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P.O. Box 1738
London, KY 40743-1738
Investing with Vision
www.khic.org
Paul Whitaker (left) and his dad,
Mike, are two of the Whitaker
family members who work at
Superior Printing & Publishing.
The family business, has grown
as a result of working with KHIC.
National resources help family business grow
E
ntrepreneurs in rural areas typically face larger obstacles than their urban counterparts because
funding, technical assistance and advising are scarce.
But one family business in Letcher County
has accessed capital to buy state-of-the-art
equipment, benefited from ongoing training
and participated in a national program at
Babson College, which U.S. News and World
Report has ranked as the top business school in
entrepreneurship for more than 15 years.
The national training program, Goldman
Sachs’ 10,000 Small Businesses, is co-chaired by
Berkshire Hathaway Chairman and CEO Warren
Buffett, the billionaire “Oracle of Omaha.”
As a result of these unprecedented
opportunities and hard work, Superior Printing
& Publishing Co. has more than doubled the size
of its business in the last six years.
Charles and Bobbie Whitaker started the
printing company in a four-room coal camp
house in 1956. Superior Printing & Publishing is
now run by their son, Mike, and his wife, Tina;
grandchildren Paul and
his wife, Betty, as well
as Nick and his wife,
Sabrina; and Mike’s aunt,
Sue Browning.
About six years ago,
son Mike started working
with KHIC, which also encouraged the family to
apply for the 10,000 Small Businesses program.
Family members travel two hours to London
as often as KHIC holds classes on building a
business plan, creating financial statements and
other tools.
“We’ve attended numerous Kentucky
Highlands’ seminars and business training,”
said Paul, who attended the program at Babson
College. “All of it prepared me for 10,000 Small
Businesses.”
Through specific curriculum and a peer-to-peer
learning, the program leverages participants’
shared objectives to grow their businesses,
increase revenues and create jobs. They must
complete and present their business plan to the
class in order to graduate.
Participants spend a week at Babson College
at the beginning and end of the program, where
they receive a combination of advice, guidance
and coaching. Faculty and business advisers work
together to review the growth challenges of each
business owner and suggest specific community
resources that participants might use to target
those challenges. This approach also helps
participants understand the range of resources
in their community and the most effective ways
to use them both during the program and after
graduation.
Paul still talks to members of his peer group
weekly, including an
advertising agency
owner in Atlanta and a
construction company
owner in Milwaukee.
“The program focuses
on growth and got all of
us into the mode of how to grow,” Paul said. “It’s
the first time we sat down and thought about it as
a family. We each bring a specialty to the table.”
As a result of the program and plan for growth,
the company recently bought a small newspaper
in Cumberland and has a plan to continue to
expand in the future.
“Having support of a group of business owners
makes you feel confident,” Paul said. “It’s like
having a board of directors. All businesses have
similar problems, and you can hash them out with
other business owners.”
Participants own companies that had revenues
ranging from $200,000 to $4 million. Of the 75
people selected to participate from across the
country, four were clients of KHIC or the Kentucky
Highlands Innovation Center.
The program is a component of a partnership
KHIC announced in fall 2012 with Goldman Sachs.
The 10,000 Small Business program provided
KHIC’s loan fund with $5 million to lend to small
businesses in low- and moderate-income areas
throughout Kentucky.
To date, KHIC has closed more than $4.6
million in loans to 20 different companies to
create 180 jobs and retain 891 jobs.
Contents:
Letter from the President .............................................2
Long-term relationship helps Phillips Diversified ......2
Promise Zone planning under way ..............................3
Homegrown, healthy & happy.................................3
Workforce housing initiatives..................................4
SOAR Initiative groups meet...................................4
Stardust on the Rise.................................................4
Collaboration provides increased assistance................5
The nutrients of milk and the fun of soda..............5
KHICenter launches entrepreneurial coaching......5
KHIC Initiative featured at Clinton Global Initiative..6
Mountain Ventures invests in Healthcare ............. . 6
OVC president recognized for contributions to
economy.......................................................................7
Bell County medical practice provides
much-needed care........................................................7
In Memory of Eldred Musgrove.................................8
Rockcastle Hospital leverages tax credit ..................8
Staff hires......................................................................8
Exceptional
opportunity arises
from unprecedented
challenges
by Jerry Rickett
Almost 42 percent
of Eastern Kentucky
coal jobs have been
lost in the last three
years. That’s more
than 5,700 jobs
in a region that
already exceeds
state and national
unemployment
averages.
