Region's Business 06 December 2012

PHILANTHROPY CAN BE A DOUBLE WIN FISCAL CLIFF VS. N0-TAX PLEDGE

A 7-POINT AGENDA TO HELP PHILADELPHIA GROW IN 2013

REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

OUTLOOK 2013: SOME QUESTIONS & LOTS OF OPTIMISM Across key sectors of the Philadelphia economy, the expectations for next year are running high.

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6 DECEMBER 2012

6 DECEMBER 2012

REGIONSBUSINESS.COM

CONTENTS

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Outlook for 2013

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PEOPLE SAY THAT MOTIVATION DOESN’T LAST. WELL, NEITHER DOES BATHING THAT’S WHY WE RECOMMEND IT DAILY.’

Despite a looming fiscal cliff and uncertainties about Obamacare, optimism is running high across six key economic sectors. !

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Governor Corbett plans busy year

—ZIG ZIGLAR, WHO PASSED AWAY NOVEMBER 28, 2012

Despite dragging approval ratings, his 2013 agenda is packed with weighty items including a clean up of the state’s pension mess. !

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Setting an agenda for growth The time is right for the region to really take off.

But time is short to make it happen, according to Rob Wonderling, President and CEO of the Greater Philadelphia Chamber of Commerce.

!

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Impact from Sandy remains Incomes are at a standstill and spending continues to drop in the aftermath of the storm. !

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CORRECTION

Giving’s double win

City Council considers tax credit

As the year closes, take a look at how philanthropy can save you on taxes.

The move is aimed at health care for partners.

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REGION’S BUSINESS Independence Media Corp.

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PRG welcomes National Penn Bank to their newest center city location at the corner of 21st and Market. Occupancy is scheduled for the Spring 2013 while the apartments above have begun delivery, totaling 282 units. PRG would also like to thank Metro Commercial Real Estate and Joe Dougherty for their efforts representing the Tenant.

!

In an article on Obamacare in Region’s Business edition of 29 November 2012, co-founder, CMO and executive vice president Marty Rosen was misidentified.

PRESIDENT AND PUBLISHER James D. McDonald

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EDITORIAL DIRECTOR Karl M. Smith ASSOCIATE EDITOR Terrence Casey CONTENT TEAM Brandon Baker, Emily DiCicco, Victoria

Marchiony CONTRIBUTORS Karen Fratti, Eric Boehm, Timothy

Holwick, Don Lee ADVERTISING DIRECTOR Larry Smallacombe DIRECTOR OF BUSINESS DEVELOPMENT Jim Bauer ACCOUNT MANAGER Rachel Sollberger

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Region’s Business is published weekly on Thursdays and online at www.RegionsBusiness.com.

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6 DECEMBER 2012

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EDITOR’S DESK

Looking Ahead, Reasons for Optimism

Karl Smith is the Editorial Director for Region’s Business.

You can contact him at ksmith@regionsbusiness.com.

By now, most of us have heard “The Most Wonderful Time Of The Year” a few dozen times already which, combined with the mounting traffic, swelling crowds and frantic schedule is enough to convert neutral observers to Scrooge status.

Yet, as 2012 starts to fade into the sunset and 2013 anxiously awaits its formal introduction, there is a certain resonance to the song title.

Early December has a lot going for it, image wise, especially this year.

As always, there’s the ramp up to Christmas. It’s not without its downside, of course, but it still generates a good vibe.

Most of all, though, there is the anticipation of a new year. While the whole premise of nailing the beginning of the year to January 1 is a wholly human invention, it’s

a benchmark we cannot ignore.

Somehow, we have hard-wired it into our brain.

The pragmatist knows that we can change behavior any day of the year, but we tend to measure success on a January 1 start date, which means viewing New Year’s Day as beginning with a fresh slate.

Somehow, that seems to allow us to be optimistic, even unreasonably so, about how the 364 days that follow will pan out and this time around is no different.

Well, maybe this year is different, but for all the right reasons.

While reporting this week’s cover story, we were re-introduced to something we were met with during the work on our initial cover story (Visions of a World-Class Philadelphia, way back in August), an unmistakable enthusiasm about our region and, maybe more

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importantly, our region’s future.

Philadelphia has earned a reputation for being a city with a chip on its shoulder, at being an underdog that’s underappreciated. But we may have to come to grips with the fact that the region’s image is improving – dramatically, in many ways – and people are taking notice.

In fact, it’s not really a stretch to say that Philadelphia is poised for a breakout year in 2013. A lot of things – both physical and intangible – are falling into place.

On the broader stage, there’s less uncertainty. For good or ill, Barack Obama will be president for the next four years, which means the Republicans can no longer try to run out the clock on his administration. In short, Washington has to get to work. Also, it appears that Pennsylvania Gov. Tom Corbett is about to get aggressive on the

agenda for the second half of his first term, despite sagging approval ratings.

Clarity is better than uncertainty, so good news there.

Closer to home, tourism is booming, both in the city and the suburbs as more people learn what we already know – this is a great place to be. Our universities continue to make major investments and developers seek to create more room for a city population that is on the rise.

Interviews with others who shape our region’s economy share the optimism and, let’s face it, optimism is contagious and much of our economy is based on emotion rather than facts.

So don’t grit your teeth when you hear that refrain, this may, in fact, be the most wonderful time of the year, especially this year.

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6 DECEMBER 2012

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WEEKLY BRIEFING

GAMING

INVESTING

Gaming Board Considers City Applications

Vanguard Chairman: Investors Learned from Volatile Markets

Now that the application deadline has come and gone for Philadelphia’s second casino license, a new process has begun for narrowing down the six total applicants who submitted boxes of paperwork to the Harrisburg, Pa.-based Gaming Control Board on November 16.

From here, the board will take the next six to 12 months assessing the applications.

“The first part is to review the applications and see that they’re complete,” said Dough Harbach, a spokesman for the Gaming Control Board. “[The Gaming Control Board] will see that the information has been completed before the Licensing Bureau can then pass on that information to our Bureau of Investigations and Enforcement …

They will do background investigations on the individuals who are involved, and all of that will be ongoing through a number of months in 2013.”

Mr. Harbach said that the board will begin filtering through the applicants and their suitability to hold the license by weighing factors including the financial strength of the applicant, the location of the facility, potential revenue and jobs to be generated in “the best interest of the commonwealth.”

Following this process, the board will host public input hearings and accept written comment on the proposals. As of now, Mr. Harbach said there has not been a date set for the

I believe that — for better or worse — investors have grown more accustomed to market volatility, given some of the dramatic turns we’ve seen the markets take over the past 10 or 15 years. It’s my hope that investors have drawn lessons from recent history and adopt balanced and diversified portfolios that can help smooth out market jolts.

— VANGUARD CHAIRMAN BILL MCNABB VANGUARD.COM

CONSTRUCTION

Slots Revenue Steady The Pennsylvania Gaming Control Board reported total revenue made through slot machine play at casinos during November rose slightly compared to the amount generated a year ago.

November’s gross revenue at the 11 operating casinos from slot machine play was $192,512,491 compared to $191,852,271 of gross revenue in November 2011, an increase of 0.34 percent.

In a comparison of just the 10 casinos operating in November 2012 that were also open for the full month of November 2011, public forums, and that the length of the process will depend on the applications.

Though the entirety of the proposals will eventually be posted online at gamingcontrolboard.pa.gov, the board has already made public the legal counsel for the applicants, ownership structures and local impact

revenue was 1.89 percent lower this year.

The board also reported that the amount of tax revenue generated for the Commonwealth from slot machine play during this November was $103,691,872.

The average number of operating slot machines throughout Pennsylvania at the 11 casinos was 26,356 in November 2012 compared to 26,534 at the casinos in November 2011.

The board will release table game revenue for November 2012 after December 15. reports.

“We will make information publicly available so that those who want to make public comment will have all the information necessary to do so,” Mr. Harbach said.

For now, this is the last of the 14 casino licenses to be awarded across the state.

Revel Financial Situation ‘Dire’ The future of Atlantic City’s newest casino, which owes $12 million in taxes to Atlantic City, is grim, New Jersey Senate President Stephen Sweeney said.

Eight months after Revel opened its doors, contractors and vendors still have not been paid, according to an Associated Press report. Sen. Sweeney is planning a tax sale to recover some of the missing funds, the AP reported.

“I have received a number of additional reports that Revel’s finances have deteriorated considerably, and that the situation has become dire,” Sen. Sweeney wrote in a letter to David Rebuck, director of the state Division of Gaming Enforcement “The casino appears to be burning cash at an alarming rate.”

Toll Brothers Release Q4 Earnings

Toll Brothers income in the fourth quarter, which ended October 31, was $411.4 million, up from $15 million in 2011, the company announced this week.

The largest luxury home builder in the country, based in Horsham, received a tax benefit of $350.7 million in the fourth quarter, which allowed for the great difference.

Net income for the fiscal year was more than $487 million, or $2.86 per diluted share, up from $0.24 per diluted share the previous year, the company announced.

LAW

Report: Two-Tiered Justice In Philadelphia’s Traffic Court It’s not what you know, it’s who you know.

And if you happen to know a Traffic Court judge in the city of Philadelphia, getting out of those pesky parking offenses and red light violations seems to have been a simple matter. But if you’re not part of the elite class of the well-connected, you better pay up.

The Philadelphia Inquirer broke the story last week — basing its reporting on a leaked report being developed by the Judicial Conduct Board, a 12-member board that operates in confidentiality and investigates ethical misdeeds of other judges within the state court system.

In a Wednesday follow-up to the initial story, the Inquirer revealed that as many as 10 current and former judges — including sitting Supreme Court Justice Seamus McCaffery — could face disciplinary proceedings based on the report.

— PaIndependent.com

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6 DECEMBER 2012

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WEEKLY BRIEFING QUOTABLE

MAYBE WHEN THEY KISSED THAT FROG, IT DIDN’T WORK. SO KISS ANOTHER.’ ‘WE TEND TO BET ON THE JOCKEY, NOT THE HORSE.’ ‘WE DON’T GO TO CASINOS, BUT WE BET ON COMPANIES.’ — BERNIE RUDNICK, COFOUNDER OF MIDATLANTIC DIAMOND VENTURES, AT A RECENT COFFEE & CAPITAL EVENT. TECHNICALLYPHILLY.COM

RETAIL

MEDIA

Hostess Liquidation Continues

100 Jobs Lost With Printer’s Closure

Hostess Brands Inc. is hoping for approval from White Plains, N.Y., U.S. Bankruptcy Court Judge Robert Drain on December 6 to distribute $1.75 million in bonuses for 19 top-level executives, excluding CEO Greg Rayburn, as incentive to stay on with the company to oversee its liquidation.

The company, which stopped contributing to its pension plans last year, will also ask the court to allow it to stop paying additional retiree benefits of $1.1 million per month.

According to Hostess spokesman, Lance Ignon, the company is now “in active dialogue with 110 potential bidders, 70 of which have

Newspaper publishing house AFL Web Printing announced recently that it would be closing its doors next week, leaving 100 workers without jobs, officials said.

Company officials told employees they would close operations Wednesday.

AFL prints numerous monthly, weekly and daily publications, including South Jersey Times.

The company had previously announced layoffs in its Voorhees and Secaucus plants.

The private equity-owned company said the layoffs came after it lost two contracts valued at $10 million annually, according to northjersey. com.

The closure will not disrupt service to South Jersey Times customers, said general manager Joseph P. Owens. He said the newspaper will be published elsewhere.

JENN DURFEY

signed nondisclosure agreements” for its assets.

The Irving, Texas, company shut down in November citing that it could no longer function after a nationwide strike by the Bakery, Confectionery, Tobacco and Grain Millers Union in which workers accused Hostess of slashing wages and benefits while bumping up executive pay.

Special Delivery.

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REGION’S BUSINESS A JOURNAL OF BUSINESS & POLITICS

6 DECEMBER 2012

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MUST-HAVE APP

WEEKLY BRIEFING GOTTA-HAVE-IT GADGET

WHO TO FOLLOW

Venmo

ioSafe Solo G3

Dealing with “IOUs” among friends and family can be a disastrous affair.

