FRAME PROBLEMS BEFORE SOLVING INCENTIVES FOR WATERFRONT PROJECTS
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OUR INFRASTRUCTURE FINALLY GETTING SOME
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18 APRIL 2013
12 Time to Revise
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State’s Tax Code
Pennsylvania’s tax code is too big and too complex. Columnist Charlie Gerow says it’s time to simplify.
10 Liquor Money Not Another Stimulus If the state forges ahead with privatizing liquor sales, columnist Eric Boehm argues the money should not be used to fund yet another stimulus.
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28 Framing Problems !
The sequester is absurd. It is the wrong way of doing things. But it does something - namely, it reduces the deficit, and has made the worries about debt sustainability in the U.S. decrease.”
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18 APRIL 2013
Neither Dems Nor GOP Really Have A Clue
Karl Smith is the Editorial Director for Region’s Business. You can contact him at firstname.lastname@example.org.
ashington’s budget dance continues to reel about with the Senate producing its first budget proposal in four years, Congressional Republicans recycling a plan that’s been soundly rejected just about everywhere and the president unveiling his so-called plan two months late. This would all be disturbing if any of those entities actually deserved a shred of credibility, but no need to be concerned about that, since that train left the station a long, long time ago. It appears that, despite the best efforts of both major parties, Americans want to push the economy forward. Let’s consider this as a five act play. Act I: The setting is the November elections. Both parties, clueless that Americans want solutions and results not rhetoric and dogma, state that the strictest interpretations of their platforms have been overwhelmingly approved by voters. The fact that they can miss the obvious fact that neither party won a mandate foreshadows a comedy, but we
already can sense that it is more likely to be a tragic comedy. Act II: President Obama is cast as the villian. As Bush-era tax cuts are set to expire, the president pins a bruised GOP-controlled Congress to the wall and wins a compromise that allows, essentially, taxes to increase on the wealthiest of Americans. House Speaker and unofficial Minister of Gloom and Doom John Boehner pronounces this as a death knell for a shaky American economy. His forecast calls for another recession. Act III: In a role reversal, Congress assumes the role of villian. With the fiscal cliff behind them, congressional Republicans rediscover their spine and refuse to budge on avoiding the upcoming automatic spending cuts, ridiculously named the sequester. When it becomes clear the across-the-board cuts are almost certain to take hold, President Obama and his Democratic colleagues begin wailing and gnashing their collective teeth, warning of a total ecnomic meltdown that will cripple America for years to come.
Act IV: Analysts come to realize that most Americans have tuned out the nonsensical rhetoric in Washington and have gone about their daily lives, working hard, paying their mortgage and trying to save a buck. The result? Chief economists at both Morgan Stanly and JP Morgan Chase increased their forecast for U.S. economic growth from around 1 percent to 3 percent or more. All this despite Republican claims that President Obama’s tax hike would kill the economy and despite Democratic claims that the GOP’s inaction on avoiding automatic, across-theboard spending cuts would do the same. Act V has yet to be written as we roll through 2013’s second quarter. Yet one thing is clear, at least to everyone outside the Washington beltway. Americans and the U.S. economy can no longer wait for President Obama, Speaker Boehner and the rest of the comedy troupe in Washington to finish their Punch and Judy show. American businesses and workers are now taking center stage.
18 APRIL 2013
WEEKLY BRIEFING: GAMING
SugarHouse Casino To Pay $650,000 In Settlement
Wynn Resort Proposal Wins Over Fishtown Neighbors Association
SugarHouse Casino latest expansion plan includes a bike trail, a larger promenade, additional riverfront eateries and a smaller parking garage, according to a report in The Philadelphia Inquirer. The estimated cost for the expansion is more than $540 million, and investors are seeking an additional $410 million in financing, according to the Inquirer report.
Gaming Board Adds Additional Hearing The Pennsylvania Gaming Control Board announced it has added a second day next month at Lincoln Financial Field to collect public input for the awarding of another casino license in Philadelphia. The session, to be held 9 a.m. to noon May 9, will be in addition to the previously announced hearing to be held 9 a.m. to 5 p.m. May 8. The additional session has been added because all of the available spots for that first day of hearings have been filled. The hearings at the stadium will be held on both days in the Red Zone Lounge.
Table Game Revenue Tops Record The amount of revenue generated from the collective play of table games at Pennsylvania casinos during March of 2013 was the highest monthly amount to date, 9 percent higher than revenue produced last March.
SugarHouse Casino has agreed to pay the United States $650,000 to resolve claims that it performed unauthorized work along the Delaware River, in violation of the Clean Water Act and the Rivers and Harbors Act. The Clean Water Act requires SugarHouse to obtain a United States Army Corps of Engineers permit before discharging dredged and/or fill material into waters of the United States.
Casino Announces New Expansion Plan
$67.38M This March’s gross table games revenue
Fishtown residents liked the Riverwalk, the proposed public access component of the development.
BY BROOKE HOFFMAN Wynn Resorts representatives recently presented the proposed plan for their casino/resort on the Delaware waterfront as Wynn tries to win the remaining casino license in the city. Locals voted in favor of the proposed plan 173 to 55. The Fishtown Neighbors Association hosted the presentation. Wynn’s team has previously reached out for community support with a similar town-hall meeting in Port Richmond. The 60-acre area, located along Interstate 95 near the Girard Avenue interchange between Cumberland and Beech streets, had been used for light industrial work in past years; Wynn’s team seemed confident they would be able to use the land for a better purpose. Along with creation of jobs, the presentation focused on providing locals public access to non-gambling amenities along the Delaware River. The 22-acre Riverwalk would create a waterfront area seven times larger than Penn’s Landing. Current plans include an ice skating rink, dog park, bike rental, and amphitheater. By keeping this space public, Wynn’s team feels they are enhancing the riverfront as well as providing to the community. As for employment, Wynn’s team projected they will create 3,600 construction jobs over the two- to three-year project period. Once open, they expect to create 2,200 permanent jobs along with 1,100 jobs generated with suppliers. And yes, they do plan to work with local unions — put the inflatable rat away. They also stressed that Wynn’s approach
in training and providing for its employees creates fewer turnovers. Annie Allman, representing Wynn, explained the company’s philosophy was not just to create jobs, but to build careers. The resort itself is modeled after existing Wynn properties. With its Philadelphia outpost, Wynn is trying to do something different from other casinos in the area—it’s not just about gambling. Ms. Allman stated the existing casinos in the Philadelphia area are 90 percent gaming, while Wynn’s proposal seeks to create a more integrated experience. Similar to their Las Vegas properties, Wynn’s resort is planned to have 60 percent non-gaming amenities and only 40 percent gaming. By not being just a full-on casino, Wynn Philadelphia will be able to attract a different crowd than Harrah’s and Sugar House. Terry McKenna, executive vice president of Keating Consulting, LLC, stated Wynn intends to make all non-gambling amenities accessible without even stepping foot on the casino floor. One local criticized the look of the tower portion of the casino, but the focus on the property is to bring plenty of green space. The tower at the center of the proposed property will be 19 stories tall and contain 300 hotel rooms with an average 900 square feet per room. The property will also have 2,800 parking spots and will be free for those using the public Riverwalk along with the resort. That is a lot of asphalt for a green space. This article was originally published on the Philadelphia Real Estate Blog at PhiladelphiaRealEstate.com.
Increase in gross table games revenue from March of last year That revenue total last March had been the highest to date since table games were introduced at Pennsylvania casinos in July 2010.
Tables in operation statewide on a daily basis
$9.71M Tax revenue produced this March
Coupled with figures on slot machine revenue released earlier this month, overall gross revenue from both slots and tables this March
Increase from March 2012
18 APRIL 2013
AmeriHealth Announces Name Change AmeriHealth Mercy Family of Companies announced this week that it has chosen AmeriHealth Caritas as its new company name. “Caritas” is Latin for “charity” and embodies the 30-year legacy of caring that AmeriHealth has established in several states and communities across the country. AmeriHealth Caritas is a majorityowned subsidiary of Independence Blue Cross; Blue Cross Blue Shield of Michigan holds a minority interest. AmeriHealth Caritas began as Mercy Health Plan in West Philadelphia in 1982 to meet the growing need for quality care for the underserved, many of whom turned to emergency rooms as their primary source of care.
Cooper, AmeriHealth Partner on Health Plan A health insurer and a hospital system — AmeriHealth New Jersey and Cooper University Health Care — announced that Cooper will acquire a 20 percent interest in AmeriHealth New Jersey. Together, Cooper and AmeriHealth New Jersey will develop and offer an expanded suite of health plans and an accountable care model for New Jersey residents. BANKING
Beneficial Moving to 1818 Market St. Beneficial Bank announced last week that it was moving to 1818 Market Street, which was to be renamed “Beneficial Place.” Beneficial will occupy four floors of the 42-story building, which is owned by Sovereign Capital Management Group, the company announced.
