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CAN IT WORK FOR PENNSYLVANIA? Take a look at both sides of the discussion: Can public banks save money and guarantee safety against another recession?
CITY RESIDENTS WARY OF PROPERTY TAX OVERHAUL URBAN OUTFITTERS EXPANDS STATEWIDE
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CONTENTS
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“In times of rapid change, experience could be your worst enemy.” — Harry S. Truman
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20 Public Banks: Can It Work For
Pennsylvania?
22 CASE STUDY: Bank Of
North Dakota
12 15 24 26
Political Commentary
29
Year Of The Innovator Fine Estates
POLL: Philadelphia Residents Wary Of Tax Overhaul
Q&A: Ken Goldenberg
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WEEKLY BRIEFING
TECHNOLOGY
IBM Aquires Xtify IBM announced Monday, October 7, the acquisition of Xtify Inc., a provider of cloudbased mobile messaging tools that help organizations improve mobile sales, drive in-store traffic and engage customers with personalized offers, according to a press release. Financial terms are not being disclosed. The acquisition will help extend IBM’s mobile capabilities to digital marketers across all industries through cloud-based services. Xtify will expand IBM’s Smarter Commerce initiative providing campaign creation, personalized content, dynamic real-time segmentation and analytics for all mobile devices and browsers. The technology is designed to help companies engage, convert and retain mobile application users and site visitors, the release said. Xtify’s cloud-based campaign management platform notifies mobile consumers when new content and promotions are available.
Urban Outfitters To Expand Statewide
New $100 Bill Full Of Philly
Urban Outfitters will add 2,500 jobs statewide, including 2,000 in Philadelphia, the Morning Call reports. Lt. Gov. Jim Cawley made the announcement at a Monday press conference in Philadelphia along with Richard Hayne, Urban Outfitters’ founder and chief executive officer. The expansion includes more employees at Urban’s Philadelphia Navy Yard headquarters, as well as a 1.2 million square-foot shipping site near Gap, Pa. The two projects represent an investment of $210 million. Urban Outfitters will benefit from tax abatements at both sites, the paper reports. The existing Keystone Opportunity Zone (KOZ) at the Navy Yard will be expanded to include the headquarters building, according to the deputy mayor for economic development, Alan Greenberger. A new KOZ was created in Gap for the expansion. New hires in Philadelphia would be years away, Mr. Hayne said. The renovation project will not start for two to three years and will take another two to three years to finish. A groundbreaking for the Gap facility is set for Nov. 1 and will be completed in Summer 2015.
The new $100 bills were released Tuesday, October 8, and feature more images related to Philadelphia. Most noticeable is the bigger image of Benjamin Franklin which is no longer contained in an oval. There is also a color changing Liberty Bell contained in an inkwell, symbolic of the signing of the Declaration of Independence.
MONEY
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WEEKLY BRIEFING
TECHNOLOGY
Philly’s Graphene Frontiers Awarded $745K Grant Graphene Frontiers, a Philadelphiabased advanced materials and nanotechnology company, has been awarded a $744,600 grant from the National Science Foundation. The funds will be used to develop roll-to-roll production of graphene. Graphene is a single-atom-thick layer of carbon. It is transparent, conductive and impermeable. “The new project is to advance the approach to the point where it works like newspaper printing,” said A.T. Charlie Johnson, co-founder and chair of Graphene Frontiers’ scientific advisory board. “A roll of copper foil goes in to the growth system, and a roll of graphene on a suitable backing comes out. This sort of ‘roll-to-roll’ process would enable large-scale production of graphene with high quality at low cost.”
Barker DZP, Wins 2 Gaming Voice Awards For Parx Ad Campaigns Advertising agency Barker DZP has won two 2013 American Gaming Association (AGA) Gaming Voice Awards in the categories of “Best Multi-format Advertising Campaign” and “Best Outdoor Advertisement” for the firm’s work on behalf of Parx Casino, the number one revenue-generating Pennsylvania casino. Barker and Parx Casino were recognized for their “Get Lucky in No Time” campaign that targeted New York City area residents, less than 100 miles from the casino. The “Get Lucky in No Time” campaign featured hyper-local advertising that demonstrated Parx Casino’s close proximity to the New York area as well as the casino’s high-quality gaming experience through the creation of a series of attentiongrabbing television, radio, outdoor and print advertisements. As a result of the successful campaign, Parx Casino’s out-ofmarket revenue for the second quarter of 2013 increased by more than 50% compared to the second quarter of 2012. “It’s a thrill to win two Gaming Voice Awards for a campaign that embodies the creativity of our agency and our ability to drive powerful results for our clients,” said John Barker, President and Chief Idea Officer of Barker DZP. “Being able
to help Parx Casino attract more out-of-market gamers, through the use of eye-catching creative designs that showcases the excitement of the gaming experience and blends in a little sense of humor, is something everyone at our agency is proud of accomplishing.” “Our campaign was a great success, and I’m honored that my peers in the gaming industry agree,” said Marc Oppenheimer, Chief Marketing Officer of Parx Casino. “Barker developed a clever idea that effectively showcased the convenience, friendliness, fun and excellent customer service that defines the Parx Casino experience and we couldn’t be happier with the result.” The annual AGA Gaming Voice Awards celebrate the gaming industry’s most innovative and effective communicators by recognizing achievements in advertising, public relations and marketing. The 2013 Gaming Voice Awards were presented at the 13th Annual AGA Communications Awards Luncheon on September 25 at the Sands Convention and Expo Center in Las Vegas.
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WEEKLY BRIEFING
Wynn Exec Shares 5 Star Strategy With Students Last week, Wynn Resorts executives shared the company’s business model behind earning more Forbes Five-Star ratings than any other independent hotel company in the world with more than 150 regional tourism and hospitality students and faculty during two events at Temple University’s School of Tourism and Hospitality Management (STHM). Students learned that anyone can build a beautiful building, but achieving a Forbes Five-Star rating and earning customer loyalty around the globe is only accomplished through hiring, training and nurturing excellent employees. “We were honored to host Wynn executives on campus to educate students on the company’s Five-Star service model,” said Elizabeth Barber, associate dean of the School of Tourism and Hospitality Management. “It was a unique educational experience for our students to gain insights behind the company’s employee selection, training and hotel operations.” On Wednesday, Gamal Aziz, president and chief operating officer of Wynn Resorts Development, spoke about his career and experience with moderator Meryl Levitz, CEO of the Greater Philadelphia Tourism Marketing Corporation, during an Executive in Residence presentation for Temple University
Wynn Resorts, including the Wynn Philadelphia proposal.” Aziz first worked with Steve Wynn to open the Bellagio in 1998, which was the most expensive and successful casino of its time. When asked about the plans for the company to build a $926 million casino on the Philadelphia riverfront, Aziz told students that the company saw tremendous potential in the city and the abandoned shipyard where the integrated resort will be built. “We’re looking at the Philadelphia of tomorrow, not the Philadelphia of today,” Aziz said. “When Steve Wynn bought land outside Gamal Aziz, president and chief operating officer the Vegas strip it was unconventional. After opening it was a tremendous success and is of Wynn Resorts Development, with moderator an anchor for Las Vegas economic expansion Meryl Levitz. along the strip. Our vision for Philadelphia is similar. students, faculty and administrators. “There’s so much potential for realizing a revital“The day was a real success. It was reenergizing to meet the future leaders of the hospitality and tourism ized vision for Delaware waterfront and creating a industry,” Aziz said. “The students clearly did their new destination that will bring new tourists from homework, as they were very engaged and asked around the world to our city and jobs for all of you. some great questions, from managing New York City If granted the license, Wynn Philadelphia will be hotels, to today’s development and operation of future that catalyst.”
