June 20 region's business

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REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

WRITING PA’S MEDICAID

PRESCRIPTION Some say expansion will help Pennsylvanians by providing more residents with coverage; others say looming changes will make a bad situation worse

REALTORS SUGGEST GOING LONG ON ABATEMENT MARC VETRI, PIDC ANNOUNCE NAVY YARD RESTAURANT PLAN COUNTY LEADERS GATHER AT GPCC BREAKFAST

20 JUNE 2013

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REGIONSBUSINESS.COM

CONTENTS

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Writing PA’s Medicaid 18 Expansion Prescription

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YEAR OF THE INNOVATOR

Vetri Opening Navy Yard Restaurant REGION’S BUSINESS A JOURNAL OF BUSINESS & POLITICS

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Lessons on Life, Leadership at Core Class

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20 JUNE 2013

REGIONSBUSINESS.COM

DEALBOOK

MANUFACTURING

Boeing Inks $4B Helicopter Contract Boeing Co.’s Ridley plant received a $4 billion contract from the U.S. Army to build 177 CH-47F Chinook helicopters, with deliveries starting in 2015, the Philadelphia Inquirer reported.

The plant recently announced layoffs of 41 workers, but the five-year deal should ensure steady work at the plant. A Boeing spokesman said the company doesn’t anticipate any major increases in hiring.

The company is now producing five Chinooks and three V-22 Osprey tiltrotor aircraft each month and still building Chinooks under a previous five-year $4.3 billion Army contract from 2008.

Boeing recently spent $130 million to modernize and expand its Chinook operation.

Marc Vetri Plans for Restaurant at Navy Yard for Summer 2014

DirecTV Acquires Langhorne Business LifeShield Inc., a home security company in Langhorne, was bought by DirecTV earlier this month, according to a Los Angeles Times report.

DirecTV said it will start marketing LifeShield to customers starting in the first quarter of 2014.

REAL ESTATE

PHILADELPHIA NAVY YARD

Notable Philly chef Marc Vetri announced that he’s signed a deal with the Philadelphia Industrial Development Corp. for a new restaurant at the Navy Yard, set to open next summer.

Mr. Vetri is planning for a full-service restaurant and bar at the former gatehouse building and told Philly.

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com that the menu will include rotisseries, sandwiches and pasta.

Mr. Vetri is also moving his offices to the Navy Yard and preparing for the upcoming opening of his newest restaurant, Pizzeria Vetri, at 20th and Callowhill Street.

The name of the new Navy Yard restaurant will be The Brig.

Post Brothers Sell $6.3 Apartment Site The Philadelphia real estate company Post Brothers has sold the 92-apartment complex in West Mt. Airy, Copley Manor, for $6.3 million, the Philadelphia Business Journal reports.

Post Brothers bought Copley Manor in 2007 for $2.9 million and put in $1.75 million for cosmetic upgrades.

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20 JUNE 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

CHAMBER REPORT

Leaders Gather At Chamber Breakfast

Independent Fiscal Office Predicts Modest Growth In PA

Leaders from Philadelphia and surrounding Pennsylvania counties gathered June 12, at Parx Casino for the Greater Philadelphia Chamber of Commerce Elected Officials Breakfast.

The region comprised by Montgomery, Delaware, Chester, Bucks and Philadelphia counties accounts for 40 percent of the state’s economy, Philadelphia Mayor Michael Nutter said.

“We are partners; we are not competitors,” he said.

Montgomery County overcame “massive challenges” by rebuilding the budget from scratch, County Commissioner Josh Shapiro said. For the first time in five years, the county was able to contribute to its reserve fund, he added.

Delaware County is set to release a 15-year “blueprint for economic development,” County Councilman John McBlain said in his report.

TOURISM

Sandy Blamed For Drop in AC Travel New details released by the South Jersey Transportation Authority show that Atlantic City saw double-digit percentage declines in air, casino bus and rail traffic in the first four months of 2013.

The biggest drop was in airline travel: 307,426 passengers traveled through the airport in the first quarter, compared with 425,819 passengers a year earlier.

DEVELOPMENT

Phila. Approves Plans for Districts There are now official long-range plans for future development within the Central and University/Southwest districts of Philadelphia.

The Central plan calls for revitalizing civic spaces in Center City, while encouraging development in West Callowhill.

The University/Southwest plan calls for more denser, mixed-use buildings.

PARKS

First Leg of Delaware River Trail Now Open The first quarter-mile of the Delaware River Trail was officially completed Tuesday, June 18.

The Delaware River Trail is a critical element for the Master Plan for the Central area of the Delaware River.

The first leg of the trail runs from Spring Garden Street to Ellen Street, and features rain gardens that aid in stormwater management, new landscaping along the trail and new benches, bike racks, and lighting.

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Knittel said.

“Prospects for stronger growth improve ennsylvania’s economy is seeing a toward the end of 2013 and into 2014.”

Since lawmakers are deep in the throes slow but steady recovery, accordof negotiating the 2013-2014 budget, with ing to the latest fiscal analysis.

The Independent Fiscal Office released the constitutional deadline for lawmakers its revenue projections for the end of this to pass a budget about two weeks away, it fiscal year, painting a slightly brighter pic- remains to be seen how these projections ture than it did just six weeks ago — about will factor in to budgeting Gov. Tom Corbett introduced his spend$300 million brighter, to be precise.

The IFO, which offers non-partisan ing plan at $28.4 billion, while the House analysis, concluded the state would end Republican caucus dropped that down to the year with $28.7 million in revenues, slightly more than $28.3 billion. about $153 million more revenue than Speaking Monday afternoon, after the anticipated in May. Senate Appropriations Committee voted And it projected the 2013-14 year would out the budget bill, Senate Appropriations see $29 billion in revenue. Some of that Chairman Jake Corman, R-Centre, said growth is due to projected increases in he thought the Senate would look for an personal income tax collections, as well overall total somewhere between those as moderate growth of business profits, proposals. according to the full report.

House Majority Leader Mike Turzai, Matthew Knittel, executive director of R-Allegheny, said that the IFO numbers the IFO, said in a press release the official won’t change the budget process, but the estimate incorporated sustained, modest outlook is positive. growth.

“It would mean that our projections for He also explained how some current next year would be better,” Rep. Turzai economic challenges facing the state are said to reporters Monday afternoon. a result of federal decisions.

“We would have more money in reserve “The economy continues to expand, but and I was very pleased with the numbers it faces headwinds as consumers adapt to that came from the IFO.” the expiration of the payroll tax cut and This article was originally published as the automatic spending cuts from the at PA Independent at PAIndependent. federal sequester are implemented,” Mr. com.

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The Pennsylvania Environmental Council’s 58th Street Greenway is finally open after more than three years of planning and more than a year of construction.

The Greenway connects Cobb’s Creek Trail and Bartram’s Garden, as well as the trails beyond it.

The Greenway is also another piece of The Circuit, a project to build and connect 750 bicycle trail miles throughout the Philadelphia region.

Master Plan Looks to Add 100 Trail Miles The Philadelphia Trails Master Plan hopes to add 100 miles to the city’s 200-plus miles of existing network of trails.

Goals of this plan include reaching areas without convenient access to open space and improving connectivity of city neighborhoods through trails and parks.

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20 JUNE 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

EDUCATION

137 More Jobs Cut From Phila.

School District On the heels of announcing close to 3,800 layoffs in the Philadelphia School District, 76 more were announced, while eliminating 137 jobs overall.

In a statement from Friday, June 14, the District said it was laying off 76 employees who work in its central and regional administrative offices.

The 137 jobs being eliminated include vacant positions.

The district said the newly announced layoffs would result in elimination and reduction of areas including career and technical education supports, driver’s education, livestreaming School Reform Commission hearings and reduced customer service to parents and families.

TRANSPORTATION

Transportation Funding Cut Short The Delaware Valley Regional Planning Commission’s long-range plan calls for the Philadelphia region to receive less than half of the $120 billion it needs for transportation over the next 27 years, the Philadelphia Inquirer reported.

A draft version of the plan says the region in Southeastern Pennsylvania and South Jersey will be short $68 billion to maintain and expand its network of highways, bridges, public transit and airports between now and 2040.

Bucks, Chester, Delaware, Montgomery and Philadelphia Counties will have $33 billion for $95 billion in needs.

SOCIAL RESPONSIBILITY

Partnership Formed The Federation of Neighborhood Centers and ARAMARK announced a joint commitment last week to support families in struggling Philadelphia neighborhoods.

The partnership will establish hubs for job readiness and health and wellness education at two community centers in Fishtown and Camden, respectively.

Realtors Seek 25-Year Abatement For Lower-Income Neighborhoods

SMALL BUSINESS

10,000 Small Businesses Initiative Deadline Set

BY SANDY SMITH City Council member W. Wilson Goode Jr.’s proposal to place a cap on the value of construction eligible for the city’s 10-year tax abatement has drawn opposition from the city’s development community, with both the Building Industry Association (BIA) and the Greater Philadelphia Association of Realtors (GPAR) lobbying against it. In a move that could change the whole debate over the abatement’s benefits, the Realtors have put a proposal of their own on the table: Instead of limiting it, expand it in a big way to stimulate construction of more affordable housing.

