Region's Business 28 March 2013

END CITY’S JOB-KILLING TAX STRATEGY SENATE TAKES ON LIQUOR PRIVATIZATION

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REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

LOCAL BEER INDUSTRY SERVES UP RECIPE FOR

SUCCESS

Small-batch breweries have crafted a community that’s fueled growth and national acclaim.

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28 MARCH 2013

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28 MARCH 2013

REGIONSBUSINESS.COM

36 Medicaid: No Free Lunch

Gov. Corbett did the right thing in asking for more flexibility on Medicaid, realizing that there were strings attached to the federal offerings.

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CONTENTS

1519 Walnut Street

Something Brewing

Small-batch brewers have revitalized the beer industry here.

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11 Council

Supports Expansion Philadelphia City Council expressed support for expanding Medicaid.

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2013: YEAR OF THE INNOVATOR

18 Get Your Geek On

Philly Tech Week features more than 70 events, making for a jampacked, can’t-miss agenda.

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25

Exhibits Explore Prohibition, Beer

The National Constitution Center’s exhibit on Prohibition has proven to be one of its most successful endeavors and the Philadelphia Museum tapped into the region’s beer legacy. !

12 Preview: Senate Takes on Liquor

The bill aimed at getting Pennsylvania out of the liquor business passed the House after significant changes, but will the Senate get something to Gov. Corbett’s desk?

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23 Beer Law Changes Remain Unclear

! When Gov. Corbett drafted a bill to privatize liquor sales, he included big changes for beer sales, too. The House stripped out a lot of those, but no one is sure what’s next.

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2,600-6883 SF Available For Lease 30 Feet of Walnut Street Frontage Liquor License Available Neighboring tenants include Barbour, Govberg Jewelers, PNC, Apple, Guess, Ubiq, Gap, LuLulemon, Diesel, and Brooks Brothers

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Job-Killing Tax Strategy

! One Philadelphia businessman says the city’s growth in population is good, but might be masking deep problems rooted in the city’s unhealthy tax burden on city businesses.

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

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28 MARCH 2013

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EDITOR’S DESK

Twitter Shows Worst of Privatization Debate

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

You can contact him at ksmith@regionsbusiness.com.

Twitter is awesome. I love it (follow me @ coachkarlPA) and use it every day.

That being said, I’m not one of those people who checks their Tweet stream every three or four minutes and last week I was reminded why I follow that practice.

The state’s House of Representatives were kicking around the liquor privatization bill.

With something that big on the table, I made it a point to be a little more Twitter-focused.

And with something that big, I expected a healthy back and forth. But it went from healthy, to perplexing to sickening in short order.

Lots of people - including politicians and lobbying groups - were tweeting away, expressing their bias, explaining what was happening on the floor and some engaging in a little back and forth.

Plenty of good points were made, then the whole thing started slipping downhill.

One lawmaker asked what would happen if the state didn’t make as much money moving forward as analysts projected. I had

to read that one twice, shake my head, then read it again. Pennsylvania is only one of two states - Utah being the other - that has total control over the liquor business. I thought (and tweeted), here’s a concept, why not tap into the other 48 states that have done this already and figure out how they make enough money. Simple, right?

Another lawmaker questioned what would happen if consumers had a bad customer experience. My blood pressure literally tripled as I thought, gee, why don’t we ask PennDOT for some pointers here?

It went on and on like this. In all, more than seven hours were invested in the debate, with probably 10 percent worthy of being called productive. At some point, something had to happen. Either make realistic concrete suggestions to improve the bill or put it on the floor for an up or down vote.

Yet the chatter continued.

This sort of idiocy is indicative of the general problem with government. There comes a time when stuff has to get done, so just get

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it done. In this particular instance, the discussion should start with a simple question: Strip away all the finances and everything else, should the state be in the liquor business? If the answer is no - and that seems like the only real common sense answer - the only reasonable follow up question is, what’s the best way to make this happen?

Of course, the nonsense eventually wound down and the bill got its moment. The House passed the most sweeping liquor legislation in the post-Prohibition era and now the whole circus moves to the state Senate.

Here’s to hoping the senators can keep a more practical focus during the debate, pass a bill, then reconcile with the House and get something on Gov. Corbett’s desk.

Even with all the goofiness, the House deserves credit for getting the work done. Our hope must be that next time they have such an issue (turnpike or lottery privatization?), they can be a little more efficient.

That would be something worth retweeting.

28 MARCH 2013

WEEKLY BRIEFING: GAMING

REGIONSBUSINESS.COM

ATLANTIC CITY

Revel Files For Bankruptcy Atlantic City’s Revel casino will begin the restructuring process after formally filing for bankruptcy Monday.

$2.4B

Original value of Revel

$500M

Revel’s maximum estimated value, according to disclosure forms sent to creditors

$1.5B

Revel’s debt, according to the filing

$272M Revel’s target debt

$111M $43M Revel’s 2012 loss

Revel’s projected 2013 loss

$9M

Revel’s projected 2014 earnings (before interest, taxes, depreciation and amortization) PRESS OF ATLANTIC CITY

Proposals By The Numbers: Casino Revolution Each week, Region’s Business will feature one of the proposed casinos vying for Philadelphia’s second gaming license. Find all features online at RegionsBusiness.com.

BY SANDY SMITH Project name: Casino Revolution Developer: PHL Local Gaming LLC Operator: PHL Local Gaming LLC Location: Front Street and Pattison Avenue, South Philadelphia Particulars: Gaming hall: Phase I: 2,400 slot machines, 105 table games; Phase II: up to 5,000 slot machines depending on market demand Hotel: 250 rooms Other ancillary facilities: Phase I: Italian restaurant, steakhouse, sports bar, coffee/espresso bar, 300-seat buffet, 156seat cafe; Phase II, unspecified number of additional hotel rooms and entertainment/ event center and meeting space. Parking: 1,600-car covered garage

tion and the speed with which the backers right next to the Walt Whitman Bridge onsay they can get it up and running: “We and off-ramps from I-76 and I-95.

This the backers promote as an asset: Can Open A Quality Facility Six Months Sooner Than Any Other Bidder,” they said They note that it is farther away from the in their presentation to the Pennsylvania nearest residential neighborhood than any Gaming Control Board. (The expedited other project, and we suspect the residents The developers of Casino Revolution facility would contain about half the slots of that neighborhood would agree with make much of their local roots, but that proposed for Phase I, about 50 table games PHL Local Gaming that this is a positive doesn’t make their project stand out from and 10 poker tables, the Italian restaurant, attribute.

Given that the site is best suited for auto the others; both Bart Blatstein and the bar and buffet.) people behind the Market8 proposal can Unless one arrives by car, this is the access, the small size of the parking garage make the same claim, and Steve Wynn has least accessible of all six proposed casino compared to the other proposals strikes local ties. sites, located as it is at the far southeastern us as odd.

On the other hand, if the casino is built The features that make this project corner of the South Philadelphia stadium/ distinctive are its relatively remote loca- warehouse/light industrial district — but out to the projected maximum size, it would be the largest gaming hall of the six proposed.

And while the presence of a hotel indicates that the developers have aspirations of running a destination facility, it lacks some of the other amenities being offered at the destination resorts, such as shopping, spas or meeting facilities.

The project is projected to cost $428 million. The developers did not provide total economic impact figures in their presentation, but they estimate that the project will directly or indirectly generate 3,188 jobs in Pennsylvania, 2,599 of those in Philadelphia, and $147.2 million annually in city and state taxes and fees.

The ownership group also touts itself as being the most diverse of the six bidders with the highest commitment to diversity in construction and employment as well.

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

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28 MARCH 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

TRANSPORTATION

MANUFACTURING

SEPTA Proposes $1.32B Budget

Manufacturing Grows Unexpectedly in March The general economic index provided by the Federal Reserve Bank of Philadelphia minus 12.5 in February to 2 in March (a positive reading shows regional growth).

According to Bloomberg, the regional economic forecast anticipated a minus 3 reading on the index, though estimates ranged from minus 8 to 8.5.

The March data shows that there was an increase in both orders and factory employment, according to the Bloomberg report.

SEPTA’s proposed 2014 budget — which totals $1.32 billion — includes $25 million in additional revenue to be generated from fare increases set to arrive July 1, according to a report in The Philadelphia Inquirer.

The 2014 budget — which is about 3 percent larger than SEPTA’s current budget — also includes a $34 million increase in labor and benefits costs (which make up 70 percent of SEPTA’s expenses), according to the report.

MILITARY

Horsham Site Chosen for Drone Operation Base Pennsylvania Air National Guard’s 111th Fighter Wing, in Horsham, Pa., has been selected by the U.S. Air Force for a “new remotely piloted aircraft mission,” effective October 1, the National Guard said in a statement. About 75 full-time and 175 part-time jobs will be added to the Horsham site, according to the statement.

“This is great news for Pennsylvania, especially when you consider the government cutbacks nationwide,” Maj. Gen. Wesley Craig, Pennsylvania’s adjutant general said. “We are fortunate that Governor Tom Corbett and local, state and federal elected officials were able to help secure such a major military and economic victory for Pennsylvania.”

SUPERSTORM SANDY

Christie Seeks $250M for NJ Homeowners New Jersey Gov. Chris Christie said last week that he is asking the federal government for $250 million to buy out homeowners with homes in flood-prone areas who want to sell, the Associated Press reported.

That would allow the government to purchase 1,000 $250,000 homes.

City Welcomes Feedback On Central District Plan

BY SANDY SMITH At its March 19 meeting, the Philadelphia City Planning Commission heard staff member Laura Spina present the final draft of the commission’s Central District Plan, the fourth of the 18 district plans that make up the heart of the Philadelphia2035 master plan to reach final draft stage. (The other three — Lower Northeast, West Park and Lower South — have all been approved.)

The plan contains numerous recommendations for improving the livability, attractiveness and accessibility of Central Philadelphia writ large — a zone that encompasses the territory between the rivers from Girard Avenue on the north to Washington Avenue on the south.

Some of the key recommendations include: — Expanding the pedestrian realm and adding landscaping and bicycle transportation improvements to unify the public spaces at Center City’s core: City Hall/Dilworth Plaza, Reyburn (Municipal Services Building) Plaza and JFK Plaza (LOVE Park), plus the privately owned open space throughout Penn Center — Stimulate redevelopment of West Callowhill by providing improved transportation links, most notably bus rapid transit in the Reading Railroad City Branch cut (“Cultural Corridor BRT”)

— Revitalize the Ridge Avenue and North Broad Street commercial corridors through upzoning, improved east-west connections, greening projects and higher density around transit nodes, in particular the Broad Street Line’s Fairmount and Spring Garden stations — Transform Franklin Square into an actual neighborhood by narrowing thoroughfares, restoring and adding streets and redeveloping much of the area’s surface parking lots Other recommendations deal with improving the Central District’s physical infrastructure, restoring City Hall to a status worthy of a National Historic Landmark, relocating obsolete Police Department facilities, adding parkland and green space (including the Reading Viaduct), and marshaling the city’s forces to compel owners of vacant properties to redevelop or sell their holdings.

The final draft of the Central District Plan and presentations from public meetings held to discuss it are available online at the Philadelphia2035 website.

Public comments and feedback on the plan may be addressed to laura.spina@ phila.gov from now through May 15.

The City Planning Commission is slated to adopt the final version of the plan on June 11.

This article was originally published on the Philadelphia Real Estate Blog.

BY THE NUMBERS

State of the City Pew Charitable Trust recently released its 2013 State of the City report, detailing many aspects of life in the City of Philadelphia.

3.8%

Philadelphia’s population growth from 2006 to 2012

18%

Increase in median home sale prices over the last two years

$34,207

Median household income

$14,586

Median household income in North Philadelphia (East)

$93,222

Median household income in Society Hill

1,900

Fewer jobs in Philadelphia in 2012 than in 2008

6.2%

Unemployment rate in 2006

10.7%

Unemployment rate in 2012

38%

Decrease in manufacturing jobs since 2002 CURBED.COM

28 MARCH 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING EXECUTIVE BOOKSHELF

WHO TO FOLLOW

@JoshSevin Josh Sevin, Deputy Director of the @EconomyLeague of Greater Philadelphia RT @JoshSevin: Do we need a nat’l #infrastructure bank to replace #PHL’s aging water & sewerage systems? #WorldClassPHL RT @JoshSevin: @Michael_Nutter about to announce @startupPHL seed fund partner and ideas competition winners - great day for #entrepreneurship in #PHL

Toughness The popular ESPN basketball analyst and former Duke player looks at the true meaning of toughness.

If anyone knows tough, it’s Jay Bilas. A four-year starter at Duke, he learned an incomparable work ethic under coach Mike Krzyzewski, battling against the greatest college players in the game.

Featuring never-before-heard stories and personal philosophies on toughness from top players and coaches including Coach K, Bob Knight, Grant Hill, Mia Hamm, Jon Gruden, Tom Izzo, Bill Self, Curtis Strange, and many others — Bilas redefines what it takes to succeed.

Amazon.com

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TapeACall Pro Whether you need to record an interview, or just record a call you want to share with someone, TapeACall ($9.99) can do just that.

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Recordings show up instantly in the app and can be shared via email, SMS, Facebook, Twitter, or even downloaded to your computer.

