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DETROIT FILES FOR BANKRUPTCY; COULD PHILADELPHIA BE NEXT?

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REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

CORBETT’S STEEP ELECTION CLIMB History shows that Pennsylvania’s governors win second terms, but recent polls have some wondering if Corbett’s hat should be in the ring

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25 JULY 2013

REGIONSBUSINESS.COM

CONTENTS

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1519 Walnut  Street  

Corbett’s Steep 18 Election Climb 20

What If Corbett Doesn’t Run?

Area Hospitals Partner On Benefits Plan

4

Is Philadelphia The Next Detroit?

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27

Using Art To Show Energy Usage

26

Renters Moving In At Goldtex Building

REGION’S BUSINESS A JOURNAL OF BUSINESS & POLITICS

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NorthPoint Opens Center City Office

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Diary of a Startup: AutoAlpha Calls It Quits

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25 JULY 2013

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DEALBOOK MEDIA

Warren Buffet Buys Press Of Atlantic City BH Media, a Berkshire Hathaway company, announced Thursday, July 18, it will acquire the Press of Atlantic City from private holding company Abarta, of Pittsburgh. Mark Blum, a former controller for the Press, will return to the paper to take over publishing duties when the deal goes through in August. The paper is New Jersey’s sixth largest and is more than 110 years old. It covers a large portion of southeastern New Jersey. The terms of the sale were not disclosed.

Abington, Aria Health, Einstein Enter Into Collaborative Partnership Three healthcare networks — Abington Health, Aria Health and Einstein Healthcare Network — announced a partnership July 16 that will take national health care reform head on. The health systems will collaborate while remaining independent to jointly manage the health care benefit plans of the systems’ employees and their families, about 30,000 people. Longer term, the goal of the initiative is to establish a platform to improve care delivery throughout the community for individuals and families and improve the health of populations through highly coordinated and efficient care. Meanwhile, more and more private doctors in Pennsylvania are folding their practices into hospital systems, CBS reports. Cardiologist and President of the Pennsylvania Medical Society, Dr. Richard Schott, based in Delaware county, told CBS he ultimately made the decision to go with a hospital system. “There’s a very large disparity in payments between what physicians in private practice are reimbursed by Medicare and more glaringly in the private insurance market... compared to a physician who is employed where the billing is done by a hospital system.”

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REAL ESTATE Mack-Cali To Sell Real Estate In $233M Deal Mack-Cali Realty Corporation announced Thursday, July 18, that it agreed to form various joint ventures with a fund sponsored by Keystone Property Group to sell Mack-Cali’s 15 commercial properties and three land parcels located throughout the Philadelphia suburbs. The portfolio will be sold for approximately $233 million: $201 million in cash, a $10 million mortgage secured by One Plymouth Meeting, and subordinated interests in the portfolio with capital accounts aggregating $22 million.

DoubleTree Suites Sells For $31M Arden Group announced its purchase of the DoubleTree Suites in Plymouth Meeting for $31 million, Tuesday, July 16. Arden will be investing an additional $6 million in the hotel to renovate the guest rooms, public space and a new restaurant option.

PHA Auctions 189 Properties for $2M The Philadelphia Housing Authority sold 189 properties for just under $2.1 million at its third vacant property auction Tuesday, July 16. The auction was intended to unload some of PHA’s vacant property backlog and generate funds that PHA will put toward its operating budget.


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25 JULY 2013

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WEEKLY BRIEFING

GAMING

Revel Announces First Profitable Week, Layoffs

After Detroit’s Bankruptcy, Which City Will Be Next?

Parx Casino named Anthony Fa r a n c a as its new General Manager on Wednesday, July 17. Mr. Faranca, a Philadelphia native, joined the Greenwood Racing, Inc., —operators and owners of Parx — team in 2008 as Director of Operations and quickly progressed into the Assistant General Manager role.

Gaming Revenue in Pa. Flat Compared To Last Year Pennsylvania’s casinos pulled in $3.1 billion in revenue for the 2012-13 fiscal year, a figure essentially flat compared to the previous year, PennLive.com reports. Overall, revenue from table games at Pennsylvania casinos rose 7 percent over the previous fiscal year. However, gains in table games were mostly offset by lower slot machine revenue. Slots gambling accounts for the bulk of casino gaming money. Hollywood Casino at Penn National Race Course saw declines in both table games and slots. Seven of Pa.’s 11 casinos saw declines in table games revenue in 2012-13.

Manufacturing In Philadelphia On The Rise Manufacturing activity in the Philadelphia region grew in July at the fastest pace in more than two years, the Associated Press reports.

Revel casino announced Monday, July 15, that it had its first profitable week since opening more than a year ago. In the same statement, interim CEO Scott Kreeger said the company was laying off 75 employees. “The Revel organizational structure was established to support a level of revenues that have not been achieved over the 15 months of operation,” Mr. Kreeger said. Revel lost $150 million in its first year.

Parx Casino Names General Manager

JOBS

This suggests that factories may help support economic growth in the second half of the year.