Aiming to solve the problems of miscommunication — or unreliability — Venmo is a handy alternative to PayPal, using bank-grade security systems to transfer your funds to a friend using only their name, number or email address.

Striving to make paying debt fun, it also serves as a social networking tool, allowing for payment comments and messages to friends.

If you have a safe for your tangible belongings, why not for your virtual ones as well?

The ioSafe Solo G3 treats its protective agencies in the same way a standard fire-proof safe would, protecting digital data in temperatures of more than 1,500 degrees Fahrenheit.

And, if your safe does happen to combust into flames alongside your childhood photos and business plans, ioSafe will pay as much as $2,500 to recover lost data. ioSafes range in price from $200 to $800.

Philly Watchdog Available for the iPhone, iPad, and iPod touch, this free app allows Philadelphians to report waste and abuse directly from their phones.

Citizens can upload video that is directly sent to the Fraud Unit of the Philadelphia City Controller’s Office.

The application is a first for the city as well as for the nation.

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Presidential Courtship

Straying away from the common belief that the core political battle of Washington, D.C. lies between President Obama and Congress, Jeffrey Toobin makes his case in “The Oath: The Obama White House and the Supreme Court” for the confrontational and all-important relationship between the president and Chief Justice John Roberts.

Toobin, who previously authored “The Nine,” a thoroughly-detailed account of what really makes the court “tick,” re-tackles the subject of the Supreme Court from the perspective of a president capable of shaping history through the makeup of the court’s justices.

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6 DECEMBER 2012

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WEEKLY BRIEFING

Income Stalled, Spending Decreased After Sandy Destruction, Interruption

SUPERSTORM SANDY

Donations Still Needed A Philadelphia Hub for Occupy Sandy NJ recently opened at 2nd and Spring Garden Streets and is continuing to accept donations for victims of Superstorm Sandy.

ITEMS NEEDED: Safety equipment, muck out gear tarps, pry bars, heavy-duty garbage bags, OSHA N95/ N92 facemasks, waterproof boots, work gloves, hazmat suits or heavy-duty overalls, waterproof plastic bins, headlamps, flashlights, batteries, construction equipment, drywall, floorboards, lumber joints, insulation, wiring, appliances, hot water heaters, refrigerators, stoves (gas or electric), newer-model personal computers, electric wheelchairs, generators NOT NEEDED: Clothes (except socks, underwear, heavy winter coats), food (except baby food, pet food and bottled water), toys

Consumer spending dropped 0.2 percent in Octobers after disruptions caused by Superstorm Sandy that are likely to slow the economy for the remainder of the year, the Commerce Department announced recently.

It was the lowest spending figure since May, and down from a 0.8 percent increase in September, according to an Associated Press report.

The Commerce Department also announced that wages and salaries were reduced by an annual rate of about $18 billion in October,

because of work interruptions. Income had been up by 0.4 percent in the previous month, according to the government.

Removing Sandy from the equation, the nation still saw only slight growth — an increase of 0.1 percent, Paul Dales of Capital Economics told the Associated Press.

Mr. Dales suggested that spending in the nation would continue to be lower than last year’s numbers through the end of 2012, but added that rebuilding would help in early 2013.

DEVELOPMENT

CATHOLIC REAL ESTATE

Blatstein Sued Over Deposit

by Inquirer, Daily News Owner

Philadelphia School For Sale

Interstate General Media, the parent company of the Philadelphia Inquirer, the Daily News and Philly.com, has filed a lawsuit against developer Bart Blatstein, owner of Tower Investments, alleging he won’t rightfully return a security deposit.

Mr. Blatstein purchased the North Broad Street home of the Inquirer and leased it back to the news organizations until they moved. Then he declined to return almost $350,000 of a security deposit, according to an Inquirer report.

The news organizations did not leave the building “broom clean” as required in the lease, according to

Sacred Heart Parochial School at Moyamensing Avenue and Reed Street in Philadelphia is listed for sale at $3.5 million.

The school, which was built in 1893, has four floors each with four, 800-square-foot rooms with high ceilings, according to

NakedPhilly.com.

The listing follows that of Annunciation BVM School at 12th and Wharton Streets ($3.1 million), which could become commercial space and apartments, NakedPhilly.com reported.

Church Slated for Demolition KEVIN BURKETT

the report.

Mr. Blatstein, who would not comment to the Inquirer, hopes to use the North Broad Street building for a second Philadelphia casino resort called Provence. His plans for the casino are being considered by the state.

Philadelphia’s Church of the Assumption, 1123 Spring Garden Street, will be demolished beginning December 11, HiddenCityPhila.org reported.

Opponents in the Callowhill Neighborhood Association are fighting the demolition.

Church of the Assumption was built in 1849 and closed by the Archdiocese of Philadelphia in 1995.

ENTREPRENEURSHIP

LaunchPad Partners With Area Colleges The Blackstone Charitable Foundation recently announced the creation of the Blackstone LaunchPad in Philadelphia, which will seek out the next generation of entrepreneurs.

The $3 million grant establishes a partnership between the University City Science Center, Temple University and Philadelphia University and is expected to help generate more than 100 ventures and hundreds of jobs over the next five years.

“Entrepreneurship is a job multiplier.

Our economy cannot create jobs or improve income quickly enough without more successful entrepreneurs, Blackstone Chairman and CEO Stephen A. Schwarzman said in a statement.

First Round Capital Funds Penn Startup The Dorm Room Fund, First Round Capital’s venture fund targeting Philadelphia college students, made its first investment this week — Firefly.

Three Penn undergraduate students — Dan Shipper, Patrick Leahy and Justin Meltzer — are behind the screen-sharing startup chosen for the $20,000 investment.

Investment team member Bradley Ericson told TechnicallyPhilly.com that Firefly was selected by the Dorm Room Fund because of its simplicity.

Mr. Ericson added that eight to 10 pitches will be considered each month.

Temple App Program Supported With Grant The Knight Foundation has given a $635,000 grant to Temple’s Urban Apps and Maps Studios, which teach digital design and business skills.

“Philadelphia is becoming a center for tech and innovation, and Knight Foundation wants to make sure that the African-Americans and Latinos who make up more than half of this community are engaged in this growing field,” said Donna Frisby-Greenwood, Knight’s Philadelphia program director said in a statement.

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6 DECEMBER 2012

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WEEKLY BRIEFING EVENTS

Budding Entrepreneur Presents Fusion Tower

The Ben Franklin Technology Development Authority is hosting several upcoming sessions for entrepreneurs.

Informational Technology 9 to 10:30 a.m. Thursday at the Ben Franklin office at the Navy Yard.

Energy and Physical Sciences 9:30 to 11 a.m. December 11 at Montgomery County Community College Life Sciences 10 to 11:30 a.m. December 13 at the Pennsylvania Biotechnology Center of Bucks County in Doylestown WWW.BENFRANKLIN.ORG

AWARDS

Random Hacks of Kindness TeacherCom, an inexpensive tool for teachers to more easily communicate with students’ parents, was the winning tool in last week’s Random Hacks of Kindness contest, organized by TechnicallyPhilly.com and hosted at Drexel University’s ExCITe Center.

TEACHERCOM.ORG

Matt Kyle, right, tests his Fusion Tower at the Hulmeville Inn in Bucks County recently.

SUBMITTED

When Matthew Kyle first delved into the beer world, he was a wide-eyed beer enthusiast mesmerized by the smells of malt he’d waft in from his home-brewing kit. But after recognizing that the good malt beer he was enjoying had the potential to be great beer, he rethought the concept altogether.

Today, Mr. Kyle boasts his “Fusion Tower” beer infuser, a patent-pending technology he largely claims as all his own.

“I’m not the first person to infuse beer, but no one’s ever really sat down and said, ‘I think there’s a better way to do this,’ until now,” Mr. Kyle said.

Mr. Kyle, a 22-year-old beer connoisseur and Bucks Countynative, has spent the past two years perfecting a new method of beer-making. After experimenting extensively with pool filters for home-brewing and evolving this concept into his five-foot-tall, sleek-and-shiny tower-infuser, he’s finally ready to take the device to the masses.

“We’re taking the creative process and putting it back in the hands of the consumer, instead of the brewer retaining 100 percent of the creative oversight of the beer,” Mr. Kyle said.

Though Mr. Kyle said he began his endeavor in Philadelphia merely for convenient

purposes, he admitted Philly’s allure as a beer city has been helpful — even if it comes with a few hurdles.

“I’m fortunate to have grown up in an area where I’ve always been surrounded by the malt beer scene here in Philly,” Mr. Kyle said. “But that being said, Philly is also a very traditional beer city — some people prefer not to have their beer infused because it’s ‘scary.’”

As a result, Mr. Kyle spends much of his time at the location of his first client, Whole Foods’ Cold Point Pub in Plymouth Meeting, Pa., explaining the device to customers and testing infused beers made from every ingredient ranging from jalapenos to coffee beans.

“I sit by the infuser and listen to customer reactions when they drink [the infused beer], and that’s the best part of my job, because everyone just loves it,” Mr. Kyle said.

Though Mr. Kyle’s Fusion Tower runs for a hefty price — $52,128 to purchase and $1,200 per month to lease — interested beer drinkers can taste-test at the Whole Foods location and are welcome to submit infusion ideas through the location’s new suggestion box.

“It’s always fun to see people get creative with it.”

— Brandon Baker

HEALTH CARE

REAL ESTATE

Wharton Alumnus Named J&J Chair

Report: City Home Sales Rebounding

Johnson & Johnson recently announced that its Board of Directors elected Alex Gorsky chairman of the board.

Mr. Gorsky, who received his MBA from Wharton, will assume the chairman title and additional leadership responsibilities for the global health care company December 28.

Mr. Gorsky has been appointed Chief Executive Officer of Johnson & Johnson in April.

Current Chairman Bill Weldon will step down as chairman December 28 and will retire in the first quarter of 2013, after a brief transitional period.

Teva Pharmaceutical Announces $1.5B Cuts Teva Pharmaceutical Industries, which has its North American headquarters in North Wales, Pa. said it would cut $1.5 billion to $2 billion in costs over the course of several years.

Officials did not give specific details on job losses or facility closures.

EDUCATION

President Ousted at Wm. Penn Foundation The William Penn Foundation is searching for a new president after it and Jeremy Nowak, who has served in that role since June 2011, “mutually decided that the time is right for Nowak to transition out of his current role.”

Under Mr. Nowak’s watch, the foundation paid the Boston Consulting Group more than $1 million for a controversial plan that called for closing more than five dozen schools, according to the news records.

Mr. Nowak was also criticized for the foundation’s rasing of $15 million to the pro-charter organization Philadelphia School Partnership.

Center City District recently released a report on home sales in the city.

The highest-priced homes were located in the following neighborhoods: Rittenhouse Square, Fitler Square, Logan Square Prices increased dramatically in the following neighborhoods: Graduate Hospital, Grays Ferry, Point Breeze, Newbold, South Street West The fastest sales were in the following areas: 19102, that strip between Callowhill and Waverly, and Broad and 16th Streets Prices declined in the following neighborhoods: the Gayborhood, Chinatown, Washington Square West The slowest markets were in the following neighborhoods: Rittenhouse Square, Fitler Square, Logan Square.

WWW.CURBED.COM

ENERGY

Natural Gas Program Launched The Department of Environmental Protection is now accepting applications for its Natural Gas Vehicle Grant program, which will provide up to $20 million over the next three years to help pay for the incremental purchase and conversion costs of heavy-duty natural gas fleet vehicles.

An additional $7.5 million in funding will be available the second year, with $2.5 million the third year, according to a statement from the DEP.

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6 DECEMBER 2012

REGIONSBUSINESS.COM

WEEKLY BRIEFING

RESTAURANT ROUNDUP

Blackfish Just in case the Mayans are right about the world ending later this month, Blackfish is offering a seven-course final meal. The End of the World dinner on December 20 costs $169 per person and reservations are a must.

