) 849-3800 Fax: (401) 849-3838

Brian Young www.castlehillinn.com

35 NA

$259 to $1,600 NA

Yes

Dining, private beach, fireside gatherings on the lawn, guided historical hikes of the property, complimentary fishing gear and bikes, specialized activities such as croquet and bocce

10

9

Vanderbilt Grace 41 Mary St. Newport, R.I. 02840 (401) 846-6200 Fax: (401) 847-7689

Marina Aslanidou www.vanderbiltgrace.com

33 NA

$275 to $2,500 50

Yes

Muse by Jonathan Cartwright, The Spa at Vanderbilt Grace with indoor and outdoor swimming pools, The Conservatory at Vanderbilt Grace serving breakfast, lunch and dinner, rooftop deck with harbor views

11

10

Ocean Rose Inn 113 Ocean Road Narragansett, R.I. 02882 (401) 783-4704

Doug Brady www.oceanroseinn.com

32 NA

$149 to $379 10

Yes

Walking distance to Narragansett beach, restaurant on premises, 10 minutes to Block Island ferry, Newport and University of Rhode Island, 30 minutes to Providence

11

10

The Bay Voyage Inn 150 Conanicus Ave. Jamestown, R.I. 02835 (401) 423-2100 Fax: (401) 423-3209

Linda Souther www.bayvoyageinn.com

32 NA

$269 to $289 15

No

Outdoor seasonal pool, fitness center, 24-hour concierge service, free parking, restaurant

13

12

Forty 1 North Hotel 351 Thames St. Newport, R.I. 02840 (401) 846-8018

Laurent Boisdron www.41north.com

28 10

$300 to $2,500 150

Yes

LEED-certified waterfront destination featuring marina, restaurants, lounges and event spaces; appointed lodgings with fireplace, iPad and iPod

14

13

OceanCliff 65 Ridge Road Newport, R.I. 02840 (401) 841-8868 Fax: (401) 841-0586

Stephen Crean www.newportexperience.com

25 NA

$275 to $450 120

Yes

Mansion guest rooms, estate setting, DVDs, stereos, marble baths, waterfront dining

15

14

Mill Street Inn 75 Mill St. Newport, R.I. 02840 (401) 849-9500 Fax: (401) 848-5131

Caron Rivera www.millstreetinn.com

23 23

$135 to $525 15

No

Free parking, complimentary continental breakfast, afternoon tea, highspeed Internet, Aveda products, rooftop deck overlooking Newport Harbor

16

15

The Atlantic Inn P.O. Box 1788/High St. Block Island, R.I. 02807 (401) 466-5883 Fax: (401) 466-5678

Brad and Anne Marthens www.atlanticinn.com

22 2

$175 to $475 45

Yes

Victorian inn with antique-filled rooms, formal-service restaurant

17

16

Francis Malbone House Inn 392 Thames St. Newport, R.I. 02840 (800) 846-0392 Fax: (401) 848-5956

AnneMaria Duprey www.malbone.com

20 NA

$125 to $525 12

No

Waterfront location, fireplaces, jacuzzis, gourmet breakfast, afternoon tea, concierge service, parking, Wi-Fi

17

16

The Chanler at Cliff Walk 117 Memorial Blvd. Newport, R.I. 02840 (401) 847-1300 Fax: (401) 847-3620

Christine Sullivan www.thechanler.com

20 NA

$299 to $1,399 70

Yes

Jacuzzi tubs, shower rooms, fireplaces, decks, terraces, ocean views

19

18

Admiral Fitzroy Inn 398 Thames St. Newport, R.I. 02840 (401) 848-8000 Fax: (401) 848-8006

Angela Craig www.admiralfitzroy.com

18 NA

$105 to $325 10

No

Parking, breakfast, rooftop deck, private bath, free Wi-Fi

20

19

Cliffside Inn 2 Seaview Ave. Newport, R.I. 02840 (401) 847-1811 Fax: (401) 848-5850

Bill Bagwill, Nancy Stafford www.cliffsideinn.com

16 6

$190 to $525 7

No

Whirlpools, fireplaces, steam baths, fine linens, antiques, daily wine receptions and afternoon high tea, gourmet breakfast, free parking, free Wi-Fi

21

20

Harborside Inn Christie's Landing Newport, R.I. 02840 (401) 846-6600 Fax: (401) 849-8510

Jane Ford www.historicinnsofnewport.com

15 9

$129 to $429 9

No

Air conditioning, cable TV, wet bars with small refrigerators, continental breakfast, wireless Internet access

22

21

Christopher Dodge House 11 West Park St. Providence, R.I. 02908 (401) 351-6111 Fax: (401) 351-4261

Kenneth Parker www.providence-hotel.com

14 NA

$129 to $250 8

No

Private bath, cable TV, free Internet, off-street parking, free use of Foundry Fitness Center, breakfast included

22

21

Hotel Dolce Villa 63 DePasquale Square Providence, R.I. 02903 (401) 383-7031 Fax: (401) 383-7041

Mat Babin www.dolcevillari.com

14 14

$139 to $279 6

Yes

Full stainless steel kitchens, Jacuzzi bathtubs, free high-speed Internet, valet parking

24

23

The Stone House 1854 122 Sakonnet Point Road Little Compton, R.I. 02837 (401) 635-2222 Fax: (401) 635-4443

Ron Lavoie www.stonehouse1854.com

13 4

$175 to $450 33

Yes

Spa, 1854 Tavern, wedding/event space, beach access

25

24

Pelham Court Hotel 14 Pelham St. Newport, R.I. 02840 (401) 619-4950 Fax: (401) 619-4960

Kate Jenkins www.pelhamcourthotel.com

12 NA

$179 to $499 3

No

Marble bathrooms with oversized tubs, full kitchens with stainless steel appliances and granite counters, queen-size pillow-top mattress beds, flatscreen TVs with HD, wireless Internet, individual climate controls, continental breakfast, parking

25

NL

Stagecoach House Inn 1136 Main St. Wyoming, R.I. 02898 (888) 814-9600

Debra Bokon www.stagecoachhouse.com

12 2

$100 to $199 7

No

Free wireless Internet, jacuzzi tubs, air conditioning, seasonal gas fireplaces, continental breakfast

NA = Not available/applicable, NL = Not listed last year. B The number of guest rooms includes the number of suites, if any. C Price range is according to summer rates; cost is subject to reductions in the off-season. D An additional four weekly rental apartments also available. LIST RESEARCHED BY Lindsay Lorenz Some survey recipients may not have responded; information is the best and most complete available as of press time. It is not our intent to endorse the participants. While every attempt is made to ensure the accuracy of the top lists, omissions and errors sometimes occur. Please send additions or corrections to: Researcher, Providence Business News, 400 Westminster St., Suite 600, Providence, R.I. 02903. To request a survey or to update contact information, write to research@pbn.com.