Midtown Detroit: The city of Detroit filed for bankruptcy on Thursday, July 18. The city is in debt for about $!8 billion. FLICKR.COM/ANNMILLSPAUGH

After Detroit emergency manager Kevyn Orr sought to subordinate the city’s debts to the welfare of its residents via bankruptcy, the question on the horizon is: Who’s next? The Wall Street Journal recently analyzed the effects of Detroit’s bankruptcy on other cities. It will set a precedent for cities, like Detroit, that are feeling the heat with pensions and towering debt. And Philadelphia is on the list. Philadelphia is now forced to make balloon payments to prevent retirement funds from vanishing, while the city is spending about 20% of its budget on pensions to make up for years of short-changing the system, the Wall Street Journal reports. In 1999, it issued $1.3 billion in bonds to

TOURISM

Interim President Promoted At AfricanAmerican Museum The African American Museum in Philadelphia announced Thursday, July 18, that it has promoted its interim president, the Philadelphia Business Journal reports. Patricia Wilson Aden will now serve as the president and CEO of the museum. Ms. Aden had been interim president since the former president, Romona Riscoe Benson, left the museum to become PECO’s manager of corporate relations in December.

invest in the pension fund, but it has paid more in interest than it has earned on its pension investments. Philadelphia has also recently raised sales, property and business taxes. The city council is now discussing using revenues from a one-percentage-point sales tax hike in 2009 intended for schools to finance pensions. The sales tax is also now 8% — the limit under Pennsylvania law. Other cities cited as potential bankruptcy victims are Oakland — “Detroit’s doppelganger on the West Coast” the report says — and Chicago. Detroit’s smaller suburb, Hamtramck, is also at risk, as are smaller cities in general, due to their lower borrowing limits.

The Federal Reserve Bank of Philadelphia says its index of regional manufacturing activity jumped to 19.8 in July, up from 12.5 in June and the highest since March 2011. A gauge of hiring jumped into positive territory for the first time in four months and shipments increased. Orders also rose, though at a slower pace than June. This rise follows an increase in manufacturing in the New York region reported by the New York Fed.

Venture Capital Continues Success In Q2 A MoneyTree report released Friday, July 19, shows that area companies are on track to receive more venture capital this year than any year since 2008. Venture capitalists invested $142.6 million in 29 deals involving companies in the Philadelphia Metro Area in the second quarter, according to the report. The deal and dollar totals for the first half of 2013 comes to 62 and $286.3 million, respectively, according to the report.


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18 JULY, 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

TECH

Bill McDermott To Be Sole SAP CEO

Chilean Energy Companies Express Interest In Marcellus Shale Gas

Moody’s Downgrades Temple University Health System Moody’s Investors Service announced Tuesday, July 16, that it was downgrading Temple University Health System’s $525 million debt held from Ba1 to Ba2, with a negative outlook. This means that Temple Health will see its lending costs rise, and may have to cut spending. CHOP has an Aa2 bond rating, Penn Health is rated Aa3, and Thomas Jefferson is rated A1. Temple Health said it did not agree with the rating.

Biomed Pharma Names New CEO Biomed Pharmaceuticals, of Sharon Hill, named Gaston L. Bernstein as Chief Executive Officer July 16. Mr. Bernstein was also elected to Biomed’s board of directors. Most recently, Mr. Bernstein spent seven years at Coram Specialty Infusion Services, the pharmacy division of Apria Healthcare, a $2.3 billion home healthcare company. At Coram Specialty, Mr. Bernstein was the Corporate Vice President of Industry Relations, responsible for business development and relationships with pharmaceutical manufacturers.

SEPTA Sets Record For Regional Rail SEPTA announced Monday, July 22, that it had set a new ridership record with rides on its Regional Rail during the 2013 fiscal year:

Newtown Square-based Bill McDermott will become the sole chief executive officer of SAP A.G., the Inquirer reports. Jim Hagemann Snabe, who had shared the top post with McDermott since 2010, asked to step down by next May’s shareholders meeting so he can spend more time with his family in Denmark, he told investors and reporters in a conference call Monday. HEALTH CARE

NUMBERS

36M

Trips taken on SEPTA’s Regional Rail from July 1, 2012 to June 30, 2013

Chilean energy executives are interested in Pennsylvania’s Marcellus Shale natural gas and recently spent three days on a trade visit to Pennsylvania. FLICKR.COM/LJSTEINCO

On a three-day trade visit to Pennsylvania, Chilean officials said they were very much interested in Marcellus Shale gas and importing it to Chile, State Impact reports. Bernardo Larrain, chairman of Colbun, a Chilean energy company, said demand for energy in Chile is growing five to six percent a year, and will continue at that rate for the next 20 years. “And that’s why we’re here,” Mr. Larrain told StateImpact. “Pennsylvania produces a lot of natural gas, shale gas. And Chile has a big installed capacity with plants that operate with natural gas. So I think there’s a good potential for association with the state of Pennsylvania.” Following a ribbon-cutting ceremony

near the site of Chile’s new consulate in Philadelphia, Gov. Tom Corbett told a crowd of energy executives from both the U.S. and Chile that he’s all for exporting the state’s natural gas to the developing nation. “As Chile’s manufacturing sector grows, she is clearly going to need energy,” said Gov. Corbett. “Well we have a little bit of it here in Pennsylvania, we have it in abundance and we’re blessed by that.” Establishing exports to Chile could be easier than sending gas abroad to large consumers like India and Japan because the U.S. has a free trade agreement with Chile, according to State Impact. Gov. Corbett recently visited Chile for a trade trip in April of this year.