WWW.BLACKFISHRESTAURANT. COM

ENERGY

DEVELOPMENT

PGW Raises Gas Rates

Report: Society Hill Theater Could Add Apartments

Philadelphia Gas Works raised its residential natural gas rate December 1 from $1.41 per hundred cubic feet to $1.46.

Costs have been rising since it hit a new low in April and remain lower than they were this time last year.

REAL ESTATE

Survey Says: Hold Industrial Property Jerry Idaszak, associate editor of The Kiplinger Letter, said a recent survey showed mixed opinions about commercial real estate in Philadelphia.

25%

Said now is a good time to buy

Jake’s and Cooper’s Wine Bar

BANKS

The Wine Bar has been a featured dining location in Manayunk for 25 years, but a new focus on wine, cheeses, charcuterie, salads and small plates offers a fresh experience for veteran diners.

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Penn. Banks Profits Up Banks in Pennsylvania saw an increase in profits compared to the third quarter of last year, according to a recent report by the Federal Deposit Insurance Corporation.

The 200-plus insured institutions in the state increased from $1.1 to $1.2 billion in the respective third quarters. Additionally, 57.5 of all insured institutions reported an improvement in their net income from last year, according to the FDIC.

Plans are preliminary now, but Society Hill’s Ritz Five could down the line become a mixed-use building with apartments, according to PlanPhilly.com Mosaic Development Partners is the local partner of Landmark Theaters, which owns the property. Mosaic representatives told the Society Hill Civic Association’s Zoning and Historic Preservation Committee that the proposed theater would have smaller screen rooms with comfortable chairs and alcoholic drinks with wait service, according to the report.

Customers would reportedly also be able to rent individual theaters for private events.

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6 DECEMBER 2012

REGIONSBUSINESS.COM

DEALBOOK PENNSYLVANIA CONVENTION CENTER

Report: Firm Hired in Privatization Push The board of the Pennsylvania Convention Center Authority has hired Philadelphia consulting firm Public Financial Management Inc., to craft a report on whether to privatize some functions at the site, the Philadelphia Inquirer reported.

With a “controversial 10-year customer service agreement” between the Convention Center and the city’s unions entering its final year, the time has come to explore options that may curb persistent complaints about high labor costs.

Prior attempts to address cost issues included ending an 8 percent labor management fee that was charged to exhibitors.

B. KRIST FOR GPTMC

COMMUNICATIONS

BANKING

Conshohocken Agencies Announce Merger

FTS Acquires Pa. Payment Organization

Diccicco Battista Communications (DBC), a fullservice brand communications firm based in Conshohocken announced December 3 it has merged with public relations agency DeFazio Communications, LLC., also of Conshohocken.

The acquisition of DeFazio, which specializes in media relations services for corporations and emerging growth companies, will increase total agency billing by 20 percent.

DBC’s strategic plan for growth began when Creative Director Sean Donahue and Public Relations Director Tim Cifelli joined CEO Mike Diccicco as agency partners.

King of Prussia, Pa-based Financial Transaction Services (FTS), a six-yearold independent service organization that clears payment card transactions for retailers and banks, has acquired Mars, Pa.-based Dependable Payment Processing and its affiliate Discount Payment Processing for an undisclosed sum.

HEALTH CARE

HEALTH CARE

Virtua, CVS Collaborate on South

Aetna, GlobalFit Create Reimbursement Plan

MinuteClinic, the retail health care division of CVS Caremark and Virtua, South Jersey’s largest health care provider, have entered into a clinical collaboration to enhance access to high quality, affordable health care services in Burlington, Camden and Gloucester counties.

Virtua physicians will serve as medical directors for five MinuteClinic walk-in medical clinics inside select CVS/pharmacy stores and will accept patients who need care beyond MinuteClinic services.

The Aetna Fitness Reimbursement Program was recently launched in collaboration with Philadelphia-based GlobalFit, a provider of physical activity programs for businesses.

Beginning January 1, employers will be eligible to implement the program, which will give Aetna members money back for a wide range of activities that can help them lead healthier lives, such as gym membership fees and group exercise classes.

6 DECEMBER 2012

PHILADELPHIA POLITICS

REGIONSBUSINESS.COM

15

Pew Report Targets Property Tax Overhaul

As early as this spring, Philadelphia City Council is expected to enact the Actual Value Initiative, a complete reform of the city’s property tax system, affecting tax bills due in 2014.

A recent Pew report set out to better understand the challenges involved and the advantages and disadvantages of possible programs.

R. KENNEDY FOR GPTMC

Programs Philadelphia could enact, according to the report: Homestead Exemptions: Available for owner-occupied, primary residences, homestead exemptions reduce the assessed value of a property that is subject to taxation.

These exemptions provide higher tax savings in percentage terms for properties with lower values, so owners of more expensive houses would pay more.

Gentrification Relief: Because homeowners in newly hot real estate areas often cannot enjoy the benefits of a more valued neighborhood without selling their properties, the gentrification relief program would freeze property taxes for residents who have lived in their homes for at least 10 years. These individuals would have otherwise had to pay steep tax increases.

Smoothing or Phasing: The process of “smoothing” was introduced by Mayor Michael Nutter in his first AVI proposal; he suggested that the new tax assessments be phased in over the course of three years. City Council rejected the idea in 2012 because many property owners would have to pay more during the phase-in process.

Abatement Program: In September 2012, Councilman W. Wilson Goode Jr. introduced a proposal to reduce tax abatement from 10 years to five, with the value of the abatement starting at 100 percent and phasing out to zero over the five-year period. This would bring in more revenue from new or renovated properties in the future, thereby limiting reductions to the city’s property tax revenues.

Revenue Caps: Revenue caps could limit how quickly total revenue from property taxes can grow. This puts a ceiling on annual property tax increases across the board. Three state representatives from Northeast Philadelphia said they will push the legislature to create some kind of cap for the city.

Council Seeks Tax Credit for Health Care for Partners CITY COUNCIL MATTERS

Timothy Holwick is a freelance writer covering Philadelphia government.

Find more coverage at citycouncilmatters.com and follow him on Twitter @CityCouncilBlog.

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

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

On November 29, Councilman Jim Kenney introduced a bill in Philadelphia City Council to increase the equality in treatment regardless of gender identity. The language of the bill focuses on the concept of life partnerships.

The bill features numerous alterations to the Philadelphia Code by essentially adding some variation of “life partner” or “life partnership” wherever marriages and other legal relationships are discussed. It also makes changes in the Philadelphia Code to make definitions of “person” more gender neutral.

While those changes will have their effects played out in many spheres, the bill takes an interestingly proactive approach with a tax credit built into the business income and receipts tax. That tax is no stranger to changes in recent years, but this bill is very different from the reductions, cuts and other tweaking sought by Councilman Bill Green and others.

Here, the proposed bill will offer a tax credit to businesses that provide health insurance on the basis of life partnerships in

the same manner that they offer health insurance to the spouses or children of employees.

The bill does not propose an amount for the tax credit, so that will presumably be decided in the committee hearings phase of the bill. The bill’s language phrases the tax credit of a percentage of the funds used by the business in order to pay for health insurance for the life partners of its employees, or the children of those life partnerships.

This bill will be of no use to a business that already provides health insurance on the basis of life partnerships. Eligible businesses must have not provided health insurance in such a manner in the previous three years. If a company offers the insurance, and claims the credit, it would have to pay back the tax credit if it ceases offering such insurance within three years of receiving the credit.

The tax credit, if passed along with the rest of this bill, would come into effect for the 2013 tax year. However, it would not impact estimated business

J. SMITH FOR GPTMC

income and receipts tax payments due in April 2013 as those payments should be calculated as if the ordinance is not in effect.

Life partnerships are nothing new to the Philadelphia Code, but this bill’s multiple revisions across many sections of the Code are definitely a major change.

Councilman Kenney has already been mentioned as a potential

mayoral candidate in 2015.

These types of bills are the sort that rally voters to a particular candidate, and can be easily pointed to as an accomplishment in campaign ads.

Without commenting on the social sensitivity of the bill, it is politically interesting as time marches toward the conclusion of Mayor Michael Nutter’s term.

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6 DECEMBER 2012

CAPITOL REPORT

REGIONSBUSINESS.COM

TAXES

ELECTORAL COLLEGE

COURTS

Future Bill Would Increase Gas Tax

Pileggi Targets Electoral College

Obama Nominates 3 Judges for Pa.

Senate Transportation Committee Chairman John Rafferty (R-Montgomery) told the Associated Press he will introduce a bill that would increase a tax paid by gas station owners, increasing revenue for state road construction and repair.

Sen. Rafferty added that borrowing against the higher expected tax collections from lifting the cap to expedite construction could be part of the legislation.

The oil franchise tax is a portion of the state’s gas tax applied to the first $1.25 of every gallon sold at the wholesale level.

Out of the 32-cent-pergallon gas tax, roughly 20 cents of that comes from the oil franchise tax.

Governor Tom Corbett called the cap, which was set in the 1980s, “artificial.”

Senate Majority Leader Dominic Pileggi is attempting once again to change Pennsylvania’s electoral college vote, this time according to percentage of the popular vote, plus two for the statewide winner.

According to PoliticsPA.com, under that system, Barack Obama would have won 12 of Pa.’s electoral college votes and eight for Romney.

This would not have changed the outcome of the race.

Because Federal law gives the option

of allocating electoral votes to the states, this plan would require normal legislation.

However, Sen. Pileggi’s spokesman Erik Arneson told PoliticsPA.com that it was not a top priority issue and would not be voted on immediately next year.

President Obama nominated three judges — two Democrats and one Republican — to take the bench in Pennsylvania’s eastern district. This district includes Berks, Bucks, Chester, Delaware, Lancaster, Lehigh, Montgomery, Northampton and Philadelphia counties.

These choices — Judge Nitza I. Quiñones Alejandro, a judge on the Philadelphia County Court of Common Pleas and the first openly gay Hispanic woman to serve on the federal bench; Judge Luis Felipe Restrepo, a United States magistrate judge in the Eastern District of Pennsylvania since 2006; and Judge Jeffrey L. Schmehl, president judge of the Berks County Court of Common Pleas since 2008 — must be confirmed by the U.S. Senate.

ARE YOU READY TO TAKE YOUR BUSINESS TO THE NEXT LEVEL? Exploring the Future of Healthcare

Economic Outlook

Thursday, December 6 The Rittenhouse Hotel

Wednesday, January 16 Hyatt Philadelphia at the Bellevue

Regional Spotlight – Building a Logistics Network

The Art of Persuasion with Daniel Pink

Women in the Workforce

A Conversation with the Governor

Thursday, December 13 Adventure Aquarium

Friday, December 14 Radisson Plaza – Warwick Hotel

Wednesday, January 23 World Café Live

Thursday, January 31 The Academy of Natural Sciences of Drexel University

GREATER PHILADELPHIA CHAMBER OF COMMERCE | 215-790-3700 | GPCC.com

6 DECEMBER 2012

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

17

Bonds Celebrated Through Pennsylvania Society Events

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.

This week the leaders of Pennsylvania business and politics make their annual pilgrimage to New York City for the festivities surrounding the Pennsylvania Society’s Annual Dinner. Amtrak’s Keystone service will be jammed with the commonwealth’s movers and shakers, the people who help make it the marvel that it is.

In addition to the Society’s black-tie extravaganza Saturday, there will be an endless array of receptions, luncheons and dinners.

There are even seminars to attend.

Through more than a century, the Society has sponsored scores of social, charitable and historical events. But its gala dinner, held on the second Saturday of each December at the famed Waldorf Astoria, remains its signature event. It’s a virtually required “see-and-be-seen” occasion for the state’s powerful.

The Carnegies and Mellons and Heinzes and Schwabs and those who built the state have been central figures in the Society’s dinners.

A youthful Sir Winston Churchill was the first speaker. Several U.S. presidents have followed. The list of Society dinner honorees is a veritable who’s who of Pennsylvania business, politics, education, sports, arts, science and culture.