New Tech Companies Join Science Center Incubator
Two more international tech companies have joined the University City Science Center’s Port business incubator: HDI Group, a software consulting company headquartered in Sao Paulo, Brazil, and London-based medical communications company, Bioscript Science. In addition three new domestic companies have also taken space at the Port: OChem Industries, a testing laboratory servicing pharmaceutical, environmental and chemical industries, Cognizance Biomarkers, a diagnostic startup and FLUX Photon Corporation, an R&D company focused on developing materials for renewable energy applications. Based in Sao Paulo, Brazil, HDI Group has developed an innovative and proprietary technology for testing software called STARC. HDI Group is now present in four different countries, having served clients such as ABN Amro, Tokyo Marine and
Walmart Mexico. With its expansion into the U.S., HDI Group hopes to establish a foothold in the U.S. market with its unique software testing application. Bioscript Science, an independent medical communications company with offices in London, Manchester, England and Philadelphia, has established a U.S. presence in the Bullpen, the Port’s coworking space. The Bioscript Group delivers medical communications to healthcare professionals, the pharmaceutical industry, health purchasers, universities, professional and government bodies, and the media. With the opening of its Philadelphia office, Bioscript Science is targeting early-stage biotech companies to assist with the output of manuscripts, review articles, regulatory writing, electronic media and press releases. Bioscript Science is a former virtual resident of the Port.
Trolley Marks 100 Years Of Service SEPTA will commemorate the 100th birthday of the Route 101 Media Trolley Line with festivities throughout 2013. The Route 101 centennial celebration includes the wrapping of one current Media Line car to look like the trolley did when it was first rolled out on the tracks by the Philadelphia and West Chester Traction Company on April 1, 1913. This unique trolley will be in service over the next year, after making its in-service debut from 69th Street Transportation Center to Media April 13.
Liberty Property Trust Reveals Q1 Leases Liberty Property Trust welcomed six new customers and completed four renewals and three expansions during a busy first quarter of 2013. “It was an extremely active first quarter — a tremendous way to start off 2013,” said Tom Sklow, vice president and city manager, Liberty Property Trust. “Our suburban Philadelphia office parks experienced a surge of interest, especially at Great Valley Corporate Center as a result of the opening of the new fourway Route 29 Interchange on the Pennsylvania Turnpike, where commute times have been cut by as much as 25 minutes.”
Square feet leased by Crothall Services Group at 1500-1550 Liberty Ridge Drive, the largest new lease of the quarter at Chesterbrook Corporate Center in Wayne.
Square feet at 180 Sheree Boulevard, the largest renewal at Stoneridge Office Park in Exton. Kidde Fenwal, Inc. renewed its lease. There were an additional 11 leases at Great Valley Corporate Center in Malvern, Renaissance Park in King of Prussia, Brandywine Business Center in Radnor, Chesterbrook Corporate Center in Wayne and Devon Park Drive in Devon.
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18 APRIL 2013
Governor’s Plan: Reduce Corporate Income Tax It will take more than a decade, but the first step to reducing the state’s corporate income tax could be taken by summer. A plan to overhaul business taxes in Pennsylvania will improve the state’s competitiveness and increase opportunities while cracking down on some corporations that try to cheat the system, Revenue Secretary Dan Meuser said during a hearing of the House Finance Meuser Committee. “We in Pennsylvania, of course, want to be on the short list to attract the best companies in the world to Pennsylvania,” Mr. Meuser said. “It will be one big step in the right direction.” In his February 5 budget address, Gov. Tom Corbett pitched a litany of business tax changes he said he would like to see approved before the end of June. Among them is a long-term plan to reduce Pennsylvania’s corporate income tax from 9.99 percent to 6.99 percent by 2025, the closure of several tax loopholes and rarely used deductions and the continued phase-out of the capital stock and franchise tax, which businesses pay on physical assets, similar to a property tax. — Pennsylvania Independent PENNSYLVANIA TURNPIKE
Moody’s Downgrades Commission’s Debt Lower-than-expected usage and a steady stream of debt caused Moody’s Investors Services to downgrade the bond rating for the Pennsylvania Turnpike Commission. Announced last week, Moody’s downgraded the rating to A1 from Aa3 on approximately $3.1 billion worth of revenue bonds. The rationale for the rating was that traffic and revenue forecasts were too optimistic, with lower usage and higher toll rates expected to bring lower revenues over the next 10 years. — Pennsylvania Independent
What’s In The Neighborhood? Northern Liberties
Corporation Reveals 2012 Compensation
2012 salary of Brian Roberts, chairman of the board, president and CEO, according to the SEC
$4.8M Brian Roberts’ 2012 stock awards
Brian Roberts’ total compensation in 2012
A farmers’ market is held at the Piazza at Schmidts in Northern Liberties.
Once considered Philadelphia’s favorite up-and-coming neighborhood, Northern Liberties has officially arrived, evidenced by the international restaurants, respected gastropubs and trendy boutiques — all this while maintaining the artistic vibe that made it so cool in the first place. The warehouses that populate the former manufacturing district found new life as condos, galleries, stores and restaurants, and along with newly designed buildings, the area enjoys a pleasant mix of older functional and modern design. Two shopping/dining/art/entertainment plazas helped make Northern Liberties an accessible and thriving area: Liberties Walk and The Piazza at Schmidts. The neighborhood lies north of Old City, and its borders (depending who you ask, of course) are Girard Avenue to the north, Callowhill Street to the south, 6th Street to the west and the Delaware River to the east. To get from Center City to Northern Liberties, people can hop in a cab, or take “the El” — SEPTA’s Market-Frankford line, also called the elevated line because it rides above ground when it’s outside of the main downtown area — from any of the Market Street subway stations to the Spring Garden Street stop.
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WHAT’S IN TOWN?
WineO More than 50 European and American vineyards add to the wine list at this rustic wine bar and restaurant, which also keeps the cocktail and beer crowd happy with its full bar and 30 brews. The ingredients for the Mediterranean/American dishes come from the nearby Italian Market. 447 Poplar Street, (215) 925-0999, wineophilly.com
Millesime It’s the ever-evolving inventory of modern home furnishings, lighting and accessories that keep design-savvy shoppers satisfied at this shop where the focus is on the work of upcoming designers who combine practicality with a modern design aesthetic. 1001-13 N. 2nd Street, (267) 455-0374, millesime.us
R.E.Load Philadelphians pack fashionably with stylized messenger bags, wallets, tees and more designed by the R.E.Load team. The messenger bags come in two basic variations (one strap or two) and then take off from there in varying sizes, colors and designs. Aspiring designers can customize a handsewn bag. 608 N. 2nd Street, (215) 625-2987, reloadbags.com GPTMC
Total compensation given in 2012 to Stephen Burke, executive vice president of Comcast and CEO of NBCUniversal
Total compensation given in 2012 to Michael Angelakis, vice chairman and chief financial officer of Comcast
Total compensation given in 2012 to Neil Smit, executive vice president of Comcast and president and CEO of Comcast Cable Communications
Total compensation given in 2012 to David Cohen, executive vice president
18 APRIL 2013
WEEKLY BRIEFING EXECUTIVE BOOKSHELF
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The Great Deformation is a searing look at Washington’s craven response to the myriad of financial crises and fiscal cliffs. It counters conventional wisdom with an 80-year revisionist history of how the American state — especially the Federal Reserve — has fallen prey to crony capitalism and the ideologies of fiscal stimulus and financial bailouts. These forces have left the public sector teetering on the edge of political dysfunction and fiscal collapse and have caused America’s private enterprise foundation to morph into a speculative casino that swindles the masses and enriches the few. — Amazon.com
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Georges Perrier Taking Over Mica For One Week Georges Perrier, the former Le Bec-Fin chef who announced his retirement this year, will take over as chef of Mica Restaurant for one week, Mica owner (and Perrier mentee) Chip Roman wrote on Facebook. “My friend and mentor chef Georges Perrier will be taking over my Mica Restaurant from May 7th through May 11,” he wrote. “A la carte and tasting menus will be available. He will be creating his signature dishes that made Philly famous. Items will range from $10 to about $30 bucks. My staff and I will be following his command that week. Please call 267-335-3912. The menu will be on our mica website shortly. Reservations strongly recommended .
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18 APRIL 2013
Avoid New Stimulus With Incoming Liquor Funds
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.
For all the criticism they take, give politicians some credit for one thing: they are never short on ideas for how to spend money. Even if the money isn’t even there yet. The state House passed its version of a liquor privatization bill last month. It is now awaiting action in the state Senate. One provision of that bill created a special “lockbox” to hold the estimated $600 to $800 million that will be raised by auctioning off liquor licenses to private retailers. Even if the Senate also passes the liquor bill — a pretty big “if” at the moment — there will still be the question of what to do with the money in that special account. Of course there is no shortage of ideas there. When Gov. Tom Corbett proposed liquor privatization in January, he wanted to use the proceeds to create a four-year block grant program for school districts to use for a variety of purposes, including increasing school safety and boosting math and science education. Now, a group of House Republicans led by Rep. Jerry Knowles, R-Schuylkill, are pitching a different idea. They want to use the potential extra cash from selling the state liquor stores
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to help fund road and bridge repairs. But Rep. Knowles and the others who support his plan are making a lot of sense (as long as you leave aside the fact that there is no money to actually spend just yet). It’s simple accounting; the revenue to be gained from selling liquor stores is a one-time windfall of cash, and it would be a bad move to put those funds towards basic education, or any other ongoing expense of government. The state should have already learned this from its experience with the federal stimulus. Despite being warned not to do so, cashstrapped school districts plowed stimulus dollars into ongoing costs like teacher salaries and overhead. The state did the same with regard to its basic education subsidy. When the “free” cash from the federal government disappeared after two years, the state and school districts were left with a funding gap and no money with which to fill it. There are legitimate concerns that districts would do the same thing if they were handed another wad of cash by the state in the aftermath of liquor privatization.