EDUCATION

CCP Announces New Interim President

PSU To Spend $60M On Claim Settlements

Dr. Judith Gay, vice president of academic affairs at the Community College of Philadelphia, was named its interim president on Thursday, July 18, the Philadelphia Tribune reported. A national search will continue for a permanent hire. She will take on her new responsibilities September 6. Ms. Gay arrived at CCP in 2000 and was instrumental in bringing the Goldman Sachs 10,000 Small Businesses program, providing business education, technical support and access to capital for small business.

Penn State’s board of trustees has authorized the university to spend about $60 million to settle almost 30 outstanding claims by victims in the Jerry Sandusky child sexual abuse case, the New York Times reports. The settlements, which will number about 25, vary in size and could be completed within the next month, the sources say. A spokesman for Penn State said the university “does not comment or confirm information on settlements.” The settlements will come a year after Mr. Sandusky was found guilty in June 2012.

337.3M

SEPTA trips taken systemwide, including buses, trains and trolleys

1M

Average weekday ridership

Airport Adding 300 Jobs The Philadelphia International Airport will be adding 300 jobs, the Inquirer reports. Opening in October, the terminal will feature retail shops, a food court, newsstands, bars and sitdown restaurants. Cashiers, cooks, bakers, supervisors, sales associates, retail managers and other similar jobs will be available, the Inquirer reports.

ARAMARK Plans For Layoffs ARAMARK announced it will lay off 300 positions as part of a restructuring operation. The jobs will be sent to Nashville, Tennessee, where the company is making a $20 million investment. At least 500 other Aramark employees around the country will also be laid off.


25 JULY, 2013

REGIONSBUSINESS.COM

WEEKLY BREIFING EXECUTIVE BOOKSHELF

WHO TO FOLLOW

@PhillyMFA PhillyMFA When you work in Philadelphia, sometimes the quickest, tastiest lunch options are through food trucks. The Philly Mobie Food Association tweets out locations and schedules for the city’s food trucks. RT @PhillyMFA:: Where are the food trucks today? Let us know by tweeting #pmfalocation RT @PhillyMFA: @ThePiazza Make Music Philly. Lots of great local music and food trucks until 8 tonight!

Accountability Citizenship Are Americans voting less in presidential and general elections? Stephen P. Tryon, Army veteran and former political insider, thinks so and has the data to back him up. His book Accountability Citizenship examines voter apathy from a nonpartisan perspective and presents a toolkit to empower individuals to participate in the political process. One Amazon reviewer writes, “Not only does Mr. Tryon cause us to rethink our responsibility in the voting process, but he makes interesting observations about Congress and gridlock.”

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Montco’s Edibles Gets Makeover On Food Network This past weekend saw Food Network’s Restaurant Impossible visit Edibles, a bar and restaurant in Horsham. It was discovered in the show that, not only was the restauarant losing $4,000 a month, but there should have been $600,000 in the bank, according to its P&L’s, that wasn’t there. Though the answer to that problem was never solved, the show’s host, restauarant interventionist Robert Irvine, revamped the menu, staff and changed the name to Hurley’s American Grille. The episode will air again Saturday.


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18 JULY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Corbett Kept Promises, Provided Leadership

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.

It’s late July and Harrisburg looks more like a ghost town every day. If you want to have a meeting of legislators right now you’ll probably have better luck on Long Beach Island. With the legislature out of session for the summer, the folks in the capitol press corps who are not vacationing themselves have to search for things to write about. These are classic “slow news days.” So it’s not surprising that the relatively innocuous departure of a key staff person and a cabinet secretary sets in motion a whirlwind of speculation. The ‘what ifs” are reminiscent of Joe Pesci’s great line in Oliver Stone’s “JFK.” ...”it’s a mystery in a riddle inside an enigma.” Chris Carusone, the Secretary of Legislative Affairs departing the administration was a poorly kept secret. A very able and competent lawyer with a keen understanding of the inner workings of state government, his decision to pursue private sector opportunities that better provided for his family was made weeks before. Hardly startling since this is the time at which people in any administration seeking other opportunities choose to go. Steve Aichele, who was the chief of staff is an accomplished lawyer and former head of one of the state’s largest and most prestigious law firms. He and his wife Carole, the Secretary of the Commonwealth, were one of Harrisburg’s true “power couples.” Again, not a great shock that he chose to go before the 2014 campaign kicked into high gear. Yet their departures came amidst a flurry of stories about a “huge shakeup” in the administration. Quoting almost exclusively anonymous sources the stories ran the gamut. They focused on alleged political dissatisfaction from some “leadership” of the Republican Party. They went so far as to speculate about whether or not Governor Corbett would even seek re-election (some unnamed “insiders” suggested there was pressure on him to not run) and who might be the GOP standardbearer if that were the case. All of this is pretty harmless stuff. Most of the media prefers to focus on the process of politics and government rather than policy. It’s more interesting and sells more newspapers and television advertising. The “horserace” of politics is always going to be on the front page. The parlor game of “what if ” makes a good story, especially when there’s not much else going on. And people love polls so polls make better copy than

performance evaluations. But amidst all the “if ’s” is my dad’s favorite expression: “IF I had wheels I’d be a bus.” All of the speculation omits one fact: Until Tom Corbett says he’s not running for re-election this is nothing more than conjecture. The reality is that, although he has made no formal announcement, his political team insists that he’s running and they are doing all the things that should be done in preparation for a race. They’re gearing up to tell the governor’s story. And this governor has a great story to tell. The smoke of fires stoked by others has sometimes obscured a solid record. Governor Corbett has kept his promises. He’s passed budgets on time (something his predecessor never managed to do) and without raising taxes. He’s put the Commonwealth on sound financial footing and tackled issues not previously addressed. He’s built a platform for prosperity in Pennsylvania that will benefit Pennsylvania for generations to come. On the issue most Pennsylvanians care about — jobs — Governor Corbett created more than 130,000 new ones, the second highest in the nation. He enacted common sense reforms to the state’s “joint and several liability” rules that protect job creators from