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FOOD SERVICE
Company HQ Leaves Philly For New Jersey The Philadelphia Business Journal reports that Philadelphia lost the headquarters for BK Specialty Foods to New Jersey. BK Specialty Foods — which has 50 employees and distributes to universities and hotels — moved to larger space at 200 Eagle Court in Swedesboro, N.J. With the move, the company quadruples its floor space, taking over 48,000 square feet. Its move was aided by financing and a grant from the N.J. Economic Development Authority. “The move from Philadelphia to South Jersey was facility driven. There was no space to grow at our existing facility in Philadelphia. Logistics and traffic patterns were becoming a disadvantage for our business,” founder and president Brett Kratchman said to the Philadelphia Business Journal.
WEEKLY BRIEFING
Malvern’s Zonoff Connects With Staples, Anticipates Fast Growth BY ELISE VIDER
later this month in San Francisco at the GigaOM Mobilize show. Cooper says this is the biggest commitment any retailer Staples, the world’s largest office products company and second largest Internet retailer, is launching an has made to the connected home market and is Zonoff ’s exclusive new product for the “connected” home or largest partner to date. The Zonoff name on the box, much in the way the Dolby office. And every Staples Connect sold will bear the name name appears on audio equipment, is a first, too. Until of the company that developed the platform, Malvern’s now, Zonoff ’s products have been sold under its partners’ names. Zonoff. It’s a delicate balance, he adds, “We’re not interested in “This is a big announcement for us,” says Zonoff chief marketing officer Bob Cooper with considerable under- being a consumer brand, but we are a core component of the solution.” statement. With Staples, and several more sector leaders as partStaples Connect is a multi-platform app and universal hub that allows residential and business ners yet to be announced, Zonoff is growing fast. When customers to control lights, window blinds, ther- KeystoneEdge last checked in with the company in May, mostats, security systems — you name it — from a they had 18 employees. Now the workforce stands at 24 and Cooper says they smartphone or tablet. The product will be available online and in a limited are on track to double by the end of the year. This story was originally published in Keystone number of Staples stores — including in Pennsylvania — in November. It will be on public display for the first time Edge at KeystoneEdge.com
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WEEKLY BREIFING EXECUTIVE BOOKSHELF
David and Goliath WHO TO FOLLOW
@AcadNatSci AcademyofNatSciences If you’re a fan of the Academy of Natural Sciences at Drexel University and the many exhibits they display throughout the year, you’ll want to give this account a follow for behind-thescenes looks and up-to-date science news and info. RT @AcadNatSci: Dinos are popping up everywhere! Dinosaurs Unearthed exhibit opens Sat Oct 12 RT @AcadNatSci: Three new guinea pigs in our Live Animal Center!
Why do underdogs succeed so much more than we expect? How do the weak outsmart the strong? In David and Goliath Malcolm Gladwell takes us on a scintillating and surprising journey through the hidden dynamics that shape the balance of power between the small and the mighty. From the conflicts in Northern Ireland, through the tactics of civil rights leaders and the problem of privilege, Gladwell demonstrates how we misunderstand the true meaning of advantage and disadvantage. One Amazon reviewer writes, “Gladwell has delivered another classic book that makes you think outside the box... he also makes it easier for you to look adversity in the eye and say... ‘thanks.’”
MUST-HAVE APP
ParkBud When it comes to parking apps, there are a plethora of options that handle different services. But from what we’ve seen, ParkBud is the only one to pack it all in one app. The app ($1.99, iOS) helps you find spots, fill the meter, remember where you left your car. You can pin your location, take a picture of your surroundings and set a timer for your meter all from the one app. You’re able to do these with other built-in iPhone apps, but having it all in one place makes it much simpler then juggling through three or four. Plus, it also helps you locate nearby parking garages. It’s a great tool for a few bucks.
RESTAURANT ROUNDUP
University City Gets Shake Shack, Federal Donuts Openings The second location for Shake Shack, Danny Meyer’s burger chain, is officially opening in University City on Friday, October 11, Foobooz reports. The burger and milkshake restaurant will open in the Chestnut Square location, at 32nd and Chestnut. Federal Donuts also announced that it will open its third location next to Doc Magrogan’s Oyster House at 3428 Sansom Street in early 2014. Also confirmed is another location at 7th and Fairmount.
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10 OCTOBER 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
Proposed Bill Involves Fire Dept. in Demolition Enforcement
Timothy Holwick is a freelance writer covering Philadelphia government.
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 its weekly meeting on October 3, 2013, Philadelphia City Council introduced legislation that would grant the Philadelphia Fire Department concurrent authority with the Department of Licenses and Inspections to halt bad demolitions or construction. If the legislation passes, the Fire Department will be able to issue stop work orders at a construction or demolition site whenever a violation of the Philadelphia Fire Code or any other condition which presents an immediate danger to life or property is detected. This proposed legislation is one of many measures born of a special City Council committee created to investigate the deadly building collapse of June 5, 2013 and evaluate any and all methods to prevent another such catastrophe from occurring. In that collapse, six people died and another fourteen were wounded. Many pointed to a weak and ineffective demolition licensing procedure and enforcement process as one of the things to blame. The special committee made 71 total recommendations including this increase in the role of the Philadelphia Fire Department in investigating construction and demoli-
tion sites. While the Fire Department will support them, investigators at the Department of Licenses and Inspections will also see their ranks swell in order to increase enforcement efforts. In addition to detailing how the Fire Department will be involved in enforcement, the legislation also details some new signage requirements for construction and demolition sites. In a prominent area on the site, where passersby could read it, a sign must be displayed on plywood or sheet metal that provides information about the project in letters at least three inches high. The sign must include a concept drawing of a construction project, any relevant permits, and contact information for the owner of the property as well as the general contractor. As the sign will instruct, its purpose is to encourage any persons observing the site to report anything at all that looks out of the ordinary or dangerous. The inclusion of the Philadelphia Fire Department, as well as additional training for the police, is designed to help Licenses and Inspections respond to and thoroughly investigate what may end up being a deluge of reports.
Construction and demolition are under the microscope in Philadelphia after last summer’s tragic incident. If the special City Council committee was not enough of a warning, this legislation and other similar pieces of lawmaking will certainly send the message that dangerous construction and demolition sites will not be tolerated in Philadelphia.
10 OCTOBER 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
13
Shutdown Shows True Nature Of Both Sides Of Aisle
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.
As America moves into another week of government “shutdown”, the pathologies of Washington, D.C.’s ruling class are laid bare. The finger pointing and blame-gaming have reached epidemic proportions. The White House won’t even sit down and talk.House Republicans appear as divided internally as they are with the Democrats on the other side of the congressional aisle. Many Americans have tuned out; they see this as yet another of the political tugs-of-war that have become so commonplace they think it’s simply the way Washington does business. Others have said, “a pox on both your houses,” to feuding Democrats and Republicans, giving them approval ratings in single digits. But the struggle to resolve the partial shutdown and break the gridlock continues in as deep a partisan divide as many longtime observers can recall. House Republicans believe they are standing on principle, fighting a two-front war against an increasingly unpopular and cumbersome Obamacare and continued runaway federal spending. But many within the GOP congressional ranks, although they agree with the objectives, are increasingly unsettled by the tactics. Allowing the media to blame them for a “government shutdown” doesn’t make political sense to these folks. The Democrats originally thought they’d have the high moral ground by claiming that belligerent Republicans had shut down the government. But that position has already been eroded by the Senate Democrats refusal to go to conference
and discuss the differences that exist. Dramatically exacerbating their troubles is the fact that their refusal to negotiate, both on the continuing resolution and the debt ceiling, is increasingly working against them. “We won’t talk” is impossible to defend. The American people expect solutions and they understand that conversations and negotiations lead to solutions. Ultimately, the Democrats will be forced to negotiate. One of the reasons the Democrats have stuck with their “we won’t talk” stance for as long as they have is that they believe they have to “break the fever” of the seemingly endless brinkmanship and last minute crisis over spending, Obamacare funding and the debt ceiling. Their position is rooted in the belief that constant crisis has given conservative House Republicans disproportionate power whereby they “win” by forcing stalemates what they couldn’t get with a Democrat Senate and White House. This polarization has become a hallmark of recent congresses and stifles problem solving in Washington. It mirrors an increasingly sharp divide in the voting patterns of members on both sides. Americans for Democratic Action, a leading liberal group, and the American Conservative Union, the most prestigious conservative group in the country, both track congressional voting patterns with scorecards. Their results are strikingly similar. They both show a growing divide. Both scorecards show Democrats becoming increasingly liberal, while Republicans are trending more conservative.
