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the but small, still amounts Dollar

FOR VENTURE CAPITAL VENTURE FOR

A VALUE PROPOSITION VALUE A KENTUCKY IS HATCHING HATCHING IS KENTUCKY

KENTUCKY’S BUSINESS NEWS SOURCE FOR 32 YEARS 32 FOR Report SOURCE NEWS BUSINESS KENTUCKY’S Lane MARCH 2017 2017 MARCH $4.50

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24 COVER STORY A VALUE PROPOSITION FOR VENTURE CAPITAL Dollar amounts are still small, but Kentucky’s incentivized environment is growing an investor community

28 SEARCHING FOR THE KEY TO ALZHEIMER’S No effective treatment yet, but Kentucky researchers are helping unravel its pathology

32 SOLAR ECLIPSE PUTS SPOTLIGHT ON TOURISM Hopkinsville, THE center of August’s total eclipse, has spent a decade preparing for the event

36 KEEPING KENTUCKY AG WELL ROOTED Co-op lenders finance a third of farm operations, then share the profits

Departments 4 Perspective 38 Banking Outlook 6 Fast Lane 42 Wealth Management Outlook 16 Interstate Lane 44 Emerging Lane 17 Kentucky Intelligencer 46 Lane List 18 On the Boards 47 Opinion 19 Corporate Moves 48 Exploring Kentucky 20 Lane One-on-One: 50 Passing Lane Ryan Quarles Kentucky Commissioner 52 Kentucky People of Agriculture

On the Cover lanereport.com Years of organizational effort boosted now Kentucky Business News Online by state incentives are beginning to build a Read up-to-the-minute Kentucky business news stories, start-up community where entrepreneurs and current and archived copies of The Lane Report, the investors who fund them find their money Market Review, BG – A way of life, Next – Your Future After goes further than in the bigger-dollar venture High School in Kentucky, Health Kentucky, Research Kentucky capital centers on the East and West Coasts. special reports, white papers and community profiles. (Photo illustration by Paul Blodgett/ pjb marketing) Faster Lane Email news bulletin Three or more times a week, the editors of The Lane Report publish Faster Lane – email bulletins of fast breaking and important Kentucky business and economic news. Visit lanereport.com to sign-up for this free, must-have, at-your-fingertips news service.

March Lane 1-22.indd 2 3/4/17 9:58 AM IN 2015, TOURISTS SPENT MORE THAN JUST TIME IN KENTUCKY. THEY SPENT $13.7 BILLION.

Tourism is the third largest revenue generator in our state, making it a vital part of Kentucky’s economy, culture and quality of life. Tourism also supports 186,204 jobs in Kentucky – up 6,241 good-paying jobs since 2014.

It’s clear – tourism works for Kentucky. kentuckytourism.com

March Lane 1-22.indd 3 3/4/17 9:58 AM 94696_KDTT_EcoImpact_8_125x10_875c.indd 1 12/14/16 11:33 AM LThe ane Report PERSPECTIVE Kentucky’s Business News Source for 32 Years EXECUTIVE EDITOR/VICE PRESIDENT on entrepreneurship, which is a dra- Mark Green TAX REFORM HARD; matically growing focus of the millen- ASSOCIATE EDITOR NO REFORM WORSE nial generation that is projected to be Karen Baird 75% of the workforce by 2030. DIGITAL EDITOR Fair, pro-business code will Adding to the incredibly compli- Jonathan Miller take bipartisan compromise cated current corporate and individual CREATIVE DIRECTOR tax codes are the dizzying array of Jessica Merriman BY DICK KELLY deductions, exemptions, credits and CREATIVE SERVICES carve-outs generally initiated and Stone Advisory retained by special interest pressure. Paul Blodgett This malaise of conflicting and overlap- CORRESPONDENTS NE of the dominate topics in leg- ping exceptions make the current rules Michael Agin; Katherine Tandy Brown; islative conversations these days is not only incomprehensible but patently Russ Brown; Chris Clair; Shannon Clinton; fundamental tax code reform at unfair across the board. One of the key Kevin Gibson; Frank Goad; Robert Hadley; Oboth the national and state levels, and it objectives of tax reform needs to be to Lorie Hailey; Debra Gibson Isaacs; Kara Keeton; Abby Laub; Tim Mandell; Esther Marr; is also one of the ripest areas for big leg- create a code that is simple, transparent Greg Paeth; Robin Roenker; Josh Shepherd; islation this year. The common chorus is and more fair. Sean Slone; Katheran Wasson; that taxes are too high for individuals, But these simplifications mean mak- Gary Wollenhaupt; Dawn Yankeelov families, businesses and investors. But it’s ing unpopular choices. Lower rates, PUBLISHER/CEO a complicated, multifaceted issue that’s broadening the base and simplifying Dick Kelly been tweaked then stalled and tweaked the tax code dictates the triangulation ASSOCIATE PUBLISHER again in “small ball” reforms for the past of the House, Senate and President on Donna Hodsdon two decades. the national level and the Kentucky Melissa McGarry Historically, analysts point to the 1986 House, Senate and Governor on the BUSINESS DIRECTOR Reagan tax reform as the most impactful state level. Nicole Conyers action in recent history. That plan Alternatives put forward to replace MARKETING CONSULTANT reduced the rate on ordinary income some elements of the current tax regu- Curtiss Smith from 50 percent to 28 percent while rais- lations include consumption taxes that CIRCULATION/IT ing long-term capital gains rates from 20 tax purchases and service taxes that tax Josiah White percent to 28 perent. But modifications business operations. Each of these are on ordinary income is but one of the vari- alternatives that can replace the exemp- FOUNDER ables that has to be considered. tions/deductions scheme in the cur- Ed Lane On the corporate side, the way the tax rent system. However, while they can code treats corporations remains one of accomplish simplicity and ease of SYNDICATED COLUMNS the biggest drains on domestic growth; administration as proponents say, Creators Syndicate the U.S. rate of 39 percent is the highest opponents line up to protect special PRINTING & CIRCULATION SERVICES of any of the 34 most industrialized coun- interests that benefit from those tax Publishers Printing Co. ties in the world. This not only prevents breaks. Additionally, some argue the WEB MARKETING & PUBLISHING foreign companies from expanding oper- consumption and service tax idea nega- Able Engine ations to America, it motivates U.S. com- tively and disproportionally affects IT SERVICES panies to relocate some activities abroad. lower and middle income groups. NetGain Technologies Additionally, the U.S. is the only major Meaningful reform should have a INTERNET SERVICES nation that taxes income companies earn series of goals: QX.net in foreign operations; effectively suppress- • To lower rates in order to Lane Communications Group ing job creation and wage growth at strengthen the economy by improving is a member of home for American workers. incentives to work, save and invest. Another discussion regarding how the • To establish the correct, neutral current tax code impacts business is the tax base, one which doesn’t pick win- The Lane Report is published monthly by: different treatment given to corporations ners and losers. Lane Communications Group verses small businesses that make up the • To establish a simple, transparent 201 East Main Street 14th Floor code that demonstrates how taxes fund Lexington, KY 40507-2003 vast majority of the U.S. economy. The so [email protected] called “pass through firms” are made up the government. For more information and of sole proprietors, partnerships, limited Ideally, the end-game objective is to advertising rates contact: PHONE: 859-244-3500 liability companies and S-corporations. accomplish meaningful reform without blowing up deficits. Achieving success- The annual subscription rate is $29. These businesses are not taxed through (Kentucky residents add $1.74 sales tax.) the corporate tax system, but on their ful tax reform begins with a genuine Newsstand price is $4.50. owners’ individual tax returns. Therefore, commitment to a common bipartisan Send check or money order to: high tax rates on small businesses reduce goal reached through compromise Circulation Manager their ability to expand operations, hire driven by pressure from the citizenry. The Lane Report 201 East Main Street 14th Floor additional workers and increase wages. Doing comprehensive tax reform is Lexington, Kentucky 40507-2003 Multiple layers of taxes, likewise, hard; not doing comprehensive tax or go to lanereport.com/subscribe inhibit investors from backing promis- reform is dangerous. ■ The Lane Report corrects all significant errors that ing opportunities for new business are brought to the editors’ attention. development. These C-corporations © 2017 Lane Communications Group pay a rate of 35 percent, and invest- Dick Kelly is publisher of All editorial material is fully protected and must not be The Lane Report. He can reproduced in any manner without prior permission. ment return is then subject to taxes on be reached at [email protected]. capital gains and dividends. Combined, it all can have a dampening influence

4 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

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March Lane 1-22.indd 5 3/4/17 9:58 AM FAST LANE A compilation of economic news from across Kentucky

LOUISVILLE: ERNST & YOUNG HIRING 125 TO STAFF NEW ERLANGER: DHL ADDING 900 $4.3 MILLION NATIONAL EXECUTIVE SUPPORT CENTER EMPLOYEES, 16 GATES AS CVG HUB DEMAND GROWS RNST & Young LLP, one of the world’s largest business-services organizations, is investing more than $4.3 million to open a 125-member office for executive HL Express is in the process of assistants and other shared professional functions in downtown Louisville. adding 900 new positions as the EThe office will house members of the firm’s expanding company completes the latest national executive assistance team, which supports EY part- Dexpansion of its at the Americas Hub ners across the country, as well as creative digital services Cincinnati/Northern Kentucky employees. The firm operates similar centers in Dallas, Airport (CVG). Cleveland and Tucson, and expects to have its full comple- DHL’s $108 million expansion to a new ment of Louisville employees in place by mid-2018. day sort operation and projected growth in “We were very impressed with the level of talent in Louisville shipments is expected to increase the and commend efforts by the city, state and local learning insti- hub’s workforce from 2,400 to more than tutions to grow the talent base even more aggressively and in 3,300. The company has said the new new areas,” said Brent Summers, EY’s Americas enterprise sup- positions will be an equal mix of full- and port services leader. “That, along with Louisville’s affordability and quality of life, were part-time positions and will offer health important factors in our location decision. We are also excited to be locating our new benefits, tuition reimbursement and a center in the downtown area. There is so much new development and energy. We think variety of flexible work schedules. it will be a great environment for our new team.” The expansion will include a new The firm traces its roots to the early 1900s with the founding of two accounting north ramp built on 45 acres of land and firms: Ernst & Ernst in Cleveland, and Arthur Young & Co. in Chicago. Their provides parking space for 16 additional 1989 merger created Ernst & Young, which then became Ernst & Young LLP. The planes, bringing the hub’s total capacity to firm is a member firm of the global EY organization, whose members provide assur- ance, tax, transaction and advisory services to many of the world’s largest compa- nies. They operate in 152 countries, including 30 countries in the Americas, and employ 231,000 people globally. photo DHL

PIKEVILLE: AG START-UP APPHARVEST UNVEILS PLANS FOR HI-TECH GREENHOUSE THAT WILL CREATE 140 JOBS N agricultural startup company plans to build a $50 million high-tech greenhouse in Pikeville that will create 140 full-time jobs. A plans to locate the 2 million-s.f. green- AppHarvest house on a 60-acre site that was once a surface coal mine. The company plans to grow fresh vegetables year round and will grow a variety of produce with a focus on cherry tomatoes and bell peppers. The high-tech facility DHL’s latest expansion at CVG will enhance the hub’s will feature computerized monitoring and hydroponic, ability to handle the growing shipment volume DHL is above-ground growing systems. seeing throughout the Americas. AppHarvest’s Pikeville AppHarvest employees will be trained in agronomy greenhouse will grow a variety of and agricultural science. Positions will include manage- 65 aircraft gates. The project also includes vegetables, with a focus on cherry ment, human resources, logistics and picker/crop tomatoes and bell peppers. additional automated sorting capability worker. and 40 new reload positions that will AppHarvest Founder and CEO Jonathan Webb cited enhance the hub’s ability to handle the Pikeville’s proximity to retail markets, quality of the regional workforce and growing shipment volume DHL expects to opportunities created as the coal see in the United States and throughout industry transitions as reasons for the Americas. It also adds new storage and locating in Eastern Kentucky. warehouse space for ramp equipment and Building near its markets will shipping containers. significantly reduce shipping costs, Webb said, and also lower costs for consumers. The expected shipment growth will As a gateway between the Midwest and South, Kentucky’s borders lie within a day’s require DHL to add a new day shift drive of 65 percent of the U.S. population and income. seven days a week, beginning in May, to Construction on the new facility is expected to begin in June. complement the evening shifts currently running at the hub. DHL has invested more than $280 million in its Americas Hub at CVG We want to know what’s going on at your company! If you have news to since 2009. The company’s latest share with Kentucky’s business community, please forward your press releases announcement comes just weeks after and photos/logos/graphics to [email protected]. In order to reproduce Amazon unveiled its plan to build a well, images must be large enough to publish in high resolution (300 dpi). centralized air hub at CVG that will create more than 2,000 new jobs.

6 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

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BUSINESS BRIEFS STATE: NEW WORKFORCE REPORT OFFERS DATA TO HELP SHAPE EDUCATION NEEDS BARBOURVILLE ENTUCKY has released the state’s first interactive ■ Xerox Federal Solutions LLC has filed papers with the state indicating its intent to lay off 62 workers at its facility in Barbourville by report on workforce supply and demand, designed to mid-April. Xerox was awarded a three-year, $16 million contract in 2013 use data to better determine the needs of employers by the to provide records digitiza- Kacross the commonwealth and develop a workforce that can Department of Homeland Security tion services for the U.S. Citizenship and Immigration Services. meet those needs. Education and Workforce Development BOWLING GREEN Secretary Hal Heiner said the report ■ , the Cabinet Western Spirits Beverage Co. provides much-needed feedback to policymakers, Bowling Green-based maker of Bird Dog Whiskey, Lexington Bourbon practitioners, the business community and the and Calumet Farm Kentucky Bour- public about the future of Kentucky’s workforce. bon Whiskey, has joined The Bard- “It’s the first time in the commonwealth and pos- stown Bourbon Co.’s collaborative sibly the United States that a report has been this distilling program. The partnership Education and comprehensive when linking actual education affords Western Spirits the opportu- Workforce and workforce data,” Heiner said. nity to work with Bourbon Hall of Development The report outlines historic workforce sup- Fame Master Distiller Steve Nally and Cabinet Bardstown Bourbon to produce their Secretary ply, current employment outcomes and future bourbon products. Hal Heiner workforce demand. “The Kentucky Future Skills Report is a tool BULLITT COUNTY that can be used by the Kentucky Department of Education and ■ Online fashion retailer Nasty Gal has filed papers with the state local schools and districts to make informed decisions regarding outlining plans to close its distribution center in the Cedar Grove career pathway opportunities for students that lead to high- Business Park by April, eliminating 70 jobs. The Los Angeles-based company filed for Chapter 11 bankruptcy in November. demand, high-wage career opportunities,” Commissioner of Education Stephen Pruitt said. “It will be a great resource as we CYNTHIANA continue to focus on the creation of regional career academies ■ Henderson-based throughout the state.” Field & Main Bank “There is no question that finding and retaining a skilled has donated its historic workforce is the top priority for many businesses. That’s why building on East Pike the Kentucky Future Skills Report will prove so valuable to Street to the City of Cynthiana and opened our cabinet and to employers,” said Terry Gill, secretary of a new banking center the Kentucky Cabinet for Economic Development. “Not that features the only will it help fill current openings, but it also will help us company’s new design prepare for future workforce needs, and will enable the state concept that uses to encourage more students to go into professions in the freestanding service greatest demand. This tool promises to be a significant asset desks in place of traditional teller counters. Field & Main Chairman for us in economic development.” and CEO Scott Davis said the service pods remove the barrier created by traditional teller lines and allow bankers to interact more directly To use the interactive report in its entirety, visit kcews.ky.gov. with customers and demonstrate electronic services on computers and mobile devices. Cynthiana plans to use the former Field & Main ERLANGER: FRONTIER, DELTA ADD FLIGHTS building to house municipal offices. AT CVG AHEAD OF SOUTHWEST’S LIFTOFF EASTERN KENTUCKY ■ The University of Louisville School of Dentistry is collaborating S Southwest with the Red Bird Clinic to provide comprehensive general dentistry Airlines prepares for both children and adults in the southeastern Kentucky counties of to enter the Cin- Clay, Bell and Leslie. Dental and dental hygiene students from UofL are Acinnati/Northern Ken- now part of clinical rotations at the clinic each week. Red Bird Clinic tucky market for the first Executive Director Kari Collins said the partnership increases the time beginning in June, availability of dental treatment for the underserved and hopes that some of the students participating in the rotations will be drawn to competitors Delta Air practice in rural areas. The clinic has also been awarded a $20,000 Lines and Frontier grant from benefits administrator Avesis Inc. that will be used to oper- Airlines are expanding ate a mobile dental clinic at schools, senior centers, nursing homes and their presence there Frontier Airlines is expanding its flight service other remote locations in the area. as well. out of CVG by 20 percent. Frontier Airlines is growing its flight service at the ELIZABETHTOWN Cincin- (CVG) by 20 ■ has acquired Elizabethtown-based nati/Northern Kentucky International Airport MainSource Bank First Service percent with the addition of three nonstop destinations. Nonstop Capital Management Inc., an independent firm that offers securities through Raymond James Financial Services Inc. First Service will flights between CVG and New York/LaGuardia and Minneapo- become part of MainSource Investment Services, which operates within lis/St. Paul will begin April 21, with nonstop service to San Diego the Indiana-based bank’s wealth management division, and will beginning May 16. continue to operate out of Elizabethtown. Meanwhile, Delta is adding more daily flights from CVG to Atlanta, Chicago, Houston, Orlando and Toronto and FRANKFORT reworking its flight schedules between CVG and Charlotte, ■ Kentucky State University’s spring semester enrollment has seen a significant increase, with undergraduate enrollment up 34.3 percent Hartford, Newark and Philadelphia to allow for more over last spring and graduate enrollment up 17.8 percent. KSU’s convenient day trips. In addition to providing morning current total enrollment is 2,268, an increase of 532 students from fall departures and evening returns, the flights will be more semester. evenly distributed for improved coverage through the day.

8 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

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BUSINESS BRIEFS EASTERN KY: PROMISE ZONE INVESTMENTS ARE DRIVING MORE ECONOMIC GROWTH GEORGETOWN ORE than $453 million in funding has been announced ■ Country Boy Brewing has in the eight-county Kentucky Highlands Promise Zone opened a brewery since the federal designation began three years ago, pro- and taproom in Mviding a much-needed boost for economic growth in Bell, Har- Georgetown’s lan, Letcher, Perry, Leslie, Clay, Knox and Whitley counties. Lanes Run Nearly half of the Business Park that will enable the company to increase its craft beer funding commit- production by approximately 25 percent each year. The new location is the second site for the Lexington-based business, which first opened ments were pledged there in 2012. in 2016 alone. The Kentucky GRAY Promise Zone initia- ■ The Kentucky Public Service Commission has granted Cumberland tive was created to Valley Electric a rate hike but for a lesser amount than what the give the area a competitive advantage in applying for federal fund- electric distribution cooperative had requested. The PSC directed ing as well as additional assistance from several federal agencies. Cumberland Valley to examine how it can reduce expenses and suggested the possibility of a merger with another electric utility as a “Investments announced in the Promise Zone for 2016 set possible way to improve the co-op’s financial viability. The PSC also a record,” said Jerry Rickett, president and CEO of Kentucky criticized Cumberland Valley for providing excessive benefits to its Highlands Investment Corp., which is coordinating and salaried employees and disallowed recovering a portion of the cost of managing the federal Promise Zone. “There is more work to those benefits from the utility’s ratepayers. With the rate increase, the be done, but we continue to gain momentum as additional co-op’s 23,600 customers in southeast Kentucky will see their average partnerships are forged, and we attract new private and pub- monthly bill increase by approximately $5.40. lic funding. As a result, there have been tremendous invest- HARDINSBURG ments announced in areas such as jobs, education and ■ Whitworth Tool Inc., a manufacturer of precision-machined training, tourism, technology and health.” components for the tool and die industry, is investing more than $3.5 The top highlights for the $220 million in commitments million to purchase and install specialized machinery at its Hardinsburg made in the Promise Zone counties in 2016 include: headquarters. Whitworth Vice President Jared Whitworth said the new • Berea College will receive $30 million to fund an effort equipment will include a large CNC gantry mill capable of precisely to improve educational achievement and healthy develop- machining parts up to 14 feet long and weighing 35,000 pounds. ment children in three Knox County school districts. HIGHLAND HEIGHTS • A $12.5 ■ Northern Kentucky University million grant has developed a nurse anesthesia from the U.S. program to help fill the local and Office of Sur- national shortage of certified face Mining registered nurse anesthetists. The program is a 36-month curriculum and Reclama- that culminates in a doctor of nursing practice (DNP) nurse anesthesia tion Enforce- specialization with a population focus of the family/individual across a lifespan. Graduates will be eligible for the National Board of ment will help Certification and Recertification of Nurse Anesthetists National develop the Certification Exam and to assume the role of an advanced practice Appalachian The Appalachian Wildlife Center is scheduled to open registered nurse (APRN) as a certified registered nurse anesthetist Wildlife Cen- in Bell County in 2019. (CRNA). The first cohort of students will begin taking classes in May. ter in Bell County. It is LEXINGTON expected to attract 638,000 annually visitors by the fifth year ■ The University of Kentucky has partnered with iGrad to open a Student Financial Wellness Center that will provide students with tools of operation and generate more than $1 billion in regional to build a strong financial future. The iGrad platform includes articles, economic activity in the first 10 years. videos, calculators and games that cover topics such as budgeting, • Euro Sticks Group, a French manufacturer of ice saving and investing, scholarships and financial aid, and creating a solid cream and coffee stir sticks, has selected Corbin as its pres- financial strategy after college. ence in North America. It will invest $15 million and create 90 jobs. ■ A record 1,309,765 • has of passengers Harlan County Industrial Development Authority traveled through received a $2.52 million grant for an alternative-energy manu- Lexington’s Blue facturing center. The funds will be used to leverage an addi- Grass Airport in 2016, a figure that represents a 5.5 increase over the tional $10.5 million in private investment from Harlan Wood previous year. It is the third consecutive year that the airport has seen a Products to create 30 to 35 new jobs and approximately 60 record number of travelers. Blue Grass Airport Executive Director Eric new indirect jobs. Frankl said air service in Lexington is at an all-time high, with 18 • Promise Zone communities have been collaborating and nonstop destinations being served. planning for ways to extend the KyWired middle-mile dark- fiber system into downtown areas, industrial parks and cen- ■ Lexington-based Tempur Sealy International has issued a statement saying it has terminated its contract with Mattress Firm. Tempur Sealy ters of commerce. The “final-mile” system is critical for said Mattress Firm Holdings Corp. and parent company Steinhoff providing high-speed, high capacity internet access. International notified the company of their intent to end their • The Uplift America Fund has awarded $50 million to contracts with Tempur Sealy in the United States if they did not agree Fahe and $25 million to KHIC to be used as loans for com- to changes in their agreements, including what Tempur Sealy called munity facility projects. It leverages federal low-interest loans, “significant economic concessions.” For 2016, Tempur Sealy’s net sales bank financing and private grants to target much-needed to Mattress Firm were approximately 21 percent on a worldwide basis, a figure that was 11 percent lower than the previous year. capital to persistently low-wealth areas.

