Daily Business Report-Oct. 29, 2014
The Thomas Jefferson School of Law in Downtown San Diego.
Thomas Jefferson Law School Announces
Deal to Reduce Debt by $87 Million
The financially ailing Thomas Jefferson School of Law said today that it has signed a restructuring support agreement with nearly 90 percent of its bond holders that reduces its debt by two-thirds ($87 million), reduces its annual cash flow obligations by half, or $6 million, that ensures the continued operation of the Downtown San Diego campus.
Thomas F. Guernsey, president and dean who was recruited in July 2013 to turn around school operations, said the restructuring agreement was needed to address the $127 million in bonds that were issued in 2008 to build its new campus at 1155 Island Ave.
“This restructuring is a major step toward achieving our goals,” Guernsey said. “It puts the school on a solid financial footing and will enable Thomas Jefferson to continue to fulfill its mission serving a diverse group of students in a collegial, supportive learning environment.”
As part of the transaction, the bonds will be cancelled. In exchange, the bondholders will become owners of the building and lease it back to the school. In addition, the bondholders will also receive $40 million in new notes at an interest rate of 2 percent. Interest rates on the previous outstanding taxable bonds were over 11 percent, with non-taxable bonds at over 7 percent.
The agreement cuts the school’s debt by nearly $87 million, from $127 million to $40 million, and results in a significant improvement in cash flow, the school said. Previously, the school was paying about $12 million a year in principal and interest on its debt. Under the restructuring, the school will pay $5 million in annual rent and about $1 million a year in interest expense, cutting its annual payments to the bondholders by almost 50 percent to a total of $6 million.
Guernsey said school operations continue unchanged under the new agreement. The bondholders have expressed confidence in the school and its future plans.
“We agree with the bondholders that this restructuring is in the best interest of the bondholders and Thomas Jefferson,” said Gavin Wilkinson, senior vice president of UMB Bank, the trustee for the bonds. “The restructuring significantly reduces the debt and interest burden on the school.”
The school began discussions on a debt restructuring in earnest in April. Negotiations continued into October, with the law school and the consenting bondholders entering into a restructuring support agreement on Tuesday.
Better Odds in Biotech for Female Leaders
A recent report reveals only 2.7 percent of venture-funded firms have female CEOs, and only 15 percent of venture-backed companies have women anywhere on their executive teams, but it seems the odds are better for women in biotech.
Two San Diego female venture capitalists, Kim Kamdar of Domain Associates and Carol Gallagher of New Enterprise Associates say the gender gap is less pronounced in biotechnology for a few reasons — more women tend to go into health and life sciences, the biotech industry has a strong and diverse network, and women’s natural collaborative leadership style is a good fit for biotech firms that tend to be lead by teams instead of individuals.
Three of the nine partners at Domain Associates are female, said venture partner Kim Kamdar, and of Domain’s portfolio companies, 11 percent have women CEOs. More than half — 64 percent — have women on their management teams.
“I didn’t anticipate it would be that high, because we don’t really have a gender focus,” Kamdar said after conducting the portfolio analysis. — U-T San Diego
County to Develop Rating System
For Residential Care Facilities
San Diego County is teaming up with residential care facilities to help consumers find quality long-term care for the elderly. The Board of Supervisors unanimously agreed Tuesday to develop a rating system for residential care facilities — an idea raised earlier this year by board Chairwoman Dianne Jacob and Supervisor Greg Cox.
Nearly 20 facilities have volunteered to participate in the initial pilot phase of the program, one of several elder care reforms initiated by the county in recent months.
“Our goal is to put a spotlight on the best facilities so families can find a home they can trust for their loved ones,” said Jacob. “Many families today aren’t even sure where to start their search for quality care, but a rating system will help steer them in the right direction.”
A facility’s rating will be based on a wide range of factors, including staffing levels, medication management and dementia care. The county plans to seek and hire a community organization to work out the details and implement the program.
“Placing an aging relative in a long-term residential care facility is one of the most gut-wrenching and complex decisions a family can make,” said Cox. “We need to give families the solid information they need to help guide them.”
Construction Starts on the Third
Building in The Heights at Del Mar
Kilroy Realty Corp. has broken ground on the first speculative office construction in Del Mar Heights in eight years — the third building at The Heights at Del Mar. It’s a $45 million, 74,895-square-foot Class A office building.
The third building is being developed on the four-acre land site that was part of KRC’s 2013 acquisition of The Heights at Del Mar campus that also includes two fully leased, LEED Silver certified office buildings totaling 219,000 square feet. The new LEED Gold targeted building, located at 12770 El Camino Real, will include three stories and is projected to be completed in the fourth quarter of 2015.