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There are lots of explanations for this trend, but one is found in the reconfiguration of congressional districts every decade. When state legislatures across the country redraw congressional district lines, there’s generally one thing on which both sides agree: protect incumbents. As a result, districts are configured to give advantage to the party holding the seat. Democrat-held seats become more Democratic by registration and voting trend, while Republican seats become safer for Republicans. Consequently, Roll Call, a leading national political publication, currently lists less than 50 seats they consider to be “competitive.” That’s down from more than 100 just a couple of years ago prior to reapportionment. The political effect of this pattern is felt more heavily in states like Pennsylvania where primary elections are “closed” meaning only those registered in a party can vote. Increasingly, members of Congress have more to worry about in a primary election than they do in a general. Primary opponents generally come from the outer wings — more conservative Republicans and more liberal Democrats. To stave off such potential challenges incumbents often tack right or left not towards the center where general elections are decided. This phenomenon has resulted in increasingly divisive partisan battles and votes in Washington. It has also meant that although 90 percent of the people think Congress is doing a lousy job, 90 percent of incumbents get re-elected.
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10 OCTOBER 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
Double-Dipping Politicians Cause Pension Headaches
Eric Boehm is a reporter for Watchdog.org and can be reached at EBoehm@ Watchdog.org. Follow @PAIndependent on Twitter for more.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
Stop me if you’ve heard this one before. Government officials are finding nifty ways to enrich themselves at the expense of the public. Sure, it’s nothing new, but the recent scourge of public officials who collect a pension while still pulling down a full-time government salary is calling out for reforms. And the hits keep coming. Last year, 86 state judges collected more than $11 million in combined pension checks and salary, according to a report this week by R.B. Swift of the Scranton Times-Tribune. In each case, the judges are taking advantage of a loophole in Pennsylvania law allowing them to collect full pension benefits while still serving on the bench as “senior judges.” Those senior judges are used on an ad hoc basis, Swift reported, to help with caseloads. Though they are technically retired, they still make a hefty public salary for their part-time work. The 86 judges who get the double-dip pull in a combined $3.8 million in salary and another $7.1 million in pension benefits. At a time when the state pension system is overtaxed already – it’s running a deficit
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of nearly $50 billion – shutting this kind of loophole should be a no-brainer. But it’s not only state judges who take advantage of the legal double-dip. State employees can do it too, like the recent high-profile case involving Joe Conti, the former CEO of the Pennsylvania Liquor Control Board. Conti retired from the board in January and began cashing monthly pension checks of more than $60,000. But he immediately was hired back by the PLCB as a part-time consultant for “emergency reasons.” During his six months as a part-timer, Conti made more than $67,000, a PA Independent investigation found. That works out to better than $80 per hour, which is a pretty good gig if you can get it. Put it all together and Conti took more than $95,000 from the state’s taxpayers and taxpayer-funded pension system in just six months. It’s hard to imagine a clearer signal that the system is broken. Sadly, it’s not just broken in Pennsylvania. Across the Delaware River, our colleagues at NJ Watchdog have been, well, doggedly tracking down pension double-dippers. Like Joseph Derrico, a retired Hamilton
Township, N.J., police officer who was collecting a pension of $70,000 a year because he was permanently disabled as a result of his duties. But for a disabled man, Derrico sure moves pretty good. He recently starred in several episodes of a short-lived reality show called Bear Swamp Recovery. The show depicted him chasing down bad guys on foot and pulling them out of their vehicles. All that, despite an official finding by the state of New Jersey that declared him to be “totally and permanently disabled” by a leg injury in 2010. State lawmakers in New Jersey, Pennsylvania and elsewhere should shut off this kind of legal plunder at the spigot. No more pension benefits for people still employed part-time in the state government or judicial system. The state pension systems are in enough trouble as they stand — thanks again, largely, to the politicians — and they were never intended to be used like this. They are meant to provide some level of retirement security, not to finance a six-figure lifestyle for decades of retirement on the back of the public.
10 OCTOBER 2013
REGIONSBUSINESS.COM
2013: YEAR OF THE INNOVATOR
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Center City ‘Social Business’ Gives SEO Tactics For LinkedIn
Nathan Egan (left) and Patrick Baynes, two former LinkedIn employees, who started the Center City-based social business company PeopleLinx. SUBMITTED
BY BRANDON BAKER Though LinkedIn passed the milestone of 200 million users in Januar y, Center Citybased “social business” company PeopleLinx is hedging a bet that most of its users lack the know-how to maximize the benefits of their profile. At its core, the company’s idea is simple: Teach existing LinkedIn users how to make the most of their profiles, and give businesses data on what their employees are doing on social networks. It’s SEO for LinkedIn, in essence. The idea stems back to LinkedIn itself: PeopleLinx began in 2009 after two former LinkedIn employees — Patrick Baynes and Nathan Egan — came up with the idea, pitched it to the company’s higher-ups, and were promptly turned down. Determined, however, they took the idea and ran with it. “What they did, was they took all of the insights and techniques they’d developed in training for LinkedIn, and turned it into software solutions,” Chief Marketing Officer Michael Idinopulos said. “Today, it’s a software-as-a-service company that helps employees use LinkedIn and other social business tools to cultivate relationships
and market themselves more effectively for their company.” The idea had originally manifested in face-toface training, but was altered after the team realized it was impossible to scale clients from 100 to 500,000 people without software. Current software assigns a “PeopleLinx Score” that gives users specific instructions for what to do to improve their score — ranging from network suggestions to profile content changes. To date, the company has accumulated just shy of 80 clients, including M&T Bank, AARP, Prudential and Audi. PeopleLinx also employs about 50 people, having raked in a $3.2 million funding round from Osage Venture Partners in March. The company, which Mr. Idinopulos emphasized will continue to plant its roots in the region, will launch Version Two of its software in the months ahead. “We feel like we’ve identified a huge opportunity to help people with something very important,” Mr. Idinopulos said. “There’s so much demand and awareness of the power of social networking for business lately. It’s going through the roof, and we don’t see any end in sight.”
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2013: YEAR OF THE INNOVATOR DIARY OF A STARTUP
SpeSo Keeping Goals Aligned SpeSo Health, a healthcare IT company that connects patients living with rare diseases to experienced care centers and experts, has been focused on a small set of major goals – a few of which SpeSo founder Jonathan McEuen took the time to outline in his latest “Diary” entry.
In his words: As an emerging-stage startup, we [set these goals] out of necessity; still, gaining that clarity of function and purpose is a gift. The primary goals for SpeSo Health today are twofold: to finalize our platform for a pilot with a major hospital system, and to launch a major userinterface update on SpeSoHealth.com so that rare disease patients and advocates around the world can access more of the data platform SpeSo Health has built to help them. The pilot represents a different set of steps for SpeSo from our work developing a unified data platform and advanced algorithms: We interface on a daily basis with the hospital, refine a six-month execution program and coordinate across numerous different clinical departments. To succeed, our team must focus on the core services we are delivering in the pilot, and making sure we design milestones that validate our product and add value to the hospital. At the same time, we are working long hours to refresh the look and feel of our website, and to switch on about 10 times more data than we have today. Our current website, while already helping patients, must be improved to allow us to provide patients physicianlevel detail and information on publications and clinical trials. While it always feels like a sprint, exciting times on the horizon keep us motivated.
