Region's Business 04 April 2013 by Independence Media

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REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

THE TRANSFORMATION OF THE

NAVY YARD Falling from bustling Naval shipyard to remote wasteland, it’s now poised to join the city’s success story.

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4 APRIL 2013

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CONTENTS

Anchors Aweigh

! The Navy Yard’s steady decline after World War II left it a desolate wasteland by the end of the 1990s. It’s now poised to return to prominence.

25 15 Coming to the Region Mid-Atlantic Demo will launch in the Delaware Valley.

16 Pincus Elevator: Still Going Up

Planning ahead was the key to an “old technology” company avoiding a wild ride. !

REGION’S BUSINESS Independence Media Corp. 600 West Germantown Pike, Suite 400 Plymouth Meeting, PA 19462 E-mail: feedback@regionsbusiness.com Online: RegionsBusiness.com Twitter: @RegionsBusiness Subscription & Advertising information: 610.940.1656

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28 Medical Price Transparency Needed

! There should be no need for the government to make it happen, because medical facilities that don’t adopt medical transparency are simply going to lose out to those that do.

19 The City’s

Ultimate Connection Linda Conlin’s mission with Philadelphia’s World Trade Center is to help the region think globally and help the world think about Philadelphia.

2013: YEAR OF THE INNOVATOR

14 Leadership,

Brick By Brick

Great leadership requires great vision, no matter where you rest on the company ladder.

We believe that this is a good use of commonwealth money, taxpayer money because it’s protecting the citizens and taxpayers of Pennsylvania.” GOV. TOM CORBETT ON HIS PROPOSAL TO INCREASE FUNDING TO FIGHT DOMESTIC VIOLENCE

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Needs Some Optimism ! The governor started 2013 with an aggressive agenda and a lot of hope. As the year’s second quarter begins, it’s clear nothing is going to come easily.

PRESIDENT AND PUBLISHER James D. McDonald EDITORIAL DIRECTOR Karl M. Smith ASSOCIATE EDITOR Terrence Casey

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CONTRIBUTORS Brandon Baker, Chris Weeden, Don Lee,

Charles Gerow, Timothy Holwick, Melissa Daniels PROOFREADER Denise Gerstenfield ADVERTISING DIRECTOR Larry Smallacombe DIRECTOR OF BUSINESS DEVELOPMENT Deirdre Affel ADMINISTRATIVE COORDINATOR Zelinda Barnes

© Copyright 2013 Independence Media Corp. All rights reserved. Use of material within without express permission of publisher is prohibited. Region’s Business is published weekly on Thursdays and online at www.RegionsBusiness.com. The publisher makes no representations or warranties regarding the advertising appearing in its pages or its websites.

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4 APRIL 2013

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EDITOR’S DESK

Optimism in Short Supply for Corbett

Karl Smith is the Editorial Director for Region’s Business. You can contact him at ksmith@regionsbusiness.com.

Finally, March is in the rearview mirror and all the signs of spring are upon us - the Phillies are playing games that count, March Madness has come down to the Final Four and even the procrastinators are getting serious about filing their federal tax returns. With all of that comes the welcome side effect of Spring - optimism. And this year is no different. Whether it is confidence in a Phillies lineup featuring a healthy Ryan Howard and Chase Utley or belief that the economy’s wobbly recovery is going to kick into full gear, optimisim is rampant. This year, optimism entering the second quarter of the year is mixed with intrigue. And, like March Madness, even if you don’t have a betting interest, it will be interesting to see how all the drama shakes out. Out in Harrisburg, there are numerous moving parts and multiple layers to each story. Gov. Corbett generated optimism after signing a deal to privatize the state’s lottery

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operations and getting privatization of liquor sales to the floor of the House. But Attorney General Kathleen Kane put the legal whammy on the lottery deal and while the House passed a liquor privatization bill, it only did so after significant changes and a protracted discussion. And the bill being considered by the state Senate has anything but clear sailing ahead. A powerful governor could rely on his party’s majority to muscle legislation through, but Corbett continues to post increasingly awful approval ratings. They’ve gotten so bad that not only are Democrats lining up by the droves to challenge his 2014 re-election bid, but numerous relatively high-profile Repubilcans are ready to unseat him. Gov. Corbett started the year with an aggressive agenda, featuring privatization of liquor sales, the lottery and the turnpike as well as tackling the state’s single biggest challenge - a massive pension crisis. While he may yet get a signature legislative victory with liquor privatization, if there is

optimism in the administration, it must be, at best, tempered. Most polls show incredible public support for liquor privatization, but if it becomes law, it will be a much longer, and more difficult, path than expected. With one fell swoop, Attorney General Kane derailed attempts to privatize the state’s lottery system. As the year presses on, optimism could be harder to come by, even with a liquor privatization victory. The lottery deal has fallen to the backburner. Even though scandals continue to rock the Turnpike Commission, there appears to be no appetite to begin privatization talks. As the need for addressing the pension crisis increases, Gov. Corbett’s numbers continue to diminish and the list of potential 2014 challengers grows. It won’t be long before an NCAA basketball champion is crowned and we know if the Phillies are back to elite status. It will probably be a bit longer before we know if there is reason for continued optimism for Gov. Corbett’s aggressive 2013 agenda.

4 APRIL 2013

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EDUCATION

School District Passes $2.7B Preliminary Budget

WEEKLY BRIEFING

Proposals By The Numbers: Live! Hotel and Casino

The School Reform Commission last week passed a $2.66 billion preliminary budget for the 2013-2014 academic year, according to The Notebook. Labor costs would be cut by an additional 10 percent in the proposed budget, according to the report. It will be the third consecutive year that the School District of Philadelphia has made steep cuts to its budget, according to the report. PA CONVENTION CENTER

Center Considering Privatizing Daily Operations The Live! Casino proposal comes from two companies already operating casino/entertainment facilities in the area. Pictured here: Xfinity Live!, Cordish’s entertainment-dining venue on the site of the former Spectrum. BREA DEFEO

The Pennsylvania Convention Center Authority issued last week a Request for Proposals from experienced organizations or firms interested in managing and operating the Pennsylvania Convention Center. A selected proposer will be responsible for the comprehensive management and operation of the Center, including maintenance of the land, building, furniture, fixtures and equipment; local sales and marketing of the Center as well as coordinating with the Philadelphia Convention & Visitors Bureau; management of various product and service providers; coordination of Center utilization, scheduling, negotiating and licensing of events, as well as other responsibilities.

Of the six proposals, this is the only one Each week, Region’s Business has featured one or two of the proposed casinos put forth by companies already operating vying for the city’s second gaming license. casinos and entertainment complexes in This is the final installment of that series. the area. Greenwood Gaming and EntertainAll previous installments can be found online at RegionsBusiness.com. ment runs Parx Casino and Racetrack in Bensalem, Pennsylvania’s highest-grossing casino, and Cordish developed Xfinity BY SANDY SMITH Live!, the entertainment and dining venue adjacent to the Wells Fargo Center and Project name: Live! Hotel and Casino Lincoln Financial Field. Developer: Stadium Casino, LLC While designed to play off the existing Operators-Owners: Greenwood Gaming and Entertainment, Inc., and The sports and entertainment facilities nearby, Live! Casino is not physically connected Cordish Companies Location: 900 Packer Ave., South to any of them, not even Xfinity Live!: It would occupy the site of the current HoliPhiladelphia Particulars: day Inn Philadelphia-Stadium Hotel and Gaming hall: 2,000 slots, 125 table replace it. games Its closer proximity to Broad Street Hotel: 200+ rooms, with meeting facili- gives it better transit access than the other stadium-area casino sites, and its location ties Other ancillary facilities: Several near a Walt Whitman Bridge Expressway restaurants ranging from casual to fine (I-76) interchange offers good auto access dining; “intimate” live music venue. Park- as well. In its presentation materials submiting: Valet parking plus 2,600-car self-park garage ted to the Pennsylvania Gaming Control Board, Stadium Casino LLC did not offer any estimates of the $428 million project’s economic impact on the city or the state.