It’s the lead-up to the Saturday night dinner that makes for most of the conversation, though.

Stretching out into mid week are dozens of events hosted by law firms, lobbyists, banks, colleges and politicos. Beginning Thursday at coveted invitation-only events, like Christine Torretti’s reception at Club Macanudo, and running right up until the dinner, there are scores of culinary delights and a few spirits to imbibe as well.

Legal powerhouse Blank Rome

sponsors a pair of exceptional seminars Friday, as does former Society President Fred Anton, chairman of the Pennsylvania Manufacturers Association, whose Saturday seminar and luncheon at the fabled Metropolitan Club is considered by many to be the crown jewel of the star-studded weekend.

There are always a few kill joys who find something to carp about, most often over the money spent on all these wonderful parties outside of the state. Generally those critiques are punctuated with “Bah, Humbug.”

The Pennsylvania Society weekend is a truly bi-partisan event. Those who break lances in Harrisburg break bread in New York. Raised voices are replaced by raised glasses as participants celebrate being Pennsylvanians and all that unites us.

At a time when civility in our public discourse is sadly lacking, it is wonderful to witness the good feeling of celebrating the common bonds of friendship of which the Society’s founders spoke at the turn of the last century.

Ronald Reagan and Tip O’Neill chuckled together about “pistols at dawn and cigars at dusk.” Bill Clinton and Newt Gingrich overcame differences to meld solutions.

More and more Pennsylvanians are realizing that much more can be done if we can set aside the polarization that has too often marked our debate.

As the trek to New York begins, let’s say a quiet prayer that some of the camaraderie so evident in the corridors of the Big Apple’s finest hotels and clubs this weekend will be on display in the halls of Harrisburg and Washington and across our great state when we return.

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6 DECEMBER 2012

REGIONSBUSINESS.COM

POLITICS

Corbett Stands by Tax Pledge As ‘Fiscal Cliff’ Approaches

Eric Boehm is bureau chief for PA Independent, an online political news organization.

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

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

HARRISBURG – At a time when Republicans across the nation are looking for ways to wiggle out of the so-called “no tax pledge,” Pennsylvania Gov. Tom Corbett says he will stand-by it, even as he tries to find a few loopholes to wiggle through.

For the uninitiated, the pledge is properly known as the Taxpayer Protection Pledge, and it is the brainchild of conservative anti-tax crusader Grover Norquist, president of Americans for Tax Reform.

Though it has been around since 1986, the pledge rose to national prominence in 2010 when Republicans around the country signed on in order to gin up populist support during the tea party wave that swept the GOP to victory in several gubernatorial races — including in Pennsylvania — and gave Republicans control of the U.S. House of Representatives.

Gov. Corbett signed the no-tax pledge during the 2010 gubernatorial primary after his opponent did the same. The pledge ended up becoming a central part of his successful campaign for governor that fall, and has remained central to his policy decisions during his first two years in office.

But since this year’s election, an interesting subplot in the nation’s capital has been how lawmakers who signed the pledge are handling the obligation to oppose tax increases as the nation hurdles towards the so-called “fiscal cliff.”

Some Republican congressmen in recent days have stated publicly their willingness to break the pledge as the fiscal cliff approaches in order to make a deal with Democrats that would include federal spending cuts and some tax increases.

In a wide-ranging interview with reporters at the state Capitol on Thursday, Gov. Corbett said he keeps the promises he makes.

“I made a pledge; I’m going to

keep the pledge,” Gov. Corbett told a gathering of reporters.

Democrats have their own words for the pledge — they claim it makes elected officials stay beholden to a single man, Mr. Norquist, instead of to the best interest of the nation.

Regardless of the rhetoric, the fact is that Gov. Corbett has been committed to a mantra of “no new taxes” during his first two years — including his first budget, which closed a $4 billion deficit and was the first budget in more than 40 years to actually reduce the state’s overall spending total, though the end of the federal stimulus program was a key part of that achievement.

He’s also been adept at finding little loopholes in the pledge — like the new “fee” on natural gas drilling companies in the state that Gov. Corbett’s team continues to assert is not a tax — while keeping true to the spirit of the pledge and opposing broad-based tax increases in Pennsylvania’s residents and businesses.

He may need to find another loophole to pay for a massive dose of transportation infrastructure repairs within the next year.

Gov. Corbett seems to be weighing an uncapping of one part of the state’s two-fold gasoline tax.

He told reporters last week that such a move would not count as raising taxes since he would only be removing an “artificial cap” on an existing tax.

Voters will have to decide how they feel about that one, if and when the proposal makes it to the budgetary table.

But if Gov. Corbett can navigate what figures to be the most difficult budget since he took office in 2011 without raising taxes — particularly at a time when it appears all Americans will be stuck with higher taxes at the national level — he deserves a standing ovation.

ECONOMY

President Visits Hatfield Plant OUR LONGTERM GOAL IS TO GET OUR LONG-TERM DEFICIT UNDER CONTROL IN A WAY THAT IS BALANCED AND FAIR.’ POLITICSPA.COM

President Barack Obama visited The Rodon Group Friday to promote his plan to avoid the so-called “fiscal cliff.” The Montgomery County company manufactures K’NEX and Tinkertoy parts, among others.

The president chose the manufacturer as an apt setting for his advocacy of the middle class and domestic growth in an effort to strike a balance between deficit reduction and economic stimulus measures — especially in the holiday season.

“These guys are Santa’s extra elves here,” President Obama

joked. “They manufacture almost 3,000 K’NEX pieces every minute. And every box that ends up on store shelves in 30 countries is stamped ‘Made in America.’”

The remarks were in concert with President Obama’s overall strategy of winning support from middle class families for his proposal for higher tax rates only on incomes above $250,000.

President Obama called upon both parties to work across the aisle for an agreement.

— PoliticsPA.com

Tax Pledge: Where They Stand Sen. Pat Toomey: “If we’re gonna have to have some kind of revenue increase, which this president seems determined to do, I would hope we could at least do it in a way that does the least economic harm. That means lower marginal rates, reform the tax code, offset the lost revenue by reducing deductions, write-offs and loopholes.” -CNN.COM Rep. Jim Gerlach (Chester): “I have supported a common sense approach to averting the so-called fiscal cliff that would end decades of reckless Washington spending and would generate additional revenue by modernizing and simplifying a tax code that is stifling growth and discouraging job creation. - POLITICSPA.COM

Rep. Pat Meehan (Delaware): “The most important pledge is the one I make to my constituents when I’m sworn in. I’m going to do the very best I can to avoid the fiscal cliff and keep our economy strong.”

Rep. Mike Fitzpatrick (Bucks) and Rep. Joe Pitts (Chester) didn’t respond to a request for comment.

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6 DECEMBER 2012

REGIONSBUSINESS.COM

New Year, New Enthusiasm

Ringing in 2013

marks more than just the end of a frenzied election year and the birth of Gangnam Style. It’s also the unofficial five year anniversary of the 2008 financial crisis that sparked the Great Recession we’ve all been living in.

While the effects of the recession are still palpable and the debate ensues as to how to continue the recovery, there are tangible reasons to be optimistic about the economy in our region. Auto sales are up, industrial property has been repurposed, and we’ve even started seed funds to attract technology start ups.

To get a better feel for what’s been happening around the city, we took a look at six economic sectors in our region to see what they’re looking forward to in 2013. Despite their diversity, there is a common sensibility throughout each one that it’s not about endgames, the latest data points, or even the end of the year. It’s about innovation, connectivity, and tapping into Philadelphia’s best renewable resource: its people and their passion to work things out.

Of course there are fiscal cliffs and insurance reform and a host of unforeseen glitches and situations we’re bound to get wrapped up in. But for now, things are looking better, and at the very least, more interesting, than they have in a while.

Text By Karen Fratti

Illustrations by Don Lee

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6 DECEMBER 2012

REGIONSBUSINESS.COM

Manufacturing: Repurposing, Refining The Philadelphia region continues to focus and innovate in the manufacturing sectors. The bad news is that Philadelphia isn’t competitive in all of them. The good news is that we are competitive in the ones that matter in terms of job growth and innovation in the energy sector. If you feel that nostalgia for the manufacturing days of yore, you will be in for a treat this year.

It can be discouraging to look at the numbers. The region is still at a below average share of employment in the manufacturing sector we come in at around 6% compared to the national 9%. But things are slowly turning around. Phil Hopkins, Director of Research for Select Greater Philadelphia, notes that manufacturing employment growth was 0.5% higher in September than it was a year ago. It doesn’t sound like much, but it’s a positive. It might be half a percentage, but it’s meaningful when you put it into the context of all the turmoil the industry has seen across the state this year.

“This happened in spite of the continuing consolidation of the pharmaceutical manufacturing sector, the temporary loss of jobs at the idled refineries, and cutbacks at large, regional defense contractors, like Lockheed Martin,” he said.

The region remains competitive in the chemical, including bio-tech and pharmaceuticals, transportation equipment, machinery, and fabricated materials sectors. The next big thing for 2013 is keeping an eye on Marcellus Shale and the re-purposed refineries like Marcus Hook. The fact that the three refineries were saved and are slated for re-purposing is a “huge

Technology: Starting Up Did you know that there are 25 tech companies in Old City?

Whether it’s hosting the cloud or hosting new technology ventures, the Philadelphia region keeps growing its technology sector.

The region is also the home of large firms that use IT to produce other types of goods and services. That’s how local businessmen like Ted Swanson, CEO of IT Solutions, have made their mark.

Mr. Swanson laughs when you ask him about his company’s growth, “I can’t remember when I wasn’t hiring. Maybe in 2009 - but I think I hired people then, too,” he said. Swanson’s firm provides basic IT servicing, cloud hosting, and software development for other large firms.

His focus for the coming year is on the city’s ability to attract and help incubate the sorts of businesses that will need his services.

Philadelphia has the labor force, the low rents, and the fifth-largest regional market, but a fully developed venture capitalist culture and tangible incentives to start a business - one that would serve the secondary economy that Swanson operates in - are still lacking.

Mayor Nutter’s office has been addressing that issue with the city’s tax system and new programs meant to keep companies in town.

The Keystone Innovative Zone Tax (KIZ) is available at the Navy Yard, University City, and parts of Old City, and businesses in the zones are eligible for up to $100,000 in tax credit.

“More importantly, this program allows companies to sell the tax credit which provides a tradable component crucial to young companies that do not yet have a tax liability,” said Alan Greenberger, Deputy Mayor for Economic Development and Director of Commerce.

The recently launched Start Up PHL program is an exciting initiative also aimed at attracting and keeping young companies. The Seed Fund is a proposal for a public/private venture fund to make

advantage,” according to Mr. Hopkins. Not only does it mean getting people back to work, it means that Pennsylvania will gain a competitive edge in growing new business as we tap into the stock of competitively priced natural gas.

In light of this repurposing, Hopkins adds that the primary need right now is for highly skilled manufacturing workers. Philadelphia already seems poised to offer them up with the announcement in November that the Community College of Philadelphia is going to start a training program specifically for Marcellus Shale jobs. The Shale Coalition has already ponied up $15,000 in scholarships to support CCP’s program.

As we start to realize the benefits of Marcellus Shale, the refineries begin operating again, and the restructuring of pharmaceutical manufacturing slows down, Mr. Hopkins predicts a 1 percent increase in employment by next year.

Alan Greenberger, Deputy Mayor for Economic Development and Director of Commerce, agrees. “We’re exploring how we can best position Philadelphia to capture the success of a resurgent manufacturing sector.”

His focus lies within the city, including the updates to the Navy Yard and the 2012 work on the Lower Schuylkill Master Plan, which redeveloped 3,700 acres of industrial property.

“Both of these plans will drive investments that will usher in the new era of manufacturing,” he said.