10 OCTOBER 2013
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Transfer Station, 3rd Ward Coworking Spaces Using Fundrise For Crowdfund BY JULIANA REYES If you said you were excited about The Transfer Station, the proposed Manayunk coworking, education and storefront space announced this summer, it’s time to put your money where your mouth is. The project just launched on Fundrise, a Washington, D.C.-based crowdfunding platform that allows people to invest in local real estate. If it works, it’d bring the “community-owned” trend to a whole new level. The Transfer Station, looking to raise $500,000, is currently in a pre-fundraising stage to test out interest. There’s no down payment required to express your interest in investing. Fundrise has successfully crowdfunded five projects in Washington, D.C., said cofounder Dan Miller. The first project that reached its goal on Fundrise, a food and shopping market, is under construction and set to open in 60 days, he said. Fundrise’s crowdfunding real estate model is one that Slate columnist Matt Yglesias said “probably won’t work.” “But if it does work,” he wrote, “it’ll work in an excellent way. Not so much by providing a new kind of financial product that makes sense for middle class investors, but by altering the currently toxic politics of urban real estate development.” The Transfer Station is Fundrise’s first official Philadelphia project, but 3rd Ward, the Brooklyn maker and education space that expanded to Kensington last spring, is also looking to raise money on the site. 3rd Ward, also
in a testing the market phase, is looking to raise $1.5 million that will go toward both locations, if it raises enough, an unexpected move for an established space. Unlike the Transfer Station campaign, though, this one is targeted to accredited investors, or those who have a net worth of $1 million. Why the fundraising? In Philadelphia, specifically, 3rd Ward said the new space “is requiring more capital than expected to achieve profitability or reach cash flow break-even,” according to its Fundrise site. This article was originally published in Technically Philly at Technical.ly/Philly.
Nutter’s Trade Mission To United Kingdom, Israel To Have Tech Focus BY CHRISTOPHER WINK Philadelphia is a global city and should start acting like it. That’s what Mayor Nutter told the Chamber of Commerce in February 2012, and in his first formal international trade mission abroad, the Nutter administration is using technology as his leading hand to visit the United Kingdom and Israel later this year. “Philadelphia can’t just compete in the mid-Atlantic or even with other cities in the U.S.,” but needs to look to the rest of the world, Nutter told 100 in attendance at a reception held Monday at the National Constitution Center to announce the trip. “This is part of that commitment.” Sure, Nutter visited Florence this March to hear about the creative economy as the chief of the U.S. Conference of Mayors and last fall he visited China to talk about trade with Select Greater Philadelphia, but this is something different, said Luke Butler, chief of staff to the city’s Dep-
uty Mayor of Economic Development Alan Greenberger, who will also be on the trip. This is a clear mayoral trade mission aiming to tie together that global conversation with the future strengths of Philadelphia, he said. In Nutter’s remarks, he quoted his own speech as a way of making the case that he’s followed through on his pledge to put Philadelphia in a conversation with Chinese and Italian and British economies. The trip, which will extend from Nov. 2 to Nov. 12, will split its time between London and other spots in the United Kingdom and then Israel, with a focus in Tel Aviv, a sister city to Philadelphia and a known hub for technology startups. The London portion of the trip will coincide with the World Travel Market, a large tourism and travel exposition at which Nutter and team hope to make a splash. This article was originally published in Technically Philly at Technical.ly/Philly.
2013: YEAR OF THE INNOVATOR
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New Framework Can Cut Costs for Small Businesses
Nicholas J. Speers is a Certified Public Accountant in the Philadelphia office of Citrin Cooperman, an accounting, tax and business consulting firm. He can be reached at nspeers@ citrincooperman.com.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
In June, the AICPA finalized the “Financial Reporting Framework for Small and Medium Size Entities” (the FRF for SMEs). The framework is intended to be a simplified, common sense approach to accounting, which a company’s management may elect to use as an alternative to U.S. Generally Accepted Accounting Principles, or U.S. GAAP. The framework eliminates many of the most costly and time-consuming aspects of applying U.S. GAAP. It was created to provide relief for privately held small- and medium-sized businesses that have been forced to bear the costs of complying with accounting rules that are written with large publicly held entities in mind. The drive for a private company reporting framework developed within the past decade. During the early part of the decade, the FASB made significant changes to accounting rules in response to massive frauds at large companies like Enron and WorldCom. In their efforts to combat such frauds, the FASB cast a very wide net, changing rules and impacting a large proportion of companies. At the same time, increasing globalization resulted in renewed demand for a single set of global accounting standards, leading the FASB and IASB to begin a formal project to converge their standards. The resulting rule changes moved GAAP away from simple, traditional measures, such as historical cost and the matching principle, in favor of more complex and subjective measures such as fair value and impairment testing. Such changes have had a disproportionately large cost impact on small- and medium-size entities, which typically have limited accounting resources to interpret and apply the new rules and thus need to hire external advisors for assistance. In response to these issues, the AICPA began to study the concept of a separate financial reporting framework for private companies and determined that there was
significant demand. This led the AICPA to develop and issue the new framework in June 2013. Some of the key differences between the new framework and U.S. GAAP are summarized below. Businesses that incur significant costs complying with these accounting rules should consider whether the new framework would be suitable for their companies.
Consolidation
Entities are consolidated when the parent owns more than 50% of the voting rights. There is no concept of a variable interest entity and companies may elect to account for subsidiaries under the equity method of accounting instead of consolidating them.
Business Combinations
Companies may elect to allocate all excess purchase price to goodwill or to allocate it between identifiable intangibles and goodwill. All intangible assets are considered to have a definite useful life and must be amortized over a period not to exceed 15 years. No impairment testing is required for intangible assets.
Hedge Accounting
Derivative contracts are not recorded on the balance sheet. Rather the termination value and other relevant terms of the contract as of the Balance Sheet date are disclosed. Cash settlements under derivatives are recorded when incurred.
Income Taxes
Companies may elect to follow a deferred tax model similar to current GAAP or a “taxes payable” model, under which income tax expense is based upon the amount of tax due in the current year.
Is The FRF For SMEs Right For You?
The new framework significantly simplifies the accounting process and may reduce a company’s costs. Before moving forward with a change, however, business owners must consider whether this framework meets the needs of the organization and those who use its financial statements. Here are characteristics the AICPA has identified which may indicate that the use of the FRF for SME’s would be beneficial: Ma^ ^gmbmr ]h^l ghm aZo^ k^`neZmhkr reporting requirements that essentially require it to use GAAP-based financial statements. Ma^ ^gmbmr aZl gh bgm^gmbhg h_ `hbg` public. Hpg^kl h_ ma^ ^gmbmr Zk^ Z\mbo^er bgoheo^] in its management. Ma^ ^gmbmr ]h^l ghm hi^kZm^ bg Zg bg]nlmkr that requires highly specialized accounting guidance. Ma^ ^gmbmr ]h^l ghm ^g`Z`^ bg ho^ker complicated transactions or have significant foreign operations. Nl^kl h_ ma^ ^gmbmrÌl ÕgZg\bZe lmZm^f^gml have access to the entity’s management. Nl^kl h_ ma^ ^gmbmrÌl ÕgZg\bZe lmZm^f^gml have greater interest in cash flows and liquidity than net earnings. The list is intended as a general guideline. It is not all-inclusive and the failure to meet one or more of the criteria above does not preclude a company from using the new framework. In fact, no rules preclude a company from using the FRF for SME’s. A company’s ability to use the framework depends only upon whether it will be accepted by the company’s financial statement users. If you’re not sure whether the framework is suitable for your business, you can refer to the AICPA’s accounting framework decision tool at: http://www.aicpa.org/interestareas/ frc/accountingfinancialreporting/pcfr/ Pages/Financial-Reporting-Framework. aspx.