TapeACall.com GOTTA-HAVE-IT GADGET

Foldaway Carry On This ($200) carry on can hold a stand suitcase’s worth of clothes but then folds to become just three inches wide for storage.

The press of a button engages or releases the hinges and opens or closes the frame.

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RESTAURANT ROUNDUP Where to celebrate Passover in Philadelphia, according to uwishunu.com:

Le Castagne: Fourcourse meal ($35) daily until April 5 Zahav: Six-course meal ($48) daily until April 2 La Calaca Feliz and Cantina Feliz: Four-course meal ($30) daily until April 1

National Museum of American Jewish History: Freedom Seder Revisited will be held 6:30 p.m. Thursday, March 28.

Tickets are $10 for members, $15 for non-members.

When a Hotel isn’t the Answer Furnished park view residences with spacious living rooms, full kitchens and hotel amenities, available by the week or month.

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28 MARCH 2013

REGIONSBUSINESS.COM

DEALBOOK

MEDIA

Journal Register Sale Approved A judge last week approved Journal Register Company’s sale of assets to 21st CMH Acquisition Corp. for $114 million in secured debt and $6 million in cash, the Associated Press reported.

Union employees objected to the sale, but a federal bankruptcy court judge said a collective bargaining agreement will expire before the sale, according to the Associated Press.

Journal Register owns 18 newspapers, including the Delaware County Times, The Daily Local News, The Mercury, The Times Herald and The Trentonian.

PNC Bank Building Sold For $74.7M Liberty Property Trust recently announced it sold the property at 8800 Tinicum Boulevard in Philadelphia to an affiliate of Cole Real Estate Investments, for approximately $74.7 million.

The 441,000-squarefoot facility is occupied

by PNC Bank, for whom Liberty developed the property in two phases, delivering in 1997 and 2000.

CBREMARKETPLACE.COM

2000 Market Sold to Rosemont Realty

Supervalu Closes Sale of ACME

RETAIL

Philly Pretzel Acquires Taste of Philly Stores Philly Pretzel Factory has acquired three Taste of Philly stores in Philadelphia, according to a report on Philly.com.

Philly Pretzel Factory, which has stores from New York to North Carolina, plans to open 16 additional stores in Pennsylvania, New Jersey and in the Denver area, according to the Philly.com report.

Babbel Acquires PlaySay App Babbel.com recently announced it will complete the acquisition of Philadelphia-based PlaySay, a social language learning app for the iPhone that incorporates real conversations and pronunciation feedback with native speakers.

PlaySay CEO Ryan Meinzer will join the Babbel Team as a strategic advisor.

RETAIL

Supervalu announced last week that it had completed the sale of five grocery chains, including East Whiteland Township, Pa.-based ACME. ACME had been joined by Albertson’s, Jewel-Osco, Shaw’s and Star Market in a sale to an investor group led by Cerberus Capital Management announced in January.

ACME, the second-largest food retailer in the Philadelphia region, has 112 stores in Pennsylvania, New Jersey, Maryland and Delaware.

TECHNOLOGY

2000MARKETST.COM

CBRE Global Investors traded three Class A properties, including 2000 Market Street, to Rosemont Realty. Financial terms of the deal were not disclosed.

The 29-story, 665,649-squarefoot office building in downtown Philadelphia was joined by two eight-story structures in Herndon, VA. “We have successfully completed our business plans for these properties in line with the value-added strategy for our CBRE Strategic Partners U.S. series of funds,” said Vance Maddocks, president of CBRE Strategic Partners U.S., according to CoStar.com.

Roundhouse, Health Center, Morgue Headed For Sale If Mayor Michael Nutter’s plan to house the Philadelphia Police Department, the city morgue and Health Center offices (currently at 500 South Broad Street) at 4601 Market Street, then the three old offices will likely be headed to the real estate market.

The Roundhouse, which currently houses the Philadelphia Police Department, is located at 8th and Race Streets.

The City Morgue is located in University City.

District Health Center No. 1 is located at Broad and Lombard Streets.

The Roundhouse

JOHN DONGES

15M

Babbel.com users across the world

8M

Downloads of Babbel.com apps so far

200%

Babbel.com’s annual growth “Education is going mobile,” said Markus Witte, CEO of babbel.com. “This acquisition represents a continuation of our strategy to offer a complete range of mobile solutions to language learning and the possibility to leverage market share in the US.” Babbel.com will recruit Temple University alumnus Ryan Meinzer as advisor for babbel’s US operations.

“With an affordable price point and focus on mobile, babbel.com is poised to usurp giants like Rosetta Stone who have neglected the majority of the users in the USA market that spend less than $100 per year on self-study language learning products. The winner of the race in language learning software will be the one that does mobile the best.”

28 MARCH 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

11

Council Hearing Testimony Supports Medicaid Expansion

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.

The product of a resolution introduced on Valentine’s Day, Philadelphia City Council held a hearing March 22 to discuss Pennsylvania’s failure to enact Medicaid expansion under U.S. President Barack Obama’s Patient Protection and Affordable Care Act. In his proposed state budget Gov. Tom Corbett stated he could not recommend the expansion of Medicaid in Pennsylvania.

The Patient Protection and Affordable Care Act (PPACA) establishes a new category of Medicaid eligibility, beginning January 1, 2014, for individuals who cannot afford private insurance but are not presently eligible for Medicaid coverage in Pennsylvania. To ease the transition of such an expansion, the federal government will reimburse states 100 percent of the cost of Medicaid eligibility for the first three years, 95 percent for the next three years, and 90 percent thereafter.

Gov. Corbett’s main concerns are the cost to Pennsylvania, which he cites as one of the highest-spending states when it comes to Medicaid. Gov. Corbett plans to meet with U.S. Secretary of Health and Human Services Kathleen Sebelius to discuss reforms to assist

Pennsylvania, as well as Gov. Corbett’s own questions about Medicaid expansion.

The resolution contends that Medicaid expansion will actually save Pennsylvania money through a combination of state savings and new revenues, which will also create jobs in the health sector. As Philadelphia is home to some of Pennsylvania’s top hospitals and health systems, it is in a unique position to benefit from the influx of federal dollars.

Republican State Rep. Gene DiGirolamo testified about how critical it is that Pennsylvania opt into the Medicaid expansion. Rep. DiGirolamo testified that one of the major misconceptions among legislators in his party is not realizing many of the 700,000 to 800,000 Pennsylvanians who would fall under the expansion are in the work force, likely making minimum wage. He explained he understands Gov. Corbett’s concerns about the portion that Pennsylvania will eventually have to pay, a figure that could reach $4 billion. Additionally, PPACA cut other federal funding to hospitals to offset the expansion, and Rep. DiGirolamo felt PA hospitals would be put in jeopardy by not opting into the

expansion.

Councilwoman Marian Tasco, who chaired the hearing, mentioned how many states already opted into the expansion. She was seeking information about why some business communities are resisting the change.

She received many answers from witnesses who testified, but legislators, including Rep. DiDirolamo and state Sen. Vincent Hughes, said businesses should be very interested in the expansion, because neighboring states have opted in, and it offers enhanced health coverage to their lower-income employees.

Almost all testimony from the hearing supported the expansion. Typically, the testimony cited enhanced healthcare for the poor and how important that was in fighting HIV/ AIDS as well as covering parents of children covered under CHIP. Councilwoman Tasco said she thinks Gov. Corbett will change his mind, and she plans to present information gained from the testimony to him in an effort to accomplish that. After that, however, Pennsylvania’s participation in Medicaid expansion remains an issue only the state government can decide.

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28 MARCH 2013

REGIONSBUSINESS.COM

POLITICS

Liquor Privatization Debate Down to Dollars and Sense

Melissa Daniels is a news reporter for PA Independent, a project of the Franklin Center for Government and Public Integrity

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

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

The debate is more than 80 years in the making. But privatizing the state wine and liquor stores is closer to a reality than ever.

After eight hours of floor debate, the House passed a bill that would shutter the state’s more than 600 wine and liquor stores, and create a private industry with a new license structure.

Sponsored by House Majority Leader Mike Turzai, R-Allegheny, the bill made legislative history by becoming the first privatization legislation ever passed by either chamber.

Now all eyes are on the state Senate. There, where the Republican majority is much narrower than the House, there’s little chance of passage of the same exact bill.

In fact, senators on both sides of the aisle have already said they’d prefer “modernization” — or changing the state store laws in order to increase Pennsylvania Liquor Control Board profits.

But privatization supporters, including Gov. Tom Corbett, still say they believe the state liquor monopoly can come to an end this year — at least, publicly. They know their next battle, and they know it won’t be easy.

“We talk to the Senate and try to convince them that it is time to get us out of the business of selling alcohol,” Gov. Corbett said at a press conference following the vote.

The debate comes down to balancing what’s best for the consumer with what’s best for the state government, from both social and financial perspectives.

Lawmakers who support privatization cite better selection, price and convenience in a private system. A private industry with entrepreneurs, business strategies and competition promises to deliver flexibility to the consumer in a very different way than the state system. The PLCB is bound by its own pricing, ordering and

hiring rules, where a private business owner wouldn’t have those restrictions.

Beyond that, there’s what Gov. Corbett said — that right now, and for the last 80-some years, the commonwealth of Pennsylvania is in the liquor business. This is not typical of state governments in the 21st century — and it’s arguably a hypocritical position to be in when the state is also charged with enforcing laws for intoxication-related crimes.

From a financial perspective, supporters say the state will generate up to $1 billion by selling off the system. But House Democrats, who voted in unison against the bill, doubted this figure, citing somewhere in the neighborhood of $425 million generated from potential license sales. And, they argued the state could lose up to $170 million a year if the state stores are sold off.

This is where the modernization argument comes in — while the idea of the state running the liquor business is more than a little absurd to outsiders looking in, the PLCB has continually provided annual returns to the state.

House Democrats asked why the state should get rid of the PLCB when it could increase its value.

Some modernization proposals sitting in the Senate could bring in up to $100 million more a year to the state’s bottom line. But the full-out privatization proposal is halfway there, meaning there’s more momentum than ever to see it through.

No change this dramatic will pass without real vetting from the Senate, but it all comes down to how much supporters are willing to bend, shift and shake to get a majority on their side.

If Pennsylvania is indeed ready for this change, it’s up to Gov. Corbett, Rep. Turzai and other supporters to convince the rest of their ranks that it’s time to change history.

SUPREME COURT

Suspended Justice Submits Resignation Suspended state Supreme Court Justice Joan Orie Melvin submitted her resignation from the Pennsylvania Supreme Court Monday following a felony corruption. She will vacate the seat May 1.

“It has been my honor and privilege to serve the people of this Commonwealth for the past 28 years, and I am deeply saddened that I am not able to fulfill my commission,” she wrote in a letter to Governor Tom Corbett.

Mark Tarasiewicz, associate executive director of the Philadelphia Bar Association asked Gov. Corbett to nominate “a qualified candidate to fill the vacancy...as soon as possible, so that the state Supreme Court can be restored to its full complement of seven justices to ensure unfettered access to justice for the citizens of Pennsylvania.”

GUBERNATORIAL ELECTION

Cook Report: Corbett Race A ‘Toss Up’ The Cook Political Report, which analyzes and handicaps elections nationwide, moved its rating of the 2014 Pennsylvania Governor’s race from “Lean Republican” to “Toss Up.” It’s a reflection of Governor Tom Corbett’s ongoing problem with bad polling numbers as well as the recent emergence of several serious potential challengers — most notably U.S. Rep. Allyson Schwartz.

Joining Gov. Corbett on the danger list is Florida Governor Rick Scott.

Virginia’s governorship, which goes to voters in 2013, is the other GOP-held seat in the toss up column.

—PoliticsPa.com

28 MARCH 2013

PENNSYLVANIA POLITICS

REGIONSBUSINESS.COM

13

Problems run deep at Pennsylvania Turnpike Commission

BY ERIC BOEHM HARRISBURG — Charges against eight men involved in alleged bidrigging and “pay-for-play” schemes at the Pennsylvania Turnpike Commission may be only the surface of problems at the state agency.

Attorney General Kathleen Kane announced charges against former state Sen. Bob Mellow, D-Lackawanna; former Turnpike Commissioner Mitchell Rubin; former Turnpike CEO Joe Brimmeier; former Turnpike COO George Hatalowich; two lower ranking turnpike employees and two longtime turnpike vendors.

The men were charged with running a complex “pay-for-play” scheme in which campaign contributions and gifts were paid by vendors to favored politicians in return for contracts with the turnpike.

Though only eight were charged, the grand jury presentment paints a compelling picture of a much widerranging scam, with former state Sen. Vince Fumo, D-Philadelphia, and former Gov. Ed Rendell also implicated, though not named or charged.

The full report puts down in blackand-white what has been whispered about for years: that the Pennsylvania Turnpike Commission was deeply involved in political patronage and served as a conduit for powerful political actors in Harrisburg to steer contracts to favored firms and those that agreed to contribute heavily to campaign accounts.

The gifts of campaign donations, cash, free travel and entertainment “have tainted and thoroughly corrupted the system,” while resulting in the “manipulation, misdirection and theft of millions of dollars of public monies meant to support, repair and maintain an important and major roadway system,” the grand jury concluded.