BRIEFING

Big Brothers, Big Sisters Appoint CEO Big Brothers Big Sisters Southeastern PA (BBBS SEPA) has announced the appointment of Marcus Allen as its new CEO. Prior to beginning work at BBBS SEPA, Allen was CEO of ACHIEVEability, a Philadelphia-based nonprofit that seeks to help break the generational cycle of poverty for low income, single parent, and homeless families by providing academic, employment, housing and family support services. Allen will start April 15. “We are extremely excited about Marcus coming to BBBS SEPA. He has a thorough understanding of the challenges that face so many of our region’s children,” said Mitchell Benson, BBBS SEPA’s Board President and Chair of the Search Committee. “Marcus’ tenure will mark a new chapter in BBBS SEPA’s long and rich history.” BBBSSEPA.ORG

Workers’ Comp Rate Reduced The Pennsylvania Insurance Department announced last week that the state workers’ compensation rate was reduced 4.01 percent. This rate cut could save Pennsylvania employers up to $110 million, according to the PID. “We are very pleased with the rate reduction which is the second workers’ compensation decrease in a row,” PID commissioner Mike Consedine said in a news release. “The lower rate will benefit Pennsylvania employers with ongoing cost savings.”

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WEEKLY BRIEFING

LEGAL

Drexel Law School Launches 2-Year Program

Chamber of Commerce Takes First Peek at 2013 Phillies

Drexel University’s Earle Mack School of Law will launch a two-year program beginning next year. “Fast Forward” aims to put students into the workforce a year earlier than traditional three-year programs. “Fast Forward offers highly motivated students an attractive option for completing their education and getting a head start on their careers,” said Roger Dennis, dean of the Earle Mack School of Law, in a news release.

FEMA spokesman Dan Watson recently said 94 percent of New Jersey’s 73,778 claims have been settled, according to The Philadelphia Inquirer. However, FEMA and New Jersey Governor Chris Christie disagreed in February about the number of claims settled; FEMA claimed 50 percent, while the governor claimed 30 percent. FEMA has set up a hotline for homeowners. Residents with complaints can call 1-800-427-4661. BANKING

Royal Bank Cutting Staff, Expenses Narberth, Pa.-based Royal Bancshares of Pennsylvania will cut 9 percent of its workforce after losing money for the 18th consecutive quarter, according to a report in the Philadelphia Business Journal. Discretionary expenses will also be cut by 10 percent, according to the report. “We will imminently roll-out new technology that will expand sales channels, including our mobile banking application and home equity loan application submissions through our website,” CEO Kevin Tylus said, according to the Business Journal.

Philadelphia’s Job Market Shows Gains City Controller Alan Butkovitz recently released his latest monthly economic report for February

661,000 Jobs in Philadelphia

2,600

Increase in jobs since February last year

2,500

SUPERSTORM SANDY

FEMA: 94 Percent of Claims Settled

ECONOMY

Members and friends of the Greater Philadelphia Chamber of Commerce were invited Friday to get a first look at the 2013 Philadelphia Phillies in Citizens Bank Park. Fans lined up by the hundreds for the chance to have John Mayberry Jr. sign a baseball or Carlos Ruiz pose for a photo. Coaches and players sat in the spotlights for 30-minute Q+A sessions. The Philadelphia Phillies began the season Monday in Atlanta with the thirdhighest payroll in baseball. The team salary nears $160 million, according to a Deadspin.com report. Only the New York Yankees (about $229 million) and the Los Angeles Dodgers (about $216 million) spend more on their teams.

Year-over-year increase in jobs in the Education and Health Services industry

219,400

Total jobs in the Education and Health Service industry in Philadelphia

1,300

Year-over-year increase in Construction jobs in Philadelphia

1,100

Year-over-year increase in Professional & Business Services jobs in Philadelphia

2,300

Year-over-year decrease in Government jobs in Philadelphia

Top: Broadcaster Chris Wheeler introduces pitchers Roy Halladay and Jonathan Papelbon and second baseman Chase Utley at Friday’s “On Deck With The Phillies” event at Citizens Bank Park. Middle: Infielder Pete Orr signs autographs. Above: Outfielder John Mayberry Jr. takes a ball. TERRENCE CASEY

24,300

Job openings advertised online in Philadelphia in February

4 APRIL 2013

REGIONSBUSINESS.COM

DEALBOOK

INFRASTRUCTURE

Aqua America Sells $50M of Assets In Fla. Aqua America, Inc. completed the sale of 57 water systems and 23 wastewater systems in 12 counties in Florida to the Florida Governmental Utility Authority for $50.2 million. In separate transactions, Aqua sold nine water systems and four wastewater systems in five counties to U.S. Water for $1.6 million, and Aqua sold one water system and one wastewater system to YES Communities Companies, LLC, which owns and manages manufactured home communities, for $1.1 million. Collectively, these sales represent 65 percent of Aqua’s customers in Florida.

Union League Looks To Buy Woodcrest Country Club The Union League of Philadelphia is interested in buying and operating the Woodcrest Country Club in Cherry Hill, NJ, according to The Philadelphia Inquirer. Woodcrest will be sold at a public auction May 20 at a starting bid of $6.25 million, the amount agreed upon by Cherry Hill Land Associates and a bankruptcy trustee, according to the report.

BANKING

LAW

Bryn Mawr Bank Buys 4 Branches in Delaware

Pittsburgh Firm Opens New Branch, Again Not in Phila.

Bryn Mawr Bank Corporation acquired MidCoast Community Bancorp, Inc. for about $33 million, Bryn Mawr Bank recently announced. The four MidCoast branches bring to Bryn Mawr Bank approximately $235 million in loans and approximately $250 million in deposits. “It is exciting to have MidCoast Community Bank join the Bryn Mawr Trust organization,” said Ted Peters, chairman and CEO. “MidCoast is one of the premier de novo banks in the nation, and it’s gratifying that they have chosen us as their partner going forward. We are looking forward to quickly expanding our banking presence in the State of Delaware under MidCoast CEO Jim Ladio’s leadership.”

Pittsburgh-based law firm K&L Gates opened a new office in Wilmington, Del., maintaining the firm’s stance as the only major Pittsburgh law firm without an office in Philadelphia, according to The Philadelphia Business Journal. With the latest opening, K&L Gates has opened seven firms this year, giving it a total of 48 (26 in the United States), according to the Business Journal. “Delaware continues as the national center for formation of business enterprises, and these days newly formed alternative business entities outnumber traditional corporations by three to one,” Peter Kalis, chairman of K&L Gates said in a statement, according to the Business Journal.

4 APRIL 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Council Considers Municipal Land Bank Proposal

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.

Philadelphia City Council is currently considering a bill that would create a municipal land bank in Philadelphia to increase efficiency in the management of public land. Presently, the bill is being reviewed by the Committee on Public Property and Public Works and will likely have a hearing in the coming weeks. Land banks are public authorities which manage public land by acting as the legal and financial clearinghouse for the transfers and development of such land. Some of the main goals of a municipal land bank are to promote productive use of public land by managing vacant or blighted property and also increase the financial efficiency of any city programs dealing with the transfer or ownership of public land. The Philadelphia City Council bill proposing the creation of the “Philadelphia Land Bank” echoes these goals when it states, “a municipal land bank would ensure clear, transparent, and efficient operations by serving as a single entity to acquire, hold, and dispose of vacant property with the participation and approval of City Council.”

The expectation is that civic organizaTo achieve these goals, the new land bank would consolidate tions and community development staff ownership of all publicly-owned will use the bank as a way to surplus property and allow a seek advantageous transfer of THE NEW LAND greater proportion of public property to be used in fighting BANK WOULD funds to be invested directly into blight. CONSOLIDATE community revitalization. The fight against vacant, The proposed land bank blight property is one of OWNERSHIP OF would have a Board of Directors council’s top agenda items, and ALL PUBLICLYcomposed of 11 members. this bank will primarily be used OWNED SURPLUS to aid community development Five of those members would PROPERTY’ be appointed by the mayor, five organizations in acquiring land, would be appointed by majority and receiving assistance in vote of City Council and the final the acquisition based on their member would be selected by the board. intended use. At least four of the members must be Council has been busy in fighting vacant representatives of nonprofit or advocacy property and blight, with a particular focus organizations working in the field of housing, on tax-delinquent property. The creation of a community development, or civic associaland bank would provide Philadelphia with a centralized entity to pursue that mission. tions. The board must hold monthly meetThe bill provides for public transparency of ings open to the public. the bank. That transparency and the addition The composition of the board, namely the of the public monthly meetings reinforces inclusion of members from Philadelphia’s the idea that this bank is there to aid the nonprofit community development and small community groups who could put the similar organizations, reflects how council property to use. sees this bank operating.

