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VOL. 6 | NO. 48 | Saturday, November 23, 2013

Daily Digest

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Shelby County Schools Sued Over School Access

A man who has organized anti-abortion demonstrations in Memphis since the 1970s marking the anniversary of the U.S. Supreme Court’s 1973 ruling making abortion legal is suing Shelby County Schools in U.S. District Court for the Western District of Tennessee over the school system’s refusal to allow him to use White Station High School.

Kent Pruett filed the suit Wednesday, Nov. 20, in Memphis federal court, with legal representation from the Center for Religious Expression.

Pruett has organized past Roe v. Wade marches and speeches that included stops at Central High School over the years. Pruett moved the march and rally to a private facility in Bartlett in 2011 and 2012.

He was denied use of White Station High School this year and applied to use the school again on Jan. 19, 2014, and was again denied.

Schools officials cited their policy denying such access to school facilities for “staging and/or disbanding of any protest march, demonstration, or like activity aimed or directed toward any segment of the community.”

Pruett wants the policy declared unconstitutional by the court and voided. He is also seeking preliminary and permanent injunctions that would allow him to use a public school in connection with the annual march.

Pruett’s legal claim is that the Shelby County Schools policy violates constitutional guarantees of the right to free speech and expression as well as freedom of assembly.

Hollywood Feed Adding Stores in Alabama, Texas

Memphis-based Hollywood Feed is growing.

The pet business plans to open its third and fourth Alabama locations by year-end. The two new stores in Huntsville – one of which will open this month, the other in December – will complement the retailer’s two existing Alabama stores in Birmingham.

Hollywood Feed also plans to expand into Texas in 2014. And the retailer recently completed a 60-second television spot focused on its custom line of dog beds.

Hollywood Feed offers a selection of natural and holistic pet foods and products, professional pet grooming, training classes and washing stations for use by dog owners.

Average Mortgage Rate Drops to 4.22 Percent

Average U.S. rates on fixed mortgages declined this week after two weeks of increases, keeping home-buying affordable.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan fell to 4.22 percent from to 4.35 percent last week. The average on the 15-year fixed mortgage dipped to 3.27 percent from 3.35 percent.

Rates had spiked over the summer and reached a two-year high in July on speculation that the Federal Reserve would slow its bond purchases later this year. But the Fed held off in September and now appears poised to wait at least a few more months to see how the economy performs. The bond purchases are intended to keep long-term interest rates low.

Mortgage rates tend to follow the yield on the 10-year Treasury note. They have stabilized since September and remain low by historical standards.

Still, mortgage rates are nearly a full percentage point higher than in the spring. The uptick has contributed to a slowdown in home sales. The National Association of Realtors said sales of existing homes fell 3.2 percent in October, the second straight monthly decline.

Unemployment Benefit Applications Decline

The number of people applying for U.S. unemployment benefits fell 21,000 to a seasonally adjusted 323,000 last week, the lowest since late September and further evidence of an improving job market.

The Labor Department said Thursday that the less volatile four-week average fell for the third straight week to 338,500. Both figures are near pre-recession levels.

Applications are a proxy for layoffs. They had spiked in early October because of the partial government shutdown and processing backlogs in California. But first-time applications have now fallen in five of the past six weeks. The decline indicates that employers are laying off fewer workers.

“If claims can remain at this week’s level it would be easier to believe in the idea that ... payroll growth could break out to the upside,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Some economists warned that last week’s Veterans’ Day holiday may have exaggerated last week’s decline because many state government offices were closed on Nov. 11.

But the broader trend has been downward. The steady declines suggest hiring will remain healthy in the coming months. Employers added 204,000 jobs in October, shrugging off the 16-day shutdown.

Job growth accelerated over the summer. Employers added an average of 202,000 jobs per month from August through October. That’s up sharply from an average of 146,000 in May through July.

The solid gains should help boost economic growth next year. Greater hiring, combined with modest increases in pay, appears to be supporting more spending. Higher retail spending last month has raised hopes that the holiday shopping season will be better than many analysts expected.

Still, the economy is far from healthy. More than four years after the recession officially ended, the unemployment rate remains high at 7.3 percent.

And nearly 3.9 million people received benefits during the week ended Nov. 2, the latest data available. That’s down about 33,000 from the previous week. That total has fallen 26 percent in the past year.

University of Memphis Not Backing Tuition Hike

The University of Memphis is not backing the idea of a tuition increase the Tennessee Board of Regents is considering for the 2014-2015 academic year.