“Beyond traditional manufacturing like apparel or food processing, this planning touches on tech and health care because it focuses on advanced manufacturing, especially biopharmaceuticals, energy, and medical devices.”

seed-stage investments in Philadelphia-based tech startups. The Philadelphia Industrial Development Corporation (PIDC) will seed the fund with $3 million to be matched and managed by a private investment firm that will make investments on behalf of the fund.

The counterpart Call for Ideas “will fund up to a total of $500,000 to folks with smart ideas to grow the entrepreneurial community in Philadelphia,” Mr. Greenberger explains.

Phil Hopkins, of Select Greater Philadelphia, thinks the program is good start.

“I wish it had more money,” he notes. “The challenge for the region in realizing the potential economic benefits from growth in the tech sector is to achieve scale. While it is essential to encourage the formation of tech startups, or any startups, over the long-term they need to achieve size and scale to really contribute to the regional economy, especially in terms of generating new jobs. The availability of capital is crucial in helping startups achieve scale. Research shows that most new jobs are created by new companies, not necessarily small ones.”

Mr. Swanson agrees. “What we want is small businesses to feel comfortable making capital investments,” he adds, “businesses with a need and a budget for IT.” Mr. Greenberger elaborates that the changing tax system and the Start UP PHL projects are vital to growing the technology sector.

“These changes create parity between the City and our neighbors, and stop the disincentive to locating here. It is about not taxing [venture capitalist] corporate structure in a way that is detrimental to their operations.”

So what’s he looking forward to in 2013?

“I’m looking forward to seeing what ideas bubble up through the Startup PHL Call for Ideas program. There are a lot of smart people on the ground, who see the gaps in the entrepreneur community that government can’t see.”

Yea, Philadelphians are good at that sort of thing.

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6 DECEMBER 2012

REGIONSBUSINESS.COM

Tourism: With Love, and More Marketing Whether it’s spotting a With Love, Philadelphia, XOXO billboard in Manhattan, foodie tourists in Old City, or out-of-state art fans at the Barnes Foundation, the tourism sector is the reason there’s a swing in Philadelphia’s step these days.

The Greater Philadelphia Tourism Marketing Corporation (GPTMC) reports that total overnight visitation has grown 66 percent since 1997, which is six times faster than the national average. The total economic impact is back to pre-recession levels.

It hasn’t been an easy ride. With state and citywide budget cuts, the GPTMC worked with just $128,000 from Harrisburg and hotel tax revenue this past year to continue the successful With Love campaign and launch programs like With Art, a comprehensive guide to the city’s visual arts attractions where users can curate their experience online. The With Art program is heading into its second year, and has generated up to $3 million in partnerships with the likes of the William Penn Foundation, PECO and PNC Bank, among others.

While there are challenges to generating new and return visitors, CEO Meryl Levitz and her team are more an economic development committee than a marketing one. For every dollar spent on a With Love billboard, they generate $100 in daily visitor spending and $11 in state and local taxes. In 2011, there were 38 million visitors to the city, exceeding the national benchmark. The tourism sector alone supported 86,489 jobs in the region and boasts around $300 million in tax revenue at both the state and municipal level. Each. That’s a deficit reducer.

The best thing about all these numbers, according to Ms. Levitz, is the “unintentional by-product of Philadelphians feeling better” about their city. By bringing visitors in and flaunting all we have to offer, every Philadelphian becomes an ambassador for the city.

Expect to see a revamped With Love campaign and an

Healthcare: Holding On

R. KENNEDY FOR GPTMC

expanded Philly Homegrown program, which highlights local food resources in the region.

With a combined $600,000 from the Governor’s budget and coverage in national media like GQ and Bon Appetit spotlighting the arts, the new Barnes Foundation, and the dining and nightlife scene, 2013 means even more occupied hotel rooms. Ms. Levitz continues looking forward.

“There are a number of variables to mark success,” she said, “but there are no endpoints. Each success is just another tool to turn visitors into fans and ambassadors for the city.”

It looks like those ambassadors are starting to take road-trips down I-95. Visit Bucks County has turned the sleepy farmland around Sesame Place into a major destination. In 2012, their RevPAR (revenue per avail-

Everyone is waiting with bated breath to see how the new healthcare reforms will play out in Pennsylvania. The uncertainty surrounding the healthcare industry is palpable throughout the area. Although healthcare and life sciences makes up just under 16% of the total employment in the region, the Philadelphia metro area is still the fifth largest market in the sector nationally, nestled between the New York City and Houston markets.

It’s hard to not feel at the center of the healthcare industry when you’re in town.

US News and World Report has ranked 21 of our 93 area hospitals nationally, the top two with over ten nationally ranked specialties.

The healthcare sector sprawls within the city and throughout the region - pharmaceutical companies, bio-technology manufacturers, insurance firms.

The healthcare industry grows at a notoriously slow and steady pace. Employment grew by 1.7% in 2012. “Since the region has a large

able room) was up 3 percent, and total revenues were up 4 percent. And there are exciting, crowd drawing events in the works. First up is the Fifth Annual Bucks County Bridal Show, a perennial success.

Later this spring, the newly renovated Washington’s Crossing Historical Park Visitor’s Center will open with a 247-seat auditorium, advanced artifact storage, new galleries, and multi-purpose meeting rooms. And some of those Philly art geeks will be coming into town to celebrate the long awaited re-opening of the Bucks County Playhouse in New Hope and the 25th anniversary of the James A. Michener Museum, hosting a Jerry Uelsmann photography exhibit all winter.

With partnerships throughout the region, Visit Bucks County and the GPTMC keep creating and sustaining all the good reasons to have your friends come visit.

and very mature healthcare sector, I would expect it to continue to grow steadily,” says Phil Hopkins, Director of Research for Select Greater Philadelphia.

The Deputy Mayor for Economic Development and the Director of Commerce, Alan Greenberger, agrees, “The good news is that healthcare in Philadelphia is growing at a faster rate than growth trends nationally.”

This growth is expected to remain steady, even as the reforms roll out. Hopkins is nervous about employment growth in the sector, “Now that implementation of the Affordable Care Act will occur, the uncertainty surrounding the health care sector will disappear,” he says. “This should help the healthcare sector, although continuing pressure to control the growth rate in health care costs will constrain employment growth.”

Those in the Mayor’s office are more optimistic. With the repurposing of property along the Schuylkll, Greenberger expects the manufacturing aspects of the healthcare sector, will be repurposed in their own right. Philly specializes

in the advanced manufacturing the healthcare industry depends on, things like bio-pharmaceuticals, energy, and medical equipment.

New construction is popping up, too. The nationally acclaimed Children’s Hospital of Philadelphia is embarking on a 20 year construction plan. It’s a three - phase expansion that at full build, will be an additional 1.5 million square feet of research space on unused waterfront along the east edge of the Schuylkll river. “The project is a tremendous opportunity for the City that will bring jobs and further cement Philadelphia’s presence in the Life Sciences,” says Greenberger.

So, whether it’s building up or working on new legislation, Philly is breaking new ground. The state’s health insurance exchange is set to begin business in October of 2013. The situation on the state level is still uncertain, and the administration’s lack of concrete answers continues to plague small businesses and healthcare providers. If anything, it will be interesting to watch.

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Education: Innovation, Outreach Philadelphia is many things. Luckily, one of those things happens to be a great college town.

From nationally ranked fine arts programs, Ivy League business schools, innovative medical programs and all around great universities, we have a little bit of everything.

Hosting so many great schools means big things in terms of outreach, research, and urban planning within the city walls; it also means we flood the region with a workforce for burgeoning industries.

Economists and area experts like Alan Greenberger, Deputy Mayor for Economic Development and Director of Commerce, admit that education is the only sector in the region that is growing just on par with the national average instead of above it. But a walk through University City would make you think differently. It’s here that Drexel University is turning innovation and outreach into more than just buzzwords.

They’ve just opened the URBN Center to house the Antoinette Westphal College of Media Arts & Design and the ExCITe center, “an open work area and showcase for multi-disciplinary projects and activities, aiming to combine science, technology, engineering, arts and math in an environment that encourages collaborative exploration and innovation.”

The center is the brainchild of collaboration among the Westphal College of Media Arts & Design, the College of Engineering, and the iSchool-College of Information Science and Technology. The center is a key point in the University’s President John Fry’s and city partners’ plan for an “Innovation Neighborhood,” in West Philadelphia.

Another key element to that plan is the recent announcement of the Dana and David Dorsife Center for Neighborhood Partnerships. The center, funded with a $10 million gift, will be located on a 1.3 acre site at Spring Garden and 35th

Auto: Healing, Rebounding It might seem naive and maybe premature to get overly excited about the economy, but local auto dealers are finally feeling some relief.

“We’re starting to see real movement.

Between the credit crisis and the economy as a whole - it had a severe impact on us.

But we continue to heal,” says Kevin Mazzucola, the Executive Director of the Automobile Dealership Association of Greater Philadelphia.

You can fight about the validity of trickle down economics, but in the Philadelphia auto retail sector, the fourth largest in the nation , you get a sense of how it’s supposed to work. The economy stabilizes, credit gets better. People start to feel secure enough to buy a car. Local dealerships, who employ

DESIREE N. WILLIAMS

local residents, start to flourish. Manufacturers start to make more cars. The cycle repeats.

“Even the money generated from the sales tax,” says Mr. Mazzucola, “makes a major impact.”

In 2009, the darkest period of the recession, sales of cars in the U.S. was down to 10.4 million units from 16 million in 2007.

This past year, sales for 2012 are projected to be back up to 14.2 million. In the Greater Philadelphia region, 300,000 new cars were sold in 2011, and they are expecting a 7-8% increase in the 2012 numbers. The Greater Philadelphia market continues to expand, grabbing the attention of manufacturers.

Those manufactures have responded to the market. Michael Smythe, of Land Rover of Willow Grove, is looking forward

Streets and is slated to open in 2014. For 2013, the university is looking forward to the fall opening of Chestnut Square.

The $97.6 million development by American Campus Communities, will “transform” Chestnut Street between 32nd and 33rd Streets. It’s being designed by Robert A.M. Stern Architects and will feature 361,200 square-feet of mixed-use student housing and retail space.

A recent study by EConsult showed that Drexel’s impact in Philadelphia is enormous. Drexel is responsible for 17,600 jobs in Philadelphia; 15,000 from direct spending earning $566 million peryear, 250 jobs from capital investment earning $10 million per year and 2,350 from visitor spending earning $43 million per year.

This means 27,400 jobs for Pennsylvanians, a number well beyond the 9,500 directly employed

by Drexel. Drexel officials swear they aren’t just construction jobs.

In addition to building up and out - they just opened a center in China this year in collaboration with the Shanghai Advanced Research Institute their interests are local. The university continues to expand security patrols around campus, “spruce up the city streets, provide financial incentives for employees to buy homes within key neighborhoods in West Philadelphia, add more housing for students, partner with neighborhood public schools and develop retail space on major streets to serve Drexel and its surrounding communities.”

Things are changing in North Philly, too. Temple University is welcoming new president Neil Theobold, hailing from Indiana, this winter. As of this year, Temple’s athletic teams now play in the Big East conference and they announced tuition freezes this summer in the wake of the student debt crisis.

If all the universities and colleges in the region start transforming at this pace, data crunchers and economists better get ready for some new growth numbers by next year. to that attention. LandRover is releasing a RangeRover Sport Edition and all wheel drive features across all models this year.

“We are bullish for 2013. We’ve positioned some great vehicles in the past year, and we continue to be challenged in ways we can develop valuable products and services to the market and differentiate ourselves,” he said. “We are eternally optimistic that 2013 will be a healthier year and the economy will continue to grow.”

This is in part due to the stabilization of the economy. And the fact that the average age of a vehicle in the region is 11 years old, the oldest average in the past few decades.

It’s time to replace your car.

And with what? Mr. Mazzucola says that people are looking for “well-made, fuel efficient vehicles. And they still like their bells and whistles. Nice leather, good tech-

nology.” Which means consumer demand from our region can help push innovation on the manufacturing side. Sales of pick-up trucks are booming in our area, too.

