Region's Business 17 January 2013

MONTCO’S SHAPIRO BUILDS CONSENSUS LOTTERY PRIVATIZATION MOVES AHEAD

YEAR OF THE INNOVATOR: ADVICE, SUCCESS STORIES, RESOURCES

REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

CAN A REPUBLICAN WIN

CITY HALL?

It’s been six decades since Philadelphia had a Republican mayor. While that’s not likely to change, there are signs it’s not out of the question.

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JANUARY 17, 2013

17 JANUARY 2013

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CONTENTS

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3

Can a Republican win City Hall?

It’s been six decades since Republicans held the mayor’s office. While that doesn’t seem likely to change, some are saying it’s not impossible.

!

23 Will Nutter

finish his final term?

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He’s been adamant that he’ll finish out his term as mayor, but some say that isn’t likely. !

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Five who could be Philly's next mayor !

Look for familiar faces to lead the field.

SPECIAL REPORT

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Year of the innovator is underway After last week’s cover story anointing 2013 the Year of the Innovator in Philadelphia, we roll out the first of our regular installment of success stories, advice, resources, information and news about, by and for our region’s innovators. !

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.

LIZ PEEK ON FOXNEWS.COM

Josh Shapiro’s pragmatic politics ! The Montgomery County commissioner continues to push an agenda that doesn’t include higher taxes and focuses on less government spending. Did we mention that he’s a Democrat?

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Connecting University City ! Drexel looks to rail yards to connect to Center City.

PRESIDENT AND PUBLISHER James D. McDonald

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EDITORIAL DIRECTOR Karl M. Smith ASSOCIATE EDITOR Terrence Casey CONTENT TEAM Brandon Baker, Victoria Marchiony CONTRIBUTORS Elissa Vallano, Don Lee ADVERTISING DIRECTOR Larry Smallacombe DIRECTOR OF BUSINESS DEVELOPMENT Jim Bauer

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17 JANUARY 2013

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EDITOR’S DESK

Cue Death Knell for Our Two-Party System

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

You can contact him at ksmith@regionsbusiness.com.

It might be a bit premature to cue the death knell, but it certainly seems like a good time to prepare for the eventual passing of a political system dominated by two parties.

So writes Ron Fournier, a writer at the National Journal.

Fournier has his detractors, but he’s a veteran journalist who understands national politics better than most, so it’s not wise to dismiss his analysis.

On this topic, he latches on to the “No Lablels” movement, a group once dismissed as naive.

Now, according to Fournier, they have clear mission: “Drop the centrist label, work with frustrated voters of all political stripes, and pressure politicians in Washington to work better together while fixing the nation’s

problems.”

Fournier points out that the No Labels group is by no means a sure thing in regard to making change happen. Instead, he rightly points out that it’s a warning shot across the bow of politics as usual.

In short, America is fed up and not going to take it much longer.

He quotes Mickey Edwards, a former GOP congressman from Oklahoma: “There’s a revolution brewing. People are getting tired of a party system that turn Congress into the NFL -- one team against another. They’re going to do something about it.”

Well, it’s about time.

The country is mired in quagmire of slow job growth, political gridlock and malaise not because of the Democrats, not because of

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the Republicans, but because the two parties have lost the plot.

The should exist to promote a simple agenda, one that promotes the well-being of America and protects its interests. Instead, both parties exist for one reason and one reason only: To keep the other guys from winning.

The national political scene has devolved into a elementary school playground scene that is tough to watch. Instead of earnest discusison and debate aimed at crafting policies that work, we are inundated with finger-pointing and name-calling.

It has gotten so bad that when a member of one party even gives an inkling that they maybe should kinf of sort of think about maybe consider hearing what the other side has to say, they are

immediately subdued by their own side with shrieks of partisan rhethoric.

The two major parties have done a masterful job of protecting the status quo, however, insulating their combined grip on national politics by making the cost to play politics prohibitive. That has proven a tough nut to crack, but that sort of thing won’t likely last forever, either, especially as the average American continues to watch the two sides shoot spitwads and make raspberries at each other.

Fouriner said he’s working on a magazine piece about this concept and will make it a focus of his reporting moving forward.

Let’s hope he does. It will make the National Journal a mustread.

17 JANUARY 2013

5

WEEKLY BRIEFING: GAMING

REGIONSBUSINESS.COM

GAMING

Slot Machine Funding for Racing, Breeding Dips at Historic Level Funding from slot machine gaming for the Race Horse Development Fund decreased by 4.6 percent or $6.36 million over the last six months, according to the Pennsylvania Equine Coalition.

The decline marks the most significant since the fund was created in 2004.

Governor Tom Corbett’s office projected the fund would collect $287.8 million in the 2012/2013 fiscal year. In the first half of the fiscal year, just $131.4 million was collected.

Funds will continue to decline with the opening of a second Philadelphia casino that does not host equine racing, the Coalition predicted.

Atlantic City Revenue Continues Freefall

OMER KABIR

Atlantic City casinos showed a decline in gambling revenue for the 50th time in the last 52 months, according to data from the New Jersey Casino Control Commission.

Recent months’ declines have been attributed to the destruction caused by Superstorm Sandy, but the long-term hit on the shore town has been caused by a growing gambling presence in Pennsylvania, where slot machine revenue has been on the rise for six consecutive years.

SugarHouse, LevelUp Announce Partnership Philadelphia’s SugarHouse Casino has installed payment program LevelUp at The Refinery, it announced recently.

This is the first casino partnership for LevelUp, which allows consumers to pay for products or services using their smartphone.

Camelot Global Services Makes Case to Lawmakers

BY MELISSA DANIELS HARRISBURG — A British company poised to manage the Pennsylvania Lottery plans to boost the bottom line by getting more people to play lottery games. But some lawmakers are skeptical.

Senate Finance Committee Minority Chairman Sen. John Blake, D-Lackawanna, said he still has reservations about the Corbett administration’s pursuit of a private management agreement with Camelot Global Services, even after a four-hour hearing Monday.

The process was done without legislative oversight, and that worries him.

Yet the deal is going ahead under the umbrella of the administration. The contract with Camelot hasn’t been signed and finalized, but that’s expected within the week. Friday, the administration submitted a “notice of award,” publicizing the intent to finalize the deal.

Senate Finance Committee Chair Sen. Mike Brubaker, R-Lancaster, was impressed with

LOTTO RESPONSES Pennsylvania lawmakers had plenty to say in response to Camelot Global Service’s privatization plan.

Here are some highlights:

Rep. Paul Clymer

NATHAN WALLS

Camelot’s testimony. The hearing, he said, achieved its mission of getting onthe-record statements and giving the procurement process “the light of day.”

Camelot sent two of its top officials to the Harrisburg hearing. They gave a brief history of the company, touting its worldwide status as an industry leader.

Camelot does not operate any lotteries in the U.S., but it has served as a consultant in California and Massachusetts.

Alex Kovach, managing director at Camelot who is handling the Pennsylvania operation, said about 30 percent of Pennsylvanians play the lottery weekly, according to Camelot’s research. In the United

Kingdom, where Camelot runs the National Lottery, that figure is about 50 percent.

Secretary of Revenue Dan Meuser said commitments from Camelot are guaranteed and exceed any profit estimations made by the state. In the next five years, the staterun lottery would generate $30 million, Meuser said.

Under Camelot, the commonwealth could see $1.2 billion.

Camelot will put up $200 million in collateral in case it doesn’t meet it its estimates.

Total profits of about $34 billion are guaranteed over the life of the 20-year contract.

— PaIndependent.com

“There are enough dysfunctional families struggling in the commonwealth.

This proposal to extend gambling will only worsen this situation. Accelerating the privatization process will create more questions than answers.”

THE ASSOCIATED PRESS

Elizabeth Brassell, Dept. of Revenue “We plan to do exactly as Rep. Clymer suggests and as we have done for the last eight months: carefully, deliberatively consider what is in the best interest of older Pennsylvanians.”

THE ASSOCIATED PRESS

Sen. Rob Teplitz “I was happy to start getting answers, but I’m still skeptical.”

PAINDEPENDENT.COM

Sen. John Blake “Perhaps we should say, ‘Congratulations, you’ve won the lottery.’”

POST-GAZETTE.COM

Sen. Pat Vance

Parx Becomes Soul Sponsor Parx Casino has agreed to become the presenting sponsor of the Philadelphia Soul for the arena football team’s 2013 and 2014 seasons.

A new logo will incorporate Parx Casino.

Financial terms were not released.

JOSEPH KNAPP

“Some of these questions have come about because of the lack of transparency.”

POST-GAZETTE.COM

Sen. Jay Costa “We think it is a slap in the face to the Legislature.”

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17 JANUARY 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

LEGAL

Firm Establishes Partnership With County DA Office

Acme, 877 Stores Sold

Montgomery County District Attorney Risa Vetri Ferman recently announced a pro-bono partnership between her office and the international law firm of Morgan, Lewis & Bockius.

Twenty Morgan Lewis litigation associates will be designated as Special Assistant District Attorneys in Montgomery County to provide pro bono legal support to the DA’s Office.

TRANSPORTATION

US Airways Adding Salt Lake City Route

Philadelphia’s most dominant airline is adding nonstop, daily year-round service to Salt Lake City, beginning June 8.

Flights will be aboard a dual-class, 150-seat A320 plane.

“We are excited to expand our service for customers traveling to and from our international gateway in Philadelphia with a new daily flight to Salt Lake City,” Andrew Nocella, US Airways senior vice president for marketing and planning, said in a statement.

With this addition, US Airways will have 462 departing weekday flights from PHL to 111 destinations.

Trenton Airport Named Frontier’s Base in East Trenton-Mercer Airport will become Frontier Airlines’ commercial base on the East Coast, the Philadelphia Inquirer reported.

The most common flights out of Trenton will use two aircraft for six flights each week, according to the Inquirer report.

NATHAN REIN

Supervalu Inc. sold Acme Markets and four other grocery chains to Cerebus Capital Management for $3.3 billion. The deal is expected to close by the end of March.

The nation’s No. 3 traditional supermarket operator is selling a total of 877 stores. Acme, whose headquarters are in East Whiteland Township, Chester County, operates 67 stores.

Supervalu announced in July that it would be exploring “strategic alternatives,” hinting that the struggling Acme brand could be for sale. At the time, the grocer carried about $6.3 billion of debt, accord-

GROCERY

Robot Vending Spreading Through Region Shop24, a robotic, refridgerated convenience store that carries a maximum of 200 items weighing up to 8 pounds, has opened locations in Hatfield and in South Philadelphia.

The company is targeting apartment communities in the region.

The 9-foot-tall machines accept cash and credit cards and can be made to accept campus dining cards or SNAP cards.

ing to a Philadelphia Inquirer report.

Acme Markets was named the seventhlargest grocer in the Philadelphia region

by Food Trade News in the publication’s 2012 survey.

Acme reportedly carried 4.6 percent of the market with $2.2 billion in sales.

Leading Acme in the region were ShopRite, Giant, Walmart, A&P (which operates Superfresh and Pathmark), Wawa and CVS. The other chains sold in the deal include Albertson’s, Jewel-Osco, Shaw’s and Star Market.

STATE BUSINESS

PLCB Expanding PA Wine Sales The Pennsylvania Liquor Control Board and the Pennsylvania Winery Association have come to an agreement that will allow PA Preferred (the brand of agricultural products grown or made in Pennsylvania) wineries to sell varietals in select PA Wine & Spirits Stores.

“We are happy to work with the Pennsylvania Winery Association to expand the selection of Pennsylvania wines offered in our PA Wine & Spirits Stores and in the process, support local businesses,” said Robert S. Marcus, PLCB board member. “Greater selection will give consumers more opportunity to buy local.”