One of the uses Gov. Corbett has in mind for the liquor windfall is the hiring of school safety officers, surely a noble goal. But Rep. Knowles and others are right to question how — after the four-year block grant program ends — schools will be able to afford that new personnel cost. Consider the alternative: putting one-time liquor privatization revenues towards a onetime cost like fixing roads and bridges. There are no ongoing costs in that instance and no salaries that would have to be paid in the years after the money goes away. There’s also a serious crisis to be dealt with, as Pennsylvania has more than 5,000 structurally deficient bridges and 7,000 miles of road in need of repair. Though the whole thing risks putting the cart before the horse — remember, the liquor bill still has to make it through the state Senate — lawmakers would be smart to embrace a plan that uses one-time revenues for one-time purposes. It will leave one fewer mess to be cleaned up down the road, and might even make that road a little smoother in the process.
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18 APRIL 2013
United States Needs Fair, Comprehensible Tax Code April 15 has passed, and for millions of Americans the headaches of dealing with the most complicated tax rules in the history of humankind are beginning to subside. Why we have a tax code that is not only massive but incomprehensible is beyond me to explain. The sheer volume of the tax code — nearly 74,000 pages and four million words of legalese gibberish — stands as evidence of a system way out of kilter. It kills a lot of trees Charlie Gerow is CEO of to produce such a huge set of documents, Quantum Communications, now nearly 200 times bigger than when the a Harrisburg-based IRS went into business a century ago and the public relations and issue size of 60 copies of “War and Peace.” advocacy firm. Tucked into those tens of thousands of pages are rules and regulations that appear to be cuneiform. So complicated and confusing CONTRIBUTE are the rules by which law-abiding citizens must play that Americans spent more than Send comments, 6.7 billion hours on tax returns this year. letters and essays That’s more than 10,000 lifetimes and a to feedback@ pretty serious drain on the economy. It sucks regionsbusiness.com. $240 billion out of productive enterprise. Opinions expressed by Of course the billions of hours and dollars guest writers do not spent on tax preparation don’t mean that the necessarily reflect those returns are “right.” For years, one business of Region’s Business.
magazine gave a simple set of financials to a several high-priced tax preparers. They never got the same return. Many times they were thousands of dollars apart. That’s from honest, straightforward “experts” with no incentive to cheat. They couldn’t arrive at the same conclusion based on the same data because of the confusing and cumbersome rules. The complex web of special credits, deductions and loopholes have been burned into the tax code over years of lobbying efforts aimed at carving out economic advantage, controlling taxpayer behavior or, most commonly, protecting against high marginal rates. In 1913, when the IRS was born, Americans paid less than 6 percent of their total income in taxes at all levels. Today it’s more than 30 percent, with many taxpayers at far higher rates. We work even longer each year just to pay taxes. “Tax Freedom Day,” the date on which Americans have worked long enough to pay their tax bills and can begin to keep what they earn, doesn’t arrive until April 17 in Pennsylvania. For our higher-tax neighbors like New Jersey and New York it isn’t until May.
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Allowing Americans to keep more of their hard-earned money and decide for themselves how best to spend it would be a great boost to the nation’s economy. When the family budget gets bigger and government budgets get smaller, we’ll all be better off. Despite constant class-warfare drumbeats for higher tax rates for “wealthy Americans,” President and Mrs. Obama revealed they paid an effective rate of 18.4 percent this year. As even MSNBC commentator Joe Scarborough scoffed, that’s far lower than what a public school teacher pays. There’s more than a little hypocrisy in the entrepreneurial bashing of this administration. There’s also a large dose of bad economics. Tax Day provides a clear focus on both. We can and should have a fair system that makes filing taxes as simple as filling out a postcard. We shouldn’t have a tax system that allows the super wealthy to pay 18 percent while hard-working wage earners pay more. A simple refresher from Economics 101: If you tax something, you get less of it. There’s a lesson worth repeating between now and next Tax Day.
18 APRIL 2013
Councilman Squilla Bill Proposes Waterfront Development Incentives
Controller Candidates Face Off BY SANDY SMITH
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.
In a bill introduced in Philadelphia City Council April 11, Councilman Mark Squilla proposed changes to the Central Delaware Riverfront Overlay District by amending the Philadelphia Zoning Code. The proposed changes will provide for floor area and height bonuses for the Central Delaware Riverfront, and to make adjustments to the criteria for bonuses relating to public open space, transit improvements and green development. Overlay zoning is a regulatory or legislative device that creates special zoning rules for a defined district over an existing base zone or zones. These rules for the overlay district may alter or extrapolate rules from the base zone(s). One of the more common uses for overlay zoning, particularly in urban areas, is to guide development by discouraging or encouraging certain types of development. Such is the case with Councilman Squilla’s proposed changes which focus on turning the Central Delaware Riverfront into a commercial area that also provides enhanced public access and use. The Central Delaware Riverfront Overlay District has its borders defined by the river, Oregon Avenue, Allegheny Avenue, and the east side of Interstate 95. These boundaries contain the public space and lots surrounding the Benjamin Franklin Bridge. The legislation discourages using riverfront space for the sale or maintenance of vehicles, or parking lots. To build directly
on the riverfront or Columbus Boulevard between Washington Avenue and Spring Garden Street, a large portion of the ground floor must be dedicated to uses such as retail sales, commercial services, eating and drinking establishments, lobbies for hotels, theaters or other residences, entrances to public transit stations, or other public uses defined in the bill. Any development on lots greater than 5,000 square feet must dedicate 40 percent of the total lot area to open area. The base zone caps building height in the area at 100 feet. Under the proposed overlay zoning district changes, developers can attain bonus building height allowances if they dedicate all or part of the development to certain preferred uses such as mixed income housing, public art display, transit improvements, or retail space just to name a few. Councilman Squilla’s Central Delaware Riverfront Overlay District was created with legislation in 2012, but the proposed changes represent even more aggressive pursuit of favorable development along the Delaware Riverfront. That area is sometimes seen as an example of lost potential when compared to the flourishing waterfronts of other major cities. It appears that Councilman Mark Squilla, with the help of Philadelphia City Council, is doing all he can to encourage developers to turn the waterfront from a wasted opportunity to an irresistible one.
Four men sat at a table last week at WHYY’s Dorrance Hamilton Public Media Commons in Center City to explain why the citizens of Philadelphia should elect them to the post of City Controller. In truth, the debate was mainly about one of them: Controller Alan Butkovitz. Mr. Butkovitz is seeking a third term in the office. The other three — Democrats Brett Mandel and Mark Zecca and Republican Terry Tracy —seek to unseat him. All made their best cases for themselves at the candidates’ debate, co-sponsored by WHYY’s Newsworks.org, the Committee of Seventy and Young Involved Philadelphia (YIP). Mr. Mandel emphasized city taxpayers getting value for the money they send to City Hall. “The taxes we pay are huge, but we’re not getting all the services we pay for,” he said. Mr. Tracy and Mr Butkovitz both said education was key to keeping young Philadelphia families in the city. “You don’t announce overnight that you’re going to close 30 schools,” Mr. Butkovitz said. Mr. Tracy took a dig at the school district’s leadership, saying: “They’re like the old telephone company: They don’t care because they don’t have to.” The school district was one of the targets Mr. Butkovitz mentioned in defending his record in office. Throughout the debate, he stressed his highlighting bogus budget numbers put forth by former Superintendent Paul Vallas and the investigations into municipal malfeasance launched with data provided by his office. He also criticized the Actual Value Initiative property reassessment, as he has been doing on the campaign trail. Mr. Mandel, Mr. Butkovitz’s chief Democratic challenger, said much that was critical of that record over the course of the debate. He criticized Mr. Butkovitz for his failure to carry out a basic duty of the office — to audit every city department each year. Mr. Mandel also accused Butkovitz of using the office as a launch pad for his own mayoral campaign. This article was originally published on the Philadelphia Real Estate Blog at PhiladelphiaRealEstate.com.
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2013: YEAR OF THE INNOVATOR
ChargeItSpot Has Its Cake And Markets With It Too
Gayle Kennedy interviews co-founder Angela Giovine at the 2012 Happening List Bash. JC SAGER
In Her Own Words:
Full Speed Ahead At Happenings Media
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A staple of Happenings Media, the annual Happening List Bash has become a celebration for both head-honcho Tina Paparone as well as for the devoted readership of her string of lifestyle magazines. After bringing in more than 300 attendees to the red-carpet event last year, she’s hoping to one-up herself with an even more “happening” event this year.
DIARY OF A STARTUP
In her words: We’re jumping into Q2 at full speed, gearing up for Happening List Red Carpet events in both Bucks and Montgomery counties, preparing to launch a debut contest in Myrtle Beach, S.C., and conducting our annual one-onone conferences with Happenings Media licensees. Last year, 350 of Bucks County’s best walked the red carpet at the first annual Happening List Bash, which honored the contests winners, finalists and nominees. This year, the celebration promises to be bigger than ever with delicious food, local wines, smooth sounds and many more surprises in store on May 2 at the newly renovated Rose Bank Winery in Newtown, Pa.