There is plenty of debate on the causes of
that job loss, but one thing we can all agree on
is that we have reached a critical time for our
communities and our future. We must come
together to find the many solutions to uplift our
region into economic independence. There won’t
be a silver bullet.
We must create and implement a multipronged solution. Now is the time to focus on
opportunity, assets and collaboration.
Several new initiatives, many of which are
featured in this newsletter, are exciting examples
of how the public and private sectors as well as
local, state and federal governments are working
to implement new strategies for success.
One such new tool is the federal Promise Zone,
which is being coordinated by KHIC.
Through this initiative, the eight-county area
of Bell, Harlan, Letcher, Perry, Leslie, Clay, Knox
counties and part of Whitley County will have a
competitive advantage in applying for federal
grants as well as additional assistance from
various federal agencies. It is one of only five such
designations in the country.
At the same time, USDA’s StrikeForce for
Rural Growth and Opportunity Initiative has
expanded into this region of Kentucky and will
provide partnerships and assistance for economic
development projects and investment.
KHIC also has been part of east Kentucky’s
Shaping Our Appalachian Region (SOAR),
an expansive effort to broaden and diversify
economic opportunity led by Governor Steve
Beshear and Representative Hal Rogers.
These initiatives will complement KHIC’s wideranging economic development strategies loans
and equity investments; technical assistance
and training; and affordable, energy-efficient
workforce housing.
They also will focus the state and nation on the
investments and opportunity possible here. Look
no further than this newsletter for examples of
the successful entrepreneurs and organizations
making a difference in their communities.
The region is poised to find the solutions that
will shape our communities for years to come.
We look forward to continuing to be a partner in
these critical efforts.
Long-term relationship helps Phillips
Diversified grow to 258 employees
The latest partnership between Phillips Diversified
Manufacturing and KHIC will allow the company to
create 40 new jobs with 75 percent being filled by lowincome workers.
“We deliver on time and provide good
quality,” he said. “We don’t lose a customer
once we get them.”
It’s a relationship that dates back 20
years – the same amount of time Phillips
Diversified Manufacturing has been in
business.
Kentucky Highlands and Phillips
Diversified have long history of working
together to fund expansions and create
jobs. The contract manufacturer focuses on
electronic components and metal products.
When other plants were shuttered or
transferred jobs overseas,
owner Clyde Phillips, a
Clay County native, was
determined not only
to survive but also to
expand.
But it isn’t easy. Phillips praised the local
banks but said they aren’t large enough to
finance Phillips Diversified’s bigger projects.
That’s where Kentucky Highlands comes
in. It has made a series of loans to the
company throughout the last 20 years.
The latest initiatives were a $250,000
loan to finance injection
molding machines and
an $800,000 working
capital low-interest
loan financed by a
Community Economic
Development Projects
“A lot of our
grant from the federal
citizens leave to go to
Clyde Phillips
Office of Community
work in Lexington or
Services. That loan will
Georgetown or become
be used for working
long-distance truck
capital that is necessary to support a
drivers,” Phillips said. “We’d like to change
contract expansion with its largest client.
that.”
“We don’t lose a
customer once we
get them.”
Its two plants in Clay County make it
the largest private employer in the county.
Phillips Diversified also has a plant in
Jackson County.
Phillips attributes the company’s success
to caring for its employees and customers.
Investing in our
Community
Fiscal Year 2014
“Kentucky Highlands has been our
financial partner since our first building,”
Phillips said. “And in every major project
we’ve had since then, Kentucky Highlands
has been involved. We value them very
highly.”
Total Investments Closed - $34,616,580
Number of Loans Closed – 142 loans
Equity Investments – 6
Investments Outstanding – 342
Employment – 11,702
President and CEO
Kentucky Highlands Investment Corporation | June 2014 | Page 2
Promise
Zone
planning
under
way
Earlier this year, an eight-county area in
Southeastern Kentucky was named one of only
five Promise Zones in the country.
The initiative will give the area a
competitive advantage in applying for
federal grants as well as additional assistance
from various federal agencies that oversee
housing, education, economic development,
agriculture and safety. Those agencies also
will provide increased coordination to help
the counties maximize federal and private
investment.
The zone -- comprised of Bell, Harlan,
Letcher, Perry, Leslie, Clay, Knox counties and
part of Whitley County -- will focus on six key
areas:
• Creating jobs
• Increasing overall economic activity
• Improving career education
opportunities
• Reducing drug-related problems
• Improving broadband access
• Improving healthy food access
Projects such as the Houseboat to Energy
Efficient Residents (HBEER) and Grow
Appalachia already are benefiting from the
designation. (See accompanying newsletter
stories.)