Upcoming Lists: Web Development Firms, Chief Security Officers and Fastest-Growing Technology Companies (deadlines April 18)


Providence Business News

Jan. 28-Feb. 3, 2013

www.pbn.com n 23

Exchange

keting and operational costs. In order for the exchange to achieve its goals, the report continued, “high levels of accountability, with clear delineation of from page 8 responsibility and adequate oversight are imperative.” document as “the largest multiagency Technically, Ferguson told PBN that systems build in the history of the she reports to Richard A. Licht, direcstate.” In total, the new IT system will tor of the R.I. Department of Admintake five years to be fully built, accordistration, and that he represents the ing to the document. state’s final decision-making authority As a result of the prolonged negotiaon how the exchange spends its money. tions with the contractor to build the All contracts undergo an extensive resystems integrator, the earliest that an view, according to Ferguson, one that online demo will be available to enable includes Licht, Koller and Steven M. consumers to browse through what Costantino, secretary of the R.I. Exkinds of health-insurance plans and opecutive Office of Health and Human tions will be offered is by “the end of the Services. summer,” Ferguson said. Other states Licht said that while Ferguson works that won conditional approval for operclosely with him and they meet freation before Rhode Island were already quently, she reports to Chafee. “The adworking with their system integrator, PBN PHOTO/NATALJA KENT ministrative details of the interaction according to Ferguson, although none of the exchange and the Department of of them are offering any exchange SEAT AT THE TABLE: From left, R.I. Director of Administration Richard Licht, Health Administration are still being worked browsing yet, either. Insurance Commissioner Christopher F. Koller, Health and Human Services Secretary out,” Licht added. As the state’s chief At the heart of Rhode Island’s ex- Steven M. Cosantino, and Lt. Gov. Elizabeth H. Roberts at a Dec. 20, 2012 meeting purchasing officer, Licht continued, he change is the vision that small busi- regarding the Health Benefits Exchange. makes all final decisions on contracts nesses, their employees and consumers will be able to research, shop and buy Ferguson operates out of a small State- of the Robert Wood Johnson Founda- for the entire executive branch, when health-insurance products and plans house office with skeletal staff support. tion that provides technical assistance required, with “significant input” from At the same time that the exchange is to state leaders in order to help them the agency. through an online marketplace from Inside government, officials say they four initial health insurers – Blue ramping up to the start-up deadline, so, move health care reform forward at the are not worried that the R.I. Health Cross & Blue Shield of Rhode Island, too, must Ferguson build her own staff state level. “Each state is starting in a different Benefits Exchange could fall behind its UnitedHealthcare of New England, to manage the exchange’s operations, Tufts Health Plan and Neighborhood what the planning document calls “ad- place,” he said. “Rhode Island may not schedule to be up and running by Jan. Health Plan of Rhode Island. An es- equate infrastructure,” with new hires be leading in regard to IT [and its selec- 1, 2014. “[Lt. Gov. Roberts] is aware of the timated 294,000 Rhode Islanders are ex- and consulting contracts paid for by tion of a systems integrator], but it may pected to use the exchange to determine federal funds through 2015. Currently, be leading in other areas, such as policy federal deadlines that must be met, and she is confident that the exchange office eligibility for subsidized health insur- Ferguson said the exchange has four decisions.” employees, plus herself. She could not “Is Rhode Island where it should be? will meet them to have the exchange up ance, including Medicaid customers. In addition, another 73,000 Rhode tell PBN what the full-time staffing will I would be say, yes,” Martinez-Vidal and running to serve Rhode Islanders said. “Could it be in a better place? May- on time for 2014,” said Maria Tocco, Islanders – 57,000 for individual cover- be in January 2014. Customer service – being able to re- be. Rhode Island is as well-positioned Roberts’ spokeswoman. age and another 16,000 for small group Rhode Island’s two largest commercial coverage – will buy insurance during spond promptly to an estimated 60,000 as any other state. But I don’t want to the exchange’s first years of operation, inquiries a month when the exchange whitewash this and make you think health insurers, Blue Cross and Unitedbegins operation in 2014 – is recog- that [the task of building the exchange] Healthcare, both declined comment. according to planning documents. Dennis D. Keefe, president and CEO In total, more than one-third of the nized as a crucial component of the ex- is going to be easy; it will be nonstop work once [Rhode Island] has selected of Care New England, said: “At this state’s population is expected to buy change’s success. “The exchange will need to function a systems integrator.” point, I am not yet concerned. … Let’s health insurance through the exchange. Major resources will be spent on allow Christy Ferguson time to get her Exactly what those plans and prod- more as a business than as a governucts are, how much they will cost, and ment agency,” said Lt. Gov. Elizabeth promotion, marketing and consumer feet on the ground in Rhode Island bewhat surcharges, if any, will be added H. Roberts. “To be successful, it will research as part of a campaign to sell fore we sound any alarms.” have to have great custom- the exchange to consumers. Given the The exchange has its own 12-member to help make the operation er service.” ongoing national political and ideologi- advisory board, with former U.S. Attorof the exchange sustainThe customer-service cal divide around health ney Margaret Curran as able are in negotiation, acinfrastructure is current- care reform, Ferguson bechair and Geoff Groves, cording to Ferguson. ly being built from the lieves that efforts under president and CEO of PilFerguson remains optiground up, but the RFP to way to create messaging grim Screw, as vice-chair. mistic. “To this point we develop outside capacity and marketing to promote Koller, Costantino and have successfully worked has not yet been posted, the exchange are critiLicht are members. It is through any disagreeaccording to Tricia Leddy, cal to achieving customer charged with using public ments that may have exdeputy director of the ex- buy-in. Market research input to make design and isted around some very change. Instead, Rhode and focus groups are being policy recommendations complicated issues. I’m Island stakeholders have conducted by the Wakely to build the exchange. Its not saying it’s all roses,” Enrique Martinez- other members include: first been asked to com- Consulting Group, as part she added, describing the ment on the exchange’s ap- of an $18.9 million contract Michael Gerhardt, a forprocess. Vidal proach before the RFP is with the Clearwater, Fla., Academy Health vice presi- mer executive with Blue Another source of poissued. The Rhode Island firm, whose tasks include Cross & Blue Shield of tential delay is the changdent for state policy Christine Ferguson Health Coverage Project, educating the public and Rhode Island; Linda Katz, ing requirements for and technical assistance of the Economic Progress h e a l t h - i n s u r a n c e - p l a n R.I. Health Benefits Exchange a joint effort of The Eco- attracting consumers. Prenomic Progress Institute viously granted federal Institute; Marta Martinez executive director subscriber contracts unand R.I. Kids Count, of- funds are being used for this contract. of Progresso Latino; Margaret Holland der the Affordable Care fered the following advice: How much money is allocated in the McDuff of Family Service of Rhode Act. R.I. Health Insurance Commissioner Christopher F. Koller has proposed While agreeing that building a fully exchange’s budget to pay for different Island; Dr. Pamela McKnight, a nonnew regulations for all subscriber con- integrated consumer support infra- services is not yet transparent. For in- practicing neurologist; Dwight McMiltract forms in the commercial market. structure is essential to launching a stance, it is unclear exactly how much lan of The Basics Group; Tim Melia of The review of those new forms will be- successful health-benefits Web portal, has been budgeted for Ferguson’s mar- UFCW Local 328, and Amy Zimmerman gin March 1 and be ongoing, according it suggested that the RFP go further keting campaign and media buys, in of the R.I. Department of Health. and “require that the vendor specify part because Rhode Island does not yet In the end, as a division of the executo Koller. Another potential stumbling block is how the contact center will achieve in- have a communications plan in place, tive branch, responsibility for the exthat, under the health care reform law, tegration with other consumer-support according to Martinez-Vidal. The State change rests with Chafee and, in large OHIC now has the authority to review channels, including those offering in- Coverage Initiatives program held a part, the team he appointed to serve technical-assistance course in Wash- as the executive committee of the R.I. rates to be charged for particular plans person support.” The compressed timeline for build- ington, D.C., the week of January 13 Healthcare Reform Commission, with in the small-business and individual markets offered on the exchange, not ing the exchange’s customer-service for 10 states, including Rhode Island, the responsibility to oversee implecomponent is being driven by the Jan. focused on communications strategies, mentation of the Affordable Care Act just rate increases. budgeting and staffing issues. in Rhode Island. Its members include: Aside from the challenges that the 1, 2014, deadline to be operational. It is difficult to say where Rhode IsIn its report released on Jan. 9, Koller, Roberts, who serves as chair, complexity of the exchange creates, an inability to ramp up staffing to meet the land stands as compared to other states, “Rhode Island’s Health Benefit Ex- Costantino, and Licht. Ferguson is not exigencies of the exchange’s operation- because “there are so many moving change: Progress and Challenges,” the a member. parts to the endeavor,” said Enrique Rhode Island Public Expenditure CounIn a Dec. 2012 interview with PBN, al deadlines also may cause problems. Ferguson was appointed to her new Martinez-Vidal, vice president for state cil voiced cautious optimism, saying Chafee praised his team: “I rely on a position on June 21, 2012, by Gov. Lin- policy and technical assistance at Acad- the state had made substantial prog- good team. We have a good team. We’re coln D. Chafee. She is a former aide emy Health in Washington, D.C. He ress. The success or failure of the ex- lucky to have Christy Ferguson. We’re of the governor’s father, the late U.S. also serves as director of the State Cov- change, the report said, was dependent recognized nationally for the progress Sen. John Chafee. Seven months later, erage Initiatives, a national program on design, take-up rates, access, mar- we’re making.” n