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Devon-Based Video Game Company Expanding game mechanics to art direction. “[‘Mark of the Old Ones’] is in pre-production, and we’re almost BY BRANDON BAKER at the stage where we’re beginning to Thirty-two-year-old Jordan Brock is aware that the go full-on producvideo game business isn’t exactly booming in Philadelphia; he just doesn’t care. tion — the design “It’s not Hollywood,” Mr. Brock said. “But there are is almost done, so lots of schools here, so it’s really just that there aren’t we just have tools enough job positions available here.” to build, stuff like Fortunately for designers and programmers in that,” Mr. Brock the region — specifically those coming from videosaid. game guru Frank Lee’s program at Drexel — Mr. “We have techBrock’s Devon, Pa.-based company, Hit the Sticks, financially modest success that Mr. Brock cites as being nical things we need, too. We’re trying to get word is accruing a team of 11 for an in-the-works game built on a “shoestring budget.” out right now so we can make money and ramp up project. “What we built was really good, but we didn’t have production; from there, I can hire more artists — and The project is titled “Mark of the Old Ones,” and is a the time, budget or manpower to build everything as it I’m not going to [officially] hire people until I know I two-dimensional, physics-based video game he hopes should have been,” Mr. Brock said. can [supply] their paychecks.” to develop for Windows, Mac, Linux and eventually, Mr. “But what that first game did do, was give us credHit the Sticks launched its Kickstarter camBrock says, the looming PlayStation 4. ibility — it proved we could make a game.” paign last week, and actively seeks angel investors. The video game is the second the company has tackCurrently, his team of eight is working on pre-produc- The campaign has an established funding goal of led. Previously, it released “Just Tactics” in 2010 — a tion elements for their new project — everything from $225,000. Company: Hit The Sticks Founders: Jordan Brock Contact: jordan@htssoft.com
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CAN IT WORK FOR PENNSYLVANIA? It’s a model that’s done wonders for North Dakota but would this model be ideal for Pennsylvania? Region’s Business takes a look at both sides. STORY BY ROSELLA ELEANOR LAFEVRE ILLUSTRATION BY DON LEE America’s major commercial banks, investment firms and mortgage lenders recklessly gambled on subprime mortgages and in mid-2007, these institutions began to crumble. In September 2008, Lehman Brothers announced bankruptcy, Bank of America pays $50 million for Merrill Lynch and the government took over Fannie Mae and Freddie Mac. The last two independent investment banks, Goldman Sachs and Morgan Stanley, became bank holding companies subject to greater oversight by the Federal Reserve. JPMorgan Chase bought Washington Mutual Bank’s branches and assets, making the closing of Washington Mutual the biggest bank failure in U.S. history. Congress rejected a $700 billion Wall Street financial rescue package called Troubled Asset Relief Program
(TARP) on Sept. 29, 2008, sending the Dow Jones Industrial average down 778 points. On Oct. 3, 2008, Congress passed a revised version of TARP and President George W. Bush signed off. By one estimate from the Federal Reserve, the U.S. lost close to $14 trillion — one year’s worth of economic activity — during the recession, which lasted from 2007 through 2009. This recession, the effects of which Americans are still experiencing like a terrible hangover, raised a lot questions about the system. Whoever thought subprime mortgages were a good idea? Should we have let the banks fail? Why haven’t the irresponsible leaders of those commercial banks, investment firms and mortgage lenders been charged criminally? Americans are starting to ask: “Are public banks a viable way to reduce
the risk of a future recession and create a sound, effective and responsible banking industry?” Public banks, also referred to as “partnership banks,” “development banks” and “state banks,” use deposits from states and their agencies (or cities and their agencies, or municipalities and their agencies, or counties and their agencies) to empower community banks, credit unions and savings and loans to provide credit to those other banks won’t. A public bank functions as a bankers’ bank, a “wholesale” bank that provides core services, including participation loans, to smaller banks (There are 22 bankers’ banks in the U.S., and even once a public bank is established, community banks may choose to continue working with private bankers’ banks).
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I’VE SEEN OCCUPIERS AND TEA PARTIERS IN ONE ROOM, ALL APPROVING. I WOULDN’T HAVE BET MONEY ON THAT BUT NOW THAT I UNDERSTAND IT, I CAN SEE WHY.’ —MIKE KRAUSS, CHAIRMAN OF THE PENNSYLVANIA BANK PROJECT
Although public banks are enacted and funded by the government, they’re run by a professional banking staff and publicly audited each year. Public banks generally don’t have multiple branches but offices in one location, and they don’t usually originate business loans, take deposits from businesses or individuals, or offer consumer banking services. The upfront costs of establishing and maintaining a public bank are low. Among those who understand the concept, there is debate about the need for and viability of public banking. On Oct. 1 of this year, the New York Times ran a discussion under its “Room for Debate” section with eight experts’ opinions on the question, “In Banking, Should There Be a Public Option?” As Ellen Brown, president of the Public Banking Institute, argued that public banks are key to capitalism, Mark A. Calabria of the libertarian public policy research organization, The Cato Institute, wrote that public banking would inhibit economic growth. After reading Ms. Brown’s book, “The Web of Debt,” John Hemington of Washington County, Pa., reached out to her and asked what people could do if they wanted to prevent a future crisis. Mr. Hemington became one of the founders of the Pennsylvania Public Bank Project,
which first aimed at creating a state public bank but now works to create a network of local public banks before approaching Pennsylvania’s Congress. “My concern was that even at that early time, it was really clear that the commercial banking sector wasn’t functioning [properly]. It was essentially running a giant casino-type gambling function,” said Mr. Hemington, now serving on the Project’s advisory board. “The idea that there could be an alternative to the big banks was intriguing.” Currently, the largest 0.2 percent of banks — just 12 institutions — hold 69 percent of industry assets. As the 20072009 crisis demonstrated, no bank is too big to fail; four of the 10 largest depository institutions failed or were bailed out by the government. Of the nation’s smaller banks, roughly six percent failed during the recession. During that period, none of the community banks in North Dakota failed, which some credit to the state’s public bank. In fact, North Dakota survived the recession with just a two percent unemployment rate. “The too-big-to-fail banks are a black hole. They’re not doing what they are supposed to, which is direct credit and capital into the productive economy,” said Mike Krauss, chairman of the Pennsylvania Public Bank Project. “This is a
disaster waiting to happen. We need to decentralize our banking industry.” Public banking is designed to strengthen local banking markets, sometimes at the cost of the Wall Street banks, said Mr. Krauss. When backed by a public bank, local banks can work together to finance lending that the banks couldn’t do independently. Public banking support helps local banks compete with big banks and keeps customers coming back. By investing government funds into the local economy, public banks are better able to foster small business and create jobs, said Mr. Krauss. Most state and local governments in the U.S. currently deposit their funds in Wall Street banks, because few community banks have, on their own, the funds necessary to back up the state or local governments’ deposits. In the current system, governments don’t have access to lines of credit, so budget surpluses go into rainy day funds that collect very little interest and hardly benefit taxpayers. With public banks, governments have access to their money when they need it and can use these banks to route their public lending programs and stimulate the local economy. Also, as public banks begin to profit from lending, governments could conceivably lower taxes. The Pennsylvania Public Bank Project
initially proposed a state public bank, which could’ve been funded by the sale of state-owned liquor stores, but assessment of the financial situation across the state told Mr. Hemington and his colleagues that it was too soon for a public bank. While the west side of the state was flush with fracking money, the east struggled. So the Project has shifted focus and is instead working to build a network of local public banks. “We think this is a tool that local governments need in their tool chest,” Mr. Krauss said. Following the recommendations of the Pennsylvania Public Bank Project, Mayor Vaughn D. Spencer of the city of Reading, PA established a community development corporation and is hiring an executive director who will work towards establishing a municipal finance corporation. This is the first step towards creating a public bank and will allow the city greater control over its revenue. “This is something that we had been looking at for a while — how we’re using our money we’re depositing in big banks,” said Mayor Spencer, who wanted to find a better way to deposit and use city revenue. “[The public bank option is] an idea we’re beginning to see possibly come to fruition.” Efforts are underway to create a detailed business plan for a public bank