J.C. Sager, editor-in-chief of Montco Happening, will soon be announcing the details of the Montco Happening Bash, and we can’t wait to get started with the contest on the sunny Grand Strand in South Carolina (which coincidently is led by a former Montgomery County resident, Sherrie Glensky). A ton of work has gone into growing the Happening List contest across the network, but the enthusiasm of our readers, advertisers and licensees makes the effort incredibly rewarding. The contests encompass the core mission of the Happenings Media network — uniting, highlighting and celebrating the unique lifestyles of local communities.
BY JULIANA REYES Let ‘em eat cake and hopefully they’ll realize they need a phone charging station. That was the idea behind the marketing ploy that ChargeItSpot, a new Center City phone charging station startup, launched last Friday. The company sent three Benjamin Franklin impersonators to deliver 150 cakes — with founder Doug Baldasare‘s phone number written in frosting — to local businesses. The heavy rain on Friday changed the delivery plans somewhat, said a company spokesman, but, for one, we spotted one of the cakes arrive at the First Round Capital offices, from where Technically Philly is located. ChargeItSpot’s charging kiosks, which are free for customers, secured with locks and offer various types of chargers for different phones, are in three locations in Philly, including the Rittenhouse Square brick and mortar shop of ecommerce startup Kembrel, and a Whole Foods in Jenkintown. It hopes to install kiosks in 76 locations this summer, according to a release. Businesses pay a monthly fee to have a ChargeItSpot kiosk. The company works out of coworking spot Seed Philly and has 10 employees, including both full-time and part-time. It raised $580,000 last fall, according to SEC filings and as we’ve previously reported. Baldasare, 29, is a Wharton graduate and lives in University City. This article was originally published by Technical.ly Philly at TPhilly.com.
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2013: YEAR OF THE INNOVATOR
Philly Tech Week Lunchtime Series: All events are held at the same time and location throughout the week.
Turning Corporate Events Into Nights On The Town Teamability CAPITAL SEEKERS
Founders: Dr. Janice Presser and Dr. Jack Gerber Contact: email@example.com
Time: Noon to 1 p.m. Place: Quorum at the Science Center, 3711 Market Street, Floor 8, Philadelphia, Pa.
BY BRANDON BAKER
Innovations In Green Tech Date: Monday, April 22 This lunchtime series will showcase new and upcoming breakthroughs in sustainable technologies in the Philadelphia region. Presenters will give 7 to 9 minute previews of their respective projects.
The Social Entrepreneurship Hub: Philadelphia Date: Wednesday, April 24 During this hour-long presentation, you’ll hear updates from representatives of the city’s new $1m Philadelphia Social Enterprise Partnership, from the Mayor’s Office of New Urban Mechanics, Wharton Social Impact Initiative and GoodCompany Group, a social entrepreneurship accelerator.
The Future Of Tech Transfer Date: Thursday, April 25 This lunchtime series will feature a panel discussion on some interesting examples of Tech Transfer success stories. We’ll take a look at companies that took regional academic research to build their businesses as well as how the various universities focus their programs. MEETUP.COM
BY BRANDON BAKER
This sort of empathy is something that’s hardly foreign to the 29-year-old Mr. Justin Horn wants your corporate event Horn: He spent a decade as a DJ, lead-role to be just as exciting as your Saturday musical theater actor and hip-hop dancer after graduating from Camden County night out on the town. Mr. Horn started the Lynwood, N.J.- College. In fact, Mr. Horn said he is still based 2Life Talent agency in December the most-requested performer at his own 2011 after noticing the average private company — particularly at Atlantic City event’s entertainment lineup was hardly casinos. “My biggest motivation right now is the captivating showstopper it could be. Instead of top-of-the-line talent, events making sure top talent actually gets work,” he attended were flooded with performers Mr. Horn said. “Last year at resorts, at who were, to Mr. Horn, good but not great. one particular night club, we paid close to “I find that a lot of the entertainment $250,000 in payroll. That’s just one place people have at their events is not the type alone. “So, a lot of people get a lot of extra work, of entertainment they would pay to see at a party, so why would they pay to have and that feels good — we want to keep that at their own event?” Mr. Horn said. “I moving, and keep people working.” wanted to create a company that brought a new level of entertainment to private and corporate events — [entertainment] that deviated from your typical DJ — and wedding-type stuff.” Mr. Horn prides his agency in its recruitment of performers who have meaty resumes and thorough training. He recruits performers, he said, through his own network as well as the snowballed network of his staff and contractors. Beyond breathing life into what might otherwise be run-of-the-mill events — weddings, corporate events, mitzvahs, etc. — he also sees his business as a way of giving back to the performing arts community, a notoriously difficult industry to breakthrough in.
The Gabriel Institute’s 28-years-in-themaking Teamability technology is banking on benefitting from the inefficiencies of personality, IQ and behavioral tests everywhere. Creators Dr. Janice Presser and Dr. Jack Gerber, who met while working on their PhDs and shared a fascination with group interactions as opposed to individual behavior, see personality tests as pieces of a puzzle that lack any real capacity to actually put the puzzle together. Teamability aims to define how people interact with one another in the workplace by measuring, in an hour-long test, what’s referred to as “Roles” — that is, a person’s affinity to be a big-picture team member, collector of knowledge or a “doer.” This technology, Executive Vice President Mark Talaba said, is a brand-new way of testing that analyzes elements of communication and role-filling that, until recent years, could not be processed by computers. “People have seen so many different flavors of personality tests over the years that are based on breaking people down into parts and pieces,” said Mr. Talaba. “But it’s like a barometer: If you have a barometer, it will predict the weather in lots of ways — sunny, cloudy, precipitation, etc. — but it won’t tell you whether to wear a coat or shorts when you go outside. “…Teamability, just like temperature, is one important aspect of human behavior, which these other measurements were not meant to capture directly.” Center City-based Teamability launched in Q4 2009, having initially accrued about two clients per month during its first year. Today, Mr. Talaba said, the team attracts about 10 clients per month, ranging from startups to big-business clients like Hewlett Packard. The team also currently has 10 non-traditional — read: non-angel or venture capital — investors who have purchased equity in the company. Teamability is currently seeking more of these types of investors. “The most valuable investors you can have are using and promoting the product, and not just investing and waiting for a dividends check,” Mr. Talaba said. “Our investors are users of the technology who are absolutely convinced that this technology is revolutionary.”
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2013: YEAR OF THE INNOVATOR
NurseLineMD Takes Medical Communications Online BY BRANDON BAKER NurseLineMD co-founder Sherri Sanderson was troubled by the sluggish communication she experienced with her OBGYN while dealing with a high-risk pregnancy in 2004. Having grown tired of sitting by the phone in anticipation of an update, she approached an office worker about alternative communication options. “I said, ‘Look, do you have a secure online system where I can just put in my issues, have you reply back, have it be real-time and get a very quick response, versus this back-and-forth phone tag?’ and he said, ‘No. But we need that,’” Ms. Sanderson said. Together with Dean Newton, she made her ideal patient-provider relationship a reality with the secure-network NurseLineMD communication software. “Right now, a lot of offices have a nurse they employ full-time to listen to voicemails and write messages on paper, and then triage them throughout the office.
There’s a high fail rate for what they’re doing, and they could be spending more time with patients rather than handling the phone,” Ms. Sanderson said. “The service we’ve created moves these interactions off of the phone and onto the Internet.” The 2010-incorporated, 2012-launched NurseLineMD service platform creates a virtual, real-time line of communication that can be accessed via PC, mobile phone or tablet. The app streamlines the process of updating medical records and sharing them with medical providers. “Our business model is that we truly believe American citizens are competent enough to manage their finances. You have a bank account that you can manage from a mobile device, yet somehow we’re not responsible enough to manage our own healthcare? Who really owns your medical records?” Mr. Newton said. “[NurseLineMD] allows your records to follow you, and you can now start to integrate mobile apps that people are already investing in,
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from a personal lifestyle stance. “So if I decide to go run five miles, I’ve got an app that documents that, and I can share it on Facebook, but why can’t I share it with my healthcare provider? It’s sharing data from an in-user standpoint as a patient, as well as increasing communication from a provider standpoint.” Though the company is based in Knoxville, Tenn., the duo hopes to accrue clients from across the country — including in Philadelphia. Their goals, Mr. Newton said, are more “for-purpose” and less “for-profit.” “[Our service] is a symbiotic relationship of give and take,” he said. “You give me a little bit more, and I’ll give you a little bit more.”
YOU HAVE A BANK ACCOUNT THAT YOU CAN MANAGE FROM A MOBILE DEVICE, YET SOMEHOW WE’RE NOT RESPONSIBLE ENOUGH TO MANAGE OUR OWN HEALTHCARE?’