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4 APRIL 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Student Loans Bubble Next In Line To Burst A college education used to be the key to success. A degree was the gateway to a stable career and well worth the investment of four years and a few thousand dollars. Parents scrimped and saved, and with a little help from lenders, scholarships and other forms of financial aid, students could generally get their degree and enter the workforce with a clean slate or at least something very close to it. It was part of the American Dream. Charlie Gerow is CEO of Today students are getting degrees at Quantum Communications, incredible cost and with very modest prosa Harrisburg-based pects of meaningful career employment. public relations and issue Stories about recent college grads heading advocacy firm. back to mom and dad’s basement are legion. At the heart of this social pathology is a CONTRIBUTE ticking economic time bomb. Much like the housing bubble of a decade ago, the student Send comments, loan bubble has expanded to the point where letters and essays it is about to burst. Student loan debt is now to feedback@ in excess of $1 trillion. That’s more than regionsbusiness.com. is owed on automobiles and credit cards Opinions expressed by combined. guest writers do not Many of these loans, like mortgages that necessarily reflect those left debtors upside down, shouldn’t have been of Region’s Business.

made. More than 90 percent are government made or backed, according to a recent survey by the Federal Reserve Bank of New York. Government student loans are up 390 percent under the Obama Administration. These loans are defaulting at a horrific rate. The first quarter of 2013 is the worst yet. Equifax, the giant credit-rating firm, says that student loan default ran over one billion per month for the quarter. The U.S. Department of Education says that nearly 7 million student loan borrowers are now in default. The Congressional Budget Office estimates that of the roughly $113 billion in new government student loans this year, nearly $40 billion will be lost to default. These defaults cost taxpayers billions. A default rate of this magnitude should sound alarms. But government student loans still don’t even require a credit check. Private loans do. At a time of devastating loan rates for government student loans, Sallie Mae, a private lender, has seen its default rate shrink. And where’s the return on investment for all this debt? Student loans promised to

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make college “more affordable” for middleclass kids. But government student loans took away the incentives for colleges to control costs and keep tuition low. Only a minority of these loan debtors are graduating in four years. Barely 60 percent are getting a degree in six years. Colleges and universities are happy to see students taking lighter loads while paying full tuition. Government student loans are a prime example of good intentions paving the way to bad results. The lack of lending standards that the private sector requires and the availability of money that makes raising tuitions seem easy have created a new “student loan bubble” with potentially calamitous results. A better path is to force institutions of higher learning to stop gouging the middle class and give students a degree that represents a solid return on their investment, rather than just a ticket that’s been punched. A significant part of that pressure should be more student lending from the private sector, which provides more value for less money than government bureaucrats.

4 APRIL 2013

REGIONSBUSINESS.COM

POLITICS

House Bill Would Ban ‘Triple-Dipping’ REALLY, THEY’RE GETTING TOO MUCH AND THE TAXPAYERS ARE THE ONES WHO HAVE TO PAY FOR IT.’

HARRISBURG — Lawmakers are one step closer to barring state employees from collecting multiple state checks after they retire. The House of Representatives unanimously passed a bill to ban “tripledipping,” or the practice of state retirees who come back to work temporarily and then receive unemployment benefits. Lawmakers passed a similar bill last session, but language conflicted with federal law and kept it from getting to the governor’s desk. This session, Rep. Adam Harris, R-Juniata, sponsored House Bill 421 correcting that language, and the idea is once again up for debate. Sen. Patricia Vance, R-Cumberland, introduced a similar measure in the Senate, calling “triple-dipping” an obvious waste. “Really, they’re getting too much and the taxpayers are the ones who have to pay for it,” she said. State law says retirees who come back to work cannot hold the position for more than 95 days or they lose their pension checks and health benefits. But since the term of employment is predetermined, the state’s unemployment system considers the leave involuntary. That’s when the employee becomes eligible for unemployment

compensation, on top of their pension benefits and temporary salary. It’s a legal loophole that hundreds of people have jumped through. In 2010 and 2011, more than 450 state retirees received a combined $2.1 million in unemployment compensation, according to House calculations. “Ethically they shouldn’t have been doing it, but we’re going to have to pass a law that says you can’t do it,” Sen. Vance said. “Taxpayers are the ones who bear the brunt.” Rep. Harris’ House proposal would prohibit unemployment eligibility for public- and private sector employees who leave a job to protect their pension benefits. Sen. Vance’s Senate Bill 297 specifically applies to state workers. The state expects to save about $1 million from the general fund under HB 421. Additional savings could turn up in the state’s Unemployment Compensation Trust Fund if private-sector workers are included. In an era where pension costs are crowding out other expenditures in the state budget, closing the triple-dipping loophole won’t solve any unfunded liability crises. Sen. Vance acknowledged that compared to the state’s pension problems, it is minor. “But I think it’s important,” she said. “My dad used to say, ‘Small leaks sink

PENNSYLVANIA POLITICS

PA Agencies Awarded Nearly $2M in Settlement BY MELISSA DANIELS

— SEN. PATRICIA VANCE

BY MELISSA DANIELS

large ships.’ This is a leak that’s been dripping for quite awhile.” Sen. Vance’s bill is headed to the Senate Labor and Industry Committee. Without much opposition anticipated, a version of the legislation could be on the governor’s desk as early as May. Pennsylvania isn’t the only state considering post-retirement restrictions on state employees. A pending Louisiana bill would prohibit benefits for retirees who return to work, and a bill in the New York State Assembly would restrict retirees from coming back for two years. But Pennsylvania’s situation is a bit unique because there is no clear law keeping someone from collecting unemployment benefits if they quit a job to preserve their pension. Rep. Harris said unemployment compensation isn’t meant to fund someone who has left a job, but to assist those who are looking for work and don’t have any other income. “The Legislature has made great strides to reform our unemployment compensation laws, and this is a commonsense improvement,” Rep. Harris said in a statement. “Each time we chip away at fraud, waste, abuse and misuse, it adds up in the taxpayers’ favor.” This article was originally published by Pennsylvania Independent at PaIndependent.com.

HARRISBURG — Pennsylvania agencies caught up in the middle of international bond-rigging schemes by major financial institutions are finally starting to see compensation. Attorney General Kathleen Kane announced last week more than $1.9 million will flow to dozens Pennsylvania agencies that had investments corrupted by a big-rigging scheme from Union Bank of Switzerland. The funds will be disbursed to government agencies, municipalities, colleges and other non-profits who were victimized by the bank’s schemes to short investors and rig bids. The money stems from UBS’s $90.8 million multi-state settlement in May 2011. The settlement alleges UBS rigged bids for the market and sale of municipal derivatives investments. Local agencies might enter the agreements with the banks as way to invest or protect their bonds, but brokers and banks worldwide, including UBS, manipulated the bidding process, causing higher fees and lower interest rates. A number of the reimbursements are heading to taxpayer-funded agencies, compensating them for what they should’ve received. Among some of the six-figure UBS awards: just over $749,000 for Pennsylvania Housing Finance Agency; about $220,000 for Montgomery County; nearly $55,000 for the Pennsylvania Turnpike Commission, nearly $39,500 for the Pittsburgh Water and Sewer Authority and $36,000 for Butler County. Colleges receiving settlements include Lafayette College, Gettysburg College and Carnegie Mellon University. The Children’s Hospital of Philadelphia will be reimbursed for about $145,500. Other institutions that have settled in the multi-state bond investigations include Bank of America, JPMorgan Chase and Wachovia.