‘To this point we have successfully worked through any disagreements that may have existed.’

‘Is Rhode Island where it should be? I would be say, yes.’


Providence Business News

24 n www.pbn.com

Jan. 28-Feb. 3, 2013

Small Biz

50 states rate in appealing to small companies. Paolo says his company tried – and failed – to get financial help from the from page one state. “We had a full product, we had con“We run local news, weather, sports and traffic reports from live traffic cam- tracts, we had revenue, we had employees,” Paolo said. eras,” Paolo said. The company asked for $250,000 from GoGo Cast was a California company that in 2008 lured Paolo, whose resume the R.I. Economic Development Corincludes being CEO of Log On America, poration in 2009. Paolo said the terms a now-defunct Internet company that offered by EDC were not conducive to making the business work, because the had 300 employees in Rhode Island. Born in Providence and a resident interest rate was too high, a lot of fees of Scituate, Paolo said when it came to were required and “there were conditions associated with the working out an agreement growth of the company for GoGo Cast, he stood that made it difficult.” firm – it had to be moved They renegotiated the from Silicon Valley to terms but, Paolo said, in Rhode Island. the end, EDC’s Small Busi“We moved it here only ness Loan Fund did not apbecause I lived here,” prove the loan. Paolo said. “Then we The EDC in a letter said found a beautiful building the loan request was not in Cranston that was availapproved because of “inable.” sufficient cash flow to supGoGo Cast started with port the debt repayment, three employees and is insufficient collateral and now up to 15 people in inadequate guarantor Rhode Island, as well as a Angus Davis support.” The letter was few in California. GoGo Swipely CEO provided to Providence Cast recently acquired a Business News by EDC Toronto company with a spokeswoman Melissa new digital application. “We just recently launched a brand- Chambers. “The initial draft terms and condinew product, GoGo Planet. It’s an events-based and deals-based mobile tions were reflective of the perceived application that uses geo-targeting,” risk in providing a $250,000 loan to a startup,” Chambers said in an email. Paolo said. CNBC in July 2012 ranked the state GoGo Cast has since raised millions last among 50 states in how appealing it of dollars, “mostly because of the reis to start or grow a business. sources we were able to garner outside That black eye was on top of an “F” of Rhode Island, because of my contacts rating Rhode Island earned from the on Wall Street, in the investment comJune 2012 Thumbtack.com Small Busi- munity,” said Paolo. He also pointed to ness Survey, done in partnership with other obstacles for small businesses in the Kauffman Foundation, on how the the state.

‘There doesn’t seem to be an attitude … to just get the government out of the way.’

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skepticism of the state’s consistently low rankings for its business climate. “Many [studies] compare apples to oranges,” he said. He said the state has studied the tax burden on businesses and found R.I. ranks 26th in the burden of state taxes on businesses, in the middle on sales and income taxes and near the bottom, 41st, in terms of local property taxes borne by businesses. Chafee’s budget for fiscal 2014, however, does propose lowering the state’s corporate tax from 9 percent to 7 percent over three years. Swipely Inc. CEO and Rhode Island native Angus Davis said out-of-state money, energy and vision are what has allowed his company to succeed in the See SMall Biz, page 30

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“Taxes are higher here, but a lot of our assets are in other states, so it doesn’t affect us as much,” he said. A report titled, “Moving the Needle,” a joint effort of the state Senate and the Rhode Island Public Expenditure Council released Jan. 15, confronts head-on the negative business ratings. The report cited a number of factors in the poor ratings, including “an onerous regulatory environment, the condition of the state’s infrastructure and the high cost of doing business.” Improving Rhode Island’s business climate will require a “sustained, cooperative partnership,” according to state Senate President M. Teresa Paiva Weed. Gov. Lincoln D. Chafee in his State of the State speech Jan. 16 reiterated his

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STAYING AFLOAT? Employees at the Gunboat facility in Wanchese, N.C., work on the newest in the series, the Gunboat 55. The company relocated from Rhode Island to North Carolina because of the state’s business policies.

Watch Providence Business News Editor Mark S. Murphy during the noon news on WJAR-TV NBC 10 with Frank Coletta.

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Providence Business News

Jan. 28-Feb. 3, 2013

www.pbn.com n 25

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26 n www.pbn.com

Providence Business News

VERIZON WIRELESS recently donated $2,000 to the Rhode Island Coalition Against Domestic Violence. Pictured is Attorney General Peter F. Kilmartin, left, with staff from his office and representatives from the Rhode Island Coalition Against Domestic Violence, Women’s Resource Center of Newport and Verizon Wireless.

AG cellphone drive supports victims of domestic violence A recent cellphone-recycling drive held by Attorney General Peter F. Kilmartin and the R.I. Office of the Attorney General resulted in a $2,000 donation to support victims of domestic violence. Over the span of a month, cellphones were collected and then given to HopeLine. HopeLine is a Verizon Wireless program that refurbishes phones, provides minutes and gives them to agencies to distribute to clients affected by domestic violence. Refurbished phones are also sold, with the proceeds benefitting HopeLine.