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2013: YEAR OF THE INNOVATOR
City Should Be Heart Of Global EdTech Hub
Bobbi Kurshan is a senior fellow at the University of Pennsylvania
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 should be at the heart of an East Coast global hub of education innovation. With few exceptions, Philadelphia has all the accouterments to attract entrepreneurs in edtech. From low-cost city living and an advantageous location between education policyoriented cities like New York and D.C., to education needs here in Philadelphia, to the growing Philly EdTech Meetup to Mayor Michael Nutter’s 2012 announcement of an initiative to increase the availability of seedstage capital, the scene is set for Philadelphia to be a hotbed for entrepreneurial activity in how we teach our children. In discussions of Philadelphia’s economy, it is inevitable that someone shares that our region’s strengths are in “eds and meds,” meaning, universities and healthcare providers. The number and density of “eds and meds” together provide a unique opportunity for Philadelphia to lead in the growing demand for educational technology solutions. The region’s “eds” produce some of the finest
graduates in the country, who are driven to “do well while doing good.” The region’s healthcare providers — hospitals, pharma companies, insurance dealers — know theirs is an industry ready for disruption. In 2009 Penn’s Graduate School of Education began the Milken-Penn GSE Education Business Plan Competition, which culminates with ventures pitching their ideas to VCs, and—uniquely—to both researchers and teachers. GSE’s Academic Innovation Team plans to build out an innovation-focused ecosystem, which will capitalize on the “eds” in Philadelphia — both K-12 and colleges — and on the reputation and expertise of one of the country’s foremost education schools. The aim is to tap into the city’s abundant resources in order to engage the existing educational, entrepreneurial community, even as they attract more education entrepreneurs to Philadelphia. Some of this was in action at the recent Big Think Conference at Penn, an exploration of what it takes to innovate, specifically at the
university. When two undergraduate engineers presented their work, which uses the Leap Motion device as a base for a multi-user sign language gesture translator, it was clear from the crackle of electricity in the room that the audience was considering how their innovations could be put to use. Nursing Professor Nancy Hanrahan’s interdisciplinary course Innovation and Technology in Healthcare has engendered health-focused apps and games; this year her students won first and third prizes at healthcare Startup Weekend Health. This is just one example of the thousands of collisions of ideas that are emerging as the city sets its sights upon nurturing this economically and socially vibrant sector of American industry. If the Philadelphia region’s strengths are truly in ‘eds and meds,’ then movement in education technology should be a strength to be sure. This column was originally published by Technical.ly Philly at TPhilly.com.
Everyone saves when your employees sit here. RideECO is the new name for the commuter benefit program from DVRPC, which offers Easy Commute Options. As always, RideECO allows employers and commuters to save by putting pre-tax dollars towards public transportation fares. • • • •
Save money—pre-tax deductions save employers on FICA taxes. Boost employee morale—they can save more than $900 a year. Easy to implement—online orders, payments and more. Trusted—the only local, nonprofit transit benefit program.
Learn more at RideECO.org or call 215-592-1800.
SEPTA/DART FIRST STATE/NJ TRANSIT/PATCO/VRIDE/AMTRAK
18 APRIL 2013
UPGRADES to UP GRADES
Most portions of the region’s infrastructure fail to make the grade, but massive investments are underway get things up to par. STORY BY CHRIS WEEDEN | ILLUSTRATION BY DON LEE
very four years, the American Society of Civil Engineers releases an infrastructure report card for each of the 50 states and for the nation as a whole. The results would have been enough to get the state grounded had the parent not be a worse offender. In 2010, Pennsylvania graded at a Ccompared to the D+ the nation earned as a whole. The results were indicative of an aging industry society transitioning to a service-based economy. Discerning the regional results is difficult. Philadelphia’s economy comprises three states of counties from Pennsylvania, New Jersey and Delaware, so ascertaining specific strengths and weaknesses are difficult, but applying the state-wide grades locally, the figures were alarming. Freight rail scored the best at a B. Transit, storm water and roads all scored a D-. Drinking and waste water? D+. These issues have not been ignored, especially within the Philadelphia region. Massive undertakings are redefining the way the city operates and what kind of businesses are attracted to the area. Definitive master planning in neighborhoods, transportation and waste-water management are all a part of one goal: making Philadelphia a desirable place to live, work and visit. From the perspective of the Greater Philadelphia Marketing Tourism Corporation (GPTMC), investment in infrastructure makes growing the regional economy possible, furthering the organization’s ability to portray the city as a desirable place to visit. “The city is our agenda,” CEO Meryl Levitz said. “The airport, the well-being of the roads and the dollar value all
across the world have an influence. Consumer confidence is the ultimate arbiter.” Suburban flight combined with the loss of manufacturing jobs did wonders for the city. According to the Bureau of Labor Statistics, Philadelphia’s industry shift has been traumatic from 19922012. Most profoundly,
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there has been a 59 percent loss of manufacturing jobs and another 37 percent in formation and an additional 34 percent in financial activities. What has emerged in that dreadful wake has been a 48 percent increase in leisure and hospitality and a 38 percent leap in education and health services. Select Philadelphia came to existence for a specific reason. CEO and President Thomas Morr realized that much of the data regarding Philadelphia was being fed by the state government. While well-intended, these figures did not accurately depict the true story because of the shared borders with Delaware and New Jersey. Select Philadelphia uses data from the city and neighboring counties to more accurately portray the economic climate of the region. He sees the repurposing of the oil refineries, the modernization of the airport and the improvements and job growth in certain sectors as indicators that Philadelphia can return to a role of prominence. In order to move forward into the 21st century, visionaries in positions of power saw the necessity of the region to move forward. The question becomes: How do you develop the infrastructure required to develop and sustain growth in an already-established region? The parts of the country that had grown during the Rust Belt’s decline had a distinct advantage: They were not shackled down by the mechanisms constructed during a manufacturing economy; they also had a canvas of unused land to develop in a comparatively modern way. So with a shrinking tax base because of residents going in droves to the cleaner, spacious suburbs, or to other parts of the country, Philadelphia faced the costly reality of retrofitting much of the city. “They decided to invest in the culture,” Mr. Morr said. “That had to be a politically courageous thing to do.” He said that at the time, people were in need of the basic necessities. Leadership allocated money that could have been directed to public welfare programs and moved it to the arts and other programs, a calculated risk with the belief that it could transform the economy. Those that began the initial push may no longer be in office, but projects for plodding forward remain on the calendar for decades to come.
Stuck in traffic Hours commuters are stuck in traffic over the course of the year. City Washington New York Philadelphia San Diego Houston Seattle Chicago
2011 67 59 48 37 52 48 51
2000 65 38 36 34 40 53 39
TEXAS A&M TRANSPORTATION INSTITUTE DOUGLAS MUTH
Progress, even in the face of the stiff wind of an economic recession, continued. True, Philadelphia may house 5 percent less workers now than it did in 1992, but bringing a downhill train to a near-stop can mark success. Now, the city, and the greater Philadelphia region, is poised to utilize that momentum on improved tracks. This shift has been occurring since the end of World War II, according to Mr. Morr, when manufacturing comprised roughly 30 percent of the national economy and was 38.7 percent in Philadelphia. Over time, the national average plummeted to what is now 10 percent and seven in the city. Good jobs disappeared; the workers occupying them unable to adapt because their lack of education left them without the necessary skills. Now, 75 percent of the region’s jobs lay in knowledge-driven fields, Mr. Morr said. His company, Select Philadelphia, surveyed companies and institutions in research and development for various industries. Responders indicated that $8.9 billion in R&D comes from the private sector while educational and public entities spent another $1.6 billion. “Philadelphia is in a great position,” Mr. Morr said. “It went through a 60-year period that was very painful
when we were a declining rust-belt city. But we’re not. We’re a city on the rise.”
Transportation According to a March 5 CBS Money Watch article, Philadelphia was ranked the 10th worst city to drive in America, although it cited mostly congestion, with a population density of 11,000 people per square mile as the chief reason for making the list. Much will be done in future years to rehabilitate the I-95 within the city. The website 95revive.com chronicles work organized by PennDOT, the Pennsylvania Turnpike Commission and the Delaware River Joint Bridge Commission to bring one of the most heavily traveled roads in the country up to current travel demands. In total, 15 projects are outlined along the route from as far south as the US 322 interchange extending through the Scudder Falls Bridge in Bucks County. Several have been completed while some are in the planning stages as far out as 2036. At the moment there are four projects under construction: the Girard Point Bridge the Girard Avenue Interchange the Cottman-Princeton Interchange
the PA-Turnpike Interchange. The stretch encompasses eight miles and it’s not just on and off ramps. The stated goal is to include four lanes of traffic flowing in either direction with continuous lanes connecting the on and off ramps. A major effort is not just going into the roads. Mass transportation has been a primary focus as well. The main obstacle to growth is upfront cost, whether it be bus routes or subway lines with the latter requiring the most upfront investment. In February, the Navy Yard celebrated that it had reached 10,000 employees with the addition of GlaxoSmithKline, 30 percent more than it increased at the time the Navy announced that it was ceasing most operations in 1995. The community, operated largely by the Philadelphia Industrial Development Corporation (PIDC), stated that it aims to triple the workforce by attracting a variety of industries over the next 20 to 30 years but that to achieve that goal, a 1.5-mile, $370-million subway extension along the Broad Street line is required, according to a feasibility study. It was only able to land GlaxoSmithKline by promising to offer a shuttle service to Center City. In December, the Navy Yard added an express bus route from Market Street. Experiencing just 400 rides per
20 day in a two-loop, SEPTA-operated system, the goal was to double that usage. Instead, it more than tripled at 1,400 rides per day. “Along the line, we have to include, not as an afterthought, but as a main thought, a mass transportation structure,” said Williams Agate Jr., PIDC Vice President, Management and Development of the Navy Yard. “Not just to the Navy Yard but the collective city with the Navy Yard.” In November, SEPTA released its first-ever energy action plan to reduce costs. A November 12, 2012 Philadelphia Inquirer article stated that between more electric-efficient subway rail cars and hybrid-electric diesel buses and other changes will save the area’s principle transit system $6.9 million. Overall, a $303 million capital budget is at a 15-year low while ridership is at a 23-year high. SEPTA did receive $191 million as part of the American Recovery and Reinvestment Act, part of a national infrastructure bill totaling $787 billion with the goal of raising that D+ score. One major policy has been SEPTAinable: the Route to Regional Sustainability, modernizing the regional infrastructure through upgrades that reduce costs and are ecologically positive. A key provision details improving water use and pollutants discharge by 10 percent by 2015. Both New Jersey Transit and SEPTA received federal dollars as part of another national package to stimulate mass transit improvements throughout 48 states. By 2020, according to a July 24 Philadelphia Inquirer article, the city will incorporate a rapid bus route between Center City and Southern Jersey, a loop that would operate on 10-15 minute cycles and allow for bus use of shoulders and medians during rush hour. NJ Transit received $2.6 million of an estimated $46 million to upgrade components of a state-wide bus system while SEPTA was awarded $5 million to upgrade the 69th Street facility in Upper Darby. SEPTA regional rail continues to excel in reliability. Ninety-five percent of its lines were on time for the fiscal month February 24-March 30 with the Cwnwyd and Fox Chase lines scoring the best at 98 percent. The airport route rated just behind at 97. The performance was considerably higher than the 2012 fiscal year that averaged 88.7 percent, which was down
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Busy Skies The world’s busiest airports for the 12 months ending October 2012 (the most recent data available) based on aircraft movments. 1. Hartsfield (Atlanta) 2. O’ Hare (Chicago) 3. Dallas-Fort Worth 4. Denver 5. Los Angeles 6. Beijing, China 7. Charlotte, NC 8. Las Vegas 9. George Bush (Houston) 10. Charles de Gaulle (Paris) 11. Frankfurt (Germany) 12. Heathrow (London) 13. Sky Harbor (Phoenix) 14. Philadelphia 15. Amsterdam
In April 2012, Travel + Leisure magazine ranked Philadelphia International the third-worst airport in the U.S. with this analysis: “Philadelphia’s airport is singled out for a lousy design and lack of cleanliness (20th), surly staff (20th), and long check-in and security lines (20th). The only thing worse is waiting for your bags, ranked 21st in efficiency (make that inefficiency). That its location came in at 13th is not much consolation.”