There is plenty of detail in the report about the alleged crimes, but there is also a good deal of information about the culture of the Turnpike Commission during the years that the alleged crimes of Messrs. Mellow, Rubin, Brimmeier and the rest took place.

One man quoted, but not named, in the grand jury report is described

THE CHARGES

Robert Mellow Two counts corrupt organizations, two counts of restricted activities, one count of commercial bribery, one count of unlawful bid-rigging, one count of restricted activities, one count of criminal conspiracy, one count of failure to file expense account

Mitchell Rubin Three counts of unlawful bid rigging, two counts corrupt organizations, two counts of restricted activities, one count commercial bribery, and one count of criminal conspiracy

Joseph Brimmeier Left to right, first row: Bob Mellow, Mitchell Rubin, Joe Brimmeier and George Hatalowich.

Second row: Melvin Shelton, Raymond Zajicek, Dennis Miller and Jeffrey Suzenski.

as a “West Point graduate” and a former chief engineer for the turnpike.

He described his frustration with “an apparent inability to get the turnpike to focus on the right issues” and told the grand jury the turnpike was “sensitive to the election times.”

“It seems like running a road is more like a public utility than it is something that ought to be, you know, a political environment,” he said, according to the report.

A former chief operating officer of the Turnpike testified to the grand jury that high-ranking members of the commission would indicate “firms that we are looking for” during the bid process.

That “we” was communicated to the commissioners “through the staff from other political entities, either the governor’s office or political leaders in the legislature,” the former COO explained to the grand jury.

The political relationships superseded attempts by some members to report the illegal activity or bring an end to it, the grand jury wrote.

State Police Commissioner Frank Noonan agreed with that assessment.

He said the investigation was aided by former employees of the turnpike who tried to “do the right thing” and were reassigned or terminated by the commission for speaking out about the criminal activities.

The men charged with the alleged crimes are no longer members of the Senate or Turnpike Commission.

SUBMITTED

Mark Compton, the new chief executive officer of the Turnpike Commission, issued a statement this week detailing changes that have taken place in the last two years to make the turnpike’s bidding process more transparent and accountable.

In addition, Mr. Compton said he was ordering an immediate review of every professional-services contract cited in the attorney general’s presentment and all contracts awarded during the investigation that remain active.

Mr. Compton also said he will convene a “special advisory group” to review the turnpike’s operations.

State Rep. Donna Oberlander, R-Clarion, has introduced legislation to abolish the Turnpike Commission entirely by rolling its duties into the state Department of Transportation.

As the state moves towards addressing transportation funding, “it must eliminate inefficiencies and excesses,” she wrote in a memo to lawmakers.

Her bill would shift all of the Turnpike’s operations, maintenance, construction and reconstruction powers and duties to PennDOT and the issuance and payment of bonds to the State Treasurer’s office.

Merging the turnpike with PennDOT is generally viewed as an impossibility in the short term, since it would require the state to also take on the Turnpike’s $8 billion in debt.

This article was originally published on PaIndependent.com

Two counts corrupt organizations, two counts of unlawful bid-rigging, two counts of restricted activities, one count of commercial bribery, one count of criminal attempt, and one count of criminal conspiracy

George Hatalowich Seven counts of restricted activities, three counts of unlawful bid-rigging, two counts of corrupt organizations, one count of commercial bribery, one count of criminal attempt, and one count of criminal conspiracy

Dennis Miller One count of unlawful bid-rigging, one count of theft by unlawful taking, one count of theft by deception, one count of restricted activities, and one count of criminal conspiracy

Jeffrey Suzenski One count of restricted activities

Melvin Shelton Two counts of theft by unlawful taking, two counts of theft by deception, two counts of misapplication of entrusted property and property of government or financial institutions, one count of unauthorized use of automobiles and other vehicles, one count of perjury, one count of false swearing

Raymond Zajicek Two counts theft by unlawful taking, two counts theft by deception, two counts of misapplication of entrusted property and property of government or financial institutions, one count of unauthorized use of automobiles and other vehicles, and one count of simple assault PENNLIVE.COM

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28 MARCH 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Obamacare Losing Support, Repeal Remains Unlikely Anniversaries are usually cause for celebration. But the Obama Administration, ordinarily very adept at chest thumping, was strangely quiet on the third anniversary of the passage of “Obamacare.” It’s easy to understand why.

The promises made by Obamacare proponents have faded away and the warnings of its opponents are ringing true.

The incredibly complex and cumbersome Charlie Gerow is CEO of “Affordable Care Act” is far less than promQuantum Communications, ised, more troublesome than warned and a a Harrisburg-based headache to even its most ardent supporters. public relations and issue As the anniversary candles would normally advocacy firm. have been lighted, the Senate was moving to dismantle the medical device excise tax by a CONTRIBUTE staggering margin. Interestingly, 26 of the 34 Democrats who voted to get rid of this Send comments, particularly onerous and noxious aspect of letters and essays Obamacare voted for it in the first go around. to feedback@ About the same time, Jeffrey Crowley, a regionsbusiness.com. key advisor to the Obama Administration Opinions expressed by admitted that implementation of the gigantic guest writers do not federal scheme “was going to get messy.” necessarily reflect those “Messy” begins with more than 80 linear of Region’s Business.

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inches of regulations already built into Obamacare. The 2,200-page document has mushroomed to more than 20,000. The bureaucratic overreach is hard to imagine.

One reaction to the nightmarish task of implementing Obamacare was displayed when most states, PA included, opted not to set up “exchanges” to regulate the structure and sale of health insurance to the millions who will receive subsidized coverage.

There continues to be both political and policy blowback to the new Independent Advisory Boards (IABs) — the “death panels.”

Obamacare promised reduced premiums.

Already that promised dream has been shattered on the shores of reality. And 2014 will see giant premium increases.

The president promised the takeover would not add one dime to the deficit. The truth is that is more than 10 trillion dimes.

On the anniversary of Obamacare, one poll showed that 55 percent of the American people wanted repeal all or part of it.

Sadly, it’s highly unlikely that Obamacare will be repealed. The votes in Congress are

not there, and the president would repeal any attempt that actually got through Congress.

Obamacare was passed by the narrowest of margins, requiring parliamentary maneuvering rarely seen. Passage came on a straight party vote. All this from an administration that promised a “new way” of doing things, marked by transparency and bipartisanship.

While it may not be repealed in its entirety, there are still many slices that can be taken.

The medical devices excise tax is one example; so, too, the repeal of the IABs. Obamacare survives. That’s the essential fact on its third anniversary. It is mired in the complexities built into it and the promises it has left unfulfilled.

Congress will continue to attempt repeal of certain provisions and to defund other aspects. And more and more Americans will continue to see that legislation that promised to “fix” our health care system has actually added to its burdens.

Rather than celebration, this anniversary merely reflects how little of what it promised this law has delivered.

28 MARCH 2013

REGIONSBUSINESS.COM

IDEAS

15

8 Simple Rules For Building A Better Company

Ray Benedetto, DM, is a retired USAF Colonel. He founded a consulting firm and teaches leadership and strategic planning for the University of Phoenix Chicago Campus MBA program

Tom Walter is a serial entrepreneur and nationally recognized speaker on entrepreneurship, leadership and business culture. They are the co-authors of It’s My Company Too! How Entangled Companies Move Beyond Employee Engagement For Remarkable Results.

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

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

What are you going to do to make your company better in 2013?

Shooting for financial targets is hardly enough. Chasing financial goals is futile if the company lacks the human talent necessary to achieve such goals.

In brief, making any company better depends on how leaders retain and leverage their human assets as a distinctive competitive advantage.

Our research has shown how entangled companies sustain distinctive competitive advantages in various industries by building unique and enviable cultures that stimulate creative thinking, constantly generate new ideas, motivate high performance, and consistently delight customers.

Leaders of high-performing companies view their business as a system that requires the synchronizing of key subsystems.

Great leaders know that the future success of any enterprise rests on the strength of their leadership subsystem, which includes the current and future direction of the enterprise and their leadership pipeline— how tomorrow’s leaders are being developed today.

The leadership pipeline is a lot more than merely planning for leadership succession.

The pipeline is a set of integrated steps that begins with having the right people on board, extends to daily reinforcement of right behaviors, and manifests itself in discretionary thinking and exceptional performance.

If you want to do better in 2013 and beyond, assessing your leadership subsystem is a good place to start.

The following questions spanning eight key areas can help you begin: Core Values Does the company have a set of explicit core values? Were staff from all levels of the company involved in creating these values?

Are the values easy to understand? Does the set of core values, taken together, convey the spirit of the company? Are the values conspicuously displayed throughout work areas to remind employees about the values the company holds most dear?

Code of Conduct Have employees created a code of conduct that exemplifies how core values appear in daily behaviors? Do employees hold themselves and others mutually accountable for right behaviors? Does the performance evaluation and management system recognize and reward employees for exemplifying core values?

Organizational Purpose Does the vision for the company’s future inspire suppliers and key partners as well as employees? Does the company mission clearly state daily commitments in serving the stakeholders? When employees meet formally to conduct company business, do they review and reinforce the organizational purpose (values, vision, and mission)?

Leadership Philosophy Does each employee understand the difference between leadership and management? Is every employee viewed as a leader who has influence upon others? Does each employee have a defined circle of influence through which he or she can affect change?

Trust and Caring Is each employee trusted to act as a responsible adult? Has the company shed a 20th century command-and-control management approach for a 21st century trust-and-track leadership approach? Does each and every leader work on building relationships based on trusting and caring for others?

Does the performance evaluation and management system recognize and reward leaders for relationship building? Are leaders who fail to meet this standard assessed, counseled, and coached to develop these skills? Are leaders who fail to respond to positive development efforts relieved from duties and encouraged to find employment elsewhere?

Learning and Growth Are employees at all levels taught how to read company financial reports and to assess functional performance related to cost and expense management and revenue generation? Does each employee understand how his or her daily performance contributes to

company goals and objectives? Does each employee have an individual development plan that identifies three strengths to be leveraged as well as three improvement areas for the next performance year?

Transparency Are employees receiving all the necessary daily and weekly information from which to make decisions? Do employees receive routine, comprehensive reports of company operations they can use to improve service to their internal customers? Are employees engaged in decision-making at the lowest levels related to cost and expense management as well as revenue generation, if appropriate?

Accountability Is each employee held accountable for meeting objectives? Does each employee provide a formal accounting of performance, such as weekly huddles (ala The Great Game of Business (1992) by Jack Stack and Bo Burlingham, New York: Currency-Doubleday)? Responsibility without accountability results in less than optimal performance.

Although answers to some of the above questions may not be easy, they provide a starting point for improving the leadership system within any company.

The eight areas above serve as a framework through which leaders can work during the course of a year.

Some areas are sequential, such as the code of conduct following establishment of core values, while others can run concurrently, such as learning and growth along with transparency.

The keys to success are doing honest assessments, confronting the brutal facts, and pursuing solutions for each response that lacks a definitive “Yes.”

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28 MARCH 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

First Round Capital To Manage $6M Startup PHL Seed Fund GRANT WINNERS Ben Franklin Technology Partners/ Campus Philly $25,000 to create the Targeted Internship Matching Program to place local college students at BFTP portfolio companies

Pictured left to right: John Grady, President of the Philadelphia Industrial Development Corporation; Mayor Michael A. Nutter; Khushboo Shah, CEO of Philadelphia startup Cirrimize; Josh Kopelman, First Round Capital; Alan Greenberger, Deputy Mayor for Economic Development; and Bob Moul, President of Philly Startup Leaders.

KAIT PRIVITERA/CITY OF PHILADELPHIA

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

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

To Learn More ...

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

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

Mayor Michael A. Nutter recently announced that the Philadelphia Industrial Development Corporation (PIDC) will partner with First Round Capital, one of the most active investment firms in the country, to invest in and manage the Startup PHL Seed Fund, a new effort by the City of Philadelphia and PIDC to increase the availability of investment capital for Philadelphia-based startups.

Both PIDC and First Round Capital will invest $3 million and First Round Capital will manage the fund to make early-stage investments on behalf of the Startup PHL Seed Fund.

First Round Capital will not receive a management fee, or any other form of compensation, for managing the Startup PHL Seed Fund.

“Supporting entrepreneurs, startups and small businesses in Philadelphia is a priority for my administration and is crucial for the future of our city. I am thrilled that one of the leading investment firms in the country will partner with us in this effort,” said Mayor Nutter.

Josh Kopelman, First Round Capital’s founder, said First Round was “thrilled” about the opportunity.

“Mayor Nutter’s administration has been very supportive of entrepreneurship and the Startup PHL Seed Fund is a very concrete example of how the City of Philadelphia is dedicating real

attention and resources towards helping founders succeed in America’s founding city,” he said.

PIDC also announced that through its Penn Venture Fund, it will invest up to $500,000 in the University City Science Center’s QED Program, the country’s first multi-institutional proofof-concept funding program for healthcare and life sciences technologies.

PIDC’s loan will provide direct funding to qualifying research projects at Philadelphia-based academic and research institutions participating in QED. The projects will be developed and selected through QED’s marketdriven process. The loan will be repaid from PIDC’s share in proceeds from successful projects.

