PPA SHUTS DOWN RIDESHARE SERVICE CORBETT’S LAST WEEK TO SHINE
DOES IT MATTER IF YOUR STARTUP IS COOL ENOUGH?
REGION’S BUSINESS
PHILADELPHIA EDITION
A JOURNAL OF BUSINESS AND POLITICS
REDEFINING PHILLY’S
REAL ESTATE After months of debates over Philadelphia’s Actual Value Initiative, City Council approved the property assessment reform last week
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27 JUNE 2013
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CONTENTS
1519 Walnut Street
Redefined Real Estate: 18 Philadelphia’s AVI Impact
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YEAR OF THE INNOVATOR
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Does It Matter If Your Startup Is Cool Enough?
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DEALBOOK
REPUTATION MANAGEMENT
Sixers Partner With Parx, Consider Space At Navy Yard
Reputation Changer Buys Brand.com After moving from West Chester to a new office in Philadelphia, the online reputation management firm, ReputationChanger.com, has officially rebranded itself as Brand.com after acquiring the domain in a six-figure deal, the company said in a statement. “A world-class online reputation has become the most important facet of a respected and recognized brand,” Michael Zammuto, president of Brand. com, said in a statement. “With the acquisition... we are communicating to businesses and individuals... that our mission is to protect their brands across the entire digital landscape.” Mr. Zammuto has also said the company plans to expand the company by as much as 1000 percent by 2013’s end.
The Philadelphia 76ers have entered into a multi-year, multiplatform partnership with Parx Casino, the organization announced Monday. Parx will now be the presenting partner for the Sixers Dream Team and will also present the Sixers Halftime Radio Show for all regular season games. The casino will also be featured in a new co-branded logo for use on the scoreboard inside the Wells Fargo Center, as well as the Sixers Dream Team warm-up uniforms and other promotional materials. Parx will also host the final audition for the Dream Team July 17. In other news, the franchise has a proposal for new 55,000-square-foot practice
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space that would be built on a vacant lot that occupies 3.3 acres at the Navy Yard, the Sports Business Journal reported. The organization opened administrative offices at the Navy Yard last year and is looking for a facility that would hold two basketball courts, fitness and training space, player and coach locker rooms, an audio-video review room, broadcast facilities, player lounge, food service, laundry and 60 parking spaces. Sixers CEO Adam Aron talked to the Inquirer in March about the need for a new practice space. At that time, Mr. Aron said he wasn’t sure if the organization would buy an already existing facility or construct a new facility.
LEGAL
Fox Rothschild Merges With Denver Firm Law firm Fox Rothschild will merge with Denver law firm Lottner Rubin Fishman Saul, P.C., the firm announced Monday. Fox Rothschild will take on 16 new attorneys, effective July 1, with hopes to further develop its presence in the Mountain West region. REAL ESTATE
Starwood Puts Airport Hotels Up For Sale Starwood Hotels & Resorts is selling its hotels the near Philadelphia International Airport, the Inquirer reported. The complex includes the Sheraton Suites Philadelphia Airport hotel, Four Points by Sheraton and the Aloft Philadelphia Airport — a total of 564 rooms.
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27 JUNE 2013
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WEEKLY BRIEFING
HEALTH CARE
CHOP Announces New Facility Plans
City Debars Contractor Following Investigation
REPORT
Pennsylvania Receives C- for Manufacturing, A for Logistics Pennsylvania is one of the few mid-Atlantic states to see improving prospects for manufacturing, according to the 2013 Manufacturing and Logistics Report Card, an in-depth analysis from Ball State University. Pennsylvania received the following grades:
The Children’s Hospital of Philadelphia announced Tuesday, June 25, the largest charitable donation in its history: a $50 million gift from the Buerger family toward the construction of a new outpatient facility. The building will be named the Buerger Center for Advanced Pediatric Care and will contain 12 floors of integrated clinical care facilities and patient, family and visitor amenities. EDUCATION
Teachers’ Union Reluctant on Cuts Philadelphia Federation of Teachers president Jerry Jordan does not agree with $133 million in labor union givebacks to avert the “Doomsday Budget,” Newsworks reports. According to Mr. Jordan, district officials want PFT members to take salary cuts between five and 13 percent, while increasing benefits contributions. ENERGY EFFICIENCY
Greenworks: Vehicle Miles Down in City The 2013 Greenworks Progress Report for Philadelphia was released Friday, June 21, and significant progress has been made in the reducing the amount of vehicle miles in Philadelphia. In 2011 there were 5.34 billion vehicle miles traveled in Philadelphia, which surpasses the goal of a 10 percent reduction to 5.36 billion miles by 2015.
HIDDEN CITY PHILADELPHIA
The City of Philadelphia issued a notice of debarment Friday to Jamie Kovacs and her company, JHK. Inc., for falsely representing its role as a woman-owned subcontractor in an agreement with Corizon Health Services, Inc., a prime health care contractor with the City’s Prison System. This is the first involuntary debarment in the city’s history. After the investigation, the Office of the Inspector General found that prime contractor Prison Health Services, now known as Corizon Health, Inc., subcontracted with JHK Inc. to make it appear
that JHK — a City-certified, womanowned business — had provided pharmaceutical supplies to the Philadelphia Prison System when JHK was paid only for the use of its name and its womanowned business certification. “The City of Philadelphia will not tolerate businesses that circumvent the City’s antidiscrimination policies,” said Inspector General Amy L. Kurland. JHK admitted to the City’s Debarment Panel that the company had done nothing to provide services to PHS other than placing its name on paperwork.
City Council Holds Hearing On Fatal Building Collapse Philadelphia City Council opened hearings June 19 regarding the fatal building collapse that resulted in the deaths of six people. The Inquirer reported that most of the two-hour hearing focused more on strict demolition practices for public buildings versus the more laid-back rules it applied to private projects. Carlton Williams, commissioner of licenses and inspections, said the city had more control over public building demolitions because the city is acting as the proj-
ect manager. For private demolitions, like the one that occurred at 22nd and Market, the contractor assumes all responsibility. Councilman James Kenney said that public demolitions are treated with a higher standard of safety and pointed out that heavy equipment is not allowed at demolitions when buildings next door are occupied. This is not the case with private demolitions. The special investigative committee has promised a report after four more hearings this summer.
Manufacturing: C Logistics: A Human Capital: C Worker Benefit Costs: D+ Tax Climate: D Expected Liability Gap: C Global Reach: C Sector Diversification: B Productivity and Innovation: C“Pennsylvania saw major fiscal improvements in this year’s scorecard, both in overall tax climate and the expected liabilities gap,” said Ball State economics professor Michael Hicks. Moreover, the relative cost of worker benefits also shrank in 2013 relative to the nation as a whole. As a consequence, Pennsylvania is one of the few mid-Atlantic states to see improving prospects for manufacturing in this scorecard. “While Pennsylvania has emerged as a much improved state for manufacturing, New York, Connecticut, Maryland and New Jersey continue to underperform, due broadly to very unhealthy tax environments for manufacturers,” Mr. Hicks said. “Pennsylvania is the only bright spot for manufacturing in the region.”
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27 JUNE 2013
REGIONSBUSINESS.COM
WEEKLY BRIEFING
TRANSPORTATION
$50 Toll Possible Without Reform Pennsylvania’s auditor said that requiring the Pennsylvania Turnpike Commission to make $450 million annual payments to the state will take an ever increasing toll on taxpayers’ pocketbooks. “If we don’t do something about this by the year 2021, it will cost $50 for the average working Pennsylvanian just to travel across our state,” said Auditor General Eugene DePasquale. “That is just unsustainable. There is no way that we can ask the average Pennsylvanian to pay that.” Mr. DePasquale released a special audit showing how much debt the turnpike will incur if lawmakers don’t end the $450 million annual payment. This article was originally published on PA Independent at PAIndependent.com. CULTURE
Cultural Alliance Pres. Stepping Down Tom Kaiden announced Tuesday, June 18, that he will be stepping down as president of the Greater Philadelphia Cultural Alliance. Mr. Kaiden will be taking a new job as the chief operating officer at Alexandria Convention and Visitors Association in Virginia. “I am incredibly grateful to all of you,” he said in a letter. “The board, staff and members of the Cultural Alliance are an exceptionally collaborative and effective team, and I’m proud of what we have been able to accomplish together.” GAMING
Revel Changing Name With new leadership following Chapter 11 bankruptcy protection, the Atlantic City megaresort Revel is adopting a new marketing strategy that will focus more on gambling and attracting gamblers. The resort, originally named Revel, will be renamed as Revel Casino Hotel and will have new signs welcoming visitors to the casino.
Global Positioning Strategy For Infrastructure Unveiled
JOBS
Population Up, Jobs Down In State With Low Unemployment For the first time in almost a year, Pennsylvania’s unemployment numbers are below the national average. But Philadelphia hasn’t gotten the memo. Though numbers are good across the state, Philadelphia is seeing an increase in population with stagnant job numbers.