six tenths of a percentage point from the year before. The report utilizes the industry standard that a train arriving 5 minutes and 59 seconds after the scheduled arrival is still considered on time. Such figures make up just part of the ratings matrices evaluating the organization’s performance since adopting a five-year master plan in 2009. There are seven categories serving as the gauge with each one consisting of two indicators. Last year, Walk Score, a web site that rates cities and neighborhoods based on their walkability tabbed Philadelphia fifth partly because of the reliability and usability of SEPTA.
Airport Included in the I-95 construction were the on and off ramps for the Philadelphia International Airport (PHL). These ramps were one of the first projects of the 95 Revive campaign and was among three completed in 2002, along with the work performed on the Levick Street Bridge and the Westmoreland Viaduct. So far, $1 billion of work has been done between the A West addition, the connecting of terminals of D and E and the expansion of terminal F. That is just the start of major renovations projected between $5-7 billion. In 2010 the Federal Aviation Admin-
AIRPORTS COUNCIL INTERNATIONAL
istration (FAA) approved a $6.8 billion Capacity Enhancement (CEP) program, a year after the FAA released that 8 percent of all traffic delays. In April 2012, TravelAndLeisure.com rated PHL the third-worst airport, besting only La Guardia in New York City and Los Angeles International. PHL was slapped with low scores in cleanliness, staff friendliness, security and check-in lines and baggage-claim waits. A clumsy layout has also been to blame. Relocating between terminals often requires a haul. To combat that, US Airways offers a shuttle service. Future improvements alleviate that concern by establishing a possible monorail to link them. To alleviate the congestion, the goal is to create a two-lane system for outgoing and incoming planes, as opposed to the single-route option currently in place. Easily the most expensive, airlines have balked at the necessity of such a move. Other changes focus on improving the direct customer experience. Wider corridors and terminals to accommodate the predicted added congestion is among them, but the greatest change would be to the initial interaction with customers prior to departures. Concessions prior to the security checkpoint allow for a different experience and greater flexibility. Such a system would be comparable to Hartsfield Jackson Atlanta International
Airport. At one time, PHL was renowned for quality food and dining options. That changed when the War on Terror prompted additional precautionary measures instituted by the FAA. “Philadelphia had one of the best concessions programs before 9-11,” Mr. Morr said. “But now, concessions are needed before you get to the concourse.” Necessity dictated these efforts; marketing benefited. Lambasted by residents, travelers, the media and government for poor amenities, the city acknowledged that the airport served as the first point of access for travelers. PHL, holding such a negative initial impression upon arrival of a city in brand-rehabilitation mode, could not exist in the present state. “It means jobs during construction and it means improving the gateway to the region,” Mr. Morr said. “It’s the first impression and enhancer.”
Waste & Storm Water Management Upgrading the waste water and sewer management systems has similarly been a primary focus. The Philadelphia Water department oversees 3,000 miles of sewers and 79,000 storm water inlets over a 130-square mile area. Philadelphia boasted being of one
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of the first cities to boast of what was then modern technology for disposing of excess water and then purifying it for drinking use. The tangled web slowly expanded as the need arose from development to what is now a system that, in parts, is more than 200 years old. Under the current construction, 60 percent of the waste water is integrated into the same piping as storm water. As the city copes with roughly 42 inches of precipitation annually plus 2.22 million waste water customers, during times of excess, the result is that excess rain mixes into the waste and enters into the water untreated. Water treatment plants purify the water before it is drinkable. Still, more modern and sophisticated approaches emerged in recent years as a way to treat runoff while also being environmentally friendly. Enter Green City, Green Waters, an initiative by the Philadelphia Water Department that not only more works effectively but supports ecosystem sustainability and furthers the city’s goal of creating a more attractive, familyconducive environment. Rather than a network of pipes hidden below the surface, this new plan generates infrastructure based on the reliability of Mother Nature. Creating a parks throughout the city allows the water to file into the ground and be absorbed while also creating valuable recreational space coveted by city dwellers. At a $2.4 billion over 25 year and signed into effect in April 2012 by Mayor Michael Nutter and Lisa Jackson of the Environmental Protection Agency, multiple parties outside of the city invested themselves into the project. It makes Philadelphia a “global model for cities embracing green storm water infrastructure,” according to the EPA web site. When Mayor Nutter assumed office in 2008, he proclaimed that Philadelphia would become the greenest city in the world. Under his guidance, multiple efforts seek to make that more than rhetoric. Similar to the Green City, Green Effort, a Green Streets program mirrors policies undertaken in Portland, Seattle and Chicago reduces water runoff in impervious streets by retrofitting trees, grasses and other shrubbery when performing roadwork. Thirty-two blocks have incorporated this program while another 217 are either in design or construction but will be finished by the end of the year, said the EPA. In 2008, Mayor Nutter established the
It’s not all bad
Walkable Philly WalkScore.com ranked the 2,861 largest cities in North America. The average score was 43; Philadelphia earned a 74.1. The top cities: 1. Cambridge, Mass. 2. New York 3. Jersey City 4. San Francisco 5. Berkeley, Calif. 6. Boston, Mass. 7. Vancouver 8. Paterson, NJ 9. Chicago 10. Philadelphia 11. Newark, NJ 12. Seattle 13. Burbank, Calif. 14. Washington, D.C. 15. Providence
PHOTO BY J. FUSCO FOR GPTMC
Office of Sustainability, which devised the Greenworks program with 150 initiatives with various target execution dates by 2015. Eighty-nine percent are underway or completed, including the Green City, Green Waters, Green Streets and SEPTAinable programs, which too seeks to reduce water runoff at SEPTA facilities. As reported in the April 4 issue of Region’s Business, the growth of the Navy Yard has been used as an example for the world in how to construct a modern, intelligent community. A communications-based infrastructure allows for a smart electrical grid and more-efficiently used utilities. The blend of past construction improvements with facilities with state-of-the-art technology fostered an environment where creative approaches could be adapted for modern problems. The relative youth of the area – the PIDC assumed control of much of the Navy Yard less than 20 years ago – has allowed it to move forward at a steady rate.
In February, at the same time that the PIDC held a celebration for surpassing the 10,000 employee milestone, the 2013 plan was released, an update from the initial master plan revealed less than a year ago. What was the Corporate Center was split into the Canal Zone and Mustin Park. The Canal Zone appropriately received its name from the series of canals adjacent to the Delaware River that serve to manage storm water. Mustin Park uses open green space to manage precipitation. The plan also establishes the incorporation of a Buffer zone consisting of grasses, shrubs and trees to provide a physical barrier between the corporate area and industrialized port. “You create a case for how infrastructure has a return on investment,” Mr. Agate said. “This is not just about hard improvements but equally the soft improvements like bike lanes and pedestrian access, creating a parks lifestyle.