GPAR President Allan Domb said his group has drafted a proposal that would add a 25-year tax abatement for new construction or improvements to homes in neighborhoods with house values averaging $125,000 or less. The existing 10-year abatement would remain in place for construction above that threshold, with no upper limit, but the abatement would be reduced by 20 percent each year beginning in year six, as Mr. Goode’s bill also proposes.

“GPAR would like to see the 10-year abatement, which has been the most successful legislation in the history of Philadelphia for business and economic development, kept in place,” Mr. Domb said. “But we must recognize that many around the city feel that those getting the benefits of the current abatement are well-off and that ordinary people are left paying for them.”

Mr. Domb explained the Realtors’ proposal would “assist those residents of the city in neighborhoods like Tacony and North Philadelphia who are hurting and spur development in those areas through the private sector. There are many neighborhoods in the city where homes are still decreasing in value, and those neighborhoods could use stabilization.”

The GPAR proposal also addresses the main criticism of the existing abatement program made in a report released recently by economist Kevin C. Gillen, a senior research associate at the University of Pennsylvania’s Fels Institute of

Goldman Sachs 10,000 Small Businesses is a $500 million initiative designed to help small businesses create jobs and economic growth by providing entrepreneurs with access to capital, a practical business education, and business support services.

Applicants must demonstrate a commitment to growing their business and creating jobs within their community.

PIDC’s 10,000 Small Business Loan Fund is generally available to any small business or nonprofit located, or planning to locate in Philadelphia.

Applications will be accepted on a rolling basis based on a few criteria: SANDY SMITH

Government. The report found that the abatement produced first a doubling, then a quadrupling, of construction activity in the city after it was put in place in 1999.

Mr. Gillen’s report dismissed criticism of the abatement as a tax giveaway to the wealthy; instead, it said the abatement closed the gap between the city’s high construction costs — the fourth-highest in the nation — and its low house values relative to other high-cost cities like New York, San Francisco and Boston. But it did conclude that the abatement in its current form does little to stimulate new housing construction for low- to moderate-income homeowners.

Mr. Domb says that’s the goal of GPAR’s proposal. “The biggest outcry against the abatement has come from lower-income neighborhoods,” he said. “GPAR is not just an association for Center City and adjacent. We recognize that there are many areas of the city that need help, and this bill provides that help. You go to the bank with a 25-year abatement — that’s huge.”

This article was originally published on the Philadelphia Real Estate Blog at blog.philadelphiarealestate.com

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20 JUNE 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING EXECUTIVE BOOKSHELF

WHO TO FOLLOW

@AwesomeROAR Kevin Daum, columnist for Inc. magazine, is someone worth following for great tips on everyday aspects of running your business — whether it’s the best ways to lead or to stay awake during the day.

He also will regularly go outside of the work environment with tips on how to handle the everyday life/work balance.

RT @AwesomeROAR Want a great mentor? Find one through Linkedin. Here’s a great way to do that: RT @AwesomeROAR Are you ready to tackle a big project? A Harvard expert helps you here and now:

How Millennials Are Changing The Way You Sell If you’re dealing with the Millennial generation in your business, whether they’re customers or employees or both, it can be a challenge to say the least.

Enter T. Scott Gross’ Invisible, a quick read with a wealth of knowledge about Generation Y. Gross, author of the successful Positively Outrageous Service spent the past few years studying the Millennial generation and, though there are a number of negatives he points out, the book’s main point is that the Millennial generation can be absolutely beneficial to any team in the right hands.

Expect pearls of wisdom with plenty of humor on

9

RESTAURANT ROUNDUP

MUST-HAVE APP

Le Bec Fin Shuts Its Doors for Good After 43 Years

Uber It’s easy enough to flag down a cab in Center City, but what about in other areas of the city?

And what if you’d like to ride in style?

If you haven’t heard of Uber, an on-demand private driver service, download the app today.

After registering your credit card, you can use the app to request a ride and a professional driver will be dispatched. You’ll get info on who’s picking you up before they arrive in a sleek, black town car.

After the ride, Uber charges your card automatically — no need for any money or tip exchange. A musthave app/service — especially on date night.

This past weekend, Le Bec Fin, the upscale French restaurant at 1523 Walnut St., gave its final adieu.

The restaurant went through with its last dinner service Saturday, June 15. The front desk told Philly.com that nothing special was planned.

The space will be undergoing renovation and reopen in the fall. The unnamed new restaurant will serve progressive, American cuisine under the direction of Roxborough native Justin Bogle.

Mr. Bogle was one of the youngest chefs to receive two Michelin stars.

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To learn more, go to ShireBRAVEAwards.com.

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20 JUNE 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

NSA’s Data Mining Should Prompt Thorough Debate

Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

During the contentious confirmation hearings on the nomination of Robert H. Bork for a seat on the United States Supreme Court, someone leaked his personal video rental history.

Even though the list contained innocuous and unmemorable titles, the outrage was such that the Congress of the Unites States acted. They passed the Video Privacy Protection Act. That was a quarter of a century ago.

Today disclosure of a video rental list wouldn’t even qualify as mundane. Now it’s not only what you’ve watched that is known, but what you are likely to watch in the future.

That’s because millions of pieces of information about us are being “mined” and analyzed each day. “Data mining” is knowledge discovery and information analysis. It’s a powerful new technology that allows companies to focus on the most important and significant information about the behaviors and thought patterns of their customers and prospects. Piecing together the data allows companies to better introduce new products, cross sell, acquire new customers and manage the relationship with their existing ones.

Every time we use a credit card, loyalty card, fill out a warranty form or a user agreement, we’re essentially saying “you can data mine me.”

Every day Wal-Mart processes more than 20 million point-of-purchase transactions. By analyzing this data, they can identify sales trends, manage marketing campaigns, and track customer loyalty and buying preferences.

AT&T has 483 processors running a centralized data base.

The commercial uses of this technology are vast. Data mining in customer relationship management can vastly enhance bottom lines. Data mining allows businesses to optimize resources in marketing campaigns by matching specific products with particular channels. It allows sophisticated automated mailing that is micro-targeted. Data mining allows companies to identify socalled “alpha customers,” buying elites who connect not only with the product but the concept behind it, adopt it

and promote it within their spheres of influence.

The political world, where resources are always scarce, has caught on quickly to the benefits of effectively using large amounts of data that are analyzed and highly targeted.

Campaigns are now approaching voters armed with much more than simply a name and address. They know a lot about the decision making and potential issue appeal of most voters.

But there are some disturbing consequences to this knowledge acquisition.

What if every phone call we made, every credit card slip we signed, every doctor visit we made, every trip we took, every website we visited, every school record since kindergarten, every job we ever held or applied for, in short everything we ever did, was collected and bundled together? That’s a lot more than most of us would want known.

The privacy questions surrounding this issue have taken center stage with the recent dustup over the NSA. Questions about the Fourth Amendment abound. Law suits have been filed.

The politics of the issue have made for very strange bedfellows with Michael Moore and Glenn Beck on one side against an equally strange coupling of congressional liberals and conservatives on the other. And the debate about whether Edward Snowden is a treasonous traitor or a whistle-blowing hero is just beginning.

At the same time, more and more is coming to light about a gigantic government-data-collection center being built in rural Utah. The facility, which is more than five times the size of the Capitol, can house five zetabytes of information. That’s more than the capacity of 300 billion iPhones.

Although little is known about the facility, it’s set to open in just a few months.

Difficult questions about security and liberty are being raised. Valid concerns over the Fourth Amendment and its application to modern technology are being voiced. A robust debate about oversight, control and accountability is in the interest of every American.

TAXES

Property Taxes Continue Climb Amid Debates

BY MELISSA DANIELS HARRISBURG — After years of seeing Pennsylvania property taxes creep up, some lawmakers are saying enough is enough.

Before casting a “no” vote on this year’s state budget, Rep. Mark Painter, D-Montgomery, explained why he opposed the plan.

Reading from a prepared speech on the House floor, Rep. Painter said he thinks the GOP-backed proposal is bound to lead to higher property taxes in his southeastern district.

Rep. Painter recalled, during his days as a township tax collector, seeing home owners cry in his office, fearful of losing their homes due to rising property taxes.

“They cried because they didn’t know how they were going to be able to pay their school taxes, they didn’t know how they were going to be able to keep their homes,” he said. “The claim that this budget doesn’t raise taxes will ring hollow in Limerick Township.”

His constituents are far from alone.

State data shows that year after year, residents are paying more and more in property taxes – more than a five-fold increase in the last 20 years.

Last year, schools brought in more than $11.48 billion in property taxes. In 1981, that figure was $2.05 billion.

Overall, the 20-year average for increases is $314 million each year, or 5.9 percent.

Jay Himes, executive director of the Pennsylvania Association of School Business Officials, described property taxes as a “see-saw,” finding a balance with what the local tax base can provide and the state funding received. Lower or level state funding, matched with mandated increases in operating expenses, means districts have to look to property taxes with no other taxing options available to find local revenue, Mr. Himes said. He said school property taxes get so much attention because they arrive in one annual bill. Local and state income taxes extracted from weekly paychecks are harder to track.

“If you ask people how much they pay in local or state income tax, I don’t think they could tell you,” he said.