Interim university president Brad Martin took the unusual step of putting out a press release this week saying, “Tuition at the University of Memphis will not increase for the 2014-15 year.”

Martin was reacting to public state budget planning sessions Tennessee Gov. Bill Haslam has been conducting for the last two weeks in Nashville. During the session on higher education, leaders of the state system said they expect a tuition hike will be necessary.

Since taking the helm of the city’s largest higher education institution, Martin has emphasized building enrollment at the university and keeping tuition level.

Specifically reacting to the budget planning sessions in Nashville, Martin pointed to a 6 percent tuition increase for the current academic year and a 7 percent tuition hike the previous academic year.

“Effective allocation of available resources and improved efficiencies at the university will permit this to occur while we focus on serving more students and improving graduation rates,” Martin said in the written statement.

Any decision on tuition is ultimately up to the state Board of Regents.

Chamber Releases ‘10 to Watch’ List

The Greater Memphis Chamber has released its latest annual list of 10 local companies to watch in the coming year. The companies – chosen for making big strides this year and for their potential for even greater things in 2014 – are: BioNanovations, Highwoods Properties Inc., International Paper Co., Kronos Energy Solutions, The Regional Medical Center at Memphis, Memphis College of Art, nexAir, Prodigi Arts, RedRover Sales & Marketing and Victory Packaging.

The next issue of the chamber’s Memphis Crossroads Magazine, which will be distributed at the chamber’s Annual Chairman’s Luncheon Dec. 10, will have more details about each company.

CVS Raising Money for St. Jude

CVS Caremark has launched its 10th annual holiday season in-store fundraiser to support St. Jude Children’s Research Hospital.

Through Dec. 7, customers can add $1 to $3 to their purchases at the register to help St. Jude. Customers shopping online at www.cvs.com/stjude also have the opportunity to donate $1 at checkout.

CVS is participating in St. Jude’s Thanks and Giving holiday campaign. Since the campaign’s inception, CVS and its customers have raised more than $37 million to support St. Jude, including nearly $6.4 million last year.

Funds raised by CVS customers and colleagues during the Thanks and Giving campaign support the CVS Caremark Rehabilitation Services Center at St. Jude. The facility, which opened in 2009, doubled the space at St. Jude dedicated to providing audiology, occupational therapy, physical therapy and speech-language pathology services to St. Jude patients.

Consumer Prices Drop on Cheaper Gas

Cheaper gasoline lowered overall U.S. consumer prices slightly in October. But outside the steep drop at the pump, inflation stayed mild.

The consumer price index fell 0.1 percent last month, down from a 0.2 percent increase in September, the Labor Department said Wednesday. The October decline was due mainly to a 2.9 percent drop in gasoline costs, the largest since April. Over the past 12 months, overall prices have risen 1 percent, well below the Federal Reserve’s inflation target of 2 percent.

PNC Bank chief economist Stuart Hoffman said the low inflation reading ensures that the Fed will continue its extraordinary measures to spur growth.

“From the Federal Reserve’s perspective, inflation is too low, one reason why the central bank continues to provide massive stimulus to the economy,” Hoffman said in a note to clients.

Excluding volatile energy and food costs, so-called core prices rose 0.1 percent in October from September and have risen just 1.7 percent over the past 12 months. The prices for new vehicles, clothing and medical care declined last month. But airfares rose a whopping 3.6 percent.

U.S. gasoline prices began falling in the spring and reached two-year lows earlier this month. The average price of a gallon of gas was $3.21, according to AAA’s Daily Fuel Gauge Report.

Literacy Mid-South Moving to Playhouse on the Square

Literacy Mid-South is moving to Playhouse on the Square effective Dec. 1, leaving its transitional space at United Methodist Neighborhood Centers.

The literacy organization will be housed on the fifth floor at Playhouse, which will be its new home after five months in a temporary space in search of something more permanent. The group’s executive director, Kevin Dean, sent out notice of the move earlier this week and said the group looks forward to “new collaboration potential with our office mates,” such as Project Green Fork, Indie Memphis and others.

Literacy Mid-South earlier this year moved to United Methodist Neighborhood Centers from the Cooper-Young area, a move that shrunk its space from 10,000 square feet to about 1,700 square feet. That change resulted in savings that the group plowed back into literacy programs.

Restore Medical Moving to One Commerce Square

A small but growing medical-equipment maker has selected the One Commerce Square building Downtown for its corporate headquarters.

Restore Medical Solutions will relocate from its current office space at 62 N. Main St. in January, occupying around 4,250 square feet in One Commerce Square.