PHOTO: CJ DAWSON PHOTOGRAPHY
The Economy League of Philadelphia released the third component of the World Class Greater Philadelphia initiative: a plan of action for infrastructure. Those in attendance at the Independence Visitor Center on Thursday, June 20, not only received details on the infrastructure agenda, but listened to a keynote speech from former Gov. Ed Rendell. Gov. Rendell urged business owners to get together and issue an ultimatum to members of the House that were holding up the transportation bill from being passed. The $2.5 billion transportation funding bill would go higher than the $1.8 billion proposal from Governor Tom Corbett. The three areas in which to focus in the Infrastructure GPS report include: global and national connections, regional mobility and sustainable systems. The strategies outlined in the report
include: =^o^ehi IabeZ]^eiabZ Bgm^kgZmbhgZe Airport to a world class facility Bfikho^ bgm^k\bmr kZbe \hgg^\mbhgl d^r metropolitan areas, like New York and Boston >gaZg\^ \ZiZ\bmr hg ma^ k^`bhgÌl freight rail networks ;kbg` ma^ k^`bhgÌl mkZglbm lrlm^fl ni mh a state of good repair Ni`kZ]^ Z`bg` khZ]l Zg] [kb]`^l Lmk^g`ma^g \hgg^\mbhgl [^mp^^g ma^ region’s economic hubs Fh]^kgbs^ Zg] ikhm^\m ma^ k^`bhgÌl water infrastructure >gaZg\^ ^g^k`r bg_kZlmkn\mnk^ Zg] expand parks and open spaces. The Infrastructure GPS is just one of three focuses for the World Class initiative. The initiative also focuses on education and talent in the region, and continuing business growth.
100,000
More Philadelphians by 2035, according to the City Planning Commission.
40,000 New jobs by 2035
1,547,607
Population total in 2012, according to Census Bureau estimates.
659,200
Hopkins Receives Wanamaker Award
Jobs in 2011, according to Pew Philadelphia Research Initiative
North Philadelphia native Bernard Hopkins received the 2013 John Wanamaker Athletic Award Thursday, June 20, inside the Wanamaker Building for winning the IBF Light Heavyweight World Championship at 48. “I want to be the one that can say I inspired a young fighter to not only be able to throw a punch, but to be able to read, be able to count, be able to balance a checkbook...” he said. “Boxing is what I do, but it’s not who I am.”
488,000
Unemployed Pennsylvanians
24,000
SUBMITTED
More people employed from April 2013 to May 2013
27 JUNE 2013
REGIONSBUSINESS.COM
WEEKLY BRIEFING EXECUTIVE BOOKSHELF
WHO TO FOLLOW
@PPDJoeMurray There’s no shortage of local Twitter accounts to follow for breaking news. But how about an actual Philly detective who not only tweets details of incidents, but gives out advice to citizens? Enter Det. Joe Murray, who is very active on Twitter. RT @PPDJoeMurray: Can I make a suggestion/plea here? Do not chase robbers who are armed with guns. Your phone isn’t worth it. RT @PPDJoeMurray: The creep firing the shots off last night on Walnut St was caught by an off-duty Penn detective who was driving home after work. Nice job.
Putting the Soul Back Into Business Communication Author Miti Ampoma’s goal is to create happy staff, happy customers and more profits. How is it done? Good communication. Ms. Ampoma’s book The Innovative Communicator gives readers their own toolkit for effective business communication while showing how there is a dysfunction in the “people, process, technology equation” that is at the center of businesses. One Amazon reviewer says, “As a business owner with my heart and soul in relationship marketing, this book definitely spoke to my heart and soul, not only for my business, but to build an understanding of the ‘bad’ experiences we experience with service providers every day.”
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RESTAURANT ROUNDUP
MUST-HAVE APP
Stow Now that it’s officially summer, vacations are just around the corner. And with vacations comes the art of packing a suitcase. Stow ($1.99) aims to make the process of packing a breeze. It allows you to create a packing list by using one of the app’s many trip templates (camping trip, family visit, etc.). From there, the app auto adjusts the list based on the details of your trip, including the dates of the trip, and the people you’re packing for. Select what type of weather you’ll be expecting and Stow will give you a list of what items and clothing you’ll need.
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Top 5 Indian Restaurants in Philly Philadelphia’s roster of Indian restaurants just got bigger with the opening of Indeblue in Midtown Village and Tiffin Bistro on South 11th Street. With that news in mind, Zagat recently released its top five Indian restaurants in Philadelphia and the surrounding area: 5. Ekta, 250 E. Girard Ave. 4. Saffron Indian Kitchen, 145 Montgomery Ave., Bala Cynwyd 3. Tashan, 777 S. Broad St. 2. Amans, 2680 Dekalb Pike, Norristown 1. Shere-E-Punjab, 5059 State Rd., Drexel Hill
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27 JUNE 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
Natural Gas: ‘Goldmine Beneath Our Feet’
Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
At their summer meeting the Democratic Party’s state committee passed a resolution calling for a moratorium on “fracking,” or hydraulic fracturing, the principle technology used to extract natural gas from the Marcellus Shale that runs under much of Pennsylvania. In the category of really bad ideas this one takes a gold medal. Lest my partisanship be an issue, I’ll turn to two leading Democrats for further commentary. One is the former Chairman of the Democratic National Committee and, not coincidentally, the immediate past governor of Pennsylvania, Ed Rendell. He called the action by his party “very ill advised.” Those who know Governor Rendell understand that his private utterances were a little more “colorful.” Governor Rendell should know. He oversaw the largest expansion of fracking in the Commonwealth. He did it with tight — some would say “too tight” — environmental restrictions. Governor Rendell pointed out that his Secretaries of Environmental Protection, “the two biggest environmentalists in the state, who are both running for governor, both approve of fracking.” Governor Rendell also pointed out the huge economic boom that the natural gas industry has been to Pennsylvania, pumping billions of dollars into Pennsylvania’s economy and creating and supporting tens of thousands of new jobs. “It (fracking and sensible development of our natural gas) has created jobs and huge economic investment in Pennsylvania. And it’s helped create wealth in the poorest areas of Pennsylvania,” said the former governor. Unemployment rates in rural counties, some of which were up until recently among
the highest in the state, are plummeting. With that job growth comes all sorts of ancillary benefits. Boom industries and services supporting the natural gas industry are sprouting up and once dormant communities are vibrant. The jobs being created by the natural gas industry and its use of hydraulic fracturing were not lost on another prominent Pennsylvania Democrat, AFL-CIO President Rick Bloomingdale. While I don’t often agree with Mr. Bloomingdale on some policy issues, of this I am certain: He cares about jobs. And Mr. Bloomingdale was quick to point out the jobs the natural gas industry has created and continues to support. Natural Gas is “a goldmine beneath our feet.” Covering more than 95,000 square miles and holding more than 400 trillion cubic feet of natural gas, the Marcellus Shale is causing an economic renaissance in our commonwealth and through the northeast United States. Nationally, natural gas production is one of the few continuously bright spots in a sluggish economy still straining to recover from the recession of 2007-09. Total domestic gas production jumped almost 35 percent in the last seven years and gas reserves have increased 50 percent in just the last five years. Natural gas supports nearly two million jobs nationally, and experts expect that number to double within the next 20 years. Just a decade ago the Fed Chairman was warning that shortfalls in domestic gas production could cripple our economy. He told us we’d have to import natural gas to stay competitive. Today the terminals that were built for importing natural gas are being retrofitted
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REGION’S BUSINESS A JOURNAL OF BUSINESS & POLITICS
for exports. On a recent trade mission to South America, Governor Tom Corbett heard that Chile would love to have some of our natural gas. The U.S. exported less than 2 percent of our natural gas production through liquid natural gas terminals last year. Pennsylvania citizens can benefit not only from our own use of our natural gas but also through exports. With shale gas so freely flowing, demand for it must increase. That why’s it’s vital for large fleets to convert to natural gas as well major institutions and large buildings. Private citizens can do the same with their homes as they are in droves while we await the day when most vehicles can be powered through cleaner, cheaper and more efficient natural gas. Polls continue to show that those who live in areas where “fracking” occurs strongly favor the benefits that outweigh any potential risks. It’s interesting to note that the loudest voices in the Democratic State Committee in favor of their resolution were from people who don’t live in areas where fracking is actually being done. Of course there are legitimate concerns about how we develop natural gas. They are being addressed daily to assure safe, responsible and healthy production. Natural gas has proven to be job creating and community building, good for the economy and the environment, a safe and clean source of energy that promises prosperity to Pennsylvania for generations. Sadly there are still those, as witnessed by the Democratic State Committee resolution, for whom no amount of regulation is enough. Their answer is simply to stop (reverting back to foreign oil). They would kill the goose before it lays its golden eggs.