While plenty of Democrats relegated the proposed state budget as yet another burden to Pennsylvania property owners, a bipartisan proposal to eliminate property taxes is once again up for debate: House Bill 76, which would increase personal income tax and create a higher, broader sales tax.

20 JUNE 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

11

Council Asks Voters For Wage Enforcement Authority

Timothy Holwick is a freelance writer covering Philadelphia government.

Find more coverage at citycouncilmatters.com.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Last Thursday, Philadelphia City Council introduced legislation that will add a special question to the May 2014 election ballot asking qualified electors of Philadelphia to confirm Council’s power to enact provisions they consider necessary to accomplish the purposes of the City’s Minimum Wage and Benefits Ordinance.

Specifically, Philadelphia City Council is seeking to enact provisions mandating that minimum wage and benefits requirements be passed along to subcontractors on City contracts and subrecipients of City financial assistance.

The Minimum Wage and Benefits Ordinance is an ordinance that requires the City, those who contract with the City, and/ or recipients of City financial assistance to provide their employees with a minimum level of pay and benefits.

The Ordinance also provides for enforcement and penalties when non-compliance occurs.

The proposed ballot question refers to

a provision Council wishes to insert into the Ordinance which would grant Council the power to enact provisions it considers “necessary or appropriate” to accomplish the wage and benefit fairness goals of the Ordinance.

As mentioned, Council is seeking to extend this power to subcontractors and subrecipients of City aid.

It is no new theme that Council uses City funds and financial assistance as leverage in pursuing certain policy goals. In this case, those goals are a minimum standard for wages and benefits.

The more general articulation of Council’s authority was confirmed when the Ordinance passed, but here they are seeking the permission of the voters to pursue this more specific goal.

Contractors compete fiercely for City contracts, which often represent very public and long-running work for their company. The competition is at its peak when bidding for these contracts, and the

anticipated cost of subcontractors is calculated into these bids. Therefore, the wages and benefits paid to some subcontractors may be an attractive place to cut corners and save money.

City Council is hoping it can protect workers on subcontracting crews from becoming victims of such shortchanging.

So continues the pursuit of one of Council main goals: increase the quality of life for Philadelphians and thereby reduce crime and expand the tax base for funding City programs.

With authority to enforce minimum wage and benefit requirements against subcontractors, Council and its enforcement mechanisms can ensure that workers simply are not being classified into subcontractors to save money on their compensation.

Many union workers are vulnerable to these predatory practices by virtue of the tight job market.

Council looks to make sure the jobs they do find are decent ones.

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20 JUNE 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

In Pension Debate, Both Sides Want To Avoid Bill

Eric Boehm is bureau chief for PA Independent, a project of the Franklin Center for Government and Public Integrity

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

When are savings not actually savings, and when does “paying the bills” actually mean paying half the bills? When you’re dealing with the state government, of course.

Since 2003, Pennsylvania has been underfunding its state pension system to use state revenue elsewhere. It’s hardly the only state to do this, as politicians across the nation have apparently realized they can win votes from public-sector unions today by promising benefits that don’t have to be paid for until tomorrow.

Combine the underfunding with the twin stock market crashes in 2001 and 2008, and you have the recipe for the state’s $47 billion (and growing) public pension debt.

Faced with growing pension costs in 2010, lawmakers knew they had to do something. So, naturally, they gave themselves the ability to ignore the contribution levels recommended by the state’s actuaries and continued to underfund the plans.

Translating those figures into dollar amounts can get tricky, so for the sake of an apples-to-apples comparison, we’ll look only at the figures in terms of percentage of payroll.

Next year, the contributions for Public School Employees Retirement System and

Democrats, who are almost unanimously State Employees Retirement System will be about 16 percent of payroll — about two-thirds opposed to Gov. Corbett’s changes, argue that the state has made these promises to public of what the actuaries recommend for PSERS workers and should not change that deal. and half of what was recommended for SERS. In short, the state has to “do what we didn’t A series of pension “reforms” proposed by Gov. Tom Corbett and backed by some Repub- do for far too many years: pay our bills,” as Sen. lican legislators would reduce the contribution Vincent Hughes, D-Philadelphia, said Monday.

But to most ordinary people, “pay our bills” rates for the two plans to about 14 percent — would mean pay the full amount of the bills further underfunding the plans. that are owed. That means the full percentage The result? About $175 million in “savings” of payroll the actuaries say is necessary to keep that can be spent in other parts of the state the pension plans from falling further into budget, which is pretty much the same as debt. Unfortunately, that’s not what they mean. saying that you’ve saved money by paying less I pressed Sen. Hughes on this point Monday, than your monthly mortgage. and he said the Democratic view of paying the To his credit, Gov. Corbett also has proposed bills means paying the lower levels that the a bold set of measures that would reduce the General Assembly set for themselves in 2010. state’s long-term pension costs by moving new How convenient it would be if all of us could state employees into a 401(k)-style pension simply vote to pay half of our credit card bill plan and cut future benefits for existing state each month. workers. The proposal, if fully enacted, would When it comes to the pension debate in save about $12 billion over the next 30 years Harrisburg, don’t believe the talking points on and — more importantly — prevent the state from getting into this kind of a mess ever again. either side. Those who promise “savings” really mean they want to pay a little now in exchange But the whole thing seems a little too bold for paying more later and those who say they for most members of the General Assembly. want to pay the bills now mean they want to do There has been little to no movement on the the same. pension front for the past two months.

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20 JUNE 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

13

Lessons On Life, Leadership

Danielle Cohn is vice president of marketing and communications at the Philadelphia Convention and Visitors Bureau.

LEADERSHIP PHILADELPHIA

U

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

nforgettable, Transformative, Insightful, Enlightening, Challenging, Introspective” were just a few of the terms used by our “Junto No. 3” to describe going through Leadership Philadelphia’s Core Class Sunday night, June 16, over a celebratory dinner.

We graduated along with 109 other diverse, emerging leaders, and now we’re the Class of 2013 Leadership Philadelphia Fellows.

(For those of you wondering, the Junto, according to Wiki, was a club for mutual improvement established in 1727

by Benjamin Franklin in Philadelphia.)

In full disclosure, I was on Leadership Philadelphia’s board of directors for two years after Leadership’s 101 Emerging Connectors project and was encouraged to apply to participate with the full support of my organization — the Philadelphia Convention & Visitors Bureau.

While I thought I knew a heck of a lot about leadership and its role in the City I’ve cheered for all my life, 10 months later, I reflect on how lucky I am to have had the opportunity to go through such an exhilarating program.

Each month, for a full day, since September 2012, the maharishi of leadership, Liz Dow, reminded us to “put our professional and personal differences aside, turn off our cellphones and get our head in the game.”

And she and her team put together some of the most professionally run programs that tested our egos, built new leadership skills, created a safe environment to ask questions, gave honest

feedback, and taught us to pay it forward as we continue to grow in our personal and professional lives.

Leadership Philadelphia highlighted some of the qualities of great leaders: <Zef ]bk^\mbhg Lm^Z]bg^ll <eZkbmr BgÖn^g\^ Mknlm A^Zkm <hglblm^g\r It also reinforced that we only live once and we should do everything we can to follow our passions, do the work that we love, be kind to others, learn from mistakes, stay focused, embrace what others find inspiring about us, be a stepladder for others, say yes more than no and make real connections with the people we interact with and the City we love.

Through many team building exercises, presentations by dozens of City insiders, reality checks (some scientific, some not), we built new skill-sets and allies for life across public and private sectors.

Ultimately, these new trusted friendships allow things to get done faster for Philadelphia; when we can pick up the phone and call on someone we trust for advice, a partnership or a favor and they can do the same.

There are 3,000 Leadership Fellows in Philadelphia. Together, by continuing to grow this cohort and share our experiences with others, we can realize the full potential for our City and region.

Steadily, but almost quietly, Philadelphia has become a hotspot for entrepreneurs.

The combination of great ideas, available capital and a welcoming environment have set the stage to make 2013 a breakout year for innovation and new businesses.

To Learn More ...

For more information on sponsorship opportunities or to suggest story ideas, call our main office at 610-940-1656.

The web: RegionsBusiness.com Facebook: Facebook.com/regionsbusiness Twitter: @RegionsBusiness Sponsored by

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20 JUNE 2013

2013: YEAR OF THE INNOVATOR

FUNDING

BFTP Funding Area Companies With $1.5M Deal Ben Franklin Technology Partners of Southeastern Pennsylvania (BFTP/SEP) celebrated its 30th anniversary by sharing $1,550,000 with nine early-stage Philadelphia companies: AgileSwitch, LLC (Philadelphia): Develops power convertor technology to produce useful energy from renewable energy technologies, including solar panels and wind turbines —$250,000 Brad’s Raw Foods (Pipersville): A line of healthy snacks that use dehydration technology over baking or frying in order to preserve nutrients and enzymes — $100K Cocurrent BioEnergy (Doylestown): Offers a community-friendly platform that will allow municipal, industrial, forestry and agricultural waste producers to easily harvest a significant amount of their waste into energy — $250K OneTwoSee (Philadelphia): B2B platform that allows television broadcasters, online publishers, sports arena owners and smart TV manufacturers to enhance its programming to be connected with an audience’s connected, mobile devices — $75K Real Food Works (Philadelphia): Provides customers with a subscription plan of meals that are cooked by local restaurants, caterers and personal chefs, and delivered fresh — $175K Smart Structures (Southampton): Uses wireless sensors in wet concrete to test and monitor the health of the nation’s physical infrastructure, such as highways, bridges, tunnels and buildings — $150K SnipSnapp App (Philadelphia): The first app to scan, save and redeem printed coupons through your mobile phone —$100K Telefactor Corp (West Conshohocken): Developing the next line of advanced robotic systems for the field of Naval Explosive Ordnance Disposal Technology — $400K TicketLeap (Philadelphia): An e-commerce, do-it-yourself system for ticketing and registration that enables event organizers to sell tickets to their events online — $50K. In conjunction with the 30th anniversary, results from an independent evaluation BFTP/ SEP’s impact were released.