10 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

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BUSINESS BRIEFS LOUISVILLE: STATE OKS $15.2M FUNDING ON ADVANCED MANUFACTURING CENTER LEXINGTON ENTUCKY’S Work Ready ■ Lexington-based Lexmark International Inc. has Skills Advisory Committee has

introduced a new imaging approved setting aside $15.2 Ford photo solution that connects Lexmark multifunction printers to Kmillion dollars in bonds that will go EDCO Health Information Solutions’ Solarity platform, one of the leading towards the construction of a new scanning and indexing software solutions for medical records. The advanced manufacturing and infor- Solarity Connector enables hospitals to capture clinical information mation technology center (AMIT) into the workflow, improving quality of care and patient safety. at Jefferson Community and ■ Baptist Health Lexington, in conjunction with Bluegrass Care Technical College. Navigators (formerly Hospice of the Bluegrass), is now offering inpa- JCTC estimates that more than tient hospice services so that patients nearing the end of life can stay in the 3,000 students and adults could be Recent figures released by the hospital – usually in the same room they’ve been in for acute care – and trained annually as a result of the U.S. Bureau of Labor Statistics receive specialized hospice care. Baptist Health Lexington plans to project, significantly increasing the show that the Louisville establish a unit with designated beds for hospice care later this year. reach of the college’s workforce Metropolitan Statistical Area training. The new 50,000-s.f. facility added 17,300 manufacturing ■ The Lexington-Fayette County jobs over the past five years. residential real estate market will house multiple flexible labs, Ford Motor Co. (pictured here) continues to be hot, with January sales classrooms and support areas, and has two major facilities in the up 21 percent over January 2016. The will house JCTC’s manufacturing- Louisville area. residential median sales price related programs, allowing for the decreased 1 percent from $151,000 to renovation and expansion of the college’s automotive $148,900. The residential average days technology program at its technical campus. on market decreased 12 percent from 77 days to 68 days. The total cost of the projects is approximately $24 million. JCTC has contributed approximately $4 million in property LOUISVILLE acquisition and equipment and has held preliminary ■ The McMahan Group, along with lead contractor Messer conversations with private entities and foundations to help Construction Co., has broken ground for a 100,000-s.f. medical office cover the remaining costs. building at Old Brownsboro Crossing in Louisville. The four-story structure The combined impact of the projects will allow JCTC to is the third medical office building at the development and will begin increase the number of students by more than 55 percent by 2022. leasing space to multiple tenants in spring 2018. TEG Architects, CMTA Engineers and BTM Engineering have been hired to design the project. LEXINGTON: OUTLOOK FOR A&W FLOATING ■ The Kentucky Exposition Center in Louisville once again UPWARD WITH REVENUE, STORE GROWTH hosted the National Farm Machin- OR the first time in more ery Show in February, drawing more than 300,000 to what is billed than 10 years, A&W as the nation’s largest indoor farm Restaurants is reporting show. Spanning 1.2 million s.f. and Fsystemwide revenue and store featuring 880 vendor booths, the count growth and has event ranks sixth in attendance for announced a new franchise sales the top 10 largest U.S. trade shows and produces an economic impact of initiative designed to take that $17 million to Louisville each year, filling local hotels and restaurants with attendees from across the country. growth even further. Lexington-based A&W, one of the nation’s oldest restau- ■ Two $125,000 donations – one from the The Bufford Family rant chains, was owned by YUM! for nine years. In late 2011, Foundation and the other from Trilogy Health Services – will help fund with sales suffering and the system losing units, a core group a major lab renovation at the University of Louisville School of Nursing. of franchisees purchased the brand. Kevin Bazner, A&W’s The renovation will include creating a four-room simulation suite and president prior to the YUM! acquisition, returned as presi- home healthcare space that is expected to be complete by fall. The funds dent and CEO. will also help purchase a fourth patient simulator, enabling more hands-on learning for more students. The simulators present numerous conditions to Bazner has overseen a comeback that includes opening 15 which students respond, including difficulty breathing, seizures and heart new U.S. locations and 21 international stores in 2016 and 20 attacks, and are essential for preparing students for real-life situations. more U.S. are planned for 2017, along with 25 new international locations. The company has seen sales at its standalone locations ■ Louisville-based Humana Inc. formally announced on Feb. 14 that it rise more than 28 percent in the last five years, with sales at was terminating its merger agreement with Aetna Inc., following a co-branded restaurants up 20 percent. ruling from a federal court that blocked the $37 billion deal. Under the “Today, our franchisees are more profitable than ever terms of the merger agreement, Humana is entitled to a breakup before,” said Bazner, “which sets the stage for a new phase of fee of $1 billion, or approximately growth.” $630 million. Humana will move A&W just kicked off an aggressive development program forward as an independent company and plans to intensify its focus on that includes a new franchising website, the hiring of a public people living with chronic conditions, particularly those aging into or relations firm, increased advertising and greater visibility at already in Medicare Advantage or dual-eligible plans. trade shows. A&W is targeting gas and convenience stores, as well as traditional franchisees nationwide. ■ Zoo Printing, a California company that is one of the largest online trade printers in the nation, is closing its manufacturing facility in There are currently more than 625 U.S. A&Ws, with Louisville. Closing the Louisville plant, one of three manufacturing approximately 375 of those co-branded with KFC or Long facilities the company operates, will affect 88 workers. According to John Silver’s. There are 87 gas and convenience store paperwork filed with the state, the plant will close by the end of June. locations.

12 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 1-22.indd 12 3/4/17 9:58 AM Powering Kentucky

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March Lane 1-22.indd 13 3/4/17 9:58 AM FAST LANE

BUSINESS BRIEFS HAZARD: GALEN, ARH DEVELOP PROGRAM TO ADDRESS AREA NURSING SHORTAGE LOUISVILLE N response to a continued and growing nursing shortage in ■ Kindred Healthcare Inc. has been named one of the world’s most the Eastern Kentucky region of the state, Appalachian admired companies by Fortune Regional Healthcare and Galen College of Nursing have magazine and ranked third for inno- Ipartnered to offer an associate degree in nursing that will be vation among the companies in the “Health Care: Medical Facilities” cate- located in the ARH System Center building in Hazard. gory. To determine the best-regarded companies in 51 industries, Fortune “The need for nurses to support the growing demand of partner Korn Ferry Hay Group asked executives, directors and analysts to healthcare throughout the country is a frequent conversation. rate enterprises in their own industry on nine criteria, from investment value and quality of management and products to social responsibility and We hear concerns regularly from our partner hospitals and ability to attract talent. A company’s score had to rank in the top half of its healthcare facilities in our campus communities,” said Audria industry survey to be listed. It is the eighth time the Louisville-based com- Denker, executive vice president of prelicensure nursing pany has been named to the list. education at Galen. “Through connections ■ Coastal Cloud, a Florida-based IT consulting com- within state nursing pany, has opened a new office in Louisville headed by organizations, we had a former Kentucky Cabinet for Economic Development Secretary Erik Dunnigan that will serve Kentucky and the relationship with nursing leadership at ARH and often Midwest. Coastal Cloud designs and deploys software tai- discussed the dire need for nurses in Eastern Kentucky. lored to improve a range of enterprise operations, includ- Together, we asked a ‘What if?’ question, which brought us to ing customer relationship management, business this exciting partnership.” workflow, internal and external communications, analyt- A two-year program for those new to nursing will be offered ics enterprise resource planning and automated market- Erik Dunnigan first, with the goal to include a 15-18 month program for licensed ing. Dunnigan said the Louisville office expects to staff up practical nurses (LPN) to continue their education in pursuit of to 30 employees within the next two years. an registered nurse degree, called an LPN to ADN Bridge, within OWENSBORO the year as well. In addition, Galen offers an online RN to BSN ■ Kentucky Wesleyan College has partnered with the University of (bachelor of science in nursing) program and can support area Louisville Brandeis School of Law on a new program that will allow nurses who hold an associate degree to pursue their BSN online Wesleyan students to obtain a juris doctorate within six years. With the 3+3 while they continue to work. Accelerated Law Program, students in select academic majors will enroll at The inaugural class will begin March 30. Wesleyan as undergraduates. In their fourth year of study, those admitted to Brandeis will fulfill their senior year of undergraduate study and earn their bachelor’s degree by completing their first year of law school. They HIGHLAND HEIGHTS: UK TO DEVELOP A 3RD will receive their juris doctor degree from UofL two years later. MED SCHOOL CAMPUS IN NORTHERN KY ■ Demand for the bourbon produced by the O.Z. Tyler Distillery in Owensboro – HE University of Ken- which opened last September in the for- tucky College of Medi- mer Charles Medley Distillery – has been cine is teaming with UK photo so strong that management is already plan- T Northern Kentucky Univer- ning to expand production. “We are cur- and rently producing 25,000 bourbon barrels sity St. Elizabeth per year and have already sold or received Healthcare to develop a commitments for all our 2017 production,” said Earl Hewlette, CEO of the regional medical school cam- distillery’s parent company, Terressentia Corp. “The demand we are see- pus in Northern Kentucky. ing from our new and existing customers has caused us to begin an expan- The program is designed sion to increase our annual capacity to 75,000 barrels by this summer.” to increase the overall number The University of Kentucky is of physicians in the common- working to address the state’s ■ Tessenderlo Kerley Inc. (TKI) Crop Vitality, one of the world’s wealth and is the third largest producers of sulfur-based liquid plant nutrition products, is physician shortage by adding a third investing more than $500,000 to build a 1-million-gallon liquid fertilizer regional medical school cam- regional medical school campus to pus announced by UK. UK’s expand its total enrollment. storage tank in Owensboro. The tank will store Thio-Sul, a liquid plant nutrient that delivers nitrogen and sulfur to crops. regional medical school cam- pus in Bowling Green is projected to begin enrolling in 2018, RICHMOND with the Morehead campus slated to begin sometime thereafter. ■ Eastern Kentucky University will offer a master’s degree in indus- The UK College of Medicine currently has 547 enrolled, trial-organizational psychology as an online program, beginning this including 139 in its most recently admitted class, and has reached fall. Industrial-organizational psychology is a rapidly growing field that merges psychology and business to benefit the workplace. The master’s its capacity at the Lexington campus, said Dr. Robert DiPaola, degree in industrial-organizational psychology has been offered on- dean of the UK College of Medicine. DiPaola said that while campus at EKU for more than 15 years. there is a deep applicant pool for medical students, the college can’t expand enrollment without the help of regional partners. WINCHESTER The UK COM-Northern Kentucky campus will be a fully func- ■ Winchester-based Delta Natural Gas has entered into a definitive agree- tioning four-year campus, utilizing the exact same curriculum ment to merge with an affiliate of Peoples Natural Gas. Delta serves and assessments as UK’s Lexington campus. On-site faculty approximately 36,000 customers in central and southeastern Kentucky. Peoples, headquartered in Pittsburgh, Pa., serves approximately 700,000 will have UK College of Medicine appointments, teach in customers in Pennsylvania, West Virginia and Kentucky. Following the clos- small groups and provide simulation/standardized patient ing – which is expected to take place by the end of the year – Delta will be a experiences with lectures delivered on-site from Lexington wholly owned subsidiary of PNG Companies LLC, the parent company of utilizing educational technology. Clinical experiences Peoples, and will continue to be regulated by the Kentucky Public Service will occur at St. Elizabeth Healthcare and surrounding Commission. A statement announcing the merger said that current Delta community practices. employees will continue with the company following the transaction.

14 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 1-22.indd 14 3/4/17 9:58 AM STATE: FELONS WON’T HAVE TO REVEAL BUSINESS BRIEFS RECORD ON KY GOVT JOB APPLICATIONS Greg Magruder/Wikimedia photo OV. Matt Bevin issued an executive order in February that STATE ■ The removes questions about criminal history from the initial Kentucky Horse Racing Commission application for state jobs in the executive branch. announced on Feb. 14 the G The order – known release of the 2016 Ken- as the Fair Chance tucky Thoroughbred Employment Initiative Breeders’ Incentive – means that applicants Funds. The 2016 awards total approximately $10.8

morguefile photo will not be required to million for Kentucky breed- check the box for crimi- ers. The KBIF was imple- nal convictions on the mented in 2005 to ensure initial state application. the strength of Kentucky’s Bevin stressed the equine industry by awarding importance of Kentucky funds to individuals who leading the way in choose to breed a Thorough- removing barriers for bred in Kentucky. To qualify, the resulting foal must felons to become gain- remain in the state during fully employed, which helps reduce recidivism and improve gestation; the final award public safety. amounts are based on the foal’s eventual earnings at the racetrack. Last “Ours is a nation of second chances, founded upon core year Kentucky-bred horses won 266 graded races, including all three legs principles that include mercy and redemption,” said Bevin. “The of the Triple Crown, with wins by Nyquist, Exaggerator and Creator. simple act of removing this box will help to level the playing field ■ for all applicants, and it is my sincere hope that many of the Bluegrass Distillers in Lexington and Boone County Distilling in Independence have joined the Kentucky Bourbon Trail Craft Tour, private employers in our state will consider doing the same thing.” bringing the total number of craft distilleries on the tour to 13. The Executive branch agencies may still inquire about criminal expansion is further evidence of the strength of Kentucky’s bourbon records before interviewing an applicant, and may consider industry, which has increased its economic output by $1 billion in the criminal history when making hiring decisions. However, last two years and added another 2,000 distillery-related jobs to its postponing that inquiry until after the initial application workforce. Kentucky’s bourbon industry annually contributes $8.5 provides applicants with a better opportunity to explain their billion to the state’s economy and supports some 17,500 jobs that pro- backgrounds. vide $825 million in tax revenue.

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March Lane 1-22.indd 15 3/4/17 9:58 AM INTERSTATE LANE Business news from Indiana, Ohio, Tennessee and West Virginia

BUSINESS BRIEFS TENNESSEE: RYMAN HOSPITALITY PLANS $90M LUXURY OPRYLAND WATERPARK INDIANA ■ Florida-based Green Circle Health is investing nearly $1 million to YMAN Hospitality Properties has announced plans locate a client services center in Carmel, Ind., that will create 125 new to build a $90 million luxury indoor/outdoor water- jobs by 2222. Through the tracking and analysis of medical records and park adjacent to the Gaylord Opryland Resort & real-time health data, clinical professionals at the client services center R in Nashville. Convention Center will provide remote healthcare and coaching for GCH Platform users The proposed proj- throughout the U.S. to improve the coordination of care and treatment ect includes nearly of chronic disease and illness. 111,000 s.f. of upscale ■ WorkHere, an Indianapolis company that has developed a mobile app indoor water attrac- that allows job seekers to find and apply for nearby positions, plans to add tions and activities more than 160 new jobs to support an expansion of its operations in central over three levels and Indiana. The company currently serves more than 36,000 users in Indiana another 106,000 s.f. of and adds between 200-500 new workers to its user base each day. With its outdoor water ameni- rapid success in Indiana, WorkHere plans to expand its service to an ties. The waterpark will additional 15 metro areas, including Chicago and Cincinnati, within the A luxury waterpark at the Gaylord next 12 months. WorkHere was developed by the company’s chief Opryland Resort in Nashville is have dedicated indoor technology officer, Rick Wehrle, who created the first web-based job board, slated to open in fall 2018. and outdoor recre- Online Career Center in 1992. Online Career Center was later acquired ation zones for adults, by TMP Worldwide and rebranded as Monster.com. young children and families, as well as dining options and private cabana rentals. Year-round indoor attractions will OHIO include slide towers, a double flow rider, rapid and lazy rivers, ■ UPS is investing more than $175 and an activity pool with rock climbing. Seasonal outdoor million to double the capacity of its Columbus, Ohio, ground package features will include a wave pool with a giant LED movie hub. When complete in the fall of screen, a 45-foot slide tower, an adults-only pool and a kids 2018, the expanded facility will have pool with a multi-level play structure. the capacity to process more than According to an economic impact study conducted at the 63,000 packages per hour. Six-sided University of Tennessee, the proposed SoundWaves decoding tunnels will replace project is expected to produce a total, annual economic out- traditional scanning to more rapidly put of $57.1 million, create 699 full-time equivalent jobs and capture package information while high-speed applicators will place labels on packages to give personnel increase state and local tax revenue by $4.6 million annually. instructions for proper routing. The company plans to add 75 jobs to its These figures are in addition to Gaylord Opryland’s current existing 1,800 Columbus workforce to support the expansion. estimated annual impact to the Tennessee economy of $866.5 million and $70.7 million in state and local tax TENNESSEE revenue (based on 2015 tax data). ■ In conjunction with the introduction of a new line of loudspeakers to The waterpark is tentatively slated to open in fall 2018. celebrate the company’s 40th anniversary, Nashville-based Thiel Audio Products has brought all of its manufacturing back to the United States. The new collection of products features custom-finished OHIO: NESTLÉ MOVES MAJOR FUNCTIONS, cabinetry made in Georgia and upgraded crossovers made in Kentucky, with driver design and final assembly taking place in Tennessee. 300 JOBS TO NORTHEAST OHIO CAMPUS

■ Sedgwick Claims Management Services is investing $34 million ESTLÉ USA has to expand its corporate headquarters in Memphis, where it plans to add announced plans 150 new jobs. Sedgwick is a global corporation that provides insurance to move its techni- claims administration services to major employers, Medicare and OSHA Ncal and production orga- solutions and risk consulting. The company has nearly 15,000 employees in 275 offices in the U.S. Canada, the U.K. and Ireland. nization and all supply chain teams to its multi- ■ Dollar General Corp., headquartered in functional Solon, Ohio, Nestlé produces a broad range Goodlettsville, Tenn., intends to add campus, bringing 300 of well-known food products. approximately 10,000 new jobs this year as the jobs to the area. result of 1,000 planned new store openings The decision moves those functions closer to Nestlé USA and two new distribution centers. The new factories, 75 percent of which are located in the eastern half jobs represent a nine percent overall increase to the company’s total workforce, one of the of the United States. Nestlé’s U.S. headquarters are located largest staffing increases in its 78-year history. in Glendale, Calif. “We’re experiencing one of the most profound shifts in WEST VIRGINIA how people eat, shop and engage with brands right now,” ■ ZeroChaos, a Florida-based provider of workforce management said Nestlé USA Chairman and CEO Paul Grimwood. “To solutions, plans to open a cybersecurity lab this fall on the campus of address the ever-changing landscape, we’re striving to make Bethany College in Bethany, W. Va. The lab will allow students to our products healthier and tastier, using unmatched R&D simulate cyberattacks in a controlled environment without harming any networks. “There is a global talent deficiency when it comes to capability, nutrition science and passion for quality in cybersecurity, in part because students have limited opportunities to everything we do.” learn how to prepare for and respond to these attacks,” said ZeroChaos While the 60-acre Solon campus – located just outside of Chief Administrative Officer Doug Goin. “Conducting simulated Cleveland – has been established as the Center of Excellence for attacks in the lab will help us begin closing the talent gap by providing the Nestlé frozen and chilled foods businesses, Solon also serves well-rounded education theory and practical application that equips as home to a number of other Nestlé businesses and functions, students in this area.” providing employment to more than 2,000 people.

