Energy independence will only come with sharp increases in gasoline and power costs – and bipartisan support for it. That was the message delivered by two nationally known businessmen during a Feb. 17 town hall meeting at Nova Southeastern University.
Texas energy tycoon T. Boone Pickens and AutoNation CEO Mike Jackson, traditional Republicans, declared firm support for President Barack Obama’s much-anticipated clean energy initiatives.
“Energy is going to be more expensive if that [energy independence] is going to happen, and I’d like to see a leader tell the American people that,” said Pickens, chairman of BP Capital Management. “I’m fully on board. I’m a Republican, but I’m an American. ”Jackson said the U.S. needs an ambitious program – like President Eisenhower’s construction of interstate highways – to end the nation’s foreign oil addiction. “You can only have so much government regulation,” he said. “But, on this issue, it’s clear that, without a plan, we’re going to miss out on all this innovation happening around the world.”
Jackson, a longtime advocate of higher gasoline taxes, said he still supports additional taxes to encourage new technology, but not until the economy recovers. Jackson has been involved in lobbying efforts for federal aid to the U.S. automobile industry.
He also spoke about his support for flex fuels and cleaner, more-efficient vehicles, notably plug-in hybrids. Jackson said batteries for electric vehicles are still far too heavy and costly.
“The critical path is the battery,” he said. “Japan is pouring billions into development of a better battery, but here, manufacturers have to go it alone.” Jackson talked briefly about recent gas price swings affecting AutoNation sales. He said the value of a used Toyota Prius hybrid fluctuated by about $10,000 last year, from a high of $25,000 when gas was priced at $4 a gallon last summer.
The two businessmen drew regular laughter from the crowd. Pickens joked that he’d become “telephone mates” with former VP Al Gore. He said most recent U.S. presidents genuinely seek energy independence, but just don’t understand it.
Pickens mentioned his dreams of seeing wind turbines erected on a large scale throughout the Western states to power the nation’s electric grid. After he said General Electric makes the best wind turbines in the world, Jackson joked: “You could put a big windmill right there in [Washington] D.C. MORE SouthFlorida.BizJournals.com
$27.5 billion for highway construction
$19 billion for health information technology
$18.8 billion for clean water, flood control and environmental restoration
$17.7 billion for transit and rail
$16.5 billion to make public buildings energy efficient
Source: House Appropriations Committee
By Bill Frogameni and Kent Hoover
Now that President Barrack Obama’s $787 billion stimulus plan is law, questions are swirling about how that money will benefit South Florida.
The politics of getting the economic stimulus package passed may pale compared with the politics of getting a piece of the legislation's billions of dollars in spending. Much of the money will flow to state governments and school districts through existing funding formulas. Localities will compete with each other for much of the funding, particularly for road repair and other highway projects.
States have identified more than 5,000 highway projects costing $64 billion that could be awarded within 180 days. The bill will fund only $27.5 billion of these. Governor Charlie Crist’s office estimated Florida’s share of highway funds to be $1.4 billion. Overall, the state estimated it would receive $12.2 billion in stimulus money.
Some of that will be filtered through the state before making its way to South Florida; still other funds will be channeled directly to the local governments. But it wasn’t clear how much will be distributed to the tri-counties since the bill was so fresh, said Sterling Ivey, a spokesman for Gov. Crist. “We’re going to see what kinds of requirements are in the bill to push the money out,” he added. MORE SouthFlorida.BizJournals.com
Leases that were signed at top-of-the-market rents for office, retail and industrial space are starting to squeeze tenants, now that the good times are gone. This is prompting a growing number of companies to knock on their landlord’s door, looking for discounts.
And, as economic conditions remain tough, landlords are likely to have to deal with a mounting tide of lease renegotiation requests, said real estate analyst Lewis M. Goodkin, founder of Miami-based Goodkin Consulting. “Why wouldn’t we expect lease renegotiations in a recession?” he said. “The name of the game is to stem the tenant’s bleeding. Less cash flow for landlords beats the hell out of tenants forced out of business.”
“Tom Capocefalo, VP of tenant representation firm Studley in Miami, said there needs to be give-and-take between landlords and tenants to reflect market conditions.
“What may have been perfect space in 2005 may be too large or too small today,” he said. “I can’t give you details of my secret sauce for lease renegotiations, but, suffice it to say, they are going on quietly.
“It is not a quick or easy process,” Reichel said. “In many cases, lender approval is necessary for lease modifications over a certain square footage and, in the case of conduit loans, there are many layers of approvals to wade through. And sometimes, the lenders don’t get it.”
George Sacks, principal broker with Commercial Florida Realty Advisers in Deerfield Beach, has seen this cycle before. In fact, he was an active participant.
“When I was with Cushman & Wakefield, we set up a unit specializing in early lease renewals and renegotiations, so that tenants stayed in place,” Sacks said. “We saved millions for Prudential Securities [now Wachovia Securities] by consolidating and downsizing their spaces.”
In most situations where cash flow won’t support lease terms, there are three options that involve the landlord: buy the lease out; renegotiate the lease terms or sublet the space. A company can also file for bankruptcy reorganization, which typically allows it to keep or reject leases.
“Boy, are the law firms going to be busy.” Goodkin said. Landlords are finding they have to play ball, but both sides have to approach it from a win-win position, according to Tyrone Bongard, an attorney with Gunster, Yoakley & Stewart in West Palm Beach specializing in real estate matters.
“Unheard of a few years ago, it’s become a more common transaction in this recession, and many landlords already have stacks of renegotiation requests on their desks,” he said.
Pickens and Jackson stump for new energy policy First reported on SouthFloridaBusinessJournal.com