The program is set to launch this summer, allowing PA Preferred wineries to sell up to 10 varietals at Wine & Spirits stores.

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Existing PA Preferred wineries

150

Wineries in the commonwealth, according to the Pennsylvania Winery Association

$2B

Estimated economic impact of Pennsylvania wineries

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WEEKLY BRIEFING

Utility Companies Praised for Response

MEDIA

Inquirer, Daily News Owners Threaten Liquidation Interstate General Media threatened, owners of The Philadelphia Inquirer and Daily News, threatened to liquidate or sell company assets January 18 “if it does not reach tentative agreements with all of its unions, including the Newspaper Guild,” according to a Guild email sent to all members last week.

Other unions’ contracts expired in October 2012, but the Newspaper Guild’s deal isn’t set to expire until October of this year.

Interstate General Media asked the Guild to voluntarily accept paycuts last year.

Atlantic City’s Press for Sale The Press of Atlantic City and its affiliated operations are for sale, according to parent company Abarta, of Pittsburgh.

The third- and fourth-generation family company has owned the Press for 60 years.

Abarta CEO and President John F. Bitzer III said the newspaper’s operations would be better handled by either a local owner or a larger newspaper group.

BY ERIC BOEHM HARRISBURG — Utility companies from across Pennsylvania said lessons learned from major storms in 2011 helped them prepare for the record-setting damage and power outages wrought by “Superstorm Sandy.”

Baltimore Gas and Electric employees assist PECO with post-Sandy The storm left 1.8 restoration efforts in November.

BGE million Pennsylvania “A storm of this magnitude electric customers utilities communicated well without power when with customers and prepared requires a well-coordinated it hit October 29. for the storm by bringing in response, which is what I feel Although some of those crews and supplies from out- occurred in Pennsylvania,” he said. customers were still of-state.

He said lessons learned Robert Powelson, chairman without power a week later, the state Public of the PUC, said he gave util- from the response to HurUtility Commission gener- ity companies grades ranging ricanes Irene and Lee in 2011 ally praised the electric com- from “B-plus” through “D,” helped workers prepare for panies’ response. Members but he did not want to point Sandy.

— PaIndependent.com of the commission said the out flaws.

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REGIONSBUSINESS.COM

RESTAURANT ROUNDUP Center City Restaurant Week will be held January 20-25 and January 27-February 1. During these times, a three-course lunch costs $20; a threecourse dinner costs $35. Tax, alcohol and gratuity are not included in the price of the meal.

Below are some restaurants participating in the week.

For the complete list, visit centercityphila.org.

Amada: 217 Chestnut St. El Vez: 121 S. 13th St. Opa: 1311 Sansom St. Palm: 200 S. Broad St. R2L: 50 S. 16th St. Route 6: 600 N. Broad St. Sampan: 122 S. 13th St. XIX: 200 S. Broad St.

WEEKLY BRIEFING EXECUTIVE BOOKSHELF

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MUST-HAVE APP

FluView

The Battle Over Brainpower In “Inventing the Egghead,” cultural historian Aaron Lecklider offers a sharp, entertaining narrative to reveal how Americans who were not part of the traditional intellectual class negotiated the complicated politics of intelligence within an accelerating mass culture.

“A fresh take on the culture and politics of 20th Century America.”

—Anna Creadick, Hobart and William Smith Colleges

With the free official FluView app created by the Centers for Disease Control and Prevention (CDC), you can: — Explore Influenza-Like Illness (ILI) Activity Levels across the US — View ILI trends over several weeks — Get on-demand access to state health department websites for local surveillance information GOTTA-HAVE-IT GADGET

Bluetooth Tablet Station Dock your tablet in the Bluetooth Tablet Station ($99.99) and you’ll easily tackle the emails and spreadsheets that are too tough for touchscreens.

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DeAr wondering if you should believe the buzz, Yes. P.S. check out on your lunch break.

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17 JANUARY 2013

REGIONSBUSINESS.COM

DEALBOOK

ACCOUNTING

RETAIL

HEALTH CARE

Accounting Firms Announce Merger

Tastykake Owners Eye Hostess’ Wonder Bread

Paoli, Pa.-based Preston, Romano and Shea announced it has merged into Fresnak and Associates, which has locations in Blue Bell, Pa., and Allentown.

Founder Gene Preston and recent addition Mike Romano will become partners within the combined firm.

“It’s an exciting time for both firms as comPreston panies look to midsized firms like Fesnak that have a deep pool of experienced professionals in the life sciences industry,” Mr. Romano said in a statement.

Fesnak has been looking to build the firm up on tax, assurance and accounting, valuation and litigation support, transaction advisory, bankruptcy and restructuring, and financial management solutions.

Flower Foods, the owner of Tastykake, has agreed to pay $390 million to Hostess for its Wonder brand and others.

A bid for Wonder, Nature’s Pride, Butternut, Home Pride and Merita, along with 20 bakeries and 38 depots was valued at $360 million, according to the Associated Press. A second bid of $30 million was made for Beefsteak.

Grupo Bimbo SAB, whose brands include Entenmann’s, Sara Lee and Thomas’, had also sought Hostess’ snack food brands. Bimbo’s U.S. headquarters are in Horsham, Pa. The purchase is subject to a court-supervised auction, which Hostess hopes to have held February 28 in order to close the deal by March 5.

Chester County Hospital Joins UPenn System The Chester County Hospital and Health System announced it will join the University of Pennsylvania Health System.

The deal is set to be completed in the spring, according to The Daily Pennsylvanian.

Chester County Hospital operated at a $2 million last year and could not move forward with a planned expansion that would have added 72 private patient rooms within a “new patient tower,” The Daily Pennsylvanian reported.

REAL ESTATE DEALS

Feasterville Shopping Center Sold for $7M The Shops at Walnut Grove in Feasterville, Pa. was sold for $7 million, or $282 per square foot, the Philadelphia Business Journal reported.

PREIT Sells Mall, Power Center Philadelphia-based Pennsylvania Real Estate Investment Trust (PREIT) sold Paxton Town Centre, a power center in Harrisburg, for $76.8 million, in order to create more focus on “our core mall portfolio,” CEO Joseph F. Coradino said.

A week earlier, PREIT sold the Phillipsburg Mall in Phillipsburg, NJ, for $11.5 million.

17 JANUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

13

Council Considers Extending Job Creation Tax Credit

Timothy Holwick is a freelance writer covering Philadelphia government.

Find more coverage at citycouncilmatters.com.

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

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

Philadelphia City Council has been on recess for the holiday break since the week before Christmas.

While council may not be having its stated meetings, individual council members are still hard at work, as suggested

by Councilman Henon’s Manufacturing Matters Initiative detailed in last week’s issue.

January 24 will mark the return of City Council weekly meetings, but one hour before that, the Commerce and Economic Development Committee will hold hearings on a bill that would extend a job creation tax credit indefinitely.

The tax credit is found under the Business Income and Receipts Tax section of the Philadelphia Code, which has become a popular target for legislative reformation in recent council sessions.

This particular tax credit is formally known as the Special Tax Credit Opportunity for Job

Creation and offers a $5,000 tax credit for each new qualifying job created.

The tax credit was established in 2010 as a way to leverage the burden of a changing Business Income and Receipts Tax into new, well-paying jobs for Philadelphians.

Businesses must apply for the credit and regulations establish certain guidelines on what types of job would qualify.

Most qualifying jobs are what would be considered middle

class positions that pay a living wage.

The business commits to creating the job, is approved for the program, and then is eligible to invoke their tax credit upon successful delivery on the commitment.

The tax credit was already legislated to carry into 2013 at the amount of $5,000.

The amount has not changed, but now the language providing for the timeline of the tax credit would be changed from specific

years to “each year thereafter.”

Essentially, the tax credit will continue indefinitely until council enacts legislation to repeal or amend this particular provision of the Philadelphia Code.

It sets a tone that this hearing will occur as one of the first two hearings to kick off the 2013 City Council session.

This particular group of City Council members has demonstrated a commitment to attracting new jobs and business to Philadelphia through a tax system loaded with incentives and provisions friendly to new businesses.

It is very telling that the bill offers a $5,000 tax credit, no small amount of money, at a time when tax revenue is squeezed for every last penny.

The theory is that even one new Philadelphian who becomes gainfully employed is more valuable to the city in the long term, than any single amount of tax revenue.

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17 JANUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Trillion Dollar Coin Trivializes Debt Debate

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

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

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

If there were an Academy Award for the nuttiest idea of the year, this would be a sure bet: the Trillion Dollar Coin.

That’s right, a Trillion Dollar Coin. The notion is so inherently ludicrous that it wouldn’t have passed the Laugh Test if it weren’t for the fact that it was cooked up by “respected academics “ and politicos close to the Obama Administration.

Thankfully, even the administration saw through the transparent folly of the plan, and the Treasury Department quickly announced they wouldn’t proceed with such a scheme.

The idea was floated by Rep. Jerry Nadler (D-NY) and some less well-known academics and economists. On the verge of a serious congressional debate over raising the debt ceiling, this little clique theorized that the process

could be end run or rendered moot by employing little-known provisions of an obscure statute.

That 1996 law allows the executive branch to mint commemorative coins of any denomination.

Forget that the intent and historic use of this provision was to mint specialty coins designed for collectors at a couple hundred bucks a pop. Why not just strike a coin down at the Philly Mint worth a trillion bucks and stash it away at the Fed? Then we’d have enough to cover our overspending for a while.

In addition to being horrible public policy and crazy economics, this ploy deliberately trivializes the dangerous and serious facts of our national debt. The promoters of this nonsense are the same “not to worry” gang who suggest that no amount of federal spending is enough. In their

world view, the stimulus failed only because we didn’t borrow an additional trillion or two from our children and grandchildren.

A trillion-dollar coin causes smirks. It should cause tears. We can’t even imagine a thousand billion dollars. To reduce it to a little platinum disc makes meaningless how much a trillion really is. But if you imagine a stack of $1 bills, $1 trillion would reach 68,000 miles into outer space. Laid end to end, a trillion dollar bills would run from here to the moon and back 200 times.

Staggering.

The late Everett McKinley Dirksen famously observed, “A billion here, a billion there and pretty soon you’re talking real money.” Imagine how he’d feel about a trillion or 20.

The national debt stands at a staggering and alarming $16.5

trillion. That’s up roughly 60 percent during the first Obama Administration. Considering that it took more than 200 years for America to accumulate a trilliondollar debt, racking up six trillion additional in four short years is a pretty remarkable if dubious distinction.

The nation is rapidly spending itself into insolvency. The debtceiling debate highlights that fact.

It offers an opportunity to reverse this dangerous path and keep us from becoming a Western Hemisphere version of Greece.

Gimmickry not only sidesteps the real issues, it trivializes them.

Congress must reform automatic spending programs and dramatically curtail other spending. They have to face the consequences of their previous actions and get to work on real solutions, not tinker with goofy evasions.

17 JANUARY 2013

REGIONSBUSINESS.COM

POLITICS

Privatization Could Make For Winning Bet For Pennsylvanians

Melissa Daniels is a reporter for PA Independent, an online statehouse news bureau of the Franklin Center for Government and Public Integrity. She can be reached at Melissa@ PAIndependent.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.

HARRISBURG — Feeling lucky, Pennsylvania? The state is about to make a big gamble on the Pennsylvania Lottery.

But given the right odds, social service programs for seniors could win big.

This week, the Corbett administration is finalizing its contract negotiations with Camelot Global Services. The British company specializes in sales and marketing for lotteries, and it operates the National Lottery in the United Kingdom, where an estimated 50 percent of the adult population plays weekly.

In Pennsylvania, Camelot is pledging $34 billion in profits over the life of a 20-year contract. State officials say that’s between $3 billion and $4.5 billion more than what the state would make in that same timeframe, with similar game expansions.