The ADAGP organizes and runs the Philadelphia Auto Show, coming this January 19-27th to the Philadelphia Convention Center. In addition to the local economic impact, it’s also a way to stimulate sales in the all important first quarter.

But it’s not just about car sales. Last year, ADAGP’s Black Tie Tailgate, an Auto Show kick-off event, was able to donate $401,038 of proceeds to the Children’s Hospital of Philadelphia. They plan to hold the event again this year and hope to raise even more this time. To get involved, check out www. caringforkids.com. And go check out a new sedan while you’re at it.

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6 DECEMBER 2012

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Region’s Business: The first thing we wanted to address is your agenda for 2013.

What do you see as the high priorities?

Gov. Corbett: I think continuing what we have been doing and that’s balancing the budget without increasing taxes on the people of Pennsylvania. And that will require us to continue to be fiscally conservative as we’ve been for the last two years.

But also while we’re doing that obviously we’ve been making pension reform known to the people of Pennsylvania, the problem with it.

We’re working with and talking to many different people about what potential solutions are. There is no single or silver bullet solution to it.

It’s going to take a lot of work, working with the legislature to get something passed to get some sort of pension relief. Because if you’ve been looking at the budget and looking at the documents and the press releases we sent out earlier this week, you’ll see that we’re increasing our pension contributions between $500 to $600 million each year so that by, I think it’s by 2016 or 2017 fiscal year, our pension contribution is going to be over $4 billion. So that can certainly have a great effect on the overall budget and that’s one of the reasons we’re taking a look at that.

In addition, I would still like to see us get out of the business of selling alcohol. I don’t think we have any business selling alcohol – at all. I don’t think we have any business manufacturing alcohol, which if you’ve been following it recently, you understand that we actually market some of our own wines, which I don’t think many people knew about. It was just recently released to the newspapers. And that’s going to be on the agenda for this year.

Obviously transportation will be a subject that will be touched upon this year and there are still some education items that were left over from the first two years that we’d like to see get finished.

RB: So Governor, that sounds like a pretty aggressive agenda. What’s the environment going to be for making all that happen?

Gov. Corbett: Well, it’s not going to be an easy environment, but if we don’t do something, especially with the pensions, what you’re going to see is that just about any increase in revenues, just about, are going to go to the pension increases.

If you look at this year’s fiscal budget, we increased it by $500 million to meet the obligations that we have to meet. And a lot of that was due to mistakes made in the past and the economic conditions since the stock market fell and in the meantime, we only had about another $50 million to $100 million in for other expenditures and increases.And you should know the cost of government continues to go up, the cost of living and the cost of contracts for employees and

GOVERNOR CORBETT’S

OUTLOOK FOR 2013 His approval rating is sagging and there’s (still) a Democrat in the White House. No matter, because in this Region’s Business exclusive, Governor Tom Corbett explains that he’s bringing an aggressive agenda to 2013, hoping to tackle the state’s pension crisis and get some answers on Obamacare.

everything else. It’s very hard to keep up.

Region’s Business: Governor, there was a quote the other day attributed to you that part of the issue with the pension deficit is that they have not been getting a good return on investment. Are there any plans to change investment strategies and what is the projected return you are budgeting?

Gov. Corbett: That was not the quote. What I said was, and I don’t know how they quoted it that way, what I said was that they expected rates of return that were more than just optimistic.

They shouldn’t have taken those rates of return in their planning and this was years ago.

Region’s Business: Got it.

Gov. Corbett: In addition, what I said was that there were the generous improvements to the members’ and retirees’ benefits during the course of the late ’90s and into the 2000s. At the same time, when they’re taking those expected rates of return, as you know, the investments were rather stagnant, in which case, they couldn’t expect those rates of return.

Additionally, in some cases, when we had money, they didn’t make any contributions to the pensions, thinking that things were fine and the stock market was moving along and they didn’t need to make a contribution to the pension. So the over optimistic assumptions on the investment returns, combined with the stock market going south, combined with the increase in benefits and so forth, all of that was like a perfect storm.

RB: Are there specific initiatives that you can speak to that are designed to drive business growth and demand in the state in the next year?

Gov. Corbett: I think as we have been doing in the past we will continue the phase out of the capital stock and franchise tax. I think it was supposed to have been done by 2009. It was suspended. We reinstituted it two years ago and it should be completed this coming fiscal year because we’re going to continue it.

That has certainly shown stimulation. The single sales factor that we did last year has a great deal to do with lowering the tax burden on businesses, as you well know. That should be helpful to business.

Bring regulatory reform, bringing unemployment compensation reform is going to have a great impact and, as you know, we refinanced the almost $4 billion debt that we owed the federal government for unemployment compensation reform, basically refinancing the mortgage, if you will, and have lowered our costs and saved, I don’t have the exact figure here, but about $150 million.

So what we’re trying to do is create the envi-

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ronment where businesses can grow here in Pennsylvania.

RB: We keep hearing that small businesses, new businesses, are going to be the drivers of the economy.

Is there anything in the works to encourage innovation, entrepreneurs in Pennsylvania?

Gov. Corbett: Well, we’re always encouraging that and one of the best ways you can do that is, for instance, as we did with the capital stock and franchise tax, if we don’t increase our personal income tax – because small business is taxed at the personal income tax level – we’ve not increased it and that has to be encouraging to the marketplace.

Our regulatory reform, trying to smooth it out, trying to bring common sense into that.

We do have various funds, for instance, The Ben Franklin, for people who are inventing or innovating various things in the science area, the high-tech area, the pharmaceutical area. You know, a lot of the big companies started out as small companies.

The energy tax credit that we have with the manufacturing resource tax credit, now that applies much more to big business, but it can have a downward effect that if you stimulate these companies to come here like major petrochemical companies, a lot of businesses will be supplying them, small businesses will be supplying them with goods and services.

And that’s what you’ve seen with the development of the Marcellus Shale industry across Pennsylvania. Now right now, we have added 105,00 new jobs in the private sector and a lot of that has been driven by Marcellus Shale.

And finally, the best-known small business is our agriculture, even though it’s not a small business; it’s the number one industry in Pennsylvania. And the fact that we eliminated the inheritance tax on the family farm, allowing those farms to stay in the family, to take that burden off of them, and allows them to grown. I think can be considered very helpful to small businesses.

RB: Governor, can you backtrack to the Marcellus Shale? There’s been a push from one side to see additional tax revenue generated from that. There’s also been pushback, saying that we don’t want to see that

WELL, WE DIDN’T TAX IT, WE PUT THE IMPACT FEE IN AND IN THE LAST YEAR, THAT IMPACT FEE HAS RETURNED $204 MILLION ...

IT’S ACTUALLY PRODUCED BETTER THAN A TAX.’ — GOV. CORBETT ON MARCELLUS SHALE

talk about the interstate system, state roads, possibility of expanding rail service in and out of Philadelphia, the ongoing issues with our airport, where does that fall on your to-do list for 2013?

Gov. Corbett: Well, you know, there's TFAC [the Transportaction Funding Advisory Commission] that’s been out just about a year. We've take some looks at it and we're going to have some programs that we're going to be able to announce probably after the first of the year for things that we'd like to see done when it comes to transportation infrastructure. Beyond that, I'm not going to go into it right now.

RB: But you’ll tell us first.

Gov. Corbett: OK (laughs).

restricted. Can you talk a little bit about how that battle is going?

Gov. Corbett: We just passed this year, in February, Act 13, which is Marcellus Shale legislation that had three parts. Number one, environmental regulations. We have the toughest environmental legislation when it comes to unconventional gas production. Number two had to do with zoning issues, and that’s what’s in front of the courts right now. And then number three is the environmental impact and, as you know, before that got going, people wanted to tax the Marcellus Shale.

It’s already taxed, as you know. The net income tax in Pennsylvania is the second-highest in the country. Those companies paid their corporate tax, they paid their sales and use tax and, in many cases, other taxes and their employees paid taxes.

So we’re trying to grow the business and not scare it away and make it friendlier here. We did impose an impact fee and back when the tax was being talked about, and you can go back and find quotes from Gov. Rendell, that if we tax it, we can raise $100 million.

Well, we didn’t tax it, we put the impact fee in and in the last year, that impact fee has returned $204 million, a little more than 70 percent of that goes directly to the counties and com-

munities effected by the natural gas, 30 percent comes back to Harrisburg and the various line items. It’s actually produced better than a tax.

RB: You mentioned the corporate tax burden being somewhat onerous in Pennsylvania. Any appetite for trying to take a whack at reforming that?

Gov. Corbett: I think there’s an appetite for that and if you talk to the chamber of commerce, I think they would tell you, in fact, I know they would tell you that this past session of the legislature was the best session businesses had in decades in getting things done.

We may have wanted to try to get some more done, but at the same time, we know we do have to have revenue, so we have to be careful how far we go along.

We still have some of our tax credits for education with the education income tax credit and the opportunity scholarship tax credit and one tax credit that is highly sought after is the film tax credit at $65 billion.

RB: Our focus, obviously, is business out here in Southeastern Pennsylvania, and something that’s really important to our businesses is infrastructure. There’s been a lot of

RB: What about, turning to everyone’s favorite subject, healthcare, anything on the exchange? Any direction on that yet? You announced you wanted some time on it, but are there any indicators?

Gov. Corbett: Well, first off, I think we all understand we need good healthcare, we need affordable healthcare.

But the key word there is affordable healthcare.

The program that has been proposed by the administration and passed by the Congress has us first looking to make a determination into if we want to create a state exchange, a joint exchange between the federal government and the state, or one that the federal government runs.

If you’re following the newspapers, I think two weeks ago, there was a deadline of November the 14th. The day before the deadline, after we repeatedly as governors, as Republican governors and myself as the governor of Pennsylvania, sent numerous letters asking for clarification and asking for explanation about what they were going to do.

And not getting an answer from HHS (Health and Human Services), the deadline was postponed, until next month. And then last week, we received a set of draft regulations.

That’s sort of like sending a set of draft blueprints for a building that you want us to build, without telling us what’s supposed to go in the building or without knowing what the building is supposed to look like. And if they’re drafts, they can always change.

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The costs have been estimated, for just building the exchanges, have been estimated between and $30 million and $100 million. We still haven’t received answers to the questions that we’ve asked and we’re waiting for the answers.

It’s not a political decision, it’s a business decision. In your situation, if you were making a business decision, you’d want as much information as you could get.

And if you can’t get that information, it simply causes you to say, “well, maybe we’ll pass on it right now and see what we can do down the road.”

I have not made a decision. I’m hopeful that we’ll get some answers in the next week or so before we reach that deadline and in time enough before that deadline so we can make a reasoned decision.

I HAVE TO COMMEND THE WHITE HOUSE ON ISSUES SUCH AS HELPING WITH THE REFINERIES DOWN IN THE SOUTHEAST. THERE YOU SAW A BIPARTISAN EFFORT....’

—GOV. CORBETT ON THE MARCUS HOOK OIL REFINERIES

RB: You mentioned the administration and after the election, you know that you have, again, a Democrat controlling the White House during the last two years of your first term. How do you see that relationship developing or not developing over the next year or so?

Gov. Corbett: The contact with the White House is sporadic. I have to commend the White House on issues such as helping with the refineries down in the southeast. There you saw a bipartisan effort between myself, the White House and Congressman [Bob] Brady, between Democrat and Republican, between labor and industry. So, I commend that.

At the same time, when they are asking us to build a program like healthcare, which is so huge, and so expensive, and not give us the guidelines that they want, which causes me to wonder if they even know what they want at this point in time, why are we rushing this?

Give us some guidelines. Let us make a reasoned and informed decision.

RB: We recently heard that the first person is lining up to race against you in 2014. Does that seem a little early …

Gov. Corbett: No, it’s about the right time for that. I mean, for the media, the next big race is the governor’s race.

I think there’s one statewide court race next year, and that’s about it. So this is normal. In fact, when I first started looking at it, it was 2009. I didn’t announce until September of 2009, but this is about the right time to do it.

RB: Speaking of courts, do you see any room on your agenda or need for judicial reform in Pennsylvania?

