16 Biggest Business Stories in 2016
GoLocalProv Business Team
16 Biggest Business Stories in 2016
There was a mixed bag for big projects in Providence - Superman, Wexford, and Jason Fane's proposed three towers all face uncertain fates. 2016 can be defined as the year of the non-groundbreaking.
16 Biggest Business Stories of 2016
#16
1-on-1 with Luca + Danni’s CEO After Closing Major Investment from PJC Venture Firm
It's official - Luca + Danni has scored a major round of financing and may be on the road to being the next hot Rhode Island startup. GoLocal went 1-on-1 with Luca + Danni’s CEO Fred Magnanimi.
Luca + Danni is a different breed of handcrafted jewelry. Magnanimi would not disclose the size of the investment from PJC (formerly Point Judith Capital), but according to sources it is a seven figure deal and is in keeping with its target investment range of PJC — usually $500,000 to $3 million.
Here is what Magnanimi told GoLocal about the deal and what it means for the future of the Cranston-based company.
GoLocal: How will you use of the investment from PJC?
Magnanimi: We'll be using the funds to expand and strengthen all aspects of our wholesale and e-commerce businesses. For our wholesale channel, we plan on investing part of the capital in customer management including sales, marketing and merchandising (includes headcount increases).
#15
Alex and Ani Buys Rafealian’s Cinerama May Be Precursor to a Public Offering
GoLocal has learned that Rhode Island-based jewelry company Alex and Ani is making yet another move as the company is buying its supplying manufacturing company and the move may be a precursor to an IPO.
Alex and Ani is purchasing Cinerama, the old-line manufacturing company that spawned Alex and Ani and has been the primary manufacturer since the company launched.
The value of the deal may be as much as $100 million in cash and stock. The strategic importance is that Alex and Ani will have complete control of manufacturing. Now, the company is more vertically integrated than ever — a critical step to valuation in a public offering.
Cinerama Building in Cranston
According to an internal executive Alex and Ani memo secured by GoLocal, “This is a big step for us as we continue to grow and become vertically integrated retailer in making ALEX and ANI a global brand.”
Cinerama is owned by Carolyn Rafaelian, the founder of Alex and Ani, and her sister, Rebecca Rafaelian-Caruolo. The sisters took over the company around the time Ralph Rafaelian died in February of 2012.
#14
West Valley Inn Deal Collapses, Restaurant Closes
The deal proposed deal to save one of the state’s largest event and banquet facilities - the West Valley Inn — has collapsed.
The restaurant will close immediately and more than 70 full and part-time employees will be laid off.
Frank DiBiase, Jr., told GoLocalProv.com that the deal "did not work out.” He reiterated that he had nothing bad to say about the sellers, but that they are walking away.
“We never signed a purchase and sale," said DiBiase.
Latest in Saga
The DiBiases own the Spring House on Block Island and the Atwells Restaurant Group, which owns many restaurants on Federal Hill in Providence.
At 9:00 pm on Friday night, the Correia family announced the restaurant would close immediately. The family has owned and operated the restaurant for more than 40 years.
Approximately three weeks ago, the Correias had announced that they were seeking a buyer due to financial issues for the company.
The announcement earlier this week by the DiBiase family that they were pursuing purchasing the facility was welcomed news, but sources close to the transaction tell GoLocalProv that the deal started to come apart during the walk-through inspection by the DiBiase family and their team.
#13
GE Goes to Boston
General Electric is expected to announce that it has chosen Boston to be its new Corporate Headquarters over competing cities Providence and New York City.
This is a big hit for Governor Gina Raimondo's effort to recreate Rhode Island's economy and another win for the Commonwealth's Governor Charlie Baker. GE ranks 6th on the Fortune 500 list.
In an interview with Providence Mayor Jorge Elorza at the opening of the Say Cheese restaurant on Weybosseet Street, the Mayor refused to comment on why Providence lost out. He told GoLocal he would not comment until the selection was official.
The announcement comes months after Rhode Island was on the short list to win one of corporate America's most prized and respected companies. GE is ranked 9th in the United States by Fortune as most respected.
The Boston Globe reported on the development on Wednesday, citing that GE executives had made calls to Governor Baker regarding the deal.
RI Comes Up Short
As GoLocal reported in December in "Five Economic Projects - Can Raimondo Get Them Done?", Rhode Island came close to the prize.