27 JUNE 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
11
City Council Approves $3.8B Operating Budget
Timothy Holwick is a freelance writer covering Philadelphia government. Find more coverage at citycouncilmatters.com. CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
Philadelphia City Council gave final approval June 20 to Philadelphia’s FY2014 Operating Budget. The approved budget allocates $3.8 billion in funding across the city. The budget process and debates focused heavily on the implementation of tax measures to raise funds for the Philadelphia School District, as well as disputes about the fairness of the Actual Value Initiative (AVI) property assessment reform. Council President Darrell Clarke recognized the efforts of all city government groups involved: “I am pleased the Administration and Council arrived at agreement over the Actual Value Initiative, which brings overdue fairness to thousands of Philadelphia homeowners who property values were overassessed.” Not to appear to be expressing blanket approval for the state of the AVI, he went on to say, “However, many of us on Council remain concerned about the accuracy of the assessment process. We hope our legislation that would refine standards and increase transparency at the Office of Property
Assessment will be signed by the Mayor.” Some of those measures include the $30,000 Homestead Exemption, a lowering of tax rate, tax abatements, and gentrification relief for longtime owner-occupants. As has been the case all spring, Council President Clarke continues to press outreach efforts to educate property owners on what relief may be available to them as everyone begins adjusting to AVI. Council’s approved budget contains more than $1 billion in funding for the School District of Philadelphia. About $74.5 million of that is new revenue, which is a response to the district’s request for an additional $60 million after the initial proposed budget was released. Part of that new revenue comes from a $2-per-pack cigarette tax, which will go into effect pending approval of the Pennsylvania legislature. Another large portion of new revenue will hopefully come from the planned shakedown of delinquent property taxes, where the City is armed with new enforcement tools thanks to City Council. One of Council’s other options to increase
school funding was to increase the Use and Occupancy tax on commercial properties. Council did not vote on that proposal for fear it might endanger the chances of the cigarette tax getting through Pennsylvania’s lawmakers. The cigarette tax is projected to raise almost $100 million per year, and it can be argued that Council chose to attack an unhealthy practice instead of making Philadelphia taxes harsher on businesses. The approved budget takes on many issues aside from AVI and education, including $85 million allotted to help resolve some of the city’s heated union disputes. The approval of the budget comes as Council begins its summer recess, as is custom. While that custom comes under fire from both citizens and Council members, it is the practice for now. However, individual Council members and committees, including the one investigating the recent building collapse, will continue to meet throughout the summer months. We simply will not see any weekly stated meetings.
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27 JUNE 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
This Week: Governor’s Last Chance to Shine?
Eric Boehm is bureau chief for PA Independent, a project of the Franklin Center for Government and Public Integrity
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
They say to live every day like it’s your last. For Gov. Tom Corbett, the final week of June 2013 may be his last chance to stamp his name in the annals of Pennsylvania politics. There’s little reason to envy the unpopular governor this week. He’s trying to shepherd a third consecutive on-time, no-new-taxes budget across the finish line by Sunday night. He’s trying to convince lawmakers to give him a few major policy victories that he can take into a challenging re-election campaign next year. And he’s doing it all against the backdrop of the knowledge that this might be his last chance in the bully pulpit’s spotlight, a place in which he’s never seemed all that comfortable. The governor wants to address Pennsylvania’s unsustainable public pension systems, finally do away with an arcane system of staterun liquor stores and address sorely needed transportation funding. Already, he’s made it clear to legislative leaders he will not accept a budget unless it has some of his other goodies included, but it will be the lawmakers who ultimately decide if Gov. Corbett goes 0-for-3. Make no mistake about it: This is his last chance to take the helm during the furious activity that marks the final week of each June.
Though he still will be in office next year — barring unforeseen circumstances — it will be an election year for him and most of the General Assembly. Nothing major, and certainly nothing that could be seen as slightly controversial, will be tackled then. It’s no secret that Gov. Corbett’s bad poll numbers are hanging heavy over this year’s budget negotiations. More than a few Republicans staffers in the Capitol have made dark jokes about getting things done this year before “Gov. Schwartz” arrives in Harrisburg — a reference to U.S. Rep. Allyson Schwartz, widely regarded as one of two frontrunners, along with State Treasurer Rob McCord, for the Democratic nomination. The fact that a few recent polls have shown Rep. Schwartz to be trouncing Gov. Corbett in hypothetical match-ups is not helping things. Unless his poll numbers improve, Gov. Corbett will be viewed as a lame duck by next June. So, if major Republican initiatives like the privatization of the state liquor system, an overhaul of the state pension system and coup de grace to the state’s capital stock and franchise tax are to become realities, they will happen in the next few weeks or will be put
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off until at least 2015. And they could be put off a lot longer than that, if you believe Rep. Schwartz or Treasurer McCord is a lock to be the next governor. Gov. Corbett needs to go into full-courtpress mode this week. For a governor (and a staff ) who has never really gotten used to retail politics with the Legislature, this surely is easier said than done. He may also have to accept “half-loaves” from the lawmakers. On pensions, he has to be willing to accept changes in benefits for future employees (he wanted that, plus changes for current workers too). On liquor, he may have to accept something less than full-scale privatization, but surely any expansion of where Pennsylvanians can buy booze would be welcomed by voters. At the end of the day, getting a few halfmeasures is better than zero full-measures. Gov. Corbett has more to gain — and more to lose — from this week than any of the 253 members of the General Assembly. Few of them have reason to worry about the 2014 elections, and history suggests most of them will be back in Harrisburg for years to come. For Gov. Corbett, this very well may be it.
27 JUNE 2013
REGIONSBUSINESS.COM
2013: YEAR OF THE INNOVATOR
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Camp Bow Wow Keeps Dogs Happy on Vacation BY BRANDON BAKER Tucked away in Cherry Hill, N.J., is a camp lodge decorated with logs, a crackling fireplace and a slew of individual cabins to house and comfort its long-term visitors. This is where the dogs of Camp Bow Wow retreat to while their owners are away on vacation. “It really is like a camp,” said Michelle Bryson, co-owner of Camp Bow Wow’s Cherry Hill location. “This is for people who go on vacation, people who work too much and maybe don’t know where to go, they can drop off [their dogs] at our daycare. Right now, we’re one of the fastestgrowing stores on the East Coast, SUBMITTED and I see us continuing to grow in expanding its grooming and training services, in addithe next couple of years.” Any continued growth would be in addition to the tion to a forward-thinking — and Big Brother-esque enormous laundry list of successes the franchise has — mobile and Web application that allows customers experienced already. Camp Bow Wow has nestled into to see their dogs remotely through an iPhone app conthe Inc. 5000 four years running, and touts itself as nected to a webcam. being a “$60 million leader” in the United States’ pet For Bryson, she takes pride in being able to comfort sector. dog lovers who might feel apprehensive about leaving It has opened 200 franchises in 40 states since their dogs in an unfamiliar environment. embarking on its franchise model in 2003. “The employees here, they know every single dog. The Cherry Hill location, Ms. Bryson said, is among People will walk in, and we’ll say, ‘Hey, Barney!’ and one of the largest in the country, spanning 9,800 the customers absolutely love that,” Ms. Bryson said. square feet. Through the summer, it hosts about 120 “And the fact that people can actually see their dogs, dogs per day, eventually hitting its max capacity of 150 especially while they’re away on vacation … that when the holiday season rolls around in the fall. peace of mind of knowing their dog is OK is just so In the past year, the franchise shook up its services by important.”
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2013: YEAR OF THE INNOVATOR
DIARY OF A STARTUP
REGIONSBUSINESS.COM
Learning Management Platform Spins Out of Web Development Firm BY JULIANA REYES
Success Can’t Happen Without Your Community In his latest “Diary” entry, AutoAlpha Founder David Wynne provides words to live by for aspiring business owners, recalling not-so-long-ago struggles that have only made him stronger in his pursuit of success. In his words: Over these last seven months, we’ve come to appreciate that community is the bedrock of the start-up universe. As much as we’ve felt alone while knocking down doors to meet prospective customers and dialing investors for dollars, we’ve been really fortunate to have a support group of local entrepreneurs in Philadelphia, the University of Pennsylvania and those within the Wharton school. Since day one the adventure has been a roller coaster of emotion, with dark and haunting depths as well as exciting adrenaline-pumping heights. In the beginning, it was a daily — if not hourly — experience to feel both the highs and the lows as we abandoned the more traditional path of the MBA, recruiting for banking or consulting. We haven’t taken the ride alone, fortunately, and have sought guidance and shelter from many people. Each of us has at some point taken on roles as advisers, collaborators, cheerleaders, psychologists and even “couples” (i.e. co-founders) therapists. We’ve helped each other navigate competitions, incubator applications, conflicting legal advice and diverse feedback from stakeholders and customers. As Brett Hurt (WG’99, vice chairman and cofounder of Bazaarvoice) mentioned during a visit earlier this year, not a single classmate of his who tried to do it alone was successful. So for aspiring entrepreneurs out there: As you develop your business model, find productmarket fit and build your company — don’t forget to ask for help when you need it and to give freely when you can afford to. Both pay huge dividends!