“The simple act of donating an old cellphone can help a victim of domestic violence get emergency help and access to resources to end the cycle of violence,” Kilmartin said. “ … For someone in an abusive, controlling and violent relationship, a cellphone is much greater than a convenience, it is a lifeline.” At the end of the drive, Verizon Wireless acknowledged the attorney general and his office’s efforts with a $2,000 HopeLine contribution to the Rhode Island Coalition Against Domestic Violence. n

Calendar of Events

p.m. at its East Greenwich Campus, 1 New England Tech Blvd., East Greenwich. Attendees will tour the campus, including the NEIT’s Post Road and Access Road locations, and have the opportunity to speak to representatives of the faculty and admissions and financial aid personnel. For more information, contact the admissions office at (401) 467-7744 or visit www.neit.edu.

WEDNESDAY, JAN. 30 YOUNG & YOUNG AT HEART Jamie Palmer and Outlier Marketing Group will host an event for networking from 5:30 to 8 p.m. at Drupal Connect, 449 Thames St., Suite 100, Newport. Young professionals and professionals who are young at heart are invited to attend. Sons of Liberty Spirits Co. will be in attendance and additional treats will be offered. Cost: $10. For more information or to register, email jamie@outliermarketinggroup.com.

THURSDAY, JAN. 31 BUSINESS AFTER HOURS The Fall River Area Chamber of Commerce and Industry will hold a businessafter-hours event from 5 to 7 p.m. at Tipsy Toboggan, 75 Ferry St., Fall River. Attendees will network with other Chamber members and area business affiliates. For more information or to register, contact Jay Pateakos at (508) 676-8226 or jpateakos@fallriverchamber.com. PPS ANNUAL MEETING The Providence Preservation Society will hold its 55th annual meeting and preservation lecture at 5:30 p.m. at Brown University’s List Art Building, 64 College St., Providence. T. Gunny Harboe, Brown alumnus and founder of Chicago’s Harboe Architects, will serve as this year’s keynote speaker. A reception will follow the meeting and attendees will have the opportunity to meet Harboe and staff and trustees of Providence Preservation Society. This event is free and open to the public. For more information, call (401) 831-7440 or visit www.ppsri.org.

TUESDAY, FEB. 5 TECH NITE OPEN HOUSE New England Institute of Technology will host a “Tech Nite” open house from 4 to 8

OUT OF THE BOX EVENT Out of the Box will host a social for networking from 5:30 to 7:30 p.m. at Shela Lara Vineyards and Winery, 21-B Reservoir Road, Coventry. The event will bring together members of the business, arts, events and wellness communities in a casual setting to exchange ideas, create business relationships and meet new people. There will be complimentary wine tastings, light appetizers and door prizes. A cash bar will be available. Admission: $8 in advance, $10 at the door. For more information or to purchase tickets, call (401) 623-8206.

WEDNESDAY, FEB. 6 DEVELOPING SUPERVISOR-MANAGERS The East Bay Chamber of Commerce will continue its Business Development Program Series with a free presentation on developing the first-time supervisor-manager from noon to 1:30 p.m. at the Chamber, 16 Cutler St., Suite 102, Warren. This program is designed for those who have recently been promoted to the role of manager, assistant manager or supervisor, or those being considered for management positions in the future. Ed Alves of People Resources Inc. will lead a presentation that will cover acquiring a framework for new responsibilities, establishing objectives and measuring performance, redefining a new role with previous co-workers, understanding and utilizing an organization’s culture and more. For more information or to register, call (401) 245-0750 or visit www.eastbaychamberri.org.

Jan. 28-Feb. 3, 2013

RICE SCHOLARSHIPS were recently presented to four students. Pictured from left to right are Joseph Pratt, chairman of RICE’s scholarship committee; recipients Christopher London and Gregory Coren; Gov. Lincoln D. Chafee; recipient Andrew Grota; Thomas Cabana, RICE president; and Patrick Quinlan, RICE executive director. Recipient Elizabeth Andruszkiewicz is not pictured.

RICE scholarships awarded to students The Rhode Island Consulting Engineers recently awarded four scholarships to college students pursuing engineering degrees. Using proceeds raised at a scholarship golf tournament held in June, $2,000 awards were presented to undergraduate students Christopher London, a senior at the University of Rhode Island; Gregory Coren, a senior at the University of Rhode Island; Andrew Grota, a senior at the University of MassachusettsDartmouth and Elizabeth Andruszkiewicz, a junior at the University of

THURSDAY, FEB. 7 CHAMBER 101 The Newport County Chamber of Commerce will offer a Chamber 101 session from 8:30 to 9:30 a.m. at the Chamber, 35 Valley Road, Middletown. Chamber 101 is a comprehensive bimonthly membership orientation in which members learn how to maximize the benefits the Chamber offers. Overviews of opportunities for networking, advertising, getting involved and other benefits will be given. This event is open to both new and existing members. Cost: free for members, $25 nonmembers. For more information or to register, call (401) 847-1608 or visit the www.newportchamber.com. EXIT SEMINAR The Southern New England Entrepreneurs Forum (SNEEF) will offer a program on successfully selling a business from 5:30 to 8 p.m. at the Advanced Technology and Manufacturing Center, 151 Martine St., Fall River. Dan Gugliemo, co-founder of the Owner’s Academy at Babson College and The Boston Exit Planning Exchange, will moderate a panel discussion featuring entrepreneurs Andrew Crain, president of The Whipple Company; Chip Johns, president/ chief operating officer at Butler Automatic; and Robert Kasameyer, former president of Viscosity. The presentation is based on the experience of the entrepreneurs and will highlight what it takes to sell a business without compromising wealth or dignity. Cost: $20. Attendees may also purchase a one-year membership for $75 and attend the event for free. For more information or to register, visit www.sneef.org.

FRIDAY, FEB. 8 LUNCH CONNECTIONS The Central Rhode Island Chamber of Commerce will hold its Lunch Connections program for young professionals from noon to 1:30 p.m. at Salve Regina University’s

Notre Dame. RICE said it received applications from several highly qualified engineering students this year. The organization’s scholarship program began more than 10 years ago and is an effort to promote and support engineering by encouraging young people to enter the profession. In addition to awarding scholarships, RICE also enlists its member firms to participate in initiatives such as the University of Rhode Island’s engineering career day and its summer engineering academy, both held for high school students. n Warwick campus, 144 Metro Center Blvd., Warwick. Attendees will enjoy lunch while getting acquainted with other members of the business community and sharing a “60-second commercial.” Cost: $5 per person. Payment is due prior to or at event. For more information or to register, call (401) 732-1100 or visit www.centralrichamber.com.

TUESDAY, FEB. 12 HARNESSING CREATIVITY The Greater Providence Chamber of Commerce will offer a free seminar on the role creative thinking plays in business success from 8 to 9:15 a.m. at the Chamber, 30 Exchange Terrace, Providence. Participants will hear from Jeannette Palmer, director of client services at Nail Communications; Kara Orr, vice president of special projects at DCI; and Peter Bramante, managing director at FirstWorks. The trio will lead an interactive discussion on the value of creativity and its process. Nail will share information about a related, free online resource, Thinkerbot. This event is open to members only. For more information or to register, call (401) 521-5000 or visit www.provchamber.com. NRIC ANNUAL DINNER The Northern Rhode Island Chamber of Commerce will hold its annual dinner at Twin River Events Center, 100 Twin River Road, Lincoln. The evening begins with a reception at 5:30 p.m., followed by dinner, speeches and award presentations at 6:30 p.m. Keynote speaker will be David C. Chavern, executive vice president and chief operating officer for the United States Chamber of Commerce. Cost: $100 per person. For more information or to register, call (401) 334-1000 or visit www.nrichamber.com.