unreasonable legal liability. He eliminated the death tax on family farms and small businesses and pushed forward the phase out of the business onerous capital stock and franchise tax. Governor Corbett provided leadership, good stewardship and a common sense approach to making Pennsylvania not only energy independent but an energy exporter. He saved three refineries and thousands of jobs that they support. He worked to build the first ethane processing plant in this part of the country--a four billion dollar project expected to create 10,000 new jobs. And he developed the most comprehensive drilling safety regulations in the nation while simultaneously generating half a billion dollars in revenue for communities that have drilling. Governor Corbett also worked tirelessly to expand the Port of Philadelphia to accommodate larger ships, opening the nation’s oldest safewater port to new trade and more jobs. As summer turns to fall and attention begins to drift back home this story will get told in new and meaningful ways. It will be the centerpiece of the coming re-election campaign, still more than a year away. It should put the spotlight back where it belongs — on reality ranch.


25 JULY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

11

Proposal Could Hamper Appeal of Labor Arbitration Awards

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.

On Monday, July 22, elected officials and union representatives announced a proposal to amend the Philadelphia Home Rule Charter to require a two-thirds vote from City Council in order for the mayor to challenge a labor arbitration award. The announcement was made at a press conference in the Philadelphia Local 22 Firefighters’ Union headquarters. The location is appropriate, because the measure is specifically targeted to halt Philadelphia Mayor Michael Nutter’s continuous appeals of a 2010 arbitration award to the Firefighters’ Local 22. Mayor Nutter continues to challenge the award on the basis that Philadelphia simply cannot afford it. Nutter’s Administration has priced the award in the neighborhood of $200 million, a burden he cannot find space for in Philadelphia’s already tight budget. The union contends that the price of the award may be much lower, and likely under $100 million. The result of the appeals has been that Philadelphia firefighters have worked without a contract for the last three years. Furthermore, they have not had a raise since 2009, and uncertainty looms regarding their pen-

PERHAPS ENOUGH IS ENOUGH REGARDING THE APPEALS OF [LOCAL 22’S] AWARD.’ sion and benefit arrangements. These issues with the appeal of arbitration award were all covered during the press conference Monday, complete with particular vitriol for Mayor Nutter. U.S. Representative Bob Brady called the situation “embarrassing” and decried the general labor situation in Philadelphia. Philadelphia Councilmen Bobby Henon, Mark Squilla, and Jim Kenney have all gone on record with comments supporting the proposal. Councilman Squilla has intimated that the proposal may garner unanimous support in Council chambers. Councilman Jim Kenney will formally introduce the proposal in the fall. In the meantime, union representatives will be looking to gather at least 20,000 signatures on a

petition supporting the proposal. Given Council’s apparent support, the success of the proposal would all but incapacitate the mayor’s ability to continue appealing the firefighters’ award, or initially appeal any awards in the future. Mayor Nutter has already appealed the firefighters’ award three times, and union leaders estimate the appeals have cost taxpayers $1 million. City Controller Alan Butkovitz, who reportedly conceived the idea for the proposal, points to this spending and delay as a sign of disrespect for the arbitration awards won before the panels, which are supposed to be binding on the City. The Nutter Administration has already stated it does not support the proposal. Tempers are high given the situation with the Firefighters’ Local 22, and perhaps enough is enough regarding the appeals of their award. However, this proposal would be a substantial change to the labor negotiation process between City Hall and local unions, which is an argument the Administration will certainly present before Council in the fall.


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25 JULY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Judges Partially Shut Loophole For State-Related Schools HARRISBURG — A Pennsylvania court may have done what the state lawmakers can’t — or won’t — do. A Commonwealth Court ruling issued last week might finally require Pennsylvania’s four state-related universities to answer right-toknow requests filed under the state’s Open Records Law, at least in some circumstances. Currently, the law applies to virtually all taxpayer-funded entities in the state, with the Eric Boehm is bureau notable exception of those four institutions of chief for PA Independent, higher learning. a project of the Franklin And after two years of inaction on the part of Center for Government and state lawmakers — despite numerous promPublic Integrity ises to finally close the universities’ right-toknow loophole —the court ruling is a welcome sign for transparency advocates. Here’s the deal: Penn State University, University of Pittsburgh, Temple University CONTRIBUTE and Lincoln University get about $500 million Send comments, letters from the state’s taxpayers each year — an and essays to feedback@ amount that accounts for between 5 percent regionsbusiness.com. and 15 percent of each school’s operating Opinions expressed by guest budget. writers do not necessarily The schools argue that they are mostlyreflect those of Region’s private and therefore should not fall under Business. the Open Records Act. The key part of that

is “mostly private,” because the schools have no problems with coming to Harrisburg each spring to request more tax dollars to pad their bottom lines. After the Jerry Sandusky child sex abuse scandal at Penn State, it looked like lawmakers would finally have a compelling reason to force the schools to comply with the Open Records Law — or the spine to cut them off from state funding if the schools continued to fight those disclosures. A cynic might suggest that the state universities get more money without more transparency because of certain political arrangements. State Sen. Jake Corman, R-Centre, chairman of the powerful Senate Appropriations Committee, just so happens to represent Penn State and the rest of “Happy Valley.” Meanwhile, Senate Majority Leader Dominic Pileggi, R-Chester, has Lincoln University in his backyard. But regardless of the reason, lawmakers have been excruciatingly slow to move forward with legislation that shuts the open records loophole. Thankfully, a lawsuit might get the job done for them.