Jarvus is growing up. Founded by a pair of college dropouts who were 22 and 23 at the time, the three-year-old Northern Liberties web dev firm, which spun out of hacker space Devnuts, is spinning out Slate, its open source learning management platform. Jarvus launched Slate at Center City’s Science Leadership Academy in late 2011, but now, with three dozen schools across the country waiting to implement the platform, Slate needs a team — and funding — of its own, its founders said. Slate, a member of GoodCompany Group‘s summer social enterprise accelerator, offers a platform that centralizes a school’s technology needs, like email, Google Docs and programs like Blackboard and PowerSchool. That way, teachers and students don’t need to log in to a dozen different programs and data can be shared between all the programs seamlessly. It’s free for schools to use, though you can pay Slate to host the platform for you. The Slate team consists of two staffers from Jarvus’s team of 13, as well as Christian Kunkel, the founder of student entrepreneurship program Startup Corps, who will be the company’s CEO. Cofounders John Fazio and Chris Alfano will hold leadership positions in both Jarvus and Slate, Mr. Fazio said. The team is actively seeking funding, though Mr. Fazio said Slate is not “stuck
on the capital front.” But demand is high, Mr. Fazio said, and Slate needs more staffers to keep up. The team has heard interest from schools in Florida, California and Minnesota, he said. Slate will soon be used in three schools in Philly: Science Leadership Academy, Independence Charter School, which began using it this past spring with STEM program Knick Knack Learning and the Navy Yard’s Sustainability Workshop/Workshop School. But, Mr. Kunkel said, Slate will focus mainly on schools outside of Philadelphia because its early adopters will be schools that are heavy on the edtech side of things, and “there just aren’t enough of those schools in Philly.” What Slate can do, he said, is make sure that the money the School District spends on technology is spent efficiently. He hopes the company can approach the School District in a few years. This article was originally published on Technically Philly at Technical.ly.
INVESTORS
Philly Ranked as a Top City for Venture Capital Using data from the National Venture Capital Association, The Atlantic recently compiled a list of the top 20 locations for venture capital investment. Not surprisingly, San Francisco was the top destination, but Philadelphia was ranked at No. 11, beating out locations like Denver, Atlanta, Phoenix and Pittsburgh. Philadelphia has $347 million in venture capital, 1.3 percent of the total. There were reportedly 105 deals made, 2.8 percent of the total amount. The corridor from Boston to Washington D.C. combines for a total of $6.2 billion in venture capital investment. The complete list includes: 1.
San Francisco
2.
San Jose
3.
Boston
4.
New York
5.
Los Angeles
6.
San Diego
7.
Seattle
8.
Austin, TX
PPA Shuts Down Rideshare Service
9.
Chicago
Sidecar, a San Francisco-bred, easy-touse ridesharing service and smartphone app, has officially been shut down indefinitely, having not been able to come to an agreement with the PPA. The service, backed by Google to the tune of $10 million, allowed Philly residents to procure rides from community drivers employed by Sidecar and pay a donation to the driver via the Sidecar mobile app. The original idea was not only to promote ridesharing and its eco-friendly
11.
effects, but also to give people a different option from public transportation and taxis. Sidecar was slammed by the PPA for operating the ride service without proper authorization and fined $3,000 in February. Since then, all rides in Philadelphia were free until Sidecar and PPA could come to an agreement. The company announced the indefinite suspension to its users via email last Wednesday, June 19.
10. Washington, DC Philadelphia
12. Denver 13. Atlanta 14. Boulder, CO 15. Minneapolis 16. Santa Barbara, CA 17.
Phoenix, AZ
18. Raleigh-Cary, NC 19. Pittsburgh, PA 20. Provo-Urem, UT
27 JUNE 2013
2013: YEAR OF THE INNOVATOR
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Does It Matter If Your Startup Is Cool Enough?
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Edward Nevraumont is a Wharton alumnus and senior vice president of marketing for A Place For Mom, an assisted living, dementia care, and senior living referral service. This column was originally published on the Entrepreneurship Blog at beacon.wharton.upenn.edu.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
started my career at Procter & Gamble. Sometimes people would leave P&G to work for Disney and took about a 20 percent pay cut to do the same job. We called it the Mickey Mouse discount. A close friend left telecom to work in the music industry and took a 50 percent pay cut to do it. That’s still better than people starting in film who are expected to work for free for a few years to prove themselves. No one works for free in oil exploration or aluminum siding installation or cardboard manufacturing. Some companies and industries are considered ‘cool’. As soon as that happens they find it a lot easier to find people to work for them — and correspondingly can choose to pay that talent less than market rates. You may say: “But I’m an entrepreneur. That’s a good thing. If I start a company in a cool industry I don’t need to pay my employees as much.” That’s true, but remember as a start-up you are already ‘cool.’ Even if your start-up is the most boring thing in the world, there will still be an attraction to be part of building something. Getting cheap labor is not your biggest concern; being successful and getting traction is. That’s where being in a ‘cool’ industry gets you in trouble. A few years ago I was working at Expedia and had an inspiration. In many ways restaurants are the same as hotels. Both have high fixed costs (real estate, labor) and low variable costs (housekeeping, food). The difference is that hotels have spent the last 20 years getting very good at managing a high-fixed-low-variable business. They charge different prices different nights. They change prices daily based on forward looking demand. They have multiple channels to handle different price sensitivities (AAA, Corporate discounts, group discounts (weddings), online bookings (Expedia, Travelocity), opaque booking (Priceline, Hotwire), packages (Air+Hotel for one price), flash sales (Groupon, Travelzoo), and more). They even create programs to reward frequent travelers with more perks (not a price discount, but effectively a quality increase for the same price). Restaurants generally don’t have those things (except now there are flash sales with Groupon). My idea was to take these tools and give them to restaurants. My partner and I (another 2005 Wharton MBA grad) built a company called Restauranteers to do just that. My VC friends told me, “This is the best idea I’ve ever been pitched.” We thought we had a winner. Restaurants
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we spoke to loved it (after we were able to actually talk to them). Consumers loved it (get discounts at your favorite restaurants by eating at non-peak hours. Or try a new restaurant at a discount using our opaque model). The problem: Everyone loves the restaurant space. Here’s why that matters: Restaurant owners: They get multiple calls a day from entrepreneurs trying to sell them their latest idea that will increase sales. Most of the ideas are bad and they are busy. It’s not worth their time. This makes them very, very difficult to get ahold of and actually have the conversation about how a venture can help. Restaurant users: Consumers search for restaurants online and get a ton of people advertising to them – many irrationally. Because so many people are targeting them, the price to advertise to restaurant users is driven up. Effectively this space is ‘saturated’ and you need to be a lot better, a lot luckier, and have deeper pockets than everyone else to make a go of it. UrbanSpoon, one of the market leaders in the space, is pitching to restaurants: we will give you free booking ability on US.com and give you a free iPad to manage it. How do you compete with free+free? I currently lead marketing for A Place For Mom. APFM is the opposite of ‘cool.’ We help people (usually 50+ year old daughters) find assisted living, memory care and other senior living for their loved ones (usually her mother). The company has a simple business model: We do marketing and get families in touch with our senior living advisors (employees who work from home across the country). The SLAs help a family understand the process and then give referrals to communities that meet the family’s criteria (almost like a real estate agent). APFM gets paid by the community if a family moves in. Simple.
Yet the company was founded in 2000 and didn’t get its first competitor until ten years later. Even today we have little to no competition. All those entrepreneurs in the first decade of the 21st century were looking for ‘cool’ places to create businesses – some industry where they thought it would be ‘fun’ to work. The APFM founders were left on their own to build relationships with the communities who were desperate for help. No one else was talking to them. I am often asked to take calls with friends of friends who are thinking about starting businesses. Not a single call has been about senior housing, but I have had dozens about the restaurant space. The same ideas come up again and again: : [hhdbg` ^g`bg^ _hk lfZee [nlbg^ll^l : lbfie^ ehrZemr ikh`kZf _hk lfZee [nlbnesses : fZkd^mbg` mhhe mh `^m fhk^ oblbmhkl bgmh the restaurant (usually involving an iPhone app) : pZr mh `^m fhk^ bg_hkfZmbhg Z[hnm ]bgers and use analytics to market to them (usually via email or an app) Someone once gave advice to new writers: “write what you know.” This led to an inordinate number of memoirs and loosely fictionalized angst about 20-something writer-narrators. That has a parallel with entrepreneurs trying to solve problems they see in their own life. Half of the new mothers I know have started building businesses to solve newborn problems. Better advice for both writers and entrepreneurs is to “know what you write.” Yes that may mean writing about your life or solving a problem you already encounter. More likely it means doing research and finding an area that is less explored. It makes for a more original, interesting novel and it makes for a business that doesn’t have to be the best, luckiest and richest in order to be successful.
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2013: YEAR OF THE INNOVATOR
REGIONSBUSINESS.COM
New Business Platform Gives Companies More Control Business: Point.io Founders: Ron Rock Contact: contact@point.io
BY BRANDON BAKER Point.io is nothing if not confident about its future — somewhat of an anomaly in today’s ever-panicked world of startup leaders just struggling to get to a launch phase. “We’ve got some very big partnerships we’re going to announce soon, and I think it will instantly put us in a high-six-figure number of users on our platform. And that’s pretty hard to do these days,” said Ron Rock, CEO of Point.io – previously known as CloudPoint. Mr. Rock took over the fledgling backend-as-a-service platform and API business in 2012, just after selling his previous startup endeavor to Accenture to take some time off.