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CASE STUDY: Bank of North Dakota The Bank of North Dakota, established in 1919, is the only state-owned public bank in the U.S., and as such, is the example most cited in discussions of the pros and cons of public banking. Funded by revenue from the state and its agencies, the Bank of North Dakota primarily serves the state’s financial institutions and state agencies. Its mission is to support agriculture, commerce and industry in North Dakota, and is mandated to support the local economy. The North Dakota Bankers Association, a 125-year-old trade organization that represents the interests of the state’s banks, endorses the Bank of North Dakota. There are more banks per capita in North Dakota than in any other state; this means its small banks haven’t been forced to sell to Wall Street. John Hemington of the Pennsylvania Public Bank Project is impressed by the example that the Bank of North Dakota sets for future public banks in the U.S. “This is something really pretty impressive. Obviously, it wasn’t some big communist experiment or they wouldn’t have approved of it,” Mr. Heminton said, noting North Dakota’s conservative bent. “I think one of the most
in the city of Philadelphia, which Mr. Krauss said the Pennsylvania Public Bank Project will bring to City Council in early 2014. While it takes roughly $8-10 million to establish a public bank, Philadelphia has $12.4 billion in investments, including pension investments of $6.5 billion, eight separate enterprise agencies and other funds, which Mr. Krauss said are performing poorly. “The city of Philadelphia is hurting and everyone knows it. In Philadelphia, there’s a sense of urgency,” Mr. Krauss said. “We’re gonna give [City Council] a concrete place to start from [to establish a public bank].” By 2015, Mr. Krauss thinks his organization will be ready to approach Pennsylvania Congress about launching a state-owned public bank. Some, like Nick DiFrancesco, president and CEO of the Pennsylvania Association of Community Bankers, see no room for a public option in the state’s banking industry. “The public bank option really does nothing to enhance available services in Pennsylvania,” Mr. DiFrancesco said. “The people and communities of Pennsylvania are already served by a diverse industry that is meeting the personal and economic needs of the Commonwealth. Some are mutual (community owned), some member owned and some are stock. Some serve farming, while others serve our housing markets. Still others focus on economic development, serving existing and start-up businesses. There really is no need for a public bank option in Pennsylvania’s marketplace.” The President and CEO of Fox Chase Bank, Tom Petro, doesn’t believe public banks are answer because when a public bank fails, its taxpayers foot the bill, he said. “Fannie Mae and Freddie Mac have failed. And we Americans will be footing the bill for that for years to come,” said Mr. Petro. According to recent reports, Fannie Mae posted profits amounting $10.1 billion in the second quarter of 2013 and has paid down its $116 billion debt to the federal government. While there is some political opposition to the idea of public banking, like with the Cato Institute’s Mr. Calabria, Mr. Krauss has seen nonpartisan support of the idea. “I’ve seen Occupiers and Tea Partiers in the one room, all approving,” he said. “I wouldn’t have bet money on that but now that I understand it, I can see why.” For Mr. Krauss and Mr. Hemington, the answer to the question, “Are public banks a viable way to reduce the risk of a future recession and create a sound, effective and responsible banking industry?” is definitely yes. “We want very much to strengthen Main Street at the cost of weakening Wall Street,” Mr. Krauss said. Interested in attending a one-day workshop for community and neighborhood leaders on forming a public bank of Philadelphia? On Saturday, October 12 head to Arch Street United Methodist Church (50 N. Broad St.) from 8:30 a.m. to 12:00 p.m.
important lessons of the Bank of North Dakota is that they haven’t lost any [community] banks in 20 years. Only branches of New York City banks have pulled out of North Dakota and that’s probably a good thing.” The Cato Institute’s Mark A. Calabria called the Bank of North Dakota a “generally well-run institution” in a brief editorial published as part of the New York Times’ “Room for Debate” round-up on public banking, but criticizes its role in the fossil fuel economy. “One need only look at its annual reports to see that the bulk of its below-market lending has been to the fossil fuel industry. It’s a case in point, illustrating that government-owned banks will tell to subsidize the powerful,” wrote Mr. Calabria. Although the state of North Dakota’s public bank has been successful for nearly 100 years, its staff does not think public banking is a one-size-fitsall solution to the ills of the U.S. banking industry. “We do not advocate the use of this model elsewhere. It is an issue for each individual state or municipality, and each must determine what is best for its needs,” wrote Eric Hardmeyer, president and chief executive on the Bank of North Dakota in the New York Times.
ONE OF THE MOST IMPORTANT LESSONS OF THE BANK OF NORTH DAKOTA IS THAT THEY HAVEN’T LOST ANY BANKS IN 20 YEARS. ONLY BRANCHES OF NEW YORK CITY HAVE PULLED OUT... AND THAT’S PROBABLY A GOOD THING.’ —JOHN HEMINGTON, PENNSYLVANIA PUBLIC BANK PROJECT
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$5.2M Philadelphia Townhome On Delancey This spectacular double-wide townhome is located on one of Philadelphia’s most desirable blocks — the 1800 block of Delancey Street. Exquisitely renovated to retain its old world grandeur while adding all of today’s luxurious amenities, this home offers five spacious bedroom suites and five bathrooms. Also included is a lavish master retreat, a breathtaking gourmet eat-in kitchen and grandly proportioned great room, and a spacious dining room with butler’s pantry. There are nine gorgeous fireplaces adding warmth, while the grand staircase is architecturally significant next to the elegantly laid-out living room. Three terraces offer lovely views while the gym with full bath gives the flexibility of a full workout without leaving the house. An elevator and two-car parking garage provide wonderful conveniences and a rooftop deck provides breathtaking views. For more information, please contact Laurie Phillips at (215) 790-5644
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KEN GOLDENBERG’S
HOME TEAM AT MARKET EAST Developer Ken Goldenberg said at a recent Pennsylvania Gaming Control Board hearing that the investors behind Market8 — one of the six proposed casinos — were “the home team.” We asked Mr. Goldenberg to tell us more about why the Market8 casino is the best bet for Philadelphia and to respond to some recent heat from Gov. Ed Rendell who said Market8 wouldn’t be the right fit for Philadelphia. Go online to RegionsBusiness.com for the full interview. There has been recent public opposition to a casino at 8th and Market from former Gov. Ed Rendell, saying a casino in close proximity to the city’s historical attractions would be bad for the city. How would you respond to these comments? Actually, we believe, and research supports the fact that, the opposite is true. A 2010 study by Penn State’s Tourism Research Lab, dealing specifically with this issue, found that a material percentage of casino patrons will frequently stay longer in an area to take advantage of other experiences such as touring historic, scenic, or recreation sites. And when Governor Rendell proposed the idea in 2008 that Foxwoods move to The Gallery, the board chair of the Friends of the Independence National Historic Park said he
“didn’t think it would be a negative issue for the park.” In fact, he said he believed a casino would actually attract more visitors to the historic district. Cities, at their best, are wonderful mixes of different offerings in close proximity to each other. This area already includes the Pennsylvania Convention Center, The Gallery, restaurants, bars, hotels, museums, art galleries, historic sites, offices, parking garages and even residential towers and homes. It is by far the most diverse zone in the city center. And by far the most tourist-oriented zone in the city. So a multi-dimensional urban entertainment center with 10 restaurants and bars, a concert hall, a 4.5-star boutique hotel, and a casino, of the quality we are fashioning, will fit in perfectly – and go a long way towards filling in the “hole in the donut” that prevents these tremendous
assets from realizing anything close to their full potential. Indeed, contrary to Governor Rendell’s suggestion to turn Foxwoods’ entrance away from Market Street, we are integrating MARKET8 into the existing urban fabric so that people can experience this project as a fully complementary part of East Market Street and the City. We think this is critical! We saw what damage could be wrought years ago by turning your back on Market Street with the Gallery. So, we are working very hard to do the opposite – and hoping others along the corridor, including the Gallery, do the same - all in the interest of turning Market Street into one of the most vibrant, highly touristed, multi-dimensional, historic, convention, cultural, retail, restaurant, and entertainment corridors in the country. This will be a world-class project unlike anything else in the country. It will bring in five million people annually. MARKET8’s rewards/comp program and charities will pour millions and millions of dollars into this zone annually. It will create nightlife and energy and entertainment in this zone that will immediately turn it into one of the city’s most inviting/attractive zones instead of the opposite. Five years ago, the Governor and other city leaders touted siting a casino at our location as a “path-breaking opportunity.” The former chairman of the Philadelphia Convention & Visitors Bureau called 8th and Market “a perfect site to marry the convention customer and the leisure tourist on a street, which currently separates both visitor types.” For all of the reasons that siting a casino on East Market Street made sense then, with the quality of project we are fashioning, and with all the economic development stimuli and public interest programs we are including, it makes even more sense now. So, far from it being a shame to put it here — after this site has sat vacant for 30 years – and given the fact that you could never do a project like this without this gaming license — it would be a crying shame not to put it here. This is a once in a generation opportunity. In fact, this may be the best location in the entire country for this type of project.