Gov. Corbett: Do we need judicial reform? If you’re asking me does that mean merit selection for appellate courts, if I saw some willingness from the legislature to go that way, I mean true willingness, I would not be opposed to it at all.

RB: You have plenty of background with the courts. What’s your sense for the stability and effectiveness of the court system in Pennsylvania?

Gov. Corbett: I’m not quite sure what that question means.

RB: That’s a good answer. The sense we get from business leaders here is that the court system can

be rather onerous as they try to get things done. Is there an appetite on anyone’s part to take a hard look at the way the courts operate?

Gov. Corbett: The first way you look at it is, how do you get your judges. And I know there have been discussions in the past with people who would like to see merit selection and appointments for the appellate courts. I’ve never heard anyone really want to do that with the common pleas court. But if you’re talking about reform of the individual judges, that falls under the court system itself and outsiders are not going to be able to direct the court. Judiciary guards its own reform of its judges if they need some sort of discipline or education or something like that. The other thing you could be talking about is tort reform. And we have seen some tort reform with the Fair Share Act. We’ll see what bills go into the hopper

come next year and see what we think we may or may not be able to make it to my desk.

RB: How close to being on the same page are you and the legislative leaders in Harrisburg for 2013?

Gov. Corbett: I think with the Republican side, we’re all on the same ballpark, same room. I’ll tell you the one thing I’ve learned is we all have a lot of different views and different perspectives, but look back at the last two years and you compare the General Assembly that just ended … and I can’t remember and I don’t know if you can, when a General Assembly has gotten more done across the board, particularly on behalf of business, than this General Assembly.

So they should be well-recognized and praised for the work that they got done.

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Q&A

6 DECEMBER 2012 REGIONSBUSINESS.COM

ROLAND WHARTON’S

HELPFUL HOLIDAY SEASON

He’s the concierge at Locust on the Park, which means his job description is long and varied. In a nutshell, he’s there to help.

What’s the elevator pitch on being a concierge at a condominum building?

Well, it’s not a glorified security guard. I check in a lot of packages, make sure they get where they’re supposed to go, call for cabs to the airport and point people in the right direction for shopping. It’s a lot of small things.

How long have you been doing this?

Ten years and seven months and I’ve enjoyed every minute of it. In all those years, I’ve never called out once. When I’ve been off, it’s always been scheduled.

What does the holidays mean for a concierge?

A lot more packages. Just this morning, UPS dropped off 36 and Fed Ex and the post office haven’t even gotten here yet. People just push buttons; it seems like no one goes out shopping anymore.

What’s the best part of your job?

Oh, helping people, definitely, the kids and the parents. You get close to them. The parents will ask their kids, “did you tell Roland that you’re going to the doctor? Did you show Roland your new shoes?” There was one time when I was around the corner and they couldn’t see me and I heard the child get upset and say, “where’s Roland? I want to see Roland.”

What’s the most common request from residents?

Cab service. I make sure that the cabs are here on time. I’ve never used but one cab service. I found the best one and that’s better for the tenant. I know the tenant’s going to get a clean, safe cab and get where they’re going on time. The dispatchers know me, so I can call and say, “hey, it’s Roland” and they’ll make sure the cab gets here on time.

Do you get a lot of stories on this job?

Well, people know I’m a plant person. We had one tenant leave and they brought me a plant and said, “take care of Herman.” They came back for a wedding and I brought a picture to show them. They were so surprised, because that plant got this big [laughs while spreading his arms far apart].

Then there was the time a tenant coudn’t find their mailbox key and she needed her mail. I told her I’d get her another key, but she said she was in kind of a hurry, could I go behind the wall and get into the mailbox that way.

I said, well, that’s a cement wall and I don’t think I’ll be able to go through that [Laughs].

Text & Photo By Region’s Business Staff

6 DECEMBER 2012

REGIONSBUSINESS.COM

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CHAMBER REPORT

PRESENTING COMPANIES

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Moola

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Via an app, customers can receive real time offers based on both their location and purchasing history. Moola currently partners with fast food and coffee chains, fashion chains and retail stores. The app is free for consumers (merchants pay a monthly fee).

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My Check Israel’s largest mobile payments company allows self-checkout in restaurants and convenience stores.

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PHILA-ISRAEL CHAMBER OF COMMERCE

PHILADELPHIA BAR ASSOCIATION

Israeli Companies Featured in Events

Bar Honors Justice, Ethics Chairman

The ninth annual Israel Conference, held Tuesday, gave 10 Israeli mobile technology companies their second shot this week at reaching area investors.

The conference, whose theme was “Global, Mobile and More,” was hosted at the Philadelphia Center of Architecture

by Greenberg Traurig.

Preceding the conference was Mobile Monday Mid-Atlantic’s final event of the year, which was held at The Hub at the Cira Centre from 5:30-8:30 p.m. Monday.

Companies had the opportunity to give elevator pitches, display their products and listen to a keynote address by Israeli tech executive and investor Amir Goldstein.

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Kathleen D. Wilkinson, partner in the law firm of Wilson Elser Moskowitz Edelman & Dicker LLP, and incoming chancellor of the 13,000-member Philadelphia Bar Association, delivered inaugural remarks at the Association’s Annual Meeting Luncheon December 4 in the Grand Ballroom of the Hyatt at The Bellevue, Broad and Walnut Streets.

Ms. Wilkinson is the 6th woman to serve as chancellor in the 210-year history of the Philadelphia Bar Association.

The Justice William J. Brennan Jr. Distinguished Castille Jurist Award was given to Pennsylvania Supreme Court Chief Justice Ronald D. Castille, and the PNC Achievement Award was presented to Richard C. Glazer, the first elected chair of the Philadelphia Board of Ethics.

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MIDJERSEY CHAMBER OF COMMERCE

Chamber Events Scheduled From 8 to 9:30 a.m.

December 11 the MidJersey Chamber of Commerce will host the latest installment of its free Chamber Breakfast Workshop Series at United Way in Lawrenceville, NJ. Richard Catalina, Jr. & Lionel Frank, Esq. will speak about Intellectual Property in a program that is complimentary for members and $35.00 for non-members.

The next day, the chamber will host “Cocktails & Connections” Evening Quarterly at the Regus in Hamilton, N.J. Admission to the festive holiday evening networking event costs $25 for members and $35 for non-members.

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6 DECEMBER 2012

REGIONSBUSINESS.COM

IDEAS

Philanthropic Giving Has Dual Benefits

A

Kevin Ryan, CPA, provides audit, tax and business consulting services with an emphasis in the not-forprofit industry.

Contact him at kryan@ 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.

re you feeling generous this holiday season?

Are you also looking for additional tax deductions?

Do you want to support an organization by giving AND receive a tax deduction while doing so?

Making a charitable contribution is a way to fulfill your philanthropic desires while reaping financial benefits.

While contributions are commonly in the form of cash, they can also be in the form of stocks, real estate, motor vehicles or other assets. You will need to itemize your tax deductions in order to receive any tax benefits. Contributions that are made and/or mailed by prior to year end will be deductible for your 2012 taxes. If you make a contribution by charging it to a credit card prior to year

end, it also counts as a deduction for 2012, regardless of when the credit card charge is paid.

Remember that it’s important to keep track of the receipt from the recipient organization identifying its name, as well as the date and amount of the contribution.

Additionally, the organization must be an IRS qualified organization. Political contributions are not tax deductible. To find out more about an organization’s Federal Tax Status and Filings, visit the IRS website and go to Exempt Organizations Select Check.

Do keep in mind that the IRS does impose limitations on large deductions. Religious organizations, schools, hospitals and many nonprofits are designated as “50% limit” organizations. This means that the total of your annual

MAKING A CHARITABLE CONTRIBUTION IS A WAY TO FULFILL YOUR PHILANTHROPIC DESIRES WHILE REAPING FINANCIAL BENEFITS.’ donations to these types of organizations is deductible if it doesn’t exceed 50% of your adjusted gross income (AGI) on your tax return.

For example, if you make a $30,000 charitable contribution and your AGI is $50,000, you would be able to deduct $25,000 this year and the remaining $5,000 in a future tax return.

Keep in mind that some charities,

such as veterans’ organizations and fraternal societies are known as 30% charities, meaning only 30% of your AGI can be deducted within a calendar year. However, if a limitation does apply, you won’t lose the benefits, they will simply be carried over to future tax returns for up to five years.

There are a number of other rules to consider when you make a contribution, especially if you donate property and seek a deduction. It’s best to check with your tax preparer when you discuss your year-end strategies.

Due to potential income tax rate increases, this year, more than any other in recent years, spend time determining the most beneficial year (2012 or 2013) to make the contribution.

6 DECEMBER 2012

REGIONSBUSINESS.COM

OPINION

35

Not A Moment To Lose For City

Rob Wonderling is the President and CEO of the Greater Philadelphia Chamber of Commerce.

For additional information, visit GPCC.com or send an email to rwondelring@ greaterphilachamber.com.

Philadelphia has a major opportunity to capture a much greater share of regional growth

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

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

As the New Year quickly approaches, your Greater Philadelphia Chamber of Commerce is actively working on numerous issues at the city, state and federal level that will help your business grow. Working in collaboration with diverse groups from throughout the region, our goal is to accelerate success for every entrepreneur, fast-growing company, and small and large businesses in the 11 county foot-print we call Greater Philadelphia.

Our 2013 agenda includes the following:

To date, the literacy program has impacted over 6,000 Pre-K and Kindergarten students with book collections, training for teachers, parent/caregiver workshops, and classroom visits. And this year alone, the Chamber helped place more than 1,100 young people in paid internships in the private sector. To date, more than 6,700 youths have participated in this program.

CITY GROWTH STRATEGY

With over 100 colleges and universities in our region, our higher education system continues to fuel the economy and develop a talented and highly skilled workforce. As Chair of the Governor’s Commission on Postsecondary Education, we fully support the recommendations of the Commission and the development of a robust postsecondary education system that meets workforce needs.

We believe now is the time to jump start our local economy by renewing the Administration’s commitment to reduce taxes on employers and employees.

While the nation’s unemployment rate is decreasing, Philadelphia’s hovers at an alarmingly high rate of 11 percent. The lack of jobs in the city requires more than one-third of residents in every neighborhood to commute to work in the suburbs.

Yet, right before our eyes the Greater Philadelphia region is transforming into a modern economy. From the revitalization of our refineries to the influx of technology-based entrepreneurs, creative and adaptive solutions are remaking the way the region does business.

Philadelphia has a major opportunity to capture a much greater share of regional growth as a result of this transformation, creating opportunities for residents at all educational and skill levels, but will succeed only if it changes tax policies to encourage 21st century business formation and job creation.

REFORM OF K-12 EDUCATION

The appointment of Dr. William Hite as School District superintendent marks an exciting turning point in our city’s history. The business community stands ready to continue its work in partnership with Gov. Corbett, Mayor Nutter, the School Reform Commission, Superintendent Hite, and our broader community to ensure that there is a bright future for every child in Philadelphia.

Recognizing that our region depends upon high-quality schools that prepare every student for success in the workplace or college, the Chamber has made a significant commitment over the last several years to the education and employment prospects of our youth by assisting the School District with resources, leadership and talent recruitment, and programing such as, our early childhood literacy initiative called Read to Me Early Literacy Program and our summer internship program for high school kids in Philadelphia.

FURTHER STRENGTHENING PA’S POSTSECONDARY EDUCATION SYSTEM

INVESTMENT IN INFRASTRUCTURE

A safe and efficient transportation network is critical to economic growth - it reduces travel time and increases reliability, thereby lowering costs and leading to greater economic productivity for businesses. Yet, Pennsylvania’s infrastructure is aging significantly due to decades of underinvestment.

As such, GPCC supports passage of a comprehensive intermodal transportation funding bill that includes adequate investment in highways, bridges, transit, ports and airports.