Lottery profits fund programs that help senior citizens, like property tax rebates, free meal services, in-home aides and prescription drug cost assistance. But since Pennsylvania faces a steep spike in the growth of its senior population, Gov. Tom Corbett wanted to seek a long-term funding solution for these programs.

The key to success comes from getting more Pennsylvanians playing the lottery — even if it’s just a few dollars at a time. As managing director Alex Kovach put it, Camelot hopes to see “a lot of people playing a little, rather than a few people playing a lot.”

Camelot’s high hopes to boost profits rest on a brandnew business plan for the Pennsylvania Lottery.

That includes expanding to new gaming – like the video-based, number-guessing

Keno — and bettering sales terminal-based games, like Powerball or the daily lottery drawings. If successful, its plans would generate promising returns: Annual growth would be more than 9 percent in the first five years, and about 5.8 percent in the first 10, according to the state.

Those figures bode well for programs for the elderly.

Pennsylvania has the nation’s fourth-largest population over 60, with nearly 2.7 million people above that age. By 2030, that figure will climb to about 3.6 million, according to state estimates.

Department of Aging Secretary Brian Duke said the state should consider the private management agreement with Camelot as a way to provide “reliable, predictable” funding.

Though Pennsylvania has one of the top-producing lotteries in the nation and runs on one of the lowest operating costs, profits are apparently not keeping pace with demand for programs.

Already the department has a waiting list of about 5,300 Pennsylvanians, according to

Mr. Duke.

But Camelot’s plans, and the administration’s procurement process, saw a fair share of criticism from the union representing lottery employees, and lawmakers on both sides of the aisle.

Since two other bidders dropped out of the procurement process in 2012, Camelot was left as the sole bidder. And the firm had hired popular state lobbyists like State Street Strategies and Greenhill and Associates, raising concerns about an insular, backdoor deal.

And if Camelot’s rosy profit estimates aren’t met? State officials point to a $200 million collateral guarantee. And if it’s really not working out, the state can terminate the agreement after three years.

But right now, Pennsylvania state officials are looking for Camelot to deliver big money in the short and long-term.

If that doesn’t happen, it’ll be a big loss — not only for the officials orchestrating the deal, but for the Pennsylvania senior citizens they’re supposedly looking out for.

15

PHILADELPHIA

Mayor Creates Manufacturing Task Force Mayor Michael A. Nutter signed an Executive Order Tuesday establishing the Manufacturing Task Force, which will evaluate the state of manufacturing in Philadelphia and develop a strategy to promote and grow this important sector of the economy.

The task force will examine the challenges manufacturing companies face and recommend specific measures that will help support growth and increase competitiveness.

“Manufacturing has always been an important part of Philadelphia’s economy. By focusing our attention on manufacturing, our goal is to do everything we can to continue growing this fast-moving sector and ensure that Philadelphia is poised to be the place where innovative products are designed and made,” said Mayor Nutter.

Senator: Abolish Philadelphia Traffic Court A top lawmaker in the state Senate wants to do away with the corruptionplagued Philadelphia Traffic Court.

Senate Majority Leader Dominic Pileggi, R-Chester, recently announced his intention to introduce legislation that would close the traffic court and transfer its responsibilities to the Philadelphia Municipal Court.

The Philadelphia Traffic Court was the subject of a stinging review of by the state Supreme Court last year that concluded the court had “two tracks of justice — one for the connected and another for the unwitting general public.”

“The lack of integrity at Philadelphia Traffic court has been demonstrated time after time,” Sen. Pileggi said in a statement. “Experience proves that in order to clean up this court, we must eliminate it.”

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17 JANUARY 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

Year of the Innovator: A Theme in Philly Media

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

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

To Learn More ...

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

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

Last week, Region’s Business declared 2013 to be the Year of the Innovator — an acknowledgement of Philadelphia’s future as a growing hub for entrepreneurs.

Each week the publication will present recurring features, such as Capital Seekers and Diary of a Startup.

In Capital Seekers, readers will be introduced to the brainchildren of some of the city’s most innovative minds, whose contact information will be provided for venture capitalists whose interest has been piqued.

In Diary of a Startup, a reporter will routinely check in with various Philadelphia-based startups as they strive for success.

This week, WHYY’s Radio Times is getting in on the theme as well with Henon a daily, fivepart series titled, “Philadelphia Innovators.”

On Monday, Councilman Bobby Henon joined filmmaker Jamie Moffet and Philadelphia Department of Licenses and Inspections Director Carlton Williams to discuss new ways the city considers planning and zoning.

On Tuesday, WHYY pulled together some of the biggest local names in technology for a conversation about what brought First Round Capital and its leader Josh Kopelman into city limits from the suburbs and why more companies will follow suit in the future. Joining Mr. Kopelman were RoseAnn Rosenthal, CEO of Ben Franklin Technology Partners/Southeastern Pennsylvania; Chris Wink of Technically Philly; and Artisan Mobile CEO Bob Moul.

As he said in an interview published in last week’s Region’s Business, Mr. Kopelman stressed that Philadelphia should not try to become the next Silicon Valley. Instead, he added, it should follow Silicon Valley’s lead by making a name for itself.

On Wednesday, Radio Times focused on innovation in the city’s arts community and arts education in Philadelphia schools.

The two remaining shows, which will air Thursday and Friday at 11 a.m., will cover “Open Data & Bridging the Digital Divide” (Thursday) and “Sustainability Innovators” (Friday).

All programs air on WHYYFM and online at WHYY.org.

Archived editions of the shows can also be found online.

INNOVATION

Workshop: Become a Lean Startup-Building Machine The Lean Startup Machine is a three-day workshop February 8-10 that teaches participants to build their dream company in reality.

During the course of the workshop, teams use a problemcentric approach to business ideation.

Innovators will learn to create solutions based on true customer pain rather than creating a solution before having the problem.

Registration, which ends January 31, costs $300. For more information, visit leanstartupmachine.com

CAPITAL SEEKERS

Stork Stack Subscription commerce for both parents and expectant mothers

BY BRANDON BAKER Business: Stork Stack Founders: Chris Nakutis, Liz Eavey, Sean Richardson Contact: chris@storkstack.com Stork Stack is a subscription commerce business developed for expectant mothers in their third trimester, as well as mothers with children up to the age of three.

Its founders, Chris Nakutis, Liz Eavey and Sean Richardson, all Wharton graduates, set out after graduating in 2011 to resolve a very practical problem they were presented with after a trip to Chicago.

Mr. Nakutis and Ms. Eavey encountered a pilates instructor, pre-school teacher and mother — now their “Chief Mommy Officer,” Mr. Nakutis jokes — who felt clueless about how to find the latest innovative products for mothers.

“What we found [through research] is that not only do moms want the most innovative products, but today we have big-box retailers and Gerber-sized businesses that just don’t have the marketing arm to get products around the country,” Mr. Nakutis said.

Stork Stack launched in May 2012, and by June had already shipped “stacks” of products — books, bottles, DVDs, etc.

— to subscribers in all 50 states.

Moving forward, the business hopes to expand by exploring different age groups to service and by creating an online boutique store.

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BY BRANDON BAKER

W

PUTTING YOUR

TASKS IN HER HANDS

Today’s businessman is too busy for the day’s minutiae. That’s where Kellyann Schaefer comes in.

@TaskComplet

YourTaskComplete

hile grocery shopping in 2006, Kellyann Schaefer broke a sweat as she tugged one shopping cart from behind her and pushed another to her front, doing her best to complete her checklist without losing control of her four children in the process.

In this single, stressful moment, Ms. Schaefer experienced her light-bulb realization: She could monetize her time management skills.

“It’s such a great business model,” Ms. Schaefer said. “Everyone’s trying to cram 36 hours into 24, and with the addition of technology in our lifestyles today, everyone has become accustomed to this sort of fast-paced response in getting things done.”

Ms. Schaefer spent 21 years working as a nurse and 24 as a homemaker before finally creating Task Complete in December 2010.

Today, Ms. Schaefer and one independent contractor manage more than 50 clients in Bucks County, completing tasks that include house chores, grocery shopping, paying bills, caring for pets and other miscellaneous tasks requested by clients.

Upon creating Task Complete, the Bucks County-native initially struggled with developing the business side of her service, but quickly adapted by taking on a do-it-yourself attitude, persevering by attending seminars, reading books and scouring the Web for advice.

“I dove head-first into it all — I read everything I could and continued to educate myself on how to start a business: marketing plans, a I TRY TO GIVE THEM website, blogging, every comA BETTER QUALITY ponent of it was new to me,” Ms. Schaefer said. “I really OF LIFE. I WAS started [Task Complete] on a REALLY BORN TO wing and a prayer.”

The bulk of Task ComTAKE CARE OF plete’s clients, Ms. Schaefer PEOPLE.’ said, include executives who —KELLYANN SCHAEFER are happy to delegate tasks in favor of spending more time at work.

Her business-oriented clientele has helped the service to grow immensely since its inception, allowing her to push forward with plans to hire another independent contractor in the first quarter of 2013, as well as look into creating future “departments” that specialize in assisting clients with very specific needs — concierge services, in-home organization, lifestyle management, etc.

Regardless, Ms. Schaefer couldn’t be happier with how Task Complete has evolved since that anxiety-inducing grocery run in 2006.

“Every day, I manage and take care of people’s emotional problems and stress-related problems, and I try to give them a better quality of life,” Ms. Schaefer said. “I was really born to take care of people.”

kelly@yourtaskcomplete.com

YourTaskComplete.com

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2013: YEAR OF THE INNOVATOR

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Thinking Creatively About Infrastructure

Peter A. Angelides is Principal of Econsult Solutions, a Philadelphia-based economic consulting firm that specializes in urban issues. Learn more at econsultsolutions.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.

Infrastructure is vital to our well-being, and we need to think carefully and creatively about our public infrastructure systems, such as roads, transit, water, and parks.

Infrastructure investments, while expensive, ensure our future economic prosperity and shape future economic decisions.

Though long-lived, infrastructure does decay, both physically and economically.

Economic decay means that infrastructure designed many years ago might not be appropriate for the current world, even if it were in perfect condition.

Because of economic decay, and because what we buy today will be with us for a long time, current investments should reflect what we want the future to be like.

For example, the predominant transportation philosophy 40 years ago was moving cars quickly and efficiently, which led to underemphasized or nonexistent pedestrian, bicycle and transit facilities.

If we want the future to be more pedestrian and bicycle and transit friendly, current infrastructure projects must take

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those needs into account.

Therefore we need to put on our creative hats in two main ways — how to pay for what we build, and what we build in the first place.

Recent unwillingness to match revenue with infrastructure costs has resulted in financial constraints at the local, state and federal level, reducing infrastructure investment.

Today, many worthy projects will not be built without increasing traditional funding source or alternative funding source.

Alternatives include tolling, public-private partnerships, local infrastructure-specific taxes, and the grab-bag approach.

Dilworth Plaza illustrates the new paradigm perfectly. This public plaza at the heart of the region is being funded by

city, SEPTA, state, federal and private sources, and organized and managed by a public/private authority — the Center City District.

Even more interesting is thinking about how pricing can substitute for infrastructure or how one type of infrastructure can substitute for another.

For example, peak hour pricing on toll roads or transit systems can reduce congestion by encouraging travelers with discretion about travel times to shift their trips to less crowded times.

This shifting reduces the congestion in the peak hour, making the trip faster for the people who continue to travel during peak hours, and reducing or eliminating the need to build extra capacity. As a bonus,

revenue can be used to reduce other types of taxes.

Charging for infrastructure also makes people consider how much they use. Because transportation infrastructure is costly to build and maintain, pricing it as though it is free by not charging for it encourages more use than is economically optimal, and also leads to more energy use than would otherwise occur.

Similarly, one type of infrastructure can substitute for another.