The Heights at Del Mar is a complement to the company’s proposed One Paseo, a 23-acre property that will be transformed into a mixed-use environment.
Designed by Gensler, the building will feature steel frame construction, spectacular floor to ceiling glass, a top floor balcony and indoor/outdoor workspaces. The campus offers a myriad of amenities, including a state-of-the-art fitness center, golf simulator, outdoor amphitheater and under-building secured executive parking.
Cassidy Turley will act as KRC’s exclusive leasing agent for the property.
Home Prices Slip Slightly
Home prices in San Diego slipped 0.1 percent between July and August, but were still up 6.2 percent from August of last year, according to the Standard & Poor’s Case-Shiller Home Price Indices released Tuesday. San Diego’s annual increase in housing costs had been in double-digits until recently. The August figure reflected a national slowdown in the real estate market.
The indices were created by taking the housing prices in 20 major real estate markets in January 2000, assigning them a value of 100, and tracking their subsequent rise and fall.
San Diego’s index in August stood at 203.7, reflecting a doubling in home values over 15 years. The rate of increase is the third highest in the United States, behind Los Angeles and Washington, D.C.
— City News Service
Chicken of the Sea Parent Firm
Rated High for Sustainability
The parent company of San Diego’s Chicken of the Sea has been included in the 2014 Dow Jones Sustainability Index for Emerging Markets as a first-time member in the food category — a recognition that could positively affect the buying habits of consumers and investors.
With its inclusion, Thai Union Frozen Products joins an exclusive group of “best in class” companies that are recognized for their leadership in sustainability. Participating companies are ranked according to their total sustainability score and the top 10 percent are included in the DJSI for Emerging Markets.
“Thai Union’s inclusion in this index is a testament to the results that we have achieved not only at Chicken of the Sea, but throughout the entire group of companies under the Thai Union Frozen umbrella,” said David Roszmann, Chicken of the Sea’s chief operating officer.
Roszmann said Chicken of the Sea has been aggressive in seeking ways to manage its energy, waste and water use, and has developed key goals in each of these areas that will be met by 2020. To date, he said, the company has been most successful in waste reduction efforts, with an 11.6 percent improvement in landfill waste efficiency this year compared to last year.
Franchiser of Vending Machines With Healthy
Food Products Plans Southern California Push
San Diego-based Fresh Healthy Vending International Inc., a franchising company for vending machines that contain healthy snack and other healthy food and drink products, said it will borrow up to $1.5 million to install up to 250 company-owned “micro markets” in Southern California. It said each “micro market” features an open display of healthy snack products as well as a refrigerated and freezer case containing beverages and a variety of fresh and healthy offerings.
The company said it has booked more than 2,300 machines for placement in schools, universities, hospitals, community centers, military bases, airports, fitness facilities, YMCAs, libraries and other locations.
“We are extremely satisfied with the terms of our financing agreement, and look forward to commencing the roll out of our company-owned micro markets this quarter,” said newly appointed CEO Art Budman. “The micro markets are our newest product offering and the results of our pilot program have been very encouraging. We believe that these units will make a significant contribution to our growth in the coming fiscal year.”
Supervisors Urge Continued Funding
For Earthquake Detention Stations
The San Diego County Board of Supervisors urged the U.S. Geological Survey Tuesday to continue funding for two Scripps Institution-run earthquake detection systems and registered its support for an early warning system. The USGS plans to cut funding for the Precision Geodetic Network, or Geodesy, which measures tension along the San Jacinto Fault and a network of 21 probes that measure shaking along the fault and five other monitoring stations elsewhere in San Diego County, according to the supervisors. Both are run by UC San Diego’s Scripps Institution of Oceanography
“Scientists at Scripps have been monitoring seismic activity along the San Jacinto fault using a system of precise sensors. However, those state-of- the-art systems are now at risk due to potential budget cuts from the U.S. Geological Survey,” Supervisor Greg Cox said. Eliminating the network of 21 probes would leave only three USGS stations along to the San Jacinto Fault, which runs through San Diego and Imperial counties.
Cox said any advance warning of quake would be reduced. Instead of downsizing or doing away with the programs, the USGS should be working to expand seismic monitoring and create an early warning system.
The network of 21 probes can give officials in San Diego about 25 seconds warning of a quake along the San Jacinto Fault.
— City News Service
Green Homes Tour Set for Nov. 9
The San Diego Green Building Council will host a one-day event on Nov. 9 showcasing a range of sustainable dwellings to the community, from a renovated beach cottage to a new multi-family complex. The self-guided 2014 Green Homes Tour will allow participants to visit a variety of green properties of San Diego and speak with homeowners, architects, designers and green gurus about the eco-conscious options featured.