The study found that BFTP/SEP has helped boost the Pennsylvania economy by $6.6 Billion from 2007 through 2011, and more than $23.5 billion since 1989.

REGIONSBUSINESS.COM

Benjamin’s Desk Set for Expansion

INNOVATION

Philly Geek Awards Accepting Nominations Geekadelphia and the Academy of Natural Sciences will once again hold the Philly Geek Awards this summer to shine a light on the best and brightest geeks in the region.

Though awards include Scientist of the Year, Hacker of the Year and Web Project of the Year, the categories are not strictly science and technology.

FACEBOOK.COM/BENJAMINSDESK

As noted in Benjamin’s Desk’s previous entry, the co-working space will be expanding to an additional floor at its 1701 Walnut Street location — opening up a world of possibility and productivity for its resident-workers. Region’s Business caught up with the team to see what — and who — has been penciled in on this month’s calendar.

In their words: It’s been a crazy busy (but always productive!) month at Benjamin’s Desk. The eighth floor continues to make progress, and it’s expected to open in the next few weeks with ample room for additional entrepreneurs, innovators and startups that are serious about launching or growing their business and making an impact in Philadelphia.

We’ve recently welcomed new members, Zaahah and LifeVestHealth. Zaahah, a social media site, builds your network based on interests and encourages community building and collaboration with others. Something that we can definitely relate to at Benjamin’s Desk. The guys of LifeVestHealth recently moved back to their hometown of Philadelphia after spending some time in Denver, Colo.

LifeVestHealth lets you earn money for staying healthy and meeting you goals.

Think of it as investing in stocks for your health. We’re really stoked to have them both working out of our space.

Our second Startup Grind Philadelphia event wrapped up on June 5 with Gabriel Weinberg, CEO and Founder of Top 5 global search engine, Duck-

Artists and social media geeks will be honored as well, with categories like Visual Artist of the Year, Social Media Campaign of the Year, Event of the Year and Comic Creator of the Year.

DIARY OF A STARTUP

DuckGo, bringing in another packed house of doers in the city eager to hear about Gabe Weinberg’s commitment to continuing to build his business in the Philadelphia area and mentorship programs for startups and entrepreneurs.

Next month we will host Apu Gupta, CEO of Curalate, followed by Alex Hillman, founder of IndyHall, and Bob Moul of Artisan. All events are 6-9 p.m. at Benjamin’s Desk, and additional information and tickets can be found at www. startupgrind.com/philadelphia.

Rounding out the month, 5-6:30 p.m.

June 28, we will host authors of the book, Social Media Engagement for Dummies, Aliza Sherman and Danielle Smith. The book covers the nuts and bolts of authentically and effectively engaging with your audience on an ongoing basis.

FACEBOOK.COM/CLEVERGIRLPHOTO

The ceremony will take place August 17 at the Academy of Natural Sciences of Drexel University. There are plenty of opportunities to become a sponsor for the event or a specific award category Nominations are also being accepted for any of the categories.

Visit PhillyGeekAwards. com for more information on sponsorships, nominations or buying tickets.

20 JUNE 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

Comcast to Expand WiFi With ‘Neighborhood Hotspots’ Initiative Comcast plans on adding millions of Xfinity Wi-Fi hotspots for its multitude of customers — and it’s relying on its customers to achieve that goal.

The company announced last week that it will begin rolling out a neighborhood hotspot initiative that will exponentially boost the number of access points for customers to connect.

Comcast is giving its Xfinity Internet customers an additional “xfinitywifi” signal (or SSID) in their home that is completely separate from the family’s private and secure home WiFi signal. This service is offered at no additional cost to residential customers.

By default, one network is securely configured for the private use of a home subscriber. The second “xfinitywifi” network signal creates an extension of the Xfinity WiFi network and will allow visiting Xfinity Internet subscribers to sign in and connect using their own usernames and passwords.

“WiFi is at the center of our strategy to offer our customers the best online experience, whether it’s the fastest WiFi experience in the home, or a fast and reliable WiFi environment outside the home,” Tom Nagel, Senior Vice President of Business Development for Comcast Cable, said.

Comcast started a neighborhood hotspot trial last year in parts of the state, as well as New Jersey, Northern Virginia and the Greater Washington, D.C. metro area.

Currently, there are more than 100,000 using the neighborhood hotspots that have already been established in those areas.

In late 2010, Comcast launched Xfinity hotspots in parts of Philadelphia and New Jersey, allowing customers to log in with their credentials at familiar destinations like SEPTA’s Suburban and Market East stations, as well as select stops on the Paoli/Thorndale line and Manayunk/Norristown Line.

In New Jersey, access was enabled in towns like Berkeley Heights, Livingston, Long Branch, Montclair, New Brunswick, Perth Amboy, Red Bank, Rumson, Summit and Trenton.

But now, Comcast plans to extend its WiFi range all over the region, neighborhood by neighborhood — not just in major public locations.

The company also unveiled last week its new X2 platform for cable customers. The new TV dashboard plans to integrate social media and more personalization, recommending programming based on what a customer has watched in the past.

Comcast plans to roll the X2 platform out later this year.

FLICKR.COM/ZOGGLET

15

Replica Creative Rethinking The Future of Digital

BY BRANDON BAKER A daring contrarian, Replica Creative CEO Keith Leaphart insists that digital is not the future — or at least not the only future.

“People believe print is dead, but it’s not — people just want more control,” Mr. Leaphart said. “They want it to be customizable — on demand, sort of. They want more input into the experience, and we’ve opened up our environment to be more of a creative hub where top freelancers and designers come in.”

Mr. Leaphart took the reins of the 33-yearold, Center City-based design and print firm Replica in 2009, at the height of the economic crisis.

Since then, he said, profits and revenue have been up for the past three years.

“This is a growing market, not a declining market,” he said. “People just aren’t doing runs of 50,000 anymore. … Now people do maybe five runs of 500 to get to 2,500, but they’re changing the information and keeping it fresh.”

The firm specializes in developing brochures, business cards, architectural plans and more. In an effort to market creatively, it designed wallpaper logos for businesses all across downtown Philadelphia — including “Diary of a Startup” highlight Benjamin’s Desk — and launched a #CenterCityPopUps campaign focused on trending local artwork.

Mr. Leaphart expressed his intention to franchise the business, beginning with a brand-new, open-café-style office to be opened in October in University City.

From there, his sights are, for now, set on locations like Washington, D.C., New York and Baltimore.

“We are redefining what you consider traditional art,” he said. “And in five years, I’d like to definitely — at least — be in two other cities on the eastern seaboard.”

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2013: YEAR OF THE INNOVATOR

20 JUNE 2013

REGIONSBUSINESS.COM

Family Information Can Be Streamlined With AboutOne “I had originally built [AboutOne] for myself,” Ms. Lang said. “One of my sons got sick, and I ran out of the house with MOST ENTREPRENEURS my iPhone and car keys, and when I got to the ambulance where my son was, and

BY BRANDON BAKER WOULD LOVE TO BE IN THE the paramedic needed information on SAME PLACE I’M IN RIGHT his medication, I couldn’t provide it.

The accolades are endless: Mom’s NOW, AND I FEEL LIKE “What I wanted was to just go and Choice Award Honoring Excellence, click on a picture of him, and give it to The National Parenting Center “Seal of WE’VE EARNED IT. the paramedic so he could get all the Approval,” fellowship recipient courtesy —JOANNE LANG information.” of the Alliance of Women, a glowing New From there, having had a background York Times write-up — Joanne Lang has become something of a local, entrepreDespite raising $1.6 million from a in cloud technology, she decided to creneurial celebrity.

Golden Seeds-led funding round, it is ate a sort of virtual family filing cabinet.

“Our team worked really, really hard. currently in the middle of another stage The app is meant to streamline the … Most entrepreneurs would love to be of fund-seeking, targeting $500,000 as process of finding and sharing items in the same place I’m in right now, and the sweet spot — for now, that is. like school paperwork, family photos, I feel like we earned it,” she said. “I don’t She anticipates another round moving at-large household paperwork and, as it feel like we just randomly got them for forward as she exits the beta and strictly- turns out, medical information. not doing anything, to be honest.”

Ms. Lang, who has planted her API stage of her product and phases Still, what’s surprising is that, despite into commercializing with a rebranded AboutOne roots in Philadelphia, hopes the pileup of praise, Ms. Lang and Abou- product. to eventually bring the program under But this is a product that, she said, was the umbrella of a larger company that, tOne, an app-based family management tool, has yet to finalize its source of fund- never actually intended to be put on the she said, would represent a “trusted market. adviser for families.” ing.