Reports that the Connecticut giant is eyeing a move elsewhere — with Rhode Island on that short list — has many a Ocean Stater excited at the possibility. The Boston Globe not surprisingly made the case that their state should top the list (taking a dig at the others), saying that the "Boston area is on the short list of contenders for the headquarters and its 800 people, as GE’s search focuses on high-cost states in the Northeast. In relation to those states, Massachusetts compares favorably on its business tax climate."
However a Connecticut State Rep told the Hartford Courant a month earlier that Rhode Island as an option “wouldn’t surprise him.” Said State Rep John Frey in November, “It's been expressed to me by a couple of people at GE that they've been impressed by what the governor has done with state employee liabilities." To say a GE coup by Raimondo would be monumental for Rhode Island would be an understatement.
#12
Projo Owner Got a $1 Million Raise Amist Layoff and Buyouts
Kirk Davis, Chief Operating Officer of GateHouse Media, which is the parent company of the Providence Journal received more than $1 million in additional compensation in 2015 over his 2014 income. During the same period the Providence Journal continued to loss advertising revenue and circulation, and the company made substantial staff reductions in Providence.
Davis’ overall compensation increased from $917,000 in 2014, to $2.1 million, according to SEC documents first reported by Boston Business Journal.
Davis’ compensation increase of over $1.1 million. His 2015 compensation was comprised of a base salary of $500,000, a cash bonus of $600,000 and $1 million came in the award of stock. During the same, the Providence Journal went through two round of layoffs and buyouts.
During the past 12 months, the parent company’s stock has dropped from $23.87 per share to a close on Friday of $15.62 a share — a 34% decrease in stock value.
Cutbacks at Providence Journal
In September of 2014, twenty-two Providence Journal reporters were laid off and again in 2015 another 12 coy editors were laid off. During the remained of 2015, others on the Providence Journal staff took buyouts.
The Providence Journal's building was sold by their previous owner and now the paper only utilize about 15% of the space they once occupied.
Efforts to reach John Hill, head of the Newspaper Guild were unsuccessful.
#11
One of Rhode Island’s Top Entrepreneurs Launches New Venture
David Paolo has launched a range of companies in Rhode Island over the past three decades and now he is launching his newest project G Media Studios. The company is Rhode Island’s first agency focused exclusively on experiential marketing and content development.
“The age of experiential marketing has matured. These events…combined with the correct social and online digital campaigns are an essential piece of every integrated marketing budget. Its not about driving a one dimensional purchase anymore, it's about building a long lasting relationship (with the consumer) for which you earn repeat purchase,” said Paolo in an interview with GoLocalProv.
"From brand awareness, lead generation, or product purchase, experiential accomplishes each aspect and out performs every other medium."
Presently, G Media is launching two national experiential marketing campaign — one as a contractor to one of the largest agency in the space, and, the other with BH Group USA LLC. out of Miami Beach Florida which owns among several other brands the French made The Notorious Pink brand of blush wines.
#10
Providence Parking Meters Policy Forces Numerous Businesses to Close
No place in Providence has been hit harder than Thayer Street.
New data shows stores and restaurants on Thayer Street in Providence reporting a 40% or more decline in business and employment since the addition of parking meters, according to real estate developer Kenneth Dulgarian.
The additional information comes after two businesses -- Verizon and ZuZu's Petals -- told GoLocalProv.com that they closed their doors due to loss of business with meters.
In a letter sent to the Providence City Council this week, Dulgarian informed elected officials that after talking with business owners, he learned:
* Paragon Restaurant had averaged 6200 customers a month before meters and now averages 4000 a month
* Antonio's Restaurant had 25 employees before meters and now has 7
* Silvia Disposal hauled away 2.5 truckloads of rubbish a week from Thayer Street before meters and now has 1.5 truckloads
"Quite frankly, it's embarrassing to have to review things of this nature," said Dulgarian on Thursday. "Even to be off 5% on sales is devastating. These businesses are on oxygen support."
#9
More than 100 Errors on the RI Tourism Website
The errors are stacking up in the new Rhode Island tourism campaign. On Wednesday, numerous members of the Commerce Corporation’s staff had been redeployed to review the new tourism website to identify errors and make corrections.
This is after a Boston ad agency developed the site and it was launched to the public and potential visitors in Rhode Island. The Boston agency — Connelly Partners — was not one of the three agencies awarded contracts to rebrand the Rhode Island tourism. Moreover, Commerce has not issued any RFPs for the rebranding of the website.