The One Commerce space will house the company’s executive and support staff, while its assembly and distribution operations will be housed at the Memphis Bioworks Foundation building on South Dudley Street.

Phil Dagastino Jr. and Bentley Pembroke of Cushman & Wakefield/Commercial Advisors Asset Services represented One Commerce Square in the transaction.

Restore Medical’s new headquarters is another ray of light for One Commerce Square and the Downtown office market as a whole, which has been saddled with a vacancy rate of 29.6 percent.

This year, Pinnacle Airlines decided to relocate to Minneapolis and vacate 170,000 square feet in One Commerce Square. However, the state of Tennessee, which is vacating the Donnelley J. Hill State Office Building, is leasing 100,000 square feet in One Commerce.

Restore Medical, founded by Flynn and Ryan Ramkhelawan, moved from Atlanta to Memphis in 2012 to participate in the inaugural class of Memphis Bioworks’ ZeroTo510 accelerator program. Among other developments, the company invented a surgical tray and method that increases speed and efficacy in reprocessing sterile surgical instruments.

Officials Expect More People Directed to TennCare

While Tennessee residents have been slow to buy health insurance through a new online exchange, state officials said Monday that the number of people being directed to the state’s expanded Medicaid program is higher than expected.

The online insurance marketplaces and the Medicaid expansions are part of President Barack Obama’s health care law.

Officials had projected that the exchanges would identify nearly 47,000 people who are eligible for TennCare but not enrolled.

However, TennCare Director Darin Gordon told Gov. Bill Haslam during a Monday budget hearing the figure will more likely be about 52,000 for fiscal year 2015.

“It is concerning,” Gordon said. “But at this point, we don’t have anything to cause us to revise our numbers.”

Just in case, Gordon is asking the governor for an additional $180 million in the agency’s budget. He stressed the importance of TennCare maintaining a healthy reserve, which is currently about $315 million.

“If ... we start seeing increases in those numbers on eligible but not enrolled, we need to make sure we have adequate reserves to be able to make sure that it helps make those rough places smooth,” Gordon said.

So far, only about 1,000 people have purchased health insurance through the online exchange in Tennessee. Part of the problem may be due to issues with the website to purchase the insurance.

There are about 982,000 uninsured people in Tennessee. Before Tennessee officials decided earlier this year not to participate in a partnership with the federal government in establishing a health insurance exchange, they estimated that about 300,000 could participate in the insurance marketplace. Some estimates put that number as high as 600,000.

Homebuilder Confidence Holds Steady in November

U.S. homebuilders’ confidence in the housing market held steady this month, but many are worried that another fight over the federal budget could cause would-be buyers to put off home purchases.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday stayed at 54 this month. October’s reading was revised one point lower from its initial estimate.

Readings above 50 indicate more builders view sales conditions as good, rather than poor.

The index has stayed above 50 now for six straight months after being below that level since May 2006. It has held steady, even as mortgage rates have come off their record lows and home sales have slowed. Those readings suggest most builders are still optimistic that the housing recovery will endure.

But the trade association noted Monday that many consumers are holding off on buying a home because of concerns over another budget fight in Washington. Lawmakers reached a temporary agreement last month to reopen the government after a 16-day partial shutdown, but another potential shutdown looms.

“Policy and economic uncertainty is undermining consumer confidence,” said David Crowe, the NAHB’s chief economist.

Builder confidence took a hit in October because of the shutdown. Some buyers found it harder to close on their mortgages.

US Employment Costs Up 0.4 Pct. in Third Quarter

Compensation costs for U.S. workers rose modestly in the July-September quarter as the cost of benefits such as health insurance rose more rapidly than wages and salaries.

The Labor Department says that compensation increased a seasonally adjusted 0.4 percent in the third quarter compared to the April-June quarter when compensation had risen 0.5 percent. Wages and salaries, which make up 70 percent of compensation costs, rose 0.3 percent in the third quarter while benefits were up 0.7 percent.

Over the past 12 months, compensation costs have risen a modest 1.9 percent. The Great Recession, which saw millions lose their jobs, has kept a lid on wage growth. That has meant low inflation overall, a factor that has allowed the Federal Reserve to keep interest rates low to boost the economy.

U of M Names Presidential Search Panel

A panel of Memphians to come up with three to five finalists for the University of Memphis presidency meets for the first time Dec. 4.

The panel of 22, appointed by the Tennessee Board of Regents, is being led by attorney Greg Duckett, senior vice president and corporate counsel of Baptist Memorial Health Care Corp. and a member of the Board of Regents.