Providence Business News

PEOPLE IN THE NEWS

Butler receives commercial award for Realtors assn. Jeffrey A. Butler, broker-owner of Butler Realty Group, is the recipient of the 2012 National Commercial Award from the National Association of Realtors. The award, which honors outstanding achievement in the commercial realty industry, recognized Butler for his “deep contribution to the industry, which displays the strength of [the association’s] commercial members.” Butler, a graduate of Tollgate High School, serves as treasurer of both the Rhode Island Commercial and Appraisal Board of Realtors and the Rhode Island Statewide MLS. He is active with several other professional associations and has been a member of the Realtors association since 1977. PBN: Were you surprised to learn you had been selected for this award? BUTLER: Yes, it was a total surprise and a huge honor to be included in this elite group of commercial Realtors from across the country.

My clients and commercial real estate contacts have remarked positively about and shown support for my efforts.

PBN: You’ve been actively involved with a number of real estaterelated associations for many years. How has belonging to these types of groups enhanced your career? BUTLER: It has certainly heightened my awareness of the issues confronting our industry on a national and state level. It has given me a chance to work with, and build lasting relationships with, some very talented people that truly care about our industry and make a difference in all of our livelihoods. Many of my clients and commercial real estate contacts have remarked positively about and shown support for my efforts. There have been so many other benefits that it is difficult to list them all and how they will positively and permanently affect my career, but one of the highlights is being involved in strategic-planning sessions for the next five years with nationally noted professionals. PBN: Any advice for those just starting out in the real estate field? BUTLER: Whether you are just starting out or have been around for a while, I strongly urge you to get involved with your local, state Realtor or MLS boards. The rewards are enriching, farreaching and long-lasting, and the time is easily manageable. In essence you will get back much more than you give. n

BANKING Sean W. McIntyre has been promoted to vice president/commercial lending at NewportFed. In his new role, McIntyre is responsible for originating new commercial loans and maintaining and servicing the existing portfolio throughout Rhode Island and Connecticut. He has been with the company since 2006 and was previously employed at Bank of America and Fleet Boston Financial.

CONSULTING James Borah has been named senior benefits consultant at Cornerstone Group. In this role, he will focus on providing comprehensive benefit analysis, communication and compliance solutions and health care reform guidelines to employer groups throughout southeast New England. Borah holds a B.A. in economics from Connecticut College in addition to several professional designations.

HEALTH CARE Christine Grey has been named chief operating officer at Blackstone Valley Community Health Care, where she will be responsible for managing clinical operations. Grey previously worked at Polaris Medical Management and Rhode Island Primary Care Physicians Corp. as a clinical quality reporting manager. She holds a B.A. in mathematics from North Adams State College.

Page 27 Jan. 28-Feb. 3, 2013 www.pbn.com

Ronald LaRocca has been named an associate in the litigation group at Pierce Atwood LLP, where he will focus on commercial litigation. LaRocca, also a naval reserve officer, is the 2010 recipient of the Rhode Island Bar Association’s Lauren E. Jones Award. He is admitted to practice in Rhode Island and Massachusetts and holds a J.D. from Roger Williams University School of Law.

Ernest C. Torres has been appointed director of the board of directors of the Rhode Island Foundation. Torres, retired chief judge, U.S. District Court for the District of Rhode Island, is a trustee of South County Hospital and a former director of the Greater Providence YMCA and the Rhode Island Conservation Law Foundation. He holds a J.D. from Duke University.

Evan Gilden has been named employee benefit and private client group producer at Gencorp Insurance Group. In his new role, he will be responsible for marketing insurance solutions to organizations and individuals. Gilden was previously employed by a large health insurer, from which he acquired industry-related knowledge. He attended the University of Rhode Island.

Jay R. Peabody has been named a partner at Partridge Snow & Hahn LLP. Peabody is a member of the firm’s real estate, commercial lending and corporate groups and represents owners, developers and lenders regarding matters with commercial, large-scale residential and renewable energy projects. Peabody holds a J.D. from Suffolk University Law School.

RETAIL

LAW

NONPROFIT

Drew W. Colby has been named a partner at Partridge Snow & Hahn LLP. Colby is co-chair of the firm’s construction group and a member of the real estate and litigation groups. He focuses his practice in the construction group, representing owners, architects, engineers, general contractors and others. Colby holds a J.D. from Suffolk University Law School.

Fredrick K. Butler has been appointed chairman of the board of directors of The Rhode Island Foundation. Butler, a retired executive of Textron Inc., has been on the board since 2008 and has served as secretary since 2009. In addition, he has served on the foundation’s nominating, corporate governance and investment committees. He holds a J.D. from Harvard Law School.

Dr. Jose Polanco has been named assistant medical director and chief medical information officer at Blackstone Valley Community Health Care. Polanco, who specializes in internal medicine, most recently served as a primary care physician for the PACE organization of Rhode Island. He holds an M.D. from State University of New York.

INSURANCE

Jim Cunningham has been named commercial account manager at Crown Supply Co. Inc. In his new position, Cunningham will call on, assist and grow Crown’s commercial accounts and general contractor and HVAC contractor customer base. Prior to joining the company, Cunningham served as an outside sales manager for Floors to the Trade and director of sales and marketing for New England Appliance and Electronics Group. Bob Salvas has been named marketing director for Minuteman Press ProvidenceWarwick, where he will be responsible for developing new business for the company’s printing, direct mail and marketing divisions. For the last 22 years, Salvas has worked for the U.S. Postal Service, primarily serving in the marketing and communications department in Providence. n

Attention CEOs. You know well the value of your top Financial Executive. Take a moment and nominate him or her for the 3rd Annual CFO Awards. There are eleven award categories.

Career Achievement Public Company (Regional headquarters) Public Company (Large divisional office)  Social Service Agency  Not-for-Profit PRESENTING SPONSOR

Nomination Forms at PBN.com

Government Agency Quasi-Government Agency Rising Star Financial Executive Private Companies (one each for Large, Mid-size and Small Companies) PARTNER SPONSORS


Page 28 Jan. 28-Feb. 3, 2013 www.pbn.com

OPINION

Providence Business News

Editorials

R.I. must move health exchange to the fore Nearly a year-and-a-half since Gov. Lincoln D. Chafee created the R.I. Health Benefits Exchange by executive order, the Ocean State has yet to see any tangible evidence of what will become the centerpiece in the state of the Patient Protection and Affordable Care Act of 2010. This fact is not surprising in one sense. The federal government gave all states a Dec. 14, 2012, deadline to file their plans for operating an exchange, which Rhode Island met with two days to spare. But what has given some cause to worry about Rhode Island’s readiness for the Jan. 1, 2014, start date for the exchange is the seeming slowdown of the pace toward completion of the task. Rhode Island started off with a bang, being one of the first states to receive significant federal support, to the tune of $64.8 million to date. But the state just signed the contract with Deloitte Consulting less than two weeks ago to build the key software component of the exchange (known as the systems integrator). The contract comes about a month after the executive director of the exchange, Christine Ferguson, told a business audience that she was not sure it would be fully operational by the beginning of next year. It’s possible that the signs the state has been sending are just speed bumps along the road to project completion. But this project is too large and too important for the state not to bring a great sense of urgency to the enterprise. It’s time to show that urgency in action.