Connelly Partners did work with Commerce Corp's Chief Marketing Officer Betsy Wall when she served as the executive director of the Massachusetts Office of Travel & Tourism. Both were fired when Governor Charlie Baker took office in 2015. Both left under some controversy.
According to staff members at Commerce who spoke to GoLocal, nearly 100 errors have been found, including stock photos of other parts of the country and factual errors.
#8
Concerns Arise Over Ava Anderson Products
New concerns have arisen this week regarding Ava Anderson Non-Toxic (AANT) products, in light of the company’s news that the Anderson family is walking away from the brand amidst allegations of bullying and revelations of ingredient and labeling problems with the line.
GoLocal’s repeated efforts to reach out to the Andersons after an assistant had offered to set up an interview -- and repeated emails and calls -- have gone unanswered.
Fitness and nutrition consultant Merideth Oram wrote “Ava Anderson Scandal: Why It Impacts Female Entrepreneurs” in her blog “Below the Fork,” this week on Wednesday, in which she includes an eighteen minute video outlining the issues with how the company — which admitted to having products containing ingredients not disclosed on the label — addressed the issue.
“[It] blows my mind. If they just handled the problem and acknowledged the problem, but now they have completely ruined all integrity,” said Oram. “The problem is the entire industry is being questioned. All the progress we've made has been backpedaled. To cite online bullying makes me angry. If you have haters, you're doing something right. [You're pointing] out that the products [people] are buying at drugstores are detrimental to you in the long run. Her walking away because of ‘bullying’ -- it's 100,000 times worse.”
GoLocal Interview with Oram
Oram told GoLocal that after hearing this week that AANT was winding their LLC down and turning the company over to management, when she was forwarded an email AANT had sent saying they’d had a third party test the results with what they said contained “no chemicals of concern,” that she had even more questions.
“When I saw that email I thought it was going to be every product turns out to not have toxins,” said Oram. “I know they addressed the scents actually having synthetic fragrance (not on the label) and issues with he blush, but then the issues with the soap labeling were revealed. I don’t know why they’re not promoting the findings more and coming clean — it comes down to the lack of communication, which is a huge lesson for entrepreneurs.”
#7
New “One Tower” Design for 195 in Providence Draws Mixed Reaction
A new trimmed back proposal announced Thursday by New York developer Jason Fane to start with one tower — instead of the originally proposed three towers — on 195 land has drawn mixed reactions from elected officials and community leaders.
City Council President Luis Aponte, who had criticized the first three tower proposal when it came out, said that he appreciated Fane’s willingness to take feedback.
“Looks like one evil tower is better than three,” said Aponte. “Look, it shows a willingness to understand the terrain and the concern of city leaders -- I am under impression that this was a negotiative process.”
SLIDES: See Reactions from Community Leaders BELOW
After releasing his three tower vision in November, Fane's new proposal, or "Phase One," is a proposed 43 story tower, which "will infuse a projected $150 million in new development into the state’s capitol city," according to the company.
“It's smaller scale, fewer units, and a different approach than proposed -- the design hasn't gotten better but that's something we can work on,” said Aponte. “We look forward to further discussions and I'm please with their enthusiasm that they want to move forward quickly.”
Maintaining Opposition
Jewelry District Association Vice-President Sharon Steele said that she opposed the original proposal, and opposes the new tower for similar reasons.
Providence's skyline is set to change significantly in the coming years -- will a new tallest building in the city be part of it?
“When the original proposal happened, I said my immediate reaction was the scale was not right for that location. thought it would look great in Duba - but the scale was all wrong for Providence," said Steele. "That’s not saying we’re not ready for out-of-the-box thinking, but we’ve worked for the past ten years on bringing the park, and pedestrian bridge, to fruition.”
In his release Thursday, Fane acknowledge the opposition based on the towers’ size.
“Some people think that our proposed towers will be much higher than the existing tall buildings in downtown Providence. In fact, the opposite is true. Some confusion was caused by the angle of the rendering, where perspective made Hope Point Towers look much taller than the other Providence towers including the so-called 'Superman' Building,” “Our phase one, 43 story tower, is only about 20 feet taller than the Superman building and includes both residential use and parking, which Superman does not.”
Steele said that it was not only the tower’s height, but how it is designed that she is concerned about how it would fit in the area.