Having scoured the market looking for “the next big thing,” he stumbled upon the Wayne, Pa.located CloudPoint, which had been struggling to identify itself. “I looked at lots of technologies, companies, organizations, startups, business models … and in that journey, I found a lot of cool companies,” he said. “But I came across this technology in April or May of last year, and I think this technology is vastly different from what’s out there. There’s even a patent pending on it, which is exciting.” The technology in reference allows enterprises to share sensitive data through a secure platform, using links rather than attachments so as to give users control over what can be done with the information – editing, printing, saving, etc. This includes removing access to
a document once its intended use has been executed. Mr. Rock said its primary industries currently consist of health care, the financial sector and telecommunications, targeting an international clientele. “Because of how fast the market is moving, we’re hoping to move to the critical mass, cashflow profitable stage, so as to be a company to be reckoned with within the next 12 months,” Mr. Rock said. “So rather than thinking about the next three to five years, companies our size, in the space we’re in, we’re focusing on our knitting and making sure we’ve got revenues and profits.” Point.io, which raised $1 million in seed funding in the past year and has a team of about 17, will launch its platform in mid-July.
SUBMITTED
1st Annual
MARCUM I N N O VATO R of the Year
AWA R DS October 23, 2013
Is your company a catalyst for change? Have you pushed the boundaries in your industry? Is your innovation helping to boost Philadelphia’s growing economy? Marcum LLP and Region’s Business are in search of Greater Philadelphia’s top innovators, and we want to hear from you. The 1st Annual Marcum Innovator of the Year Awards will honor businesses of all sizes that are pioneering new advancements in the fields of Health/Biotech, Technology, Business Management, and Energy. Three winners will be named in each category, based on company size. Tell us about your break-through innovation and what makes your company a leader in our region by emailing a 500-word summary to innovation@regionsbusiness.com. Submissions must be received by September 1, 2013. Winners will be announced at a Gala Awards Ceremony at the Franklin Institute on October 23, 2013. Don’t miss out on this spectacular opportunity to join our region’s business leaders in recognizing and celebrating the spirit of innovation in and around Philadelphia. For complete details including nomination criteria, please call Jacki Hallinan at 484.270.2715. Ben Franklin may have been Philadelphia’s first and most celebrated innovator, but he did not have a corner on the market. Who knows? You could be Philadelphia’s next Innovator of the Year! For tickets to the event, please call 610-572-7112 ext 102. If you are interested in sponsoring this event, please call Deirdre Affel at 610-572-7136. Marcum LLP is a top national accounting and advisory services firm.
Sponsored by
Discover the
Difference
www.marcumllp.com
International Member of Leading Edge Alliance
ASSURANCE
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TAX
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ADVISORY
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REDEFINED REAL ESTATE Philadelphia’s Actual Value Initiative is making waves across the city while surrounding suburbs avoid drastic changes
STORY BY ELISSA VALLANO | ILLUSTRATION BY DON LEE
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hiladelphia has long battled high poverty rates and growing tax delinquency among its constituents. The School District has struggled, development has stalled, and the city’s growth has been stunted as a result, but the situation is not as hopeless it might appear. While Philadelphia’s property tax system has been widely criticized for being outdated and unjust, City Council has taken a bold and controversial step to right the economic wrongs plaguing the region. Thus, the Actual Value Initiative (AVI) was born. This Spring, AVI was created to rebuild the city’s property tax system, and it’s an unprecedented and massive undertaking for a city of its size and scale. AVI is revolutionizing the system in three distinct ways — by altering the certified market value of every property in the city, redefining how individual assessments are utilized to determine tax bills, and tackling the repercussions (such as large tax increases) that might await property owners as a result of AVI. No large city in recent memory has attempted to change all three of these factors at one time, but big problems call for even bigger changes.
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For troublingly unclear reasons, property taxes have never been a priority for Philadelphia. Until now, they’ve only accounted for approximately 18 percent of the city’s total tax revenue, a number drastically lower than its urban counterparts New York (37 percent) and Boston (66 percent). “The first tax reform commission identified the need for more accurate and equitable assessments back in 2003,” Kevin Gillen, Senior Research Consultant at the University of Pennsylvania’s Fels Institute of Government, said. “But the housing boom of the mid-decade really exacerbated the problem and made the need to fix it all the more urgent because house values began to rapidly outpace their assessed values.” AVI performed an elaborately choreographed reassessment of all 579,383 pieces of real estate in Philadelphia. Many of the city’s properties had not been reassessed since 2004, while others go as far back as the 1980s. Richie McKeithen, the city’s chief assessment officer, said Philadelphia has never undergone such a widespread inspection of its properties and related components. The Pew Charitable Trusts’ report, The Actual Value Initiative: Overhauling Prop-
erty Taxes in Philadelphia, determined a key factor in how Philadelphia’s property tax system found itself in its current position. It states: “A central reason why the city’s assessment system has become plagued with inequities is that the state does not regulate it; Pennsylvania is one of only nine states that impose no reassessment timetables or standard assessment methods on local governments. It also is one of just three states to receive a grade of F in ‘standardized procedures’ from the Council on State Taxation, a Washington-based trade group.” It appears Pennsylvania — and Philadelphia in particular — is finally trying to catch up, but the opposition to AVI has been loud and fierce. Mr. McKeithen took a verbal beating at a March budget hearing from council members who believe the assessments to be deeply flawed. The debate over property assessments in gentrifying areas of the city, neighborhoods where dilapidated row homes share the same block with newly built condos, seemed to reach the forefront. Many believe AVI’s new assessments to be the equivalent of a wild guess, and while they may not be wild, the assessments can be considered best
guesses in certain circumstances. “Moving towards a system of more computer-based appraisals that utilize more expansive and accurate data would put Philadelphia assessment process in line with the practices of most other cities,” Mr. Gillen said. “But there are significant obstacles to this task because many properties in the city are very old and the city’s assessors don’t have access to the interiors of most residences. So they often have to make their best guess as to things like a dwelling’s number of bedrooms and bathrooms.” Despite shortcomings, there is no denying that Philadelphia’s property tax system is broken. Pennsylvania is one of only three states in the nation to receive a failing grade in standardized procedures from the Council on State Taxation. New York and Delaware are the only other two to share that distinction, and the scant regulations the state currently has in effect has done little to improve conditions. In fact, University of North Carolina’s report Infrequent Assessments Distort Property Taxes: Theory and Evidence found Pennsylvania to be “perhaps the most lax state in enforc-
PROPERTY TAXES
Lay Of The Land As Philadelphians grapple with their evolving property tax rates, other cities across the country are firmly rooted in two extremes. These are the U.S. cities with the highest and lowest property taxes. The High Five: 1.) Bridgeport, Connecticut 2.) Des Moines, Iowa 3.) Providence, Rhode Island 4.) Newark, New Jersey 5.) Manchester, New Hampshire The Low Five: 1.) New York, New York 2.) Cheyenne, Wyoming 3.) Birmingham, Alabama 4.) Denver, Colorado 5.) Honolulu, Hawaii ABC NEWS
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Actual Value Initiative’s Winners, Losers BY ELISSA VALLANO
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roperty owners across the city have been keeping a close eye on Actual Value Initiative (AVI) property assessments, and as more details roll in, a clearer distinction of who the winners and losers are has come into focus. One one side sits the commercial properties that are preparing for significant tax breaks thanks to AVI. On the other side sits residential properties, many of whom will be supplementing those tax breaks with an increased property tax bill. Philadelphia businesses have undoubtedly won this round, which should help spark investments. “If a city can’t do something as fundamental as get its assessed values correct, then it signals that it’s probably not very well run,” Kevin Gillen, Senior Research Consultant at the University of Pennsylvania’s Fels Institute of Government, said. “Hence not a very attractive place to do business or invest capital.” There are several investors who will be finding Philadelphia plenty attractive because of AVI, though it won’t only be because of its accurate property assessments. City Council last week passed a bill formalizing the new property tax rates, and 25 of the city’s largest commercial buildings will be paying $20 million less in property taxes next year. Their tax bills will show an average decrease of 33 percent. One Liberty Place at 1650 Market Street will pay $2.5 million less in taxes after the new property assessments, the BNY/Mellon Building at 1735 Market Street will pay $2.4 million less, and the John Wanamaker Building has the thirdbest tax decrease at $1.1 million. The tax breaks won’t be for only the heavy hitters though. According to an Inquirer analysis, tax declines have been reported for smaller commercial properties like supermarkets, parking garages, gas
IF A CITY CAN’T DO SOMETHING AS FUNDAMENTAL AS GET ITS ASSESSED VALUES CORRECT, THEN IT SIGNALS THAT IT’S PROBABLY NOT VERY WELL RUN — KEVIN GILLEN, SENIOR RESEARCH CONSULTANT AT THE UNIVERSITY OF PENNSYLVANIA’S FELS INSTITUTE OF GOVERNMENT
stations, beer distributors, warehouses and small factories as well. Throughout Philadelphia, and notably in Center City, commercial buildings are projected to save roughly $72 million in taxes. Residential properties will mostly be picking up the tab, so the city is expected to break even when it comes to property taxes. That isn’t great news for the cash-strapped School District of Philadelphia, which has been looking for funding under every rock in the city. There has been some rampant myths about how AVI could benefit the flailing school district, and it’s clearly not a winner in this scenario — though it’s not a loser either. An average of 60 percent of the proceeds from property taxes goes to the school district, and AVI in no way changes the percentage of that revenue. AVI doesn’t even set the tax rates — that decision comes from council members and the mayor. Mayor Michael Nutter had proposed collecting the same amount of revenue in property taxes as the previous year with a 1.32 percent tax rate. Despite popular misconception, AVI is playing no part in this battle. The clear victor remains commercial properties, though how many homeowners will pay the price is the most watched aspect of AVI’s legacy.