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In Ryan Bagwell v. Department of Education, a trio of state judges ruled that — at least in some situations — the Office of Open Records has jurisdiction over records from the four state-related schools. Mr. Bagwell, a Penn State alumnus, sought information on the Jerry Sandusky investigation, including letters, emails, reports and memos sent to then-Secretary of Education Ron Tomalis in association with his role as an ex-officio member of the Penn State Board of Trustees in June and July 2012. Though he was initially blocked, he appealed the decision and the court decided that the loophole in the Open Records law applies only to salaries and financial information at the four universities —not to communications with other public officials. What does it all mean? That still needs to be sorted out by the state Office of Open Records. Director Terry Mutchler said this week she views the ruling as a victory for transparency and welcomes the chance to have her lawyers review the case. She also predicted the ruling would have a “domino effect” on similar cases. One can certainly hope.


25 JULY 2013

2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

13

Enterprise Software Firm NorthPoint Launches New Office In One Liberty HEALTHCARE IS A DYNAMIC INDUSTRY RIGHT NOW, AND THERE IS A LOT OF NEED WITHIN THAT SPACE TO HAVE GOOD DIGITAL STRATEGIES AND TO BE ABLE TO EXECUTE ON THE WEB, MOBILE AND WITH APPS.’ — DEBRA LOGGIA

BY CHRISTOPHER WINK

N

orthPoint, the New York-based enterprise software company that specializes in the financial and digital sector, opened a Center City office last month in One Liberty. To start, the office, which is the company’s third after Boston, will be a one-woman band. Debra Loggia will be running the expansion with her sales and healthcare background. As she told Technically Philly recently on a breezy afternoon in University City earlier this month, she was most recently leading digital marketing at Thomas Jefferson Hospital, where she also had done her masters work in health policy. That background may be one of her best assets for NorthPoint, which is widening its reach and

the pharma, life sciences, hospital and other medical businesses that dot this region are in strong alignment. “Healthcare is a dynamic industry right now and there is a lot of need within that space to have good digital strategies and to be able to execute on the web, mobile and with apps,” she wrote in a followup email. NorthPoint already now lists Einstein and Jefferson hospitals as clients and has done early work for the University of the Arts, Penn, CHOP and for the Digital On Ramps collaborative project for “anywhere, anytime learning.” NorthPoint currently has more than 140 employees, most in its Manhattan HQ and about a dozen in its year-old Boston office.

“Boston has grown to 12 employees, and I see no reason why we cannot meet or exceed those numbers in Philadelphia,” said the South Philly native. So why offices in Center City rather than some sprawling suburban business park that houses one of those pharma and enterprise businesses? The centrality, said Loggia, which has been a good city’s best value for hundreds of years, for not only a broader region of clients but also future hiring. “As a technology company we need to recruit the best and brightest talent,” she said. “That means we need to be in a central location so that we can recruit from the PA suburbs, the city, as well as New Jersey and Delaware.” This article was originally published by Technically Philly at Technical/ly/philly.

Steadily, but almost quietly, Philadelphia has become a hotspot for entrepreneurs. The combination of great ideas, available capital and a welcoming environment have set the stage to make 2013 a breakout year for innovation and new businesses. To Learn More ... For more information on sponsorship opportunities or to suggest story ideas, call our main office at 610-940-1656. The web: RegionsBusiness.com Facebook: Facebook.com/regionsbusiness Twitter: @RegionsBusiness Sponsored by


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2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

Referable Pushes Out DIY Startup AutoAlpha Marketing Tools, Lessons Ends Its Run After DIARY OF A STARTUP

Tough Decisions

Philly Chosen For Microsoft City Program Philadelphia is one of the 13 cities around the world that has been chosen for an urban innovation program run by Microsoft, according to a release.

David Wynne, co-founder of AutoAlpha, shares some surprising news as he wraps up his time as a “Diary” entrant In his own words: Sometimes, timing is everything. When we started AutoAlpha in December 2012, we felt the timing was just right — it was an auspicious point in our master’s program, because we had more than a full year of runway to race at full speed and immeasurable support and resources at our backs. We felt empowered and emboldened as we connected with prospective customers and validated the business model and opportunity. After locking in our first customer in May, we attended a showcase of other software players in the industry and saw demos of soon-to-bereleased updates from our competitors. We also began an important conversation: a dialogue with a different startup in California as a potential business partner. The dialogue quickly took an interesting turn when they suggested that we shut down and join their team, and during six weeks of conversations and meetings we discussed the opportunity. In the end, we were not able to come to an agreement, partly because they expected us to postpone or entirely stop our graduate program at Wharton and we weren’t prepared to leave. We parted on great terms and planned to continue our dialogue throughout the year. Back in Philadelphia, we took renewed stock of our standing in the market and realized that our timing has not been perfect after all: Our main competitor is poised to release an important update later this month and our new competitor is coming into the market hot. It turns out that we are a year (or two!) late to this fight and we can see that we will struggle to provide the clear value proposition and differentiation that we felt protected by just a few months earlier in our pitches. All told, we’ve decided to shut down AutoAlpha. Evan and I are excited to share that we’ve already joined a different early-stage startup for the rest of the summer and are helping to build the finance, operations and marketing organizations. The timing is, serendipitously, just right for us to jump in and create lasting value for this incredibly fast-growing company. We gained incredible insight and experience at AutoAlpha and look forward to the next idea that we can take and run with.