Business: AboutOne Founders: Joanne Lang Contact: jlang@aboutone.com

SUBMITTED

1st Annual

MARCUM I N N O VATO R of the Year

AWA R DS October 23, 2013

Is your company a catalyst for change?

Have you pushed the boundaries in your industry?

Is your innovation helping to boost Philadelphia’s growing economy?

Marcum LLP and Region’s Business are in search of Greater Philadelphia’s top innovators, and we want to hear from you.

The 1st Annual Marcum Innovator of the Year Awards will honor businesses of all sizes that are pioneering new advancements in the fields of Health/Biotech, Technology, Business Management, and Energy. Three winners will be named in each category, based on company size.

Tell us about your break-through innovation and what makes your company a leader in our region by emailing a 500-word summary to innovation@regionsbusiness.com.

Submissions must be received by August 9, 2013.

Winners will be announced at a Gala Awards Ceremony at the Franklin Institute on October 23, 2013. Don’t miss out on this spectacular opportunity to join our region’s business leaders in recognizing and celebrating the spirit of innovation in and around Philadelphia.

For complete details including nomination criteria, please call Jacki Hallinan at 484.270.2715.

Ben Franklin may have been Philadelphia’s first and most celebrated innovator, but he did not have a corner on the market. Who knows? You could be Philadelphia’s next Innovator of the Year!

For tickets to the event, please call 610-572-7112 ext 102. If you are interested in sponsoring this event, please call Deirdre Affel at 610-572-7136.

Marcum LLP is a top national accounting and advisory services firm.

Sponsored by

Discover the

Difference

www.marcumllp.com

International Member of Leading Edge Alliance

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REGIONSBUSINESS.COM

CONFLICTING PRESCRIPTIONS: PENNSYLVANIA LEADERS, BUSINESS OWNERS DIVIDED ON MEDICAID Pennsylvania business owners are watching as the calendar approaches January 1, 2014, when provisions of the Patient Protection and Affordable Care Act — including Medicaid expansion — become law, and mixed opinions on both sides are heated STORY BY ERIC HERR ILLUSTRATION BY DON LEE

M

any eyes in the Philadelphia area this past week may have been focused on the U.S. Open Golf Tournament at the legendary Merion Golf Club.

But other eyes were likely taking a hard look at Harrisburg lawmakers, hoping they can resolve their differences on liquor privatization, pension reform, transportation and other matters currently in limbo, before the fast approaching constitutionally state mandated budget deadline of June 30.

Progress is being made.

Last Wednesday, the House approved Pennsylvania’s 28.3 billion dollar budget along party lines, 108-92, albeit some $100 million less than what Gov. Tom Corbett wanted.

But, with less than two weeks to go, the multi billion dollar spending package must now be fast tracked through the state Senate before going to the governor’s desk for

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WE WANT TO PROVIDE PEOPLE ACCESS TO AFFORDABLE, QUALITY HEALTH CARE, BUT ALSO WANT TO BE SURE THAT THE PROGRAM WILL BE SUSTAINABLE FOR BOTH THE SHORT AND LONG TERM.’ — DEPARTMENT OF PUBLIC WELFARE SPOKESWOMAN ANNE BALE

FLICKR.COM/WAELDER11

signing and final passage.

One major sticking point between Democrats and Republicans continues to be Medicaid expansion, set to go into effect in 2014 as part of of the national 2010 Patient Protection and Affordable Care Act. Earlier this month, state Democrats on the Appropriations Committee, tacked on a Medicaid expansion amendment to Senate Bill 977, (a.k.a.

The Welfare Code) which deals with human services block grant allocation, hoping to force a vote on this highly complex and politically charged issue.

Republicans, siding with Gov. Corbett, who wants more details on the expansion plan, pulled the bill from the schedule.

Senate Appropriations Committee Minority Chair, Vincent Hughes, D- 7th District, expressing disappointment, argued the Commonwealth would see benefits at many levels.

“Medicaid expansion would unquestionably be good for Pennsylvania’s economy. The state would receive about $4 billion annually in new funds

to expand health care for low-income working individuals and in addition, more than 500,000 people would be able to get insurance, resulting in greater consumption of health care services,” noted Sen. Hughes, who went on to say that The Pennsylvania Economy League has estimated Medicaid expansion would create between 35,000 and 40,000 new jobs as a result of all of these new consumers.

Adding fuel to arguments against jumping on board the so-called Medicaid expansion bandwagon include diminishing federal aid — 10-percent over the next six years — plus potential hidden costs like program administration, staffing, training and related expenses not covered by federal funding.

Opponents contend Pennsylvania taxpayers could be stuck with picking up most of a billion-dollar-plus tab for many years down the line.

Clearly, there is no shortage of opinions as to the effectiveness of Medicaid expansion or what its ultimate impact on Pennsylvania businesses might be.

But one thing is certain: Like it or not, Medicaid Expansion and other provisions within the Patient Protection and Affordable Care Act, become law on January 1, 2014, and businesses, statewide will need to prepare for the inevitable.

To understand the big picture, some background may be helpful.

Medicaid was created in 1965 as an entitlement program under Title XIX of The Social Security Act. While jointly funded by the state and federal governments, the program is administered by each state and provides a broad range of health care as well as long term care services to U.S. citizens or legal residents of all ages, who cannot otherwise afford such care.

Unlike some states, it should be noted that Pennsylvania also provides state-only funded general assistance medical benefits for adults who don’t qualify for Medicaid.

According to Pennsylvania State Department of Public Welfare statistics, more than two million Pennsylvania adults, children, pregnant women,

disabled, seniors and low-income families, or roughly 1 out of 6 people statewide, receive these Medicaid benefits.

The same statistics indicate current spending on Medicaid accounts for roughly 75 percent of DPW’s near-$28 billion budget, nearly 40 percent of the state’s annual budget and 30 percent of the Keystone State’s General Fund, making it the No. 1 cost-driver.

What’s more, in the next fiscal year the cost of maintaining of DPW programs, including Medicaid is projected to skyrocket to upwards of $400 million, therefore making an already tenuous financial situation even worse.

With Pennsylvania and other states facing fiscal crisis, a sweeping federal overhaul of the entire healthcare system through insurance mandates, government subsidies and the expansion of Medicaid was passed by the federal government in 2010 under Patient Protection and Affordable Care Act. Two years later, in a five to four landmark decision, National Federation of Independent Business v. Sebelius, the Supreme Court ruled that most provi-

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THERE’S DEFINITELY FEDERAL MONEY...

BUT WHO’S TO SAY WHEN A BUDGET CRISIS INEVITABLY COMES DOWN THE ROAD THAT THE CONTRIBUTION RATE WON’T BE ADJUSTED OR EVEN ELIMINATED?’ — CHRISTOPHER NEEFUS, AMERICANS FOR PROSPERITY

FLICKR.COM/KELEHEN

sions within the ACA were constitutional, but also said the federal government could not force states to expand Medicaid at the risk of losing existing federal program funding.

Simply put, come January 1, 2014, the economically challenged along with everyone else will be required to have health insurance, even if Pennsylvania or any other state decides not to take part in the expansion.

This mandate has a number of ramifications, not the least of which is that Medicaid expansion is projected to add upwards of 800,000 or more recipients into Pennsylvania’s system alone.

That number reflects all adults — vulnerable and healthy, able-bodied individuals alike — between the ages of 19 and 64, with incomes at or below 133 percent of the federal poverty level (FPL) who would be eligible for the program — annually, about $15,200 per person or $31,200 per family of four.

The mandate also takes into account upwards of 250,000 children enrollees, 75,000 of whom would be transfered to Medicaid from the Children’s Health

Insurance Program or CHIP. The net result is that about one in four Pennsylvanians will be on Medicaid.

DPW spokeswoman Anne Bale noted that expansion numbers reflect existing benefit recipients, new enrollees who were eligible under current rules, but have not yet enrolled (woodwork), plus those who drop their private insurance in favor of the less costly Medicaid option (droppers).

She pointed out that under ACA guidelines, the Commonwealth will likely need to absorb an estimated $91 million in additional staffing, IT and administrative costs not covered by federal funds.

“Medicaid expansion is a complex issue with many ongoing changes to take into consideration. We want to provide people access to affordable, quality healthcare, but also want to be sure that the program will be sustainable for both the short and long term,” Ms. Bale explained, adding that her agency continues to work closely with the federal government to determine how the program can work most effi-

ciently to the benefit of all Pennsylvanians.

Proponents of Medicaid expansion anticipate that sustainability will come in the form of savings within the Department of Public Welfare (DPW), based largely on people moving out of the state welfare system into Medicaid.

The average net budget impact could be more than $100 million — money that could be used for education, for job creation or to cut taxes. But that’s a decision the state General Assembly and governor will need to make after actual savings are realized.

The economics of Medicaid expansion seem to resonate well within the hospital community. The theory goes that there will be fewer patients for whom hospitals will have to provide uncompensated care, since 95 percent of Pennsylvanians would have health insurance coverage.