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IT IS SHAMEFUL THAT WE HAVE PASSED DETROIT AS THE MOST TAX-DELINQUENT CITY IN THE NATION. — KEVIN GILLEN, SENIOR RESEARCH CONSULTANT AT THE UNIVERSITY OF PENNSYLVANIA’S FELS INSTITUTE OF GOVERNMENT
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ing its revaluation laws.” “I think that it is shameful that we have passed Detroit as the most taxdelinquent city in the nation,” Mr. Gillen said. “It is understandable that many property owners are outraged that they should have to pay more in property taxes while others simply ignore their tax obligations. I think AVI should be implemented with an aggressive enforcement and collection effort that seeks to achieve a reduction in our delinquency rate from 15 percent to 5 percent. Not only will this improve the fairness of our property tax system, but it would also allow a lower tax rate for property homeowners via increased collections.” Tax delinquency is a staggering problem for the city and homeowners. A year-long PlanPhilly/Inquirer investigation found that 96 percent of all single-family homes have lost property value because of nearby delinquents. To counteract this trend, Mayor Michael Nutter positioned the city to do battle with deadbeats. He proposed spending $40 million to fight tax delinquency, but his current budget has not allotted additional revenue from recouped taxes. Some view that as a troubling sign, but Mayor Nutter has been quick to
assuage the fears of homeowners. His administration insists that more than two-thirds of Philadelphia homeowners actually saw their property bills decrease or increase by only a fraction ($400 or less). On the other side of the spectrum, an Inquirer analysis determined that 8 percent of homeowners would see their 2014 property taxes increase by more than $1,000. Because of the general real estate make-up of the city, that is no small amount. Many cities are dominated by renters, but Philadelphia is comprised primarily of homeowners. In 2010, 54 percent of the homes in the city were owner-occupied, more than any other comparable city. In 2000, that number was even higher at 59 percent. This factor alone is exactly why a property tax overhaul has been so difficult to enact. With politics coming into play, city officials didn’t want to take the risk of enflaming the tempers of homeowners with higher property tax bills. But popularity and necessity rarely go hand in hand. “I think of AVI as being analogous to setting a broken bone,” Mr. Gillen said. “It may be painful and dislocating in the short run, but we’re ultimately
better off in the long run.” Not all areas of Philadelphia saw the same results from AVI. Center City was left relatively unscathed while Northern Liberties, Queen Village, Bella Vista, Graduate Hospital and University City saw major shake-ups. As for the suburbs, it’s unlikely they will find themselves going through their own version of AVI. “They are already getting — and keeping — their assessments correct,” Mr. Gillen said. “AVI is only necessary because we let our assessments become so out of date and inaccurate to begin with. If we had kept them up, not only would AVI be unnecessary, but it would be much less painful and jarring to many people.” AVI’s initial assessments are hugely influential, but sustainability will be the key to success in reforming the city’s property tax system. Maintaining regular and accurate assessments is the only way to ensure Philadelphia’s proper worth remains intact. Accurate and equitable assessments will also be vital to other components of tax reform strategy. “If we are to improve Philadelphia’s attractiveness by lowering wage and business taxes, then we can make up
the loss with increased property taxes, as new households and businesses move into the city and bid up property values,” Mr. Gillen said. “But this only works if assessments are accurate and keep up with rising property values. Without AVI, any further meaningful tax reform faces significant obstacles.” City council last week approved a property tax rate of 1.34 percent by an 11-5 vote. The new bill also calls for a homestead exemption of $30,000. Many insist that AVI is making the real estate situation worse, not better, and outreach sessions will be sprouting up across the city as residents attempt to make sense of what the changes will mean for them. The road ahead will be long, but there are many who see a light at the end. “I like to think of AVI as a process, not a product,” Mr. Gillen said. “Although AVI may be a significant leap forward, there will continue to be improvements in the assessments in the coming years. But whatever criticisms can be made of the new AVI assessments, they are still light years better than the old assessments.” Elissa Vallano is a freelance writer living in Los Angeles, California.
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FINE ESTATES PREVIEW
REGIONSBUSINESS.COM
Arts-and-Crafts Inspired Home in Merion With six bedrooms and three full baths, this $1.2 million arts-and-crafts-style home is one that any family can enjoy. The 9-foot ceilings, hardwood floors and ornate molding in the grand foyer are immediately noticeable when entering the house through the roomy front porch. The living room is complete with a fireplace and direct access to another screened porch. The dining room has room for plenty of guests for special dinners, and the windows are the perfect size for receiving the most natural sunlight. The eat-in kitchen has been remodeled and has ample counter space, cabinets and a pantry. The cozy family room is adjacent to the kitchen and a great place to relax. The second-floor master suite contains a bathroom, dressing room and walk in closets. A detached two-car garage, five other bedrooms, a partially finished basement and plethora of upgrades, including a new roof, round out the rest of this home that sits on two-thirds of an acre. For more information, please contact Bonnie Grossman of Prudential Fox & Roach at (610) 658-5494.
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REAL ESTATE
3737 Market Street Rising From The Ground BY MATT STRINGER
The project was designed by the architecture firm of Zimmer Gunsul Frahe newest addition to the Uni- sca Architects in cooperation with UJMN versity City Science Center, an Architects + Designers with the goal of 11-story, 272,700-square-foot receiving LEED Silver certification. The office tower, is starting to show at the building is being leased by Cushman and corner of 38th and Market streets, with Wakefield. Penn Presbyterian Medical Center will a towering crane helping to lift high the steel beams that make up the shell of the occupy approximately 155,700 square feet for orthopedics and outpatient medinew structure. With completion still scheduled for a cal facilities. In addition, Good Shepherd year from now, it’s certainly making its Penn Partners will occupy an additional mark on this little piece of University City. floor and a half in the building. The building will have a steel frame and Subject to Penn Presbyterian’s expanthe inside will be made of a composite sion rights, the Science Center and its joint metal deck structural system. The exterior venture partner, Wexford Science + Techof the building combines insulated glass nology, will control the remaining 88,000 panels and an aluminum-framed curtain square feet in the building for other uses wall with spandrel panels. related to the Science Center’s mission of In keeping with the motif of surround- supporting tech-based innovation, entreing buildings, a stone veneer will envelop preneurship and economic development the ground floor of the building. in the region. It will be capped off with an Energy Star This article was originally published thermoplastic with a modular green roof on the Philadelphia Real Estate Blog at system. PhiladelphiaRealEstate.com.
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UJMN ARCHITECTS + DESIGNERS
820 Brushtown Rd, Gwynedd Valley, PA
84 Norristown Rd, Blue Bell, PA 19422
$3.65 M (6005156)
$965,000 (5962964)
5 beds | 6 full, 3 partial baths Timeless & Elegant describe this true estate in prestigious Gwynedd Valley. Built by the builder, for the builder, the residence is sited on over 1.5 acres and offers over 11,000 sf of living space. This home was designed for those with the most discriminating taste and an appreciation for fine living.
5 beds | 5 full, 1 partial baths Meticulously maintained, solid built, Philomeno & Salamone estate home offers nearly 6,000 sq.ft. of living space on 3/4 acres w/3 bay garage. Conveniently located on a private cul de sac in desirable Blue Bell,this home was designed to entertain with its’ custom finishes t/o including newly renovated gourmet kitchen.
1204 Hunt Seat Dr, Lower Gwynedd, PA
936 N Penn Oak Rd, Lower Gwynedd, PA
Nicole Miller-Desantis
(215) 641-2727 (office) (267) 419-1454 (direct)
(215) 850-1305 (cell) (215) 999-5817 (fax)
$1.125 M (6196317)
$948,500 (6196308)
5 beds | 3 full, 1 partial baths Tastefully decorated colonial in desirable Polo Club Estates in the heart of Gwynedd Valley. Sited on over an acre, this well positioned, brightly lit home has improvements throughout. Hardwood flooring, custom paint, newly renovated powder & mud rooms along with numerous other finishes that highlight this beautifully maintained home. 4 beds | 3 full, 2 partial baths Sited on a nearly 1 acre wooded lot in popular Penn Oak, this pretty stone colonial boasts nearly 7,000 sq. ft. of living space w/ its full, finished, walk-out basement. This home offers a bright, open floor plan with access to the outdoors from nearly every room. Kitchen w/ Breakfast Room is welcoming and provides access to large, rear deck for easy entertaining.