Some R.I. regulation impedes success Now that the General Assembly seems to have taken to heart the message that Rhode Island must reform its business environment, it would seem to be a good idea to make sure that it tackles the important issues. One start is the release of “Moving the Needle,” a report done by the R.I. Senate and the Rhode Island Public Expenditure Council. There are many issues identified therein, among them the high cost of doing business and the condition of the state’s infrastructure. But one issue that comes up again and again is the “onerous regulatory environment.” Providence Business News has documented this issue on a number of fronts, from renewable energy project regulations that vary from municipality to municipality to the overlap of permitting and occupancy rules from the state and local governments. The issue of permitting is such an important one that Providence Economic Development Director James Bennett created a committee over the summer to identify the changes needed to make it a competitive advantage in the city, not a hindrance. Creating a simple, transparent and consistent regulatory regime across the state would be a major step toward making Rhode Island a better place to do business. n

Staying positive One of life’s great annoyances is the tendency of by a recurrent worry, train yourself to think of folks to ask you to perform an impossible task, list something else. Memorize a short poem, phrase or the issues they foresee and the problems that have meditation, and when you catch yourself in a negaplagued previous attempts – and then admonish tive thought, replace the negative with the positive. Your conscious mind can concentrate on only one you to “think positive.” Wow! Does that mean you are so good that you thought at a time, and driving the negativity away can achieve what no one else has? Or are you being will free you up to move forward again. Years ago, I came across an essay that really soset up to fail? Because I am an eternal optimist, I prefer to be- lidified my commitment to positive thinking. It has lieve the first premise. Positive thinking is more been credited to several people, most often Robert than just a tagline. It changes the way we behave. J. Burdette or the ubiquitous “unknown.” RegardAnd I firmly believe that when I am positive, it not less of who authored it, here is the message for you to contemplate: only makes me better, but it also makes “There are two days in every week those around me better. I think that good about which we should not worry, two attitudes are contagious. I want to start an days which should be kept from fear and epidemic! apprehension. A friend who also prefers to look for the “One of these days is Yesterday with silver lining suggested I Google “The Posiits mistakes and cares, its faults and bluntive Pledge” by author and inspirational ders, its aches and pains. Yesterday has speaker Jon Gordon. Several promises passed forever beyond our control. All the stand out among the 15 in the pledge, inmoney in the world cannot bring back Yescluding: terday. We cannot erase a single word we n I pledge to be a positive person and said. Yesterday is gone. positive influence on my family, friends, “The other day we should not worry co-workers and community. about is Tomorrow with its possible advern I vow to stay positive in the face of Harvey Mackay sities, its burdens, its large promise and negativity. poor performance. Tomorrow is also beyond our n When I want to be bitter, I will choose to get immediate control. Tomorrow’s sun will rise. Until better. it does, we have no stake in Tomorrow, for it is yet n When I meet failure, I will fail forward, toward unborn. future success. “This leaves only one day – Today. Anyone can n I believe my best days are ahead of me, not befight the battles of just one day. It is only when you hind me. The full pledge is a terrific framework for a posi- and I add the burdens of those two awful eternities tive attitude because we know that positive think- – Yesterday and Tomorrow – that we break down. “It is not the experience of Today that drives ing isn’t always easy. Negative thoughts can creep into our minds – and jump out our mouths – when men mad. It is remorse or bitterness for something we least expect them. The trick isn’t to fight them, that happened Yesterday and the dread of what will happen Tomorrow.” but to manage them so they don’t paralyze us. That’s a difficult formula to improve upon, and Identify the triggers. When you have a negative thought (“This will never work ... I can’t do this”), perhaps even more challenging to practice. But I stop and ask yourself what’s bringing it on. You promise you, I’m positive you will be better off for may be tired or stressed out, or you may be affected trying! n by someone else’s perspective. If you can locate the Mackay’s Moral: A positive attitude lightens cause, the thought itself won’t have as much power your load and expands your reach. over you. Focus on the now. Worrying about the past or the future isn’t productive. When you start chastis- Harvey Mackay is the author of the New York ing yourself for past mistakes, or seeing disaster Times best-seller “Swim With the Sharks Without around every corner, stop and take a breath and Being Eaten Alive.” He can be reached through his ask yourself what you can do right now to succeed. website, www.harveymackay.com, by emailing harFind something to distract you from destructive vey@mackay.com or by writing him at thoughts and reset your attitude. MackayMitchell Envelope Co., 2100 Elm St. SE, Replace the negative. If you find yourself plagued Minneapolis, MN 55414.

Mackay’s moral


OPINION

Providence Business News

Page 29 Jan. 28-Feb. 3, 2013 www.pbn.com

Emphasis on flawed labor data misses R.I.’s recovery The December 2012 labormarket data contained a number of very favorable developments. According to the data, Rhode Island’s unemLeonard Lardaro ployment rate fell to 10.2 percent, its lowest value in some time. Along with this, all four of the other labor-market indicators followed closely by Gov. Lincoln D. Chafee and emphasized by the R.I. Department of Labor and Training to gauge Rhode Island’s economic performance – resident employment, the number of unemployed, the labor force and payroll employment – also improved. December marked only the second time since 2006 all five have simultaneously improved, or so we are told. In general, I strongly recommend against such a narrowly focused basis for gauging Rhode Island’s economic

Guest Column

performance for a number of reasons. First, all five of these indicators are labor-market variables. Therefore, omitted from consideration are factors such as retail sales, construction activity, consumer sentiment and a host of others. Second, four of these labor market measures are interrelated. Specifically, not only do resident employment, the number of unemployed, the labor force and the unemployment rate come from the same survey (the household survey), their monthly values are not independent of each other. For example, when you add resident employment and the number of unemployed you get the total labor force. So, if you know any two of these you can automatically calculate the third. Furthermore, the unemployment rate is defined as the ratio of the number of unemployed to the labor force. So, once again, if you know any

two of these, you are automatically able to calculate the third. What this boils down to is that while it might appear that we are dealing with four indicators here, this group does not provide us with four separate and independent pieces of information because of the interrelationships described above. Finally, to make things even more complicated, the DLT has been providing us with faulty monthly data on the remaining indicator, payroll employment, for almost a year now. So, payroll employment, which measures the number of jobs in Rhode Island, has been misstating total employment for quite some time. Happily for us, the “official” number has been understating the actual level over this period. So, while

this indicator is generally independent of the other four, its values have been flawed and therefore misleading for quite some time. I could go on and discuss things like how all of the household data variables are likely to be incorrect as well, given that payroll employment is substantially higher than what the “official” data indicate, but space limitations preclude me from doing so. What is the conclusion to be drawn from all of this? While both the governor and DLT apparently believe that Rhode Island has only recently begun to see improved economic performance, a more accurate assessment based on a far more broadly based set of indicators like my Current Conditions Index, leads to a very different

A far more broadly based set of indicators … leads to a very different assessment.

assessment: Rhode Island has been improving for some time now, specifically since the end of 2011. In February, with the release of January 2013 labormarket data, we will at long last get revised labor market data for 2011 and 2012. Expect to see higher payroll employment throughout all of 2012, and an unemployment rate that never rose as high as we were led to believe, and that fell below the official rate of 10.2 percent for December. This has been a very unusual situation, to say the least. It raises the question: What if you had an economic acceleration and nobody knew about it? Welcome to Rhode Island. n Leonard Lardaro is a professor of economics at the University of Rhode Island and the author of the monthly Current Conditions Index.