The QED Program has funded a total of 16 projects since its launch in April 2009. So far, five of the projects have resulted in technology options or licenses, and close to $9 million in follow-on funding has been raised.

Twenty-two universities and research institutions in Pennsylvania, New Jersey and Delaware, including 11 in Philadelphia, participate in the program.

Mayor Nutter also announced that six local organizations will receive Startup PHL grants from the City of Philadelphia for programs or services that support the entrepreneurial community in Philadelphia. More information on those can be found to the right.

The Enterprise Center, Center For Culinary Enterprises, Philly Food Innovation Program $15,000 to support the development of a workshop series for 25 early to middle stage food entrepreneurs Greater Philadelphia Chamber of Commerce $18,400 to develop an online Entrepreneur’s Resource Directory, working with Select Greater Philadelphia, PACT and the Philadelphia startup community PhillyCORE Leaders $15,000 to support the Supporting Entrepreneurship in Education program, which includes a pitch event for education entrepreneurs to compete for funding Startup Corps $20,000 to support the expansion of the high school entrepreneur program that provides programming to teenagers looking to develop entrepreneurial skills and build businesses VentureF0rth $25,000 to create a ‘community commons’ space at the VentureF0rth co-working facility that will provide an increased range of services to the startup community

28 MARCH 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

CAPITAL SEEKERS

NowYuno A Penn alumnus’ survey platform has grown beyond the restaurant industry Business: NowYuno Founders: Sam Huntington, Brad Repinsky, Adam Palmer, Lee Morris Contact: sam@foodforthought.com

S

am Huntington is banking on hitting it big with enterprise survey platform NowYuno, to the point where he’s taking an “extended stay” in San Francisco to tap into the funding and research opportunities that made the region famous.

“Part of my job has been to discover the ins and outs of the restaurant and hospitality industry … Industries that are obviously very pertinent to the Greater Philadelphia region,” Mr Huntington said.

A Penn grad, Mr. Huntington founded the Philadelphia-based company in 2011 with Lee Morris, Brad Repinsky and Adam Palmer — the latter of whom ran two Pita Pit locations and sparked the idea for the previously restaurantfocused service titled “FoodForThought.”

Mr. Palmer commented that it was difficult for him to acquire customer feedback when he wasn’t there to receive it face-to-face. Inspired, they remedied that situation and launched their paperless survey service in Fall 2012.

“Essentially, what we’ve done is developed a platform that helps multiunit businesses — restaurants, hotels, healthcare — collect customer feedback and help them receive real-time notifications when a customer submits a survey by smartphone,” Mr. Huntington said. “If we’re talking about a large hotel chain, let’s say 10 different hotels, we could help them collect information in the aggregate sense — how the operation’s doing on the whole — and then do apples to apples comparisons.”

In the case of a wirelessly-connected hospital, a tablet could access a patient satisfaction survey, a patient would submit a survey while a nurse does his/her rounds and data is transformed into easily-accessed and dissected results tables.

Mr. Huntington said that the Webbased service is in the product stage and ready to be sold. He and his team currently seek $500,000 in funding.

17

TRAIL OF

SUCCESS LEADS TO SEO AGENCY After a family loss, Lance Bachmann resigned from his position at AT&T to build 1SEO

BY BRANDON BAKER

B

unkered on the desk of 1SEO founder Lance Bachmann’s desk is a mound of paperwork he’s yet to sort through. Each paper in the stack represents a client in line for his services.

He’s one of few in today’s economy with the perk of being selective with his clientele.

“You can’t even become a client unless you speak with me; unless you understand the expectations of what’s going to happen,” Mr. Bachmann said. “I’m not trying to be arrogant here, but you need us more than we need you. We don’t have sales people, and we never have.”

Mr. Bachmann is the type of businesssavvy executive whose footsteps leave a trail of gold. In 2005, he founded AT&T’s YellowPages.com, dedicating himself to the company until it grew from nonexistent revenues to $157 million in sales. By the time he’d left, the company had 20 offices and 900 employees.

But eventually, his ambitions changed, and he went back to the drawing board.

“My brother passed away two years ago, so I resigned [from AT&T], decided life’s too short, came back to Philly

Facebook.com/1seoCompany

1SEO’s new office space in Levittown features a bowling alley, arcade games and food service.

SUBMITTED PHOTO

and knew there was a better product and a better way to handle clients. So I just did it,” Mr. Bachmann said.

Today, 1SEO, which handles search engine optimization, website design, pay-per-click marketing and social media, is not only the No. 1 SEO agency in Philadelphia, he said, but No. 3 nationally and No. 17 in the world.

“We have a different approach to SEO where we charge for our services and manage a PPC budget without taking a percentage of pay-per-click as others do,” Mr. Bachmann said. “We email our clients every month, we speak with them on the phone twice a month and we meet with them in person if they’re local … We try to separate ourselves by saying, ‘We’re credible, and we’re going

Twitter.com/1SEOcom

to be here through the good times and the tough times.”

1SEO relocated from Southampton, Pa., in 2011 to what was previously an empty warehouse in Levittown, Pa. It has since been transformed into the bustling office space that’s become typical of the 21st-century workforce, boasting a bowling alley, arcade games and constant food service.

His more than 20 Google algorithmoriented employees thrive on this company culture, and allow 1SEO to represent local clients ranging from Harley Davidson to Rand “The Accident Attorney” Spear.

All, of course, in addition to the 450 inquiries since January he’s accrued on his desk.

1seo.com

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28 MARCH 2013

2013: YEAR OF THE INNOVATOR

MEETUP CALENDAR

Philly Tech Week Preview Event Time: 6:30 to 8:30 p.m.

Date: Wednesday, April 3 Place: Quorum at the Science Center, 3711 Market Street, Floor 8, Philadelphia, Pa. Join us for a special preview event of the third annual Philly Tech Week presented

by AT&T. This event will offer brief lightning-talk intros to some of the exciting things happening in each of the five tracks in which Tech Week is organized: Art/ Creative; Access/Policy; Design/Development; Entrepreneurship/ Investment; and Media/ Transparency.

We’ll be joined by an impressive panel of national tech reporters discussing national trends in technology and innovation and how Philly fits into it all. There will also be the announcement of a major interactive public digital arts display that will be held during the week.

-- Erica Ogg of GigaOM, reports on Apple, though occasionally she’ll detour into stories about how personal tech intersects with two of her favorite things: travel and food.

-- Timothy B. Lee of Ars Technica, covers tech policy with a particular focus on patent and copyright law, privacy, free speech, and open government.

-- John-Paul Titlow of ReadWrite, has been writing for ReadWrite since June 2011. His areas of focus include the future of music and entertainment, the ongoing online copyright wars and Apple.

-- Chris Grant of Polygon, is the founding editor of the year-old national video game culture news site, after a previous stint as an editorial director at Aol’s Joystiq MEETUP.COM

REGIONSBUSINESS.COM

Philly Tech Week Set To Launch April 19 The third annual Philly Tech Week 2013 presented by AT&T will again celebrate technology and innovation in Philadelphia during the last week of April, as part of a month of celebrating STEM in the region.

The week, which will feature more than 80 curated technology-focused events is set to take place Friday, April 19 through Sunday, April 28, 2013 with other intro events the week before and throughout the month. More than 80 organizations and 35 sponsors will host events across the city and region.

On Wednesday, April 3, a Philly Tech Week preview event will be held at the University City Science Center, highlighting examples of the week’s programming and featuring a National Tech Reporters Roundtable, including locally-based reporters and editors from national tech publications GigaOM, arstechnica, ReadWriteWeb and Polygon. There will also be the announcement of a major interactive public digital arts display that will be held during the week.

The week’s events are scheduled into five broad tracks with anchor events, which will be previewed: Entrepreneurship/Investment events will focus on how the business community is growing its impact and awareness, featuring an innovative, interactive, action-driven celebration of the 30th anniversary of the Ben Franklin Technology Partners, Switch Philly, the annual, exclusive, judged tech startup demo event and one of the largest East Coast Mobile Monday demo events ever.

Design/Development events will feature best practices and talent networking events focused on bringing together and highlighting the rich ecosystem of designers, programmers and other IT makers in Philadelphia, including an anchor miniconference on trends in mobile, ecommerce and digital marketing held sponsored by Urban Outfitters.

Arts/Creative events will celebrate the rich environment of respected digital, web-based and other fast developing artistic endeavors in Philadelphia, featuring a major interactive public digital arts display and a music tech lightning-talk event with WXPN and Little Giant Media.

Access/Policy events will include educational events for nonprofits and underserved Philadelphians, in addition to discussions and research focused on the digital divide, STEM education and related

The Philly Robotics Expo was part of Philly Tech Week in April 2012.

legislation, including a black media event keynoted by FCC Commissioner Mignon Clyburn, organized by Wilco Electronic Systems Inc. and 900AM-WURD in partnership with Technically Philly and the Free Library of Philadelphia.

Media/Transparency events will focus on the civic technology and open data movements, in addition to journalism trends and other media and community outreach efforts, including the 5th annual BarCamp NewsInnovation and News Hackathon presented by the Center for Public Interest Journalism, among other partners.

Cross-track events include the Kickoff Breakfast presented by AT&T and the lunchtime speaker series held at the University City Science Center and The Philly Tech Week Signature Event sponsored by AT&T will be the largest cocktail reception and locally-produced tech demo exhibit event in Philadelphia, held at the Navy Yard headquarters of Urban Outfitters.

These cross-track efforts are underwritten with generous support from the Knight Foundation.

Philly Tech Week 2013 is presented by AT&T, which has returned for a second year as title sponsor and close partner.

Many of the cross-track interactive events are additionally underwritten with support from the Knight Foundation and other large sponsors include Morgan Lewis, Chariot Solutions, Urban Outfitters, Ben Franklin Technology Partners and the Center for Public Interest Journalism.

The official Philly Tech Week headquar-

DREXEL UNIVERSITY COLLEGE OF ENGINEERING

ters, where the kickoff, lunchtime and other events will be held, is the University City Science Center.

Philly Tech Week is a prominent part of an effort to bring together an array of “STEAM” (science, technology, engineering, arts and math) events during the month of April in Philadelphia, including the Emerging Technologies for the Enterprise from Chariot Solutions during the first week of April, then Entrepreneurship Week from the Empowerment Group, the Philadelphia International Festival of the Arts and the Philadelphia Science Festival from the Franklin Institute.

The annual week of events is intended to grow the impact of this innovative region through programming focused on technology and collaboration. PTW2013 is organized by technology news organization Technically Philly.

“AT&T is proud to sponsor and support Philly Tech Week for the second year in a row. As a company committed to innovation, we truly appreciate all that the Philly tech community has to offer. We believe it’s our job to help encourage and support growth and creativity within the tech community,” said Tiffany Baehman, vice president and general manager, AT&T, greater Philadelphia. “In addition, Philly Tech Week’s focus on STEM closely aligns with AT&T’s focus on improving opportunities for STEM learning in K-12 education, while preparing our youth for the workforce.

During Philly Tech Week in April 2012, more than 10,000 people attended at least one of the 80 events held during the week.

28 MARCH 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

19

In His Own Words: ‘Meet the Founders’ Returns to Benjamin’s Desk DIARY OF A STARTUP

Still a startup itself, Benjamin’s Desk, the co-working space that continues to blossom as a top-tier space for both startups and established businesses, has begun regularly hosting events to pay it forward in the Philly startup community.

Region’s Business got an inside look, courtesy of founder Michael Maher, at what’s been penciled in on their events calendar for the next month.

In his words: Benjamin’s Desk will be playing host to two ongoing event series come next month.

“Meet the Founders,” a program that was launched back in November by Philadelphia Startup Digest, is coming back this spring exclusively curated and hosted at our space.

The event is simple: a startup of the week is chosen, and the founder(s) are invited to come to Benjamin’s Desk for an open forum to talk about their startup, themselves, any challenges or opportunities they have faced in the process, etc.

Startups will be selected from the members at Benjamin’s Desk, alternating with others making an impact in Philadelphia.

The event is free and anyone from the startup community or otherwise is invited to attend.

“Meet the Founders” will resume in April and will be held bi-weekly on Monday evenings from 5 to 7 p.m. in the conference room at Benjamin’s Desk.

I’ve been chosen as the Philadelphia chapter leader for Startup Grind.

Startup Grind is an international organization and startup community designed to educate, inspire and connect entrepreneurs.

Startup Grind is a monthly event that features fireside chat interviews with leaders and innovators.

The Philadelphia chapter is new for Startup Grind, and the first event and guest speaker will be announced in April.

For more information on upcoming events and news, visit our website at www.benjaminsdesk.com.

AN EVENING WITH

MARK O’CONNOR

GRAMMY WINNER VIOLINIST FIDDLER COMPOSER

SUNDAY MAY 5 4 P.M.

PATRIOTS THEATER AT THE WAR MEMORIAL TRENTON

FEATURING MEMBERS OF THE YOUTH ORCHESTRA OF BUCKS COUNTY TICKETS: $20 ADULTS, $15 STUDENTS & SENIORS ONLINE: nj.gov/state/memorial/

FACEBOOK.COM/BENJAMINSDESK

20

28 MARCH 2013

REGIONSBUSINESS.COM

TEXT BY LISABETH WEBER ILLUSTRATION BY DON LEE

T

hat old saying, “Choose a job you love, and you’ll never work a day in your life” could have been written about the craft beer business in the Philadelphia region.