Board of Regents Chancellor John Morgan will choose the permanent successor to Dr. Shirley Raines, who retired this summer. Brad Martin has been serving as interim president since the start of the academic year.

The search panel’s first order of business will be to set criteria for the search.

Health Support Effort Launches in Tennessee

UnitedHealthcare has launched an effort in Tennessee to provide one-on-one health support to TennCare-eligible individuals who have unmanaged or complex health conditions.

The Neighborhood Connections program is creating health assistance centers in communities across the state and hiring workers from those local communities. Coordinators will help participants set health and self-management goals, and create health, emotional and social support plans. The coordinators will also follow up in person to help participants address challenges.

Neighborhood Connections centers already have begun opening elsewhere in the state, and a center in Memphis will open before the end of the year.

Supreme Court Rejects Look at NSA Program

The Supreme Court is refusing to intervene in the controversy surrounding the National Security Agency, rejecting a call from a privacy group to stop NSA from collecting the telephone records of millions of Verizon customers in the United States.

While the justices on Monday declined to get involved in this issue, other lawsuits on the topic are making their way through the lower courts around the country.

But in the case at hand, the Electronic Privacy Information Center bypassed lower courts and said that only the Supreme Court can overrule a decision by the secretive Foreign Intelligence Surveillance Court, whose order allowing NSA to get the records cannot be reviewed by other federal courts.

Heimbach Chosen as New Tennessee State Architect

The State Building Commission has unanimously voted to name Peter Heimbach as Tennessee’s new state architect.

The state architect oversees the state Capitol and its grounds, along with the state’s other building and land development projects. He also develops design standards for state agencies.

Heimbach succeeds Bob Oglesby, who was named commissioner of the state Department of General Services in August.

Heimbach is a graduate of the University of Tennessee’s architecture program and spent 12 years at the architectural firm Beeson, Lusk and Street Inc.

In his previous role he has served as the executive director of Tennessee’s Real Estate Asset Management.

TVA Increases CEO Pay in Fiscal 2013

The Tennessee Valley Authority says in a filing that it paid Chief Executive Officer Bill Johnson $5.9 million during his nine months on the job in fiscal year 2013.

That’s almost $2 million more than the federal utility paid former CEO Tom Kilgore, who retired at the end of 2012, during his last year with the agency. He made just under $4.03 million.

The Chattanooga Times Free Press cited the TVA’s year-end financial report, which was filed Monday with the U.S. Securities and Exchange Commission.

The utility said that even with the increase Johnson’s pay is still below the industry average.

TVA is the nation’s largest public utility, supplying power to about 9 million people in Tennessee, Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.

Most of his salary came from performance incentives of nearly $2.6 million and deferred compensation payments of $2.06 million. His base salary for nine months of work was $712,500.

Other top executives at TVA saw a decline in pay.

Chief financial officer, John Thomas, received $2.1 million in 2013, or 3.3 percent less than in 2012. TVA’s chief counsel, Ralph Rogers, received 25 percent less than the previous year with pay of $1.9 million.

The utility ended fiscal 2013 with $271 million in net income on $11 billion in operating revenues. Although the utility has a decline in sales, it said record levels of hydroelectric generation helped offset increased fuel costs.

“TVA reported solid financial results in 2013 despite lower sales and revenues,” Johnson said in a statement.

“We experienced lower demand for power during the year due to the shutdown of a major customer facility, a slow-growing economy and adoption of energy conservation by customers,” he said.

Panel to Aid Veterans Seeking Higher Education

Tennessee Gov. Bill Haslam wants to help veterans seeking a higher education.

He has formed a task force to evaluate how to best serve those seeking a certificate or degree beyond high school.

The task force is part of the governor’s initiative to raise the number of Tennesseans with a certificate or degree beyond high school from where it stands today at 32 percent to 55 percent by the year 2025.

Members of the panel will speak to higher education leaders, veterans, advocacy groups and others and present recommendations to the governor in June.

Dixon Hughes Hires Eight in Memphis

The Memphis office of Dixon Hughes Goodman has made eight hires.

Dixon Hughes, the largest certified public accounting firm based in the South, has hired Jessie Austin, Lee Harris and Jack Kaler as associates in the firm’s dealer services group, which focuses on the specialty accounting needs of automotive and heavy truck dealerships. Mack Widder, Lauren Leone and Kimberly Kirkland have been hired as associates in the firm’s tax department, and Domina Cox and Lawson Kilpatrick are associates in the audit department.

Dixon Hughes focuses on eight major industries and serves clients in all 50 states.