We are currently planning on spending more that $10 billion to reconstruct and expand I-95 in Pennsylvania.

Indeed, just the Girard Avenue Interchange Project is set to cost $1.2 billion. Given that enormous cost, it makes sense to think of parallel projects, such as enhanced transit, including a Roosevelt Boulevard rapid transit line, that reduce the capacity needs of I-95, and hence reduce the cost of reconstruction.

Thinking creatively can help us reduce the resources devoted to building and maintaining infrastructure while still receiving the same level of service from what is built.

17 JANUARY 2013

2013: YEAR OF THE INNOVATOR

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19

Seeking This Fairy Tale’s Happy Ending Philadelphia is the ‘Goldilocks of the art world,’ says one entrepreneur who wants to show his city how to find events that are just right DIARY OF A STARTUP

BY BRANDON BAKER

our circles are — we’re seeking to expand everyone’s circle in the conAdam Kearney has spent much of temporary art world.” the past six months traversing the Mr. Kearney originally came to Philadelphia region’s tech startup Philadelphia to create a pop-up art events seeking the cream of the crop project called the Sauntering Collecof tech developers. tive.

Mr. Kearney has his fingers crossed In the process of working on the that he’ll soon find a “needle in the pop-up gallery, however, he realized haystack” to develop his events web- that there was a logistical problem in getting people both aware of the site for the arts, Saunter.

Described as being “Yelp for the events and able to find them.

An art and music enthusiast himarts,” Saunter aims to take the best attributes of Yelp.com and listings self, he empathized with the plight of from local news outlets and combine artists who struggled to find viable them into one seamless, customizable advertising alternatives for their source for finding events related to events. the visual arts, music, dance, theatre, “With art, we always look back to film and academics. other ages to understand their world.

“Philadelphia is sort of the Goldi- For example, we look at Gothic locks of the art world — it’s not too churches to understand how they hot, and it’s not too cold,” Mr. Kearney lived in that age, and for that reason, I said. “But we’re only as informed as find it to be a public matter to connect

individuals with art,” Mr. Kearney said. “But there’s a hole here: How do we connect with artists?”

To demonstrate how the site will work, Mr. Kearney has created a prototype of the events database, most recently demonstrating the mockup site at the January 9 Philly Tech Meetup, hosted at the University of Pennsylvania.

He is currently sorting through a pool of CTO applicants, and will be looking for funding in February.

Mr. Kearney’s three-stage business model has Saunter launching in Philadelphia, with immediate followup launches in Boston and New York, which he hopes will culminate in a string of launches in Minneapolis, Chicago, Los Angeles and more.

“Ultimately, I want to provide regional knowledge on a national scale.”

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2013: YEAR OF THE INNOVATOR

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DreamIt Health Care Accelerator Launched

DreamIt Ventures Demo Day 2010

TECH COCKTAIL

For the first time, a leading health insurer and a leading health care provider have collaborated to create what has become DreamIt Health, Philadelphia’s first health care accelerator.

Independence Blue Cross and Penn Medicine — with DreamIt Ventures and Venturef0rth — are jointly offering entrepreneurs the resources they need to offer solutions to modern health care issues.

The accelerator is a fourmonth boot camp that offers $50,000, office space, indepth monitoring and coaching from industry experts.

Companies will be given the chance to organize, pitch to investors and hear feedback from potential custom-

A HEALTHCARE ACCELERATOR IN PHILLY IS LONG OVERDUE.’ —ELLIOT MENSCHIK, FOUNDER OF VENTUREF0RTH

ers through the program.

As with previous DreamIt programs, the boot camp will conclude with a Demo Day, giving entrepreneurs the chance to speak about their company before industry leaders.

Philadelphia, a longtime hub for the health care industry, has been becoming a center for innovation as well. “I think a healthcare accelerator in Philly is long overdue,�

Elliot Menschik, founder of Venturef0rth, told MedCity News. “We have many of the right parties involved now and others that can add to the

255 Great Valley Parkway, Suite 150 Malvern, PA 19355

Full Service Advertising Agency

success of the program as it grows.�

DreamIt Health, which will be co-led by Mr. Menschik and Karen Griffith Gryga, managing partner of DreamIt Ventures. Its offices will be at Venturef0rth.

DreamIt has launched 80 companies in the last four years who have raised more than $80 million in investment capital.

The deadline for applications is February 8. Email dreamit_health@dreamitventures.com or visit dreamitventures.com for more information.

219 Cuthbert Street, Suite 500 Philadelphia, PA 19106

P s F

StreamCompanies.com

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CAN A REPUBLICAN WIN

CITY HALL?

It’s the beginning of the end of Mayor Michael Nutter’s reign in Philadelphia, and several would-be hopefuls are already waiting in the wings to replace him. With the city’s Democratic machine as strong as ever, does a Republican even stand a chance of winning the next mayoral race? And what type of Republican would that be?

(Hint: It won’t be someone from the Tea Party.)

BY ELISSA VALLANO

A

s Mayor Michael Nutter settles into his second and final term in Philadelphia, rumblings about the next crop of mayoral prospects have already begun. And while January 2016 can seem like an eternity for many around the region, it’s practically no time at all when it comes to the political world. Unsurprisingly, a potential list of Democrats has already been forming, but where the Republicans stand in the next election remains uncertain.

The City of Philadelphia hasn’t seen a Republican mayor in over 60 years when Bernard “Barney” Samuel served from 1941 to 1952. His mayoral tenure was the longest in the city’s history, and his legacy includes creation of the city sales tax and city wage tax. But since then, no Republican has held the mayoral office in Philadelphia, and the last presidential election didn’t do much to boost their clout amongst voters. The city’s Democratic stronghold can often discourage prospective Republican candidates, and for good reason. But not everyone sees the next mayoral election as a Democratic lock.

“A Republican candidate has a solid chance in every mayoral election because there is a growing record that reveals 60 years of failed Democrat policies and one party rule,” Dr. Seth Kaufer, Public Affairs Chairman for the Philadelphia Federation of Young Republicans, said.

“Philadelphians are open-minded to change, but the message needs to be effectively communicated to them.”

Effective messaging will be a key factor in the next mayoral race for all candidates, but especially for Republicans. After the November elections, the GOP was left pointing fingers at one another over Mitt Romney’s decisive loss. Did Romney lose because he was too conservative or not conserIllustration by vative enough? Was his biggest handicap failing Don Lee to rally his base or alienating minority voters? The

22 debate rages on within the Republican Party, but there’s no denying that there is a rebranding effort already underway amongst the party’s moderates members. And a moderate voice is the Republicans best chance for winning over a city like Philadelphia.

“Republicans will nominate a candidate who offers the best vision for the future of Philadelphia,” Dr. Kaufer said. “The type of Republican that can win will need to have a program that speaks to all Philadelphians and can offer real changes to fix the budget, schools, crime, and service problems that face us all, and he or she will need to bring all citizens together rather than continuing to divide our city.”

If it seems as though our country is more divided than ever when it comes to politics, it’s because it is. The presidential race was determined within a 3% differential, but the red state versus blue state phenomenon has now evolved into red state versus blue city.

The only major cities that voted Republican in the 2012 presidential election were Phoenix, Oklahoma City, Fort Worth and Salt Lake City, and Phoenix nearly turned in President Obama’s favor. The cultural and sociological effects of city living have become so profound that a number of America’s most Democratic cities are located in staunchly Republican states. For example, every major Texas city (Austin, Dallas, Houston, and San Antonio) voted Democratic in 2012.

Similar trends can be seen across the United States and is especially true for Philadelphia.

So with a city like Philadelphia, where Democratic ideals have prevailed for decades, how does a Republican gain a voter’s trust? Rudy Giuliani and Michael Bloomberg were able to effectively woo New Yorkers, and current mayor Tomas Regalado has won over the deeply blue city of Miami. Their successes all seemed to stem from understanding their cities’ most pivotal issues, which the same can be said for Philadelphia.

“It all depends on that actual situation in that individual city at the time,” Vito F. Canuso Jr., Chairman at Philadelphia Republican City Committee, said. “You have a crisis looming with the fact that there are no contracts for any city employees except for the police. And that contract has very devastating effects in the future, including the fact that you have substantial

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“Philadelphians are open-minded to change, but the message needs to be effectively communicated to them.”

DR. SETH KAUFER PHILADELPHIA FEDERATION OF YOUNG REPUBLICANS

raises and pension obligations to the city.”

There’s no doubt that whoever takes over for Mayor Nutter will have a whole host of issues to contend, no matter how effective his last term will be. The poverty level in Philadelphia has been significantly increasing, and the city’s median household income in 2011 ranked second-worst among the nation’s 25 largest cities. Crime, education and job growth are not problems that will be resolved overnight, and the next mayor will have to tackle them head on and provide a concrete plan of action without isolating groups of voters.

“The challenges facing the next mayor are numerous,” Dr. Kaufer said.

“The city budget is massive, is full of waste, and needs to be updated to current realities. Crime continues to rage throughout all corners of our city, and our police and crime-fighting citizens are being targeted by criminals.

The public school system is broken, despite huge amounts of money spent on ‘experts’ and ‘solutions.’ For all of these reasons and more, Philadelphians are leaving the city in droves for a better future for their families.”

While Republicans paint a considerably bleak portrait of Philadelphia at the hands of Democrats, others are

not as quick to share in that view. In fact, some argue that the only way a Republican could win a mayoral race in Philadelphia is if he or she took a huge step away from a party so many in the region doubt.

“Given the unpopularity of the Republican brand in Philadelphia, it is very unlikely a Republican will win the mayor’s race unless he or she is able to effectively distance himself or herself from that national party,” said J.J. Balaban, Principal Consultant with The Campaign Group, who has worked with Mayor Nutter. “That has happened with the past two mayors in New York City and is theoretically possible in Philadelphia, but it’s very hard to do.”

According to the latest survey, Mayor Nutter’s approval rating was at 60% - up from 52% the previous year.

Residents voiced their concerns over crime and the general direction the city was heading in, but overall, they were still happy with the mayor and his policies.

“For a Republican to win, the Democratic nominee would have to be seriously flawed because any credible Democrat would have an easier time telling the Democratic electorate that he or she shares their values,” Mr. Balaban said.

As for the heat Mayor Nutter endures from his opponents on the challenges facing Philadelphia and its residents, Mr. Balaban seeks to shine light on one the mayor’s most notable contributions to the city.

“It’s unfortunate that he doesn’t get enough credit for what he has done to restore integrity to the mayor’s office and reduce corruption,” he said. “The absence of corruption scandals doesn’t garner headlines, but it’s important to the long-term health of our city.”

There is no doubt that poverty, crime and education will continue to be factors for the next mayoral race. It is how the potential candidates plan to tackle these problems that will weigh heaviest on voters’ minds, and what issues will become most prevalent in the next two years remain to be seen.

For now, it’s simply a waiting game for Republicans, but they are taking this time to learn from the past.

“We saw that in 1999 and 2003, Sam Katz made an awful close run for it,” Mr. Canuso said. “I think that profile works. He had a substantial business and economics background, and experience budgeting governments coming from a company that was an advisor to prior mayors and governments. Someone with that kind of background and that kind of experience and knowledge will bode well. He wasn’t extreme on any issue, which I think will appeal to the voters of Philadelphia. And when you’re in a crisis situation, someone who is somewhat moderate and capable and competent will do well.”

Philadelphia Republicans have long admired Katz for the strides he made where many before him had failed.

Katz actually began his political career as a Democrat but switched to the Republican Party in 1990. Katz ran his campaigns for mayor as a moderate to liberal Republican, promoting cutting the high wage taxes in the city and reviving job growth. His 1999 bid fell in large part to a 75% voter registration disadvantage, but his 2003 resurgence was strong until he fell victim to his own party’s unpopularity.

