A year like no other

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When the RBJ began soliciting input from readers on the top local business stories of 2020, there was little doubt about what would garner the most votes.

The COVID-19 pandemic changed business, and life in general, in ways large and small and dominated the year with its widespread impact. More than 85 percent of respondents selected the pandemic as one of their five top local business stories of the year.

The social unrest that followed George Floyd’s death in Minnesota — and later, the news of Daniel Prude’s death in Rochester — and the business community’s reaction received the second-most votes at 52 percent.

Rounding out the top five were the continuing upheaval at the Rochester City School District (51%), Kodak receiving and then losing a federal loan (35%) and Rochester’s historically hot housing market (33%).

Here is a closer look at these top five local business stories for 2020, as selected by RBJ readers.

COVID-19

The coronavirus hit our region in mid-March and its impact was dramatic and immediate.

Before the Rochester region even had its first official case, businesses started moving some or all of their employees to remote work. Local colleges and schools switched to remote learning and remained remote for the rest of the semester.

On Monday, March 16, Gov. Andrew Cuomo ordered all restaurants, bars, casinos, theaters and gyms in the state to close. By the end of the week, he ordered 100 percent of “non-essential workers” to stay home and prohibited public gatherings of any size.

Eviction and foreclosure proceedings were quickly halted, helping people and companies keep their homes and offices but putting stress on lenders and landlords. Those protections have been extended until at least May 1 of 2021.

Shortages of personal protective equipment and hand sanitizer led several local manufacturers to change their product lines to pick up the slack. Concern over safety and bed shortages led the local health systems to limit or stop elective surgeries and hospital visitors.

Supply-chain disruptions led to delays for manufacturers and retailers and shortages of basic necessities like toilet paper.

The restaurant industry quickly shifted to offering more robust takeout and delivery services until they were allowed to reopen for outdoor seating and then limited indoor seating.

Almost the entire festival schedule for the region was canceled and arts and culture institutions were hit hard by the restrictions on large gatherings.

Unemployment claims in March and April reached unprecedented heights and people relied on expanded unemployment benefits and one-time cash payments included in the CARES Act to get by.

As part of the CARES Act, the Small Business Administration launched the Payroll Protection Program in April in an effort to help companies avoid closing or laying off employees. Between then and when the program ended in early August, more than 5 million loans totaling more than $525 billion were approved.

As various regions in the state began to get the virus under control, Cuomo unveiled a four-phase plan for reopening that was not always well-explained, leading to fits and starts in terms of which businesses could be open or what services they could offer.

In Monroe County, COVID cases began to spike again in the fall, leading to confusion over how the region was affected by Cuomo’s zone system for dealing with COVID clusters. Restaurants, salons, gyms and other businesses again had to deal with uncertainty and inconsistency regarding their status, with some businesses facing different rules than a similar business less than a mile away.

Monroe County’s positive case rate, which had been below 1.5 percent from early June through late October, skyrocketed in November and was between 7 percent and 9 percent for most of December. As of Tuesday, Monroe County had experienced 32,083 COVID-19 cases and 559 deaths since the start of the pandemic.

As the COVID relief measures contained in the CARES Act expired or were exhausted, debate raged over whether Congress should approve a second round of stimulus. That finally happened in December when Congress passed a $900 billion bill that President Donald Trump signed after initially criticizing it for not providing large enough payments to individual Americans.

Social unrest

After George Floyd was killed during an arrest May 25 in Minneapolis, video of the incident went viral and led to protests across the country, including in Rochester. Those protests, marches and other activities demanding social justice and racial equity continued locally and nationally throughout the summer.

In June, Cuomo announced the New York State Police Reform and Reinvention Collaborative and signed an executive order requiring that local government and police agencies create a reform plan in order to receive state funding.

Then, in early September, Rochester confronted a local example of the issue of racial equity and disparate outcomes for minorities in encounters with police when video became public of Daniel Prude suffering fatal injuries during a March 23 interaction with Rochester police officers.

The news of Prude’s death led to nightly protests throughout Rochester that sometimes included clashes with police and arrests of protestors.

Prude’s death also led to a shakeup in the Rochester police department. Former Police Chief La’Ron Singletary announced Sept. 8 that he would retire, but was fired by Mayor Lovely Warren a week later. Several other members of the departments command staff also announced that they would retire or step down from command positions.

As Rochester and other communities across the country grappled with social justice and racial equity issues throughout the year, many businesses reevaluated their diversity, equity and inclusion efforts.