“Effective planning will be the foundation
for this effort and must be completed before
we begin implementation,” said Jerry Rickett,
president and CEO of KHIC, which serves as
coordinator for the zone.
KHIC is working with the University of
Kentucky Extension Service’s Community &
Economic Development Initiative of Kentucky
to create a strategic plan, which will be
completed later this spring.
A listening session has been held in each
of the eight counties with a total 350 people
attending. In addition, there were 12 sessions
with 240 area youth. Themes that developed
from the sessions included increasing
educational opportunities, including
vocational, job training and higher education;
expanding career options; increasing tourism;
expanding economic development beyond
coal; and dealing prescription and illegal drug
abuse.
“The processes and investments that KHIC
and our partners will bring to the Promise
Zone will yield a measurable return in terms of
jobs created, increased tax base, decreased
government spending on social programs,
technology improvements, crime reduction
and private investment,” Rickett said. “There
also will be immeasurable returns in terms of
self-sufficiency, self-esteem and community
well-being.”
Homegrown, healthy and happy
I
t’s not the chicken or the egg. It’s
the chicken AND the egg … and
the potatoes, tomatoes, corn and
beans.
Grow Appalachia began with a discussion
of John Paul DeJoria, co-founder and CEO of
John Paul Mitchell Systems hair care products,
and Berea College about how to increase the
availability of local, healthy food to solve the
issues of food insecurity and chronic health
problems.
Kentucky Highlands Investment Corporation | June 2014 | Page 3
produce through pollination; and chicken
production, which has the added benefit of
reducing pest insects on plants.
Families then learn how to prepare healthy
meals as well as how to can and package their
food in commercial kitchens either for their
own use or to sell at farmers’
markets.
Grow Appalachia is one of
many organizations that hopes
to expand due to opportunities
from the Promise Zone. It
already has partners in all
but one of the Promise Zone
counties.
“We will continue to expand
sites as quickly as partners
want,” Cooke said. “We are
hoping to diversify our funding.
The Promise Zone will open up
partnerships that we otherwise
wouldn’t have had, such as
KHIC. They know what they’re doing, know a
lot of people and have been very supportive of
us.”
Grow Appalachia is looking for additional
partners who are already established local
nonprofit, have a demonstrated interest in
food security already and have solid fiscal
management. Visit http://www.berea.edu/growappalachia/ for additional program and contact
information.
courtesy of Grow Appalachia
courtesy of Grow Appalachia
In four years, the program has grown from
100 families providing food for 2,800 people
to 1,140 families providing food for 20,000
people in four states with 700 individual and 60
community gardens.
“We’re a nutrition-based wellness program
that is putting a lot of really
high quality food on the
table,” said David Cooke,
director of Grow Appalachia.
“People are losing weight
and feeling healthier. Some
folks have told us their doctors
have been able to reduce their
diabetes and heart medication
as a result. We’re also helping
people develop a greater
sense of self-esteem as they
create something of real
value.”
Grow Appalachia credits
this success to partnering
with local nonprofits that already have a
presence, credibility and organization in local
communities. As a result, 95 percent of funding
for the sites goes directly to the families rather
than for start-up or overhead costs.
The program also helps families implement
techniques such as high tunnels, which are
basically unheated greenhouses that expand
the growing season; drip irrigation; bee
colonies to aid in the production of organic
Workforce housing initiatives receive state, federal recognition
Kentucky Highlands’ several workforce housing
initiatives were recognized on the state and federal
levels.
In Whitley County, local, state and federal
officials joined community leaders in a groundbreaking on the next phase of the energy-efficient
Green Valley development.
The development will include 13 Houseboat
to Energy Efficient Residences (HBEER) units
built by Stardust Cruisers in Monticello, Ky. The
units are being funded through a $1 million
community development block grant from the U.S.
Department of Housing and Urban Development
and administered by the Kentucky Department for
Local Government (DLG).
“Quality, affordable housing is an essential
resource for every community,” DLG
Commissioner Tony Wilder said. “The new
‘green’ HBEER units in Emlyn will not only provide
affordable homeownership opportunities, but offer
homeowners continued savings through low cost
energy bills. The Beshear administration and DLG
are proud to be a part of this partnership to build
safe, modern housing in Whitley County.”
HBEER is a partnership among Kentucky
Highlands Investment Corporation, the University
SOAR initiative work
groups begin to meet;
participation
is key
The Shaping Our Appalachian Region (SOAR)
initiative has received many headlines in the last
year for its historic, bipartisan effort headed by Gov.