Hospitals will also receive payments for services provided to patients enrolled in Medicaid as a result of expansion, thereby reducing the financial burden on hospitals that have

served larger numbers of uninsured Pennsylvanians.

According to Hospital & Healthsystem Association of Pennsylvania spokesman Roger Baumgarten, studies from RAND Health, the Pennsylvania Economy League, the state’s Independent Fiscal Office and others, indicate Medicaid expansion produces a return on investment for Pennsylvania’s citizens, government and health care providers.

“This,” Mr. Baumgarten said, “manifests itself in higher rates of insurance coverage, lower rates of hospital bills going unpaid, greater economic growth, increased employment and — most importantly — timelier health care for low-income Pennsylvanians who would otherwise have no health insurance coverage.”

Christopher Neefus of Americans for Prosperity, a grassroots advocacy group, is much more skeptical of program claims, saying that 32 percent of doctors in Pennsylvania won’t accept any new Medicaid patients.

“The biggest problem with Medicaid

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expansion as I see it is that there’s definitely federal money that Pennsylvania and other states can use, but by the same token, who’s to say when a budget crisis inevitably comes down the road, that the contribution rate won’t be adjusted or even eliminated altogether,” Mr. Neefus said, citing federal trilliondollar-plus federal deficits over the last five years.

Medicaid expansion in many ways is a key component of President Obama’s health care reform legislation, but when you consider that its implementation is projected to generate thousands of jobs, then it becomes equally important to understand Medicaid in the larger context of The Patient Protection Affordable Care Act legislation in terms of its impact on employers and the business sector as a whole.

In short, it’s all about one thing: giving more people more access to healthcare, whether it be through Medicaid expansion, employer mandated coverage, or individual coverage. And whenever there are benefits given, someone must pick up the costs to pay for those benefits.

“While the intent of this law is to cover more people, it remains unclear at this point, how well companies will be able to meet various compliance stipulations, not to mention sorting out costs associated with increased operating costs, extra taxes and possible penalties,” observed Joe DiBella, Managing Director and Executive Vice President of benefits consulting firm Conner Strong & Buckelew.

With those numbers potentially being in the hundreds of thousands or even millions of dollars, Mr. Dibella is educating his clients now, to be sure they are fully informed about all aspects of the soon to be implemented ACA law.

Businesses, for example, who employ fewer than 50 full time people are exempt from offering mandatory health care to their employees. On the other hand, if a business employs more than 50 people, it is that employers responsibility to provide healthcare for employees.

For Mark Baiada, Founder and President of Bayada Home Health Care, who employs some 8,300 people in Pennsylvania alone, it will mean an investment in the millions — an extra $16 million annually if all of his Pennsylvania workers are eligible and opt to take insurance or an estimated $5 million annually, taking into account his Pennsylvania

AS AN EMPLOYER UNDER THE AFFORDABLE CARE ACT, I NEED TO SHARPEN MY PENCIL AND SEE HOW MANY FULL AND PART TIME EMPLOYEES I CAN AFFORD.’ — JUDY MCCORMICK, DINING CAR RESTAURANT

FACEBOOK.COM/THE-DINING-CAR

part-time workers and those who decline.

“The problem is that the underlying costs of health insurance continue to go up and there doesn’t seem to be any end in sight,” he observed.

Increasing costs associated with the ACA rules and regulations is also putting a huge financial strain on Judy McCormick.

She, along with sister Nancy Morozin and brother Joe Morozin, are wondering how they will keep their 52-year-old, family-owned Dining Car Restaurant in Northeast Philadelphia afloat.

The diner employs more than 100 people on both a full- and part-time basis.

“Years ago, we offered our employees health insurance, but had to discontinue offering it because the prices simply became too high. Now, as an employer under the Affordable Care Act, I need to sharpen my pencil and see how many full and part time employees I can physically afford before I shut my doors,” she lamented.

She elaborated, saying that she and her siblings care about every employee and would like to keep them all, but

admit they will be hard-pressed to find enough money to do that, especially in an industry that works on extremely close profit margins.

“Trust me; no one wants to pay $20 for a cheeseburger, even with all the fixings,” she said, lightheartedly.

Further complicating things is the fact that come January 1, 30 hours per week will constitute full-time employment vs. 40 hours per week.

Added into the mix will be penalties of $2,000 for employers who either do not offer health insurance coverage or do not provide health care at an affordable cost, or 9.5 percent of an employee’s income.

Health care coverage, under ACA rules is deemed affordable if it covers at least 60 percent of an employees healthcare related expenses. In other words, if the coverage doesn’t meet that minimum requirement.

Buyers of health insurance will be able make choices through so-called Health Insurance Exchanges. These exchanges will offer a variety of approved healthcare plans at different coverage levels and will also be an informational and education resource to help consumers understand plan differences and which choice is best

for them.

According to research provided by the bipartisan National Conference of State Legislatures, under ACA guidelines, each state can either set up one or multiple exchanges, partner with the federal government to operate the exchanges, or merge with other state exchanges.

If a state chooses not to create an exchange, as is the case in Pennsylvania, the federal government will do it and let the state decide whether or not to transition to a state exchange at a later time.

Regardless of the scenario, each state has the chance to opt in or out of a state or federally facilitated program, but must do so by January 1, 2014.

Moving forward, a list of approved health care providers that satisfy federally mandated guidelines will be forthcoming. One of many presumed carriers will likely be Independence Blue Cross, which employs some 7,500 people and serves upwards of 35,000 employer groups.

“There are clearly many complexities to this legislation, but from our perspective as carriers, it’s now our job to give both employers as well as the public all the information they will need to make good, informed purchasing decisions and to know what to do and where to go,” explained Independence Blue Cross Senior Vice President of Healthcare Reform Implementation John Janney.

Alumni Professor and Chairman, Dept. of Family and Community Medicine, Thomas Jefferson University/ Medical College, Richard C. Wender, like countless others soon to be on the front lines, hopes this legislation will achieve the goals it was designed to do, but remains cautiously optimistic.

“Predicting the precise impact of Medicaid expansion is difficult, because this legislation, like any healthcare and social legislation, is likely to change from year to year, so at this point, we’ll all just have to take a wait and see attitude,” he observed.

For his part, Gov. Corbett is still resistant to signing on to the Medicaid expansion mandate, fearing that if the federal government defaults, states will be left holding the proverbial bag.

But with neighboring Republican states like New Jersey and Ohio both on board, along with nearby Maryland and New York — both under Democratic leadership, the pressure is on.

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FINE ESTATES PREVIEW

REGIONSBUSINESS.COM

Spacious Gladwyn ‘Crown Jewel’ Seeks $24M At 50 acres, Linden Hill is referred to as the “crown jewel” of the region.

This luxurious home contains eight bedrooms, seven baths, two pools, a guest house, two staff buildings, a 10-car garage, tennis court, barn and an aviary.

The French-Norman manor has handcarved wood paneling that complements the marble fireplaces and floors, gigantic bay windows and formal gardens.

A gated entrance and long drive leads into the main courtyard and centerpiece of the estate, the manor house.

The grand formal rooms and intimate family living spaces create a welcoming and livable family environment with the exquisite original millwork and architectural details, including 10-14 foot ceilings and oak flooring.

Designed and built in 1929 by Edmund Gilchrist, the house was formerly owned by Jack Dorrance.

This is a true definition of country estate living — all while being a stone’s throw from Center City.

For more information, please contact Eleanor Morsbach Godin of Prudential Fox & Roach at (610) 341-4550.

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REAL ESTATE

Realtors Suggest Going Long On Abatement

BY SANDY SMITH

C

ity Council member W. Wilson Goode Jr.â&#x20AC;&#x2122;s proposal to place a cap on the value of construction eligible for the cityâ&#x20AC;&#x2122;s 10-year tax abatement has drawn opposition from the cityâ&#x20AC;&#x2122;s development community, with both the Building Industry Association (BIA) and the Greater Philadelphia Association of Realtors (GPAR) lobbying against it.

In a move that could change the whole debate over the abatementâ&#x20AC;&#x2122;s benefits, the Realtors have put a proposal of their own on the table: Instead of limiting it, expand it in a big way to stimulate construction of more affordable housing.

GPAR President Allan Domb said his group has drafted a proposal that would add a 25-year tax abatement for new construction or improvements to homes in neighborhoods with house values averaging $125,000 or less. The existing 10-year abatement would

820 Brushtown Rd, Gwynedd Valley, PA

84 Norristown Rd, Blue Bell, PA 19422

$3.65 M (6005156)

$965,000 (5962964)

remain in place for construction above that threshold, with no upper limit, but the abatement would be reduced by 20 percent each year beginning in year six, as Councilman Goodeâ&#x20AC;&#x2122;s bill also proposes. â&#x20AC;&#x153;GPAR would like to see the 10-year abatement, which has been the most successful legislation in the history of Philadelphia for business and economic development, kept in place,â&#x20AC;? Mr. Domb said. â&#x20AC;&#x153;But we must recognize that many around the city feel that those getting the benefits of the current abatement are well-off and that ordinary people are left paying for them.â&#x20AC;?