If prospective Republican candidates want a chance at securing a position as mayor of a decidedly blue city like Philadelphia, they will have to learn from Katz’s errors as well.

“Sam Katz made mistakes when he ran again in 2003 by failing to adequately distance himself from

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the very unpopular administration of George W. Bush,” Mr. Balaban said.

“Katz had the money and the profile, but ultimately couldn’t get across the finish line.”

That distance from the Republican base appears to be a foregone conclusion for whichever Republican candidates step up to the plate in 2015. Romney wasn’t able to capture a single vote in 59 precincts in Philadelphia, so appealing to the middle will be the top priority. A successful campaign will require a goldilocks mentality on social issues and detailed plan of action for the city’s troubling fiscal problems.

If there are Republicans up to the task, they have yet to make their presence known. But that means little in the game of politics. Much can change in a few years, as evidence by past races in the state.

“Two and a half years before the 2008 presidential election, Barack Obama wasn’t a credible presidential candidate,” Mr. Balaban said. “Two and a half years before she was the highest Pennsylvania vote-getter in the 2012 elections, Kathleen Kane was an unknown former Scranton prosecutor who was given little chance of winning the primary, let alone becoming the first Democrat elected Attorney-General in Pennsylvania history. And most relevantly, two and a half years before the 2007 mayoral race, Michael Nutter was a City Councilman who represented one-tenth of the city and was polling in fifth place of five candidates. The driving issues of the 2015 race won’t be known for years.”

As for the possible candidates already being mentioned for the next election, Mr. Balaban isn’t putting too much stock into them yet.

“It is way too soon to be able to predict what will drive a primary that is two and a half years away,” he said. “It is very possible that the winner will be someone whose name isn’t even mentioned now as a likely candidate.”

Still, Republicans are already thinking ahead. In addition to setting themselves apart from previous candidates, they are also figuring out the best methods for reaching potential voters – which at the core is voter registration.

“The toughest thing that a Republican faces is obviously the huge voter registration disadvantage,” Dr. Kaufer

Handicapping Mayor Nutter’s End Game

BY ELISSA VALLANO

W

ith three years left in his final term, Mayor Michael Nutter is back at work for Philadelphia – preparing the next budget address and making peace with the city’s firefighters.

He has much more on his agenda for the next three years, and while progress has been made, he’s also been continually plagued by public safety and education issues.

Perhaps it’s because Philadelphia's problems are not an easy fix. Despite a concerning amount of gun violence in the city, crime has actually decreased since Mayor Nutter took office in 2008. There has been a 15% reduction in homicides since 2007, though homicides have been up year-over-year since 2010.

There are also several recent developments indicating promise for job growth. Josh Kopelman, Partner at First Round Capital, moved his operations to Philadelphia last year, and Goldman Sachs will aid the city through its three-year-old 10,000 Small Businesses program, committing $20 million locally.

Mayor Nutter’s accomplishments have not gone unnoticed by those in Washington, DC, and his outspoken support for President Obama led to numerous rumors about his intentions to stay in Philadelphia or move on to the political big leagues.

“He’s saying otherwise, but I wouldn’t be surprised if Mayor Nutter doesn’t serve out the full term,” Vito F. Canuso Jr., Chairman at Philadelphia Republican City Committee, said. “You’ve got a situation where he’s terminated. He’s got his walking papers in three years, and where does he go in three years? I don’t know. There are a lot of possibilities, but I don’t think Mr. Nutter is going to stay put.”

Mayor Nutter has denied having any desire to vacate his office early. He told the Philadelphia Inquirer back in November, “President Obama knows, directly, that I love my service here as the mayor. Secondly, I'm not going anywhere. I've made that clear in a polite fashion to all the folks who need to know that in President Obama's administration."

Much can change in the next three years, but as of now, Mayor Nutter remains a much-needed leader for a city with dogged challenges ahead. His last term won’t be easy, but it is certain to be a defining one.

“I think if he has the opportunity to go onto Washington, it’s a good thing for Mr. Nutter,” Mr. Canuso said. “Not so much for the city.”

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THE NEXT MAYOR: 5 POSSIBILITIES Despite being several years away from campaign season, quite a few names have already crept into political conversation regarding the next Philadelphia mayoral race. Not surprisingly, they’re all Democrats with major clout. Will one of these people be the next mayor of Philadelphia?

Jim Kenney

Bill Green

Jim Kenney, a life-long South Philadelphia resident and LaSalle graduate, has served on Philadelphia’s City Council since January of 1992.

In addition to creating the Committee on the Environment, he has also sponsored a number of citywide environmental initiatives such as incentives for green roofs and plug-in vehicles.

His hefty roster includes Chairman of the Committee on Labor & Civil Service; ViceChairman of the Committee on Rule, the Committee on Law & Government, and the Committee on Environment; and member of the Whole, Public Property, Public Health, Fiscal Stability, Legislative Oversight, Technology, and Ethics Committees.

Another Philadelphia City Councilman, Bill Green is known for his intelligence and ambition – but also has an unfortunate reputation of being difficult to work with. If he can overcome that obstacle, he should make for a formidable opponent in the next mayor’s race (he has openly admitted his intention to run).

Mr. Green also comes from political pedigree. His father, William Joseph "Bill" Green III, won the Democratic nomination for Mayor of Philadelphia in 1979 after previously serving as a member of the U.S. House of Representatives. He understands budgets and taxes and is grounded in a fiscal discipline that will appeal to many of Philadelphia’s more moderate voters.

said. “This can be overcome though if the candidate raises enough money to be able to get their message out to the voters and is smart about utilizing earned and social media to facilitate the campaign.”

The latest voter registration statistics indicate there are nearly 1,100,000 registered voters in Philadelphia, and roughly 133,000 are registered Republican, 856,000 are Democrats, 86,000 hold no affiliation, and 25,000 are classified as “other.”

After the 2012 election, the Pennsylvania Republican state committee sent members of the media a release

Blondell Reynolds Brown Councilwoman Blondell Reynolds Brown is a leader in energy conservation and environmental matters, as well as a champion of women’s and children’s rights.

She’s a Penn State graduate who started the Celebration of Moxie Women which aims to highlight the potential and power of young girls and the next generation of women leaders, especially working mothers.

Ms. Brown is also a big supporter of the arts in Philadelphia, and she currently serves on the board of the Greater Philadelphia Cultural Alliance. So far, she remains the only female candidate being mentioned thus far for the next possible mayoral crop.

about a voter registration group in Philadelphia that “shredded and threw away numerous registration forms,” including many who were “for people trying to register as a Republican.” The group, Community Voters Project, denied these allegations and said they were only shredding photocopies, not original voter registrations, but Republicans are still skeptical.

“One interesting thing about the 2012 Presidential election was that it focused the national media’s attention on Philadelphia and voter fraud suspicions,” Dr. Kaufer said. “Many Republican minority inspectors and poll

Alan Butkovitz

Sen. Anthony Hardy Williams

Alan Butkovitz is in his second term as City Controller, and he's made quite a name for himself while serving as Philadelphia’s chief fiscal watchdog. Prior to his current position, Mr. Butkovitz served 15 years in the Pennsylvania House of Representatives.

He’s a Philadelphia native, born and raised, who graduated from Temple and currently resides in the Northeast. Mr. Butkovitz recently had his hands full balancing the city’s financial books, and he came down hard last year on tax evasion at area construction sites. But his background is more than just money – he also helped create the Office of the Safe School Advocate, the first of its kind in the nation.

watchers were thrown out of polling places by the Democrats, even though we had every legal right to be there.

The Philadelphia Republican Party and City Commissioner Al Schmidt are committed to fair elections in our city. Our eyes have been opened to the Election Day shenanigans of the Democrats, and we will be even more prepared for the next one.”

Regardless of controversy and political strife, there is a consensus among both parties that in order to win a mayoral election in Philadelphia, the candidate must appeal to both sides of the aisle.

As a lifelong resident of West Philadelphia, Senator Anthony Hardy Williams was first elected to the Senate in 1998. He previously served five two-year terms in the state House of Representatives representing the 8th Senatorial District. Last year, Democrats elected him minority whip – their number-two in command.

His father, Hardy Williams, was a legendary former state senator who passed away in 2010, and Mr. Williams has been steadily following in his footsteps. His passion for education and desire to reform the state’s school system has been his most notable pursuit, and one that Philadelphia so desperately needs.

“The best candidates can relate to the average Philadelphian by exemplifying the American dream of hard work, playing by the rules, and wanting better for future generations,” Dr. Kaufer said. “We have failed to face up to those realities as a city. I predict that the winning candidate will present a bipartisan message and approach to tackling the pressing issues of the day and will run a positive campaign that urges Philadelphians to demand better from their elected officials.”

Elissa Vallano is a Philadelphia-area freelance journalist.

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17 JANUARY 2013

REGIONSBUSINESS.COM

University City’s Future Looking to the Rails

BY VICTORIA MARCHIONY If Drexel University’s president gets his way, the landscape of Philadelphia could be drastically altered within the next 50 years.

John Fry, in collaboration with SEPTA and Amtrak, launched a milliondollar feasibility study to explore the potential for constructing a platform to connect West Philadelphia to Center City and the Art Museum at the 96-acre site of 30th Street Station’s Schuylkill Rail Yards.

In the years since 30th Street Station first opened in 1933, developers have mulled over plans to construct everything from an amusement park to office and residential properties to a baseball stadium over the rail space.

Cost and construction challenges associated with the acres have been substantial enough to kill all previous initiatives.

Potential difficulties “aren’t just technical. They’re financial,” John Gattuso, regional director and senior vice president of major Philadelphia developer, Liberty Property Trust, told the Philadelphia Inquirer.

High voltage electrical lines would need the hands of experienced, unionized, (and costly) Amtrak workers.

The inconsistent land grade combined with the current setup of structures would require the construction of a platform complete with roads, utilities and other infrastructure in order to successfully develop over the rail space.

Not to mention that causing serious rail delays for the Northeast Corridor — the nation’s busiest rail line — could be a deal breaker all on its own.

The study, slated to take about two years to complete, is investigating similar rail yard development projects such as Chicago’s Millennium Park, as well as upcoming projects on the west side of midtown Manhattan and behind Union Station in Washington.

Air rights in those cities, however, are pricier than they are here, meaning that Philadelphia “can’t necessarily create a good economic return,” President and CEO of Brandywine Realty Trust Jerry Sweeney, explained in an interview with the Philadelphia Inquirer.

As developer of the Cira Center

The Schuylkill Rail Yards at 30th Street Station could someday be found beneath an office park or a baseball stadium.

located at 29th and Arch Streets, the only building to reach completion in the rail yards’ area, Mr. Sweeney has an intimate understanding of the challenges associated with construction over active rail lines.

Though the Cira Centre was built between electrical lines and on land — as opposed to a platform — the process was still “expensive and timeconsuming.”

According to a 2011 study by University of Pennsylvania graduate students as part of PennDesign, which designed a separate but related project to overhaul the Schuylkill Rail Yards, a redesign could include extreme financial and logistical costs.

Proposed measures included lowering the height of I-76 by 20 feet, relocating the Vine Street Expressway’s

southbound lane, and extending the street grid. Projected costs for reimagining all 96-acres hovered around $3.2 billion.

Mr. Fry’s ambitions, however, are slightly less intimidating. Drexel is specifically interested in using a 55-acre parcel known as Penn Coach Yards, where trains are currently stored and maintained, to serve as a connector between Drexel’s upcoming Innovation Neighborhood and Center City.

Innovation Neighborhood, which will proceed with or without the rail yard initiative, is expected to include five million square feet of commercial office space, research laboratories, student housing and a hotel.