There’s a recipe for success in the industry and it may not be what you think.

Take equal parts history, timing, people, community, interest, innovation, passion, talent, creativity, sharing, access, geography and yes, social media. Those are just some of the ingredients that make Philly a heck of a town for beer.

And when we say beer, we mean GOOD. CRAFT. BEER. According to Rich Wagner, noted beer historian and author of “Philadelphia Beer: A Heady History of Brewing in the Cradle of Liberty,” one cannot truly talk about the rise and success of the craft beer industry in Philadelphia without talking about a history going all the way back to beer making in William Penn’s day.

The Brewerytown section of Philadelphia is the namesake to life in the late 1800’s when there were close to 100 breweries in the city.

Along came Prohibition and more than 800 breweries nationwide closed their doors. After Prohibition’s repeal, only 15 breweries remained in Philadelphia.

Through WWII and subsequent years, the big brewing companies took over and, eventually, the last major Philadelphia brewery closed in 1987.

It was just then that the micro brewing movement began in Philadelphia when many people started home brewing thanks to people like Home Sweet Homebrew owners George Hummel and Nancy Rigberg. Now there are craft breweries, microbreweries, nanobreweries, brewpubs, bottle shops, tours, books, blogs, films, apps, awards, festivals, events, parties, dinners, websites, magazines, and more.

The culture builds upon itself and the symbiotic support has created a steady rise in the marketplace.

“There’s never been a better time for beer and there’s never been a better place to drink it than Philadelphia,” said Don Russell, also known as Joe Sixpack from The Philadelphia Daily News.

What differentiates Philly is how the bar and restaurant scene has picked up on it. There are literally hundreds of beer bars, more than any other city, dozens of breweries in the region, and a great music scene to boot.

“Since beer and music are so closely linked, it’s great to see local venues like Johnny Bren-

SOMETHING IS BREWING When it comes to Philadlephia’s beer business, craft beer has replaced the huge breweries of yesteryear and a homegrown community is supporting a successful industry that the rest of the world is just discovering.

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PHOTO BY DOLLY DAS

Zagat Loves Philadelphia’s Beer Scene Renowned dining website Zagat twice highlighted Philadelphia beer twice last week.

Danya Henninger opens her list of “14 Philly Bars for Beer Nerds” like this: “Not a soul living here would dispute that Philadelphia deserves its Philly Beer Week tagline as ‘America’s best beer-drinking city.’ ” Ms. Henninger highlights spots all across town from Old City’s Euology Belgian Tavern to Northeast Philadelphia’s Grey Lodge’s Pub (“Mike “Scoats” Scotese single-handedly put Northeast Philadelphia on the U.S. beer map with this bi-level haven.”) to Local 44 in West Philadelphia (“Drinkers west of the Schuylkill now have a place to enjoy a pour from 20 rotating taps.”

The Zagat staff also pulled together a list of what it considers “24 Must-Visit Craft Beer Destinations” around the country.

Three of the two-dozen destinations are right here in the Philadelphia area: Monk’s Cafe on South Street, Standard Tap on 2nd Street in Fishtown (and they squeeze in a plug for another Philadelphia establishment here - “For good local beer alongside good local music, visit the partners’ Johnny Brenda’s, just up the street...” and Alla Spina on Mount Vernon Street (at North Broad Street).

BEER NUMBERS

240

Number of restaurants involved in 2012’s Philly Beer Week. The first event featured 75 restaurants.

50,000

Estimated attendance for 2012 Philly Beer Week.

10,000

Number of jobs in Pennsylvania directly attributed to beer production.

100%

Increase in the number of Pennsylvania breweries between 2001 and 2011.

3

Number of Pennsylvania taverns when William Penn arrived in 1682.

da’s, Milkboy, World Café Live and others supporting Philadelphia-area brewers from Sly Fox to Yards to Philadelphia Brewing Company and more,” said beer fan John Vettese, who serves as WXPN’s social media coordinator and editor of The Key, XPN’s local music website.

Mr. Wagner said he sees beer as a value-added product.

“Instead of spinning straw into gold, the brewer takes barley and turns it into gold,” he said.

While some may be surprised to learn that Philadelphia is a town laden with quality craft beer, it’s been chosen in the top ten lists of major publications like Travel & Leisure and GQ. “Our bars are in our neighborhoods, right where we live,” said Mr. Russell.

People flock here in droves to sample the finest in craft beer and this is most evident in Philly Beer Week, (www.PhillyBeerWeek.org) arguably the largest annual celebration of its kind nationwide. Entering its sixth year, the 10-day festival grew out of the former “Book and the Cook” event and the famous beer dinners hosted “BEER IS LIKE BREAD, YOU WANT by world-renowned “beer hunter” Michael Jackson.

IT LOCAL AND After Mr. Jackson’s passFRESH.’ ing in 2007, notables Tom Peters of Monk’s Café, —WILLIAM REED Bruce Nichols of Museum STANDARD TAP Catering, and Don Russell all got together to brainstorm ways to extend the interest of beer and thus, Philly Beer Week emerged. Through a grassroots volunteer effort, it grew from 350 events and 75 restaurants in the first year to more than 1,000 events and 240 restaurants in 2012.

The people running the events know they have something special. Philly Beer Week puts Philadelphia in the national and international spotlight, with an estimated attendance of 50,000, creating a positive impact on the city’s economy, which helps elected officials take the industry more seriously.

About 100 other cities around the world now have an annual beer week. With the way the current beer culture is directly tied to the past, along with the authenticity of Philadelphia, it’s as if the city was waiting for the beer revolution since the dawn of modern history, but didn’t know it.

A report recently released by the Legislative Budget and Finance Committee of the Pennsylvania General Assembly shows the amount of breweries doubling in the state from 2001 to 2011.

Revenue, jobs, and tourism increased exponentially as a result, creating even more of a solid foundation for the continued building of the craft beer industry citywide, statewide, and nationwide. According to the Beer Institute, the beer industry across the state has provided almost 60,000 jobs across all sectors of the economy and 10,000 jobs directly from beer produced

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BEER NUMBERS

PHOTO BY R. KENNEDY FOR GPTMC

366

Net increase in the number of craft breweries nationwide in 2012. More than 400 opened while more than 40 closed.

29.6

Pennsylvania’s per capita consumption of beer in gallons. Nevada has the highest rate of consumption with 44 gallons per year while Utah has the lowest at 19.5 gallons per year.

31

Gallons in a barrel of beer.

$0.278

Average excise tax on gallon of beer in the U.S.

$0.08

Excise tax in Pennsylvania in a gallon of beer, among the seven lowest rates in the country. Wyoming ($0.02) has the lowest.

PHOTO BY R. KENNEDY FOR GPTMC

IN WINE THERE IS WISDOM, IN BEER THERE IS FREEDOM, IN WATER THERE IS BACTERIA.’ —BENJAMIN FRANKLIN

STICKING TOGETHER HAS MADE US STRONGER.’ —TOM KEHOE YARDS BREWING

and sold in the state.

The numbers directly correlate to one of the most overarching concepts explaining the success of the craft beer industry: It’s community. It’s helping one another. This is pervasive throughout the region and is the core foundation for the growth of craft beer in Philadelphia; it’s a town of authenticity. A city of neighborhoods, it’s that local culture that feeds the love of the craft beer movement.

William Reed of Standard Tap and Johnny Brenda’s knows all about the importance of local, serving 100 percent local beer since the day they opened.

“Beer is like bread, you want it local and fresh,” he says.

The corner bar is part of what makes Philadelphia unique. Being a real Philly tavern, honoring the local crowd and serving really good food matters.

“It’s a good way to do business,” Mr. Reed said. “It’s a huge part of your life; you really ought to enjoy it and the culture around it.

When you do what you love, people sense that and it leads to more success.”

The numbers have increased steadily in part because the brewery owners are smart about their growth. They don’t grow too soon or too fast. Additionally, people just get

along and it’s not about competing. In Mike Lawrence’s documentary Beeradelphia, Bill Covaleski of Victory Brewing says, “We work on broadening the audience together rather than fighting one another for that single sale.”

Tom Kehoe, owner of Yards Brewing agrees: “Sticking together has made us stronger.”

Being environmentally conscious is another common thread throughout craft beer culture. Yards supports sustainable business practices by recycling spent grain that comes back full circle with locally raised beef. They also purchase 100% wind-powered electricity.

These values extend to the community. Virtually every sector of the craft beer industry donates back to neighborhoods and organizations. Mr. Kehoe said he loves giving back and knows it is the right way to run a business.

It’s pervasive from the city to the suburbs, whether it’s Monk’s Café releasing a rare beer and donating all sales to Alex’s Lemonade Stand or Nate Hugill of MOM’s (Maxwells on Main in Doylestown) raising money and awareness about pediatric cancer through their Beers for a Cure events. It’s the way of life across the craft beer spectrum.

Gene Muller, Founder/President of Flying Fish is setting the standard for going green and giving back. Their new facility has 463 solar panels providing much of their electricity, a rain garden, repurposed office furniture, recycling and more. Flying Fish was also the first “virtual” microbrewery, launching a website in 1995, long before Google.

“We all got involved with beer because we love the industry,” says Mr. Muller. “Everyone is really happy to be here and that’s a big reason for the industry’s success. That’s especially true in Philly; because we’ve all collaborated, we’ve really grown the craft beer business in the last 15 years.”

When Hurricane Sandy rocked the Shore, Flying Fish did what they do best. They made beer. A special recipe was brewed called “Forever Unloved Sandy”, which quickly became abbreviated to “FU Sandy”, and Flying Fish raised $45,000, all donated to efforts aimed at restoring the Shore.

In a business like craft beer, visuals matter and they also pay tribute to the great graphics of yesteryear. Sly Fox is one of the most beloved beer brands in the region, and that’s in no small part due to the creativity within the brand. Virtual Farm Creative, the agency of record, has managed all aspects of the Sly Fox brand for over 10 years.

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Corbett’s Original Plan for Beer Changed by House

BY MELISSA DANIELS HARRISBURG – It’s no secret Pennsylvanians love their beer.

But the industry behind those beers doesn’t love the plan to privatize Pennsylvania’s state-run wine and liquor system.

The privatization bill approved by the state House of Representatives would open up the sales of wine and liquor in grocery stores and elsewhere for the first time since Prohibition. But some restrictions on how beer is sold would stay in place.

The original plan presented by Gov. Tom Corbett in January would have allowed beer sales at grocery stores, pharmacies, big box stores and gas stations in addition to beer distributors and the small number of grocery stores that currently sell beer by obtaining a restaurant license.

But lawmakers stripped most of that language out of the proposal, meaning consumers wanting to buy beer will still have limited options, even as wine and liquor sales become more open.

Liquor Control Committee Chairman John Taylor, R-Philadelphia, said these changes were made because beer distributors were made vulnerable, potentially losing their business to competition from other stores.

“What really kills beer distributors is the real proliferation of beer in grocery stores,” Taylor said. “So that’s really not happening here. That’s the real big difference between the governor’s plans and this one.”

But what’s good for the distributor is not necessarily good for the brewer.

A collection of brewers operating in the state authored a letter to Pennsylvania lawmakers urging opposition to the privatization bill.

They argue the plan would create an unlevel playing field between beer and wine, which would have to share shelf space in beer distributors, and possibly grocery stores. The brewers say this isn’t what consumers want, or expect.

“House Bill 790 would result in the

beer segment losing as much as 50 percent of the floor and shelf space within beer distributorships, which account for more than two-thirds of our sales within Pennsylvania,” reads the letter. “It also would establish hundreds of new ‘Wine and Spirits’ outlets where only their products would be sold.”

The letter was circulated by Anheuser Busch, MillerCoors, Pennsylvania Beer Association and Brewers of Pennsylvania.

Brewers of Pennsylvania is the membership association representing breweries throughout the state. Members include popular names like Yuengling, Troegs Brewing Company and Victory Brewing Company.

In the privatization plan pass by the house, the state would create 1,200 new wine and spirit licenses. Existing beer distributors get the first crack at purchasing these licenses, and would have a year to buy one if they wanted to expand their business to include those products – meaning less room for beer on the shelves.

The one win for brewers – and beerbuying Pennsylvanians – is that beer could be sold at gas stations. Right now the state has a ban on selling alcohol wherever liquid fuels are sold, but the proposal would lift that.

And the proposal offers package reform permits for distributors, as well as bars or grocery stores that sell beer. The permit allows sales of six-packs, 12-packs and 64 oz. jugs.

In the letter, the brewers also take issue with the proposal to let grocery stores purchase licenses to sell unlimited amounts of wine in any part of the store.

To sell beer, a grocery store has to become a licensed restaurant facility, a requirement that would stay in place under the privatization plan.

Melissa Daniels is a reporter for PaIndependent.com. Contact her at melissa@ paindependent.com and follow her on Twitter @melissadaniels.

ROLL CALL

The House’s historic vote The Pennsylvania House of Representatives approved a bill that would lead to the privatization of liquor sales across the commonwealth.

Not surprisingly, the vote fell largely along party lines with Democrats opposing the measure and Republicans supporting it.