Mr. Domb explained the Realtorsâ&#x20AC;&#x2122; proposal would â&#x20AC;&#x153;assist those residents of the city in neighborhoods like Tacony and North Philadelphia who are hurting and spur development in those areas through the private sector. â&#x20AC;&#x153;There are many neighborhoods in the city where homes are still decreasing in value, and those neighborhoods could use stabilization.â&#x20AC;?

5 beds | 6 full, 3 partial baths Timeless & Elegant describe this true estate in prestigious Gwynedd Valley. Built by the builder, for the builder, the residence is sited on over 1.5 acres and offers over 11,000 sf of living space. This home was designed for those with the most discriminating taste and an appreciation for fine living.

5 beds | 5 full, 1 partial baths Meticulously maintained, solid built, Philomeno & Salamone estate home offers nearly 6,000 sq.ft. of living space on 3/4 acres w/3 bay garage. Conveniently located on a private cul de sac in desirable Blue Bell,this home was designed to entertain with itsâ&#x20AC;&#x2122; custom finishes t/o including newly renovated gourmet kitchen.

The proposal also addresses the main criticism of the existing abatement program made in a recent report by economist Kevin C. Gillen, a senior research associate at the University of Pennsylvaniaâ&#x20AC;&#x2122;s Fels Institute of Government.

The report found that the abatement produced first a doubling, then a quadrupling, of construction activity in the city after it was put in place in 1999.

In addition, the study credited the abatement for continued growth in the pace of new construction in the city while new starts fell in the suburbs.

The abatement produces an additional $88 billion in property tax revenue under the Actual Value Initiative that would not exist without it (assuming a $15,000 homestead exemption and a property tax rate about two points below the 1.34 percent approved by City Council).

Mr. Gillenâ&#x20AC;&#x2122;s report dismissed criticism of the abatement as a tax giveaway to the wealthy; instead, it said the abatement closed the gap between the cityâ&#x20AC;&#x2122;s high

1204 Hunt Seat Dr, Lower Gwynedd, PA

936 N Penn Oak Rd, Lower Gwynedd, PA

Nicole Miller-Desantis

(215) 641-2727 (office) (267) 419-1454 (direct)

(215) 850-1305 (cell) (215) 999-5817 (fax)

$1.125 M (6196317)

$948,500 (6196308)

construction costs â&#x20AC;&#x201D; the fourth-highest in the nation â&#x20AC;&#x201D; and its low house values relative to other high-cost cities like New York, San Francisco and Boston. But it did conclude that the abatement in its current form does little to stimulate new housing construction for low- to moderate-income homeowners. â&#x20AC;&#x153;The biggest outcry against the abatement has come from lower-income neighborhoods,â&#x20AC;? Mr. Domb said. â&#x20AC;&#x153;...

There are many areas of the city that need help, and this bill provides that help. You go to the bank with a 25-year abatement â&#x20AC;&#x201D; thatâ&#x20AC;&#x2122;s huge.â&#x20AC;?

The additional cost of the longer abatement would be recouped from the five-year phaseout provision for 10-year abatements. In addition, as abatements expire on improvements made more than 10 years ago, the city will realize new revenue from those properties, further offsetting the cost.

This article was originally published at PhiladelphiaRealEstate.com.

5 beds | 3 full, 1 partial baths Tastefully decorated colonial in desirable Polo Club Estates in the heart of Gwynedd Valley. Sited on over an acre, this well positioned, brightly lit home has improvements throughout. Hardwood flooring, custom paint, newly renovated powder & mud rooms along with numerous other finishes that highlight this beautifully maintained home.

4 beds | 3 full, 2 partial baths Sited on a nearly 1 acre wooded lot in popular Penn Oak, this pretty stone colonial boasts nearly 7,000 sq. ft. of living space w/ its full, finished, walk-out basement. This home offers a bright, open floor plan with access to the outdoors from nearly every room. Kitchen w/ Breakfast Room is welcoming and provides access to large, rear deck for easy entertaining.

Blue Bell Office 686 Dekalb Pike Blue Bell, PA 19422

26

Q&A

20 JUNE 2013

REGIONSBUSINESS.COM

MICHAEL ZAMMUTO’S

GROWING REPUTATION

The president of ReputationChanger.com is looking to hire up to 300 employees in the next year and moved his company from West Chester to the Curtis Center because, he says, “great companies have great headquarters.”

What is the elevator pitch for ReputationChanger.com?

Two big trends we talk about are: First, there’s been an explosion in ways that people may be writing about us on the internet — everything from social media to user-generated content to reviewers to government databases, etc. So there’s more being written about other people than ever before. The second thing is the internet has been the primary way that research is done, therefore the way that decisionmaking is done. And Google has become the way that people do that research.

Our conclusion is that you are what Google says you are because that’s what people are using. When they go there, if you haven’t taken control of your reputation, other people are telling that story for you. It’s precisely that problem we address and we do that by trying to tell a more comprehensive view of people’s stories.

What is your company’s philosophy?

Well, our mission statement is to help our clients take control of their name in search engine results. Our long-term vision is to help the lives and livelihoods of our clients, which ties in back to that.

Why did you decide to move your business from West Chester to Philadelphia, at the Curtis Center?

The No. 1 reason is access to additional talent. We believe we’re going to add 200 people in the next year, possibly an additional 100 by the end of this calendar year. We’ve already been adding people at a pretty fast clip. Being

/ReputationChanger

@RepChanger

in the middle of Philadelphia gives us access to more talent in different areas. The other reason is that it pulls us together. Because of our growth, we’ve actually split up into…a few offices now: two in West Chester, one in downtown Philly. This move will consolidate us into two offices in downtown Philly, and they’re right across from each other.

The other reason is that a lot of our business has shifted to more national accounts, big companies, government, universities. And now we’ll have access to transportation hubs, like Amtrak and the airport, which will be important since we’re doing more traveling.

Also, with talent, is universities. Universities are creating really large volumes of really smart people. Philadelphia is in a fantastic university community between Penn and Drexel and others. Being somewhere that’s centered around those is really valuable, especially in a field like ours that’s pretty hightech and pretty new, getting access to recent graduates will be an important part of this staffing strategy.

What are you most excited about with moving your office to Philadelphia?

The building itself is really exciting, the Curtis Center is a great building. Great companies have great headquarters. We have partnerships with some big internet companies like Twitter, that have beautiful headquarters. We think that space is really inspiring, particularly to knowledge workers and internet workers. So we think it’s going to be a great impact on our company culture being down there.

ReputationChanger.com

20 JUNE 2013

REGIONSBUSINESS.COM

OPINION

27

Paving The Way For Regional Growth I Steve Wray is executive director of the Economy League of Greater Philadelphia. More information can be found at economyleague.org.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

’ll be honest — infrastructure is not the sexiest topic in the world. A good many of us have a hard time getting excited about railways, roads, ports, and airports — let alone sewer systems and electrical lines.

But while infrastructure may not be the conversation topic of choice at your average party, it’s hard to discount the role that modern transportation, water, and energy systems play in allowing us to go about our everyday lives.

Together, these systems constitute a sort of physical operating platform that makes possible nearly everything we do.

Consider for a moment what your life would be like without access to roads and transit, the electrical grid, water supply, and wastewater management FLICKR.COM/KGRADINGER systems.

Admit it — you’d have a hard time doing much of anything.

In Greater Philadelphia where a legacy of prior investments has endowed us with extensive infrastructure to the forefront by a spate of water main assets, it’s easy to take all of this for granted. breaks last winter.

After all, when it’s doing what it’s supposed SEPTA’s aging facilities and vehicles to be doing, infrastructure fades into the require $4.7 billion in investment to be background. It’s when these systems don’t brought up to a state of good repair. Our perform as we expect them to that most of bridges are aging too: according to Transus start to pay attention. portation for America, one out of every four And in our region, where much of our bridges used by motorists in Pennsylvania is infrastructure is aging and in deteriorating likely to be deteriorating. condition, the prospects for these types of Finding funding to make the investments interruptions are growing greater every day. necessary to keep these systems up and Such interruptions can go far beyond running to a high standard is an enormous being minor inconveniences — infrastrucchallenge that will need to be addressed jointly at the national, state, and regional ture that doesn’t meet the needs of local levels. Here in Greater Philadelphia, we businesses or communities can inhibit must work together to find ways to fill economic growth and severely compromise immediate funding gaps and remain quality of life. focused on long-term investments that This is why business and civic leaders in will make our region a great place to live, our region identified infrastructure as one work, and play for generations to come. of three long-term priorities for Greater A sustained push by business and civic Philadelphia through the World Class leaders in support of priority infrastructure Greater Philadelphia initiative. investments will go a long way in helping The big challenge is that just about every to overcome the considerable challenges type of publicly owned physical infrastrucconfronting the region today. ture in our region is of an advanced age. The Developing a shared agenda for this work average water line in the City of Philadelwas the charge of the World Class Infraphia is roughly 78 years old, a fact brought

structure Strategy Team, convened by the Economy League in conjunction with ULI Philadelphia.

This cross-sector group of more than 50 business executives, civic leaders, and issue experts identified strategies to strengthen Greater Philadelphia’s global and national connections, ensure that our transportation networks provide for reliable and efficient regional mobility, and modernize our water, energy, and open space systems.