16 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 1-22.indd 16 3/4/17 9:58 AM KENTUCKY INTELLIGENCER® A sampling of business and economic data

LOOKING TO RETIRE EARLY? READ ON… If you’re thinking about retiring early, you’re likely already living in one of the best states in the nation to make that dream financially feasible. Kentucky ranked No. 2 in SmartAssets’ recent report on the best states for early retirement, a study that evaluated each state based on tax rates, cost of living, access to and cost of healthcare, and the number of arts/entertainment/recreation establishments. Of the eight metrics included in the methodology, Kentucky ranked in the top 20 in six of those metrics.

1. he aerage effectie income ta rate income ta rate include tate and local income tae aed on income from retirement account for peron age 55-64. 2. Annual health inurance cot are eual to the aerage cot of a iler plan on the indiidual market for a 60-ear-old in each tate 3. he final inde alo include doctor office per 10000 reident and art entertainment and recreation etalihment per 10000 reident.

THE LANE REPORT • LANEREPORT.COM MARCH 2017 17

March Lane 1-22.indd 17 3/4/17 9:58 AM ON THE BOARDS Kentuckians named to organizational leadership roles

BEREA COLLEGE HENRY CLAY CENTER Childers, Dr. Shailendra Chopra; Dr. Robert ■ Michael D. Flowers has FOR STATESMANSHIP Davenport; Dr. Jamil Farooqui; and Dr. been elected to the Berea Col- ■ Merl Hackbart, Charlie Grizzle and Bob Gregory Osentinsky. Nick Rowe and Alan lege board of trustees. Flowers Babbage have been named to the board of Stein have also joined this year’s board, recently retired as president directors of the Henry Clay Center for becoming the first non-physicians to sit on the and chief executive officer of Statesmanship, a nonprofit organization board on the directors. American Bridge Co. dedicated to educating a new generation of NATIONAL ASSOCIATION Michael leaders in the skills of negotiation, dialogue, BIG BROTHERS OF WOMEN MBAS Flowers and compromise. Hackbart is a professor of BIG SISTERS finance and public administration at the Uni- ■ The Louisville Chapter of the National Associa- OF THE BLUEGRASS versity of Kentucky. Grizzle is the chairman of tion of Women MBAs has announced its board of ■ Adam Smith has been The Grizzle Company, a Washington-based directors for 2017: President – Jill Morzillo; Co- elected to the board of direc- lobbying firm. Babbage is the leading lobbyist Directors of Communications – Laura Z. Hat- tors of Big Brothers Big Sis- of Babbage Cofounder, a firm specializing in field and Bethany Miller; ters of the Bluegrass. Smith is government relations and business strategies Co-Directors of Membership – a member with the law firm for public decisions. Gina Scott and Lisa Britton; of Stites & Harbison in the Director of Sponsorship and Lexington office. Adam KENTUCKY COMMISSION Outreach – Tracey Purifoy- Smith ON WOMEN Moneypenny; Director of EDUCATION ■ Krista Amy Fennel, Sarah Cameron, Finance – Linda Sullivan; and PROFESSIONAL , Director of Programming – Brenda Lee Gluck Miranda Leigh Jill STANDARDS BOARD Aavatsmark, Greta Greenwade Jones and Amanda Leonard. Morzillo ■ David Whaley, dean of Danette J. Wilder have been appointed to the Murray State University’s Col- Kentucky Commission on Women. lege of Education and Human Services, has been KENTUCKY COUNCIL elected board chair of the ON POSTSECONDARY state’s Education Professional David EDUCATION Standards Board. Whaley ■ The Kentucky Council on Postsecondary Education has FOUNDATION FOR elected Sherrill Zimmerman Laura Bethany Gina KENTUCKY INDUSTRY as its new chair. Ben Brand- Hatfield Miller Scott ■ has joined has been elected vice Paul Schreffler stetter Sherrill the board of directors of chair. Zimmerman Foundation for Kentucky Industry, a nonprofit founda- KENTUCKY tion aligned with the Ken- Paul HOUSING CORP. tucky Association of Schreffler ■ Louisville banker William Manufacturers that works to E. Summers has been attract, educate and retain talent for the state’s appointed to the board of manufacturing industries. Schreffler is vice directors of the Kentucky Lisa Tracey Purifoy- Linda chancellor for economic development and Housing Corp. Britton Moneypenny Sullivan workforce solutions at the Kentucky Commu- Ben nity and Technical College System. KENTUCKY PRESS Brandstetter PASSPORT HEALTH PLAN ASSOCIATION ■ Christian Furman and Douglas A. Winkel- GREATER LOUISVILLE INC. ■ Deborah T. Givens has been hake have been appointed to the board of direc- ■ Greater Louisville Inc. has announced its named to the Kentucky Press tors of Passport Health Plan. Furman is a professor officers for 2017: Chair – Steve Hanson, Bap- Association/Kentucky Press in the University of Louisville’s Department of tist Health; Immediate Past Chair – John Service board of directors. Giv- Family and Geriatric Medicine and is medical Crockett, Frost Brown Todd; Chair-Elect – ens is an assistant professor of director of the university’s Institute for Sustainable Evelyn Strange, AES Advanced Electrical journalism at Eastern Kentucky Health and Optimal Aging and administrative Systems; Treasurer – Mike Ash, Fifth-Third University. director of UofL’s Geriatric Evaluation and Treat- Bank; Secretary and Legal Counsel – Jeff Deborah ment (GET) program. Winkelhake is president of McKenzie, Bingham Greenebaum Doll. LEXINGTON CLINIC Givens the hospital division for Norton Healthcare. Spencer Bruce (Louisville Water Co.) and ■ The Lex- Russ Cox (Norton Healthcare) have joined ington Clinic SUNRISE CHILDREN’S SERVICES GLI’s board of directors. board of ■ The following individuals have been named to directors has the board of directors of Sunrise Children’s Ser- GREEN RIVER AREA named its offi- vices, the state’s largest private child-services pro- COMMUNITY FOUNDATION cers for 2017: vider: Michael Edwards, senior pastor of ■ Crystal Patterson has President – Adairville Baptist Church; O’Neil Harrell, joined the board of directors Dr. Stephen founder and president of South State Contrac- of the Green River Area Com- C. Umansky; Stephen Michael tors Inc.; Joe A. Owen, chief executive officer munity Foundation, which Vice President Umansky Cecil and president of Guardian Group; and Leigh serves the charitable interests – Dr. Michael Ann Siener, co-founder of Parents with Hope. of donors who have established T. Cecil; Sec- charitable funds as part of a retary – Dr. UK GLUCK EQUINE permanent, collective, philan- RESEARCH FOUNDATION Crystal Kimberly A. thropic resource for the cur- Hudson; and ■ Stuart Brown has been named chair of the rent and future needs of the Patterson Treasurer – University of Kentucky Gluck Equine Research region. Patterson serves as counsel to the law Dr. Andrew Foundation. Michael Banahan has been firm of Wyatt, Tarrant & Combs and is also C. McGregor. Kimberly Andrew named vice chair. Brown is a veterinarian and employed as general counsel of Gulfstream Other mem- Hudson McGregor partner at Hagyard Equine Medical Institute. Commercial Services and MidAmerica Jet Inc. bers of the Banahan is director of farm operations for and their affiliated entities. board include Dr. Haider Abbas, Dr. Kyle Godolphin LLC (USA).

18 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 1-22.indd 18 3/4/17 9:58 AM CORPORATE MOVES New leadership for Kentucky businesses

ECONOMIC been promoted to director of communications ■ Mike Medalia has been named director of DEVELOPMENT for the Lexington-based company. interactive media for Louisville-based visual ■ Whitney Risley has been solutions company Kitestring. named manager of existing ■ Joseph F. Miller has been promoted to chief industry and workforce devel- executive officer of Louisville-based Market ■ Beth Gaunce has been named program opment for Kyndle, the Finders Insurance Corp. Vickie Smith has manager of KET’s new distance learning regional economic develop- been named secretary-treasurer of the company. program. ment organization for Hen- Whitney derson, McLean, Union and LEGAL PHARMACEUTICAL Risley Webster counties and the ■ Brian W. ■ Robert E. Dries has been appointed executive chamber of commerce for Chellgren and vice president and chief financial officer of Henderson and Henderson Benjamin J. PharMerica Corp., a national provider of County. Lewis have pharmacy services headquartered in Louisville. been elected EDUCATION partners in the TECHNOLOGY ■ Larry Ferguson has been firm of Bing- Brian Benjamin ■ Jason Jacobson has been named chief named vice president of the ham Greene- Chellgren Lewis executive officer of Lexington-based NetGain Kentucky Community and Larry baum Doll LLP. Technologies. Brendan Jacobson has been Technical College System. Ferguson Chellgren practices in the firm’s Lexington named president of the company. John office. Lewis practices out of the Louisville loca- Meholovitch has been named business ■ Susan Donovan has been named president tion. controller. of Bellarmine University in Louisville. ■ Christopher G. Colson FOOD/SPIRITS/HOSPITALITY has become a member of the ■ Mike Nettles has joined Louisville-based Papa Lexington law firm of Fowler John’s International Inc. as senior vice president, Bell PLLC. chief information and digital officer. MANUFACTURING GOVERNMENT ■ Amy Porter has been ■ Jason Brendan John Beth Shields has been named plant manager of Christopher Corning Inc.’s Harrodsburg Jacobson Jacobson Meholovitch appointed state archivist and Colson records administrator. facility. ■ Marshall Fall has been named manager of ■ Donna L. McNeil has been ■ Scott Kearns has been business development for Blue Chip Consult- appointed executive director of named national sales manager ing Group’s new Louisville office. the Kentucky Infrastructure Beth for The Candleberry Co., a Authority. Shields Frankfort-based manufacturer ■ Erik Dunnigan has been of scented candles and home named managing director of INSURANCE accessories. Coastal Cloud’s new regional ■ Katy Scott headquarters in Louisville. Grachek has MEDIA Kearns been promoted ■ Sarah Wilkins has been OTHER to director of promoted to director of adult education and ■ Ward G. Wilson has been Kentucky workforce training for Kentucky Educational named executive director of the Employers’ Television (KET). Kentucky Waterways Alliance. Erik Dunnigan Mutual Insur- Wilson succeeds Judy ance. , who is retiring after 20 years of service. Ryan Katy Ryan Petersen has Worthen Grachek Worthen

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THE LANE REPORT • LANEREPORT.COM MARCH 2017 19

March Lane 1-22.indd 19 3/4/17 9:58 AM LANE ONE-ON-ONE Kentucky’s leaders express their opinions

MG: What today are the broad market Ryan Quarles forces that most affect farm revenue? Ryan Quarles was elected Kentucky’s com- RQ: It’s sometimes said that farming is missioner of agriculture in 2015 and at 33, is the only industry that pays for all of our the youngest statewide elected official in the country. A 2006 graduate of the University inputs at retail cost then sells its prod- of Kentucky, Quarles completed three ucts at wholesale, and we pay the undergraduate majors and two graduate freight costs both ways – I think I have degrees in the span of four years. He to attribute that quote to (Kentucky attended Harvard University on a full schol- Agriculture Development Board Direc- arship and in 2009 graduated with a master’s tor) Warren Beeler (August 2016 One- degree in higher education before moving on-One interviewee, see tiny.cc/kqojjy). back to Kentucky to finish his last year of law school. Prior to being elected commissioner We’re one of the few industries that of agriculture, the Scott County native produces a good without knowing what served in the Kentucky General Assembly, our sale price is going to be. Kentucky’s representing Scott, Owen and Fayette coun- car producers have an idea what they’re ties. During his time as a state representa- going to sell that vehicle for; they know tive, he was named vice chairman of the what their inputs are going to cost, and House Judiciary Committee and served on they’re able to project revenues. With the Agriculture and Small Business Commit- tee, the Tobacco Master Settlement Over- farming, there’s oftentimes a year lag sight Committee and the Banking and between putting seeds in the ground Insurance Committee. and knowing what price you’re going to get. In the global economy, the weather in South America very well could affect INCREASED FOCUS ON PROCESSING WILL corn prices here in Kentucky this fall. So in one respect we’re very integrated ADD JOBS, GROW VALUE OF AGRIBUSINESS with the international global economy, but the other respect is that Kentucky Agriculture Commissioner Ryan Quarles says Kentucky’s farmers continue to persevere through family-farm culture is key to diversity and operation quality a high-risk occupation. MG: How is the strong U.S. dollar on BY MARK GREEN world currency markets affecting Kentucky’s farmers’ market prices? RQ: A strong dollar always hurts exports, Mark Green: What’s the Kentucky Agricul- that number is around $5.4 billion right and we are an export-dependent ture Department budget, and how many now. We’re actually down 17 percent agricultural economy: One in four rows of employees does the department have? over the past two years. corn you see in Kentucky ends up Ryan Quarles: We’re around 215 employ- You mention Kentucky’s GDP is overseas. About the same is true with ees, but we have some open positions around $190 billion. The total soybeans, and 80 percent of our tobacco now. We’re always looking to hire tal- economic output nationally for ends up overseas. We are sensitive towards ented people at the Department of Agri- agriculture is about the same number. the elasticity of the strength of the culture. For a lot of folks, it’s a career Despite Kentucky being a small state American dollar. Right now, agriculture where you’re not sitting behind a desk all with only 4.3 million people, our ag represents about 5 percent of the total of day. Our hardworking inspectors may be numbers usually have us ranked in the Kentucky’s export portfolio, which is out there working gas pumps or farms. top tier of all states when it comes to the about $28 billion. Roughly half our staff are dedicated to economic impact. fieldwork all across Kentucky. MG: Fewer exports then increases The budget is usually around $33 MG: Many elements of Kentucky supply in the United States and causes million, give or take. Some of that business are directly connected to farm lower prices? money is pass-through money from operations, but people might not think RQ: That’s part of it. There seems to be federal sources like the EPA. We of them as agribusiness. Can you a trend of commodity prices being administer some of their programs mention some of those? lower not just in ag but also in metals when it comes to chemicals or RQ: We have a thriving bourbon indus- right now and other commodities that pesticides; other money flows through try in Kentucky, and a recent study are sold through Chicago (Mercantile us. Our state General Fund dollars are showed that 15 to 20 million bushels of Exchange). Oftentimes there’s a around $16 million, but our budget is Kentucky corn go into Kentucky bour- connection between other raw around $33 million. bon each year, which constitutes roughly commodities and agriculture as well. 7 percent of our total corn output. As You also have to remember that farmers MG: Agribusiness in Kentucky remains a that industry grows, so does opportunity respond to market forces. If they know significant portion of a state economy for Kentucky farmers. Another great corn prices were high, say, three years whose GDP is $190-200 billion. What example is Big Ass Solutions (formerly ago, more people are going to start portion of that is ag? Big Ass Fans). That company has its roots growing corn. With our cattle prices RQ: Our direct farm cash receipts are in agriculture, as they developed those right now (up 76 percent since 2009 to usually around $6 billion a year. That’s large, low-RPM fans for dairy barns. So the highest on record), our beef herd dollars going into the pockets of there are a lot of agribusinesses that has grown nationally over 2 million farmers. However, due to low don’t necessarily come to mind at first head recently; the supply has grown and commodity prices and low cattle prices, but have deep agricultural roots. that has caused a little dip in prices as

20 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 1-22.indd 20 3/4/17 9:58 AM well. We’re always responding to market be even more investment in our state, RQ: Yes. They’re operating in Todd forces greater than what you see on particularly from the processors locating County right now. We’re still investigating individual farm gates. here. Well over 100 chicken barns are the viability of canola here, but that’s just either under construction or planned in one of many different crops. Industrial MG: Has Kentucky become more of a Kentucky, and each one of those barns hemp continues to be a focus of the grain crop producer in recent years? represents a long-term contract, usually department. We have the largest industrial RQ: We’re about stable. There was with a beginning farmer. Poultry hemp program in the nation, and we have obviously a run with the grain market back oftentimes gives beginning farmers an attracted 40 processors into Kentucky. about three or four years ago when it hit entry point into agriculture, especially We’re also focusing on kenaf, a fibrous its 2013 peak. People were growing grain folks who may not have the ability to plant that can be grown just about in areas you traditionally wouldn’t see, inherit a farming operation. Getting anywhere. We have some innovators, particularly in Central Kentucky. However, started with a poultry barn gives that particularly in Eastern Kentucky, looking we’ve always been a strong grain state. We young farmer a stable income, gives them at using kenaf as an alternative crop in consistently rank in the top 15 nationwide the ability to start their own farming that area. And of course the craft beer when it comes to our grain production. operation. So that’s an area of growth. industry is growing, not just in Kentucky Corn is a billion-dollar industry. Soybeans We have more beef cattle than any but nationwide, so we are researching the is about a billion dollars. Wheat is still very state east of the Mississippi, and we’ll viability of hops production in Kentucky strong as well. And particularly when you continue to hold that strategic advan- this year and connecting them with a get out in Western Kentucky, we are part tage because we’ve made the invest- market that we know is going to continue of the “breadbasket” that most people ments to make sure we have high-quality to grow. associate with the Midwest. cattle herds in our state. Grain is kind of stable right now. The fate of tobacco MG: Agriculture was the world’s first MG: Land in the Western Kentucky is really depends on how aggressive peo- industry and is considered one of the similar to the Midwest? ple get with marketing, so I think that most rustic, but today it has adopted a RQ: The thing that’s unique about Ken- will continue to dwindle. And of course wide variety of high-tech, digital tools. tucky, compared to the Midwest, is that a our equine industry is strong and thriv- Which Kentucky ag sectors are the most lot of our grain doesn’t leave the state. ing; well over half of the Thorough- teched-up? We export a lot, but we also process a lot breds born in the United States were RQ: Farmers were on mobile devices long of it here because we have a lot of live- sired by Kentucky horses. As long as we before Siri was. Kentucky farmers are early stock and about half of our grain is used have the American Pharoahs of the adopters of technology, and our grain pro- for livestock feed. That’s one reason why world residing in Central Kentucky, ducers exemplify the latest and greatest in we’re so efficient at producing cattle. that’s going to be an area of growth. technology. Our grain operators were the That’s why poultry is our No. 1 livestock first to put GPS on moving vehicles after in the state, at $1.2 billion; it’s well on its MG: How is Kentucky doing at attracting the military declassified the global posi- way to becoming a $2 billion industry in agribusiness processors to the state so tioning system. Because we’re a state that our state because we’re able to lower our that the value-add occurs in the has challenging terrain, we have to be effi- input costs on the feed side. commonwealth? cient. We can’t afford not to be. That’s why RQ: I sell agriculture as economic you see the emphasis on early adoption of MG: Traditional family farms have long development. If we’re going to be serious technology. If you attended the National been consolidating and becoming part- about this, we need to make sure that we Farm Machinery Show last month in Louis- time operations. How many farms are focus on processing. About 20 percent of ville, you saw that more vendors each year there in the commonwealth today, and every dollar you pay at the grocery store push agricultural technology products, what is the trend in operations? today actually goes to the farmer. If we software management, those small changes RQ: We have 76,000 farms. That’s a lot of want to create jobs and track investment, farmers can make that can create efficien- farms. That ranks us fifth or sixth in the we need to continue to focus on process- cies across our commonwealth. If you go to nation in the number of farms. And 95 ing. If you go to Christian County, you’ll a modern dairy operation, each cow is elec- percent of our farms are owned and see where we take corn and turn it into tronically monitored to control their feed operated by families, so the corporate ethanol. That’s a multimillion-dollar oper- rations; automated feeders recognize agriculture presence is quite small in ation now. We supply the Greater Nash- which calf has already had its fill for that Kentucky. We are a state of small family ville area with ethanol. If you go right day and which calf needs to have a little bit farmers. That sets us apart from most next door to the next plant, Kentucky extra. They can all be monitored via other agricultural states because we have a wheat is being milled for McDonald’s; mobile devices. lot of people involved, and they’re used to their biscuits come from Kentucky wheat. growing specialty crops and have a focus Those are two shining examples of pro- MG: Across all areas of business, on value. We grow everything from apples cessing. We’ve also seen an uptick in the Kentucky is conservative and can be a to zucchini and everything in between number of meat processors in our state; slow adopter of “the new.” How does because we have such a large number of we’re at 27 USDA-inspected meat proces- Kentucky agribusiness’s adoption of small family farms. sors. Since we’re so good at livestock, let’s technological change compare with its process them here, use that Kentucky peer or competitor states? MG: Poultry has been the state’s top ag Proud label and get them in front of more RQ: I’d say we’re right in the middle with revenue producer for a decade or so. Kentuckians. During my administration, our peers. Kentucky agriculture is large, Corn, livestock, soybeans, equine, pork we’ll have a concerted effort on attracting and we’re fortunate to have ag leaders and tobacco are all significant also. more processing to our state. who are known nationally, who have made What are your expectations about these Kentucky a destination state. The National sectors for the next five years? MG: There was news a year or so ago Farm Machinery Show is the biggest RQ: Poultry will continue to grow in was that a canola processor was looking indoor farm show in the country. We had Kentucky. We have indications there will at coming in. Did that happen? over 300,000 people come to our state to