TECH

While the city will gain some pro bono IT support, it’s also a valuable way to keep Microsoft product in various departments, a method common among larger vendors.

Conor Logan (left) and Ryan Draving co-founded Referable, a service that provides marketing tools and lessons with a per-month subscription model. SUBMITTED

Business: Referable Founders: Conor Logan, Ryan Draving Contact: conor@referable.com

BY BRANDON BAKER As most modern marketing techniques begin to defy the “Mad Men” tactics of the ‘50s, costs for effectively advertising a small business have, to say the least, inflated. To address this problem, Ryan Draving and Conor Logan have created a brand-new, do-it-yourself marketing company that puts the decision-making process back in the hands of business owners. Referable is a subscription service that provides businesses with a bevy of Web-based training courses put together by 19 part-time-employed experts in specific avenues of marketing. The subscription is, Mr. Logan said, a per-month double-digit solution for what would otherwise be a triple- or four-digit expense with full-service agencies. “[Mr. Draving] was consulting for big clients like Comcast in regards

to SEO and paid search. And really, what happened was, he was doing consulting work on the side for small businesses, and charging them $150 an hour and giving them pretty much the exact same information every time to different business owners,” Mr. Logan said. “Eventually, he realized, ‘Hey, if I recorded this, and taught them how to do it themselves, then I’d reach thousands of small business owners and they wouldn’t have to break the bank for it.’” Mr. Logan said the subscription service will eventually include in-housecreated tools like their “Review Balance,” which sorts through positive and negative reviews of small businesses through Web platforms like Yelp and Google Plus. Beyond that, the service also includes analytics and a general heads-up on what’s becoming trendy in marketing. The polished version of the service launched July 4. As of now, the University City-based company employs six full-time employees, and is seeking funding of $150,000 to $500,000 to expand.

The program, dubbed Microsoft CityNext, aims to help cities use technology to thrive, whether it’s through STEM programs for students or an office in City Hall that helps government adopt new technologies. Philadelphia, the only North American city to be chosen for the program, will receive three years of Microsoft staff and technical support. As per the release, some preliminary ideas about Philadelphia projects with CityNext include: - Assisting the City to establish a ‘municipal innovation lab,’ - Proofing the City’s concept for the creation of an officeof-the-future to streamline service delivery and improve workforce productivity - Providing technical support for hackathons and developer camps - Awarding a software grant to a STEM (science, technology, engineering and mathematics) education nonprofit TECHNICALLY PHILLY


25 JULY 2013

2013: YEAR OF THE INNOVATOR

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15

Financial Reporting Framework Simplifies Financial Statements E

David A. Price, CPA Partner, Assurance Services, Philadelphia

Michael Brooder, CPA, CCIFP Partner –in-Charge, Hartford Marcum LLP www.marcumllp.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.

ntrepreneurs beginning new technology companies have many matters with which to concern themselves, including developing their products and bringing them to market, raising capital, and growing their companies. While accounting and financial reporting matters often are not priorities, lack of proper attention to accounting and financial reporting can impede the activities of young tech businesses. To succeed, a technology-based entrepreneur needs more than an innovative product. Often, the ramifications of poorly prepared or inaccurate financial statements are uncovered at the worst times, such as during due diligence by an investor or when a potential new customer requests to see the company’s financial statements. The right attitude, people, and actions make a bigger contribution than a novel idea to the success of these endeavors. Never underestimate the role of passion, the importance of management talent, and the significance of teaming with the right investors and accountants. To make it in this industry, companies normally are required to have an audit, review or compilation performed on their financial statements by an independent accountant. Before now, small and mid-size privately owned technology companies were required to prepare their financial statements in accordance with the complexities and challenges of accounting principles generally accepted in the United States of America (US GAAP). Companies now may have another option, provided they have agreement and acceptance from their stakeholders. On June 10, 2013, The American Institute of CPAs (AICPA) introduced the Financial Reporting Framework for Small and Medium-Sized Entities (FRF for SMEs) to help the small business community with its financial reporting needs. The FRF for SMEs accounting framework is a new accounting option for preparing streamlined, relevant financial statements for privately held, owner-managed businesses that are not required to use US GAAP. The FRF for SMEs is not US GAAP, and it is not intended to become US GAAP. It is another comprehensive basis of accounting

with a framework available for enhanced financial reporting. The FRF for SMEs framework offers technology startup companies an alternative to the non-GAAP options that are currently available (cash or tax basis). It provides efficient, meaningful results without needless complexity within US GAAP. Further, as young technology companies are trying to grow and focus their resources to advance their products, preparing US GAAP financial statements could be costly due to the complexities of revenue recognition, derivatives, stock-based compensation and other standards. This new framework may allow companies to reduce the cost of their financial statement audits, reviews or compilations. The FRF for SMEs has been developed to provide consistent and simpler financial statements for small and medium sized entities where US GAAP is not required. Technology companies will use the FRF for SMEs to prepare financial statements that clearly and concisely report what a business owns, what it owes and what its cash flow is, similar to US GAAP. Investors, lenders, insurers and other financial statement users will find this new accounting framework helps them clearly understand the key measures of a business and its creditworthiness. We would advise a candid discussion with your financial statement users and your independent accountant before engaging in this framework.