Steve Beshear and Congressman Hal Rogers to
move Kentucky’s Appalachian region forward.
“The goal of the project is to develop ideas for
change through new approaches and out-of-the
box ideas that provide solutions for the region,
from the region and of the region,” said Jerry
Rickett, KHIC’s president & CEO, who also is serving
on SOAR’s futures forum. “The hard work is just
beginning. We need all hands on deck. Everyone
with a stake in Appalachia should get involved as
we work on implementation of the SOAR plan.”
The latest SOAR meeting was held in April
during the East Kentucky Leadership Conference,
which also gave its Public Individual Award to
Rickett.
SOAR Working Groups convened for the first
time during the conference. They will lead public
discussions throughout Eastern Kentucky on
categories related to strengthening the economy
and quality of life in the region -- agriculture,
community and regional foods; broadband;
business incubation; business recruitment;
education and retraining; health; infrastructure;
leadership development and youth engagement;
regional collaboration and identity; and tourism
including natural resources, arts and heritage.
Along with the Promise Zone and Strike
Force, SOAR is a key component to mobilizing
homegrown entrepreneurs, community leaders and
all citizens to overcome the loss of several thousand
coal jobs, Rickett said.
of Kentucky and Stardust Cruisers to create
energy-efficient manufactured housing at the
region’s houseboat plants. The project’s goals
are to create green jobs, revive the houseboat
industry, utilize Kentucky products and provide
energy-efficient housing.
“This is another step toward making Emlyn,
Ky., a shining light for other communities to see,
and the opportunity to serve as a model of what
can be accomplished when you bring together
people and organizations committed to reducing
the energy cost for homeowners,” Rural Housing
Service Administrator Tony Hernandez said. With solar power being sold back to the TVA
grid, estimated energy costs at current rates are
expected to be less than $1.75 per day -- which
is one-half to one-sixth of energy bills for other
housing alternatives. In addition, more than 80
percent of the home value will be derived from
products made in Kentucky and Kentucky labor,
further increasing the jobs created or saved.
“This development brings together two key
components of our work: putting Kentuckians to
work in good-paying manufacturing jobs in the
houseboat industry and providing homeownership
opportunities to working families in our
community,” said Jerry Rickett, president and CEO
of KHIC. “This workforce housing would not have
been possible without our many partners, who
total more than 35 public and private organizations
and businesses. In particular, I want to thank Judge
Pat White and the Whitley County Fiscal Court, the
Department for Local Government, USDA/Rural
Development, Kentucky Housing Corporation,
Bell-Whitley Community Action Agency, Stardust
Cruisers, Fahe (Federation of Appalachian Housing
Enterprises), and the University of Kentucky’s
College of Design.”
Five near zero energy homes, which are part
of the development, also includes Rural LISC as a
partner.
These efforts earned KHIC an award during
the 2014 Midwest Residential Energy Conference,
where South Kentucky RECC recognized that 100
percent of KHIC’s homes in 2013 were ENERGY
STAR New Homes.
KHIC’s Southern Tier Housing Corp. is an
implementation partner in the Promise Zone,
where HBEER is an identified project. In addition,
USDA Rural Development’s Strike Zone and the
SOAR initiative will include housing components.
From downturn to Dubai –
Stardust on the rise
They are built to withstand the ebb and flow
of the tide, but luxury houseboats became one
of the first casualties of the huge economic
retreat seven years ago.
Kentucky’s Houseboat Capital of the World
went from a $100 million a year industry with 11
manufacturers in the Monticello area during its
prime to only two companies making boats on
a full-time basis now. One of those is Stardust
Ventures.
During the height of its boat building, the
company employed 200 people, but it dropped
down to eight employees by 2010.
Stardust survived the recession and now
has more than 65 employees. The company is
rebuilding its internationally known business
thanks to an improving economy and a couple
of timely programs.
HBEER
The Houseboat to Energy Efficient
Residences (HBEER) initiative has given the
plant work during its traditional downtime
during the summer. Stardust has built three
HBEER homes and will work with KHIC and the
University of Kentucky to build an additional
13 homes through a federally funded grant to
provide energy-efficient workforce housing.
“The partnership also has accelerated our
learning about the constantly developing
trends and products in energy efficiency,” said
Terry Aff, president of Stardust Ventures.
Economic development trip to Dubai
The overseas market has always been
an important customer base for the luxury
houseboat business. That’s why Aff was
interested in participating in a state economic
development trip to Dubai.
Jerry Rickett, president and CEO of Kentucky
Highlands, informed Aff that a Kentucky Export
Initiative State Trade and Export Promotion
grant could help defray the costs of the trip.