THE LANE REPORT • LANEREPORT.COM MARCH 2017 21

March Lane 1-22.indd 21 3/4/17 9:58 AM LANE ONE-ON-ONE

look at what’s latest and greatest in ag towards anyone who seeks our guidance tory agency. Roughly half of our staff is technology. That’s a testament that’s been towards a new agribusiness or a new pro- dedicated towards a regulatory func- true for the past 50 years. We have the cessing plant. It’s important that we don’t tion of some sort. If you fly out of a reputation, along with collaboration with stand still. The innovative process may Kentucky airport, sell gold at a pawn our land grants research institutions such have failures on the way, but Edison didn’t store, buy meat at a grocery or even as UK, where we have a culture of invent the light bulb on his first try. ride a zip line, it is the Department of innovation, new technology and research. We want to develop a culture here in Agriculture that plays that consumer Kentucky that our farmers are bold or protection role. We now are also com- MG: You have initiated a Kentucky experimental and that we have a critical bating credit card theft. As we inspect Hunger Task Force. What are the goals? mass of resources, such as our universities, our 60,000 gas pumps across the state, RQ: It’s an unfortunate reality that one that will aid folks in developing new crops we’re looking for the installation of in six Kentuckians and one in five Ken- and technology. As an example, 40 years skimmers, which have been stealing tucky schoolchildren are considered food ago soybeans were considered an credit card identity from Kentuckians insecure. As agriculture commissioner, experimental crop in Kentucky, and look for years. We caught our first skimmer representing an industry that is blessed at the impact soybeans have today. We this past summer. with an abundance of food, I know we want to make sure we don’t pass up any can do a better job. The Hunger Initia- good opportunities. MG: Are younger Kentuckians entering tive seeks to collect an inventory of what’s agribusiness in adequate numbers, and working and what’s not working across MG: Where specifically does Kentucky what kind of backgrounds and our state, build a collaboration among stand with industrial hemp? qualifications do people need nowadays? our organizations that are already RQ: Kentucky has the largest research RQ: They aren’t. We need to develop a addressing this, and build consensus on program in the nation. We have approved better pipeline to encourage the next strategies that can reduce hunger in our up to 12,000 acres to be grown in 2017 generation of agricultural leaders to get state. This legislative session we’ll be pass- and have attracted 40 processors who have involved in an industry that accounts for ing what’s called a food donation immu- brick-and-mortar locations in our state one in five jobs nationwide. We support nity bill, which will help encourage our and are processing that hemp to interme- our premier youth development grocery stores and other entities to diate or final products. We continue to organizations such as 4H and the FFA donate more food to our food banks. It have conversations on a weekly basis with financially. We want to develop a pipeline also encourages farmers to let volunteers other industries about whether or not of not just farmers, not just agribusiness on their farms to harvest food that other- industrial hemp or kenaf can be used with owners, but the researchers and the wise would rot in the field and get it into their industrial applications, such as injec- technology specialists that modern the hands of those less fortunate. tion molding, concrete, insulation, agriculture demands. It’s so important makeup, protein shakes, even nutraceuti- that we develop a culture in our state that MG: What legislation or initiatives are cal purposes. We seem to have attracted a views agriculture as co-equal, as part of our you advocating to enhance international lot of interest, and there’s no lack of greater economic portfolio. We’re trade for farm products? encouragement from Kentuckians about working hard to inspire the next RQ: International trade is imperative if we the future of this group of crops. generation of leaders. want to expand Kentucky agriculture revenue; we need to expand our markets. MG: What is agribusiness’s role in MG: Are there particular qualifications, And as the Trump administration consid- helping Appalachian Kentucky diversify education, skills that people who want ers trade deals or bilateral agreements, we its economy? to go into agribusiness should pursue? need to make sure our policymakers RQ: Agriculture has a bright future in RQ: We hear a lot about STEM and its understand that farmers can benefit by Eastern Kentucky because it is situated importance. I like to add an A for agri- getting access into new markets. In 2017 within one day’s drive of two-thirds of the culture, because agriculture already we will put an emphasis on international U.S. population. If we could attract some includes science, technology, engineer- trade as a state-level priority and start con- processors to Eastern Kentucky that could ing and math. If you don’t have a mas- necting farmers with those emerging mar- be a win. We already have large-scale tery of those skills, farming is going to kets. We provide technical assistance for warehouses locating to Eastern Kentucky be tough for you, because modern agri- farmers and agribusinesses to connect that are supplying restaurants on the East culture demands proficiency in so many them with importers and exporters, to Coast. The bourbon industry is thriving cross-disciplines. We have several phe- help them explore whether their products and needs American white oak to make nomenal agriculture colleges in our can be sold internationally. I recently bourbon barrels, which cannot be reused state, and they continue to produce served on the Trump Agriculture Advisory by federal law. We are in discussions with top-quality employees who can work not Committee and plan to continue to be the timber industry about creating a long- just in agriculture but in other indus- active, particularly on trade issues, in term collaboration with the bourbon tries. It’s important to reach young Ken- Washington, D.C. industry to get more of that American tuckians to remind them about the white oak replenished in Eastern science behind agriculture, remind MG: You are an advocate of Kentucky. them that food doesn’t come from a diversification and adding new crops to grocery store – it comes from a family Kentucky’s farmers’ options. What do MG: The Department of Agriculture is farm, and there is a future career oppor- you want to see happen? the state’s largest regulator and the tunity in this industry as well. ■ RQ: We’re always on the lookout for new primary consumer protection entity. opportunities for our farmers and agri- How much of the department’s businesses. We have several crops being resources are devoted to that role? Mark Green is executive editor researched in partnership with our univer- RQ: It may come as a surprise to most of The Lane Report. He can be reached at [email protected]. sities, which are hops, kenaf, industrial Kentuckians that the Department of hemp. We have an open-door policy Agriculture is the state’s largest regula-

22 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 1-22.indd 22 3/4/17 10:31 AM This is an Advertisement 15 QUESTIONS TO ASK A Potential Financial Advisor Kevin Avent, Managing Director-Wealth Management, answers for Unified Trust Company

1. How old are you? very competitive. We are also one of the first fee-based, based on the phases of your life and potential prolonged full disclosure, discretionary investment managers in the adverse economic climates. As a fiduciary, our focus is We have a team of experienced advisors of varying country. While other firms make it difficult to discern on managing downside risk in client portfolios and thus ages. At most other investment firms, each advisor has how they are paid and how fees are assessed, we have we recognize there could be times, albeit few and far their own investment philosophy which can lead to in- always practiced full disclosure of our fees. 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We provide all clients with a quarterly investment report conditions that influence our strategic investment deci- As a fiduciary, we always have your best interest in mind. showing the progress of our fiduciary oversight and sions. You can rest easy knowing your portfolio is being Our advisors don’t receive any incentives for recom- meet with them regularly to discuss their ongoing plan. managed by experts according to prudent investment mending one type of fund over another and we disclose Our Trust Investment Committee also evaluates invest- standards. our fees to you in a quarterly report. Any compensation ments and asset allocations monthly . we receive as a result of transactions, known as revenue 2. What is your educational background? sharing, is credited to your account to help offset costs. 14. 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They are subject to continuing education stan- To build a personalized financial strategy, we must first those goals. To reach your goals you need to have a long- dards within their fields. get a complete picture of your financial situation. After term plan in place and continue to adjust and modify it you answer our risk tolerance questionnaire we can de- as time goes on. That’s the way we work and that’s the 3. How long have you been an adviser? termine your asset allocation and develop a personal- reason our clients have had so much success. ized long-term plan. As your circumstances change, we On average, our advisors have at least 12 years of wealth will help you modify your plan. management experience implementing high level finan- 15. Do you think you would be a good cial planning, trust and investment solutions for clients. adviser to me? Why? All have experienced the ups and, more importantly, 10. 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March Lane 23-52.indd 23 3/4/17 10:00 AM COVER STORY A Value Proposition for Venture Capital

“It was tough to talk about angel invest- ing 10 years ago in Kentucky,” Nash said. Many entrepreneurs “wouldn’t have had the courage” to try to raise funds here then, he said. And while “Shark Tank” gets people talking today about start-up invest- ing, he shrugged, “it is not what happens in Kentucky.” Many have been working for years to build an innovation ecosystem. How- ever, the recent surge in investment capital is adding energy to Kentucky small-business development programs that are 15 years old. “It’s many pieces that are coming together, and it takes time,” said Nash. “I think we are on the cusp of many things happening.” Outsiders are taking notice. Alejandro Cre- mades, author of “The Art of Startup Fundraising” and executive chairman of Onevest, a leading startup investing platform, spent two days at The Kentucky Alejandro Angel Investor & Entrepre- Cremades, Dollar amounts are still small, but Kentucky’s incentivized Executive neur Summit last October Chairman, environment is growing an investor community in Lexington. Onevest “I am convinced from what I heard here that there are great BY MICHAEL AGIN minds, and a great team of individuals who are executing this,” Cremades said. “I think in 10 years that I’m going to hear that this is a hub for real entrepreneurs.” S Kentucky finally becoming a den growth the past three years in the The nine people sitting on a panel at startup capital destination for number of individual private investors the October summit made for a historic entrepreneurs used to flying over and investment firms, also known as moment, Nash said, because they were to the East and West Coasts? The angel investors and venture capitalists. the largest gathering ever of Kentucky best answer is, “We are trying very For example, 70 more angel investors and regional VC firms Ihard,” according to private investors angel investors registered on a single program event. Of the nine and government officials. with Kentucky just this funds represented, four were created Kentucky is not going to be Silicon year, making for 344 since 2014. In describing their firms and Valley, or an East or West Coast, said added since 2015. At least funds, the panelists spoke of investing Warren Nash, executive director of the four new angel funds, in over $450 million in start-ups (in Ken- Von Allmen Center for Entrepreneur- which private investors tucky and elsewhere). ship at the University of Kentucky. How- pool their money, were Warren Nash, The startups’ new investor support ever, a value proposition is emerging. formed since 2015. Ken- Executive Director, Von can be defined broadly, said Nash, and “But if you raise a dollar here, and tucky’s reality version of Allmen Center vary by region. you can get it done here,” Nash said, “Shark Tank,” the popular for Entrepre- Startups that get private investors “that dollar will go a hell of a lot further television show about ven- neurship talking are ones with a unique, new idea than in Boston or in San Francisco.” ture capitalists making that could disrupt the old ways in an Kentucky dollars, meanwhile, are deals with startups, is growing an audi- industry or business sector, then grow to more readily available because of sud- ence for its entrepreneurial ecosystem. employ from 50 to 100, maybe thou-

24 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 24 3/4/17 10:00 AM sands. They talk about “scalability,” the $10,000 each. That would, Fugitte said, minority-owned companies, and counts potential for rapid growth. They want “allow us to say to entrepreneurs that if 230 jobs created. innovation that creates a new technol- you want to work and grow your com- Connectic Ventures’ portfolio ogy, process or invention yielding a pany in Elizabethtown, then we have $1 includes ConnXus, a cloud-based sup- unique product, device, scientific proce- million of private startup capital.” plier management portal, and Super- dure or software. Startup founders Lincoln Trail Venture FanU, a fan loyalty and engagement who’ve created intellectual property Group’s 40 current mem- platform presented in a customizable protected by patent, copyright, trade- bers have invested to date mobile app for colleges and universities. mark, etc., might need to get out of the in 10 companies, such as In Lexington, members in one of Ken- way of the stampede of investors. Jail Tracker, a database tucky’s oldest angel investing funds, the Ideally a startup can steer a commu- management system built Bluegrass Angels, volunteer and work to nity towards huge economic growth, specifically for managing grow the entrepreneurial community like the now-iconic firms in Silicon Val- jails that has been Jim Fugitte, spirit. They raised the first $3 million fund ley. In the past 25 years, firms less than acquired by a larger com- President, in 2004, and followed with two funds that five years old accounted for all net new pany. They meet regu- Lincoln Trail total more than $6 million. Many of the U.S. jobs, according to the Kauffman larly and listen to pitches, Venture Group Bluegrass Angels’ 52 members serve on Index of Entrepreneurship, whose in- then make personal investments. the boards of the companies they invest in depth economic research has been pub- This happened recently in Owensboro and volunteer their time. lished for more than 10 years. also. Marshall Ventures raised a $2 million “It’s part civic duty because banks don’t Kentucky targets startup company sup- fund in 2015 from 14 investors in less than lend to startups,” said Chris Young, volun- port in five categories that have demon- 30 days, said founder John Moore. teer chair of the board of managers for strated potential for scalability and “People were looking Bluegrass Angels Venture Funds II and III. innovation: bioscience; environmental for something like this,” “We don’t want to lose these businesses to and energy technology; health and Moore said. “People other areas.” human development; information tech- really got behind what we Being a mentor to entrepreneurs nology and communications; and materi- were doing, and that was offers a lot of satisfaction. als science and advanced manufacturing. pretty cool.” “It is fun to get involved “Why should anyone care about start- They have invested in with companies and help ups, innovations, and the funding for five deals so far, most in John Moore, them along,” said Young, research and development that powers the $200,000 range, he Founder, who shares his experience them?” asks the Kentucky Annual Eco- said. Marshall in the entrepreneurial cul- nomic Report. “The answer is simple: Its portfolio includes Ventures ture of San Francisco and Over the long term our collective standard eCoach, which offers a commercially Silicon Valley, where he Chris Young, of living will likely depend on it.” available app and platform to “connect cofounded an internet Volunteer athletes of all ages and skill levels to jewelry company and Chair, Board Local funds sprouting around state experts in their respective sports another involving corpo- of Managers, What has kick-started this sudden surge of through state-of-the-art video analysis rate communication and Bluegrass private angel and VC fund investment in coaching software.” Also, there is Nectar packaging files for execu- Angels Venture Kentucky startups? Technologies, a clean-coal technology tive or sales teams. Funds II The attraction “is the company based in Henderson. Living in Lexington and III combination of building On the east end of Kentucky, Ashland since 2004, he is general manager of jobs, building the technical joined the community-based angel inves- Overbrook Farm and vice president of community and solving tor fund trend when Tri-State Angels W.T. Young Storage, a public warehous- real-life problems,” said formed in 2015 and raised a $1.2 million ing company. In 2008, he began volun- David Goodnight of Lex- fund from 22 members, including two teering with the Bluegrass Angels, and ington, a retired Lexmark institutions. It has invested in six compa- now is one of nine fund managers. executive and a six-year David nies, said Chairman Don Perry. Joining that system is relatively easy, Goodnight, investor in startups Investor, “Things are really mov- Nash said, and new members are through the Bluegrass Bluegrass ing well for us. It is a new needed from all regions of Kentucky to Angels funds. Angels group, and we are very grow the total capital available for start- Notice he didn’t specif- active,” Perry said. “We are ups. However, he believes there is a ically include making money. Cash very fortunate to have good need for expertise as much as a need returns are part of the attraction, but members who are really for money. Without expertise in the investors again and again first stress that interested in spurring eco- ideas startups pitch, funds and investors building an innovative and entrepreneur- nomic development. That Don Perry, have to pass on making a deal. ial spirit in their communities ranks was one of the main goals, Chairman, He encourages anyone interested in ahead as a reason for the recent growth in as well as to make money Tri-State becoming an investor and mentor to con- Angels their ranks. They want to support local along the way.” tact the nearest Kentucky Innovation Net- talent who have great ideas, solve prob- In Northern Kentucky, Covington’s work office (kyinnovation.com), join the lems and want to keep the companies and Connectic Ventures raised a $5.6 mil- state’s virtual angel investor network jobs they create in Kentucky. lion fund in 2015 with 54 Angel inves- (kyangels.net) or contact any individual “It’s all about developing that (entre- tors, 90 percent of them from Boone, angel or VC firm. There is also informa- preneurial) spirit in your community,” Campbell and Kenton counties, said tion at the Cabinet for Economic Develop- said Jim Fugitte, president of the Lincoln cofounder Brad Zapp. ment’s ThinkKentucky.com website. Trail Venture Group in Elizabethtown. “Our goal is to help you start a busi- In 2008, community leaders wanted ness so you can change the world,” its The language of investings a fund in which 100 investors from website declares. So far, the fund has Helping to grow your community’s around Elizabethtown committed made 30 investments, nearly half with entrepreneurial spirit is all well and

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good, but the spirit to make money is a second key reason to invest. There have been many success stories that could be driving Kentucky’s influx of new angel and VC investors. Moore, from Owensboro’s Marshall Ventures fund, said Kentucky’s entrepre- neurial ecosystem especially needs those successful business owners and commu- nity members who have stock portfolios. “There is real good reason to have 5 percent of that portfolio in startup com- panies,” Moore said, suggesting they should invest as individuals or put money into funds of at least $2 million that make startup investments. There have been several success sto- ries in Kentucky, and fund members need to tell this story because “not enough people know about it,” he said. Angel investing has its own language. Investment decisions are called a “deal,” or referred to as a “bet,” reflecting the Some members become accredited and Members of a start-up investing panel at the Kentucky risk involved. A “term sheet” is the legal invest individually, while joining the fund Angel Investor & Entrepreneur Summit last October document defining what investors and requires a minimum commitment of in Lexington were, from left, John Moore, founder of entrepreneurs must do. $25,000 for three years. Marshall Ventures fund in Owensboro; Jim Fugitte, founder of Lincoln Trail Venture Group in Making money requires an “exit.” Young stresses that becoming an inves- Elizabethtown; Brad Zapp, managing partner of One form is when a larger company tor in startups is serious business for all of Connetic Ventures in Covington; Don Perry, chairman within the startup’s industry acquires for Kentucky’s angel and VC funds, whose of Tri-State Angels in Ashland; Marty McClelland, cash and investors get dividends in pro- members put in a great deal of effort and chair of Enterprise Angels Fund in Louisville; Scott portion to the amount of their bet. Exits due diligence to be successful. Jacobs, executive director of Queen City Angels in can involve convertible debt, revenue- “This isn’t just ‘let’s pretend that we Cincinnati; Chris Young, board chair of Bluegrass sharing, sale of the business, or the rare are doing ‘Shark Tank’ and throw some Angels Venture Funds II and III in Lexington; but very profitable initial public offering money at some kids trying to start a Elizabeth Rounsavall, director of research and (IPO) of a portion of ownership to the business.’ We are trying to do things analytics for Chrysalis Fund in Louisville; and Don Aquilano, co-founder and managing director of Allos stock market. Early investments become very diligently and very intelligently,” Ventures in Indianapolis. stock shares whose value is set by the Young said. “We try to make sure we market, with prudent cashouts typically invest in the right people and the right taking another five to seven years. deals. We have learned a lot of hard les- look at Kentucky deals Exits return money to investors in sons about what not to do. We have because of it,” he said, term of “2X, 3X, 4X,” etc. – e.g., a come a long way in our sophistication.” adding that the credits $25,000 investment returning $50,000 is have enticed many out-of- a 2X return. Rates of return are not ‘Tax credit math is pretty cool’ state businesses to relo- published, but everyone interviewed for To encourage activity, Kentucky in 2015 cate in Kentucky. The tax credit pool is this article expects to make money. introduced a tax credit that stimulated Casey Barach, “We say that we will more than $25 million individual invest- limited to $3 million a year, Director, make ‘10 bets’ and hope ments in its first three years. Individuals however, and available to Northern that one is a 10X return,” investing in qualified startup companies investors accredited by Ken- Kentucky said Brian Luftman, a for- can receive a 40 to 50 percent state tax tucky who submit applica- Innovation mer Chicago Mercantile credit (higher for investments in economi- tions in December. In 2015, Network Exchange floor trader cally depressed regions). credits were exhausted in who is now a fund man- “The tax credits are such an important eight months, then within three months in ager for the Bluegrass Brian thing here,” said Marty 2016, and in one month this year, accord- Angel Venture Funds. Luftman, Fund McClelland, chair of the Enterprise Angels ing to Casey Barach, director of the North- “Every deal I invest in, Manager, Fund of Louisville which raised $4.6 mil- ern Kentucky Innovation Network office at the time, I expect a Bluegrass lion in 2014. “All the investors out there and the key driver of getting legislators and Angel Venture the business community throughout Ken- return of five to 10 times Funds understand tax credit math. Tax credit my money. But I know that math is pretty cool.” tucky to support the angel tax credit. half the companies I invest in will fail,” Enterprise Angels Fund had one of its “There is no doubt that the angel tax Luftman said. “I am willing to make those investments of $200,000 fail in 2016, get- credit is driving deals in Kentucky,” bets because I know there will be ones that ting only $90,000 back, McClelland said. Barach said. turn out truly great, and make up for all “In tax credit math that is a slight Kentucky’s return on investment is the others and then some.” profit,” he said. “It really makes a com- $3.50 in increased tax revenue for each $1 New investors most often join a local pelling case for investing in this class of in tax credits, according to research from venture club, such as the Bluegrass Angels companies. All our investments are in Northern Kentucky’s Tri-County Eco- private investor group in Lexington. Mem- Kentucky, in part for that reason.” nomic Development Corp. bers pay $1,000 in dues and attend regular The tax credit is a huge draw, said Tri-ED’s data also shows growth in meetings to hear about startup businesses. Young of Bluegrass Angels. “We only the tax credit program:

26 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 26 3/4/17 10:01 AM • 344 angel investors were registered funds may invite entrepreneurs they hear may apply for a $30,000 grant or initial in 2017, up from 274. to pitch to them too. investment of up to $250,000. It is one of • 28 companies were funded in 2017, Entrepreneurs giving pitches are several programs out of the Kentucky Sci- with the three-year total at 81 companies. required to have worked with one of the ence and Technology Corporation. • 80 individuals were approved for 12 Innovation Network offices. Ken- “Some of the companies in the past few credits in 2017, with 381 individual invest- tucky Angels and the Innovation Net- years that we’ve invested in are doing ments gaining credits over three years. work both are programs from the Office really, really well. It’s exciting.” Price said. • 307 small businesses are qualified of Entrepreneurship in the Kentucky “We should celebrate that, but at the same for tax-credit investments. Cabinet for Economic Development. time look at the bigger picture.” Since the tax-credit program’s “It’s all about the community, the eco- “The Midwest has less capitalization launch, Barach said, the following funds system of giving back,” Nash said. “It’s relative to the economic activity that is were created: about the community being supportive, bubbling up,” said Don Aquilano, manag- • Kentucky Angels (statewide) whether it’s a breakfast, or getting ing partner of Allos Ventures, a Midwest- • Tri-State Angel Investment Group together to compare the trials and tribula- focused, early-stage VC firm. Allos has (Ashland) tions, or someone who has been successful about $55 million in active investment • Marshall Ventures (Owensboro) and now comes back to be a mentor, or from about 100 successful high-tech entre- • The CONNETIC Fund (Northern come and judge a pitch competition, or sit preneurs, founders of companies, and Kentucky) and talk to an entrepreneur. I think we university and institutions. • Northern Kentucky Growth Fund have grown that support system.” Aquilano was on the Entrepreneurial (expanded due to anticipated increased Summit panel in October, and Allos has demand). funded some Kentucky start-ups. The new incentive is in addition to Now that Kentucky has more, but an older tax credit that applied only to relatively small, angel investment firms, money deposited in venture capital they will need to collaborate on deals funds. Since 2015, another $5.8 million and invest in start-ups in other parts of was invested from these funds to qualify the commonwealth, said Perry, of Ash- for a 40 percent tax credit under the land’s Tri-State Angels. Kentucky Investment Fund Act, accord- “That is key in regards to any Ken- ing to KIFA’s most recent annual report. tucky angel group. No one angel group Another reason Kentucky’s entrepre- Is growth in capital enough? can typically fund the needs of one com- neurial investor ranks are growing is Despite the geographically expanding pany,” Perry said, “so it takes a number that Kentucky matches Phase II federal efforts, the new funds and tax credits, a big of us to come together.” innovation and technology transfer difference between Kentucky and the Moore, from Owensboro’s Marshall grants for startups, said Young, of the coasts remains the total private capital Ventures, agreed. Bluegrass Angels. Each phase has eligi- available. Commonwealth investors talk “I think it is going to be hard for any of bility requirements for the grants, which millions of dollars in deals, while their us to just invest in our region and make can total millions of dollars. counterparts in Boston, Colorado and Sili- this thing work,” Moore said. “The key is Since 2006, the Kentucky SBIR/STTR con Valley often discuss billions, amounts for us to all work together and prime the Matching Funds has awarded $61.4 mil- that can launch companies capable of pump, and try to make the big numbers lion to 251 companies, which leveraged growing into Apples and Googles. work. The pump gets primed, and we $112.6 million in federal funds. Most Kentucky funds range from $1 make more deals that people are talking The commonwealth has consistently million to $6 million, the exceptions being about, then that will spike interest, I’m lagged behind on investments for the few VC firms that invest in several sure, in individual investors.” matching grants, but that appears to be states. The tax credit programs account More individual investors would greatly changing, according to the 2017 Ken- for projected investments of $7-$12 mil- change Kentucky, said McClelland of the tucky Annual Economic Report: “Ken- lion annually. Beyond the tax credit pro- Enterprise Angels Fund of Louisville. tucky’s $93 per $1 million in state gross grams, actual amounts invested in “We really need $25 million angel domestic product during 2013-15 is con- Kentucky are known only when compa- funds to make the economics work,” he verging on the competitor state average nies self-report their activities. said. That would support larger deals of $108; the U.S. average, while declin- Companies in the seven-county Central and allow funds to hire and keep full- ing, is still significantly higher at $133,” Kentucky region reported to the Innova- time, professional managers. the report states. tion Network that private Young, from Lexington’s Bluegrass equity raised in FY 2015 Angels, said there also is a problem of An online state angel network was over $26 million, and “deal flow,” meaning a more consistent The virtual Kentucky Angel Investors Net- in FY 2016 over $40 mil- availability of deals instead of up-and- work created in November 2013 is also lion, Nash said. down cycles. But he said the quality of growing the number of private investors Although growing, the innovative ideas being pitched to inves- for startups in communities all over the amount of private capital tors is definitely growing. commonwealth. With 84 accredited inves- in the state “is dispropor- Kelby Price, “We are always looking for new mem- tors from nearly every region, the online tionately tiny compared to Director, bers, new deals,” he said. “We want to get network “gets more knowledge out into what is going on in the rest Kentucky people knowing that we exist. We don’t the state about angel investing,” Nash said. of the country,” said Kelby Enterprise want accolades – we want more deals, bet- Most members telecommute into its Price, director of the Ken- Fund ter deals, all the deals we can find, and we regular meetings to hear the “pitches” tucky Enterprise Fund. want more members who will give their then take surveys to express whether they A state-sponsored, venture capital-like time, treasure and talent. ■ are interested; Nash connects those who fund, KEF invests in Kentucky-based seed are with the entrepreneur. Kentucky and early stage technology companies Mike Agin is a correspondent for The Lane Report. Angel members involved in the other with high growth potential. Companies He can be reached at [email protected].

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Dr. Linda Van Eldik, right, is director of the Sanders-Brown Center on Aging and the University of Kentucky Alzheimer’s Disease Center. Research there has learned more about the pathologies of dementia. Pictured with her is Dr. Steven Scheff, recently retired former assistant director of SBCoA.

complications from vascular disease and sometimes can be treated. When a fam- ily member or friend is struggling with problems in memory or thinking, it’s important to determine a cause before jumping to conclusions. “Alzheimer’s is a disease. Like any other chronic illness, it has a recognizable pathology. Unfortunately, it is one for which medications and treatments have thus far not been very effective,” Van Eldik said. “But there are times when we find people are suffering for reasons that can be treated.” As research advances understanding of dementia and its effect on the brain, expectation grows that there will be a breakthrough. In the meantime, though, the disease exacts a steep emotional and economic cost – one that extends far beyond patients and their families. Over $236 billion was spent on hos- pice, home care and long-term care for the needs of those suffering from some form of dementia, according to the 2016 Alzheimer’s Disease Facts and Fig- ures report, published by the Alzheim- Searching for the er’s Association. And that’s just half the story. The $236 billion figure only counts what was billed. Key to Alzheimer’s Unpaid caregivers, family members and vol- unteers provide the clear majority, about 83 per- Bari Lewis, No effective treatment yet, but Kentucky researchers director of cent, of care to patients commun- are helping unravel its pathology with dementia, said Bari ications and Lewis, director of com- advocacy, munications and advo- Greater BY JOSH SHEPHERD cacy for the Greater Kentucky and Kentucky and Southern Southern Indiana chapter of the Indiana PTIMISM is hard to mus- director of Telemedicine Cognitive Alzheimer’s Association. Chapter, ter in the face of recent Clinic, have dedicated their professional Nationally, in 2015, Alzheimer’s Association statistics on dementia in careers to dementia research, provider unpaid caregivers pro- Kentucky – particularly and caregiver education, and clinical vided approximately 18.1 Alzheimer’s disease – but treatment of patients with dementia. billion hours of assistance to people Osome sense that slow progress is occur- At the start of our discussion, both with dementia. In economic terms, it ring emerges from a pair of researchers doctors stressed two critical points: was a contribution of over $221 billion who each have over three decades of • Problems in thinking and memory in unpaid care. For perspective, the experience in the field. loss are not normal facets of aging. Alzheimer’s Association said the Linda J. Van Eldik, Ph.D., director of • Alzheimer’s disease is not the only amount of unpaid care in the United the Sanders-Brown Center on Aging form of dementia affecting people in States was about “47 percent of the net (SBCoA) and the UK Alzheimer’s Dis- Kentucky. value of Walmart sales ($473.1 billion) ease Center (UK-ADC), and Greg Jicha, Alzheimer’s is the most prevalent, and eight times the total revenue of M.D., Ph.D., a clinical neurologist at but there are other forms of memory McDonald’s restaurants ($27.4 billion) UK, co-director of the UK-ADC and loss. Some problems are attributable to in 2014.”

28 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 28 3/4/17 10:01 AM Research trial information For detailed information about dementia and the research trials being conducted to fight the disease, visit the Sanders-Brown Center on Aging website at uky.edu/coa/. The Alzheimer Association website is also an invaluable resource for information about the disease. Visit them at alz.org/dementia/ types-of-dementia.asp.

In Kentucky, the numbers are similar. The estimated hours of unpaid caregiving in the Bluegrass state affect 270,000 peo- ple, not including patients. Those people provide about 307 million hours in unpaid care at an estimated worth of over $3.7 bil- lion. Add an extra $166 million in overall added healthcare expenses, job and wage losses to provide care, and reduction in available workforce. the health of their brain. It’s given the Dr. Greg Jicha, director of the UK Telemedicine There has been a decline in Ken- center an incredible amount of data Cognitive Clinic at the Sanders-Brown Center on regarding the cognitive health of a strat- Aging, watches a remote patient perform an tuckians diagnosed with some form of exercise to assess brain function. dementia in recent years, Van Eldik ified population of individuals. Mem- added, but the patient population hov- bers of this cohort cover a wide ers between 68,000 and 80,000 adults. demographic involving several genera- tions, including some children of for- 32nd year of NIH funding at UK mer volunteers, Van Eldik said. than others. Researchers do know that The UK Alzheimer’s Disease Center at “Sanders-Brown is blessed with an the brain has incredible “plasticity,” SBCoA is entering its 32nd year of con- amazing population of volunteers for constantly building networks of neural tinuous research funding from the our cohort and other independent pathways to process the constant bar- National Institutes of Health. It is one of research trials. Following them for over rage of information it receives. the first Alzheimer’s centers to be NIH- 30 years has given us a ton of data on Throughout its life, even into old age, funded and remains one of eight cen- people whose brains remained cogni- the brain can develop multiple new ters in the United States to continue tively healthy their entire lives, others pathways that can, if necessary, operate receiving funding. In fact, last Septem- who developed some level of cognitive like built-in redundancies. ber, NIH renewed its long association impairment, and some who developed Those who demonstrate cognitive with the UK-ADC with a five-year, $8.25 Alzheimer’s Disease or some other form reserve may have developed a dense million grant to continue its research of dementia.” network of pathways, Van Eldik and clinical initiatives. The accumulated research from explained, so that when Alzheimer’s One of the keystones of UK-ADC’s SBCoA and the other national research manifests and begins destroying brain NIH research is an ongoing longitudi- centers has not found a consistently cells, the other pathways can compen- nal study of about 800 volunteers. These effective treatment for the disease but sate. This hypothesis is one of many people annually undergo extensive neu- has enabled specialists to recognize the being studied in research trials ongoing ral imaging, donate spinal fluid and par- pathology of Alzheimer’s and to study at SBCoA. ticipate in a battery of exams to track individuals whose brains appear to be Being resistant, however, does not resistant to the disease. mean people are immune. Even in cases “We can see the pathology in a per- of cognitive resilience, there comes a son’s brain and identify the specific neu- point where patients enter a period of ral breakdown that is occurring, even if decline that’s often very rapid. For those we haven’t yet figured out how to stop who cannot tolerate the disease’s or reverse it,” Van Eldik said. pathology, though, the process of Intriguingly, some patients in the decline tends to be a steady accumula- longitudinal study develop the pathol- tion of problems. It can go on 10 to 15 ogy of Alzheimer’s but manage to main- years, Van Eldik said. tain normal memory and thought And it is this steady decline that tends processes for years. Van Eldik describes to wreak the most havoc on families. these patients as having what she termed a “cognitive reserve” or resil- Telemedicine expands access to specialists ience to the disease. Others were pro- “There is a changing consciousness in foundly affected by the exact same stage America about aging people,” Jicha said of the disease. in the breakroom of the clinical offices Researchers don’t know why one of the SBCoA in Lexington. brain is resistant and another is not. As more Kentucky families experi- Dr. Greg Jicha conducted research that validated One thought is that persons with ence life as caregivers for dementia the usefulness of telemedicine systems in assessing cognitive reserve may have developed a patients, there is an increasing emphasis the cognitive function of patients. larger number of neural connections on locating support services, Jicha said,

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March Lane 23-52.indd 29 3/4/17 10:01 AM HEALTHCARE SERVICES

but they often come up empty-handed in their own small communities and have to seek out services elsewhere. The increasing desire for convenient access to local services is limited by fiscal realities. Aside from the concentrations of people in Louisville, Northern Ken- tucky and Lexington, Kentucky’s popu- lation is sparsely distributed, which makes specialized local care in smaller communities difficult for healthcare sys- tems to provide. The UK Telemedicine Cognitive Clinic represents a major innovation in clinical outreach, which the SBCoA pio- neered a little more than decade ago. “We in Kentucky need to think dif- ferently about how we can provide access to highly specialized health and support services to the population,” Jicha said. “Telemedicine has given UK leverage to provide people across the state access to medical specialists and still manage costs in terms of needed capital to maintain those programs, sup- port services, and providers in highly specialized fields.” At the time that Jicha became involved in telemedicine, there was no model on which to build a Telemedi- cine Memory Clinic. Jicha’s research team was awarded a grant to validate the easily translated to other research and ley, an RN whose mother- use of telemedicine to conduct cogni- clinical services in cardiac care, arthritis in-law, Mary Lois “Bingo” tive assessments of patients versus in- and other conditions,” Jicha said. Horsley, was UK telemed- person interviews. icine service’s pilot The results of these studies allowed Caregiver networks and education patient in 2005. the research team to definitively con- Perhaps more than any Videoconferencing has clude that memory evaluation was other disease, dementia expanded into continuing strikes broader and harder medical education pro- Mary equally valid through telemedicine as Horsley personal office contact. In two outlying on caregivers than trained grams for professionals at examples, a patient and their family professionals. When it long-term care facilities. A were even more honest in a telemedi- comes to serving Kentucky further educational initiative application cine setting. It was not enough data to patients with dementia, is being explored for first responders and draw a definitive conclusion, but Jicha telemedicine’s powerful Greg Jicha, community leaders to develop “dementia- feels there are times when telemedi- and expanding videocon- M.D., Co- friendly communities,” said Bari Lewis of cine’s distance enables people to be ferencing capabilities could Director, UK the Alzheimer’s Association. more honest than visiting the clinic – be considered its most Alzheimer’s important innovation. Disease Center; Future opportunities for growth being in a home setting may be a factor. Director, The important outcome, though, is Sanders-Brown, in asso- Telemedicine in the private sector that the study confirmed the validity of ciation with the Alzheim- Cognitive “We are living in a society where there is a telemedicine encounters, he said, and er’s Association, uses Clinic dichotomous split. If one is solely depen- enabled Jicha to expand the reach of his videoconferencing to host dent upon Medicare or Medicaid, the clinical work to outlying areas of Ken- four major statewide training sessions for availability of private-sector resources to tucky. On a given day, he can conduct caregivers each year. The quarterly ses- help care for patients with Alzheimer’s is appointments for patients in Lexington sions enable specialists to update families quite expensive,” Dr. Jicha said. There are and remote clinical assessments of across Kentucky on research and advice nursing facilities especially designed for patients from Calloway to Menifee on care, but some think the most impor- persons with dementia. They have resort- County. Neither he nor his patients tant aspect is the time allotted to families like features, but they can cost upwards of spend costly hours traveling, and to relate stories, shared insights and per- $5,000 to $10,000 a month, which is more patients gain the convenience, at a criti- sonal experiences. than the average family can afford. cal time in their lives, to access reliable “Though I had experience as a Hospice and home care services are care while in a place where they are nurse, I was frequently challenged by growing to meet the rising demand. In most comfortable. my mother-in-law’s needs. These educa- terms of home health services and trans- “Another novel development of the tional sessions, combined with our portation, Kentucky is growing more study is that our results were transla- community support network, gave me and more sophisticated all the time, tional to other spheres of clinical ser- some practical feedback and let me Jicha said. But one area has not been vice. What we do for memory can be know I was not alone,” said Mary Hors- nearly as well developed.

30 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 30 3/4/17 10:01 AM In the realm of specialized technol- to live in their homes or with their fami- million “Part the Cloud” grant to test a ogy for folks in the early stages of lies longer. But it’s a market where drug that may reduce brain inflammation. dementia, Kentucky is “behind the demand is not being met with the same Van Eldik is optimistic a balance of medi- ball,” even though the means to pro- vigor as other areas of medical device cations targeting symptoms can be formu- duce these devices exists, Jicha said. development. It’s only constrained by lated to help slow the progress or even These devices can help people the imagination of what an aging popu- temporarily halt pathology. remain in their homes for longer peri- lation may need,” Jicha said. “There are estimates that if the onset of ods of time, which is becoming more symptoms can be delayed through medi- important with each passing year. There Hope for the future cations or other treatments for just five are badges people can wear or that can While lack of effective treatments for years, it could cut the rate of incidence for be sewn into clothing that would allow dementia persists, there are plenty of dementia in half. Eventually, we would like for improved GPS tracking should a ways to measure progress. Decades into to find a cure, but if we could just find loved one wander off. Automated pill the fight against the disease, Jicha and something to delay onset, that would be dispensers which, in the latter stages of Van Eldik say growing education and tremendous,” Van Eldik said. the disease, can be programmed, caregiver experience is helping society Developing an effective combination alarmed, and timed to reduce the inci- becoming more sophisticated in dealing approach is going to demand a lot more dence of medication errors. Phones with it. Families with Alzheimer’s investment in research, but Van Eldik with pictures and pre-programmed patient experience are talking openly said federal, state and private funding numbers are available but don’t have with and passing knowledge to others for research into Alzheimer’s disease widespread distribution. whose journey is beginning. and dementia has increased, particu- GPS devices to help people with mild Alzheimer’s is complex and differs larly in the last decade. cognitive impairment re-orient them- from patient to patient. At this stage in Although money spent on cancer or selves to their location would reduce clinical research, Van Eldik said, there is HIV research still dwarfs funding for some unnecessary moments of stress a growing consensus among colleagues Alzheimer’s research, she said, “a little and fear, he continued. that no single silver bullet will be found. goes a long, long way. There is a huge “There is an estimated population of The prevailing sentiment is that success- return on investment. Discoveries about some 1.5 million people over the age of ful treatment might be found in a medi- the disease are being made at an 65. A percentage of them will develop cation “cocktail” such as has proven increasing rate.” ■ some level of cognitive impairment. effective with HIV patients. There is a tremendous market out there The Alzheimer’s Association awarded Josh Shepherd is a correspondent for The Lane Report. for anything that will permit individuals Van Eldik’s research team a two-year, $1 He can be reached at [email protected].

March Lane 23-52.indd 31 3/4/17 10:01 AM TOURISM

The small city of Hopkinsville in Western Kentucky will be the best place on the earth to view the Aug. 21, 2017 total solar eclipse. It will be the first total solar eclipse in the continental United States in 38 years, and the first time in 99 years that a total eclipse will be viewable by people from coast to coast.

What is a solar eclipse? Solar eclipses occur when the moon’s orbit brings it between Earth and the sun, during the new moon phase, and its shadow is cast onto Earth. These are a happy mathematical accident of nature. The sun’s 864,000-mile diameter is fully 400 times greater than that of our puny moon, which measures just 2,160 miles across. But the moon also happens to be about 400 times closer to Earth than the sun (the ratio varies as both orbits are elliptical), and as a result, when the orbital planes intersect and the distances align favorably, the new moon can appear to completely blot out the disk of the sun. On average, a total eclipse occurs somewhere on Earth about every 18 months.— From eclipseville.com

Hopkinsville is not only located along the path of totality, it is where the center axis of the moon’s shadow passes closest to the earth. That means specta- Solar Eclipse Puts tors in Hopkinsville will have the best and longest view of a full 360-degree solar corona – the gaseous white spray of energy that is always pouring from Spotlight on Tourism the surface of the sun but visible on Earth only when the moon completely blocks out the star in the center of the solar system. Hopkinsville, the center of August’s total eclipse, With a totality duration of 2 minutes has spent a decade preparing for the event and 40 seconds, NASA has designated Hop- BY LORIE HAILEY kinsville as “the point of greatest eclipse.” Thousands of people, from the sim- ply curious to professional sun scien- N 2007, Hopkinsville Tourism you can’t be totally sure, so that’s why I tists, will flock to Hopkinsville to catch Director Cheryl Cook received an answered (the email) as politely as I could.” the best glimpse of a rare celestial email that she thought might be a Afterward, however, Cook went event. If the city didn’t prepare for the prank. It said that online to research the 2017 eclipse and influx of visitors, it could be disastrous, Hopkinsville, a West- discovered “what a big deal” it would be, Cook realized. Additionally, it pre- Iern Kentucky city with she said. sented a perfect opportunity to show- about 33,000 residents, On Monday, Aug. 21, 2017, at 1:24:41 case all that the town had to offer. would be the world’s best p.m., a total solar eclipse will be visible place to view the 2017 total along a path from Salem, Oregon, to Preparing for the unknown solar eclipse, and asked if Charleston, S.C. A large part of North Armed with details of the decade-in- the city had started plan- Cheryl Cook, America will be able to view the eclipse the-future “Great American Eclipse,” ning for it. Tourism in its partial phases, but only the cities Cook got to work. She started discuss- “I didn’t know anything Director, City in its narrow path of totality will see the ing it in meetings with community about it, so I was very nice of Hopkinsville moon appear to completely cover the groups, she put an eclipse countdown and polite and said we don’t usually work sun. It will be the first total solar eclipse counter on the city’s websites, started a 10 years out, we work more like five years in the continental United States in 38 Facebook page, attended eclipse con- out,” Cook said. “I have a lot of friends in years, and the first time in 99 years that ferences, and participated in interviews the tourism business … We play a little a total eclipse will be viewable by people with newspapers and the Associated prank on each other now and then. But from coast to coast. Press.