Not everything needed to be gutted, overhauled, undone or covered with grass. Instead, old infrastructure serves new purposes. Philadelphia’s location along the Delaware and Schuylkill River made it an epicenter of commerce throughout the Mid-Atlantic. As such, when crude oil and petroleum navigated to the region way from foreign sources, refineries emerged to support the need and demand. Faced with paying a premium for this remote oil, Sunoco was hemorrhaging $1 million a day, according to Mr. Morr of Select Philadelphia. Much of the oil entered the city up the river from Africa, costing Sunoco an extra $25 per barrel. Logically, they wanted out. It did, sort of, going to Washington, D.C.-based Carlisle group where the two would form a joint venture. The Carlisle group committed $200 million and Sunoco contributed existing assets. Rebranded as Philadelphia Energy Solutions, the new company restructured existing agreements with organized labor and worked an arrangement to obtain oil from North Dakota and other parts of the country via train, creating more competitive pricing. Marcus Hook’s chemical building was bought by Braskem last July while Sunoco retained the rest of the refinery. The Conoco Phillips facility in Trainer was sold to Monroe Energy, a subsidiary of Delta Airlines. Here, the aviation company can vertically integrate its supply chain by producing up to 250,000 gallons daily, said Morr. Had these facilities shut down, the local economy would have suffered a devastating blow with the numbers of those effected through direct and indirect employment numbering in the thousands, said Mr. Morr of Select Philadelphia. “The biggest development in this part of the country was that we didn’t lose 36,000 jobs,” Mr. Morr said. Changes to the economic conditions brought about this investment. Marcellus Shale natural gas also provided new opportunities to generate an energyrelated infrastructure. It also signified perceived opportunities executed into reality. “These people invested in these buildings because they want to make money,” Mr. Morr said. Chris Weeden is a freelancer writer based in Wilmington, Del.
18 APRIL 2013
FINE ESTATES PREVIEW
Stunning Rooms, Views in Center City Condo Come see the ultimate stylish Center City condo, two-car parking included. This light-filled penthouse is actually three units combined, offering space, comfort and luxury all around. There is bamboo flooring throughout, floorto-ceiling windows and three balconies, offering breathtaking views of the city. The large living and dining areas give the unit an open feel and showcase the kitchen, which features top-of-the-line cabinetry, an oversized island and stainless steel appliances. Off the kitchen there is a lovely family room, and be sure to take a moment to admire the office and study with built-in shelving, gorgeous wine room and full-sized laundry room. The two bedrooms and full bath are a treat, and the master bedroom is stunning, including a wet bar and immense walk-in closet. The spa-like master bath includes marble to the ceiling, a jacuzzi tub, a dual vanity and electronically controlled showerhead and body spray system. Enjoy comforts such as a fitness center, indoor pool, sun deck and 24-hour doorstaff.
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CHERRY HILL/VOKEN TRACT Gorgeous brick home with 5BR, 5 full baths & 2 powder rooms. Joanne Hudson designed kitchen w/prof appliances, 2 granite islands & Breakfast area. 1st Floor Master Suite & Master Bath w/radiant heat floors. FR w/custom wet bar & passthru FP to 2nd TV room. 1st Floor Study w/built-ins. Finished, walk-out lower level w/Media Room, Family Room, 5th BR w/full bath. Stone & HW floors. 5 zone heat/AC, 3 car heated gar. ...Realistically priced at $1,800,000
CHERRY HILL/CHANTICLEER Beautiful Penthouse Condo w/23BR, 2 full baths & 1 car attached gar. Living Room w/ gas FP, recessed lights & sliders to private deck. Dining Room w/cathedral ceiling & 2 skylights. Eat-in kitchen w/ newer appliances, 2 pantries. Master Suite w/large walk in closet, cathedral ceiling recessed lighting & private deck. Updated Master bath. Security & intercom systems. Newer HVAC. …..Realistically priced at $269,900
WOODSTOWN Magnificent Country Estate. 5 BR, 4.5 baths, 3 entry RV door det garage on sprawling 35+ acres w/pond. Western red cedar, mahogany & Italian tile thru-out. Gourmet Kitchen, Sunken LR w/ custom built-ins & wood burning FP. Custom Bar area. FR w/ wood burning FP & Palladium windows. Fin Lower Level w/ full bath, Gym, Entertaining area & Office. 3 zone geothermal heat/AC, sprinkler & sec. systems. Close to Rte. 55 & 295. ….Realistically priced at $1,199,000 Also for rent $6,500/month
VOORHEES/STURBRIDGE LAKES Expansive 4 BR, 5 Full bath home w/3 car gar on a private cul-de-sac on Sturbridge Lake. Views of the lake from almost every room. Gourmet kitchen w/commercial appliances. Family Room w/ stone gas FP & French doors to deck. Unique indoor spa room w/spa pool, sauna, full bath & entertainment area. Finished, walkout lower level to patio & lake. ….Realistically priced at $795,000
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18 APRIL 2013
Kermit’s Bake Shoppe Leads Retail Revolution
BY MICHAEL BURLANDO The soon-to-open Kermit’s Bake Shoppe at 22nd Street and Washington Avenue is just the latest sign that a change is coming to the west end of the thoroughfare. The combo pizzeria and bakery from Adam Ritter of Sidecar and Kraftwork fame should be spinning pizzas and frosting cakes for take-out and delivery by the end of April. With former Next Great Baker contestant Chad Durkin manning the bakery ovens, Kermit’s will bring a much needed bakery to the southwest corner of Graduate Hospital. In the longer term, Mr. Ritter hopes to also use the large commercial kitchen at Kermit’s as a production commissary for his other restaurants, allowing them to more efficiently scratch-make all of their breads, desserts, and soups. Behind the new facade with a custom sign from local sign painter Gibbs Connors, customers will be greeted by bakery cases displaying sweet treats and pizza by the slice, along with a great view of the expansive commercial kitchen. Mr. Ritter hopes to generate a “Wonka-esque” atmosphere for customers who will get glimpses of bakers frosting cakes and spinning pizzas. On the delivery side, Mr. Ritter sees his delivery people as the perfect vehicle to advertise, and has gotten them the perfect vehicle for doing so: a fleet of six custom Worksman delivery bikes. Kermit’s will take over a renovated space formerly occupied by Pier 22 Seafood. This legacy was a major influence in Mr. Ritter’s decision to locate on Washington. The ability to open the new restaurant in a location without imme-
diate residential neighbors allowed the ownership to avoid a fight in a neighborhood that’s been marred by some ugly NIMBY-driven zoning battles. Washington Avenue’s commercial and industrial past, along with an absence of residential uses, make it ideally positioned to become a new retail corridor serving the established Graduate Hospital and burgeoning Point Breeze neighborhoods. Others have seen this advantage of being close, but not too close, to the booming neighborhoods. NextFab recently relocated its sophisticated membership-driven digital fabrication shop from West Philly to a huge renovated warehouse on the 2000 block of Washington. With it came a second location for Fairmount’s popular Cafe L’Aube, Cantine L’Aube, which fronts NextFab’s new location and adds some life to its street presence. Also looking to cater to residents is Shop & Save Beverage, a long-established wholesale beverage warehouse adjacent to Kermit’s that is currently working to get its retail distributorship license. Mr. Ritter sees a not too distant future when the corner of 22nd & Washington is busy with people picking up a pizza, cake and a case of beer on their way to a party, while fast-pedaling delivery drivers dispatch hot pizza all over town. For a corridor that can be desolate after business hours, it’s a big change. But with so much demand nearby and a surfeit of existing commercial spaces, it’s easy to see this vision becoming a reality. This article was originally published on the Philadelphia Real Estate Blog at PhiladelphiaRealEstate.com.
18 APRIL 2013
What is the elevator pitch for Philly Tech Week 2013? Philly Tech Week Presented by AT&T is an open calendar of events celebrating technology and innovation in the Philadelphia region.
What are some of this year’s highlights? Pong on the Cira Centre — which will be the world’s largest video game; FCC Commissioner Mignon Clyburn giving a keynote at the Free Library; our Navy Yard Day Friday, April 26, which features the week’s biggest Entrepreneurship/Investment event, a Mobile/eCommerce event and our big Signature Event closing party at Urban Outfitters HQ.
Were you able to test the Pong game on the Cira Centre? What was that like? It was hard to comprehend. It felt like the screen was just out of reach, not that I was controlling a video game on a skyscraper from a halfmile away.
The co-founder of Technically Philly and lead organizer of Philly Tech Week is on the verge of his busiest — but most rewarding — time of the year
How do you describe the city’s tech community to outsiders? Philadelphia’s biggest technologists and entrepreneurs aren’t here because it’s good for their career; they’re here because it’s good for their life, so the community here is more civic minded than most. What is Philadelphia’s best-kept tech secret? The flourishing network of coworking, accelerator and incubation spaces that are building the density of innovation that continues to retain talent. What’s your next project? We’re expanding to Brooklyn this summer and will begin work on September’s second annual Baltimore Innovation Week. Photo by Terrence Casey
18 APRIL 2013
Focus First On Framing, Not Solving, the Problem T
Natalie W. Nixon, Ph.D., is director of the Strategic Design MBA at Philadelphia University. Learn more at philau.edu/ strategicdesignmba.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
he real added-value in business today is in problemframing; not in problemsolving. Knowing how to ask the right question from the outset is critical. Problem solving has, in many ways, become a commodity activity. Problem framing is at the root of the more creative insight which leads to innovation. Daniel Pink made this similar point when he spoke last month at an Arts and Business Council event at World Café Live, while explaining the salient messages from his newest book To Sell Is Human. So many businesses plunge ahead, merrily continuing to sell products and services that they assume still resonate with their end user in a meaningful way. In fact, often the end user has adapted the product or service to better align with their real © MRGREEN needs- not the perceived needs that are part of the company’s early stage product or services launch. I’ll give you two examples, the first shared by a Proctor & Gamble associate. Proctor and Gamble conducted a focus group asking customers around the table about a laundry detergent. Everyone around the table sang the detergent’s praises, and said that the detergent was great, that they loved it, and there were no problems with it. One P&G associate asked if someone in the group would be willing to let her observe them at home doing their laundry. When the P&G associate visited the customer in their home, in the intimacy of their laundry space, what they discovered was a bit astonishing. The customer had tied a piece of string with a paper clip attached to the end, and used the contraption to nudge open the metal tab on the box of detergent. The user had adapted the design of the box to suit her needs. Now although this example is about a product, the lessons from it can be applied to services, experiences and processes. The main lesson is that your customer does not always know how to articulate the latent need. The second example comes from Harold
Problem framing is at the root of the more creative insight which leads to innovation.