4 APRIL 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

MEETUP CALENDAR

April 2013 Philly Tech Meetup

Mid-Atlantic Tech Demo Event to Launch in Philadelphia

Time: 6:30 p.m. Date: Wednesday, April 10 Place: Quorum at the Science Center, 3711 Market Street, Floor 8, Philadelphia, Pa. Join fellow technologists for live start-up demos. [6:30] Networking [7:00] Intro + Sponsors [7:05] Demo: Apply [7:20] Demo: Apply [7:35] Demo: Apply [7:50] Open Mic and Community Announcements [8:00] Exit to Han Dynasty for Happy Hour Find more: PhillyTechMeetup.com

Pre-Tech Week Meta-Meetup of Meetup Groups Time: 7 p.m. Date: Tuesday, April 16 Place: Zivtech, 1315 Walnut Street, Suite 1500, Philadelphia, Pa. There are dozens of active user groups in Philadelphia, but we don’t often enough come together to make sure we know each other and know which groups are still active. So, in the spirit of leading up to Philly Tech Week, we’ll come together, have some pizza and beer, sponsored by Monetate, organized by Technically Philly and hosted by Zivtech. Other groups participating: Philly Drupal Girl Geek Dinners NodeJS PhillyJS NodePhilly Scala Code for America Philly Hacks/Hackers GirlDevelopIt Philly Cocoa Heads

BY CHRISTOPHER WINK

on Schmelzer runs a software company in Baltimore called Bizelo, but he’s known better there for his monthly demo event TechBreakfast, which he’s growing into a tidy local tech empire. From a startup pitch meeting in Baltimore to versions in nearby Columbia and then D.C., now Mr. Schmelzer, 38, who says standard fare tech meetups in the mid-Atlantic need better crosscity connections, is launching Philly TechBreakfast during Philly Tech Week. If you’re interested in pitching at TechBreakfast, send an email to info@ teklove.com. RSVP for the inaugural Philly TechBreakfast here. “While there are unique tech communities throughout the ‘lower Acela corridor,’ there’s actually quite a bit of fluidity in movement of people, money and technology throughout this region,” said Mr. Schmelzer, who adds he was seeing Philly startups express interest in demoing in Baltimore, like CoupedOut and Mind Me Mobile. “Strong tech ecosystems provide many opportunities for random collisions that result in continued momentum and growth,” he said. To be sure, Philly is silly with events for tech startups to pitch their products — the annual Entrepreneur Expo from Philly Startup Leaders, Philly Tech Meetup, regular sessions at incubators like Venturef0rth and Seed Philly, tech niche sessions like the EdTech Meetup

— but Mr. Schmelzer says he takes a different look at the conversation. “Events are simply opportunities for individuals to meet and learn from each other, and one thing I’ve learned is that strong tech ecosystems provide many such opportunities and options for the random collisions that result in continued momentum and growth,” said Mr. Schmelzer, noting he wants to include demos from academics and large companies. “TechBreakfast offers a few things to add to the existing mix of events in Philly: a morning demo-style event that showcases not just software startup activity, but tech innovation from a broad range of sectors such as IT, biotech, energy, robotics, and aerospace.” Mr. Schmelzer is partnering with Drexel, the team behind CoupedOut, Enterprise Law Associates partner Gary Smith and lead sponsor DLA Piper. If you had a software startup and a profitable event series, where would your focus be? Mr. Schmelzer notes the balance can be tricky. “TechBreakfast is definitely becoming a business of its own, but it’s still something I’m doing on the side while Bizelo takes up most of my time. If it continues to grow as it’s going, however, I might have to rethink things.” This article was originally published by Technical.ly Philly at TPhilly.com. Full Disclosure: Technical.ly Philly is a media partner of TechBreakfast.

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

4 APRIL 2013

2013: YEAR OF THE INNOVATOR CAPITAL SEEKERS

Pagevamp A trio of entrepreneurs released a five-minute webpage template Business: Pagevamp Founders: Atulya Pandey, Fred Wang, Vincent Sanchez-Gomez Contact: business@pagevamp.com

BY BRANDON BAKER

oss out that old-school Blogger. com Web template — Pagevamp’s got a better idea. Co-founders and Penn seniors Vincent Sanchez-Gomez, Atulya Pandey and Fred Wang began their journey together in their freshman year, opting to brainstorm product ideas in their dorm rooms late at night in lieu of chugging beers. “We lived in the same hall in the dorm, and we all just had this entrepreneurial spirit,” Mr. Sanchez-Gomez said. “But it wasn’t until junior year of college, about a year ago, that we decided to do a venture together to start websites for people.” Pagevamp, launched in late March and first introduced as the second-place winner at PennApps hackathon, makes Web designing a simple, less than five-minute process — literally. Users can copy and paste the link to their Facebook page to a Pagevamp conversion page, which will then — under the free version of the service — automatically create a website with a Pagevamp domain name. For those interested in extended services, a paid Pagevamp option is available that allows for add-ons, an original domain name and further extended services. So far, three clients — a restaurant, a wine museum and a university club — have signed on for the paid version. By comparison, about 300 have used the free version of their service in Pagevamp’s first week. “We’ll be working to convert [those 300] to the paid version soon,” Mr. Sanchez-Gomez said. “We’ve had people say that they’re interested. There’s sort of this time period between when someone decides to try our product, and when they decide to pay … We’ll see soon what our conversion rates will be.” The trio plans to relocate to New York after graduating and, barring a majorly successful bootstrapping campaign, will seek funding shortly after.

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Advice From Tech in Motion BY ANDREW EISER If you want more startup successes, you should show off the startup successes you already have. That’s what’s behind the Startup Success event series coming from Tech in Motion Philadelphia, a yearold Meetup group from IT recruiting firms Workbridge and Jobspring. At the inaugural meeting in the offices of Two Liberty Place, four panelists took the stage to dish out the do’s and don’ts of startups and how they managed their own ventures. FIND THE RIGHT PARTNER The night began with Bart Mroz of SUMO Heavy Industries, who gave a relatively short presentation laying out his four tips to success. Mr. Mroz’s first tip was to choose the right partner, which he related to a marriage, noting that he eventually moved in with his business partner during the early building stages. Similar to finding the proper partner, Mr. Mroz’s second recommendation was to put the right team together by implementing good processes and efficiency through a controlled number of members. He found six to be the magic number, thus far. “There’s a lot of stuff that goes through everyday and you go ‘Well, I got to take care of everything,’ but just do it,” Mr. Mroz said. “Just do what you need to get done to get through the day, or let your people do it.” The two steps are to focus and learn to juggle, Mr. Mroz said in order to concentrate on what you do best. HIRE PEOPLE WITH DIFFERENT SKILLS THAN YOURS A second speaker, C.H. Low, the CTO of Chaikin Analytics, spoke of his 30-year career as an entrepreneur and gave valuable insight into the quickpaced startup market. His first piece of advice: “Go and work with the smartest people you can find,” Mr. Low said, which he mentioned also goes for hiring. “That’s what I did. “Every day you work with them, you’re going to learn something.” Secondly, Mr. Low advised that the worst thing you can do as a startup leader is vetoing the ideas of your peers and sticking only to your own.

AVIEWFROMMYSEAT.COM

IF PEOPLE CALL YOU CRAZY, YOU’RE ON TO SOMETHING.’ —TOM KULZER, AWEBER

Mr. Low encouraged the crowd of 100 people that you cannot succeed without making a lot of mistakes. “Your IQ is not always as important as your EQ [emotional intelligence],” Mr. Low said. Mr. Low’s final advice was that when you have problems, solve them fast. He gave an example of how when managing his project teams, he aims to resolve any issues within 24 hours and if he can’t, he has a backup plan within the following 24 hours to keep things running smoothly. KNOW YOUR CORE VALUES The night’s third guest was Tom Kulzer from AWeber, an email marketing software company he started at 21 in his two-bedroom apartment in York, Pa., while taking a semester off from college. Fourteen years later, his company is responsible for serving 120,000 customers. Mr. Kulzer started his presentation with the hiring of prospects, which he advised to do sooner than you think. He said team growth helps resolve evolving problems. Once the team is in place, Mr. Kulzer said to establish core values, which commonly surround a basic model in the technology industry: Learn. Educate. Innovate. As for the product, Mr. Kulzer said providing value is key, noting to “sell

something people want to pay for.” Related to the product is the service, which Mr. Kulzer said he believes many companies overlook. By teaching customers how to use a service, it gives them confidence and minimizes frustration, which leads to satisfied, return customers, he said. Lastly, Mr. Kulzer greatly emphasized to the audience to be different. “I can’t tell you how many times I’ve been called crazy,” Mr. Kulzer said regarding ideas he’s had. “If people call you crazy, you’re onto something.” Given Mr. Kulzer said he cherishes the vitality of teamwork at his company, he decided to be different by providing his staff with daily meals, along with fully covered health insurance. FIND A PROBLEM TO SOLVE Frank Panko shared his experiences with his newly founded project, A View From My Seat, which began in 2010 after he realized when selecting Phillies tickets that he could only see a simple seating chart, opposed to his idea — a photo of the full, real view you’d experience in that seat (The startup is a Project Liberty company). He and his wife, also his business partner, have taken things on together. “We’ve both been right, and we’ve both been wrong,” Mr. Panko said, an example that was echoed by the panelists throughout the night, which is that no single person can do everything as teamwork is often the best work. This article was originally published by Technical.ly Philly at TPhilly.com.