Aff applied for and received the $7,500 grant,
which helped him travel to Dubai twice.
The trips have yielded $2 million in sales,
and Aff believes that the number could grow
to $10 million by selling boats to a charter
business that tours Dubai’s expanding canal
system. The canals will eventually reach to the
Burj Khalifa, which at 160 stories, is the world’s
tallest building.
Continued on Page 7.
Kentucky Highlands Investment Corporation | June 2014 | Page 4
business at the RIGHT time. The eCoaches bring the
expertise, passion, and resources available to the state
directly to your own hometown.
Collaboration provides increased
technical assistance
The East Kentucky Technical Assistance
Providers Network is an informal association of
the entrepreneurial and small business training
and technical assistance providers servicing the
development needs of the start-up, emerging and
established businesses throughout Appalachian
Kentucky.
It is a natural outgrowth of 12 years of a
vibrant cooperative lending spirit embraced
by six Community Development Financial
Institutions comprising the Appalachian
Development Alliance. Led by Alliance members
Southeast Kentucky Economic Development
(SKED), Mountain Association for Community
Economic Development (MACED), and KHIC,
the T.A. Network also includes Small Business
Development Centers (SBDC), the Ashland
Innovation Center and the EKU Innovation Center.
Other business support agencies are encouraged
to join as well by contacting Kentucky Highlands
Innovation Center Director Bill Schutters at esd@
khic.org or 606-864-5175.
FIZZA®, which has rented a lab at the
Kentucky Highlands Innovation Center,
has invented a way to provide the taste
and fun of soda while providing milk’s
nutrients.
Providing the nutrients of milk
and the fun of soda
Photo courtesy of FIZZA®
A company in the Kentucky Highlands
Innovation Center has solved the question of
how to get kids to choose the nutrition of milk
over the fizzy taste of soda. The answer: You
don’t.
FIZZA® has invented a way to provide the
taste, feel and sensory appeal of soft drinks
while providing the qualitative nutrients found
in skim milk. The solution isn’t the milk-andPepsi drink favored by the title character in
the old “Laverne & Shirley” sitcom. Founders
George and Mary Ann Clark experimented in
their own kitchen then worked for years with
researchers from Cornell University and Virginia
Tech University.
Essentially FIZZA combines the nutrients
of lactose-free skim milk with highly purified
water, natural flavorings, fruit sugar and a little
carbonation for sensory appeal. It is available
in three flavors – orange, mixed fruit and
strawberry.
“All my life I’ve worked around kids,” said
Mary Ann Clark who is a registered nurse
and also served as a school lunch volunteer
in the past. “The food was terrible, and the
drinks were the worst. But we weren’t giving
parents an alternative. I didn’t want a Band-aid
solution. I wanted to solve the problem.”
FIZZA is distributed by KeHE Distributors,
Inc. and is currently available at many small
health-food stores in several states and is
gearing up to take orders from major chains
this spring. It also has been approved for sale
in schools by the USDA and its Healthier US
School Challenge division.
The company moved its headquarters
here to London to utilize Kentucky milk and
to work with Prairie Farms Dairy in Somerset
to produce FIZZA. It also has rented a lab at
the Kentucky Highlands Innovation Center for
quality control testing and to experiment with
a new flavor it will introduce nationally for the
Christmas season.
FIZZA could be an important tool to help
fight childhood obesity, which has more
than tripled in the past 30 years, by offering
consumers nutritious alternatives to sugary
beverages and help them develop better
dietary habits.
Kentucky Highlands Investment Corporation | June 2014 | Page 5
ntrepreneur
www.KHIC-Center.com | 606.729.0225
Innovation Center launches
entrepreneurial coaching
program
Training and coaching is an integral part of
developing entrepreneurs. That’s why Kentucky
Highlands Investment Corporation is launching
the eCoaches initiative in Bell, Clay and Wayne
counties.
“E” stands for entrepreneur. KHIC will utilize
local business leaders and entrepreneurs to take
the lead and promote the opportunities available
to area businesses.
Entrepreneurs will be guided by a local eCoach,
who will evaluate their needs and guide them
into programs, education or associations that can
solve their problems to help them become more
successful. The solutions will come from within the
region by the people who know it best.
“Studies show that bringing entrepreneurs
together motivates them and stimulates ideas,”
said Bill Schutters, director of the Kentucky
Highlands Innovation Center. “In the past, most
of the wealth in the region has been accumulated
as a result of mining. We’re going to mine for
entrepreneurs.”