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What would you say was the main inspiration behind the redesign of MARKET8 that was recently released? There were three concerns and objectives that went into this design. First and foremost, was having it work seamlessly internally — and making sure the whole was even greater than the sum of its many exciting parts. There are 11 restaurants and bars, a concert hall, a club, a 4.5-star hotel, and a world-class casino in this project — and making sure that each of those components is not only tremendous in its own right, but also blends fantastically with all of the project’s other components was essential. Second, was making sure that the street is enormously activated, energetic and inviting. Accordingly, it is critical for us — and every other redevelopment and development in this zone, including The Gallery redevelopment — to bring that back. So, the front entryway to our Project, which will offer its own attractions, entertainment, and special features, will be on Market Street — four signature restaurants will be on Market Street — and our coffee, ice cream, pastry, chocolates cafe as well as our retail boutique will be on Market Street. But they won’t just “be” on Market Street, they will flow out onto Market Street, and have tables and patrons on Market Street, and their energy and activity and festival/entertainment atmosphere will all become part of a new Market Street experience. What this will do to our site, and the “hole in the donut” as it’s referred to (the three blocks around us, including the Gallery), and all of Market Street East, given that five million people per year will be visiting this entertainment venue and participating in one or more of its offerings, is almost incomprehensible — and so exciting. Finally, exterior design-wise, we were so excited about the potential of this tremendous location. We recognized that there were so many great historical structures, with so many different architectural styles, already up and down Market Street — and we recognized that, given its location, and given how compelling a project this will be, MARKET8 will be as visited and visible as any of them — but we also recognized that MARKET8 will be here for 200 or more years into the future, maybe even significantly longer. So, it was critical to our minds that we strike a balance between the past, the present, and the future — and come up with a truly inspiring design that both honors the past and exalts the future. And we believe our current design accomplishes that. While certain of the exterior design elements and materials are traditional and speak to very a classical language, at various critical points they peel away and reveal something that’s completely modern and futuristic
GoldenbergGroup.com
in its sensibility, almost as if the future is growing inside of the past, and something that we hope is even better and more exciting than the past, which, of course, is pretty much what happens ideally and everybody hopes for, isn’t it, sociologically, culturally and architecturally-speaking. Our desire, of course, is that this is a timeless message that inspires Philadelphians, Pennsylvanians, Americans and others for many years to come. What are the key economic impacts that would differentiate MARKET8 from the other casino proposals? First of all, we are right in the heart of the Center City district. We are midway between the Pennsylvania Convention Center, two-and-a-half-blocks to our west – and Independence Hall, the Liberty Bell Pavilion, the Constitution Center, and the Philadelphia Visitor’s Center, two-and-a-half-blocks to our east. We have thousands of assets and amenities immediately around us: the Convention Center, the Loews, Marriot and Monaco Hotels, The Gallery, Chinatown, the Jewish History Museum, so many historic sites, so many other museums, so many restaurants, so much retail, and so many galleries. We have 17,500 pedestrians who pass by our site daily. We are right at the center of Market Street, center city Philadelphia’s major east west boulevard – and right on 8th Street, the major ramp in the eastern half of the City to and from the Vine Street Expressway — which connects our site to every other major highway system serving the Philadelphia market. And we are in close proximity to one of the busiest transportation hubs in the country — with 19 million customers annually. We are surrounded by many of center city Philadelphia’s most concentrated residential communities – and center city Philadelphia is the third largest center city residentially-speaking in the country. From the standpoint of all the benefits that will inure to our project – from the surrounding assets, amenities, businesses, residences and infrastructure — no other proposed project or location touches us. As Alan Greenberger pointed out in his testimony to the Gaming Control Board, the variety of activity proposed by MARKET8, including on-street mixed use activity as well as the gaming facilities, are crucial in terms of spurring additional economic development and revitalization on East Market Street – a key priority for the Nutter Adminstration. He said, “This variety of activity has the largest potential to generate a new audience.”
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10 OCTOBER 2013
REGIONSBUSINESS.COM
OPINION
Controller Must Know What Keeps People Coming Back
Terry Tracy is a candidate for Philadelphia City Controller. He can be reached at (215) 402-7300 or at tracyforphilly@gmail. 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.
In four weeks, voters in Philadelphia will have the opportunity to vote in the municipal mid-term election. I refer to November 5th as a mid-term election because at the halfway point of each mayoral administration, Philadelphians have the opportunity to elect two independent, executive officials — City Controller and District Attorney — as a referendum on the status quo. These offices have the power to steer policy in a new direction and practice effective governance independent of business as usual in City Hall. Like many Philadelphians, I have grown wary of hearing about our city’s potential and am more interested in expediting its comeback. As a candidate for City Controller, the issues are clear: Our children deserve to have equal access to education worthy of their individual potential. Today, an entire generation is in jeopardy. We have a pension system that has an unfunded liability that is fifty percent larger than Detroit’s, threatening the safety net so many of our retired neighbors depend on. And, arguably most importantly, we must redouble our efforts to attract investment and inspire entrepreneurs. The key to solving our city’s seemingly intractable problems relies almost entirely on our ability to make businesses in Philadelphia successful and providing the disenfranchised with the promise of a career. There is no doubt that a thriving and bustling Philadelphia is in the entire region’s best interest. Improving education, stabilizing our pension system, combating the ceaseless cycle of poverty and despair — these are both worthy and achievable goals. What is often overlooked is the fact that the City Charter provides the City Controller with the resources and authority to shape the debate and move the needle. After attending Temple and Penn, I’ve spent much of my professional career in retail, working in various senior management roles with international brands, with an emphasis on urban settings. I am a student of public policy and a merchant by trade. An effective retailer capitalizes on the latest trends, understands who buys what and when, determines cost efficient methods of service delivery and then puts it all into a cohesive strategy that excites customers and drives financial results. If you think about it, that’s exactly what the next Controller of Philadelphia needs
to do. In my professional experience, I typically ask, what separates one city from another? What separates a customer’s experience in Toronto from Philadelphia? Why are retailers more attracted to places like Newbury Street in Boston or Union Square in San Francisco, cities that are a fraction of the size of Philadelphia? Why is it that on average, stores in those
THROUGHOUT MY CAREER, I’VE LEARNED WHAT KEEPS CUSTOMERS COMING BACK. YOU HAVE TO MAKE PEOPLE FEEL WELCOME, ENCOURAGE THEM TO BE PARTNERS IN YOUR SUCCESS AND LET THEM KNOW THEY ARE PART OF SOMETHING BIGGER. MUNICIPAL GOVERNMENTS... HAVE THE CAPACITY TO DO THE SAME.’ cities tend to be bigger, carry more inventory, and have more employees working their sales floors than comparable stores in Philadelphia? Each of the aforementioned cities faces many of the same inherent challenges as Philadelphia such as traffic congestion, aging infrastructure, and weather-sensitive shopping patterns. Yet they have still managed to capture the imagination of the industry and create the kind of unique experience that Walnut and Chestnut Streets have yet to offer. Closer to home, why is it that a commercial district such as Center City, with a daytime population 8.5 times that of King of Prussia, boasts a fraction of its retail offerings? Why is it that King of Prussia, home to the largest mall in the nation, has embarked on a mega million dollar expansion while Philadelphians watch the old Borders’ Bookstore space at Broad and Chestnut Streets become yet another discount drug store? These anecdotes offer important, accessible lessons about the effectiveness of
our City’s economic policies. Here we have companies, in a very overt fashion, voting with their pocketbooks, stating that they are not afraid to make major investments in urban settings and that they want to be in our region, but they are unable to justify the investment within city limits. We all know about the high tax rates, but high taxes compounded with the incoherent mix of taxes and the never ending revenue grabs give too many businesses legitimate pause. Ultimately, who suffers? And, really, where does all that money go? This cuts right to the heart of why we often feel boxed in by our problems. I have sat in too many meetings where more than a nominal investment in our city was possible, but ultimately set aside. I have taken that train ride to New York City, where you ride through so many of our neighborhoods left to devolve into graveyards of the Industrial Revolution, one too many times. Our government’s financial decisions have profound moral implications for our local neighborhoods. Fundamentally, a government’s budget is a demonstration of our understanding of the problems we face and how we as a society prioritize and combat those problems. That’s why it is so important that we have a Controller who is able to objectively, independently and comprehensively review public investments and their subsequent return. Throughout my career, I’ve learned what keeps customers coming back. You have to make people feel welcome, encourage them to be partners in your success and let them know that they are part of something bigger. Municipal governments and their direct influence on our quality of life have the capacity to do the same. Ultimately, this campaign is about a commitment to developing and articulating a new and forward looking vision for the city that begins with a commitment to getting our fiscal house in order — but it certainly doesn’t end there. For more information about Terry Tracy’s campaign for Philadelphia City Controller, visit www.TracyForPhilly. com.