One of the main goals of the upcoming “superblock” is the transformation of the space around the Bulletin Build-

FEBOOPTIMUS/FLICKR

ing, which currently creates an “empty and intimidating gap in the urban fabric” by developing significant pedestrian space and relocating the JFK bus stop.

According to Drexel’s Master Plan blog, these and other changes will serve to create an accessible portal to Drexel and, by extension, University City.

If the rail yard project is a feasible addition to Drexel’s Master Plan, “It has the potential to be a game-changer for University City,” Harris Steinberg, executive director of Penn Praxis and supervising professor of the University of Pennsylvania graduate students who produced the 2011 rail yards report, told the Inquirer.

University City is a subject close to Mr. Fry’s heart.

From 1995 to 2002 Fry served under then-president Judith Rodin as a col-

26 lege administrator at the University of Pennsylvania, playing key leadership roles in Penn’s successful neighborhood revitalization efforts that resulted in the launch of the University City District.

His work with Penn, in combination with similar redevelopment success during his term serving as president of Franklin and Marshall College in Lancaster from 2002 to 2010, has earned him a strong reputation for successful innovation.

“We’re very supportive of John’s vision,” Steven M. Altschuler, president and CEO of Children’s Hospital of Philadelphia told the Inquirer. “He has a great track record of urban development and university campus development.”

Such confidence will be crucial in securing partners for his ambitious endeavors in the coming months.

“We’re trying to use other people’s money and our land,” Mr. Fry explained to the Inquirer.

The backing of a major university with a stake in the neighborhood may be the key to bringing rail yard construction dreams to fruition that has been missing from previous failed efforts.

Mr. Fry recently presented his ideas to a high-powered group of business leaders and was met with encouragement and excitement.

“This concept is exactly what the region needs to enhance job creation here,” William R. Sasso, chairman of the law firm Stradley Ronon Stevens &

17 JANUARY 2013

REGIONSBUSINESS.COM

Chicago’s Millennium Park will be looked at in a feasibility study over the Schuylkill Rail Yard in Philadelphia.

Young, told the Inquirer.

Between funding, designing and construction, the reinvention of the rail yards’ acres will take decades to complete, and with a daunting “TBD” next to the cost estimates for implementation on the Master Plan blog, the tone of discussion is understandably

one of cautious enthusiasm.

City and business leaders alike are eager to find out if such a mega-project could actually work. If it can, both private and public organizations are likely to jump at the opportunity to have a hand in redefining Philadelphia’s landscape.

BALAJI SHANKAR

If the projects proposed for the rail yards are indeed feasible, “it opens up possibilities that I don’t think anyone has really ever thought about before, to link the city in various ways. This could be the basis for Philadelphia’s innovation and economy for the next 100 years,” said Mr. Fry.

RegionsBusiness.com Philadelphia, 24/7

28

17 JANUARY 2013

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The exterior is wrapped in cast limestone with rich, slate roofing. Stone can be found in the turrets, woven beautifully in the cast limestone.

The first floor offers voluminous ceiling heights, 15-inch baseboards, outstanding moldings and trim throughout.

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27

Then & Now

‘Think Strawbridge & Clothier first’

BY SANDY SMITH John Wanamaker is Philadelphia’s best-known merchant prince, and rightly so, for he invented the modern department store and introduced practices that revolutionized American retailing in the late 19th century.

But he was actually beaten into the business of selling “dry goods” locally by a couple of Quaker merchants, Justus C. Strawbridge and Isaac Clothier, who opened a small dry goods store in the 800 block of Market Street in 1868.

That store grew into a beloved local institution that outlasted its more legendary rival — though only barely — as an independent business and played a key role in the ongoing efforts to reshape and refashion Philadelphia’s Main Street.

Like John Wanamaker, Strawbridge & Clothier grew rapidly in the later decades of the 19th century, and like its across-the-street rivals, Lit Brothers and Gimbels, it accommodated its growth by slowly expanding into adjacent buildings on its block.

Eventually, the Strawbridge and Clothier families decided as Wanamaker did that the best way to ensure the store’s future growth and success was not to keep adding on but to build new from the ground up.

In 1928, Strawbridge & Clothier demolished all but one of the buildings it had acquired and began construction on the handsome stone edifice that stands today on the northwest corner of 8th and Market.

The Strawbridges ran their store in keeping with Quaker

traditions of fair and honest dealing, as reflected in the trademark the store adopted in 1911 — the “Seal of Confidence,” which depicted William Penn’s “never written, never broken” treaty with the Lenape Indians that enabled him to establish Philadelphia and Pennsylvania on Lenape land.

Like Wanamaker with his pioneering money-back guarantee, Strawbridge & Clothier stood behind everything it sold — a customer who had a problem with anything purchased there could return it to the store for repair, replacement or refund.

The Strawbridges were also early adopters of the trend of following their customers to the growing suburbs, opening branch stores in Ardmore in 1930 and Jenkintown in 1931.

At its peak, Strawbridge & Clothier had 13 stores through-

out eastern Pennsylvania, southern New Jersey and Delaware, and profits from the branches offset the losses of the flagship store.

Its introduction of revolving charge accounts around the same time also revolutionized retailing as much as Wanamaker’s innovations had.

The store reached its peak of reputation and popularity under the leadership of the last family member to run it, Stockton Strawbridge.

After returning to the United States after World War II, Stockton Strawbridge toured the flagship store, pronounced it dull, and set about updating and enlivening it.

One of his most successful additions was a British import: the Food Hall, an emporium inspired by the famous Food Hall in London’s Harrods that proved a successful draw for

improving branches and even organizing a bid to buy its archrival John Wanamaker — he proved unable to keep his own family on board with his vision: the store barely fended off a takeover by a corporate raider in the late 1980s, and competitive pressure from newer retailers ultimately led Strawbridge’s to suffer the same fate as its more famous rival up the street: sale to a national chain, the May Department Stores Company, in 1996 over Stockton’s vehement objections.

Even before May’s sale to Macy’s Inc. in 2005, the the 8th and Market store (it Strawbridge flagship store was was never copied in Strawbeing gradually downsized just as the huge Wanamaker store bridge branches). had been, and the Macy’s sale Around the same time that he was installing the Food Hall, sealed its fate: it was closed in Stockton Strawbridge also took favor of the more historically significant Wanamaker store. a keen interest in the overall Its basement and first two fate of Market East. floors have remained vacant His store’s participation, since then, largely in hopes along with Gimbels, helped of attracting another departmake the Gallery at Market East a reality in 1977, and he ment store tenant, while the also organized and led the upper floors now house offices nonprofit organization that — most of them state agencies gave Market Street itself a total relocated from the old Philamakeover in the mid 1980s. delphia State Office Building While he fell short of his goal (now Tower Place). of turning the street into “the The most recent office tenant Champs-Elysees of Philadelto take space in the building is Interstate General Media, phia,” his efforts most likely helped stave off further decline. owner of The Philadelphia Inquirer and Philadelphia Unfortunately, for all that Daily News.

Strawbridge did to keep the store an independent concern This article originally and a force in its home region appeared at PhiladelphiaR— going into discounting with its Clover division, adding and ealEstate.com.

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Q&A

17 JANUARY 2013

REGIONSBUSINESS.COM

R

egion’s Business: Could you give us the elevator pitch for your job as the county commissioner?

Josh Shapiro: County government is an entity of government that is often overlooked by our constituents. But the truth is county government has a reach that is far and wide. Whether it is managing a half a billion dollar budget, whether it is dealing with the many challenges that come for us each day, it’s an extraordinarily invigorating job and one that we take seriously and one that touches the lives of constituents all across our county, who walk on our trails, who rely on our court system, rely on getting a marriage license or who are planning changes in their community and have to come before the county.

RB: People seem to almost dismiss county government, but as you point out, it’s very integral to their lives, why do you think that is? What do you think is the image problem of county government?

JS: I don’t think we have an image problem, I think it’s just a matter of making people aware of the good things happening in their community and I think often times people don’t appreciate which level of government is managing a particular issue. For example, when I was running for state representative for the first time in 2004, people stopped me all the time and asked me to stop the war in Iraq. I don’t blame the people there for not understanding the role that we play; I think it is incumbent upon the elected officials to educate the public about the things that they’re working on. For us, the biggest issue has been restoring some fiscal sanity and getting our fiscal house in order in Montgomery County and I think we’re working very hard to make the public aware of all of the changes that we’ve made in there that are benefitting them.

RB: So let’s just jump into that. Let me describe a politician to you and I’d like you to tell me where they fall in the political spectrum. This politician believes in keeping taxes down and also cutting government spending.

Where does that person fall on the political spectrum?

JS: I think that person is me, and I think that person would fall on the political spectrum somewhere in the middle.

RB: What we’ve seen on the national stage is kind of that polarization where if you’re interested in cutting taxes, you’re put in one camp and if you’re interested in government spending, you’re put in the other. Is there a balance between those two?

JS: There is a balance and the two are not mutually exclusive. I think people want to know that you’re operating an effective and efficient government. And when you’re doing that and you can show tangible changes you’re making to accomplish those dual objectives, then I think it’s easier to have the discussion about new revenues or more revenues in the public. What I fundamentally believe is before you go ask for

JOSH SHAPIRO’S

PRAGMATIC POLITICS

He’s helped turn the Montgomery County commissioners from divisive to a body that slashed spending and held the line on taxes.

His success has some expecting to take his sensible politics to a larger stage, but for now, he’s keeping his focus closer to home.

more revenue or before you increase spending on a particular program, you need to make sure that you’ve eliminated waste and duplication and abuse of the system so there are no tax dollars that are not being wisely used and once you do that, then you can have a responsible discussion with the public one way or the other. Where I think Washington has failed, is that they’re just having a discussion about new revenue when they’re not responsibly talking about cuts, or they talk about these extreme cuts without responsibly talking about revenue, and they’re doing all of this without ever talking about reforming the government in a way to eliminate wasteful spending. And I think that’s why the public is so frustrated by government there and in contrast, why I think they’re more optimistic today than they were a year ago about their county government.

RB: We’re on parallel tracks here; you’re in Montgomery County doing one thing, people in Washington are doing another. Can you talk a little bit about why you believe you’ve been effective at the county level?

JS: I’m a consensus builder and I’m someone that doesn’t subscribe to one doctoring or another, but rather just the goal of trying to get things done and meet the needs of my constituents. I’ve found an environment here in Montgomery County where dramatic reform was needed, I have a history of being a reformer in the state legislature and I think there was a natural extension of those reform efforts here in Montgomery County and I think when the public and your employees see you as trying to do the right thing and trying to make necessary change, even if it’s not the most popular decision at the moment, it is widely understood that it’s necessary and ultimately you gain the support of people to make that change.

RB: How far along would you say you are in accomplishing what you had hoped to accomplish when you became a county commissioner, knowing the need for reform at the county level?

JS: I would say that we’ve made great strides, but we’re certainly not done yet. One of the signature reforms of our first year was adopting zerobased budgeting. And this is something I’ve talked about and contemplated for many years in the state legislature, and that is instead of just simply passing the same budget from the year before with a slight cut or a slight increase, you really need to start with a blank sheet of paper and define the core mission of county government and the core mission of each department and determine what the cost is to meeting that core mission. And we did that, and it was an 11-month budgetary process as opposed to a three or four week budgetary process, which is what the county was used to in the past.

And the result of which was we were able to make really dramatic and sweeping positive change in our budget process. I’ll give you a few benchmarks of that. When we took office, our reserve fund was 20 million dollars, when my predecessors took office 4 years prior, the reserve fund was at 100 million. They wasted 80% of the reserve fund, lost

Q&A

17 JANUARY 2013

REGIONSBUSINESS.COM

the AAA bond rating as a result of it. In four years, the reserve fund declined. For the first time in four years, we actually increased the reserve fund. ... We’ve got mass infrastructure problems to focus on, we’re trying to make wise investments in technology that’s ultimately going to reduce our physical footprint, we’ve reduced about four percent of our workforce and we’re continuing to look at ways to consolidate. We had 58 governmental departments when we got into office, we are down to 50.