The coaches will be entrepreneurs in the later
stages of their career who’ve been successful
and want to give back as well as local bankers,
business owners and agriculture extension agents.
“I’m in,” said Samuel Coleman, director
of the Small Business Development Center
in Middlesboro. “I have worked with a lot of
entrepreneurs and a lot of business owners. This
is exactly what we need. The eCoaches program
takes the resources we all need and puts them
into the community’s hands in a way that makes
sense.”
KHIC is asking volunteers to make a three-year
commitment of two hours a week to be engaged
in the community, provide feedback, help organize
classes and mentor budding entrepreneurs.
Together, KHIC and the eCoaches will be
targeting high-potential entrepreneurs who have
had some success and want to start another
business but need assistance on how to channel
their ideas into market opportunities. In addition,
they will be looking for entrepreneurs who’ve had
success locally and have the potential to sell to
markets outside the region, and businesses that
attract visitors into the region, such as tourism and
artisan industries.
Funded by the Rural Community Development
Initiative grant from the USDA, this training will
teach people how to identify, train and coach
entrepreneurs in their local communities.
The hub of the program will be local coffee
shops or other common community locations,
which will become an informal networking
headquarters for entrepreneurs. They can share
work space, participate in networking events
and connect to webinars conducted through the
Kentucky Highlands Innovation Center in London.
The program also is a pilot project for the
Promise Zone and can be replicated and rolled
out to the region and beyond.
To learn more or become an e-coach, visit
www.khicenter.com/events.
At the Clinton Global Initiative’s
2013 meeting in Chicago, Appalachian Regional Commission
Federal Co-Chair Earl Gohl (at far
right) announced the formation of
Appalachian Community Capital
(ACC). He was joined by Clinton
Global Initiative founding chair
Bill Clinton, 42nd president of the
United States (second from right);
ACC board chair Ray Moncrief,
executive vice president and chief
operating officer of KHIC; and
Donna Gambrell, director of the
U.S. Department of the Treasury’s
Community Development Financial Institutions Fund. (Photo courtesy of Clinton Global Initiative)
KHIC initiative featured at Clinton Global Initiative
During the 2013 Clinton Global Initiative
(CGI) America meeting in Chicago, a new
initiative of Kentucky Highlands Investment
Corporation was featured.
CGI’s Commitment Announcement
Feature, held in front of an audience of 1,000
participants and members of the media, was
designed to inspire others in the room to take
action.
An initiative that Kentucky Highlands
Investment Corporation was instrumental in
forming, Appalachian Community Capital
(ACC), was selected as “an exemplary
approach to addressing challenges in the
Community Investing area, and we hope that
your story will inspire others in the room to
take action,” according to a letter from CGI.
L. Ray Moncrief, executive vice president
and COO of Kentucky Highlands, has
been elected the first board chairman
of Appalachian Community Capital. He
represented KHIC and the Appalachian
Mountain
Ventures
invests in
health-care
technology
company
Community Capital at the event.
ACC was formed to increase business
lending in Appalachia by providing individual
loan funds with a new source of capital
through the creation of a wholesale capital
intermediary.
“Banks across the country have significantly
tightened credit standards and greatly
reduced their risk appetite during the last
several years,” Moncrief said. “Combined with
a challenging economic environment, this has
left many solid businesses looking for new
sources of capital. Local businesses have been
turning to non-profit Appalachian Community
Development Financial Institution Funds for
that financing. These funds are often leaders
in their respective business communities,
maintaining a rich web of long-held community
relationships and a strong track record of loan
deployment.”
Thirteen of these high-performing
Appalachian loan funds, including Kentucky
Highlands, comprise ACC’s membership.
Two other Kentucky organizations, Southern
Kentucky Economic Development and
Mountain Association for Community
Economic Development, are also ACC
members. Collectively, ACC’s 13 members
deployed $104 million in loan originations
in 2010. However, they need to find about
$60 million in new capital in the next couple
of years to meet forecast lending demand
in a variety of sectors, including valueadded agriculture, energy, health care and
manufacturing.
With the projected additional capital to be
raised through ACC, lending to the chronically
underserved regions of Appalachia is expected
to increase by approximately 39 percent or
$41 million annually. This inflow of new capital
is projected to create 2,200 jobs and leverage
$233 million in bank loans for 450 businesses.
Xcelerated Learning Dynamics (XLD) was
launched from TiER1 Performance Solutions
in 2012 to help hospital systems meet the
emerging challenges of health-care reform
by quickly aligning their workforce with
the rapidly evolving Affordable Care Act
guidelines.