A big disconnect between health insurance, care cost Our company is still negotiating the annual renewal of our health coverage. According to the insurer’s rate filings, we should probably expect an increase. We know any increase will undoubtedly further erode Ted Almon take up (the number of employees who participate) among our employees who bear 25 percent of the cost. Dropouts will be among the younger and healthier of course, so the increase in premium may not prove profitable for the insurer. I have been actively studying the health-insurance market and participating in the public debate for 20 years now. Over that period health-insurance rates have increased at double the rate of inflation. This raises the question of whether it is a proper mission of a health insurer to produce an affordable product, or even to exert any influence over rates. Obviously if that is what we expect of them they are failing – but why? I believe the reason has most to do with the way the insurers pay providers.

Guest Column

Traditional fee-for-service reimbursement creates perverse incentives that have driven costs inexorably upward. In the fee-for-service model any licensed provider can bill the system independently and get paid. No one is actually responsible for the outcome the patient experiences, and even more important, no one is paid to coordinate his care. The result is a health care system in which there is no accountability for the health of the patient. Let’s just glimpse at the way private insurers pay hospitals, where about 40 percent, by far the largest portion of expense, is incurred. Recently, the OHIC released its 2012 Hospital Payment Study, a much expanded effort more than a year in preparation. Keep in mind that negotiating rates with hospitals is a key performance metric bearing upon insurers’ profitability. If they pay hospitals less than their competitors, they can have lower premiums, a competitive advantage, or they could simply retain more as profit. So this is not a function insurers take lightly. A team of top-paid executives man-

age the process, usually headed by, or including a medical doctor. It is equally important to the hospitals, so they also must utilize highly paid experts. Since there is a vast list of prices, the process can really drag on and get contentious. According to the OHIC study, commercial payers end up paying hospitals about 66 percent more than Medicare pays for the average patient stay. How does Medicare come up with its rates? Rather than bare-knuckle bargaining, the Centers for Medicare and Medicaid Services employs some of the industry’s foremost experts in what is called the Medicare Payment Advisory Commission or MedPac. This group figures out what it really should cost the provider for each reimbursed procedure. And get this; they actually measure hospital margins on Medicare business, which for many hospitals is more than half their business. You have all heard hospitals say they lose money on Medicare/Medicaid and have to make it up on the private payers. OK, so how much do you lose on the public payers that has to be shifted onto the privately insured? Is it 66 percent? And how about rate differences be-

tween contracted hospitals? For the average hospital stay, the OHIC study found rates that were more than double from the lowest-paid hospital to the highest. Really? OK, so as a subscriber, why didn’t I know this? I mean if you are going to pay hospital X twice what you pay hospital Y for the same procedure and build your costs into my rates; shouldn’t I know this up front? Let’s just go to the extreme of the spectrum and assume for a moment that OHIC had the legislative authority to just set the rates – like Medicare. Now rate setting, like price controls, is never an effective method in a free, competitive market. But do we think the health-insurance market is functioning properly? Or even if we think it merely reflects the market for health care services, do we think that market is efficient? What would really happen? Providers and insurers alike tell us Armageddon. I wonder. n Ted Almon is president and CEO of the Claflin Co.

Reader response A look at PBN.com’s weekly poll, plus this week’s poll Jan. 13-19 How many times in 2012 did you or your family visit one of the Newport Mansions? Page views: 662

This week’s PBN.com Poll Does the continuing drop in passenger traffic at T.F. Green Airport affect your thinking about the extension of the runway there?

• Yes, it’s not needed; the state doesn’t need to go further in debt • No, the extension help grow the economy • I don’t know

To vote in this week’s poll, go to PBN.com and follow the link on the home page.

Op-Ed, Letters policy: Providence Business News welcomes opinion pieces as well as letters from its readers on local business, financial and political issues. Opinion pieces and letters cannot have been published anywhere else before appearing in PBN. They should include a daytime telephone number and e-mail address. All pieces may be edited for space and clarity, as well as for length. Send to: Editor, Providence Business News, 400 Westminster Street, Suite 600, Providence, RI 02903, editor@pbn.com, or by fax: (401) 274-0670.


30 n www.pbn.com

Small Biz from page 24

Ocean State. Swipley started in Rhode Island in 2009 and provides technology for merchants to accept payments, understand their customers and grow their business, Davis said. “I think Rhode Island is a very difficult place to start a business, grow a business and join a business as an employee,” said Davis, who went to Silicon Valley when he was 18. His first startup, the voice-recognition technology company TellMe, was acquired by Microsoft for almost $1 billion, Davis said. “I always wanted to come home to Rhode Island and bring some of the energy of Silicon Valley here,” said Davis. “I could get investors who never invested in a Rhode Island company before, because they knew of my success in Silicon Valley and were willing to back me.” While Swipely has nearly doubled in the last year and has 40 employees, Da-

Providence Business News vis said his small real estate venture is not moving along at the same pace. “I have a vacant property in Bristol. It’s a former lumber yard. I’ve been going through government agencies for over a year, with the planning and zoning boards and the town council.” said Davis. “This state has the second-highest unemployment rate in the country, and I want to employ people and redevelop a property, and these boards only meet once a month,” Davis said. “I’d like to see them just decide if the proposal is in compliance and do it on a fast turnaround. The “Moving the Needle” report does state that due to revisions in 2012, “businesses looking to begin construction projects in Rhode Island could soon have a new level of predictability in the form of a single building-permitting system that stretches across every city and town in the state.” Other improvements in the business climate, including an income tax reform package, are pointed out in the report. Those improvements didn’t come soon enough for Peter Johnstone, formerly of Newport and CEO of Gunboat

Jan. 28-Feb. 3, 2013

Co., which manufactures high-performance cruising catamarans. The company had been manufacturing in Cape Town, South Africa, and wanted to bring production to the U.S., Johnstone said. “I spent four months trying to make it work in Rhode Island, and what it really comes down to is facilities, costs and labor costs,” said Johnstone, who moved his company to Wanchese, N.C. Gunboat will have about 40 employees at the end of its first year in North Carolina and has revenue of $28 million. Johnstone said North Carolina has programs that paid for half the cost of renovation for the vacant building and built a catamaran dock at his site, and has an excellent training partnership with community colleges. EDC’s Chambers in an email said, “In 2011, EDC staff worked with Gunboat Inc. to assist them in possible relocation of their production facilities to Rhode Island.” She said Gunboat was approved for a small-business loan and “EDC staff provided site-location assistance,” before the company left. “State leaders,” continued Chambers, “are working toward improving