Q&A

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LINDA CONLIN’S

ULTIMATE CONNECTION

The president of the World Trade Center of Greater Philadelphia is introducing Philadelphia businesses to more than 100 countries

What’s the elevator pitch for the World Trade Center of Greater Philadelphia? Business today takes place within a global economy. With 95 percent of the world’s consumers located beyond our borders, and with growth still sluggish in the U.S. domestic market, it is not surprising that more and more companies are looking to international markets to diversify and grow their sales. Tapping into global markets can be complex and is not without risk. That’s where we come in. For over a decade, the WTCGP, a membership organization, has been helping companies in Southeastern Pennsylvania and Southern New Jersey

increase their sales in global markets. We have the staff expertise — our professional staff has experience in over 75 markets — and worldwide connections to do this. As a world trade center, we are connected to a powerful network of world trade centers in 100 countries, providing our members access to close to one million potential customers. What do day-to-day operations at the WTCGP include? In many ways, the WTCGP acts as a catalyst to generate economic growth and jobs through international trade, and we are proud to say that we do it one business at a time. Each year we work with some 400

/World-Trade-Center-of-Greater-Philadelphia/

companies, so on any given day you will find our trade specialists visiting on-site with companies, helping them to target best markets, develop the right market entry strategies and identify partners to sell into worldwide markets. We are the ultimate connectors. As the state’s official export representative in SE PA, on a daily basis, we link Pennsylvania companies with the state’s international representatives for advice on major markets throughout the world. What are some of the key goals and objectives for 2013? We want to continue to deliver the quality of service and the diversity of educational programs to meet the

twitter.com/WTCphila

needs of our companies — whether they are exporters, importers or international delegations seeking to conduct business with companies in Greater Philadelphia. Above all, we want more companies to know about us — manufacturers, entrepreneurs, minority and woman-owned businesses, and the many large companies that want to see these businesses succeed. We believe in a “World-Class Greater Philadelphia,” and will continue to work collaboratively with Mayor [Michael] Nutter and our many local, state and regional partners to enhance the region as both a great place to visit and do international business. — Melissa Brooks

www.wtcphila.org

4 APRIL 2013

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FULL STEAM AHEAD Once Moribound, The Navy Yard Has Reversed Course And Charted A Bright Future

Text By Chris Weeden Illustration By Don Lee

4 APRIL 2013

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hen the Navy Yard ceased operations in 1996, it was a dying speck in a remote corner of a strife-ridden city. In February, the Yard announced it now boasts 10,000 employees - 3,000 more than it did when it closed more than a decade and a half ago – and plans have been discussed for tripling that number in the long-term future through a total of $2 billion in investment and 13 million square feet of mixed space utilization.

“The Philadelphia Navy Yard, today, represents the greatest turnaround of any closed naval facility in the United States of America, right here in Philadelphia,” Mayor Michael Nutter said at the ceremony commemorating the accomplishment and the release of the 2013 plan for the land developed by the Philadelphia Industrial Development Corporation (PIDC). The 68 page document was a follow-up to the PIDC’s original report assembled in 2004 detailing strategic urban planning methodologies, and in February, spawned by the success it witnessed, the 2013 follow-up was released delineating future visions and assessments of past results. It was undertaken for two main reasons, said Williams J. Agate Jr., Senior Vice President for Management and Development at the Navy Yard. First, after nearly a decade, the Philadelphia Industrial Development Corporation and prime investor Liberty Property Trust, among other power brokers within the city, had enough perspective to analytically dissect the 2004 document and determine ways to improve it. In the process, they discovered that they wanted to bring greater diversity for building arrangements that could offer flexibility capable of handling different sectors of the economy that may be interested in relocating to the Navy Yard. The original vision was simple and remains the same: create a desirable place to work and live. The breadth of the planning lay in the details. By analyzing several core competencies, the nearly vacant land could be more than a rusted vestige to a once-proud past, a painful reminder to a better past. Situated along 1,200 acres with the Delaware and Schuykill Rivers, the Yard was armed with valuable waterfront property. The existing architecture provided beautiful glimpses of a community laden in history, and the space made a canvas for modernization and innovation. What unfolded was the formation of a communities consisting of residential housing, commercialization, commercial, industrial and light manufacturing while

also maintaining its presence as a port for the incoming and outgoing of goods and materials. The 2013 update has retooled two areas, the newly named Mustin Park and the Canal District. Eradicated are the neighborhoods of standalone residential housing, a byproduct of the commercial success the Yard has realized in the last few years. Since 2008, 2,500 jobs have been added. Through development, the PIDC boasts of the area as an urban campus. Special care has been taken not to overly develop the land. Green spaces line the map with a focus on pedestrian and bicycle access a primary focus on planning. To develop this, $130 million in public investments have been required to develop electrical, water, sewage, transportation and other systems required for the renovations. Private investment has surpassed $700 million. Over this period, numerous corporations have relocated their headquarters to these facilities, including clothing retailer Urban Outfitters, who was among the first to buy in to the development by moving in 2006. Now there are more than 130 companies located on the former base including Tasty Baking Company, Unique Industries, WuXi App Tec Laboratory Services, Rhoads Industries, Iroko Pharmaceuticals. The Navy’s Ships Systems Engineering Stations, Penn State and Department of Energy Efficient KEVIN BURKETT Buildings (EEB) Hub each have research and development activities on site. GlaxoSmithKline’s move to the Navy Yard put the facility over 10,000 workers. Sixty percent of the pharmaceutical company’s 1,300 workers moved in Feb. 5 with the remaining 500+ employees completing the full transition roughly two weeks

later. Such was a milestone coincided with the unveiling of the 2013 plan, and a celebration was held that month. The 2013 plan brings further ambitions with the goal of employing 20,000 workers within the next 10 years with aspirations of ultimately reaching 30,000 workers. A lot of the development is tied to transit. In 2004, the goal was 850 residential units housed mostly in the Historic Core, but revised figures bring that number to 1,013. Although the campus is mixed use, invariably, thousands will need to descend into the 6.2 million square foot area daily. To handle that kind of demand, improving accessibility is a must. Currently, there are several options. First, there are parking options. Initially, there were two public bus lines available, but in December of 2012, the PIDC added an express route from the East Market station. Mr. Agage said that the addition of this service has showcased a desire for mass transit. Prior to December, the Navy Yard’s two bus loops experienced 400 rides per day. The goal of the express loop was to double that, but in less than a quarter, it tripled at 1,400 rides, said Mr. Agate “It’s a great testament that if you offer good choice and regulatory service, people are more likely to adopt a larger mass transit role as a means of transportation,” he said.

HISTORY

Anything But Smooth Sailing 1794 President George Washington signs the Naval Act. 1797 First ship launched. 1801 Southwark Yard created. 1868 923-acre League Island transferred to the federal government for $1. 1876 Just eight years later, Southwark closes, though the Navy will maintain its presence as a base until 1996, 200 years after the first ship launched WORLD WAR II The Yard reaches Its peak, employing more than 50,000. 1970 The Yard builds its last ship. 1991 Base Realignment and Closure Commission announces formal closure. Lawsuits attempted to keep it in operation, but only delay the inevitable. 1996 7,000 workers were let go in 1996. 2000 Ownership was once again transferred back to the city, although the Navy has maintained small presence at the site along the Delaware River. PHOTO BY STEVEN DEPOLO

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NEOSCAPE FOR ROBERT A.M. STERN ARCHITECTS

THE NAVY YARD HAS FULFILLED ITS INITIAL PROMISE OF BECOMING A CENTER FOR BUSINESS, INNOVATION, INVESTMENT, TALENT, AND JOBS.’ —WILLIAM HANKOWSKY LIBERTY PROPERTY TRUST

THE STRUGGLE IS TO INCENTIVIZE ALL 130 BUSINESSES TO WANT TO EMPLOY ENERGY AND DISTRIBUTION TECHNIQUES.’ —WILLIAMS J. AGATE, JR. NAVY YARD

Still, for the kind of scope that the Navy Yard projects, Mayor Nutter and those involved with the project need more. According to a feasibility study, creating a 1.5-mile subway extension in order for the Broad Street line to reach the Navy Yard would cost $370 million but is entirely necessary. Two other options included bus loops operated on seven-minute and 14-minute loops, which would cost $14 million and $8 million, respectively, although on a per-rider basis, the subway extension is cheaper, and revenues would also be significantly higher. However, the main obstacle will be securing the funding necessary for the development.