The company has created an innovative
new approach for improving patient
satisfaction scores in hospitals with its
research-based, competency-driven,
accelerated learning platform. Using
this system, hospital leaders can rapidly
implement organization-wide training via the
web or mobile-enabled devices to enhance
their patient satisfaction improvement plans.
Mountain Ventures, Inc., a small business
investment company wholly owned by
Kentucky Highlands, made an equity
investment in XLD in April 2013. “Our partnership with Kentucky Highlands
and Ray Moncrief provides the capital and
expertise to guide us through the pilot
phases and positions us for significant
growth,” said Normand G. Desmarais, XLD’s
CEO.
XLD’s program was developed and
tested with leading hospital systems and
incorporates research-based methodologies
studied in conjunction with the US Air Force,
NASA and the National Institutes of Health.
A recently completed pilot program
with two leading Kentucky-based healthcare systems demonstrated significant
improvements in patient satisfaction scores.
Kentucky Highlands Investment Corporation | June 2014 | Page 6
OVC president recognized for
contributions to economy
H
e’s been an engineer for NASA, but
J.C. Egnew’s most challenging job
is ensuring that his McCreary County
company and its 200 employees remain
competitive in an ever-changing global
economy.
Egnew’s success in continuing to remake and
diversify Outdoor Venture Corporation (OVC)
earned him the 2014 East Kentucky Leadership
Award for a Private Individual.
In addition, the U.S. Small Business
Administration also selected OVC as one of just
10 small business success stories from across
the United States to be featured in its national
resource guide. “All small businesses start out without a
diversity of products,” said Egnew, who is OVC’s
president and CEO. “They all are good at one
thing, but change is the lifeblood of business.
All businesses must learn to diversify because
globalization and the rate of innovation are
occurring at such a rapid rate – no matter what
business you’re in.
“At OVC, we’re getting ahead of the curve by
transitioning from tents to modular buildings.”
OVC started in 1972 as a manufacturer of
family camping tents. Global competition forced
him to reinvent the company a couple of times.
Most recently, OVC increased its presence
in the military
tent industry
and recently
expanded into
a new hard-wall,
insulated shelter
market. Through
KHIC, Outdoor
Venture was able
to purchase assets
that allowed
the company to expand into manufacturing
iPanels, which are steel insulated panels. These
panels are being marketed to the military,
which is looking at ways to maintain forces in
hostile environments in more energy-efficient,
cost-effective ways, as well as school systems
that need temporary structures to deal with an
overflow of students.
This diversification will result in more
job security for existing employees and an
additional 30 to 50 employees working on iPanel
projects over the next two years.
“We are thankful to be able to invest in
entrepreneurs like J. C. Egnew, who has
consistently provided high quality jobs over
multiple decades,” said L. Ray Moncrief,
executive vice president and COO of Kentucky
Highlands. OVC and KHIC have been working
together since OVC was founded.
Bell County medical practice
provides much-needed care
If Bell County families needed medical
care after 4:30 p.m., their only option was the
emergency room.
That’s why Dr. Lovie Stallworth opened
Stallworth Internal Medicine and Pediatrics.
In addition to normal office hours, Stallworth
also has an after-hours clinic from 4:30 p.m. to
8 p.m. Monday through Friday and 8 a.m. to
noon on Saturday.
“A lot of people can’t afford to take time
off work, so they either won’t do it, or wait until
they’re very sick,” Stallworth said. “Having
extended hours gives them options for their
treatment and for their kids.”
KHIC and Southeast Kentucky Economic
Development (SKED) provided start-up capital
for the practice through the Small Business
Administration’s Community Advantage loan
program. “Kentucky Highlands was very helpful
analyzing data and modifying numbers to
be realistic about what we really needed,”
Stallworth said. “They are still there to support
us after opening.”
Stallworth, board certified in both internal
medicine and pediatrics, previously served
as the primary physician in an Appalachian
Regional Healthcare clinic in Middlesboro for
the past six years.
Her medical practice provides care for
patients from birth to the elderly. The clinic
provides services including physicals, lab
tests, EKGs, inoculations, injections, well child
visits, sports physicals and walk-in sick visits.
Stallworth also sees patients at area nursing
homes and the local hospital.
Stallworth provides internal medicine and
pediatric care in the same office, which makes
the company the only such practice in the area.
There are currently eight internal medicine
physicians in the Middlesboro area, including
Stallworth, and half of those physicians are
at least 55 years old. She is one of only two
physicians in the area that are accepting new
patients.