The tour will feature green homes in the neighborhoods of El Cajon, Jamul, Ramona, La Jolla, South Park, Lemon Grove, Sunset Cliffs and Downtown San Diego.
To register for the tour, click here.
County Roads Need $7.2B in Repairs Over Next Decade
The amount of money needed to bring roads up to par in the San Diego region over the next decade is the second-highest total of any county in the state, according to a report released Tuesday. The “California Local Streets & Roads Needs Assessment 2014 Update” estimates that $7.2 billion is required for road and bridge repair in San Diego County over the next 10 years. Only Los Angeles County, at $19 billion, has a higher estimated cost.
The biennial report — a collaboration between the California State Association of Counties, the League of California Cities and the state’s regional transportation planning agencies — found that pavement conditions statewide are declining, and current funding levels are insufficient to properly fix or maintain streets, roads, bridges, sidewalks, storm drains and traffic signs.
The condition of roadway pavement in San Diego County was rated in the study as a 66, which falls in the “at risk” category and matches the state’s overall rating.
Nearly $7.3 billion in annual statewide spending is needed to fix California’s roads and bridges, according to the report.
— City News Service
New Invasive Mosquito Found in County
County environmental health officials are asking the public for help after the discovery of a new invasive mosquito in San Diego County that feeds in daylight hours and can transmit several diseases. “We’re urging people to look for, and to eliminate or report any standing water that could be breeding grounds for mosquitoes, outside their homes, but also inside their homes because these small mosquitoes like to breed inside too,” said Elizabeth Pozzebon, director of the San Diego County Department of Environmental Health.
County officials said military entomologists at Naval Base San Diego had discovered four Aedes aegypti mosquitoes, otherwise known as “yellow fever mosquitoes,” in the last couple of weeks in offices at the base, situated on San Diego Bay. Navy and County vector control teams are working together to put up traps on and around the base to determine if there are more of these mosquitoes.
The Aedes aegypti mosquito is small and black with white stripes. It differs from native California mosquitoes in that it is known as an aggressive pest that likes to feed mainly during the day, rather than mostly at dusk and dawn. It also likes to live in urban areas and breed in containers, inside and outside of people’s homes — in almost anything that can contain water.
Northrop Grumman Completes
Testing of MQ-8C Fire Scout
Northrop Grumman Corp. successfully completed testing of its MQ-8C Fire Scout unmanned aerial system at Naval Base Ventura County Point Mugu in preparation for at-sea testing later this year.
The Fire Scout, which performs intelligence, surveillance and reconnaissance missions for the U.S. Navy, underwent sloped takeoff and landing testing, electromagnetic testing to assure compatibility with emitters like radar, and dynamic interface testing.
“The sloped takeoff and landing tests are designed to be as real as it gets to actually operating on a navy ship,” says Capt. Patrick Smith, Fire Scout program manager at Naval Air Systems Command. “The autonomous MQ-8C Fire Scout system is able to precisely track and understand the roll and pitch of the surface which resembles at-sea conditions.”
41 Percent of Students At Risk of Not
Graduating Under New SDUSD Standards
More than 40 percent of students in the San Diego Unified School District are in danger of not graduating under new standards that were adopted to ensure students are college ready, according to a district report.
The new standards, called the A-G Plan, ensures that college-prep courses are offered equitably throughout the district, regardless of neighborhood income and ZIP code. Class of 2016 will be the first class to graduate under the new standards, which is more in line with the University of California and California State University entrance requirements.
The district has already made some strides in preparing students for new graduation standards — 50 percent of the Class of 2014 met the standards, compared to 59 percent projected for the Class of 2016. Last year’s graduation rate was 88 percent, the second best in the state for large urban school districts.
Girls have a better chance of graduation than boys with 66 percent projected to pass compared to 54 percent for boys. White (80 percent) and Asian students (71 percent) are more likely to pass the classes than black (45 percent) and Hispanics (44 percent) students, according to the report.
The A-G standards called for four years of English, three years of college-prep math, three years of history and government, three years of science, two years of the same foreign language and one year of visual and performing art with at least a D or better in those courses. A cumulative GPA of 2.0 or better is needed in order to graduate.
— Times of San Diego
UC San Diego Ranked 18th Best in World
UC San Diego was rated the 18th best university in the world in U.S. News & World Reports’ inaugural rankings of global institutions of higher learning that were released Tuesday. The publication has ranked the top U.S. colleges for many years, but this is the first list to include universities around the world. UCSD scored highly for publications by professors and how frequently the works are studied.
California dominated the top 10, with UC Berkeley third, Stanford fourth, the California Institute of Technology seventh and UCLA eighth. Harvard was first on the list, followed by the Massachusetts Institute of Technology.