However, these five area GOP lawmakers voted against the measure: Gene DiGirolamo, Frank Farry, and Paul Clymer of Bucks County; Tom Murt of Montgomery County; and Mark Gillen of Berks County.

Rep. Murt released a statement on his vote, which says, the legislation “expands the sale and distribution of alcohol in Pennsylvania on a massive scale without any increase in funding for law enforcement and public safety activities. This is an unfunded mandate on all of our law enforcement professionals.”

Rep. Clymer’s statement said, “Alcoholism, underage drinking and drunk driving are serious problems in our society, and moving the sale of alcohol out of the controlled hands of government and increasing access to purchase alcohol will not help resolve these issues.”

Distributors Campaign Money Went to Western Pa.

BY MELISSA DANIELS HARRISBURG — Liquor privatization in Pennsylvania is a decades-long battle involving piles of money.

Not surprisingly, the labor union representing stateowned store employees has given generously to state lawmakers on both sides of the aisle as a way to keep its voice heard in the debate. But the beer industry also chips into the campaigns of elected officials, and has for years.

In Pennsylvania, beer can be purchased at distributors by the case, or at bars and grocery stores with restaurant licenses, creating a niche market.

Beer distributors are represented by the Malt Beverage Distributors Association of Pennsylvania. The association doled out $20,510 to state candidates in 2008, and $32,836 in 2010, according to campaign finance records.

Last election cycle, the association gave $26,500 to candidates. A majority of the cash, about 53 percent, went to Republicans, who control the Legislature.

But it was three top western Democrats who took in the most from the group’s political contributions. Senate Minority Leader Jay Costa, D-Allegheny, House Minority Leader Frank Dermody, D-Allegheny, and Sen. Jim Ferlo, D-Allegheny, received a combined $5,750 in donations. Democrat caucuses in both chambers have said they support modernizing the state-owned liquor store system over privatizing sales.

But MBDA’s support to lawmakers doesn’t swing in one direction. House Liquor Control Committee Chairman John Taylor, R-Philadelphia, got $2,500, and four top senators received a total of $6,000.

The association gave $300 donations to both Rep. Mark Mustio, R-Allegheny, a co-sponsor of the privatization proposal, and Rep. Paul Costa, D-Allegheny, the Democrat chair on the House Liquor Control Committee and a vocal privatization opponent.

Mark Tanczos, president of MBDA, said the organization doesn’t play partisan politics, partially because of the diversity of Pennsylvania’s population.

“We need to work with everybody because our state is totally different, from Pittsburgh to Wilkes Barre to up in Erie County in the northwest corner,” he said.

Distributors aren’t the only beer industry heavyweights writing checks. The Pennsylvania Beer Alliance, which represents wholesalers, gave $45,550 to state candidates in the 2012 election cycle.

Melissa Daniels is a reporter for PaIndependent.com.

Contact her at melissa@paindependent.com and follow her on Twitter @melissadaniels.

24 IN THESE STORIES

Selected breweries Some of the breweries we talked to for these storeis include: Yards Brewing Company 901 N. Delaware Avenue Philadelphia, PA 19123 YardsBrewing.com Flying Fish Brewing Co. 900 Kennedy Blvd.

Somerdale, NJ 08083 FlyingFish.com Sly Fox Brewing Company 520 Kimberton Road (RT.113) Phoenixville, PA 19460 and 331 Circle of Progress Drive Pottstown, PA 19464 SlyFoxBeer.com Triumph Brewing Company 117 Chestnut Street Philadelphia, PA 19106 and 400 Union Square New Hope, PA 18938 and 138 Nassau Street Princeton, NJ 08542 TriumphBrewery.com Stoudt’s Brewing Company Route 272 2800 North Reading Road Adamstown, PA 19501 StoudtsBeer.com Dock Street Brewing Co. 701 South 50th St. Philadelphia, PA 19143 DockStreetBeer.com Philadelphia Brewing Co. 2440 Frankford Ave. Philadelphia, PA, 19125 215-427-2739 PhiladelphiaBrewing.com

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“VFC’s approach is complete brand management, not just beer packaging,” said Creative Director Todd Palmer. “It’s our objective to create a personality for Sly Fox.” With the resurgence of canned beer, Sly Fox had the first craft beer canning line in the Mid-Atlantic region and they have created campaigns like “Respect the Can,” with fun YouTube videos, infographics, and websites like Cantacular. com that help educate the public on the environmental advantages of cans.

Of course there are real-world challenges in the industry, from the art of running a business to the “craft vs. crafty” issue, where big breweries are making “craft-like” beers and blurring the lines for consumers.

However, other challenges can also lead to industrywide improvements.

Eric Nutt, sales and public relations manager PEOPLE CAME for Triumph Brewing tells FROM ALL OVER, how the voices of brewers BECAUSE THEY and consumers alike led to WERE THIRSTY New Jersey Governor Chris Christie signing a bill into FOR WHAT WAS law modernizing the state’s HAPPENING.’ craft beer laws and opening —CAROL STOUDT up possibilities for expanSTOUDT BREWING sion and job creation. Here in Pennsylvania, the state House of Representatives passed a bill to modernize liquor sales, but of craft beer.

“I love ultra-hoppy ales and smooth chocoits impact on beer brewing and distribution late stouts,” she said. “Philly’s beer scene remains unclear. expanded my palette far beyond my mother’s Though the demographics lean toward appreciation for an ice cold Rheingold when men, women beer drinkers and brewery I was a kid.” owners have been integral in the beer busiCarol Stoudt, owner of Stoudt’s Brewing, ness from pre-colonial days to the resurgence and Rosemarie Certo, owner of Dock Street of breweries in the late 1980’s and especially Brewing both said they believe education now. Bloomberg Business Week and other plays a big part in the development of the news sources attribute more than 80 percent business.

Though neither spends much time of the buying decisions in this country to focusing on what it’s like to be a woman in women, and that bodes well for the future as their industry, there is cause to celebrate more women become interested in craft beer. these women role models and the energy, With specialized clubs focused on women creativity, and passion they have brought to craft beer drinkers such as Suzanne Wood’s the business over the last 25-plus years.

(Allagash Brewing) group “In Pursuit of Ale,” Ms. Stoudt knows fi rsthand how far craft there is still plenty of “untapped” potential as beer has come since opening Stoudt’s in 1987. this sector grows.

“People came from all over, because they Beer aficionado and WXPN host Kathy were thirsty for what was happening, and O’Connell appreciates the range and nuances it’s that energy that really helped to grow the

industry to what it is today,” she said.

From the excitement of innovating new products to running the company, being a wife, and raising five children, her business model of “controlled growth” was manageable for her. Family was most important and kept her grounded.

“What makes the industry exciting is that we have created it in our own way. Craft beer is a counter culture business,” Rosemarie Certo said. “You figure it out and you become creative. Our industry is driven by our passion. I think the craft brewing trade typifies the American mystique and brings a sense of independence and forward thinking which for me is really the exciting part of what we do.”

Speaking of women, Sebbie Buhler has been in the craft beer community for more than 20 years, as the face of Rogue Ales (her picture is on the Chocolate Stout bottle). She was Rogue’s East Coast PR advocate before craft beer was valued and before many women were doing her type of work.

Though the company is from Oregon, Sebbie is local and speaks highly of the beer scene in Philadelphia.

“It’s a very collaborative group of people,” she said.

“The amount of sharing is exceptional, whether it’s ingredients, equipment, or problem solving. People help you out without questioning.”

Craft beer is here to stay. In the 1990’s, there were some companies that didn’t make it but the school of thought is that they weren’t in it for the right reasons. The rest survived through hard work and the driving passion to share better beer with the public who wants it.

Community. Support. Collaboration.

That’s the recipe for a great beer town.

Freelance writer LisaBeth Weber lives in Bucks County. Learn more about her at CreativeBizHub.com.

Stock beer glass photos courtesy © Beisea and © Ril.

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OF ALL THE 27 AMENDMENTS, IT’S THE SEXIEST AND HAS AMAZING CULTURAL APPEAL.’ —STEPHANIE REYER NATIONAL CONSTITUTION CENTER

Exhibits Look at Prohibition, Brewing Legacy

BY LISABETH WEBER PHOTO BY H. SALEH FOR GPTMC Prohibition. There’s more to the story than most people know, and now visitors to the National Constitution Center can go back in time to when speakeasy and bootlegger were the common words of the day.

American Spirits: The Rise and Fall of Prohibition is nearing the end of its run in Philadelphia before hitting the road for a two year traveling exhibition, so get there while you can.

Curated by Pulitzer finalist and former New York Times public editor Daniel Okrent, the exhibit chronicles the storied history of the temperance movement that led to Prohibition and the ratification of the 18th Amendment in 1920, and continues to its repeal with the 21st Amendment in 1933.

Featuring artifacts gathered from Okrent’s collection and collectors across the country, the exhibit spotlights the correlating suffragist movement and the influence of women on both amendments, as well as organized crime that was rampant during Prohibition.

Inspired by writing his book, Last Call: The Rise and Fall of Prohibition,

Okrent thought a story encompassing two amendments might be interesting to the Constitution Center. It was.

According to Interim President and CEO, Vince Stango, the Prohibition exhibit is on pace to be one of the top three of the last five years and he calls it the best show they’ve ever done. The capture rate, (a metric that refers to how many visitors buy a ticket for the featured exhibit in addition to the main exhibit) was very high in general and almost doubled for school students.

“Aside from opening the museum, it’s the single project that I’m most proud of here,” said Mr. Stango, and he should know, having been at the Constitution Center since Day One. Literally.

His first job out of college, Mr. Stango had no idea what was about to happen as the 180 million dollar capital campaign took off in 2000. The museum opened on July 4th, 2003 marking 2013 as their ten-year anniversary.

“We’re always balancing the mission and the bottom line”, says Mr. Stango.

There’s also a balance between original exhibits and ones that are rented from other institutions with Mr. Stango adding, “One of the reasons for creating our own exhibitions is for the economic objec-

tive of being able to continuously fill our walls.”

Both Mr. Stango and Mr. Okrent credit Vice President of Exhibitions Stephanie Reyer and her team with bringing the stories to life.

The Prohibition exhibit is a pinnacle for Ms. Reyer and the buzz surrounding the show has been unsurpassed.

“Of all the 27 amendments, it’s the sexiest and has amazing cultural appeal,” she said.

Being a first time curator, Mr. Okrent was greatly advantaged by Ms. Reyer and her colleagues.

“They learned a lot about Prohibition and I learned a lot about the curatorial arts,” he says.

Mr. Okrent describes the learning curve as an interesting intellectual exercise in how best to translate the written word to be visually provocative.

“It’s very rare that someone who practices history has the opportunity to turn his work into something with sufficiently broad appeal to be appreciated by both children and adults,” he said. “When people come out of the exhibit interested in learning more, that is very gratifying.”

In that spirit of younger and older, as the Constitution Center enters its next

ten years, Ms. Reyer puts it best: “We’re a young institution, but we have mature ambitions.”

Over at The Philadelphia History Museum at the Atwater Kent, there’s an exhibit brewing on the history of craft beer in Philadelphia. When noted beer historian Rich Wagner gave a standing room only talk, the museum staff realized they were on to something and curator Jeffrey Ray invited Mr. Wagner to help with the exhibit.

The potential success influenced much of the decision making in bringing a show like this to the History museum, and Mr. Ray shares that anecdotally this has been the favorite show among visitors.

Juxtaposed in a room off the main portrait gallery, the show focuses on the early history of beermaking in the city, from William Penn’s time to the breweries of today, highlighting Dock Street, Yards Brewing, Philadelphia Brewing Company and McGillins, Philadelphia’s oldest tavern.

Mr. Ray didn’t know much about craft beer at the time, but had the foresight to extend the exhibit into Philly Beer Week, amazed at “the depth of product, the depth of interest, the variety of beer, and the devotion of people to drink it.”

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GRADUATE DEGREES

Degree in Happiness?

The first World Happiness Report was released last year by Columbia University’s Earth Institute and it found that people with graduate degrees were happier than people at any other educational level. They were almost twice as happy as people with no formal educaiton.

President, Ph.D. Woodrow Wilson is the only president to hold a doctoral degree (from Johns Hopkins). George W. Bush is the only president to earn an MBA (Harvard, no less).

There are 10 presidents who did not earn an undergraduate degree.

Hall of Famer, MBA, Ph.D. Shaquille O’Neal left Lousiana State University to play in the NBA. But he not only returned to earn his bachelor’s degree, he went on to get an MBA from the University of Phoenix and a doctoral degree in education from Barry University in Florida.

© DELPAUL

BY KAREN FRATTI

O

ne of the biggest ironies job seekers or those looking to move ahead in their field is finding out at the eleventh hour that they need more ‘experience’ in the field, or worse: that they should have gotten an extra degree to revamp their resume or plea for a pay bump. The ironic part is that obtaining a graduate degree takes time away from a career, and the financial burden can be overwhelming.

If you’re lucky, you already work in finance, or education, or human resources, and want to go further in the field. Most employers in these industries are happy to subsidize your master’s or doctorate as long as you’re willing to put in the time and keep your grades up.

In fact, many college graduates take jobs specifically for tuition reimbursement and health insurance perks.

“I’m an instructional assistant in an autism support classroom [working with] third-tofifth graders. The kids are very low functioning.