RB: Can you explain what you mean by structural deficit?

JS: You total up all of the different shortfalls we had, whether it was the [pension] payment, whether it was just simply them overspending by $10 million in the 2010 budget, whether it was unfunded liabilities, for example, they built a new wing on a prison but didn’t provide any money to staff it. When you put all of those things together, it totalled $49.3 million.

RB: You talked about massive investment and infrastructure; can you provide some detail around that?

JS: There has been an extraordinary deferred maintenance and frankly ignored problems for at least a decade.

The county owns lots of real estate in many buildings, three structures that our employees and the public rely on most are two parking garages right around the courthouse and 1 Montgomery Plaza, which is like our municipal office building, it’s 200,000 square feet.

The facade on 1 Montgomery Plaza is falling off and it’s known to be falling off for years and the garages are compromised, we need to repair/replace all three and the total price tag on that is at least $50 million. We have in excess of $100 million worth of road and bridge repair on county roads and bridges that are necessary. We have several million dollars in IT infrastructure that we need to invest in and we ultimately decided rather than buying all new hardware, we would move our operations to the cloud. Which reduced our capital cost and increased our operating costs, but ultimately it’s going to yield a savings for the county, so we did that.

RB: So far, things sound great. The expenses are going down, the efficiencies are increasing, what are your critics saying? What are you seeing from the other side?

JS: I can tell you that every single vote we’ve been put up in over the course of a year has been unanimous. So I have not had any opposition from our republican

The facade on 1 Montgomery Plaza is falling off and it’s known to be falling off for years. on the board, so that should tell a story.

And by contrast, if you look at the four years prior to us taking over, Montgomery County government was known for one thing and one thing only, and that was the bickering between the commissioners. And that is gone now. In its place are three commissioners who are working extraordinarily well together to tackle the major challenges we face.

I’m sure there are some who don’t like change and don’t like our method of change and would like to see the status quo, but I’m not particularly interested in status quo and reserving a system that wasn’t working for the taxpayers of our county.

RB: Why isn’t this thinking more widespread in government?

JS: I don’t know. I think it’s unfortunate that leaders at the national and some at the state level seem to be more interested in winning the new cycle and firing 140 character missives back and forth at one another, as opposed to simply doing the right thing and practicing good government, which I believe is ultimately the best politics. I fundamentally believe that the public just wants us after the elections are over to focus on the work in the office that we ran for and get the job done and each party will be rewarded around election time with electoral success. But when you try to win the individual new cycle, you end up angering the public and not getting done what you’re supposed to get done, and I think it has little, if any, appreciable difference ultimately on the election.

RB: If we can move on a bit, you mentioned the state. Governor Corbett has set out another aggressive agenda for 2013 and a lot of that has to do with reduced funding for a number of initiatives. What impact have you seen on the changes the state has

made and how does that trend effect the way you look forward?

JS: The governor’s budget cuts have had a severe impact on Montgomery County, and many other counties. In particular his cuts to human services have really hurt our constituents and really put a strain on our budget. I hope that in his next budget, he’ll reverse his course and begin to fund these important and necessary programs. I don’t really spend much time worrying about those things I can’t control. The governor has his agenda and his reasons for doing things and all I can do is deal with the impact of his budget and try to work through them the best I can and the most innovative way I can.

RB: What do you see as the biggest challenge facing Montgomery County in the coming year?

JS: Just continuing getting our fiscal house in order. Like I said, we have a good foundation now, but we still need to make some tough choices. We want to continue to work with area businesses to help them grow and be successful and to attract new business to our county and we’ve been working hard on that. And making sure our infrastructure investments are made early on this year so we can begin to see some tangible results.

RB: We’ve spent a lot of time talking with Governor Corbett, in particular addressing his re-election bid that is coming up in two years. Your name is one that continues to surface.

I know you’ve kind of dismissed those rumors or overtures, but I’m wondering if you can give us one more look at how you respond to people saying, “Gee, Josh you should really think about this in 2014.”

JS: Look I’m honored and flattered that people think that I could move the state in the right direction, but right now I’m focused on doing my job here

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in the county and making the necessary change to make our government more effective and efficient.

RB: My brother used to tell me you never interview for the job; you interview the job that this job is going to get you. So what job is Josh Shapiro interviewing for right now?

JS: Respectfully, I don’t view politics that way. I know some do, I don’t. I always believe that if you do a good job, the job people elect you to do, and you also manage your politics effectively, that opportunities will come. I’ll make a decision at the appropriate time, about what, if any, the next steps are going to be.

RB: You’ve done a really excellent job of illustrating the political theater that is happening down in Washington. What would it take to get that pragmatic civility you’ve worked hard on in Montgomery County to happen on the bigger stage?

JS: I think politicians need to be woken up either by major issues they’re confronting that forces them to put partisanship aside and force them to focus on real results and some of them need to lose, frankly, and a new generation with leaders with a new mindset need to come in. I think it would a combination of those two. The country faces ... [an] unbelievably serious fiscal crisis in a couple months, relative to the debt limit, and I would hope that congressmen and senators would recognize the serious nature of the issues at hand and focus on what’s right for the country and not just what’s right for the party caucus or for the particular moment.

RB: Anything else you want to toss out to our readers?

JS: Montgomery County is open for business and we have an extraordinary new commerce department that is uniquely situated and run by a businessman to be able to help businesses locate in Montgomery County and grow in Montgomery County. We put a lot of emphasis on the creation of the commerce department, the consolidation of many other departments that are dealing with business, so that we focus like a laser beam on meeting the needs of the business community in Montgomery County.

More online Read the complete Q&A with Josh Shapiro on our website: RegionsBusiness.com

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CHAMBER REPORT

DELAWARE COUNTY CHAMBER

LOWER BUCKS COUNTY CHAMBER OF COMMERCE

Presidential Lunch Planned

Chamber Partners with Villanova To Offer Certification Program

Lunch with the President, an opportunity to meet Delaware County Chamber of Commerce President Alex Charlton or mingle with other businesses, will be held 11:30 a.m. to 1 p.m.

January 17 at the Edgmont Country Club, 5180 We s t Chester Pike, Edgemont, Pa. The family-owned and operated Edgmont County Club is currently celebrating the 50th anniversary of its founding.

Tickets to the event, catered by Pronto Catering, are $25 each for members or $35 for non-members.

For more information, visit www. delcochamber.org.

Villanova University partnered with the Lower Bucks County Chamber of Commerce to offer a 13-week Certificate in Human Resources Management course.

The class will be offered 6 to 9 p.m. Tuesdays beginning January 29 at the chamber office, 409 Hood Boulevard, Fairless Hills.

Under the direction of professor Richard Handschumacher, students will be prepared for the senior professional in human resources exam or the professional in human resources exam.

When students com-

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To register, visit www1. receive the certificate in Professional Human villanova.edu/villanova/ Resource Management continuingstudies/profrom Villanova University, fedprog/noncreditprog/ along with 3.5 Continuing hrstudies/hrmanage.html.

PENNSYLVANIA CHAMBER OF BUSINESS AND INDUSTRY

Social Media Presence Expanded The Pennsylvania Chamber of Business and Industry is expanding its social media outreach in 2013 to reach out to member companies.

The PA Chamber’s Twitter page, with more than 2,575 followers, is now using a new hashtag — #PAChamberevents — that will enable followers to easily search for information on roundtables, conferences, summits, and other educational forums that the PA Chamber hosts throughout the year.

The Chamber also updates its LinkedIn group page and Facebook page with photos and details of upcoming events.

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17 JANUARY 2013

REGIONSBUSINESS.COM

ESSAY

35

The Race: NYC Marathon as Metaphor for Our Times

Alan Beck, a practicing physician in Minnesota, is the author of 'A Southern Solution' and 'A Faithful Proposal.'

Editor’s note: The author originally posted this essay with this preamble: “Because of sensitivity about the victims of Hurricane Sandy,The New York Marathon is rescheduled for the day after Thanksgiving, Black Friday.

The event lives up to its billing.” teve Kopfklopper is standing at the crowded finish line as the long procession of colorfully dressed, sweaty runners comes streaming by.

He spots his grandson, Jonathan, coming to the finish line dressed in his black leotards, light royal blue sweatshirt with Columbia University embroidered on it, and a black headband/ear muff combination. Sweat is rolling down his smiling face.

His blondish, curly hair stands out from under the headgear. It’s about 45 degrees with little wind and the sky is overcast but has visible blue sky breaking through. He walks over and greets his grandson.

He offers him several Hostess Twinkies, a relish of his own youth and soon an artifact of the past. Jonathan grabs the Twinkies and quickly devours them. Kopfklopper is thinking the marathon is a great way to get young people to stop or postpone texting.

“Well done, Jon; doing it in three and a half hours is great! I’m proud of you running the rescheduled marathon. What a great idea to have the New York Maration on Black Friday and have all these people out and then ready to shop.”

“Thanks, Grandpa. I really appreciate you coming out, especially knowing that you had to fly out from Puerto Vallarta to be here.”

“My pleasure; you know, your mom and dad are just about to return from Italy and I thought someone should help you celebrate the event. I’m proud of you doing it.“ “Cool.”

“What was the highlight of the run? I know you’ve been training for a long time.”

“Seeing Mayor Bloomingbird and President Omar jogging; I passed them by and saw them sharing embraces, and throwing candy to the homeless was the first highlight.

They promised the homeless and those whose houses were badly hit 2% of the revenues to help them out! But, I have to say, that wouldn’t cover much of the destruction I saw in Staten Island at the start of the race. It was fun knowing that Trump was running behind me; couldn’t see him but sure could hear his mouth running. The last highlight was

S

I have had nightmares that one day the august United Nations would vacate the Allies win in WW2 based on likely use of steroids in the battlefield.

the great, cheerful support staff with all the hydration stations every mile. Every refueling station and first aid station was named for an international or national city. One weird thing was one of the stations was covered, like no one was there!”

“I bet that was called the Benghazi station.”

“You got that right, good guess.”

“Thanks, Jon, something must have gone awry, but the truth will one day come out. I love your mayor; he’s quite the brain. Figuring all that stuff out about global warming and sharing views with all of us.”

“I smell a little cynicism, I know you,” Jonathan states with an amused smile. “”I used to be able to get that by you but now that you’re a freshman at Columbia, I should have known better. Global warming is surely due to hydrocarbons, but he’s supersizing the impact. A third of global warming is likely due to the hot air that politicians all over the world produce.” Kopfklopper returns Jon’s amused smile.

“I should have seen that coming.”

“Maybe, maybe, but even I change some.

Also want to thank you for not wearing anything tacky on your school sweatshirt, like “chainsaws are outdoor toys”; you know, the stuff that campuses just don’t’ seem to tolerate anymore, you could be hurting someone’s feelings.”

“There’s been a big movement to restrict those kinds of expressions. Free speech is not as free as it used to be. So how long are you staying and what are you going to be doing?”

“Let’s go get a bite at a deli and talk. I’ll be

around for at least week. Thinking of setting up a new business venture, Biographer-R-Us. Everyone deserves a good biographer so that the true you comes out; believe me you never want to leave it to the media, as they see reality through variable prisms depending on their current mindsets and agendas.”

“OK, OK; that sounds good; there’s a great deli just around

the next corner.”

They walk to the neighboring deli with Kopfklopper having an arm around Jonathan’s right shoulder.

“I’ve got to tell you that I almost set up a booth at the beginning of the race. I was going to sell steroids and growth hormone to help everyone out.”

“What changed your mind?”