Yahoo Vows to Encrypt All Personal Data

Yahoo is expanding its efforts to protect its users’ online activities from prying eyes by encrypting all the communications and other information flowing into the Internet company’s data centers around the world.

The commitment announced Monday by Yahoo Inc. CEO Marissa Mayer follows a recent Washington Post report that the National Security Agency has been hacking into the communications lines of thee data centers run by Yahoo and Google Inc. to intercept information about what people do and say online.

Yahoo had previously promised to encrypt its email service by early January. Now, the Sunnyvale, Calif., company plans to have all data encrypted by the end of March to make it more difficult for unauthorized parties to decipher the information.

Google says many of its services already are encrypted.

Factory Production Rises 0.3 Percent in October

U.S. factories increased production for a third straight month in October, as stronger output of primary metals and furniture offset declines in auto production.

Manufacturing output rose 0.3 percent last month, up from 0.1 percent in September, the Federal Reserve reported Friday. Factory output is the biggest component of industrial production, which also includes mining and utilities.

Overall industrial production fell 0.1 percent after a 0.7 percent September gain. The mining sector, which includes oil and gas drilling, declined 1.6 percent after six months of gains. Utility output fell 1.1 percent.

Manufacturing has been gaining strength in recent months. Output has risen in five of the past six months. And factories have stepped up hiring over the past three months, according to the government’s October employment report released last week.

Factories are busier in part because overseas growth has picked up and the housing recovery has driven more demand for furniture and other wood products. Automakers are also having their best year for sales since the recession, although production of motor vehicles and parts fell 1.3 percent in October after two months of gains.

Output of primary metals such as steel rose 1.1 percent and furniture production was up 1.5 percent.

Economists were encouraged by the gains in manufacturing after a period of weakness in the spring and early summer. They predicted those increases would continue, helped by strengthening overseas demand and less impact from federal government spending cuts and tax increases.

“As long as the overseas recovery continues and the domestic fiscal drag fades, output should continue to grow at reasonable rates,” said Paul Dales senior U.S. economist at Capital Economics.

The government report was the latest sign of strength for manufacturing. A private sector report from the Institute for Supply Management showed factory activity climbed to a 2.5-year high in October. The group’s manufacturing index has risen for five straight months.

The October gain was especially encouraging because it showed the federal government’s 16-day partial shutdown had little effect on manufacturers.

Kiersten Bagley Joins Speak Creative

Kiersten Bagley has joined Speak Creative as a digital marketing and PR specialist.

Bagley, who previously was with Howell Marketing, is the 20th team member at Speak in what is a new position created to offer more services from the agency, including strategic content writing, media placement and more.

Jacob Savage, owner and president of the Memphis-based Web design and interactive agency, told The Daily News in September that Speak would be adding to its staff thanks to an influx of requests from businesses looking to take their digital offerings to a new level.

Senate Panel Advances Yellen’s Bid to Lead Fed

A Senate panel on Thursday advanced Janet Yellen's nomination to lead the Federal Reserve, setting up a final vote in the full Senate after lawmakers return from a two-week Thanksgiving break.

The Senate Banking Committee approved her nomination on a 14-8 vote. Sen. Joe Manchin, D-V.Wa., was the only Democrat to oppose Yellen's nomination. Republican Sens. Bob Corker of Tennessee, Tom Coburn of Oklahoma and Mark Kirk of Illinois supported her.

Yellen's path to confirmation also became easier on Thursday when the full Senate voted to change its rules for approving all presidential nominees other than Supreme Court selections. Now a simple majority will be required, instead of 60 votes.

Republicans could still try to delay the final vote to focus attention on other issues. For example, Sen. Lindsey Graham has threatened to hold up nominations for government positions until survivors of last year's deadly attack on the diplomatic post in Libya appear before Congress.

But Democrats control 55 votes in the chamber, so such tactics could easily be overcome.

Yellen was nominated by President Barack Obama in October to succeed Ben Bernanke, whose second four-year term as chairman will end Jan. 31.

She would be the first woman to lead the Fed and the first Democrat to do so since Paul Volcker stepped down in 1987. She made clear at the committee's hearing last week that she's prepared to support the Fed's extraordinary efforts to bolster the economy until there are clear signs of a sustained rebound and further improvement in the job market.

As a result, the Fed's low-rate policies are expected to continue under her leadership.

PROPERTY SALES 21 82 6,474
MORTGAGES 7 53 4,088
BUILDING PERMITS 240 353 15,714
BANKRUPTCIES 38 58 3,328