The only way I can move up in my field is to get my master’s degree,” said Bucks County native Clare Posey. “There is no room for advancement working with autistic children unless you have your masters. The only reason I took the job was because they offered partial tuition reimbursement for grad school.”

Otherwise, cost is a major factor. US News and World Report consistently warns students that most schools use a blanket term like “financial assistance” when talking about how they help students pay for their programs. But students should look for more specific things like the

CHARTING your GRADUATE DEGREE availability of loans and the availability, and likelihood, of organizational scholarships. Once you parse the two aspects, you can get a better picture of just how much help you can expect from the organization, depending on the situation. And with graduate programs, unlike undergraduate ones, it’s best to know what’s available before you apply.

How you complete a professional degree is another concern. Since most people do it in conjunction with their current career, it means commuting to a university in the area. Most universities also offer full-tine or partial online learning, too. The beauty of online learning is that a Philadelphia native could get a masters at say, Stanford

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28 GRADUATE DEGREES

Star Power More high-profile graduate degree holders.

David Duchovny holds a master’s degree in English literature and was working on a doctorate when he went to Hollywood.

Brian May made his fame and fortune as a guitarist for the rock group Queen, but he also earned a Ph.D. in astrophysics from Imperial College in 2007.

Mayim Bialik enjoyed success as TV’s “Blossom” in the 1990s and now as a cast member of “The Big Bang Theory.” In between, she not only earned a bachelor’s degree in neuroscience, Hebrew and Jewish Studies, but also a Ph.D. in Neuroscience. She did all her college work at UCLA in Hollywood’s shadow.

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University in California, without ever industries in the area. In Franklin Mills, leaving the living room. Online-only and that means medical assistance, medical for profit schools like Phoenix University coding, and pharmacy, building trades is a booming industry and information and information technology degrees, technology has moved many to among other degrees like criminal justice. enroll. Upwards of 20.3 million There’s nothing wrong with a doctorpeople in the United States are ate in English literature or history, except enrolled in professional degree that the job offerings in programs. academia are slim. The IT’S A BIG But for some people, it’s betuncertainty that comes DECISION, with those degrees in the ter to do it the old-fashioned current job market just way. Distance learning often BUT NOW MORE doesn’t make sense. means more work and more THAN EVER Dan Watkins, Director of writing, since most online THERE’S MORE Admissions at the Franklin classrooms expect answers TRANSPARENCY Mills campus explains that and responses to readings and TO HELP MAKE “The people that are comcase studies on a discussion board. It requires more disci- A DECISION.” ing to our school are lookpline. And some people just —DAN WATKINS ing to get employment. learn better in the classroom. KAPLAN CAREER INSTITUTE Their objective and ours For those in the Philadelphia are the same. When they region, the choices abound. leave our program, we want Ms. Posey is skeptical about online them to be employed. Some people are education. hands-on people, and they perform bet“I’m considering Rider in New Jersey. ter just with hands on.”

I could work during the day, and go to Curious prospective students get a class at night. I don’t really dig the online campus tour, career counseling, and college concept and Rider offers the profinancial aid assistance. They even have a gram I need. It’s out of state, but local,” she explains.

Area schools like Temple, Drexel, UPenn, and even Penn State all offer ‘distance learning’ and night classes for their graduate programs.

Along with associate degree programs, and online education, there is a new trend in career focused programs throughout the region. Like the Kaplan Career Institute in Franklin Mills, one of the Kaplan Higher Education Campuses. Each campus focuses on associate degrees in professional certification programs, depending on the major

promise to students, so no one gets wrangled into an expensive and time consuming program for nothing.

“We call it the Kaplan Commitment.

They can attend school for 30 days. It’s like a test drive - let’s see if this is in fact what I thought it was, do I enjoy it, do I like it , can I see myself doing this as a career, and then if so, they can get credit for the time spent. And if not, they can leave, at no cost,” Watkins says.

That kind of flexibility is important, especially for those juggling a career and a family. Not all colleges and universities offer a cost-free test drive, but in any case, Watkins says the most exciting thing about choosing higher education these days is the openness of programs.

Everything, from course guides and financial aid information to retention rates and career placement, is available online. It’s a hefty research project, but once prospective students gather the information, all they need to do is contact a school and see for themselves what works.

Watkins agrees, “It’s a big decision, but now more than ever there’s more transparency to help make a decision.”

Stressful? Of course. But’s it’s easier to get the information, a tailored program, and career advising than ever.

The important step is realizing that a professional degree is more or less essential, advises Watkins.

“Choosing education and choosing to improve your skill set, is a positive across the board... As long as you’re choosing education, it’s a good thing.”

Freelance writer Karen Fratti lives in Brooklyn and contributes to the 10,000 Words blog on mediabistro.com.

CURIOSITY MAY HAVE KILLED THE CAT, BUT IT SURE HAS EARNED A LOT OF PEOPLE GRADUATE DEGREES.’ —ROBYN IRVING

© PROMETEUS

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28 MARCH 2013

REGIONSBUSINESS.COM

No Lack of Graduate School Rankings There may actually be more graduate school “Best of ” lists than graduate schools.

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According to U.S. News & World Report, these are the top online MBA programs: ! Tennessee.-Martin ! Texas-Dallas ! Connecticut ! Auburn ! Central Michigan ! Cal State-Fullerton ! Florida ! Indiana-Bloomington ! Arizona State ! Washington State

Kiplinger’s picks for top online graduate programs: ! Business: Duke ! Business: Indiana ! Business: Thunderbird School of Global Management ! Computer Science & IT: Carnegie Mellon ! Computer Science & IT: Stanford ! Computer Science & IT: Illinois Champaign-Urbana ! Education: Columbia ! Education: Michigan State ! Education: Penn State ! Engineering: Georgia Institute of Technology ! Engineering: Stanford ! Engineering: USC ! Health: Boston University ! Health: Johns Hopkins ! Health: Vanderbilt

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28 MARCH 2013

FINE ESTATES PREVIEW

REGIONSBUSINESS.COM

Privacy, Luxury In Desirable Blue Bell Luxurious privacy awaits you here in desired Blue Bell.

This 24,000-square-foot-plus estate is located in a one-of-a-kind private compound.

There is a gated driveway that leads you over a tenth of a mile off the main road to your grand entrance with an imported fountain from Italy in the middle of the entrance way.

Upon entering, the home welcomes you in its foyer, where immediately the magnificent amenities present 23-foot ceilings, Trey ceilings, deep crown moldings and Travertine tile.

You also see past the columns right through the living room to the estate’s salt water pool.

The home offers a chef ’s dream kitchen with a Viking 12-burner, four-oven stove; a car collectors’-style 10-car garage with a professional tool box; an entertainer’s finished basement area that is headlined by a basketball court; and a media room equipped with a sound system that rivals a ride in Disney World.

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For more information, call Coldwell Banker Preferred at (215)641-2727

28 MARCH 2013

REGIONSBUSINESS.COM

REAL ESTATE

31

Avenue of the Arts Anniversary Marked with Groundbreaking

SANDY SMITH/PHILADELPHIA REAL ESTATE BLOG

BY SANDY SMITH Given how far the Monster Construction Equipment had dug into the ground already, last week’s ceremonial groundbreaking for Dranoff Properties’ Southstar Lofts project at Broad and South streets on the Avenue of the Arts seemed a bit anticlimactic.

But the first day of spring was as good a time as any to recognize the project’s getting off the ground — and the 20th anniversary of the start of the effort to restore grandeur to South Broad Street, once the city’s premier office address.

“The intersection of Broad and South is a true crossroads,” Dranoff Properties President and CEO Carl Dranoff said at the news conference. “There the avantgarde vibe of South Street and the artistic, dining and cultural environment of the Avenue of the Arts meet.”

Dranoff ’s 85-unit luxury rental residence with 10,045 square feet of streetlevel retail will occupy the intersection’s northeast corner.

At the news conference, Mr. Dranoff emphasized his company’s commitment to helping the Avenue of the Arts realize its full potential, as reflected in the several investments Dranoff Properties has made along the street since 2000.

“The Avenue of the Arts has become one of the city’s liveliest neighborhoods,” he said. “I live on the avenue. I invest on

the avenue. I build on the avenue. And I just moved Dranoff ’s corporate headquarters to the avenue. I guess you could say Dranoff is all in on the success of the Avenue of the Arts, and we are proud to be part of its past, present and future.”

Mr. Dranoff also had plenty of praise to share with everyone involved in bringing Southstar Lofts to fruition: City Council members Mark Squilla and Kenyatta Johnson, whose district includes the Suzanne Roberts Theatre where the news conference took place; Chris Terlizzi, senior vice president and regional manager for First Niagara Bank, which handled the project’s financing; Diane Semingson, chairwoman of the Avenue of the Arts, Inc., board and the dozens of local businesses and organizations that donated items for a 30-year time capsule that will be buried on the Southstar site and reopened in 2043.

Deputy Mayor for Administration and Coordination and Managing Director Richard Negrin noted that the Southstar project fit in with Mayor Michael Nutter’s stated goal of making Philadelphia “the greenest city in the country,” as the building is designed to earn LEED certification, which would make it the second LEED-certified multifamily residential building in the city.

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

Q&A

28 MARCH 2013

REGIONSBUSINESS.COM

33

PATRICK MCGOVERN’S

UNCORKED PAST

The Penn-based biomolecular archaeologist is discovering the history of human culture through fermented beverage remains

What is the elevator pitch for biomolecular archaeology?

As the phrase implies, we tease out the ancient organic compounds from archaeological finds by using advanced chemical techniques.

One of the major accomplishments of our laboratory at the Penn Museum was the discovery of the earliest grape wine and barley beer in the Near East, dating back 5,500 and 7,400 years ago.

My books on Ancient Wine and Uncorking the Past tell the compelling story of humanity’s ingenious, intoxicating quest for the perfect drink.

Although I’m prejudiced, I’d also go so far as to say that this field represents the “wave of the future” in archaeology.

What is your relationship with Dogfish Head brewery?

I have had a long, stimulating relationship with Sam Calagione, the

owner, founder and first brewer of Dogfish Head Craft Brewery, going back to 2000 when he won the microbrewers’ competition for re-creating “Midas Touch.”

There is no one I’d rather work with on bringing “Ancient Ales” back to life. Sam is dedicated to following the archaeological and chemical evidence where it leads us and making the genuine thing. It was then quite natural that we make our relationship an exclusive one for the benefit of fermented-beverage lovers everywhere.

So far, our liquid time capsules include: 1) Midas Touch 2) Chateau Jiahu: details on my website and Dogfish’s 3) Theobroma: dark chocolate, ancho chili, honey and corn, achiote or annatto colors it red, etc.

4) Chicha: chewed and spitted out Peruvian red corn with added pepper

berries and wild strawberries.

5) Ta-Henket: literally “bread-beer” in ancient Egyptian hieroglyphics, which is based on our chemical findings from some of the earliest wine from Abydos (ca. 3150 B.C.) but also botanical evidence from Wadi Kubbaniya near Aswan, dating back 18,000 years. It’s called Ta Henket, because lightly toasted emmer wheat bread was added to the wort.

6) Etrusca, which is based on evidence from early Etruscan times in Italy, ca. 800-700 B.C. These people were notorious for their banquets and pleasure-seeking. Together with Sam and two other highly experimental Italian microbrewers, we produced three versions of the beverage, one made in pottery of Etruscan style, one in oak barrels, and Sam’s in bronze.

7) And most recently our Nordic grog. More of that to come soon.

Is there another time in history that you’d like to recreate?

Many more to come. Probably the homeland of humankind in Africa, south of the Sahara, next. But don’t hold me or Sam to it.

What evidence of your work can be found in the Penn Museum?

The Penn Museum is a treasure trove of fermented beverage artifacts, from the classical galleries where nearly every vessel played a role in the ancient symposion and convivium to the gold goblets and silver jar of the Sumerian queen Pu’abi.

The latter is thought to have contained her daily allotment of barley beer — five liters. Suitably, she drank it the way unfiltered beer has been drunk from time immemorial around the world — through a drinking-tube or straw, but hers weren’t pedestrian reeds, but made of gold and lapis lazuli.

Photo: Patrick McGovern, scientific director of the Penn Museum Biomolecular Archaeology Laboratory, stands next to a case of royal drinking vessels in the Penn Museum.

penn.museum/sites/biomoleculararchaeology/

/PennMuseum

PENN MUSEUM

@PennMuseum

28 MARCH 2013

REGIONSBUSINESS.COM

OPINION

35

Time To Reconsider City’s Job-Killing Tax Strategy H

Joseph Zuritksky is chairman and CEO of Parkway Corporation, a family-owned parking and real estate development company.

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

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

aving been actively engaged in business in Philadelphia for over 50 years, I’ve watched our city slowly decline from a vibrant business center to one which has driven away most big business and made it extremely challenging for small businesses to survive or grow.

Over these years, as other major cities our size and smaller, grew and prospered by taxing mainly real estate rather than its businesses and workers, our city’s population shrank in size by 25% and it lost well over 230,000 jobs.

The irony is, this didn’t have to occur.