Blue Bell Office 686 Dekalb Pike Blue Bell, PA 19422
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Q&A
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NANCY HOHNS’
INTERNATIONAL ADVICE
The director of marketing, communications and outreach for the City of Philadelphia’s EnergyWorks program has been asked to join the Global Advisory Council of World Brand Congress 2013
What is the elevator pitch for the EnergyWorks program? EnergyWorks is a comprehensive energy efficiency solutions program for homeowners in Bucks, Chester, Montgomery, Delaware, and Philadelphia counties, and we support the growth of the energy efficiency market in the Greater Philadelphia region by offering all of the services for home and business owners who wish to make energy efficiency improvements. Our programs bring together all of the available rebates, tax credits, low interest loans and qualified contractors to make home or business energy efficiency improvements simple, affordable and reliable. What’s the philosophy behind the program? Our hope is to serve as a catalyst for the energy efficiency market and the region and to improve the energy efficiency of homeowners and business owners throughout our area. What do you hope to contribute to and take away from your time on the Global Advisory Council? The World Brand Congress itself is in its 22nd year of existence, and the subject matter this year is “Sustainable Brands.” In my role as a member of the Global Advisory Council, I will be in the position to weigh in on the World Brand Awards regarding the companies and corporations that are eligible to be considered to receive that prestigious honor. I also am presently networking and interacting with brand and marketing experts from 45 other countries and from all corners from the world. Its been an incredible experience, even in the last few weeks while trying to organize ourselves, just to have the honor to be in touch with marketing and branding experts of nearly every corner of earth. It is a thrill. To be part of this international dialogue is an amazing experience.
/EnergyWorksNow
@EnergyWorksNow
EnergyWorksNow.com
27 JUNE 2013
REGIONSBUSINESS.COM
OPINION
27
Death, Taxes and Penn State I
G. Terry Madonna is director of the Center for Politics and Public Affairs at Franklin and Marshall College.
Michael Young is managing partner of Michael Young Strategic Research
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
n this world nothing can be said to be certain, except death and taxes.” Pennsylvania’s Benjamin Franklin bequeathed this familiar wisdom to us in 1789, after a long life of learning and achievement. But if Franklin lived today he might be tempted to add a third certainty: the continuing Penn State scandal. Indeed, now more than two years after the story first broke there is little more certain than that the Penn State saga will continue to fascinate, bewilder, confound and anger for years, if not decades, into the future. It is truly the story that won’t go away. Horrific as Jerry Sandusky’s acts have been for his victims, absorbing as the case has been for law enforcement, the scandal has now gone far beyond even them in its effects. Consider only a few of the consequences so far: Political Effects: Perhaps most obvious are the scandals political effects. Already the scandal has played a pivotal role in electing a new Pennsylvania attorney general -- and may play an even larger role in defeating an incumbent governor. Fallout over the case was a huge factor in electing Kathleen Kane as attorney general in 2012, far more than originally thought. Kane, the first Democrat in history elected to the office, shrewdly capitalized on public discontent with the prosecutorial timing and management of the case. The case is also a factor in incumbent Governor Tom Corbett’s low job performance and is likely to be a factor in his reelection. Numerous polls have shown disapproval with then Attorney General Corbett’s handling of the Sandusky investigation. Corbett initially supported the controversial Freeh report and accepted the unpopular sanctions; subsequently, he reversed himself, suing the NCAA in a case now thrown out of federal court. Paterno Legacy: But the political consequences of the scandal may be among its lesser consequences. Looming over mere politics is the gargantuan battle shaping up over Joe Paterno’s legacy and his treatment by Penn State. Ignominiously fired, repeatedly humiliated, relegated by some to the near status of a non-person, restoring Paterno’s reputation is now a major cause for a powerful coalition of alumni, fans, former athletes and the Paterno family. Led in part by legendary former Steeler Franco Harris and aided by former governor and
U.S. Attorney General Dick Thornburgh, the coalition has already filed a lawsuit against the NCAA. They have also launched a major attack on the Freeh report, underlying many of the allegations against Paterno and branded by Thornburgh as a “rush to injustice.” The fight for Paterno’s legacy marks a major fissure in the Penn State community, one likely to continue for a long time. Legal Effects: Putting Sandusky in jail and providing his victims an opportunity for financial redress is not the end of the legal process in the scandal, but perhaps only the beginning. Still ahead are the expected trials of three top university administrators, including its former president and senior vice president. These trials alone may keep the story center stage for months or years. Other trials are possible. Three separate lawsuits have been filed against the NCAA, one now dismissed. So far, the NCAA shows no sign of backing down or reducing its sanctions, setting up what may be a succession of legal confrontations. Moreover, at least two additional federal investigations are ongoing including one begun by the U.S. attorney’s office based in Harrisburg. Additionally, state Attorney General Kathleen Kane is conducting an independent investigation into Tom Corbett’s handling of the Sandusky case. Future of Penn State: Certainly, not least of the consequences of the scandal are frustrated alums waging an ongoing battle for control of the university’s governance. To date several long term trustees associated with the Paterno firing and acceptance of
the NCAA sanctions have been defeated for re-election, resigned or declined to run for another term. Many alumni are furious at Penn State leadership and committed to bring about permanent change. The NCAA sanctions particularly rankle as they have affected players, students, faculty, alumni and fans that had no responsibility for the Sandusky outrages. Recent polls show the strong feelings unleashed by these and related issues may be increasing in ferocity. None of this will end soon; some of it will not end well. But why does this particular scandal continue to loom ever larger even beyond the evil deeds of an evil man? Why does it linger in an era in which other horrendous events enter into and then exit out of our lives at warp speed almost daily? Shootings, attacks, bloody massacres and more come and go with depressive regularity as our media saturated attention quickly turns to the next crisis, the next outrage. Yet, the Penn State story remains fixed in our focus — sometimes to a point of near obsession. Beyond all else — beyond the legal issues, the economic issues, and the political issues — there is something even deeper, even more profound and infinitely more personal going on. Ultimately, the Penn State scandal, in all of its guises, is about us; our most cherished hopes, our deepest fears and our highest values. We care about it because it threatens those hopes, triggers those fears and attacks those values. That’s why it won’t go away soon or quietly. Nor should it!
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27 JUNE 2013
REGIONSBUSINESS.COM
OPINION
Government Support for Homeownership: Still Critical to American Democracy?
A
Eric John Abrahamson is the author of “Building Home: Howard F. Ahmanson and the Politics of the American Dream” and a fellow with the Institute for Applied Economics, Global Health and Study of Business Enterprise at Johns Hopkins University.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
s the five-year anniversary of the Lehman Brothers bankruptcy and the collapse of the mortgage market approaches, Americans are still struggling to cope with the consequences of the Great Recession. More than four million households have lost their homes to foreclosure. Millions of breadwinners are still out of work. Although household wealth has returned to its pre-recession level, thanks to a booming stock market, families who don’t own stock are still waiting for a broader recovery. Pundits and politicians have spent nearly five years pointing fingers, but too few have questioned the root cause of the crisis — a deeply held belief that Americans should own their own home and that the government should help make that dream possible. Founding fathers like Thomas Jefferson believed that for the American experiment with democratic government to work, citizens needed to be independent property owners. In Jefferson’s mind, independent farmers made ideal citizens because they couldn’t be pressured to vote one way or another by a landlord or employer. As people left the countryside at the end of the nineteenth century to work in the nation’s burgeoning cities, the homeowner took the place of the yeoman farmer in the epic story of American democracy. During the Great Depression, the federal government became deeply involved in promoting homeownership. New agencies like the Federal Housing Administration, the Federal Home Loan Bank, and the Federal National Mortgage Association (Fannie Mae) stabilized the mortgage industry, increased liquidity, and made the thirtyyear, self-amortizing loan ubiquitous. After World War II, with the GI Bill, governmentbacked low-interest, low-downpayment loans helped even more Americans, especially younger families, achieve the
to the idea that some of these public benefits are real. ComWE SHOULD ASK IF THE GOVERNMENT’S pared to renters, homeownCURRENT PROGRAMS TO PROMOTE ers are more likely to vote HOMEOWNERSHIP ARE EFFECTIVELY and to be engaged with their WORKING TO REALIZE JEFFERSON’S community. In lower income neighborhoods, higher rates AMERICAN DREAM.’ of homeownership correlate with lower incidences of crime. A 2010 study by the Federal Reserve Bank in Kansas City also found that over the last four decades investing in homeownership was generally a better strategy for building wealth than renting and investing in the stock market. But in the wake of the 2008 mortgage crisis, policymakers should be asking whether the marginal increase in homeownership driven by government programs outweighs the costs to the taxpayer. And taxpayers should be asking if the public American dream. investment in homeownership is effectively All of these interventions changed the focused on the right part of the market. basic structure of the mortgage industry, The mortgage interest deduction alone and homeownership rates in the United costs more than $100 billion in lost tax States increased nearly 50 percent between revenues. Far from encouraging low- or 1940 and 1960. moderate-income renters to become homeOver the next four decades, Republicans owners, the deduction primarily benefits and Democrats in Congress and the White wealthier taxpayers. Studies show that it House, encouraged by the housing industry does little to promote homeownership. and social welfare advocates, pushed to Some analysts have suggested that a extend homeownership to even more simple tax credit available to low- and Americans, especially those who had been moderate-income families would provide marginalized by income or race. With all of a far more effective and less costly way for these programs, the homeownership rate the federal government to help American peaked at 69 percent in 2004. families become homeowners. Eliminating Politicians and officials in the real estate the mortgage interest deduction would and mortgage industries have long touted also reduce the incentive for households to the social benefits of homeownership, use home equity as a piggy bank to finance including stable communities, engaged personal consumption. citizens, and lower crime rates along with As we approach the five-year anniversary increased savings and household wealth. of the mortgage crisis, policymakers would There is an implicit economic argument do well to remember the ambitions of the that these public benefits outweigh the founding fathers. But we should also ask costs of government support for tax deducif the government’s current programs to promote homeownership are effectively tions, mortgage insurance and various working to realize Jefferson’s American subsidies for homebuyers. Dream. Dozens of academic studies give credence
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27 JUNE 2013
REGIONSBUSINESS.COM
OPINION COMMENTARY FROM ACROSS THE WEB
Lack of Common Sense In Prevailing Wage Debate
Young, Gifted And Likely To Leave Philadelphia
Prevailing wage law is geographically flexible, allowing pay rates to vary in different places across the state. Smaller communities are allowed to pay workers less than they’d make in Philadelphia and other large counties. When local governments complain that the law drives up a project’s cost, they might just as well say, “We want to save our taxpayers a few bucks by using our spending power to wring lower wages out of the people who do the work for us.” On most public construction projects, labor is only about a quarter of the total cost. Even if wages were cut in half, the savings on a project would be no more than 12.5 percent. Local governments could save a lot more than that on their projects if the state would let them use prison labor, but that doesn’t mean it’s a good idea. With one minor exception, there’s nothing wrong with the prevailing wage law that needs to be changed.