“These buildings - and this tower - are slated to be built on ‘podiums’ of five stories — that’s for parking,” said Steele. “116 Chestnut Street is six stories. That would be just the platform — that will read like a wall, all along Dyer Street. Behind it is the park, and the river, and pedestrian bridge. The park would be in constant shadow, and then it becomes for all intents and purposes a private park for the towers. We didn’t fight [the Paw Sox] stadium to end up with a five story podium for parking."
#6
Raimondo, Elorza Refuse Comment on Donations from Construction Co. Hit by Feds
Two of the top recipients of campaign contributions from Rosciti Construction -- who improperly sought reimbursement of funding for minority-owned and women-owned businesses, according to the U.S. Attorney's Office -- have refused to say whether or not they will return the donations.
Rhode Island Governor Gina Raimondo, and Providence Mayor Jorge Elorza, who each received thousands in contributions from Rosciti, were silent on the issue of whether or not they would keep the money from employees of Rosciti construction.
Read: RI Construction Co. Hit by Feds in $1M Settlement is Big Campaign Donor
Rosciti is responsible now for paying part of a $1 million dollar settlement with the Feds to resolve civil allegations that they violated the Federal False Claims Act, by submitting, or causing the submission of, claims for reimbursement for funding earmarked for minority, women-owned, or small business that they were not entitled to receive.
Responses to Action
Warwick Mayor Scott Avedisian, who trailed Raimondo and Elorza in Rosciti contributions at $1500, had the following to say on Tuesday.
" needed to speak with the United States Attorney to make sure that I have all of the appropriate background information. The US Attorney told me this is a civil issue and not criminal," said Avedisian.
"Then I needed to check to see if either company has any existing contracts with the city. They do not. There was apparently some sewer work many years ago," continued Avedisian, whose Rosciti contributions were made in 2013 and 2014. "Given those facts and never having met the donor, I do think any further action is warranted."
U.S. Attorney Peter Neronha had strong words to say about the case, however:
“Disadvantaged business enterprise requirements exist to make sure that small companies owned by women and by minorities have a fair shot to compete for, and benefit from, the economic opportunities provided by federal grants and contract dollars,” said Neronha on Monday. “That opportunity is lost when companies manipulate the process to secure federally funded work in place of those that are legitimately deserving. This Office will continue to use all means at our disposal to ensure that contractors who receive federal dollars play by the rules."
#5
Superman -- Still Vacant After 3+ Years
After three plus painful and embarrassing years, the Superman building is still vacant.
Potetential tenants include PayPal, but after months of plans there is no progress in making the rehab of the building a reality.
As GoLocal reported in November, the new plans for the 3 Tower complex (now 1 Tower) may be a barrier to Superman's developement.
Superman's Recent Residential Play
In 2014, when Superman Building’s developer was proposing transforming Rhode Island’s tallest building into residential use, a number of leading economists and business leaders raised concerns about the market's appetite to absorb the influx of high-end housing.
“The residential units proposed in the Superman Building, when completed and with the extra charges added to the rent or sale of the unit, will not be affordable to most Rhode Islanders. Most of these units will remain empty for years,” said Dr. Edward M. Mazze, Distinguished Professor of Business Administration at The University of Rhode Island, at the time.
“The city should not fund housing projects by providing special deals. Government officials should not be dazzled by slick presentations, pro-forma financial statements, models of the construction project and promises of the future. If the project makes economic sense, private investors will put in their money because of the returns they will receive. Providence can then collect the taxes it needs to support city programs. If the project makes no economic sense, the builder will go to the government for funding or relief and Providence taxpayers will get hurt,” added Mazze.
At the time, Superman’s developers were asking for upwards of $35 million in state support, above and beyond tens of millions in federal tax credits and tens of millions from the city of Providence in tax stabilization.
Mazze also told GoLocal at the time, “During the next five years, the growth in good paying jobs in Rhode Island will be for jobs located outside of Providence. The real need for housing in Providence is for families needing affordable housing and students attending colleges in the city. This market, unless subsidized by tax credits or other government support, is not as profitable for builders as is constructing higher priced residential units,” Mazze said.
“Even though Providence tries to portray itself as a great place to live, many of the amenities that city dwellers want do not exist. Residential building projects with more than ten units in Providence are extremely risky.”
Whether those words are true two years later can be argued. Certainly, there has been little significant economic develop during this period that would change Providence’s fundamentals.
#4
The Fall of WPRO - Cianci's Death and DePetro's Departure
For decades WPRO AM has been one of the leading mid-market AM talk radio stations in America. While most AM stations have shifted to syndicated shows or dropped the format all together, WPRO had been successful.