In Rochester, the United Way of Greater Rochester convened a 21-Day Racial Equity Challenge that ran from Oct. 22 through Nov. 20. Nearly 500 organizations and more than 100,000 people signed up to participate and learn more about topics ranging from privilege, bias and the challenge of talking about race to adverse childhood experiences, environmental justice and being an ally.

“The challenge was meant to really provide an opportunity for people to grow in their racial awareness, issues around social justice, discussions about privilege and systemic inequities to provide an opportunity for people to learn and grow but to carve out time each day to be able to form and build a habit of digesting this type of content that for some people was entirely new,” said Cicely Strickland-Ruiz, United Way’s chief operating officer.

School district upheaval

The Rochester City School District’s budget crisis was selected by RBJ readers as the top local story in 2019 after a massive budget shortfall ultimately led the district to lay off more than 100 employees just before Christmas.

The woes for city schools continued into 2020 with an unexpected superintendent change and a widening budget deficit.

Terry Dade, who took over as Rochester’s superintendent in July 2019, left his position abruptly last spring. A day after rumors surfaced that he was “considering” leaving, Dade was named superintendent of Cornwall Central School District, 60 miles north of New York City.

It took less than a month for the district to select a replacement: former Brockport Superintendent Lesli Myers-Small.

Myers-Small was immediately faced with the dual challenge of addressing the district’s budget problems while figuring out how to educate students in the midst of the COVID-19 pandemic.

City schools have had 100 percent virtual learning since the pandemic hit in March and it was announced this month that students in grades seven through 12, at least, would remain virtual through the end of the school year.

Meanwhile, the district reported in October that it is now facing a deficit of at least $117 million for the 2020-21 school year.

Kodak loan

In late July, Eastman Kodak Co. announced to great fanfare that it would receive a $765 million loan from the government to begin manufacturing generic drugs here and at a plant in Minnesota.

The stock price of Rochester’s former largest employer took off, climbing from $2.62 to as high as $60 in two days.

But the loan and the substantial number of shares picked up by company leaders ahead of the announcement quickly drew the attention of congressional leaders and the Securities and Exchange Commission.

On Aug. 7, less than two weeks after Kodak announced the loan, the U.S. International Development Finance Corp. announced that it was putting a hold on the loan in light of the SEC investigation. That caused Kodak’s shares to plummet again, though they stayed well above the level from before the initial loan announcement.

An independent legal review of Kodak’s actions during and ahead of the loan announcement, conducted by Akin Gump Strauss Hauer & Feld LLP and released in September, concluded that the company and its executives broke no laws.

In early December, DFC announced that it had found no wrongdoing in the loan process.

It is unclear whether the DFC loan is still on the table, but Kodak officials have repeatedly said the company will move ahead in making the drug ingredients, regardless of whether it receives government assistance.

Housing market

The COVID-19 pandemic imposed changes and restrictions on the real estate industry just like it did with so many other industries.

Most in-person interactions for real estate transactions — including showings, open houses, walk-throughs, home inspections, closings and more — stopped in March when non-essential workers were ordered to work from home.

Amid the restrictions and economic uncertainty, however, buyer interest never subsided in our region. Showings were done virtually and offers were made without buyers ever setting foot inside the house.

According to the New York State Association of Realtors, median home prices in Monroe County have been up at least 6 percent year over year each month since March and have been up double digits in six of nine months.

Part of the reason for the extended seller’s market amid a pandemic is an extreme lack of inventory. Monroe County had just 549 homes on the market in November, down 47.1 percent from 2019.

Monroe County continues to have the lowest inventory in the state, with a months supply rating of just 0.8. A months supply of between 6.0 and 6.5 indicates a balanced market. The statewide average is just 3.9.

The trend of low inventory and climbing prices extends to the surrounding counties as well. The supply was at 1.8 in Livingston and Wyoming counties, 1.4 in Wayne County and 1.3 in Genesee County. Ontario County was at 2.3 in November.

Ben Jacobs is the editor of the Rochester Business Journal. Contact him at [email protected] or (585) 232-6922. Includes reporting by Bennett Loudon, Velvet Spicer and Kevin Oklobzija.

How readers voted

RBJ readers voted on the top local stories of 2020 in a poll conducted Dec. 14-16. Each respondent was allowed to select up to five choices from a list of 13 options.

Here are the stories that received the most votes:

COVID-19 leads to restrictions, disruptions for local businesses — 86%

Amid social unrest, businesses connect with social justice, racial equity issues — 52%

Rochester City School District upheaval continues with superintendent change, budget woes — 51%

Kodak receives then loses federal loan to make generic drugs — 35%

Rochester experiences hottest housing market in recent memory — 33%

Gallina Development purchases Xerox Tower to create Innovation Square — 22%