32 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 32 3/4/17 10:01 AM The countdown is on for the August 2017 Total Solar Eclipse and western Kentucky’s State Resort Parks are the place to be! View this rare astronomical event and utilize the accommodations or camp sites offered at:

Learn more about the eclipse at kentuckytourism.com/eclipse/ and be a part of the most exciting two minutes and 40 seconds in 2017, the exact instant when the axis of the Moon’s shadow passes closest to the center of Earth!

March Lane 23-52.indd 33 3/4/17 10:01 AM TOURISM

Above: The City of Hopkinsville has purchased Logistical committees are working approximately 200,000 pairs of dark glasses for with the city’s safety and transportation viewing the total solar eclipse. It is dangerous to departments to make sure everyone is view the sun during the stages of eclipse without protective eyewear. able to make it safely around town dur- ing the events. Local police, fire and Left: Hopkinsville Tourism Director Cheryl Cook EMS units will be on hand to assist, as and Tab Brockman, superintendent of Hopkinsville will Kentucky State Police. Parks & Recreation, show off the city’s Solar Eclipse vanity plates. What about the streetlights? One very important piece of the puzzle is the local utility companies, Jung said. “We’re working with our utility compa- Figuring out the logistics nies to make sure the (street) lights don’t Last fall, the City of Hop- come on during the eclipse,” she said. “We kinsville hired Brooke need to make sure our light pollution Jung as its full-time doesn’t interfere with anyone’s viewing eclipse coordinator. Jung experience.” has worked in event plan- The city anticipates that many eclipse As the news spread, “we started getting ning for Churchill viewers will come to town the weekend more and more emails from people want- Downs, the Louisville Brooke Jung, before the eclipse. There are five major ing to get a hotel room,” Cook said. Convention and Visitors Eclipse hotels/motels in Hopkinsville, and most Coordinator, Tasked with educating the commu- Bureau, and several other of them are booking three-night mini- nity, marketing the city as the best place City of organizations. She hit the Hopkinsville mums. As of mid-February, there was to view the eclipse, and planning com- ground running, and about 50 percent availability at those estab- plementary events, Cook turned to hasn’t stopped yet. After four weeks on lishments, Jung said. “eclipse chasers” for information about the job, she had launched a website – Justin Whitehair, general manager of what to expect. While it is difficult to eclipseville.com – and conducted a com- the Comfort Suites in Hopkinsville, said know exactly how many people will munity forum. he has received inquiries from eclipse come to Hopkinsville to see the eclipse, “People had so many questions,” she enthusiasts since at least 2012, but most estimates range from 50,000 to 200,000 said. “And as much as we want this to be local hotels didn’t start booking rooms people. an incredible event for our visitors, we until late 2015 and early 2016. Comfort Eclipse chaser Dan McGlaun, a project also want it to be a great event for our manager for a Fortune 500 company, has residents.” seen 12 total eclipses. He has visited Hop- Jung’s next task was finding a way to kinsville multiple times to share his knowl- accommodate thousands of visitors. edge of how other communities have “There are a lot of logistical pieces handled these kinds of events. that go into this when you’re talking “He talked about things we probably about fitting 50,000 people into a city ought to have in stock, lots of water, sun- of about 30,000 people and county of screen, and little white plastic chairs about 70,000. We’re essentially tripling because a lot of people will be flying in the city population,” Jung said. “It’s and they’ll need something to sit on going to be incredible that we’re able while they’re watching,” Cook said. to welcome all of these people to town, One of the most important items, she but we want to make sure we’re ready said, is dark glasses for viewing the eclipse. for them.” “Everything we’ve heard is you never have enough glasses,” she said. Cook has already ordered and sold about 100,000 pairs of eclipse glasses, mostly to local businesses and indus- tries. She has about 100,000 more on hand to sell in August to attendees. (Glow-in-the-dark T-shirts and eclipse Solar eclipse coordinator Brooke Jung and Fred Espenak, a world-renowned eclipse chaser, vanity plates are also available.) try out the city’s eclipse glasses.

34 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 34 3/4/17 10:01 AM Other Western Kentucky sites to see the total eclipse Hopkinsville is not the only Kentucky city that will be able to view the total eclipse. Adairville, Calvert City, Dawson Springs, Eddyville, Franklin, Lake Barkley, Madison- ville, Paducah and Princeton are all located on the path of totality, as well as several other small communities. Nearby cities will be able to view partial phases of the eclipse. Learn more at eclipse2017.nasa.gov.

Suites has received calls from potential guests as far away as Australia, China, Japan and the United Kingdom, White- hair said. Anticipating the need for additional lodging, the city created new primitive campsites in four prime eclipse-viewing vehicle parking space is available at the Tie Breaker Family Aquatic Center in Hopkinsville is locations. city’s Trail of Tears Park. Reservations just one of the many attractions sure to benefit from an “It’s a great space, 15- by 20-foot spaces for most of these spaces can be made influx of eclipse visitors. It features a twisting tube, lazy with shower and restroom facilities onsite. online, which is important when deal- river, and splash interactive playground. And really, we’re creating small villages,” ing with guests who may be coming Jung said. “There will be food vendors and from other countries, Jung said. shuttle transportation to take folks to dif- Special eclipse viewing areas have been with big heads and long arms with eyes ferent events happening throughout the set up in the DeBow Recreation Complex and hands out of proportion to their small community.” and Western Hills Golf Course. bodies.” It was documented in the local The idea of camping under the stars newspaper with photos and a lengthy to view the eclipse will be appealing to Out of this world entertainment story, which said investigating officers eclipse enthusiasts and first-time viewers Visitors arriving early will have plenty to could not find anything to prove or dis- alike, she said. see and do in Hopkinsville. More than 15 prove the family’s story. Some Hopkinsville residents and events – including a three-day music festi- “It’s on the national register of UFO businesses plan to rent their properties val and EclipseCon, a comic-themed event events,” Jung said. “It is believed that ‘ET’ to visitors, Jung said, and recreational with nods to sci-fi and pop culture icons – is loosely based on what happened there.” are scheduled the weekend before the The Kelly community has kept the eclipse. (To see the full list, visit eclipse- story alive by each year hosting the Little ville.com.) The city also expects its local Green Men Festival, a three-day family attractions, including two bourbon distill- event featuring music, vendors, non-profit eries, to get ample traffic in the days lead- booths, and lots of food and souvenirs. ing up to the eclipse. The fact that the 2017 total solar Lovers of sci-fi won’t want to miss the eclipse will occur on the anniversary of Kelly Little Green Men Festival, Aug. the little green men sighting has been 18-21. It celebrates the 62nd anniversary fun for eclipse event planners. of the day that aliens are said to have “It really gave me cold chills when I landed in Kelly, Ky., a community just saw the date,” Cook said. north of Hopkinsville – coincidentally “Now, we’re just waiting to see if the the same day as the 2017 eclipse, Aug. little green men come back,” she said 21. The well-documented event is a fun with a laugh. “I like to joke and say they piece of local folklore. were here in 1955 looking for where On Aug. 21, 1955, a family in Kelly they want to set up to see the eclipse.” ■ Hopkinsville is rich in history and outdoor beauty. claimed a spaceship with aliens had Shown here is the town clock, framed by beautiful landed near their home and “battled” with dogwood trees. Lorie Hailey is a correspondent for The Lane Report. them. They were described as “little men She can be reached at [email protected].

Plan a weekend of family fun for this once in a lifetime experience.

877-243-5280 visitmadisonvilleky.com/eclipse 270-821-4171 We’re located just minutes from the point Hopkins County Tourist and of greatest eclipse. Convention Commission

March Lane 23-52.indd 35 3/4/17 10:01 AM FINANCIAL SERVICES

John Peek, left, loan officer at the Stanford branch of Ag Credit, speaks with Patrick Higginbotham of Fayette County about Higginbotham’s horse boarding operation.

rison, Jessamine, Lincoln, Madison, Marion, Mercer, Montgomery, Scott, Washington and Woodford. It is part of the federal Farm Credit System, estab- lished in 1916 to provide a reliable source of credit to the nation’s farmers. At least four other Farm Credit Sys- tem co-op lenders serve portions of Kentucky: River Valley Ag Credit oper- ates in Western Kentucky and 12 coun- ties in Tennessee; Farm Credit Mid-America serves Indiana, Ohio, Ken- tucky and Tennessee; CoBank, a national co-op that serves industries in rural America, has offices in Louisville; and Colorado-based FCC Services has a secondary headquarters in Louisville. Ag Credit’s average loan is $90,000. Small loans usually get same-day approval while larger complex loans require several days to gather and ana- lyze financial and property information. Nationally the system now provides more than one-third of the credit needed by those who live and work in Keeping Kentucky rural America. With more than $61 bil- lion in loans to more than 500,000 bor- rowers, the Farm Credit System is the largest single producer of U.S. agricultural credit. Ag Well Rooted “We provide a strong, steady and reliable source of credit for agriculture. We are mandated to do it Co-op lenders finance a third of farm and we will be there operations, then share the profits through all the cycles,” said Jim Caldwell, Jim Caldwell, Ag Credit President/CEO, president and CEO. “Agri- Central culture is a very risky busi- Kentucky BY LORIE HAILEY Ag Credit ness because of all of the unknowns that affect the farmer, the weather being the first and foremost, but N the 1980s, with one purpose: to provide loans to also things like the commodity cycle, gov- Georgetown, Ky., farmers. He’s been a customer there ernment programs [going] in and out … farmer Alvin Lyons ever since, and now serves as chairman even the strength of the dollar overseas faced a dilemma. of the co-op’s board of directors. impacts agriculture.” It was time to Ag Credit’s customer service, rates Istart his spring planting, and agricultural expertise kept him but the commercial bank Alvin Lyons, coming back, but the co-op’s consis- he had been using had Board tency is what remains most important, repeatedly stalled his Chairman, Lyons said. loan applications. The Central “They’re there for ag all the time, early ’80s were a tumultu- Kentucky not just when it’s a good market,” he ous time for the ag mar- Ag Credit said. “They’re there every year, not in ket: Nationwide, farm and out of the market like some of the income dropped from the equivalent of other (lending institutions).” $80 billion in today’s dollars, to about With 43 employees and an annual $25 billion. Farm loans often were per- operating budget of $7 million, Ag ceived as a risky investment. Credit has nearly $450 million in assets To get the funds he needed, Lyons – mostly loans – and serves 17 Kentucky turned to Central Kentucky Ag Credit, a counties: Anderson, Bourbon, Boyle, Alvina Maynard gives Ag Credit loan officer Chris cooperative lender established in 1934 Clark, Fayette, Franklin, Garrard, Har- Cooper a tour of her Madison County alpaca farm.

36 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 36 3/4/17 10:01 AM Ben Robin, left, loan officer at Ag Credit’s Paris branch, visits with co-op member-borrower John Sparks at his farm in Bourbon County.

Because Ag Credit exists to serve farmers despite agriculture’s cyclical nature, farmers have come to depend upon the lender in good times and in bad. The association provides small and large loans for equipment, farmland purchases, agriculture-related busi- nesses, ag processing and marketing, livestock, and other farm-related needs. It serves the whole spectrum of farm operations, from the small part-time farmer who needs to buy a tractor, to a large farming operation that needs to “It’s a very important part of what we There are a lot of part-time farmers in purchase land for cattle ranching. do,” Lyons said. “When the association Central Kentucky, but agriculture is “still Ag Credit also lends to rural resi- is successful and we make money, that pretty solid in our area,” Caldwell said. dents and agriculture-related businesses goes back to the members. It’s a 100 Young and beginning farmers repre- in its service area. percent cash payout.” sent a growing segment of Ag Credit’s The co-op employs experienced Ag Credit is governed by a board of business. Young farmers are defined as rural property appraisers, and it pro- directors comprised of five farmers age 35 and younger; beginning farmers vides free financial planning assistance elected by owner/members, and two are those with 10 or fewer years in farm- to its members. It offers other financial outside appointed directors – Dr. Lionel ing, ranching or aquatic agriculture services, such as revolving lines of Williamson, a retired professor at the experience. credit, which is what Lyons uses for his University of Kentucky College of Agri- “It’s not as difficult to get started now nearly 2,000-acre diversified farm. culture, and Mary-Lynn Hinkel of the as it was 10 years ago,” he said. “A lot of banks offer revolving lines,” CPA firm Barr, Anderson & Roberts. Good crop prices from 2008 to 2014 Lyons said, “but the agricultural exper- Each board member has an equal say in – when Kentucky farm cash receipts hit tise that you get at Ag Credit … no bank the governing body of the association. a record $6.5 billion – and lower land can offer that.” To be elected to the board, one must values after the stock market crashed in Ag Credit is not the only farm lender in be a farmer and a customer of Ag Credit. 2008 helped make it possible for more Kentucky, but what makes it unique is its young farmers to buy land and get cooperative structure and governance. Ag ‘still solid’ in Central Kentucky started, Caldwell said. Because it is a co-op, its 2,600 members The association is active in the farming “Before the stock market crashed, share in the profits. Ag Credit calls it community, and continually searches you saw a lot of Central Kentucky farms “patronage refunds,” and this year alone, for ways to better provide for Kentucky’s being developed for home sites, and it the co-op will return nearly $3 million to changing agricultural landscape. From was really hard for the farmers to get its customer-farmers, an average of $1,100 the number and types of farms to the out there and buy land,” he said. each, Caldwell said. technology and machinery used on To make sure the co-op is meeting the “Of our profits, our board decides them, farming is much different in 2017 needs of the young farmer, it recently what we need for the future and then than it was just 20 or 30 years ago. established the Young Farmers Council to they’ll declare a patronage dividend. The number of farms in the com- advise the board. The council has a mem- We’ve declared one for the past 20 monwealth has dropped by about 30 ber from each of the 17 counties. The years,” he said. percent since 1978, down to about council is assisting Ag Credit with a new The co-op has issued more than $22 76,000 operations, but Kentucky still educational initiative called Central Ken- million in patronage refunds since the ranks sixth in the nation in the number tucky Ag Start, which will help beginner program began. of farms. farmers and those interested in learning “There’s been a great more about how to get started. deal of consolidation,” “The council is a great resource for Lyons said. “There are us, and we rely heavily on them,” not too many mid-size Caldwell said. farms now. You either The association’s goal is to provide have a big farm or you affordable, convenient and reliable finan- farm more as a ‘hobby’ ” cial services that cater to the unique needs – meaning the house- of farmers and rural families, he said. hold does not rely on Ag Credit has branches in Lexing- agribusiness income to ton, Richmond, Paris, Lebanon, Dan- survive. ville and Stanford. In December, the More than 57 per- co-op opened a new branch in Frank- cent of Kentucky’s fort to better serve farmers and rural farms had annual sales residents in Franklin and Anderson Central Kentucky Ag Credit’s Board of Directors, shown here, is of less than $10,000 in counties. ■ comprised of five farmer members and two outside appointees. In the front row, from left, are Chairman Alvin Lyons and Vice Chair Jim Rankin III. 2014, according to the In the back row are Jerry Rankin, Joe Myers, Dr. Lionel Williamson, Jim National Agricultural Lorie Hailey is a correspondent for The Lane Report. May and Mary-Lynn Hinkel. Statistics Service. She can be reached at [email protected].

THE LANE REPORT • LANEREPORT.COM MARCH 2017 37

March Lane 23-52.indd 37 3/4/17 10:01 AM BANKING OUTLOOK

and business activity have brought banks more loan demand and fewer problem loans. However, pressure on our net inter- est margin will continue as long as the Fed continues to hold interest rates low.”

“Rising rates signal that our economy is heading in a positive direction in 2017 and this is great news for businesses and consumers. Growing con- fidence could encourage William “Bill” J. projects and expansion Jones which is good for every- Division one. Technology plays a Manager, large role in how custom- U.S. Bank ers are interacting with money. It’s an exciting period in payments history and U.S. Bank is a leader in the field with P2P (person to person) payments. We will continue to see new technologies come into play in 2017 and we are committed to growing our relationships with Fin- tech companies.”

“Business optimism has risen significantly in the past few months. For the first time since the reces- sion, the majority of busi- nesses are planning to expand their workforces Improving Economy Paul Costel and make new capital Region investments. However, Manager, JPMorgan what we hear from our Chase clients is that as busi- Bodes Well for Banking nesses look to invest and expand, most are having trouble find- Business borrowing is rising and Fed rate hikes ing skilled workers. So, for the past few years JPMorgan Chase has given nearly create space for better loan profits $3 million to support the workforce development efforts of the state, the Kentucky Chamber and education lead- ENTUCKY banks expect “The national and Ken- ers throughout Kentucky. Helping peo- distinct improvement in tucky economy improved ple develop their skill set to meet the 2017. Business confidence in 2016, and should be demands of the workplace results in is improving, enough that stronger in 2017. However, greater success for individuals, our busi- many are at last making Kentucky’s improvement nesses and our communities.” Kinvestments to meet the growing was regionalized: weak demand they expect – after having conditions continue in “We see positive indicators Jean R. stood still for five to 10 years. And Hale east and northeast Ken- for the U.S. economy in there’s good news from Washington, Chairman, tucky due to loss of jobs 2017, including projected where the Federal Reserve has sug- President and employment opportu- tax reform, infrastructure gested three baseline interest-rate and CEO, nities. Workforce retrain- investment, higher GDP increases this year that would give com- Community ing is underway, but growth, stronger con- munity bankers some “spread” with Trust Bancorp opportunities must occur sumer confidence and a Inc. Thomas F. which to make better profits on their for significant change in Eller Jr. strengthening labor mar- loans. Also, Congress and the new presi- economic conditions. For Regional ket. Our clients are mak- dential administration strongly support our nation and state, 2017 is expected to President, ing equipment and reforms in banking regulations that be a year of change. Significant change is BB&T personnel investments have steeply raised compliance costs for proposed in tax structure, healthcare, after being on the side- banks and made it difficult to qualify trade and the regulatory environment. lines for five to 10 years. While Kentucky borrowers. Housing demand is The extent and impact remains unknown, will lag the robust growth of major U.S. expected to drive more construction but there is optimism in the business com- markets, we expect commonwealth com- and increased mortgage lending. munity. Improvements in unemployment panies to push toward solid growth, espe-

38 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

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March Lane 23-52.indd 39 3/4/17 10:01 AM BANKING OUTLOOK

cially in the manufacturing, construction, healthcare and automotive sectors. Busi- nesses are expanding and advance tech- nologies are being developed here, bringing prominence to the common- wealth. Interest-rate hikes and possible Dodd-Frank regulations relief will likely bolster financial services performance, specifically banking. Banks will make more technology investments to enhance customer experience, are eager to lend to creditworthy borrowers and ready to help drive economic success.”

The economic outlook for Kentucky continues to show signs of improve- ment. We’ve seen steady growth across numerous segments, including com- mercial real estate, small Tucker business, consumer and Ballinger residential lending. It’s President/CEO, Forcht Bank widely expected the Fed- eral Reserve will continue its path of increasing rates in 2017. As rates continue to rise, the opportunity for residential refinances will decline, but we anticipate demand for new homes to increase, leading us into a strong purchase market. We are opti- mistic that with new government leader- “Lexington’s economy is to grow our market share relative to com- ship, regulations currently hindering on sound footing for mercial banking, providing relationship- the banking industry’s growth will ease, 2017 with strong local based solutions that serve the unique creating an environment for banks to consumer spending and needs of businesses in the Bluegrass. Ken- invest more in their products and ser- stability in employ- tucky’s community banks have adapted vices, thus providing more options for ment. Education and well to the current financial climate, set- ting the stage for healthy growth on the businesses and consumers. Overall, we John healthcare continue to are excited for what 2017 holds for Gohmann be reliable growth driv- lending front and allowing us to continue Forcht Bank and the commonwealth.” Regional ers making the biggest to serve the developmental needs of our President contribution to employ- local communities – which is always a top “Kentucky’s economy will Lexington ment growth in 2016. priority for our bank.” continue its slow-growth Market, The University of Ken- recovery in 2017. Modest PNC Bank tucky will contribute to “City National Bank had growth will be likely, the region’s stability and an excellent 2016. A $4 mostly in the “Golden Tri- will support economic growth by sup- billion publicly traded angle” of Central and plying educated workers. About 36 per- company with 85 offices in Northern Kentucky and cent of the area’s adults hold at least a Kentucky, West Virginia, Luther Louisville. I believe four-year degree compared to 31 per- Virginia and Ohio, City Deaton Jr. employment will cent nationally. Higher educational celebrated its first year in Chairman, Bill Central Kentucky and saw President and improve, but we are not attainment increases Lexington’s Craycraft CEO, Central creating enough middle- chances of attracting diverse, high- Market growth in commercial and Bancshares income jobs to improve wage employment.” President, City retail lending. City has a Inc. household income for National Bank very positive outlook for the majority of our citi- “As we move into the 2017 and expects strong zens. Consumer spending has improved eighth year following the loan growth across the board in Central some but has been inconsistent. We are financial crisis, community Kentucky’s diversified and growing econ- seeing modest housing growth, mostly banking is going strong. omy. Lexington’s hot housing market is from sales of existing homes, due to a Even in the midst of heavy the best we’ve seen in years, and our lack of available land. Apartment con- regulation, mortgage lend- mortgage portfolio puts us in a great struction has been very strong as ing has expanded over the position to serve greater Lexington. We younger consumers are choosing that Bill past 12 months. By increas- have had great success with our Cham- option instead. The soft economy is Alverson ing our tolerance for regu- pion Mortgage that has no down pay- making our banking environment Chief Executive latory costs and embracing ment, no private mortgage insurance, Officer, low closing costs and low interest rate extremely competitive as community Traditional technologies that serve the banks seek to address consumer and Bank needs of our clients, Tradi- options. 2017 should be a great year for business opportunities.” tional Bank has been able the Bluegrass.”