But the death of Buddy Cianci and now the departure of the controversial John DePetro is making the station a bit of an also ran. Since Cianci's death there has been a huge drop-off in ratings and revenue. Hopefully, the station will stay local and live.
#3
Is Garden City the New Providence Place Mall
In 1999 when Providence Place Mall opened it was a heralded as the spark to the City of Providence’s Renaissance and was expected to be the death knell to suburban malls. Now, fifteen plus years later, Providence Place has lost a little of its luster, and has been hit with some key vacancies. Top upscale retailers are now choosing to locate at Garden City in Cranston over Providence.
For Garden City, an outdoor shopping center built in the 1950s as part of a planned community, there is a growing momentum and creation of a true destination shopping experience.
Providence Place has had a vacancy in one of its three anchor locations for a year since JC Penney closed in 2015. This month, Joe’s American Bar and Grill closed in Providence. Only one of the three anchor positions has remained consistent since the Mall opened - Nordstrom.
"Finding the right anchor tenant(s) takes time, in any mall in any city. Our parent company, GGP, has a group of dedicated individuals focused on locating an appropriate tenant to fill this space." said Dante Bellini, spokesperson for Providence Place.
Providence Place is a bit of a microcosm of the city itself. The mall has been the site of suicides, gang violence and robberies. On most Friday and Saturday nights Providence Place is abuzz with a large teenage crowd and a corresponding show of security force. "Providence Place is an urban mall that enjoys the advantages and faces the challenges every urban mall has. With respect to safety, PPM has both 24 hour security plus Providence Police details. We have an excellent relationship with Providence Police who understand the differences between an urban and suburban retail center," said Bellini.
Now, Garden City, an outdoor shopping center once left for dead in the 1970’s, has unexpectedly surpassed Providence Place and become the hub for upscale shopping in Rhode Island.
"The center is now a destination where shoppers can buy clothing, gifts, furniture, get a haircut, do their banking, enjoy a nice restaurant, workout, grocery shop, enjoy a summer concert and more all in one convenient location. We wanted to create an enjoyable place for shoppers of all generations -- and the response has been tremendous," said Joe Koechel, General Manager from The Wilder Companies, Garden City Center's management company.
Certainly, Providence Place still continues have a range of upscale retailers — Nordstrom, Apple, and Tiffany. "Zara, first in the area, LEGO, Free People, The North Face. These retailers would be stellar additions in any mall in the country. These are retailers that do their due diligence and select locations that will be successful," said Bellini.
#2
Raimondo's Massive Subsidies to Out-of State Companies
Gina Raimondo's administration has been handing out tens of millions of dollars to out-of-state companies for promises of jobs. To date, Rhode Island taxpayers have promised Wexford (Brown and CIC) nearly $40 million, Johnson & Johnson $6 million ($80,000 a job), the British conglomerate Virgin nearly $6 million, and GE is getting $5.3 million for just 100 jobs. Nearly $60 million in total subsidies.
The corporate subsidies.
#1
CNBC: Rhode Island is Last in America for Business
Governor Gina Raimondo may want Rhode Islanders to stop complaining, but the cable business news network CNBC gave the complainers lots of new ammo. Rhode Island is ranked 50th out of 50 states for business.
Scott Cohn, the author of the rankings interviewed Raimondo and then pointed out that Governor Lincoln Chafee before her had made many of the same claims about how RI’s economy was on the rebound.
But, in fact Rhode Island dropped under Raimondo. Rhode Island was ranked 48th Raimondo’s first year.
Rhode Island ranks 45th for cost of doing business, 50th for infrastructure, 43rd for cost of living and 45th for access to capital.
Utah is Number 1
Here is how CNBC praises Utah's top ranking:
"In many ways, this is the culmination of a decade of hard work by the people and businesses of Utah, developing innovative industries, a skilled workforce and a critical mass of companies big and small that is now rivaling Silicon Valley.
It's not surprising that unicorns like Qualtrics and InsideSales.com are emerging in Utah as venture capitalists flock to the state to invest in a wide variety of industries — from energy and software to medical device companies.
Lured by factors such as tax breaks, affordable real estate, an educated populace and a strong public-transit system, many iconic companies have set up home bases in the state. They are attracted to the pipeline of STEM workers from such schools as Brigham Young University and the University of Utah."