GOOD GOVERNMENT

We believe steps must be taken now to address Pennsylvania’s pension liability issues. Tragically, this unfunded liability takes much needed funding away from education and important social services. We look forward to working closely with the Governor and members of the General Assembly to pass meaningful pension reforms for SERS & PSERS, and Act 111 changes to aid local governments in maintaining fiscal

solvency.

SUPPORT FOR INNOVATION

The U.S. must structure our tax policies and rates to be competitive with world markets and continue to develop incentives for U.S. and foreign direct investment in all stages of technological development from research to commercialization, especially in Greater Philadelphia’s target industries like healthcare, energy, life sciences, and advanced manufacturing.

We advocate for policy changes that expand and make permanent the federal research and development (R&D) tax credit; create a research credit for startup companies; provide an incentive for the re-investment of foreign earnings into domestic R&D, technology commercialization, and early stage venture investments; as well as make permanent the suspension of capital gains tax for qualifying investments made in small businesses.

To increase our region’s access to a diverse pool of skilled talent and remain competitive, we must focus national and regional initiatives on improving STEM (science, technology, engineering and mathematics) education. As the education community continues to work hard to revamp the country’s STEM education system and produce more native scientists and engineers, U.S. visa policies force top-level talent from colleges and universities to return to their home countries. U.S. immigration policies should encourage the retention of top talent.

ACCESSIBILITY

The Philadelphia International Airport (PHL) is a critically important asset in the Greater Philadelphia region for business travel and to attract visitors. Last year, the airport served more than 30 million passengers with more than 600 daily departures to over 120 cities.

We will continue to support efforts to expand and improve airport infrastructure as well as additional flights to new global destinations.

If our region is to achieve its tremendous potential, we must act now on these key policy initiatives. There is not a moment to lose.

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6 DECEMBER 2012

REGIONSBUSINESS.COM

OPINION

Why Gov. Corbett Probably Won’t Win/Lose in 2014

P Politically Uncorrected™ is published by G. Terry Madonna (above) and Michael L. Young (below) twice monthly, and previous columns can be viewed at http://politics.fandm.edu.

ennsylvania governor Tom Corbett expresses himself clearly on the subject: he has “no plans to break” Pennsylvania’s vaunted “tradition” of reelecting incumbent governors to a second term. Translation, should one be needed: the governor is a candidate for reelection—and he plans to be reelected.

Others apparently are not so sure, notably the numerous wannabe Democratic opponents rumored or actually already running against him. They all sound pretty sure Governor Corbett’s destined for early retirement.

Someone has to be wrong here and if we wait until November 2014, we will discover who.

But for those of a less patient bent, we posit the compelling arguments you will hear over the next two years: 1) why Tom Corbett will invariably be defeated for reelection and 2) the equally persuasive reasons why he invariably will win reelection.

Why Corbett Probably Cannot Win

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

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

· Unpopularity - Corbett enters the race as the weakest incumbent for reelection in modern times. His positive job approval rating recently broke above 40 % (barely), thanks to good marks for his handling of Hurricane Sandy’s relief efforts. More typically, he has been receiving approval ratings in the mid 30’s, a polling score rarely seen except among the most unpopular (and endangered) of incumbents. · Controversial Decisions – Much of Corbett’s unpopularity stems from his controversial budget cuts, especially to educational programs as well as the ongoing debate over how he handled the Sandusky sex abuse case.

The bad news, however, is his low performance standings will be hard to reverse amid continuity fiscal austerity. Indeed, further unpopular decisions are likely in upcoming budget cycles as urgent challenges in pension reform, infrastructure development and social programs continue. · Ideological bent – Corbett remains an ideological warrior committed to less government, alternatives to public education and no new taxes. Inconveniently for him, Pennsylvania remains a state not comfort-

able with political ideologues, either on the right or left. Corbett’s hard opposition to tax increases, for example, has painted him into a corner in a state increasingly desperate to find new revenues. · Political Skills – While a very successful attorney general, Corbett’s tenure in the governor’s office has revealed a paucity of those political skills usually found in gubernatorial incumbents. Some blame his political leadership for the Republican Party’s poor statewide showing in November’s election. Worse perhaps, he has failed to move virtually any of his major agenda, despite having large majorities of his own party in the state legislature. Relatedly, he has failed to sell most of his proposals to voters and at times seemed little interested in doing so.

Why Corbett Probably Cannot Lose · Yes, But – Corbett’s problems are seriously exaggerated. Yes, he has encountered some political headwinds as have most incumbent governors combatting economic hard times. Moreover, as an incumbent, he still commands impressive organizational, financial and political resources supporting his reelection. And while his polls have been underwhelming through most of his tenure, they are showing modest improvement as he enters his third year in office. For Corbett, the worst is over. · We Have Seen This Movie Before – Corbett is not the first incumbent to look like a road kill early in his first term. In the 1990’s, Republican Tom Ridge looked like a goner into his second year in office. By the spring of 1996, Ridge’s job performance dropped into the mid 40’s. Ten years later, Democrat Ed Rendell reprised Ridge’s problems. In February of 2006, his job per-

formance was just a nudge above 40%. Yet both won easily: Ridge by 26 points and Rendell by 21 points. · Somebody beats nobody every time – It’s a hoary, old political axiom: you can’t beat somebody with nobody. Right now, Corbett, his problems notwithstanding, is a known quantity running against a field of relative unknowns. Only one of Corbett’s putative opponents has run and won a statewide general election. None approach Corbett’s statewide name recognition. Historically, this is a familiar pattern. With one possible exception, the out party has not produced a viable gubernatorial opponent since 1970. · The Six Year Itch – It’s almost never good to be a candidate from the president’s party in the president’s sixth year in office.

Known as the six year itch, the president’s party in that sixth year almost always courts electoral disaster – losing seats in Congress, governorships and state legislatures. In 2014, it is the Democrats doing the scratching, making it doubly tough for any Democrat to take on and beat an incumbent. In addition to this powerful trend, Pennsylvanians tend to reelect governors from the party out of power in Washington.

Barring an actual tie on Election Day, these diametrically opposed arguments both can’t be correct. Corbett is going to win reelection or he isn’t. But it may matter less what either Corbett or his opponents do – and more what the economy does or does not. The only incumbent governor in modern times to almost lose – Dick Thornburgh in 1982 – was the near victim of what was then the worst economy since World War II. Conversely, those incumbent governors experiencing easy reelections all benefited from running in a year in which the economy was strong or on the mend.

Almost inevitably, Corbett’s fate is hostage to what happens in the economy during the next two years.

6 DECEMBER 2012

REGIONSBUSINESS.COM

OPINION

37

Political Inaction Can Only Hinder Region’s Growth

D

espite an economy moving ahead slowly in fits and starts and despite the continued gridlock in Washington, the outlook for 2013 is bathed in optimism in the Philadelphia region.

The tourism industry continues to thrive in the city and the suburbs, despite dwindling resources. The manufacturing sector continues to reorganize and, at the same time, show signs of modest strengthening. As 2012 heads toward the finish line, car dealers see steady improvement in sales, leading them to believe 2013 will get out of the gates quickly.

Our universities continue to thrive, infusing the city with redevelopment opportunities and enlarging a deep talent pool.

With a national economy often driven more by emotion than cold, hard facts, optimism can be a useful tool, maybe the most useful tool. It cannot, however, be the only tool.

Washington spent most of 2012 in a holding pattern as both parties waited to see who would control the White House after November. Now that we have that answer, as well as knowing that there will be pretty much a status quo in the House and Senate, it’s time for lawmakers to ease up on the partisan bickering long enough to get down to the details of implementing healthcare

reform and hammering out the details of tax rates and spending cuts.

Certainly, our state lawmakers are anxious for some information, as the vagaries surrounding healthcare reform continue to stymie them. Meanwhile, Gov. Tom Corbett, saddled with low approval ratings, continues to tout an aggressive agenda that will become increasingly difficult to achieve as Democrats begin to line up for a shot at thwarting his 2014 re-election bid.

Inaction in either Harrisburg or Washington may prove the greatest threats to optimism for 2013.

Just the domino effect of implementing healthcare reform could be enough to derail the fragile momentum of the economic recovery. In the Philadelphia region, about 16% of the jobs are tied up in healthcare and life sciences. That entire sector is holding its breath, waiting for Harrisburg to make important choices about the direction it will take. For its part, Harrisburg is waiting for Washington to provide enough actionable details to make an informed decision.

The Philadelphia region is poised to make 2013 something special across multiple economic sectors. It doesn’t need much from Harrisburg or Washington.

In fact, Philadelphia simply needs them to get out of the way.

REGION’S BUSINESS A JOURNAL OF BUSINESS AND POLITICS © COPYRIGHT 2012 INDEPENDENCE MEDIA 600 GERMANTOWN PIKE, SUITE 400 PLYMOUTH MEETING, PA 19462 610.940.1656 | WWW.REGIONSBUSINESS.COM

COMMENTARY FROM ACROSS THE WEB

GOP remains inside a bubble The rubbish that House Speaker John Boehner and other congressional Republicans keep dishing out about the federal budget shows the multimedia “bubble” that envelops the GOP and its mouthpieces is pretty durable. Even after Mitt Romney’s loss at the hands of President Obama that “shocked” both the candidate and operators like Karl Rove, the “bubble” continues to blur their judgment even though a few them are jumping ship.

JOSEPH A. PALERMO, THE HUFFINGTON POST 4 DECEMBER 2012

Pa. lawmakers turned prisoners Congratulations, Pennsylvania.

It seems we broke a record this week.

Thanks to former Sen. Robert

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

Mellow, the commonwealth now has eight — that’s right eight — former state legislators in prison on corruption convictions.

Observers believe that scandalous total is an all-time high for the Keystone State.

(We have gotta now be a in league with New York and Illinois.).

THE PATRIOT-NEWS EDITORIAL, 1 DECEMBER 2012

@annebuchanan Local radio reporter John Ostapkovich of beloved station @KYW reports that 95% of Philadelphians still listen to radio once a week #prsaphl 4 DECEMBER 2012

Bourdain’s visit was just a visit Okay, so last night was the debut airing of Anthony Bourdain‘s 36-hour stay in Philadelphia on The Layover.

All in all, it was your standard Layover episode, but it was

nice to see Bourdain eat his words about the city and obviously have a great time. But, with local outlets freaking out over his trip here to film and tracking his every move like they were NORAD and he was Santa Claus, the show was … well … just a show.

PHILEBRITY.COM 4 DECEMBER 2012

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.

ho ed

ho dy e

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29 NOVEMBER 2012

REGIONSBUSINESS.COM

BY THE NUMBERS

4

$7,500,000,000,000

Philadelphia’s ranking in Lonely Planet’s Top U.S. Destination rankings. The travel website wrote: “Forget the cheesesteaks and tri-corner hat, Philadelphia is becoming known as an art capital.”

Amount of revenue generated annually by U.S. small businesses.

$514.9M Amount of property tax revenue generated in the city to be used for city government in 2013.

$637.2M Amount of property tax revenue generated in the city to be used for the School District of Philadelphia in 2013.

$729

Property tax per resident in Philadelphia in 2011.

$2,213

Property tax per resident in Boston in 2011.

$2,275

Property tax per resident in Hartford, Conn. in 2011.

40,000

Number of vacant lots in Philadelphia.

17,000

Number of vacant lots in Philadelphia that are tax delinquent.

SOURCE: U.S. SMALL BUSINESS ADMINISTRATION

500

Maximum employees before a business is no longer considered a small business.

99.7%

Percentage of American businesses considered small businesses.

$39,000,000 Salary to be paid former Phillies centerfielder Shane Victorino under the terms of his new, three-year contract with the Boston Red Sox.

$80,000

Average investment by an owner in a new business.

75%

Percentage of small businesses that don’t survive 15 years.

59%

42%

Percent of Philadelphia homes that were owner-occupied in 2000.

Percentage of city revenue generated by the wage and net profits tax.

54%

7%

Percent of Philadelphia homes that were owner-occupied in 2010. The overall U.S. percentage in urban areas is 65%.

Percentage of city revenue generated by the sales tax.

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