40 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 40 3/4/17 10:01 AM “The 2016 economy in 2017. Unemployment continues to mism and signs we believe make Central ended well, and PNC hover around 4.8 percent, and we Kentucky a solid marketplace for the expects Louisville to set- expect it to remain close to that foreseeable future.” tle into its long-term throughout the year. The Federal growth rate in 2017. Reserve may increase short-term rates “The economy in early With a tight labor market two or three more times in 2017. 2016 suffered from weak and favorable mix of jobs Depending on how often those take investment in the oil sec- Chuck Denny being created, we expect place, we are likely to see an increase tor, a contraction in Regional wage growth to increase. in interest rates both for commercial manufacturing and the President E-commerce is playing and consumer purposes. Kentucky aftermath of rapid rise Greater an increasingly impor- Bank is fortunate to be in 10 stable or of the dollar; all those Louisville and tant role in retail, which growing markets, which have allowed Mike Ash weights by the second Tennessee, is a boon for local trans- us to grow as we provide needed finan- Kentucky half, lifted creating PNC Bank Regional portation firms. Our cial services.” President, momentum for 2017 economy’s success in the Fifth Third throughout Kentucky years to come will be credited to its “The sustained growth of Bank and the nation. The diverse industrial base of a wide array Central Kentucky’s diver- election results built on of large, successful employers from sified service economy that momentum with the prospect of auto manufacturing to education and was a strong factor in pro-growth fiscal and regulatory poli- professional services.” influencing Old National cies. Most of the potential policies will Bank to expand our suc- accelerate growth from a three- to five- “The U.S. economy is on cessful Louisville and year perspective. Even without legisla- firmer footing than in Scott Western Kentucky fran- tive change, many regulatory burdens Cvengros chises. We believe health- prior years. The same Central on growth can be eased in the energy can be said of local econ- Kentucky care and education will and financial sectors. Pro-growth initia- omies in the markets Market continue to provide a sta- tives such as tax reform, repatriation of Kentucky Bank serves. President, Old bilizing effect on the overseas profits, and infrastructure Central Kentucky contin- National Bank region’s economy. The spending will likely improve business Louis ues to be stable with recent expansion at Toy- confidence, historically a leading indi- Prichard GDP growth of around 2 ota with the Lexus production line, in cator of capital investment, which President/CEO, percent in 2016, perhaps addition to our continued conversations drives productivity.” ■ Kentucky Bank increasing to 2.5 percent with business leaders, show real opti-

March Lane 23-52.indd 41 3/4/17 10:01 AM WEALTH MANAGEMENT OUTLOOK

“The economic and politi- cal tug of war will continue throughout 2017, having broad long-term effects on A Busy Year with the economy. Front and center is tax reform, infra- structure spending, easing Ernest regulatory burdens and Sampson CEO, Private trade policy changes for High Expectations Client Services 2017. By year’s end expect slightly higher interest rates, an overheated labor market and increased costs for goods and services, Policy and rising confidence mean GDP growth, thus higher inflation. Many believe we were overdue a stock market correction but will that push a historic market higher? even before the Trump run-up following the election. Predictable are further increases in the market with the possible ENTUCKY financial advisors “Recent economic convergence of historic tax cuts, govern- foresee a boom year for trends, the possibility of ment economic stimulus and increased their services. While a his- corporate tax reform, a military spending. Finally, look for contin- toric bull market’s run to all- more favorable regula- ued overall favorable interest rates with time highs looks ripe for a tory environment and improved availability of money resulting Kcorrection, many business and public increased infrastructure from decreased banking regulations.” policy indications suggest growth could Lou spending all are support- well continue for at least a couple of Lemos ive of a better U.S. busi- “Economic growth and years. GDP growth and corporate profits Chief ness and equity market corporate profits are are expected to improve, supported by Investment environment in 2017. expected to accelerate this tax cuts and government spending on Officer, First While the U.S. market year, and real tax reform infrastructure and military contractors Kentucky Trust clearly is not as attrac- will provide an additional as well as an increasingly confident pri- tively valued as a few boost if Congress can get it vate sector. 2017 is shaping up to be a years ago, with the P/E ratio slightly done in 2017. Tighter Chad monetary policy and busy year with baseline interest rate higher than the historic average we Sturgill increases by the Federal Reserve and a believe a strong case can be made that Senior Portfolio slightly higher core infla- wait-and-see game on what business-pol- the market is not overvalued given the Manager, tion will both serve as icy changes finally emerge in Washing- improving corporate earnings outlook Unified Trust minor headwinds for ton and in Frankfort. Those with wealth and low inflation expectations. We Co. financial markets, but to manage face an ongoing series of would be less constructive on the U.S. shouldn’t be a significant strategic decisions regarding how best equity market if economic growth impediment to the economy. Stretched to balance their positions while showed signs of slowing or inflation equity valuations leave limited upside for responding to change. expectations moved materially higher. stocks, while bond returns will be Historically, the P/E multiple of the restrained in a rising interest-rate environ- market is not unduly pressured until ment. Risks to economic growth could inflation approaches 4 percent.” include trade wars and additional defec- tions from the European Union.”

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42 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 42 3/4/17 10:01 AM “We are calling 2017 the “Global economic growth year of high expectations. bottomed the first half of The market appears to be 2016 and began a cyclical discounting a significant upswing that should last amount of the pro-growth several years in emerging policies that the new markets and at least administration has prom- through 2018 for the U.S. Andy Travis K. Waters ised. We remain confident Musgrave The positive effects of President/CEO, that an overweight position Managing lower oil prices and the Community in equities is appropriate Director – strong dollar for U.S. con- Trust Bank and see high mid-single- Wealth sumers are lifting house- tionally are havens for risk-averse inves- Investment digit returns for the year. Management, hold spending back to its tors. With current valuations, we could We continue to prefer Merrill Lynch 3 percent real growth see a correction – at least a 10 percent financials as we see them as the primary Lexington trend. Expect U.S. real drop – in equity markets. To mitigate beneficiaries of rate hikes and stronger GDP growth of 2-3 per- risks, a thoughtful tilt toward defensive GDP growth. However, we do not believe cent next year with inflation continuing equities may offer the best prescription the Fed will implement all three rate hikes to move slightly higher. Higher nominal for weathering the uncertainties likely in 2017 because of the high level of global growth and the possibility of lower corpo- during 2017.” debt and its impact on the administra- rate tax rates add to the upside potential tion’s ability to provide fiscal stimulus. We for profits. While policy remains the wild- “The wealth management continue to favor municipal bonds since card, we expect consumer and investor outlook could not be municipalities benefit from a stronger confidence to continue rising. We believe brighter. Dow Jones housing market and healthy economy.” wealth management is entering a bull Industrials have climbed market for advice like nothing we have from 6,443 in 2009 to “Over the next 12 to 18 seen in history.” 21,115 on February 28, months, many believe the 2017. To ride the wave of U.S. economy will push “Fiscal and monetary pol- Rod tumultuous times surely higher and take equity icies will be driving forces Brotherton ahead will require a markets with it. Since the for financial markets. A Vice President, steady hand. Tried and Wealth recession, I’ve seen indi- more transparent Federal Advisor, true methods to balance viduals, banks and corpo- Reserve has telegraphed portfolios should be Brandon Kentucky Bank Gaines rations increase their its intention to raise employed: dividend-pay- Wealth balance sheets and care- interest rates three times ing stocks, quality bonds and a cushion fully steer clear of issues. Tim Yessin during 2017, while the of cash for emergency buying. Billions Management Vice President, Advisor, Small businesses are hir- WealthSouth new administration shows have flowed into unmanaged index Northwestern ing and wages have a mercurial willingness to funds, and those investors may be sorely Mutual increased, driving con- add or remove regulations. While inves- disappointed in future growth. Once sumer spending. tors should maintain a long-term view, the multitude moves to the latest invest- Although an interest-rate increase by the the short-term outlook certainly pres- ment trend, historically, you can be Federal Reserve could cause an equity ents some risks to portfolios, particu- assured they are already “late to the market hiccup, our clients know the larly with equity markets at historically party.” It may be beneficial for people in importance of diversification and having high valuations. Given the Fed’s pos- the unmanaged funds to have a conver- a solid written financial plan that grows ture, we expect under performance in sation with those offering a steady hand and protects wealth from turmoil.” the fixed-income markets, which tradi- and a proven path.” ■

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March Lane 23-52.indd 43 3/4/17 10:01 AM EMERGING LANE Kentucky’s young professionals and creatives

Brittany Martin works with a patient at a diabetes screening as part of her work as an AmericaCorps Vista volunteer.

skilled leader who loves the community and wants to discover and share evi- dence-based interventions to bring about health outcome improvements.” Martin also had to work as a waitress to support herself last year, all while studying for the Medical College Admis- sion Test and Optometry Admission Test. Her ultimate goal is to become a practic- ing optometrist in a rural community. Most of her work at Big Sandy now revolves around optometry. “A lot of times patients are so focused on their blood sugar they for- get their eyes and teeth,” Martin explained. “Regular diabetic eye exams are needed. They might have diabetic changes in eyes or develop glaucoma.” The area served by the Big Sandy Dia- betes Coalition has a diagnosis rate of 15.2 percent, compared to 10.6 percent statewide. Overall, the state’s Appala- Brittany Martin, Diabetes Warrior chian diabetes rate is 13.6 percent, according to the 2015 Kentucky Diabetes Report. The pre-diabetic rate is roughly Young Eastern Kentucky native has 25 percent. a passion for fighting regional problem Other Kentuckians “just lump it together with OT every young adult feels com- an AmeriCorps Vista volunteer. A regis- our culture,” she said. pelled to remind Grandma to tered phlebotomist, Martin graduated “They think, Appalachia, check her blood sugar, but Brit- from the University of Kentucky in 2014 that’s where all of the Ntany Martin, 25, is not a normal young with a dual degree in biology and sociol- problems are – they don’t adult. Martin, a Hazard native who is ogy, and spent most of the voluntary year have jobs, they’re more diabetes coordinator for Big Sandy Dia- conducting diabetes screenings, patient obese, they have more dia- Brittany Martin betes Coalition in Prestonburg, works follow-ups and educational classes. It ulti- betes. It’s just the status the front lines every day in the battle mately landed her the job at Big Sandy quo for our region: It’s not with diabetes – a disease so prevalent in Diabetes Coalition. if you get diabetes, it’s when.” the region where she was raised. Much of her work was supported by Big Sandy aims to reduce new “We all just think our grandparents get grants and training from the UK Center cases of diabetes and treat undiag- diabetes, but that’s not the case,” Martin for Clinical and Translational Science nosed cases. said. “Diabetes is especially prevalent in (CCTS), which facilitates interdisciplinary “We also help people manage their southeastern Kentucky, with an average of and community-engaged health research diabetes,” Martin said. “It’s a disease of 13 percent of adults diagnosed. In Pike with a focus on Appalachia. Martin complications, so we want to help them County, at least 16 percent of adults have received further funding and research maintain their blood sugar so it’s not been diagnosed, and an estimated training through the CCTS Community dangerous to their organs.” 138,000 Kentuckians are thought to be Leadership Institute of Kentucky. The nonprofit also offers many living with undiagnosed diabetes.” CLIK is a leadership development classes and local resources. It’s these numbers, including many training program offered by the UK “We try to do classes and create a in her own family, that ignited a pas- Center of Excellence in Rural Health, social element to it for accountability sion in Martin to help others combat the Kentucky Office of Rural Health, so they’re not alone,” Martin the complicated disease. and the UK CCTS Community Engage- explained, adding that it ultimately is a “I’m the first ever in my family to ment and Research Program. cultural hurdle. “Our culture is very receive a bachelor’s degree, and I devel- much family based and food based so a oped a passion for helping people,” Mar- ‘Skilled leader who loves the community’ lot of the foods that we are accustomed tin said. “I like work that gives me “When we were developing CLIK and to are fried or extremely carb loaded, meaning. That’s just really what shaped picturing who potential participants in or fat and grease. So when you go to me. There’s no better feeling than when Appalachia might be, Brittany was your grandma’s, you know that you’re you’ve helped someone lower their exactly who we were hoping to find,” going to eat fried chicken and biscuits blood sugar. They’re just so thankful.” said Fran Feltner, director of the UK or whatever she makes. It’s what’s That passion drew her to a year of gru- Center of Excellence in Rural Health you’re raised on. You don’t want to eling but rewarding post-college work as in Hazard. “Her success has added a hurt grandma’s feelings.”—Abby Laub

44 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 44 3/4/17 10:01 AM Dorm Room Style 2017 Will Be Another Big Year for Bourbon WKU alumni started their thriving leather business in college HIS year is shaping up to be a hot HEN college students Tyler Jury and Clay Simpson started one for Kentucky’s signature spirit. creating leather products in their Western Kentucky Uni- If you’ve traveled recently versity dorm room in 2012, they didn’t know it would Tbetween Lexington and Louisville on Wultimately turn into the very successful Clayton & Crume, well I-64, you’ve probably noticed the beau- known for its university-inspired leather goods. Clayton & Crume tiful new Jeptha Creed facility in the has four full-time employees, including Jury and Simpson. The works in Shelbyville. Lane Report learned some of their keys to success. The new bour- bon and spirits dis- TLR: I hear you started Clayton & Crume in your dorm room, and now you have tillery will feature multiple employees. Did you imagine it growing like this? grain recipes made TJ: The idea of C&C was first imagined in our dorm room prior to our graduation in from rare heirloom 2012. After leaving college and pursuing other ventures, we reconvened that winter and Bloody Butcher set the wheels in motion for the establishment of our business in December 2012. We corn. Founded by knew we enjoyed the craft, but weren’t entirely sure where it would go. What we did the Nethery family of Shelby County, Jep- know is that if we could focus on making a quality product right here in Kentucky, peo- tha Creed is a 15,500-s.f. distillery that is ple would most likely enjoy it. situated conveniently close to iconic stops on the Kentucky Bourbon Trail. How did you come up with this business? TLR: In February, Frankfort-based bourbon TJ: I’d be willing to bet that Clay can out-sew scene staple Buffalo Trace announced it’s most people’s grandmothers. He’s insane. Our considering a $25 million expansion of its products began with the fraternal and collegiate facility in Frankfort. The project would markets – belts and key fobs fully-backed in grow the Sazerac Co. operation’s barrel leather. As recent college grads at the time, we storage warehouse to keep up with saw a need for quality, branded goods for our increased demand. fraternity and university. This initial step led to Government officials have been busy us experimenting more with leather and devel- making sure all of Kentucky’s bourbon oping products as we saw needs in our own lives. players are competing on an even playing TLR: Now that you’re out of school, has the field. U.S. Senate Majority Leader Mitch line changed? McConnell, Sen. Rand Paul and Rep. Andy Barr recently reintroduced leg- TJ: It’s been interesting to see our product line follow our career development, with preppy and islation that corrects a provision in the tax collegiate-inspired goods to start, then with more code to ensure that Kentucky’s bourbon of a focus on leather goods as we have pro- producers are no longer at a disadvantage gressed professionally. I’m married and Clay is with their global competitors. dating, so the ladies’ encouragement led to our The Advancing Growth in the Econ- Tyler Jury, left, and Clay Simpson launched development of a women’s line this past fall. As a omy through Distilled Spirits Act in the the now thriving Clayton & Crume out of homeowner, I’m seeing that influence the direc- U.S. Senate and the Aged Distilled Spir- their form room in 2012. tion of some of our newer/upcoming products. its Competitiveness Act in the House of Representatives would permit bourbon TLR: Did your business hit any economic milestones in 2015? producers to deduct interest expenses TJ: We took on our first commercial lease in the popular Highlands neighborhood associated with the production of bour- of Louisville. Having our own shop space, rather than a spare bedroom, to work out bon in the year it is paid. Under cur- of was transformative to our business. rent law, interest expenses are not deducted until the bourbon is bottled TLR: Where do you see your business in 10 years? and sold, which could be anywhere TJ: We’d love to have a small bricks-and-mortar and a large online web presence from two to 23 years after aging. and solid distribution throughout the U.S. We also are focusing more on larger This is good news for distillers on the products like duffels, satchels and furniture, which prove our ability and help us Kentucky Bourbon Trail Craft Tour, which define ourselves as true masters of what we do. We’re fortunate to now to have a in February announced two more mem- small team that really believes in our vision. bers with Bluegrass Distillers in Lexington TLR: Did either of you ever need to get other jobs, in addition to C&C? and Boone County Distilling Co. in Inde- TJ: Clay was in sales and I was in dental school when we started C&C. After nearly a pendence. There are now 13 distilleries year of night and weekend work, Clay went full-time and I was in the shop almost on the tour showcasing the state’s micro- every day after clinic. distillery sector. Visitors made more than 175,000 stops on the tour last year. TLR: What advice would you give young people who want to start a business? And finally, Heaven Hill in Cox’s CS: Successful business aren’t built in a night, or a month, or even a semester for Creek, the nation’s second largest family- that matter. It’s easy, while busy with school or another job, to adopt the idea that owned producer and marketer of dis- things will simply fall into place eventually, once there’s more time to devote to the tilled spirits, is considering expanding its business. It’s easy to forget that every great temple is built a single block at a time. barrel storage and aging operations in a Every hour spent developing your product or exploring your niche is one step $5.55 million investment that would all closer to success. Fight for those steps and take them at every opportunity. go towards building construction.