The framework’s streamlined commonsense requirements are based on traditional and proven accounting methods to ensure consistent application. As such, this framework will use historical cost — steering away from complicated fair value measurements. It will offer a degree of optionality that could allow businesses to tailor the presentation of statements to their users. FRF for SMEs includes targeted disclosure requirements and reduces book-to-tax differences. No matter which reporting criteria is ultimately elected, all technology companies need to set the proper “tone at the top” so all employees know the importance placed on accurate financial reporting; to be current on their internal financial reporting; to know the difference between cash flow, the pipeline, financial reporting rules and taxability; and to not let accounting considerations stand in the way of great business opportunities. Keep in mind that if your stakeholders require US GAAP-based financial statements, they will still need to follow Financial Accounting Standards Board guidance, but if there is no need for US GAAP-based financial statements, you will have the option to use the FRF for SMEs provided the ultimate financial statement users find this acceptable. Using this standard will allow for fewer complexities in financial reporting; reduced costs, allowing the entrepreneurs to focus more resources and attention on their technology.


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2013: YEAR OF THE INNOVATOR

REGIONSBUSINESS.COM

Continuum’s New Leader Brings Fresh Perspective BY BRANDON BAKER

Dr. Christopher Olivia, of Continuum Health Alliance, became president of the company in early July. SUBMITTED

Continuum — began with a call he received earlier this year soliciting Continuum Health Alliance, a him as a potential game-changer sort of guru for medical practice for the company; he immediately management, is getting a clean saw it as a chance to strike during slate under the new leadership of a historic time in healthcare. “It gave me an opportunity to Dr. Christopher Olivia, who took over as president of the company come back in the second half of my career and help design a sysin early July. Dr. Olivia comes into the job tem of health care that’s different,” with a storied business career: He he said. “There’s a convergence of contributed efforts to a merger of [management, technology and Pittsburgh’s West Penn Allegheny insurance] happening right now, Health System, turned around and when you have to redesign Cooper Health System in Cam- the care model, it’s really all about den, N.J., and more recently held putting together the different elethe reins of Navigant’s health IT ments you need in order to deliver subsidiary, HealthAware. Through care.” these experiences, he hopes to Dr. Olivia said he perceives the bring a fresh perspective to the Affordable Care Act, which will Martlon, N.J., based company. be fully implemented in the next His journey back to South Jer- year, as a unique opportunity to sey — having lived there for 11 restructure the basics of operayears prior to his latest gig with tional healthcare. Continuum, a

300-employee-strong blend of doctors and business professionals formed in 1998 to reevaluate the non-clinical efforts of practice management, was itself built under the premise that operational changes in offices across the country are a foundational necessity for reform. “You need three things: leaders who want to change the system, financial incentives to change the system and you need tools and technology to help change that end. … Now, with the federal ACA — Obamacare, if you will — the incentives in the act, they set up an environment that allows us to take another crack at [change],” he said. “From my perspective, if you look at what Obamacare offers, this is our Dot Com era for healthcare.”


Inaugural

MARCUM I N N O VATO R of the Year

AWA R DS

November 14, 2013 Is your company a catalyst for change? Have you pushed the boundaries in your industry? Is your innovation helping to boost Philadelphia’s growing economy? Marcum LLP and Region’s Business are in search of Greater Philadelphia’s top innovators, and we want to hear from you. The Inaugural Marcum Innovator of the Year Awards will honor businesses of all sizes that are pioneering new advancements in the fields of Health/Biotech, Technology, Business Management, and Energy. Three winners will be named in each category, based on company size. Tell us about your break-through innovation and what makes your company a leader in our region by visiting our website – www.marcumllp.com/innovator. Submissions must be received by September 15, 2013. Winners will be announced at a Gala Awards Ceremony at the Franklin Institute on November 14, 2013. Don’t miss out on this spectacular opportunity to join our region’s business leaders in recognizing and celebrating the spirit of innovation in and around Philadelphia. For complete details including nomination criteria, please call Jacki Hallinan at 484.270.2715. Ben Franklin may have been Philadelphia’s first and most celebrated innovator, but he did not have a corner on the market. Who knows? You could be Philadelphia’s next Innovator of the Year! For tickets to the event, please call 610-572-7112 ext 102. If you are interested in sponsoring this event, please call Deirdre Affel at 610-572-7136. Marcum LLP is a top national accounting and advisory services firm.