The team’s recommendations serve as the basis for a Global Positioning Strategy (GPS) for World Class Infrastructure, released this week. This Infrastructure GPS complements previously released World Class GPSes focused on education and talent development and business growth.

It will help focus and guide business and civic collaboration and dialogue about the critical infrastructure improvements that we must make as a region in order to remain competitive and become an even more attractive place to live and do business.

For more information about the GPS, please visit worldclassgreaterphila.org.

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20 JUNE 2013

REGIONSBUSINESS.COM

OPINION

ACA Update: Administration Delays Small Business Provision Until 2015

B.J. Hoffman is a certified public accountant and certified fraud examiner for Citrin Cooperman. He is a partner in the Philadelphia office. He can be reached at bjhoffman@citrincooperman. com.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

ONE BUSINESS OWNER...SAID THAT THEIR EXISTING CARRIER INCREASED RATES BY 115 PERCENT FOR 2012 — ESSENTIALLY MAKING THE EXISTING PLAN IMPOSSIBLE TO KEEP FOR THE FIVE-EMPLOYEE COMPANY.’

One of the major enhancements promised under the Affordable Care Act (ACA) was the Small Business Health Insurance Exchange (“SHOP”) being implemented

by January 1, 2014, with small employers beginning their open enrollment on October 1, 2013.

The ACA legislation stipulates that each state will have a SHOP exchange in 2014 that will provide lower-cost health insurance for small employers.

The SHOP exchange is supposed to help employers compare numerous lower-cost health plan options provided by various insurance carriers (known as the “choice option”), while being given assistance on how to enroll their employees and streamline payment of insurance premiums.

However, due to what the Obama administration referred to as “operational challenges” in implementing the SHOP exchange by the original deadline, in 2014 there will only be one single health plan option available under SHOP.

The pricing of this one plan option is still not yet available, so small employers will most likely continue offering their current plan options until 2015, when the choice option is operational under the SHOP exchange.

This is not good news, especially because many of the small businesses we have spoken with are seeing record increases in 2013 already and were hoping to have some relief to start shopping new plans in October of this year.

In fact, one business owner in Bucks County, Pa., that we spoke with said that their existing carrier increased rates by 115 percent for 2012 — essentially making the existing plan impossible to keep for the five-employee company.

When that same company reached out to other carriers for underwriting, they came back with rates 200 to 300 percent higher than the current carrier.

As a background on the SHOP exchanges under the ACA, businesses with up to 100

employees will be able to buy insurance in the exchanges.

In 2014 and 2015, states can limit participation to businesses with 50 or fewer employees. States can open the exchanges to large employers in 2017.

Companies with fewer than 25 workers may be able to obtain tax credits for up to two years of coverage bought through an exchange.

In addition, because of the three-year anniversary of the law, there have been numerous reports in the news recently about above-average health insurance premium increases because of the mandates required under the ACA. In 2013, Philadelphia-area employers can expect to face the added challenge of ever increasing health plan premiums without the previously anticipated benefit of a competitive marketplace from which to shop.

The next 12-18 months will be difficult for small employers to mitigate their health insurance costs during the renewal process.

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20 JUNE 2013

REGIONSBUSINESS.COM

OPINION COMMENTARY FROM ACROSS THE WEB

A Way Forward On Medicaid Expansion

Changing Pension Plan Only Way To End Crisis

Besides being a humane and decent thing to do, expanding Medicaid coverage for our fellow Pennsylvanians makes good business and economic sense.

On the business side, Pennsylvania’s hospitals care, and care a lot, about Medicaid expansion. That’s because they have to give millions of dollars in free emergency care to poor patients, and the federal health reform law is taking away the government payments that help cover the cost of that free care.

Those “Disproportionate Share” payments are being phased out because they aren’t supposed to be necessary – everybody is supposed to have health coverage, either through private insurance or expanded Medicaid. Pennsylvania hospitals will lose upwards of half a BILLION dollars each year unless Medicaid coverage is expanded, according to a study by the RAND Corporation, a respected think tank. Refusing the federal Medicaid money, as Gov. Tom Corbett has done so far, will probably drive some smaller Pennsylvania hospitals out of business.

Under my pension reform plan, new state and public school employees will be enrolled in a defined-contribution plan, rather than a defined-benefit plan.

In my view, conversion from a defined-benefit plan to a defined-contribution plan is the most responsible way to provide an adequate retirement for state and public school employees, while shielding the taxpayers from bearing the burden of contributing billions to help balance an outdated and expensive defined-benefit plan that has become increasingly rare in the private sector.

Moreover, as I have said countless times, my plan does nothing to affect the benefits of retirees or the benefits of current employees that have already been earned.

So count me in. As governor, I pledge that if the General Assembly passes pension reform, I will gladly join new state and public school employees as a member of the new definedcontribution system.

Together, we can solve this pension crisis and make Pennsylvania a better and less expensive place to live, work and raise a family.

PATRIOT-NEWS EDITORIAL,

TOM CORBETT FOR THE MORNING CALL,

12 JUNE 2013

17 JUNE 2013

Medicaid Expansion Makes Sense For State

Thank You To An Environmental Champion

Healthier, more productive communities and employees, a better health care system, billions in economic growth, and 35,000 new jobs — that’s what Pennsylvania has to gain by expanding Medicaid eligibility to more lowincome Pennsylvanians. Medicaid expansion makes good business sense for Pennsylvania and for Delaware County.... If PA chooses to expand Medicaid to cover people under 65 years old who earn up to 138 percent of the federal poverty level, the federal government is required by law, as part of health reform, to pick up nearly all of the costs of covering these new beneficiaries. According to three recent studies, that will have a very positive impact on our state’s health and economy.

If you love the Jersey shore, you can thank Sen. Lautenberg for fighting for clean beaches and waters. He wrote the Beaches Environmental and Coastal Health Act, a law to improve water quality monitoring standards and make sure the public is informed of problems. He worked to ban ocean dumping, and changed federal laws to fortify the hulls of oil tankers. His landmark legislation that banned smoking on commercial airline flights led to other antismoking measures, all vastly improving public health. He wrote the Toxic Right to Know Law, giving local communities information about harmful toxins released into the air by chemical plants.

ALEX CHARLTON AND CURT SCHRODER

MICHELE BYERS ON PHILLYBURBS.COM,

ON DELCOTIMES.COM, 18 JUNE 2013

17 JUNE 2013

REGION’S BUSINESS A JOURNAL OF BUSINESS AND POLITICS © COPYRIGHT 2013 INDEPENDENCE MEDIA 350 SENTRY PARKWAY, BLDG. 630, SUITE 100C BLUE BELL, PA 19422 (610) 572-7112 | WWW.REGIONSBUSINESS.COM

Le Bec Fin closes forever after Saturday dinner service. It will be something else in [September], but never what it was. @PETERCRIMMINS

@emcatalano

@AxisPhilly

So glad I got to experience it at least once: MT @EaterPhilly The Shutter: Le Bec Fin is closing for good Saturday

Philly Realtors: don’t stop abatements, make them longer for lower incomes http://axs.ph/12EJdpM @regionsbusiness #5at5

12 JUNE 2013

17 JUNE 2013

@daniellecohn PHL=City of Murals. Still one of my favorites at 20th & Arch. @muralarts @ discoverPHL

EDITORIAL BOARD CEO and President James D. McDonald Managing Editor Terrence J. Casey Associate Editor Rich Coleman

@NavyYardPhila EXCITING! RT @uwishunu: Awesome news: @MarcVetri to open a new restaurant at the Navy Yard next summer http://uwishu.nu/11jHWTv 17 JUNE 2013

@Josh_Shapiro #MontcoPa named one of America’s 50 Healthiest Counties for Kids by @ usnews. Only county in PA on list.

18 JUNE 2013

@phillymag Corbett cabinet member asked to resign over racially-charged email. That’s the 6th member to resign in 9 months.

14 JUNE 2013

18 JUNE 2013

HOW TO CONTRIBUTE To contribute, send comments, letters and essays to feedback@regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business. We reserve the right to edit all submissions for content, style and length.

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20 JUNE 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

37.5%

$3.1B

Philly Tech Week participants who fell into the 21-29 age range

Total annual economic impact of recereational boating in Pennsylvania, according to a recent study by the National Marine Manufacturers Association

30.6%

Participants who fell Into the 30-39 age range

$2.2B

Total annual economic impact of recreational boating in New Jersey

365,678

Registered recereational boats in Pennsylvania

573

Recreational boating industry businesses in Pennsylvania

24,835

Total jobs in recreational boating industry in Pennsylvania

$1.3B

FLICKR.COM/JPTOTO

Annual recreational boating-related spending in Pennsylvania FLICKR.COM/MOYAN_BRENN

12,190

Jobs created directly from recreational boating in Pennsylvania

$3.4M

45.4%

Participants who attended Philly Tech Week in 2012

23.7%

Spent on boat building in Pennsylvania

Participants who attended Philly Tech Week in 2011

4,576

$32.3M

Indirect jobs created

Spent on motor/engine manufacturing

76.8%

8,069

$1B

Induced jobs created

Spent on accessory/ supplies manufacturing

Participants who found Tech Week events as â&#x20AC;&#x153;Great programming, great speakers and networking experience. Would recommend to a friendâ&#x20AC;?

NMMA.ORG

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