Although the city’s investments may seem small compared with the billions managed by major venture-capital firms, efforts to get up-andcoming business people to stay in Philadelphia for a while are important. As start-ups hire more employees and establish business connections in a region, the cost of relocation becomes increasingly prohibitive. AdMob, Invite Media, Milo, and Warby Parker are all young companies founded in Philadelphia that left town for California or New York, depriving this city of their combined market value, which now exceeds $1 billion. There are more than 300 tech start-ups in Philadelphia now. Although most will fail, some will grow to hire hundreds of employees and generate millions of dollars. With its premier educational institutions, hip neighborhoods, and affordable prices, Philadelphia should be able to keep more of the next generation of start-ups home.
PATRIOT-NEWS EDITORIAL,
25 JUNE 2013
PHILADELPHIA INQUIRER EDITORIAL
Overlooking Independence Hall knowing the Founding Fathers would have loved to participate in #worldclassPHL (June 20) @DANIELLECOHN
21 JUNE 2013
Pa. Legislature Late On Property Tax Reform A bipartisan proposal to eliminate property taxes is once again up for debate, but legislative observers are not optimistic that it will get traction. The proposal...would increase personal income tax and create a higher, broader sales tax. Last year, a similar proposal failed to pass the House Finance Committee. Then a bipartisan committee of lawmakers studied the issue in depth, and HB 76 was once again up for discussion. The proposal has 67 co-sponsors in the House and 20 in the Senate, a mix of Republicans and Democrats from all corners of the state and much of the area in between. But it goes nowhere. Perhaps if the Legislature started working on property tax reform before the final two weeks of the session — and went about it in the same manner they attacked Traffic Court — more might be accomplished.
Get Pennsylvania Out Of Fireworks’ Dark Ages Fireworks and the Fourth of July are synonymous. You simply cannot have a complete Independence Day celebration in America without fireworks. Americans love to celebrate with fireworks in much the same manner as envisioned by John Adams on July 3, 1776, when the future U.S. president wrote in a now famous letter to his wife, Abigail, that Independence Day “ought to be solemnized with pomp and parade, bonfires and illuminations (fireworks) from one end of this continent to the other, from this day forward forevermore.” Pennsylvania legislators have the power to change the fireworks laws and take Pennsylvanians out of the shadows of uncertainty and illegality, bringing Pennsylvania to parity with so many other states that permit the sale and use of the full line of consumer fireworks. This is long overdue.
DELCOTIMES.COM EDITORIAL
WILLIAM A. WEIMER ON PHILLYBURBS.COM,
25 JUNE 2013
25 JUNE 2013
REGION’S BUSINESS A JOURNAL OF BUSINESS AND POLITICS © COPYRIGHT 2013 INDEPENDENCE MEDIA 350 SENTRY PARKWAY, BLDG. 630, SUITE 100C BLUE BELL, PA 19422 (610) 572-7112 | WWW.REGIONSBUSINESS.COM
@IngaSaffron
Tom Ferrick on @AxisPhilly says AVI & school cuts will drive middle class out of Philly. So, are you leaving? 17 JUNE 2013
@TaunyaEnglish Philly disqualifies prison-health contractor, says JHK Inc was paid–not for work–but its status as a certified, woman-owned business 25 JUNE 2013
@PhiSportsTalk1 Sixers agree to marketing deal with Parx Casino; casino will stamp its name on the dance team and halftime radio show 25 JUNE 2013
@AmyKeiferHansen
I didn’t know Fox Rothschild was already in Denver before this — ”Lottner Rubin attorneys to join Fox Rothschild” 24 JUNE 2013
@ChildrensPhila CHOP thanks the Buerger family for their $50M gift, and names the Buerger Center for Advanced Pediatric Care 25 JUNE 2013
@melissamaynard
Ouch. RT @inkyamy: PA auditor general says cross-state tolls could reach $50 without action on Turnpike debt. 18 JUNE 2013
@juliana_f_reyes Just visited @ArtisanMobile’s new Old City office. Happy to report that their candy bowl is well-stocked with Almond Joys & Kit-Kats.
EDITORIAL BOARD CEO and President James D. McDonald Managing Editor Terrence J. Casey Associate Editor Rich Coleman
@phillymag
Wawa doesn’t seem too happy about a cigarette tax. Everybody wants to save the schools, just not to pay for it. 19 JUNE 2013
21 JUNE 2013
HOW TO CONTRIBUTE To contribute, send comments, letters and essays to feedback@regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business. We reserve the right to edit all submissions for content, style and length.
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27 JUNE 2013
REGIONSBUSINESS.COM
BY THE NUMBERS
$3,400,000,000
Annual total cost of traffic congestion in Philadelphia, including cost of lost time and wasted fuel, according to a TRIP research report
$552,000,000
What, additionally, PA should spend annually to relieve traffic congestion, according to the Transportation Funding Advisory Commission
70%
125
Employees who have “checked out” at work, according to recent Gallup survey
Hours lost annually by drivers on I-676 from I-95 to I-76 due to congestion, according to a TRIP research report
30M
54
US workers who are actively engaged at work
Gallons of gas lost annually by drivers on I-676 from I-95 to I-76
117,000 Maximum amount of daily drivers on I-676
58
Hours lost annually by drivers on I-76 from I-676 to Belmont Avenue due to congestion
25
Gallons of gas lost annually by drivers on I-76 from I-676 to Belmont Avenue due to congestion
124,000 Maximum amount of daily drivers on I-76
FLICKR.COM/WHEATFIELDS
FLICKR.COM/ROBOTBRAINZ
1.29M
$2.25
Increase in SEPTA City Transit riders vs. 2012, according to SEPTA’s April 2013 Revenue and Ridership report
New cost of SEPTA cash fare for bus, subway and trolleys, starting July 1.
$163
90,000
New cost of a monthly Zone 3 Trailpass
Increase in Suburban Transit riders
45,000
Increase in Regional Rail riders
$109
FLICKR.COM/JOSEPHA
New cost of a monthly Cross County Pass
50M
US workers who are not engaged at work
20M
US workers who are actively disengaged at work
$550B
Annual drain on economic activity due to actively disengaged employees
BRING THE WHOLE FAMILY FOR A TRIP BACK TO THE 80’S! Free movies under the stars every Saturday night at Parx East Picinic Grove. Plus 80’s trivia games, giveaways & totally tubular prizes! ••••••••••••••••••••••••••••••••••••••••••
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TOP GUN LABYRINTH & PURPLE RAIN GHOSTBUSTERS BACK TO THE FUTURE
8/3 8/10 8/17
ROCKY III & CONAN THE BARBARIAN RAIDERS OF THE LOST ARK KILLER KLOWNS FROM OUTER SPACE Special Guest: The Chiodo Brothers
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MANAGEMENT RESERVES THE RIGHT TO CHANGE OR CANCEL THIS PROMOTION AT ANY TIME. MOVIE SCHEDULE SUBJECT TO CHANGE. VISIT PARXCASINO.COM/AWESOMEFEST FOR ADDITIONAL DETAILS. GAMBLING PROBLEM? CALL 1.800.GAMBLER