The Oxford and Cambridge — both in England — ranked fifth and sixth as the highest rated universities outside this country.
The list includes the top 500 colleges in the world based on research reputation, international collaboration, and doctorates awarded, along with publications and citations.
San Diego State University was tied for 492nd.
— City News Service
Elder Care Guides Acquires
Senior Care Management Inc.
Elder Care Guides, a San Diego company that provides in-home care services for aging and disabled adults, has acquired Senior Care Management Inc., following the death of Hilde Lehmann, the founder of Senior Care Management.
Senior Care Management’s longtime director, Betsy Evatt, has joined Elder Care Guides’ care management staff, which is made up of professionals from the fields of social work, nursing, recreation therapy, and gerontology.
“While we are saddened by the reasons behind the acquisition,” we are honored to carry on Senior Care Management’s long tradition of ethics and high standards of service,” said Amy Abrams, vice president of client services for Elder Care Guides.
Headquartered in the Bankers Hill area, the locally owned Elder Care Guides has served families and the professional community throughout San Diego County since 2004. The company serves those with chronic physical or cognitive impairments, including Alzheimer’s disease and other dementias, and assists aging families caring for a loved one with serious mental illness or a developmental disability.
Gov. Brown in San Diego Today
To Promote Water Ballot Measures
Less than a week before Election Day, Gov. Jerry Brown plans a stop today at the San Diego County Water Authority to rally support for a pair of state ballot measures that he has made the cornerstones of his unprecedented fourth-term re-election campaign. Confident he will glide through on Nov. 4, the 76-year-old Democrat has waged a low-key gubernatorial race against his opponent, Republican Neel Kashkari.
His one and only television ad focuses on Proposition 1, a statewide water bond, and Proposition 2, a rainy day fund for the state budget.
“Propositions 1 and 2 will even out the boom and the bust,” Brown says in the ad. “Prop. 1 saves water, to prepare us for droughts. Prop. 2 sets aside money to prepare us for economic storms.”
Brown’s Proposition 1 is a $7.5 billion water bond that would allocate money for water treatment, ecosystem restoration and water storage amid the state’s crippling drought. His second measure, Proposition 2 would create a rainy day fund to help the state in times of budgetary drought.
A recent poll by the nonpartisan Public Policy Institute of California shows Brown leads Kashkari by 16 percentage points. It also shows that Proposition 1 is ahead, with 56 percent of likely voters saying they favor it, 32 percent against and 12 percent undecided. Support for Proposition 2 was not as strong, with 49 percent of likely voters supporting it, 34 percent against and 17 percent undecided.
Opponents of the water bond say it is pork-barrel spending that would create huge debt by building projects that would do little to help ease the current drought. Some also say it favors Northern California projects over those in the southern part of the state.
Those against the rainy day fund budget measure say it includes a provision that would limit how much money school districts can keep in their reserves and puts their stability at risk.
Personnel Moves
Michael Lees Joins Solomon Ward Law Firm
Michael Lees has joined Solomon Ward Seidenwurm & Smith LLP as partner. Lees’ practice focuses on real estate and business transactions, taxation and health care law. He advises individuals and businesses in corporate and transactional matters, and represents both buyers and sellers in acquisitions and divestitures of businesses, real estate and capital assets.
Lees previously was a partner and shareholder at Seltzer Caplan McMahon Vitek. He received his J.D. from the University of San Diego School of Law and his LL.M. in taxation, with distinction, from Georgetown University Law Center. He also holds an undergraduate degree in business administration with a double major in accounting and finance from the University of Arizona.
Procopio Adds Associate
Eric Bernsen has joined Procopio, Cory, Hargreaves & Savitch LLP as an associate. Bernsen focuses his practice on preparation and prosecution of domestic and international patent applications for a variety of technologies, with a particular emphasis on electronics, wireless power and wireless communications, including Wi-Fi and CDMA. He also has experience in prosecution of applications for technologies involving medical devices, radar and aerodynamics. Prior to joining Procopio, Eric was patent counsel at Knobbe, Martens, Olson & Bear LLP.
Morgan Petriello Joins Gerson Law Firm
Morgan Petriello has joined Gerson Law Firm APC where she will be a member of the Real Estate and Environmental Practice Groups. Petriello will represent clients in commercial real estate financing transactions, real estate transactions, and matters involving environmental law. Prior to joining Gerson, Petriello worked for Gordon Rees Scully Mansukhani LLP as an environmental litigation associate. She is a graduate of the Boston College and Fordham University School of Law. Petriello is a member of the San Diego County Bar Association and the American Bar Association.