Corp. Tax from page one

Business Administration. “But the corporate tax change is only about $8 million [in fiscal 2014], so it is not that significant in the context of the economy,” Higgins said. “The bigger thing is what Massachusetts is doing with sales tax and income taxes. I am afraid the legislature might raise income taxes in Rhode Island in response.” So far, Rhode Island small-business reaction to Chafee’s budget has featured a mix of relief that no new taxes have been proposed, and disappointment that tax cuts are focused on big corporations. “I’m not completely satisfied, but it is moving in the right direction and holding the line on taxes,” said Grafton H. “Cap” Willey IV, managing director of Providence accounting firm CBIZ Tofias Inc. and a member of the Smaller Business Association of New England. SBANE has proposed a capital gains tax holiday for startups to spur innovation. R.I. House Republicans have proposed eliminating the state sales tax entirely. By all appearances, the business winners in the Chafee budget are the roughly 1,700 companies who pay the state’s 9 percent corporate tax, but don’t benefit from one of the incentive programs being scaled back or terminated. The vast majority of Rhode Island companies, 40,800 in tax year 2011, only pay the $500 corporate minimum fee, according to figures from the R.I. Division of Taxation. For the companies paying the corporate tax, Chafee’s budget would reduce the rate their earnings are taxed from 9 percent now, to 8 percent starting in January 2014, 7.5 percent in January 2015 and 7 percent in January 2016. The rate cut is projected to cost the state $8 million in the fiscal year starting in July, $21.1 million in fiscal 2015 and $31.1 million in fiscal 2016, and by fiscal 2017, the first fiscal year in which the 7 percent rate is in full effect, the state would stand to lose $36.7 million compared with the current rate. Rhode Island is now the only New England state with a 9 percent rate. Connecticut corporations currently pay 7.5 percent and Massachusetts

PBN FILE PHOTO/FRANK MULLIN

ZONE DEFENSE: Gov. Lincoln D. Chafee’s budget would eliminate the Enterprise Zones program, which awards credits for hiring in one of 10 “distressed” zones in the state.

charges 8 percent. Of course, not all Rhode Island companies subject to the corporate tax pay 9 percent, and Chafee has proposed paying for part of the rate cut by cutting in half the state’s largest tax-incentive program, the Jobs Development Act. The Jobs Development Act awards companies a quarter-percentage point cut in their corporate tax rate for every 10 new jobs they have created, if they have fewer than 100 to start with, or for every 50 new jobs if they started with more than 100. The rate reductions, once approved, are permanent until the company lays off any of the new hires. The maximum decrease in a company’s income tax rate is 6 percentage points, meaning that the recipient of the break could potentially be paying state income tax at a rate of 3 percent. In fiscal 2012, Jobs Development Act tax breaks went to eight companies and were worth $16.4 million in lost revenue, nearly half of the $34.5 million in total credits and incentives for all programs that year. Of that $16.4 million, $15.4 million went to CVS Caremark Corp., which has been the largest recipient of Rhode Island tax incentives since at least fiscal 2008, the first year the Division of Taxation began publishing a comprehensive tax-credit report. The Jobs Development Act was created by lawmakers in 1994 and since

then no state agency or committee has conducted an analysis summarizing the program’s historical costs and benefits, according to the Division of Taxation. Chafee proposed eliminating the program entirely in his fiscal 2012 budget proposal, but the legislature rejected that idea. In Chafee’s current proposal, the Jobs Development Act credits would be reduced by one quarter in January 2014 and by half for tax years thereafter. According to Peter Marino, director of the R.I. Office of Management and Budget, when the proposal was fully phased in, Jobs Development Act tax breaks would still be calculated from the old 9 percent rate, even though they would be worth half as much. For example, the 2.25 percent rate cut approved for Alexion Pharmaceuticals last year, which would have cut the company’s rate to 6.75 percent, would instead drop it to 7.31 percent in 2014 and just under 8 percent in 2015. Under that scenario, Alexion would be better off paying the 7 percent for all corporations. The Connecticut-based company, which received the break for hiring 113 people since it bought and renovated a Smithfield factory in 2006, is not happy about the proposal. “We are deeply disappointed – the act is an effective tool for jobs creation,” said Irving Adler, director of corporate

the overall business climate to foster company creation and growth.” One clear bright spot on the state’s economic landscape is the startup community, particularly in Providence, says Melissa Withers, chief of staff for startup-accelerator Betaspring. “It’s a great buttress to some of the negativity and hopelessness many in our community feel,” she said. “It’s a beacon of hope to get through tough times and not just survive, but thrive.” Of 57 startups Betaspring has worked with since 2009, about 30 are still active in Rhode Island, Withers said. The founders chose to live in Rhode Island after successful entrepreneurial ventures in other areas and created Betaspring in Providence because of the location between New York and Boston, the sense of community, availability of real estate and lifestyle, said Withers. “One of the big differences with the startups is how they define their markets,” Withers said. “From the very beginning, they’re looking at the national or global market and the whole Northeast corridor is still a very important place to do business.” n communications at Alexion. “It was a critical factor in our decision to remain in Smithfield. The changes proposed directly affect our ability to grow and invest in Rhode Island.” Asked whether paying 7 percent instead of 6.75 percent would really cause a company that invested $200 million in a new factory to move jobs elsewhere, Adler said those kinds of calculations have not been made yet. In an email about the budget proposal, CVS Caremark spokesman Michael DeAngelis said the company “applauds” Chafee’s focus on the corporate tax rate, but views the Jobs Development Act as “an important tool for bringing more business to Rhode Island and making it an attractive place for us to continue hiring in the future.” The Chafee budget projects savings of $10.3 million from trimming the Jobs Development Act when the plan is fully implemented in fiscal 2016. Behind CVS, the company that received the second-most tax relief under the Jobs Development Act in fiscal 2012 was General Dynamics Electric Boat, which received $602,160. An Electric Boat spokesman declined to comment. The other, much smaller, tax-incentive program slated for elimination under Chafee’s budget is the Enterprise Zones program, which awards credits for hiring in one of 10 “distressed” zones in the state. In fiscal 2012, 20 companies received enterprise-zone credits worth a combined $701,935. Pass-through companies had already been made ineligible for enterprise-zone credits, raising a fairness concern for small businesses. Enterprise-zone credits were part of the package the state used to attract British medical-alert company Tunstall to Pawtucket last fall. Requests for comment through Tunstall’s local public relations firm, Providence-based (add)ventures, did not receive a response. The PR firm itself received $7,500 in enterprise-zone credits in fiscal 2012, but is an S corporation and now does not receive the credit, said Executive Vice President Mary Sadlier. As for how the proposed rate reductions and incentive cuts for big business will impact the majority of smaller businesses, Willey at SBANE said every large company attracted helps smaller ones. “We have to be competitive for large business because they spin off services to smaller ones,” Willey said. n


Providence Business News

Jan. 28-Feb. 3, 2013

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