10 OCTOBER 2013
REGIONSBUSINESS.COM
OPINION LETTERS TO THE EDITOR
Letter: Wynn Resort Is The Best Option The testimony received by the Gaming Control Board the other day revealed behind the scenes battles very different from those I witnessed in 1970 in Atlantic City.
TWITTER REACTS
vision. But, alas, if what happened at the Gambling Control Board is any indication Philadelphia will turn its back on the demonstrably best proposal and settle for ‘any one but Wynn.’ REESE PALLEY
In Atlantic City, in those halcyon days, most of us active in the gambling industry begged Las Vegas to come on in. Recognizing that when it came to casino operation we were babes in the woods, we reached out to the two men who represented the best that Vegas had to offer, Clifford Perlman of Caesar’s Palace and, of course, Steve Wynn who was already mythic in Nevada. Ultimately it was Steve Wynn who set the entire course of casino development in Atlantic City when he built the fabulous Golden Nugget which quickly became the touchstone that every operator who came after him had to copy. But Wynn was not well received at the Board meeting the other evening. The forces against a Wynn casino in Philly lined up.
1 OCTOBER 2013
Letter: Attack On Government Employees Is Naïve In response to “Government Shutdown: Don’t Cry For Federal Employees” (Oct. 3): The vast majority of federal employees do not work in Washington DC. A relatively very few of those that do are in Senior Executive Service and are highly paid based on their job descriptions. Most are low level clerks, guards, park rangers, etc. These are the ones who are hurt. Contrary to your implication lobbyists are not paid through tax dollars. They are paid by corporations, unions, associations and other special interests.
The Nutter Administration, glossing over the terrible image of casino dead center in the City of Brotherly Love, declared that the old Inquirer property, a stones throw from City Hall, was the preferred location.
Further, DC is home to many, many, many high income lawyers. No doubt foreign diplomats and their entourages are fairly well paid.
This must have been a great relief to Bart Blatstein who owns that property as well as to the Sugarhouse investors, Richard Sprague and Robert Potamkin, who, I am sure, had not been looking forward to the competition from Wynn’s billion dollar vision of Vegas along the Delaware.
Further still, DC is home to housing churn. Every 4 to 8 years or so the market is hit with new elected officials and a minor shake up in high level housing. To point to DC housing as an indicator of federal employee welfare with or without a government shutdown is naïve.
Poll: Philadelphians Wary of Property Tax Overhaul A Pew Charitable Trusts poll finds that many Philadelphians are not aware of the city’s new property tax system, and those who are aware are skeptical about the structure. Little more than half of the residents surveyed said they knew about the new system, known as the Actual Value Initiative, or AVI, which was enacted by the City Council this year after several years of consideration. Among those who are aware of AVI, 44 percent said it would make real estate taxes less fair, compared with 26 percent who said it would make real estate taxes more equitable. Most Philadelphians said the change would have no impact on whether they would continue to live in the city; 22 percent, however, said they would be less likely to remain, compared with 8 percent who would be more likely to stay. As for the future of city taxation, residents said they favored a concept long
Your presentation is worthy of a high school debate club.
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GREG RICHEY 3 OCTOBER 2013
advocated by leaders of the business community and others: reducing wage and business taxes as a way to spur job creation. The ratio of support was well over 2-to-1. But they opposed the idea of raising property taxes to help make up for any resulting budget gaps by a ratio of nearly 2-to-1. On the whole, residents appeared to be less accepting of taxes and government than in prior years. Asked which path they generally preferred—higher taxes and more government services or lower taxes and fewer services—Philadelphians opted for lower taxes and fewer services by a margin of 9 percentage points, 50 percent to 41 percent. In 2012, respondents favored higher taxes and more services by 7 percentage points, 49 percent to 42 percent. This report is the third based on the results of the recent Pew poll. The first covered public education, and the second focused on the overall mood of the city.
@keystonepol Main thing I want to write about this new Pew #AVI poll is that it’s a not a useful thing to poll 8 OCTOBER 2013
@commack
@keystonepol One useful number: only 52% have even HEARD of #AVI. That’s a catastrophic failure of both media and gov’t. 8 OCTOBER 2013
If Wynn cannot convert our slightly old fashioned town into a major entertainment and gambling destination then no one can. He has proven himself in every venue in which he has invested hard cash and enormous experience and he now seems to feel that Philadelphia is ripe for his sort of
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@keystonepol @ccommack but also a catastrophic failure of residents to read the damn newspaper 8 OCTOBER 2013
CONTENT PARTNERS
@ChristianRBeyer RT @REIHQ Philadelphians say property tax overhaul is unfair: Philly turning into a red city? More prefer lower taxes 8 OCTOBER 2013
@tkslegal #Philadelphia Board of Revision of Taxes is madness today for the AVI appeal deadline - 5K appeals and counting - line out the door! 7 OCTOBER 2013
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10 OCTOBER 2013
REGIONSBUSINESS.COM
BY THE NUMBERS
$30,000,000
Profits returned to North Dakota general fund earned by the state’s public bank without any appropriation of taxes
$2,800,000,000 Loan portfolio injected into North Dakota’s economy through the public bank’s partnerships with local banks
263M
Tweets about TV content in the second quarter of 2013, according to a Nielsen survey recently released
138M
Tweets about TV content in the second quarter of 2012
$10,000,000
255
Loan program through the public bank’s partnership with the North Dakota Housing Finance Agency
Business and industrial projects funded through the public bank
$1,000,000,000 Student loans funded through the public bank
670,000
38%
Population of North Dakota as of 2010
Increase in tweets about TV compared to the second quarter of 2012
24%
24%
20%
Small business owners cited regulations and red tape as their number one concern, according to NFIB’s September Small Business Optimism Index
17%
Small Business owners cited poor sales as a number one concern, according to the Small Business Optimism Index
Owners said they had jobs they could not fill in the current period, according to the Small Business Optimism Index
More Twitter users tweeting about TV content compared to the second quarter of 2012
8%
Owners said September 2013 was a good time to expand, according to the Small Business Optimism Index
50 Times the number of people consuming TV-related content on Twitter than there are people publishing the same content on Twitter
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