Kentucky Highlands Investment Corporation | June 2014 | Page 7
Dr. Lovie Stallworth (left)
provides internal medicine
and pediatric care in the same
office, which makes it the only
such practice in the area.
From
downturn
to Dubai –
Stardust on
the rise
continued from page 4
Kentucky Economic Development
Cabinet Secretary Larry Hayes and others
at the cabinet helped Stardust maximize
the trip.
“Larry Hayes and the cabinet were
really helpful providing guidance and
introducing us to banks and financing,”
Aff said.
It’s only fitting that Stardust was able to
return the favor. The company organized
a meeting with its customer in Dubai,
where Gov. Steve Beshear and Hayes
were able to tour the harbor in a Stardust
boat made more than 7,000 miles away in
Monticello.
In Memory of Eldred Musgrove
Part of what sets Kentucky Highlands apart
is the long-term dedication and tenure of our
board members. One of the finest examples
of that was Eldred
Musgrove. We
note with sorrow
the passing of Mr.
Musgrove, who
served with distinction
for 33 years.
Mr. Musgrove, a
longtime resident of McCreary County, served
his fellow citizens in many ways throughout
his 93 years -- from serving his country in
World War II to being a charter member of the
Pine Knot Kiwanis Club to chairing the South
McCreary County Fire Department Board.
He also was a member of the first McCreary
County Airport
Board, the McCreary
County Industrial
Development
Association and the
first Stearns Museum
Board.
His devotion
and commitment to the region will be sorely
missed.
He served with distinction
for 33 years.
Hospital
leverages New
Markets Tax
Credit
Thanks to the New Markets Tax
Credit Program, Rockcastle Hospital and
Respiratory Care Center is improving patient
care.
KHIC closed a $2.6 million leveraged
New Markets Tax Credit transaction with the
hospital to construct a new facility to house
Rockcastle Family Wellness, an expansion of
the hospital campus for Drs. David Bullock,
Kevin Rowe and Karen Saylor as well as
several nurse practitioners and physician’s
assistants.
The building features state-of-the
art exam rooms, waiting areas, private
registration areas, consultation area for
dietitians and pharmacists, and a children’s
play area. The modern, streamlined design
will provide better patient flow and improve
patient wait times.
Rockcastle Family Wellness provides
health-care services to a large patient
population from Rockcastle County and
around the region with 37,000 patient visits
in the past year.
The growing clinic currently employs 47
people with plans for multiple positions to
be filled. The hospital is the largest private
employer in the county with 600 employees.
The New Markets Tax Credit program
improves health care in low-income,
rural areas by attracting private-sector
investments. Participating individuals,
banks and other institutions receive a credit
against federal income taxes for making
qualified equity investments in community
development entities such as Kentucky
Highlands.
Staff hires
David Smith
has joined
KHIC as an
account. His
responsibilities
also include the
daily accounting
and financial
reporting for
two limited
partnerships
licensed by
SBA, Southern
Appalachian
Fund, LP, a New Markets Venture Capital
company; and Meritus Ventures LP, a Rural
Business Investment Company. Kentucky
Highlands is responsible for all aspects of
the financial management of these funds,
including required reporting to the Small
Business Administration.
Smith earned a Bachelor of Business
Administration in Accounting and Managerial
Finance from Eastern Kentucky University
in Richmond, Ky. Prior to employment with
Kentucky Highlands, he was a staff accountant
at Cloyd & Associates, PSC in Corbin, Ky., and
was assistant
controller
at Vinland
Energy, LLC in
Lexington, Ky.
Tennille
Reed is an
accountant for
KHIC. She is
responsible for
consolidating
the financial
statements
for Kentucky
Highlands and its five subsidiaries. She also
analyzes and reconciles trial balances for close
to 100 funds for the correct presentation of
temporarily and permanently restricted funds. Reed earned a Master of Business
Administration degree from the University
of Kentucky and graduated Summa Cum
Laude from Morehead State University with a
Bachelor of Business Administration degree
in Finance. She also is a
graduate of
Leadership East
Kentucky and
Leadership TriCounty.
Luke Ramsay
is the assistant
director of
the Kentucky
Highlands
Innovation
Center after
previously working at the American Association
of Equine Practitioners as the student
programs coordinator.
Ramsay joined Kentucky Highlands in June
2013 and provides clients with the resources
they need to build a better business. His
primary responsibilities have been providing
grant reporting support, building relationships
with clients both in the KHICenter and out,
and implementing marketing efforts.
He graduated from Eastern Kentucky
University with a degree in public relations.
Kentucky Highlands Investment Corporation | June 2014 | Page 8

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