Business appeal

OUR NEXT STEP IS TO MANAGE THE GROWTH OF THE CAMPUS.’ —JOHN GRADY, PIDC

Perhaps by recognizing the danger of having a single occupant of the valuable real estate, having a multi-faceted industry scene does several things. First, it brings a diversity of talent to the area, with talent ranging from port operators to scientific researchers. That flexibility insulates the area from market risk, assuring occupancy. After the Navy was the lone tenant for 200 years only to be left essentially abandoned, consider it a lesson learned. But that alone would not spur the growth and inspire a redeveloped vision with more expansive goals. Instead, it’s been the Navy Yard’s ability to appeal to those previously outside of Philadelphia. Mayor Nutter said that of the 130 businesses, roughly 63 percent of them are new to the area, providing new revenues for existing businesses and an increased tax base. For national and international firms to want to centralize operations or take on large-scale research projects a major East Coast city is rare. Costs are often higher, so what the PIDC and other entities

within the city need to do is create buy-in, from investors financing these projects and prospective ventures seeking homes. If nothing else, the Navy Yard has sold a vision to these power players. From initial conceptualization through implementation, and now, refining past successes, the PIDC prognosticated that the Navy Yard could become a model template for other cities, both domestically and globally. If the second half of the 20th century was the suburbanization of America, then the first few years of this one may be witnessing the flocking back to the cities. But not the same cities. The things that drove people away: the noise, the congestion, the cost all led people away, and this generation does not necessarily accept going back to the conditions. They want a different experience. They don’t want to struggle to find parking, and they want their greenery in convenient, well-maintained public parks. By being able to raze parts of the Navy Yard but still keep the former charm, Philadelphia gets the best of both. Even in the Historic Core, that encompasses roughly 17 percent of the terrain, has been gutted and improved with modernized facilities. Twenty-five buildings have seen renovations and upgrades. This reinforces one of the original 2004 plan’s original tenants: sustainability. And it is this that makes the Yard so attractive. In 2004, the plan called for green buildings with reduced energy costs. The 2013 update calls for an extension of these plans and for further implementation of its Energy Efficient Building (EEB) Hub status. Here, all multi-tenant buildings have LEED status, among them Urban Outfitters. The Department of Energy, utilized several fed-

eral agencies to fund the yard as a Energy Regional Innovation Hub (E-RIC) because of its eclectic mix of old and new buildings of different scales and purposes and serviced by an independent electric grid maintained by the PDIC. Such a massive undertaking consists of a consortium of 27 educational and corporations in a dynamic, “living laboratory” attempting to devise solutions to local energy problems that can be applied as global remedies. A term used repeatedly throughout the 2013 report is smart-grid, where energy usage patterns can be tracked and adjusted through communications technologies. Such was unveiled in a 10-year Energy Master Plan, which occurs in two rounds of execution. “The first phase will focus on creating a basic grid Networks Operation Center (NOC) and installing capable and proven smart metering technology along with a robust, secure communications network,” it reads. “The advanced metering will support active business-to-grid interactions for demand response and energy market transactions. The communications backbone will facilitate the development of a common utility real-time database, allowing The Navy Yard to improve situational awareness and better manage current grid operations Tenants will also have the ability to engage directly in monitoring their energy use, and will be able to earn revenue through demand response, supply capacity, and ancillary service programs.” “We have the ability to centralize all the information from the entire Navy Yard,” Mr. Agate said. “The struggle is to incentivize all 130 businesses to want to employ energy and distribution techniques.”

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The second phase will be to reduce operating costs and enhance system reliability through a digital substation. “With The Navy Yard’s growing reputation as a national hub for innovative energy and sustainability practices,” said John Grady, PIDC president. “Our next step is to manage the growth of the campus with this updated Master Plan, providing a blueprint for the continued development of The Navy Yard as a vital economic engine for the city and region, as well as a leading demonstration ground for the nation.” Penn State, which has deployed its resources for energy sustainability to the Yard, provided oversight to the creation of the Energy Master Plan. Because it is on the front edge of technological innovation, it will cost roughly $50 million, according to Mr. Agate but it is worth it because of the attention it will bring to Philadelphia and the revolutionary potential it could yield. Cisco, Siemens, General Electric, among others, have taken notice. “They see this as a great way to show why these strategies are so critical in America,” he said.

Future growth Federal incentives certainly aided the growth and made the economics more attractive, but for the PIDC to reach its goal of doubling the existing workforce within the Yard, there needs to be continued investment of public and private capital. So far, it has continued. Liberty Property, which has been involved heavily in development since the onset of the project collaborated with Ensemble Hotel Partners on a $34 million, 172-room Courtyard by Marriott. Located on the corner of Rouse Boulevard and Intrepid Avenue, construction began in October and is the first hotel built on the former base with a completion target of 2014. This plot sits at the corner of the Historic Core and the Central Green District, which was rebranded in the 2013 plan from the Corporate Center it had been named as previously. “The Navy Yard has fulfilled its initial promise of becoming a center for business, innovation, investment, talent, and jobs,” said William P. Hankowsky, Chairman, President, and CEO of Liberty Property Trust. “For 40 years, Liberty has invested in the City of Philadelphia, and we have always viewed our partnership in The Navy Yard as a logical extension of that commitment. Experience tells us that companies are attracted to The Navy

and Broad Street on the west with buildings ranging from 60,000-25,000 square feet including retail, office and light manufacturing capabilities across the 81-acre lot. Both feature man-made water bodies to control water management; Mustin Park’s reflecting pool achieves that while the canals in the aptly mentioned Canal Zone achieve Still Steeped In History the same purpose. They The Navy Yard’s Master Plan calls for two significant also provide pedestrian and architectural landmarks, but the Yard already bike-friendly centers for boasts a nationally recognized building. their separate communities. Two architectural landThe Commandant’s Quarters (above) has been on marks will highlight these the National Register of Historic Places since June areas. Plans include a 3, 1976. 12-story tower at the Rouse Boulevard and Kitty Hawk The final Station Log entry reads: “Shipyard Avenue intersection, viewcommander arrives, observed morning colors, able from I-95. At the westcommenced closure ceremony, shipyard ern edge of the two neighcommander orders the watch secured and borhoods along Kitty Hawk Philadelphia Naval Shipyard closed; secured the Avenue where Mustin Park watch, Philadelphia Naval Shipyard is closed, no East and Canal Street East further entries this Log.” Meet, there will be an eightstory building. A lot of the growth can Yard because of its progressive focus on be tied directly to the presence of Urban high performance development and its Outfitters. Not only was it one of the environment for growth, and we remain first corporations to sign along the dotexcited not only about our current activted line, it has been among the principal funding sources, according to Mr. Agate. ity at The Navy Yard but also about the Of the $700 million in private investfuture mapped out by this updated Master Plan.” ment to date, about 70 percent of it has This is one of several land changes procome from Liberty Property Trust and Urban Outfitters. There are roughly posed in the 2013 update. Most strikingly 1,400 employees at Urban Outfitters in was the change of the name the Research the Navy Yard at the moment, but corPark to Mustin Park and the Marina to the Canal Zone and the installation of a porate anticipates continued expansion. shrubbery-lined buffer zone between the In the next three years, it hopes to add those two neighborhoods and the heavily another 1,000 employees and create a industrialized, less aesthetic Port. campus of its own by moving into two These revised territories are intended more buildings. to reinforce the campus feel while also “The vision of Urban Outfitters is promoting distinguished entities. Mustin directly parallel to what the city of PhilaPark will feature 901,000 new square delphia has with the Navy Yard,” Mr. footage of office space, almost a 900 perAgate said. “The involvement of Urban Outfitters is one of the most imporcent increase in current occupation. The Canal Zone, with no current occupants, tant things that happened. Its success will stretch from the Delaware River to is beyond our control but it’s a happy the Buffer Zone on the east and corridor occurrence that happened at the same belonging to the Navy on the west and time.” share a border with Mustin Park on Kitty Additionally, the Navy will be expandHawk Avenue to the north with a total ing its facility of engineers and R&D to potential for 948,000 square feet. In the west. total, there will be 10 buildings at least The one hang-up at the moment is four stories tall. the implementation of the residential Mustin Park resides between League units. The Navy has balked at allowing Island Boulevard on the north and east the development of the originally 850

– now 1,013 – units. None of which has been developed. Mr. Agate feels that this is about two to three years away. “It was too heavy of a lift,” he said. “Time is one of the biggest forces and heals all things.”