Hambrose, CEO of Electronic Ink here in Philly. Harold recently was on the Philadelphia University campus speaking to students about what he calls “the human truth”- that which lies between the abstract business process and the technology solution. Highlights from his talk only reinforced this notion that framing the problem is just as, if not more, important than the problem solving process. He gave an example of working with a client, a call center in India, where the outcome of deep and systematic observation was a technological solution that helped to redesign how employees worked. The call center employees were redirected to engage in open-sourcing, by posting and commenting on one another’s ideas to troubleshoot kinks in the system. Electronic Ink redirected work flow processes, so that employees essentially showed up to a gaming environment every day. The lesson here is that your internal front line team, often has the solution to your service delivery problems and there are ways to get their buy-in to ask new questions, and therefore frame new problems. The Electronic Ink and Proctor & Gamble stories both point out that what starts out
as a pain point can be converted into a gain point. These examples also reiterate what Henry Ford said almost 100 years ago: If I had asked my customer what they wanted, they would have said a faster horse- not a hunk of metal that is mechanized, motorized and propels through space on four wheels. Sometimes your user can’t articulate the need. Thus, we’ve got to find ways to get beyond the SWOT analysis, and beyond the focus group, to get to the next big idea- and to gain insight on what’s already been developed. More user centered, qualitative research methods as found in design thinking have to be used in tandem with more linear, analytical processes. Design thinking applies the problem solving process that designers usevariations of observation, ideation, prototyping, testing the prototype, and then reiterating- and applies it to marketing strategies, financial operations, service delivery and management. Design thinking, a user centered problem framing and problem solving methodology, is scalable (it can be applied in a week’s time and in a year’s time) and it can be expanded in terms of scope (to products and to services). So how do you ask the better questions, and frame the better problem, to begin to hone in on interesting opportunities? In other words, how do you turn pain points into gain points? An integrative approach is key. In the Strategic Design MBA at Philadelphia University, we like to say that we teach you how to integrate the analytical intelligence of business with the creative intelligence of design to get to the innovative insight. This isn’t an MBA for designers although design is in the name, our first cohort has people from a range of backgrounds and sectors including product management, textile marketing, industrial design, insurance, social work and engineering. Short of enrolling in our program, start with having empathy for your user! Begin to simply ask, and not assume, if what you are making & selling is solving the problem you think it is solving.
18 APRIL 2013
Infrastructure Key to Fulfilling Promises of Economic Growth
here are many exciting things afoot in the Philadelphia region and many intriguing possibilities. The region continues to build its reputation as a center for business innovation as entrepreneurs find opportunities to establish new businesses or expand existing ones. Once-forgotten areas like The Philadelphia Naval Yard are experiencing a rebirth, as grand ideas lead to investment, which leads to redevelopment and jobs. Tourists are experiencing the area in record numbers, coming not just for the tried and true historical sites, but also a worldclass arts scene, vibrant nightlife and stellar restaurants. Conventions and business meetings are happening at increased numbers for the same reasons. All of the excitement has reversed a decades-long decrease in the city’s population. Yet, essential to all of this growth and, maybe more importantly, continuing and increasing the pace of this growth, is something that, quite frankly, is not all that exciting to talk about: Infrastructure. Efforts, both private and public, to create jobs and improve the business environment are all welcome, and often require sophisticated and complex negotiations. In the end, though, infrastructure will always play a part, and the city and surrounding suburban counties must come to grips with some significant challenges.
Transportation is a major challenge. As the overall economy improves and more jobs are created, it only stands to reason that more people will need to get to work. If the region’s major arteries are clogged with unemployment near 8 percent, traffic will only get uglier when that number drops. The roads are, in general, in poor repair and despite major construction projects on both I-95 and the Pennsylvania Turnpike, that will require a great deal of investment - and patience - to change. Likewise, major improvements are afoot at SEPTA, which recently completed its acquisition of new Silverliner cars and is making headway on an automated fare system. Despite those upgrades, the core of the system has not been changed much since the early 1980s. The list goes on and on from freight rail service to the outdated electrical grid to the demand for faster internet speeds operating on larger “pipelines.” As the captains of industry work with elected officials to continue to spur the economy, it will be increasingly important to undertake the not-so-exciting task of rethinking the region’s infrastructure and investing some of the limited resources into maintenance and upgrading. Without addressing those issues, economic growth will come to a standstill, much like any major area road during rush hour.
COMMENTARY FROM ACROSS THE WEB
Lack of Economic Freedom Costing Pennsylvania Jobs [Early last week,] GE announced plans to move 950 jobs from Erie, Pa. to Texas. What is one of the key reasons Pennsylvania continues to lose jobs and population to states like Texas? Economic freedom. The Mercatus Center’s latest edition of Freedom in the 50 States underlines the problem hindering the opportunities available to Pennsylvanians. The study ranks the Keystone State 31st overall on its freedom index. BOB DICK ON COMMONWEATLHFOUNDATION.ORG, 12 APRIL, 2013
Liquor Privatization Bill Riddled With Flaws [Gov. Tom] Corbett and the Republicans need to put down the bottle and either rectify their error of pushing a bill they think is good, or stop the political expediency of rushing a bill they know is bad but can deceivingly trumpet as a success purely for re-election purposes. Do liquor privatization right, or not at all. And you don’t have to be blitzed to know that. CHRIS FREIND, DELAWARE COUNTY TIMES, 15 APRIL, 2013
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EDITORIAL BOARD CEO and President James D. McDonald Editorial Director Karl Smith Associate Editor Terrence Casey
During her (very tired) Monday thing on NPR, Cokie [Roberts] said that [Sen. Marco] Rubio was on seven talk shows Sunday because he gets high ratings. I smell BS. 15 APRIL 2013
Corbett’s Tax Cuts Favor Large Corporations ... [U]nder the Corbett administration, corporations get tax cuts and real people don’t. For the third year straight, the governor’s budget proposes more tax cuts for corporations. All told, corporate taxes have already been cut by $800 million since Gov. Corbett took office. These corporate cuts tend to go to larger businesses, not small businesses that are a major driver of our economy. Many small businesses pay the state’s personal income tax, which has not been cut a penny since Gov. Corbett took office. KATHY JELLISON ON PENNLIVE.COM, 15 APRIL 2013
HOW TO CONTRIBUTE To contribute, send comments, letters and essays to firstname.lastname@example.org. 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.
18 APRIL 2013
BY THE NUMBERS
Average age of a Twitter user in 2012.
Number of tweets from the average Twitter user and the average user has 51 followers. Twitter surpassed 200 million active users in December of 2012 and there have been more than 165 billion tweets since it launched.
Average number of tweets sent per day in 2012.
Number of retweets of Barack Obama’s tweet “Four more years,” the most retweets ever.
The average number of people reached every time a consumer posts social content (Twitter, Facebook, etc.) to the internet.
Percent of Americans receiving a tax refund who plan to use the money for a shopping spree.
Percent of Americans receiving a tax refund who plan to use the money to buy a gadget like a tablet or smartphone.
Percentage of people who say word of mouth recommendations including social posts influenced car, technology or electronic product purchases.
Percent of Americans receiving a tax refund who plan to use the money to buy a car, make car payments or pay for vehicle repairs.
Average number of pieces of direct mail (some call it “junk mail”) received by each U.S. household every day.
Percent of Americans receiving a tax refund who plan to use the money for food & drink.
Percent of direct mail recipients who throw it into the trash without even looking at it.
Percent of Americans receiving a tax refund who plan to use the money to pay bills.
Average number of seconds direct mail recipients who do not throw it immediately into the trash spend with a piece of direct mail.
Percent of Americans receiving a tax refund who plan to put the money in savings accounts or other investments.
Amount spent on direct mail in the U.S. in 2010.
Number of heads of state that have an official Twitter account, including @BarrackObama, @Laura_Ch (Costa Rica’s Laura Chinchilla Miranda) and @David_Cameron (U.K.’s prime minister).
Percent of state and local government employees across the U.S. accounted for by teachers.
Percent of state and local government employees across the U.S. accounted for by public safety.
Average annual salary for a policeman or sheriff’s patrolman in 2011.
Average annual salary for a U.S. elementary school teacher in 2011.
Average annual salary for a Pennsylvania elementary school teacher in 2011.
Average annual salary for an elementary chool teacher in Lancaster in 2011, highest among all Pa. metropolitan areas.
SOURCE: IQ AGENCY & CRIMSON HEXAGON PHOTO © TISSIANA
PHOTO ANDREW MAGILL >
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