THE LANE REPORT • LANEREPORT.COM MARCH 2017 45

March Lane 23-52.indd 45 3/4/17 10:01 AM THE LANE LIST KENTUCKY BUSINESS TAXES Business operations in Kentucky pay some or all of the following:

Corporation Net Income Tax State and Local Property Tax Kentucky corporations and foreign corporations are subject to Kentucky taxes real and property not exempted by the state income tax due to a “doing business” standard on the portion constitution or the legislature. State and local jurisdictions of business income earned in Kentucky. may tax Real property (land and buildings), Tangible property (other, including office and computer equipment & furniture) NET TAXABLE INCOME TAX RATE and Finished Goods. Local jurisdictions may not tax manufac- turing machinery, raw materials and goods in process. $0–$50,000 4%

$50,001–$100,000 5% PROPERTY STATE (AND LOCAL) TAX RATE CATEGORY $100,001+ 6% Real $0.122 per $100 value (All 120 counties levy a tax, averag- Limited Liability Entity Tax ing $0.3064 per LLET applies to C corporations and limited liability pass- $100 in 2014. through entities (S corporations; limited liability corporations; More than 400 cities also levy a partnerships; sole proprietorships). Corporations may credit tax, averaging LLET payments towards their Corporate Net Income Tax. $0.2240 in LLET is the lesser of: 2014.) • 0.0095 percent of Kentucky gross receipts or Tangible $0.45 per $100 for business (Local rates aver- • 0.075 percent of Kentucky gross profits. (varies by type) furniture and computer age $0.3757 per The minimum tax is $175 regardless. $100 among 120 equipment counties, and $0.2863 per $100 Proprietorships and Pass-Thru Entities in the 299 cities) Limited liability entities are exempt from Corporate Net Income Tax; sole proprietors and pass-through entity owners Finished Goods $0.05 per $100 (Local rates vary) pay state Individual Income Tax on their share of earnings. Manufacturing $0.15 per $100 valuation Machinery Raw Materials $0.05 per $100 valuation Individual Income Tax Goods-in-Transit Exemption: Property in a warehouse or distri- NET TAXABLE INCOME TAX RATE bution center to be shipped out of state within six months is $0 - $3,000 2% exempt from state, city, county and school district property taxes. Fire districts or other special districts may exempt such $3,001 - $4,000 3% property. $4,001 - $5,000 4% $5,001 - $8,000 5% $8,001 - $75,000 5.8% Kentucky Sales Tax $75,000+ 6.0% The tax rate is 6 percent. There are no local sales taxes in Kentucky. Major exemp- tions for categories important to business and industry include: • Machinery for new and expanded industry. Local Occupational License Tax Cities, counties and school districts may levy Local Occupational • Raw materials, industrial supplies and industrial tools. License Tax on local net business profits or gross receipts. Some • Items purchased for resale. jurisdictions cap taxes payable annually, exempt lower amounts of • Certified pollution-control equipment. profits, or exempt income from outside sales. • Containers, packaging and wrapping materials used in See current occupational license tax rates at app.sos.ky.gov/ manufacturing. occupationaltax/. • Energy and energy-producing fuels costs that exceed 3 percent of the cost of production in manufacturing. • Industrial supplies and tools used to perform a manufac- turing process on another entity’s property. Unemployment Insurance Tax For new employers, the Unemployment Insurance Tax rate is 2.7 percent on the first $9,900 in wages per employee (in 2015), increasing $300 annually until 2022. Kentucky employer Utilities Gross Receipts License Tax UI tax rate tables are set annually based on the balance in the • 3 percent tax is levied by over 100 counties on telephone state UI trust fund and individual employers’ reserve account service, water/sewer, gas and electric and cable services to balance ratio. fund local schools. Learn more at revenue.ky.gov. Source: ThinkKentucky.com, the Kentucky Cabinet for Economic Development

46 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 46 3/4/17 10:01 AM OPINION

protection from household budgets THERE’S NOTHING FREE goes to corporate coffers, at home or abroad, not paychecks of American Costs – for lunch, libraries or jobs – can be concealed but not elimated workers. In the case of tire protection, our estimates indicate that fewer than 5 BY WALTER E. WILLIAMS percent of the consumer costs per job saved reached the pockets of American workers.” T was Nobel laureate economist Mil- pose the clothing manufacturer can get There is another side to this. When ton Friedman who made famous the Congress to impose a $60 tariff on for- households have to pay higher prices adage, “There’s no such thing as a free eign suits in the name of leveling the for tires, they have less money to spend Ilunch.” Professor Friedman could have playing field and fair trade. What hap- on other items – such as food, clothing added that there is a difference between pens to his chances of being able to sell and entertainment – thereby reducing something’s being free and something’s his suit for $200? If you answered that employment in those industries. having a zero price. For example, peo- his chances increase, go to the head of Some people point out that other ple say that there’s free public educa- the class. Next question is: Who bears countries, such as Japan, impose heavy tion and there are free libraries, but the burden of the tariff? If you answered tariffs on American products. Indeed, public education and libraries cost that it’s customers who must pay $50 Tokyo levies a 490 percent tariff on rice money. Proof that they have costs is the more for a suit, you’re right again. imports to allow Japanese rice growers fact that somebody has to have less of In his 2012 State of the Union to gain higher income by charging Japa- something by giving up tax money so address, President Barack Obama nese consumers four times the world that schools and libraries can be pro- boasted that “over 1,000 Americans are price for rice. Therefore, some suggest duced and operated. A much more working today because we stopped a that Congress should even the playing accurate statement is that we have zero- surge in Chinese tires.” According to a field by imposing stiff tariffs on Japa- price public education and libraries. study done by the Peterson Institute for nese imports to the U.S. Costs can be concealed but not elim- International Economics (tinyurl.com/ Such an argument differs little from inated. If people ignore costs and look jdtbktu), those trade restrictions forced one that says that because the Japanese only to benefits, they will do darn near Americans to pay $1.1 billion in higher government screws its citizens, the U.S. anything, because everything has a ben- prices for tires. So though 1,200 jobs government should retaliate by screw- efit. Politicians love the fact that costs were saved in the U.S. tire industry, the ing its own citizens. can easily be concealed. The call for cost per job saved was at least $900,000 Putting the issue in another context: import restrictions, in the name of sav- in that year. According to the Bureau of If you and I are at sea in a rowboat and I ing jobs, is politically popular in some Labor Statistics, the average annual sal- commit the foolish act of shooting a quarters. But few talk about the costs. ary of tire builders in 2011 was $40,070. hole in my end of the boat, would it be We know there are costs because noth- Here’s a question for those of us who intelligent for you to retaliate by shoot- ing is free. support trade restrictions in the name ing a hole in your end of the boat? ■ Let’s start with a hypothetical exam- of saving jobs: In whose pockets did ple of tariff costs. Suppose a U.S. cloth- most of the $1.1 billion that Americans ing manufacturer wants to sell a suit for paid in higher prices go? It surely did $200. He is prevented from doing so not reach tire workers in the form of Walter E. Williams is a professor of because customers can purchase a higher wages. economics at George Mason University. nearly identical suit produced by a for- According to the Peterson Institute eign manufacturer for $150. But sup- study, “most of the money extracted by

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March Lane 23-52.indd 47 3/4/17 10:01 AM EXPLORING KENTUCKY

AMP Berea is a free weekly celebration of Appalachian culture in the downtown Artisan Village district of Berea 5-10 p.m. Fridays from July to September.

ular include the spoonbread and the “chicken flakes in a bird’s nest.” Order it; you’ll love it! For a lighter meal a few doors down, family-owned Papa Leno’s has been serving pasta and hand-tossed pizza to hungry diners for 37 years. The square is the place to snap up fine Berea College Crafts (BCC), the culmination of 123 years of traditional Appalachian craft making, which forms the backbone of this educational institu- tion. Berea College charges no tuition but requires each student, who must qualify through financial need, to learn a craft and work weekly hours through- out their stay. BCC helped form both the Kentucky Guild of Artists and Crafts- men and the Southern Highlands Craft Guild. Reflecting the town’s principles of Handcrafted Heaven embracing interracial culture, sustain- ability and conservation, the college was Amble over to Berea to explore Kentucky’s arts and crafts capital founded in 1866 as the Berea Literary Institute. In the 1890s Berea College BY KATHERINE TANDY BROWN President William Frost established the institution’s Fireside Industries to mar- ket crafts made by people at home in HERE’S good reason why Berea The other exit – 76 – leads straight the Appalachians, encouraged crafts- is known as Kentucky’s Folk Arts into this Kentucky Trail Town and sev- men to move to the area, and then Tand Craft Capital. Not only can eral concentrated areas of artists’ stu- founded the Student Craft Industries, you peruse and purchase lovely hand- dios, art-and-craft-rich shops, eclectic which continue today and include crafted treasures here, but its crafts- eateries and the Berea College campus. woodcrafted items, furniture, broom men share their secrets through classes In Artisan Village, a number of stu- making, weaving, jewelry and ceramics. that teach you how to create your own dios are marked as those of working His wife, Nellie, conceived the idea that imaginings. artists, where you can witness the fasci- grew into Boone Tavern, which after Located on I-75, this small, folksy town nating creative process and chat up the undergoing an $11 million renovation, welcomes guests at either of its two inter- creators at their easels, looms, wheels is now a LEED-certified green facility. state exits. Should you hop off at Exit 77, and kilns. Some offer classes, where The Berea College campus is across you’ll practically drive into the sprawling you can learn to make jewelry, create from College Square. Student craft stu- Kentucky Artisan Center (KAC), an arts glass giftware or paint your own ceram- dios are open to the public on weekdays and travel resource extraordinaire. A ics. In the village you also can nibble for self-guided tours; student-led tours “footprint” of Berea proper, the 25,000-s.f. on Kentucky Proud gourmet fudge, are also available. Student crafts can be limestone center is a great place to begin watch musical instruments being purchased several places, including the exploring. In addition to statewide arts- crafted (they’ll give you lessons, too) Log House Craft Gallery, the Shoppe at related tourism information and trip- and wander through Berea’s beauti- Boone Tavern and online. You’ll want to planning assistance, this contemporary fully renovated 1917 railroad depot, hoof it around the quaint square and building features an expansive array of which now houses the town’s visitor peek into its shops and galleries. woodcraft, paintings in varied mediums, center. One “don’t miss,” even if you’re not fiber wearables, hand-thrown pottery, In the center of town, College remotely musical, is Warren May Dulci- intricate quilts, wrought iron, music, Ken- Square is the place to find more spe- mers. The ever-personable Carroll tucky Proud edibles and books about the cialty shops, intriguing galleries, coffee County native - one of 10 children – is Bluegrass, its history and its folk art. shops and restaurants, including the nationally revered and has been making Plan to stretch your legs, browse Boone Tavern Hotel and Restaurant, gorgeous furniture and dulcimers awhile and grab coffee and a muffin for circa 1909. Built by the college’s wood- (more than 16,000 at last count) for breakfast, or lunch on soup, salad, a sand- work department and using student- 40-plus years. wich or homemade hot lunch at the KAC made bricks, the venerable landmark is Hang around Berea and soak up Café. Be sure to save room for some bour- known for its Kentucky fare served fam- knowledge at the college’s free convo- bon bread pudding or Derby pie. ily style. Dishes that are particularly pop- cation series, shake a leg at Berea’s

48 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 48 3/4/17 10:01 AM contra dances, and tap your toes at A participant in the 2016 Festival of Learnshops ongoing jam sessions. Stay overnight at last July in Berea uses a power sanding tool on a Boone Tavern, or at one of several bed craft she was creating. and breakfast inns near College Square. Annual events include the 35th annual Berea Crafts Festival, July 8-10, at Indian Fort Theater, a lovely spot nes- tled in the Appalachian foothills. A To make certain visitors have ample short climb up, a rock formation called options, the Kentucky Guild of Artists the Pinnacle affords a panoramic view and Craftsmen’s Visual Arts Academy of Berea and its hilly environs. And the has weekday and weekend classes taught Berea Spoonbread Festival is rife with by their talented members. And just in fun, crafts, music and – of course – lus- time to create heartfelt handmade gifts cious eats. This year’s 20th celebration for the holidays, there are the “Make It, takes place Sept. 15-17. Take It, Give It” workshops that last If all this crafts immersion tickles from two hours to 12, depending on your creative fancy, Berea offers several their focus, be it jewelry, fiber arts, options for making your own. On an woodworking or making a Christmas ongoing basis, the HOW Program con- ornament or a Santa. Try your hand at sists of hands-on workshops for visitors one of Berea’s creativity classes. Who to learn more about trade crafts such as only knows? You might unearth a cot- glass blowing, jewelry making, sculpt- tage industry of your own. ing, stained glass, et al. Another oppor- Find out more about this crafty desti- tunity rolls around each July, this year nation at visitberea.com, where you can the 7th through the 23rd, when you can download a Berea Travel Planner, or call participate in workshops that range (800) 598-5263. ■ from creative writing, dulcimer playing and blacksmithing, to sustainable liv- Katherine Tandy Brown is a correspondent ing, culinary arts and theater in the Fes- for The Lane Report. She can be reached tival of Learnshops. at [email protected].

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March Lane 23-52.indd 49 3/4/17 10:01 AM PASSING LANE Commentary on Kentucky

Faith-Based Economic Summit Takes New Approach to Development

VER the decades, there have been countless conferences and Omeetings focused on bringing more jobs to the Appalachian region of Kentucky. This past fall, the Kentucky Highlands Promise Zone and SOAR (Shaping Our Appalachian Region) decided to take a new approach: If faith can move mountains, then why can’t it create jobs? That question lead to the organization of a faith-based economic development summit, “Jobs Wanted: Faithful Investing in Appalachia’s People.” a client of the Kentucky Innovation Net- Together, the four organizations rep- More than 200 people attended the work London office. resented at the convening have created conference in Hazard to find out how Meridzo shared its successes, including more than a hundred jobs and attract faith-based organizations can connect how it expanded its ministries to include a thousands of visitors each year through with entrepreneurs, financial institu- development corporation focused on cre- attractions like Meridzo’s retreat cen- tions and job seekers to make a differ- ating jobs. Not only does Meridzo have ters, the Laurel County African Ameri- ence in Eastern Kentucky. several sites for religious retreats, it has a can Heritage Center and various area “They have a heart for it,” said Sandi coffee shop, fitness center and has settlement schools. Curd, program coordinator for the expanded into mushroom growing and “The summit provided another Promise Zone. “They’re already serving dulcimer making. opportunity to break down silos in east- the population with the most needs. “This summit was greatly needed,” ern Kentucky,” said Jared Arnett, exec- Many of our best leaders are in these said Lonnie Riley, the pastor who is the utive director of SOAR. “One group organizations. We want to expand their executive director for Meridzo Center who knows what to do but doesn’t have work in for example food pantries to and also serves on the Promise Zone the network to accomplish it; and the empowerment building like growing Board of Directors. “It raised awareness other who has the network but is not food to sustainable like selling surplus of how all segments of society can work always informed on how they can help. food at the farmers market.” together. We are sometimes overlooked This was a great step in the right direc- One organization that led a panel because of our religious affiliation, but tion in understanding that there is a discussion at the summit has already we are supplying jobs and attracting visi- very human, spiritual side to the work figured out how to turn ministry into tors to the region, which puts new dol- that we do in Appalachia Kentucky.” job creation is Meridzo Center, which is lars directly into the community.”

Safeguarding Against Tax Fraud Celebrating 225 Years

AX season is one of the most common times for identity of Statehood fraud to take place, making it even more important than ENTUCKY officially celebrates 225 years of statehood Tever for consumers to take the proper safety measures. this year and to commemorate the occasion, the Ken- According to CyberScout, a leading data security and iden- tucky Department of Tourism has launched a new web- tity-theft protection firm, having a password-protected Wi-Fi K site highlighting the best of the Bluegrass State. connection, two-factor authentication for tax preparation ser- The ky225.com website includes an vices and an encrypted USB drive for sensitive tax documents interactive map of bucket-list ideas to are some of the most basic ways to protect oneself. In addition, experience across the state, as well as taxpayers should use the following techniques to protect them- a list of events and information on selves: Kentucky’s statehood. Examples • Always use long and strong passwords. include visiting the oldest country • Never authenticate yourself to anyone who contacts you online store in America, sampling barbe- or by phone; the IRS will never contact you by those methods. cue, visiting Blue Licks Battlefield • Use direct deposit of refunds into your bank account or a State Park and other iconic Ken- locking mailbox for mailed refunds. tucky experiences. • Monitor and protect your accounts and elements of your per- “Kentuckians take great pride in sonal identity online and in social media. It’s easy for hackers to our state and we want to encourage them figure out answers to security questions from social media. to celebrate that in 2017,” said Tourism Commissioner “If the worst happens, victims of identity theft should turn Kristen Branscum. “We have compiled ideas and events state- to organizations they trust, including their insurance provider, wide to inspire participation throughout the entire year.” financial services institution, or the HR department of their In addition, travelers are encouraged to share their Kentucky employer, who offer low-cost or free cyber protection services 225 anniversary adventures by using #Ky225. For more informa- to protect and restore stolen identities,” said CyberScout Chair- tion on travel in Kentucky, visit kentuckytourism.com. man Adam Levin.

50 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

March Lane 23-52.indd 50 3/4/17 10:01 AM DanceBlue Raises $1.8M for Pediatric Cancer Patients ITH nearly 1,000 University of Kentucky student participants, WDanceBlue – a student-led dance marathon organized to raise money for pediatric cancer patients – this year brought in nearly $1.8 million in donations. A 1962 Corvette that was damaged as a result of a sinkhole cave-in at the National Corvette Museum in All of the money raised at the annual 2014 is being restored to commemorate the third anniversary of the disaster. Museum guests will be able to 24-hour no-sitting, no-sleeping marathon watch the restoration process, often as it is happening. goes to benefit children with cancer and their families and for cancer research. This year’s event was held Feb. 25. Corvette Museum Commemorates The event first began in 2006. That year, DanceBlue raised $123,323 and Sinkhole’s 3rd Anniversary the amount has increased every year since then. With this year’s total, Dance- little over three years ago, on Feb. 12, 2014, viewers tuning in to their morn- ing news witnessed and heard a nearly unbelievable story – a sinkhole had A opened inside the National Corvette Museum in Bowling Green, Ky., leaving UK photo eight Corvettes lying at the bottom of a deep gaping hole. Fortunately, the cars and building were the only things damaged since the cave- in occurred in the early morning hours before anyone was in the museum. The story captivated those who watched it, and while the museum initially planned to put the past behind them, the interest in the sinkhole and damaged Corvettes was undeniable. Last year, the museum commemorated the second anniversary of the interna- tional headline-making event with a ribbon cutting for a new exhibit: “Corvette Cave In! The Skydome Sinkhole Experience.” The exhibit features eight sections, from a recap of what happened the day of the sinkhole, the media coverage and pop cul- ture aspect, to the cars themselves, the recovery and repair process, and caves and karst landscapes, leading to a grand finale cave-in experience. After interacting with the display, visitors are led into the Skydome where they can see an outline of where the sinkhole was, an outline of where the cave is and even peer down the 30-foot- deep shaft into the remaining portion of the cave. The exhibit was extremely well Nearly 1,000 University of Kentucky students received, helping the museum achieve the second highest attendance in its 23-year participated in this year’s DanceBlue dance history. marathon to raise money for pediatric research and This year, to commemorate the third anniversary of the event, Corvette Museum to help children already battling cancer. officials decided to begin restoring a 1962 Corvette that was damaged by the effects of the sinkhole and has since been on display in the exhibit to demonstrate extent Blue has contributed more than $11.6 of the damage incurred by the event. million to the Golden Matrix Fund and “The car has been on display ‘as-is’ for nearly three years, so we thought to com- the DanceBlue Kentucky Children’s memorate the third anniversary of the sinkhole, we would start the restoration work Hospital Pediatric Hematology/Oncol- on the last Corvette to be repaired,” said Katie Frassinelli, the museum’s marketing ogy Clinic. and communications manager. “Almost all the work will be performed in-house by “For the last 365 days, students at the Daniel Decker, our vehicle maintenance and preservation coordinator. It’s exciting University of Kentucky have been on a that guests will be able to see the car come back to life.” mission to fight pediatric cancer,” said The Corvette was donated to the museum in 2011 by David Donoho, a die-hard 2017 DanceBlue Chair Richie Simpson. enthusiast who saved up enough money to buy the car in high school and ultimately “They have come together to be a part of owned it just over 50 years. Donoho was so obsessed, in fact, that he earned the nick- something so much greater than any one name “The Weather Man” because his friends would tease him about how closely he individual, and for the last 24 hours they would watch the weather and quickly take his Corvette home when there was a have literally taken a stand against cancer. chance of rain. They refused to accept the realities of can- The Corvette needs about $15,000 worth of new parts, including a complete cer, and they showed the families in the front-end assembly, hood panel and windshield, but overall the damage was minor DanceBlue Clinic they are not alone and compared to the other cars. Thanks to the generosity of General Motors, all $25,000 will never be alone as they face some of in restoration expenses have been covered. Returning the 1962 to original condition the toughest circumstances life can throw will be a lengthy process, and Decker expects the task to take as long as a year to at you. It has been an honor to stand complete. “It’s a real big honor to be able to do the work, to bring it back to life alongside students at the university who from the sinkhole,” he said. “We want to do it right. The fiberglass will need to set are so committed to making a difference and cure so it doesn’t shrink later. We want the car to look immaculate.” and changing the world.”

THE LANE REPORT • LANEREPORT.COM MARCH 2017 51

March Lane 23-52.indd 51 3/4/17 10:01 AM KENTUCKY PEOPLE

LOUISVILLE: ANGEL’S ENVY DISTILLERY BECOMES THE LEXINGTON: UK HONORS NEWEST STOP ON THE KENTUCKY BOURBON TRAIL DISTINGUISHED ALUMNUS, PLACES 2 IN HALL OF FAME

The University of Kentucky’s Martin School of Public Policy and Administration recently honored a distinguished alumnus and inducted two new members into the Kentucky Public Service Hall of Fame. Former Kentucky Lt. Gov. Crit Luallen and Merl Hackbart, the first person ever to serve as director of the Martin School in the early 1970s, were welcomed into the hall of fame. Larry W. Gray, president of Baptist Health Corbin was selected as the school’s distinguished alumnus for 2016.

Pictured left to right are Martin School Board of Visitors member Mike Ruehling; Kentucky Rep. Sannie Overly, former Kentucky Lt. Gov. Crit Luallen; former Kentucky Gov. Paul Patton; and Angel’s Envy, Louisville’s newest distillery, also became the newest member of the Kentucky Bourbon Trail Martin School Board of Visitors Chair Brad Cowgill. experience in February. Kentucky Distillers’ Association President Eric Gregory (right) was on hand to present a commemorative plaque to Angel’s Envy Distillery leaders to signify their member in the Kentucky Bourbon Trail tour. Pictured with Gregory are (left to right) Bob Gorman, vice president and managing director, Angel’s Envy; Dee Ford, brand home manager, Angel’s Envy; Louisville Mayor Greg Fischer; and Wes Henderson, co-founder and chief innovation officer, Angel’s Envy.

ELIZABETHTOWN: CARL SWOPE NAMED 2017 AUTOMOBILE DEALER OF THE YEAR AT ANNUAL NADA CONVENTION

Pictured left to right are UK Gatton College of Business and Economics MBA Program Director Harvie Wilkinson; Martin School Board of Visitors member Ron Carson; Merl Hackbart; Martin School Professor of Public Policy and Administration Eugenia Toma; and Martin School Board of Visitors Chair Brad Cowgill.

Carl Swope, president of Swope Toyota in Elizabethtown, was recently named the 2017 TIME Dealer of the Year at the 100th annual National Automobile Dealers Association (NADA) Convention and Exposition in New Orleans. Swope, who oversees six dealerships representing nine brands in Elizabethtown and Radcliff, was selected from a group of 49 nominees from across the country. He is pictured here at the award Larry Gray with Martin School award presenter presentation with his wife, Anne. and student Jaronda Williams.

52 MARCH 2017 LANEREPORT.COM • THE LANE REPORT

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