Costs Undertaking this 2013 update will require serious capital, with the projection at $101 million, roughly 30 percent of which is tied into utilities upgrades. Electricity will be derived from a PECO feeder on League Island Boulevard while PGW’s new main on Kittty Hawk Avenue should meet the new demand. The minimal amount of upgrades will cost the city $23 million. Mustin Park development will run approximately $34 million, including the work to be required for the development of the parks and athletic fields. The Canal Zone will run $21 million. Mr. Agate said that the goal of the project is to keep the public dollars vs. private investment at a 6:1 ratio, so of the $101 million, about $14.5 million would need to come from public sources, which he said blend both city, state and federal funding. Of course, this does not include the aforementioned 1.5-mile subway extension with a price tag of $370 million. Ultimately it is necessary to secure the funding to create the pipeline necessary to support the influx of people required to meet the established workforce goals to successfully integrate the Navy Yard with the rest of the city. With more than $700 million privately invested and revenues arriving to the city daily through taxes and subsidies for research, the Navy Yard is primed for a great future as a driver of the Philadelphia economy. “Make no mistake — The Navy Yard is a major engine of economic growth, and it promises to be better than ever in the years to come,” said Mayor Nutter at the 10,000 celebration. “Today’s event marks a significant milestone in this long-term public-private partnership led by PIDC that has brought The Navy Yard from the uncertainty of the early 1990’s, through the acquisition of the property in the early 2000’s to now. The Navy Yard has established itself as a vibrant, progressive campus leading the region and the nation in high performance design, sustainability and smart energy innovation.” Freelance writer Chris Weeden lives in Wilmington, Del.

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REAL ESTATE

Philadelphia Realtors Urge More AVI Action

BY SANDY SMITH $265 million. That’s how much money the city needs to find to bring the property tax rate under the Actual Value Initiative down to 1 percent while keeping its $1.16 billion budget in balance. In a Call for Action issued just before the weekend, the Greater Philadelphia Association of Realtors (GPAR) called on city residents to push their representatives to take a number of steps that would close that gap. The biggest revenue-raiser in the GPAR’s toolbox: Outsourcing collection of delinquent taxes to private contractors, a move it says would raise $175 million right off the bat. “We have been told by many sources that the collection rate in the city averages 85 percent,” the GPAR said in its call. “We are compared to Detroit in all studies as the second worst tax collection city in the United States!” The association noted that in cities that have turned over collection of back taxes to private collectors, collection rates average 95 percent, and the remaining 5 percent could be monetized through the sale of tax lien certificates, as New Jersey municipalities do. Should the city be unable to privatize the collection of delinquent property taxes, the GPAR recommends selling tax lien certificates for the entire $175 million in unpaid taxes. This would leave a $90 million gap to close.

The local Realtors group recommends two additional moves to close it: Selling all 60,000 vacant lots currently in city hands. At an average sale price of $1,000 per lot, the GPAR says this would produce initial revenue of $60 million, plus $600,000 a year in property taxes at a 1 percent rate. Creating tax-free business zones for graduates of Philadelphia colleges and universities who live and work in the city. While the Call for Action does not go into the details, we assume this means that the city’s business taxes would be waived, but workers would still be subject to the city wage tax, which would be the source of the remaining $30 million in revenue. A GPAR survey of tax rates in 400 cities across the country found that property taxes averaged 1 percent of the market value of homes in those cities, which is what led the trade group to support that ratio as a fair level here. But the group also cautions that property values must be applied “fairly, equally and uniformly. We will not support properties being assessed above market value.” As a corollary to that stand, the GPAR also recommends the city extend the deadline for filing first-round appeals of property assessments to May 30. As the original deadline was this past Sunday, this would in effect reopen the filing window. This article was originally published by the Philadelphia Real Estate Blog at PhiladelphiaRealEstate.com.

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REAL ESTATE

Drexel Sets Sights on More New Housing BY MICHAEL BURLANDO Drexel University is looking to continue its current classroom and dormitory building binge with a new tower at 34th Street and Lancaster Avenue in the Powelton Village section of University City that could house up to 1,300 students. Drexel would hold the land while the building, dubbed Lancaster Square, would be developed by private student housing developer American Campus Communities (ACC). The university is already partnering with ACC on the now-under-construction Chestnut Square, on the 3200 block of Chestnut Street. The new project is in line with Drexel’s master plan for the campus and would sit on the southwest corner of 34th and Lancaster. The site is currently occupied by the onestory Hess Engineering Research Laboratories, an unremarkable mid-century low-rise that presents a blank face to the street and

NEW LISTING

seems emblematic of Drexel’s less than storied architectural past. According to new plans submitted by Drexel and ACC to the City Planning Commission for review, Hess Lab and its adjacent surface parking lot would be demolished and replaced with a five-story mid-rise along Lancaster Avenue and a 25-story tower on the campus side of the parcel. The ground floor of the building would also offer significant retail space along Lancaster Avenue and an impressive double height student dining commons on the 34th Street side of the building. With all of this retail, the building would make a great new gateway for the Lancaster Avenue commercial corridor, adding life to what is now a fairly dead block that divides the rest of the corridor from the heart of Drexel’s campus. This article was originally published by the Philadelphia Real Estate Blog at PhiladelphiaRealEstate.com.

PHILADELPHIA/SOCIETY HILL

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4 APRIL 2013

REGIONSBUSINESS.COM

OPINION

Medical Facilities Need to Adopt Pricing Transparency Y

Dr. G. Keith Smith is a board certified anesthesiologist in private practice since 1990. Contact him via email at KSmith @surgerycenterok.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.

ears ago, I hired a carpenter to build a deck in my backyard. He showed up with a pencil behind his ear, a spiral notebook, and a tape measure. I told him what I was looking for, and he made a few suggestions. After 15 minutes of measuring and taking notes, he handed me a piece of paper with how much it would cost. In two days, he called me and asked for a payment for the lumber. I sent it to him. Five days later, he showed up with the lumber—cut, ready to assemble. Amazing? Yet many do this every day in a free economy. They state an up-front price, and get the job done. But some say that isn’t possible in medicine. After all, building a deck isn’t surgery. Contractors like this man, however, have run into unanticipated problems that make certain jobs more difficult. Experienced contractors anticipate these problems and factor them into their price. Most of the time they get it right. If they get it wrong too often, they go broke. If their error rate is low, they are able to be much more competitive in the marketplace. I think of this carpenter often. I certainly had him in mind when I formulated internet pricing for our surgicenter. I knew that some cases would be more difficult than others. I knew that we would probably lose on some and make a little better marginal profit on others. This is what all businessmen do every day in every sector of the economy—except medicine. Eleven years ago, we began construction of the large facility in which we now work in Oklahoma City. By this time, I had been providing occasional prices for the uninsured and poor, but still found the contractor’s confidence in what our new facility would cost fascinating and incredible, having heard hospital folks saying so many times that fixed, upfront pricing in health care is impossible. But we did it anyway. Sometimes I got the price wrong. In some cases I was too high, and in some cases I was too low. Adjustments were made. Not at the expense of the patient, however. Transparent pricing is necessary for any concept of value to have meaning, and to

gladly jumped on a plane and come to us for surgical care for a known price. In spite of big hospitals’ attempts to denigrate this idea, they have found themselves in a competitive environment, like it or not. Whether patients are willing to fly to Costa Rica, Those who won’t divulge prices will lose New Delhi, or Oklahoma City, they have a price in out to those who will. Price sanity is mind, and hospitals are having to explain why they coming to surgical care, and ultimately are six to ten times more expensive while simultato all medical care. neously claiming to not make a profit. In Oklahoma City, upfront pricing is now available at several facilities, in addition to ours, by gastroenterologists, oncologists, radiologists with a breast imaging center, cardiologists and cardiac surgeons with a physiciancontrolled heart hospital, and orthopedic surgeons. A tertiary hospital has recently joined in this effort, providing upfront pricing for procedures too complex for an outpatient center. This is a very exciting development. Since hospitals are responsible for the vast major© DONNARAE ity of medical costs in this country, slashing their outrageous charges brings incredible savings without even touching physician send pay. appropriate I don’t advocate legislation to force medisignals concerning scarcity or abundance. cal facilities to be transparent. I believe this Non-transparent pricing is a hallmark of is a violation of the non-aggression princommand economies, as Professor Robert ciple and might also provide legislators Higgs explains in his brilliant bookCrisis the opportunity to sell exemptions. The and Leviathan. There can simply be no movement for medical price transparency meaningful competition when the prices is happening. It is better to let the much aren’t transparent and known up front. more unforgiving market deal with those Not all medical facilities need to exhibit who refuse to be transparent. Those who transparent pricing in order for a comwon’t divulge prices will lose out to those petitive and market economy to emerge. who will. Indeed, our internet pricing has allowed Price sanity is coming to surgical care, individuals to leverage their local medical and ultimately to all medical care. facilities, as otherwise they would have