Philadelphia has more to offer than almost any other city with whom we compete. We have the most historic city in our nation, a walkable city business district, a fabulous array of restaurants and shops, plus worldclass cultural institutions. Our region has the largest number of higher education institutions in the nation, as well as a dominant position in pharmaceutical and medical industries. In addition, we have one of the best transit systems in the nation, as well as one of the shortest commutes. Our housing stock, in both the city and the suburbs, is among the best in the nation. The only area where, historically, we have fallen flat is attracting and retaining businesses, even though when questioned, most business leaders would locate or remain here as they grow larger and stronger, but only if our city were on a level playing field with its competitors on a taxation basis and had a predictable legislative future. As a matter of fact, they would even pay a bit more to be here because of all the advantages that I listed above, but they just can’t bear the job-killing business and wage taxes that our city has uniquely levied on its job-producing businesses and citizens.

The proof of this should be obvious to all – over 35 once viable office buildings have been converted to apartments, hotels and condos in the last decade, and we have not been building new ones because there is no demand to do so. It’s great to have new residents downtown, but the conversion of these office buildings cost the city and school district millions in lost real estate and U&O taxes, as well as wage taxes. As a result of this low demand, our office rents have been stuck at the same dollar rate for over 25

PHOTO BY G. WIDMAN FOR GPTMC

Only a well-thought out, long-term plan built around a strategic tax policy for business growth will succeed in changing the message our city sends to our country’s entrepreneurs and to the rest of the world’s businesses. years, but the dollar has depreciated by over one-half during this same period, so rents have actually decreased! To make matters worse, construction costs have risen by over 100% in the same period. As a result, the last two major commercial office buildings built have both required significant subsidies – the Comcast Center with over $40 million in state subsidy; and Cira Centre at 30th Street with its KOIZ zone, so its tenants do not pay many city or state taxes. The same dynamic is evident at the Navy Yard, where commercial development has been spurred by the tax savings offered in its KOIZ to the detriment of Center City.

Over the last decade or so as these negative effects have accelerated, I’ve waited patiently for someone in city government to acknowledge that Philadelphia will never produce the jobs our citizens need under our current system of taxation, but there is only silence on this subject – leaving only a baseless hope that somehow it will happen on its own. As a result, Philadelphia is being transformed into a bedroom com-

munity that houses young and older Philadelphians who commute to work outside the city (currently at the rate of 42% of our workers), and this problem continues to grow each year. Unfortunately, a bedroom community, while enjoyable and positive in many respects, does not generate the jobs or the tax base necessary to care for the high number of under-educated and outof-work Philadelphians; only a community of vibrant businesses will create the growth in jobs and tax base necessary to enable our city to thrive.

Now is the time for our business and political leaders to change how and what we tax.

If we continue down the same trodden path, the city is doomed to drown in red ink. We must begin laying the fiscal foundation to attract businesses back into the city; advertising alone will not do the job. Only a wellthought out, long-term plan built around a strategic tax policy for business growth will succeed in changing the message our city sends to our country’s entrepreneurs and to the rest of the world’s businesses.

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28 MARCH 2013

REGIONSBUSINESS.COM

OPINION

Gov. Corbet Knows There’s No Free Lunch for Medicaid I

Nathan A. Benefield is director of policy analysis for Commonwealth Foundation, Pennsylvania’s free-market think tank. Learn more at CommonwealthFoundation. org.

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

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

f I offered you a “free lunch” every day for the rest of your life, you’d take it, right? Oh, but there are a few strings attached. The lunch may not taste very fresh, and I’m paying for it by taking money from your kids’ college fund. I should also mention that the free lunch is really a buy-one-getone deal—you have to buy a lunch to get my free offer.

Doesn’t sound so great now, does it?

The old adage is correct. There really is no such thing as a free lunch. But this is the kind of offer the federal government is giving states to expand their Medicaid programs as part of the Affordable Care Act. In Pennsylvania, Gov. Tom Corbett wisely turned down this offer with his newly proposed budget.

Critics say Corbett gave up “free money” and refused to help the poor.

But the money wasn’t really free, and throwing low-income Pennsylvanians into a failing health care system isn’t a real solution.

Under the ACA, the federal government would pay the lion’s share of costs for new enrollees in Medicaid (government health care coverage for the poor and disabled). But the federal government first takes that money through taxes on individuals, families and businesses across America— including those in Pennsylvania.

The Affordable Care Act included more than 20 new taxes with a $500 billion price tag. That’s $6,363 more in taxes per family of four through 2022.

Even with these new federal taxes, taxpayers would be on the hook for billions of dollars in higher state costs. The Heritage Foundation estimates that expansion would have cost $1.3 to $5.5 billion in state taxes over the first eight years of the program. Moreover, President Obama’s 2013 budget proposal included a reduction of the federal share of the Medicaid expansion, meaning states like Pennsylvania would have to pay even more.

Besides the huge taxpayer burden of expanding Medicaid, the low-income families who really need health care will get the short end of the stick. Families on Medicaid

Gov. Corbett made the right call by rejecting an illusory “free lunch” and demanding the ability to control Medicaid spending. often receive poor quality care. Nearly one in three doctors in Pennsylvania currently refuses to take Medicaid patients, because the program pays far less for services while imposing more red tape. As a result, families on Medicaid have to wait longer to get care.

A study in the New England Journal of Medicine found that 44 percent of children on Medicaid with juvenile diabetes could not get an appointment with an endocrinologist, compared with 9 percent with private insurance. The average wait time for those children was 103 days on Medicaid, more

than twice as long as those who were privately insured.

Medicaid already consumes 30 cents of every dollar that our state government spends, including federal funding. Medicaid spending grew 83 percent over the past decade—nearly twice as fast as residents’ income.

Unless lawmakers are able to control Medicaid spending and slow this rate of growth, tax relief for Pennsylvania families will be impossible, and the cost for Medicaid expansion will push out other government programs.

Here’s a worse proposition: The only way state lawmakers can currently reduce Medicaid spending is to cut payments to medical practitioners even more. States like California are moving in this direction, but such a policy could prove disastrous.

Hospitals would lose money. Health care providers would be forced to shift more expenses to the privately insured, driving up the cost of health care coverage. And more doctors would refuse Medicaid, reducing the access and quality of care for families.

So if expanding Medicaid isn’t the answer, what is? Gov. Corbett didn’t just say “no” to Medicaid—he asked the federal government for flexibility to fix the program. For our fiscal health, and the health of families, we desperately need this flexibility to allow state officials to design a program that fits the needs of Pennsylvanians.

State reforms to improve Medicaid services and control costs have worked elsewhere. Florida received a waiver to give poor families a credit to buy private insurance, which saved the state $118 million, and recipients were healthier and more satisfied with their coverage.

Rhode Island saved $55 million over three years and improved the quality of health care through reforms made possible by a federal waiver.

Gov. Corbett made the right call by rejecting an illusory “free lunch” and demanding the ability to control Medicaid spending.

That’s the kind of health care policy that will truly give low-income Pennsylvanians the health care they need.

28 MARCH 2013

REGIONSBUSINESS.COM

OPINION

37

Liquor Privatization Vote Important, but Far from Final, Step

I

t was a rather protracted and laborious effort, but the state House of Representatives managed to pass historic legislation that would finally privatize liquor sales in Pennsylvania.

While they deserve kudos for approving the most sweeping liquor legislation since Prohibition, there is not time to celebrate or pat each other on the back.

The legislation must get past the state Senate and that is anything but a sure thing.

Late last week, Bucks County Senator Chuck McIlhinney (R-10) spoke to a group of business leaders and told them that he would have voted against the legislation if he were still in the house, according to phillyBurbs.com.

While the unanimous Senate support cannot be expected, McIlhinney’s stance is important he’s the chairman of the committee that oversees the state’s beleagured liquor control board. And he supports modifying the current system rather than wholesale restructuring called for by the Corbett administration.

PhillyBurbs.com quotes him as saying “We have all these small business people who have gone through the system we said you have to go through. We can’t blow that up overnight.”

We disagree.

Pennsylvania’s liquor sales system isn’t just broken, it’s a shoddily engineered mess that is as antiquated as it is impractical, with two clear ongoing problems.

First, the system is built to allow corruption. The Pennsylvania Liquor Control Board consistently makes headlines for alleged corruption and mismanagement.

Second, it keeps the state in the business of controlling what should clearly be a private enterprise.

Liquor sales require government supervision and regulation, that’s clear. So let private enterprise do what it does best - run businesses.

And let the government do what it is created to do - regulate.

Modify it if they must, but the state Senate must pass legislation to privatize liquor sales in Pennsylvania. Fear of change, such as that suggested by Sen. McIlhinney, is no excuse for timid action. Privatization is the right thing to do and now is the right time.

This vote also sets the stage for what should be a series of important steps aimed at scaling back the size of state government and getting government out of the business of doing business. The privatization of the Pennsylvania Turnpike and lottery system (the latter slowed by questions from Attorney General Kathleen Kane) are also on the governor’s near-term agenda.

While they also deserve thorough and thoughtful debate, the discussion should focus on details and implementation.

The only way to shrink government is to shed responsibilities and the privatization of liquor sales, the Turnpike and lottery are three common-sense ways to get things moving in the right direction.

COMMENTARY FROM ACROSS THE WEB

Pa. Senate Republicans Must Pass Liquor Reform On the strength of the Republican House majority and with muscle from the office of a Republican governor, Pennsylvanians saw something Thursday they had never seen before. A chamber of the Legislature passed a bill to end the state’s liquor monopoly.

Now the reform moves to another Republicancontrolled venue, the state Senate. The message from Pennsylvanians, most of whom now favor getting the government out of this business, is simple: Don’t blow it.

PITTSBURGH POST-GAZETTE, 24 MARCH 2013

As lawmakers debate the divestment of an asset that annually generates hundreds of millions of dollars for taxpayers in a field crowded by special interests, they should remember three words: Consumer, choice, convenience.

Those should be the guiding principle as lawmakers try to craft a privatized system.

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

So happy the PA House passed the liquor privatization bill! Time to get the gov’t OUT of the liquor business!

22 MARCH 2013

State Democrats Resist to Protect Unions Part of the rationale for this state control is to curb alcoholism. But the Centers for Disease Control reports that Pennsylvania ranks seventh among the states in the rate of binge drinking.

Not a sign of a strategy that’s working.

Consumers Count in Liquor Privatization

THE PATRIOT NEWS, 22 MARCH, 2013

REGION’S BUSINESS

@vmorgs

Democrats who oppose this bill claim to speak for consumers, but it’s clear most consumers hate the state stores and the crazy-quilt system for buying beer. The Dems’ stance really is driven by a desire to take a stand, any stand, against the national Republican drive to neuter public-sector unions. And those state store employees are unionized.

CHRIS SATULLO ON NEWSWORKS.ORG, 24 MARCH, 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

28 MARCH 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

PHOTO BY M. KENNEDY FOR GPTMC

-4.94%

-40%

Change in the number of jobs in Philadelphia between 2000 and 2012.

Two-year percentage change in median price of homes sold in 2012 in the 19134 ZIP code (Port Richmond).

1.98%

28%

Change in the number of people living in Philadelphia between 2000 and 2012.

Two-year percentage change in median price of homes sold in 2012 in the 19106 ZIP code (Society Hill).

3.76%

Change in the number of people living in Pennsylvania between 1992 and 2012.

-28.3%

-1.52%

Percentage change in the number of homes sold in Philadelphia from 2002 to 2012.

Change in the number of Philadelphians employed by some level of government between 2002 and 2012.

3.8%

-11.96%

Percentage of city tax revenue generated by the real estate transfer tax.

Change in the number of city employees in Philadelphia between 2002 and 2012.

-10.35%

Change in the number of crimes in Philadelphia between 2003 and 2012.

-14.4%

Change in the number of violent crimes in Philadelphia between 2003 and 2012.

16.3%

Change in the average daily prison population in Philadelphia between 2001 and 2012.

STATISTICS COURTESY OF THE PEW CHARITABLE TRUSTS AND THE U.S. CENSUS

STATISTICS COURTESY OF THE PEW CHARITABLE TRUSTS

© NEWPHOTOSERVICE

5

Number of Republican members of the Pennsylvania House of Representatives that voted against the liquor privatization bill that passed last week.

9

Number of wineries participating in the third annual Bucks County Wine Trail’s Spring Tour, May 5 and May 19.

More information available at BucksCountyWineTrail.com

1%

The chances of the Philadelphia 76ers making the NBA playoffs this year as of March 6, according to BleacherReport.com.

According to OddShark. com, the Sixers were a 125-to-1 shot to win the NBA title as of January 5, but as of March 14, they were “off the board.”

2

Number of playoff series won by the Sixers since losing in the NBA Finals in 2001. They’ve lost seven series and failed to qualify for the playoffs four times.

$30,000,000

Amount Yahoo! paid for Summly, a news aggregation app created by Britain’s 17-year-old Nick D’Aloisio, who made the app when he was 15.

$1,000,000

Annual base salary for Yahoo! CEO Marissa Mayer, whose contract also makes her eligible for between $2 million and $4 million in incentives.

$25,000,000

2013 base salary for Philadelphia Phillie Cliff Lee.

$24,000,000

Amount earned last year by actor Ashton Kutcher, who took over Charlie Sheen’s role in TV’s “Two and a Half Men.”

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