“The realization that society might just not be ready for that. You wouldn’t have all the hearings in Congress about the stuff and their agendas would be vastly reduced. Having those hearings on athletes makes them feel important and shows they’re minding the store. Meanwhile they and their cronies get to persistently pick everyone’s pockets. I have always wondered what would happen if everyone in sports and life took the stuff.

Governments might actually achieve something or have one less excuse and national and international sporting organizations would reduce their budgets; you wouldn’t have as many victories to vacate. I have had nightmares that one day the august United Nations would vacate the Allies win in WW2 based on likely use of steroids in the battlefield. They would award the victory to the Germans and the reparations would be all McDonald restaurants in Europe.”

“But what about the Japanese then?”

“They’re not black, Latinos, or Muslims and the Chinese have them on their s*** list; they wouldn’t care.”

They find the deli and soon fill their cravings.

36

17 JANUARY 2013

REGIONSBUSINESS.COM

OPINION

Public Banking a Solution to Dysfunctional Banking System T

Mike Krauss is a director of the Public Banking Institute (learn more at publicbankinginstitute. org ) and is chair of The Pennsylvania Project, a nonpartisan public policy advocacy 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.

pal bonds, at substantially reduced he American banking industry interest and debt service borne by is in crisis. As a result of the taxpayers.

Wall Street bailout and the ... a public bank can underwrite municipal Only North Dakota has its own Dodd Frank “reforms,” the concentrabank.

Over the past decade the Bank tion of assets and deposits in the bonds, at substantially reduced interest and of North Dakota (BND) has generated “too-big-to-fail banks” is now greater an average of $30 million a year in than it was before they failed and debt service borne by taxpayers. non-tax revenue for the state and its were rescued. people, and has a current commercial The St. Louis Federal Reserve loan portfolio of more than $2.9 reported that at the end of 2011, billion invested in the state’s economy five Wall Street firms — JPMorgan through its community banks — in a Chase & Co., Bank of America Corp., state with a population no larger than Citigroup Inc., Wells Fargo & Co. some suburban Philadelphia counties. and Goldman Sachs Group Inc. — The bank is run by civil servants on controlled 48 percent of total U.S. was brought to the brink of financial collapse civil servants’ salaries – no bonuses or banking system assets:$8.5 trillion, because of a systemically corrupt culture on commissions as incentive to speculate or take equal to 56 percent of the U.S. economy. The Wall Street.” undue risk. The bank is overseen by a board other 7,307 banks held the remaining 44 As Nobel Laureate Joseph Stiglitz and whose members are all bankers. It is publicly percent. others have warned, this corruption and audited.

At the same time, affordable credit, the unprecedented lawlessness – mortgage fraud The BND has been instrumental in suplife blood of a modern economy, remains from bottom to top, compromised rating porting perhaps the nation’s strongest banklargely unavailable or prohibitively expensive agencies, rigged Libor rates and municipal ing industry: not one failure as the economy for the businesses that can power economic bond markets, laundered billions from Mexicollapsed, and more than double the national development and job creation. can and Columbian drug lords and, accordaverage of bank offices per capita.

The Wall Street–Federal Reserve banking ing to a U.S. Senate investigation, clients with The Center for State Innovation concludes: system fails in its most important function: terrorist ties – is having a corrosive effect on “The extra leveraging ability that the state the effective allocation of capital into the our economy: crowding out honest investbank provides through participation loans, productive economy. Investment is directed ment and further distorting markets. the increase in municipal deposits from away from the production of new goods and David M. Sachs at the Psychoanalytic letters of credit, and the other supports that services which create jobs, and into “financial Center of Philadelphia explained how these a state bank can provide as a ‘banker’s bank’ products” which produce few jobs. practices and unchecked individual criminal are all critical in helping to strengthen small And it is going to get worse. behavior are destroying trust and effect and/or young banks.”

A recent article in American Banker markets: “Normal expectations of what is In a recent conference call with other described remaining smaller and community safe and dependable [are being] shattered.” bank CEOs around the nation, the CEO of banks as under siege, forced to comply at In a recent op-ed in The Washington one small North Dakota bank said: “When a cost they can’t survive with Dodd Frank’s Post, GOP stalwart Craig Shirley wrote: the crash hit, the BND never blinked and capital requirements and regulations.

“Wall Street is too fearsome and corrupt for kept the credit flowing.” The CEO of a large, Of course, that’s what Wall Street wanted anyone’s good. We should find a way to create regional North Dakota bank said this: “With and got, with its army of lobbyists and an 50 Wall Streets, so that money can stay in the the support of the BND, we can go toe-to-toe ever helpful Congress. states and corruption can be kept to a miniwith the big boys.”

It is estimated the U.S. will lose more than mum and law enforcement to a maximum.”

Community banks in North Dakota are 2,000 of its remaining community banks in What Shirely, Martens and a growing taking back market share from Wall Street, the next two years. The concentration in Wall army of problem solving Americans are while in most of the nation they continue to Street will grow ever greater. Pennsylvania’s talking about is public banking. lose market share. community banks will not be spared.

Public “partnership” banks use public Twenty states and an increasing number Local businesses banking with Wall Street funds to capitalize a bank which assists comof municipalities are considering creation of firms will find themselves talking to little munity banks to get affordable credit into public banks. A national network of public more than “paper pushers,” with decisions the economy, for economic development and banks, providing locally generated credit for being made in regional centers, by people jobs creation – and grow their profits and locally directed economic development and who know little of the businesses and have no market share. jobs creation is the long overdue alternative stake in the local community or economy.

The profits of the public bank come back to a dangerously concentrated and dysfuncPam Martens writes on her blog, Wall to the state, city or county that charters the tional banking system and the distorted Street on Parade, “That level of concentration bank as non-tax revenue for the general fund. markets it has produced. should be a wake-up call to a country that And a public bank can underwrite munici-

17 JANUARY 2013

REGIONSBUSINESS.COM

OPINION

37

Lottery Privatization Makes Sense As Long As Details Do, Too

T

he hallmark of Tom Corbett’s short tenure as Pennsylvania governor is clear - difficult

issues.

The Jerry Sandusky scandal and the resulting sanctions against Penn State’s football program kept the state in the national spotlight for far too long and in the worst possible way.

In a sharp turn against the tide, he proposed slashing government spending, putting forth a budget with a 3 percent spending cut. State and state-related universities felt the sting most sharply, seeing their funding cut in half.

Even the positives have proven difficult. The discovery of huge reserves of natural gas in the state led to a financial windfall, but not without protracted and contentious debate over the enivronmental impact of hydraulic fracturing.

The next chapter of Gov. Corbett’s tumultuous tenure arrives in the form of lottery privatization.

While it certainly fits the mold of smaller government and getting the government out of the business of being in business, it represents uncharted waters.

At its core, the deal makes sense for Pennsylvania. The government doesn’t need to be in the lottery business. And the deal proposed by Camelot Global Services looks like a winning bet.

The British company is promising to earn the state billions more in revenue over the course of the 20-year contract.

The equation seems simple. The

state sheds itself of the burden of running the business, increases profits and, to settle another problem, creates a more consistent revenue stream.

There are skeptics, of course, and they raise some legitimate concerns, though the very idea of privatization is not among legitimate concerns.

Nonetheless, Camelot promises lofty revenue numbers. Will the state be protected if those projections are not met? Inserting another layer (Camelot) creates additional expense. How will that expense be met and still allow additional profits? What about the impact on the state’s casinos? Concern has also been voiced about the lack of specifics made available to the public regarding the contract.

Like any deal, the devil will be in the details.

However, in these negotiations, Pennsylvania holds the upper hand and, therefore, significant leverage.

Pennsylvania would be the first state to privatize its lottery system.

So if Camelot can show it to be capable of running it efficiently, the company would stand to gain a king’s ransom from other states eager to cash in on privatization.

That means Camelot has a great deal at stake here and it also means that Pennsylvania has the leverage.

It is up to Gov. Corbett and the state Senate to scrutinize the proposal and make sure that Pennsylvania gets protection against possible failure. This could be lucrative, but it’s not a sure bet.

COMMENTARY FROM ACROSS THE WEB

Lottery Not Broken, So Why Privatize?

@terrymadonna

I am disappointed in Gov. Tom Corbett for planning to outsource the management of the Pennsylvania Lottery to a company from a foreign country. I don’t think the lottery department should have broad authority to do this. A 20- to 30-year management contract is unreal. No one knows how long people will continue to spend money on the lottery.

Right now, we have Pennsylvania workers doing a good job for our lottery. Why change?

AGNES PELCHER, POST-GAZETTE.COM, 15 JANUARY 2013

Review All City Services, Expenditures As part of the Actual Value Initiative, I propose that we comprehensively review city services.

Automatic funding increases are no longer tenable in an environment in which revenue sources are declining and tax rates are on the rise. Zero-based budgeting, in which each department provides a line-by-line justification of its annual budget, has been adopted at the state level and elsewhere. It should be in place here, too.

PHILADELPHIA COUNCILMAN JIM KENNEY ON PHILLY.COM, 15 JANUARY 2013

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

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

Since Camelot owned by a pension fund. Should Pa public pension funds run lottery - - solve pension problem, keep unions, raise revenue?

Hmm. 14 JANUARY 2013

President Must Avoid ‘Lame Duck’ Baggage As President Obama begins his second term in office, he must confront the conventional wisdom that most second terms are unproductive because the administration gets tired, the first team begins to depart, and the media and the political opposition labels you as a “Lame Duck!”

The President cannot let that happen. There are simply too many vital challenges the country must meet head on that simply can’t be deferred for four years.

ED RENDELL, PENNSLIVE.COM, 14 JANUARY 2013

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

38

17 JANUARY 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

After a protracted work stoppage, the NHL opens its season Saturday.

$336M

Value of the Philadelphia Flyers franchise as calculated by Forbes.com.

39

27,436,000 Total page views for VisitPhilly.com and uwishunu.com, two websites operated by the Greater Philadelphia Tourism Marketing Corporation to promote tourism in the Philadelphia region.

1

$150M

Average number of Republicans in the U.S. Senate that voted to increase the debt ceiling during Barack Obama’s tenure.

Price paid by Comcast Spectacor for the franchise in 1996.

$140M

2.2

Amount paid by the NHL to acquire the Phoenix franchise out of bankruptcy in 2009.

Average number of trips consumers made to a supermarket each week.

$67

Average price of a Philadelphia Flyers ticket, which ranks fifth-highest in the league, according to Forbes.com.

63,000 Average number of households that watch the Flyers on CSN Philadelphia, the fifth-highest total in the NHL according to Forbes.

2 Stanley Cup championships won by the Philadelphia Flyers. The Flyers lost in the finals four times.

Average number of Republicans in the U.S. Senate that voted to increase the debt ceiling during George W. Bush’s tenure.

16

94%

Percentage of uwishunu.com users who said they attended an attraction or event featured on the website.

101.2%

Increase in the number of visits to VisitPhilly.com and uwishunu.com from2010 to 2012.

The two sites generated more than 8.5 million visits in 2012.

1

Rank of visitphilly.com in terms of the most-visited destination websites among the 10 largest cities in the U.S.

41,000

Approximate retweets of GPTMC in 2012.

40,004

Approximate number of VisitPhilly.com followers on Twitter.

169,000

Number of times people watched videos on Visit Philly’s You Tube channel in 2012. Uwishunu’s “Philly 101” series featured 101 new videos in 101 days.

93,363

Number of visits to VisitPhilly.com, from Canada in 2012.

More than a half-million visits came from 213 countries.

727%

Increase in mobile traffic to VisitPhilly.com from 2010 to 2012.

Last year, about 26% of traffic came from mobile devices.

Consecutive years that Wegmans Food Markets has made the Forbes list of the top 100 places to work.

The company ranked fifth in the list to be published in the February 4 edition of the magazine.

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