4 APRIL 2013

REGIONSBUSINESS.COM

OPINION

Common Sense Approach to City’s Delinquent Taxes

ike many of America’s cities, Philadelphia has welldocumented fiscal problems. While they aren’t severe enough to cause talk about bankruptcy and state takeover, they are siginificant enough to have an impact on the city’s overall health and prospects for growth. While there is no single solution, Alan Domb, president of the Greater Philadelphia Association of Realtors, has put forth a simple proposal that could pay off big dividends: Privatize collection of delinquent taxes in the city. Collecting on back taxes is an ongoing issue in many cities, but aside from Detroit, none greater than in Philadelphia. In-depth research by WHHY’s Newsworks.org, The Philadelphia Daily News, AxisPhilly.org and The Philadelphia Inquirer point out the depth of the problem in painful detail. The headline is that, when combined, the delinquent taxes, penalties, interest and fees, total about $541 million. According to the city’s records, there are more than 400 properties with delinquent taxes by $50,000 or more and, make sure you are sitting down, almost 2,400 properties that are at least 30 years behind on property taxes. That’s right, taxes haven’t been paid on almost 2,400 properties since early in Ronald Reagan’s first term as president. Consider this excerpt from Patrick Kerkstra’s work for the Inquirer: “The city’s decades-old

delinquency epidemic - the worst of any big city in the country except Detroit - has reached a level where it depresses the overall tax base by at least $9.5 billion, saps an average of 22.8 percent of the market value of all single-family homes in Philadelphia, and deprives City Hall and the cash-strapped School District of $298 million a year.” While Mayor Nutter’s recent efforts to improve collection of these revenues may have been wellintentioned, Mr. Domb’s plan makes more sense from a fiscal, as well as governmental, perspective. Privatizing collections of deliquent property taxes takes a task off the city government’s list. In an era that demands leaner, more efficient government, that can only be applauded. The collection rate on these pastdue accounts will almost assuredly increase, and increase dramatically, under the control of a company that specializes in this task. As Mr. Domb points out, these companies work on a commission, which motivates them to collect in an efficient manner. And the company’s fees are paid by the delinquent taxpayer, so there is no impact to the city’s revenue stream. Additionally, privatization takes politics out of the mix, eliminating potential allegations of city officials exerting undue influence over which delinquent taxpayers move to the top (or bottom) of the list for collections. All in all, this common-sense approach deserves immediate action.

COMMENTARY FROM ACROSS THE WEB

Nutter Needs To Step Up in Sick Leave Debate A few paid sick days are not going to make or break any business in this or any other economic climate. City Council has done the right thing, and parents, kids, teachers, workers and business owners need Mayor Nutter to stand up on the right side of this issue. Mayor Nutter, please don’t be swayed by the scare tactics of the business lobbyists. YVONNE THOMAS ON PHILLY.COM, 2 APRIL, 2013

Protect Innocent People Pennsylvania lags behind other states, including New Jersey and Ohio, in reacting to the irrefutable evidence that innocent people are languishing in prison. Can there be a worse injustice than taking away the freedom of an innocent person?

@TonyBrunoShow

Phillies Phan Panic already in mid-season form after Opening Day loss in Atlanta. #HowWeRoll 2 APRIL 2013

balanced-budget policies of Calvin Coolidge and allowed George W. Bush to dive into the deep end, bankrupting the nation through two misbegotten and unfinanced wars, a giant expansion of Medicare and a tax-cutting spree for the wealthy that turned K Street lobbyists into the de facto office of national tax policy. In effect, the G.O.P. embraced Keynesianism — for the wealthy. DAVID STOCKMAN ON NYTIMES.COM, 30 MARCH 2013

DAILY NEWS EDITORIAL, 2 APRIL, 2013

How the GOP Abandoned Balanced Budget Policies The destruction of fiscal rectitude under Ronald Reagan — one reason I resigned as his budget chief in 1985 — was the greatest of his many dramatic acts. It created a template for the Republicans’ utter abandonment of the

EDITORIAL BOARD CEO and President James D. McDonald Editorial Director Karl Smith Associate Editor Terrence Casey

Think Like a Startup Remember, even the largest corporations were once brand new startups. In order for the U.S. to remain competitive in a global market, Fortune 500s and startups need to engage in order to leverage the innovations and strategic assets that drive growth. SCOTT CASE ON HUFFINGTONPOST.COM, 1 APRIL, 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.

4 APRIL 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

Number of active justices on the Pennsylvania Supreme Court in the wake of Joan Orie Melvin’s resignation in February.

Number of times the jelly beans sold for Easter this year (16 billion) would circle the earth if laid down end-to-end.

Number of campaign corruption convictions against Justice Melvin. She was cleared on one charge.

Millions of pounds of chocolate consumed during the Easter season worldwide, the secondhighest total for holiday season. Halloween, of course, tops the list at 90 million pounds.

6 1

Number of Pennsylvania Supreme Court justices impeached by the State House of Representatives, who impeached Rolf Larsen of seven counts of misconduct in 1994. The Senate gathered the twothirds majority needed for impeachment on only one count.

Number of years the Pennsylvania Supreme Court existed before the U.S. Supreme Court was created. Pennsylvania established its high court in 1722.

Pennsylvania’s rank among the 50 states according to FreedomInThe50States.org, produced by the Mercatus Center at George Mason University. It’s a combination of personal and economic freedoms. Pennsylvania ranked 33 in 2009. North Dakota and South Dakota ranked first and second, respectively.

Pennsylvania’s rank for economic freedom, which includes fiscal and regulatory policy.

Age of the youngest justice on Pennsylvania’s Supreme Court, Debra Todd, who joined the court in 2007. Chief Justice Ronald Castille reaches the mandatory retirement age of 70 in March of next year.

Pennsylvania’s rank for fiscal freedom, which includes categories for taxes, government employment, spending, debt, and fiscal decentralization.

Pennsylvania’s rank for personal freedom. The state ranked 21 in 2007 and 33 in 2009. Alaska topped the list as it did in 2009.

Pennsylvania’s rank for tax burden and improvement of five spots since 2009. South Dakota topped the list, as it did in 2009.

Pennsylvania’s rank in the “find a job category,” described by the website as a “user-created category combines the labor market and occupational freedom categories.” The state was 27th in 2009 and 26th in 2007. Kansas topped the list, as it did in 2009. California was at the bottom of the list.

Pennsylvania’s rank for alcohol, which includes restrictions on distribution, taxes, blue laws, keg registrations, and “happy hour” bans. Colorado topped the list, as it did in 2009.

Pennsylvania’s rank for gambling, which includes includes “an estimated cost of gambling restrictions and whether social or online gaming is allowed.” Pennsylvania moved up five spots since 2009 and now only Nevada, Louisiana and Indiana ranked higher. New Jersey ranked 13th, down two spots since 2009.

TIM SACKTON

560

Calories in 100g of milk chocolate.

719

Calories in 100g of nuts and seeds.

62%

Percent of U.S. workers who qualify to take leave under the Family Medical Leave Act, passed in 1993.

Millions of U.S. workers who have taken leave under the Family Medical Leave Act.

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