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International Member of Leading Edge Alliance

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CORBETT’S STEEP CLIMB History tells us that governors in the Keystone State win a second term, but low poll numbers are making some question whether Gov. Tom Corbett should even run in 2014. Others, however, say the incumbent’s stock will rise when he has a clear opponent. ILLUSTRATION BY DON LEE


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BY KATIE SULLIVAN

R

ecent polls, public, Republican or otherwise, all agree — Pennsylvania Gov. Tom Corbett’s in trouble. With his big three agenda momentarily stagnant, the governor is experiencing historically long-lasting low public support, even from members of his own party, experts and political commentators agree, which could make it more difficult for him to be reelected in the 2014 gubernatorial race. Of the 813 people polled by Republican firm Harper Polling July 1-2, just 24 percent said Gov. Corbett deserved to be reelected, with 56 percent voting that someone else should get the job. Just 43 percent of Republicans said Gov. Corbett has earned a second term. Forty-five percent of respondents identified as Democrats and 42 percent as Republicans. The poll had a plus or minus 3.4 percent margin for error. Pollster and Director of the Center for Politics and Public Affairs at Franklin & Marshall College G. Terry Madonna said with a more than 50 percent disapproval rating, Gov. Corbett is in the “danger zone,” especially with no movement in legislation for transportation, liquor privatization and pension reform. “I don’t think there’s any doubt he faces the toughest hard elect numbers and job performance numbers in recent history,” said Mr. Madonna. “He has got a huge challenge to win reelection and a short amount of time to change it.” Although Pennsylvania governors historically have difficulties in their first two years in office, by this time in their term, governors within the past 20 years started to rise and show improvement in approval ratings. This is not the case for Gov. Corbett, who has a lot of ground to make up for before the November 2014 election. “Historically, his situation is more dire at this moment than any governor in recent history,” Mr. Madonna said. Gov. Corbett had a number of serious challenges to try and overcome from the moment he took office in 2011. The governor inherited a $4.2 billion deficit from former Gov. Ed Rendell’s administration when he took over in 2011. Gov. Corbett put up a $27.249 billion budget in 2011, a billion-dollar drop from Gov. Rendell’s 2010-2011 budget, but only after recommending cuts to higher education, school districts and human services throughout the commonwealth. Gov. Corbett faces another issue rooted in his days as state Attorney General, serv-

BY THE NUMBERS

Gov. Corbett’s Uphill Climb

THE GOVERNOR IS SOMEONE WHO SAYS WHAT HE MEANS. HE DID EXACTLY WHAT HE RAN ON.’ —TOM CORBETT FOR GOVERNOR CAMPAIGN MANAGER MIKE BARLEY

It isn’t just independent polling that’s putting a cloud over Gov. Corbett’s re-election chances; Republican firm Harper Polling has produced some bleak numbers for the incumbent as well.

56%

Pennsylvanians who believe Gov. Corbett does not deserve to be re-elected

24%

Pennsylvanians who believe Gov. Corbett does deserve to be re-elected

20%

Pennsylvanians who are unsure about whether Gov. Corbett deserves to be re-elected

43%

Republican Pennsylvanians who believe Gov. Corbett deserves to be re-elected

ing his second term in the position after winning reelection in 2008. A grand jury he convened in 2009 handed down a 40-count indictment against former Penn State football assistant coach Jerry Sandusky in November 2011. Sandusky was charged with inappropriately touching multiple underage boys, followed with a very publicized and scrutinized trial. Sandusky was convicted and an investigation into who all was at fault for the cover up of the incidents was launched resulting in the Freeh Report, which did not in any way implicate Gov. Corbett or the Attorney Generals office. The public was another matter. Victim advocates asked Gov. Corbett why it took so long to hand down an indictment, more than two years after the grand jury was convened, to questioning why he

signed off on the Freeh Report, which fingered legendary football coach Joe Paterno as one of the many Penn State leaders who failed to take action in the course of longterm events, as well as the NCAA handing down sanctions that plagued the school and the football team with more than $60 million, football scholarship reductions, a five-year bowl ban and vacating all the wins under Paterno from 1998 to 2011. Gov. Corbett later launched an unsuccessful lawsuit against the NCAA that claimed the organization did not have the authority to give the sanctions, which was tossed out by a federal judge in June. “The fallout from that has been enormous,” Mr. Madonna said. “I don’t think we realized how much that damaged him in the run up to [current state Attorney General] Kathleen Kane’s election. It’s bogged

40%

Baseline support from Pennsylvanians for a Republican candidate

41%

Baseline support from Pennsylvanians for a Democratic candidate


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What If Corbett Doesn’t Run? BY KEEGAN GIBSON

T

he rumors have spread for a few weeks now. One Republican elected official or another is making calls or dropping hints that, should Gov. Tom Corbett decline to seek re-election, he or she would be interested in running. They dovetail into the broader conversation within GOP political circles about Gov. Corbett and his re-election chances in 2014 — and acute concern that the governor’s poor polling bodes ill for the party. Not one but three national elections handicappers have suggested another Republican might fare better than Gov. Corbett in 2014. The latest was the Washington Post, which named Pennsylvania the state mostly likely to see a gubernatorial party switch next year. PoliticsPA tracked down the latest buzz, that one or two members of the congressional delegation were making calls. I talked with a dozen Republican party officials, consultants, etc. I won’t publish the names of those rumored to be doing the calling, for lack of on-the-record confirmation. For any official to be publicly identified making such calls, or for any party operative to admit to entertaining the idea would be a quick way to put his or her higher ambitions on life support. Hence when we started digging, the rumors retreated. But several GOP politicos, each of whom asked to remain anonymous for similar career-related reasons, had heard the calls were happening. One Republican operative PoliticsPA spoke with was on the receiving end of such a call. But he didn’t read much into it. “I think somebody does that to be considered for 2018,” he said. “I’ve heard that rumbling,” said another Republican party politico. “But the real question is, will Corbett step aside?” The answer to that question is no, says Corbett campaign manager Mike Barley. “Governor Corbett is running for re-

election,” he said, definitively. Nonetheless, the rumors persist. Said one Republican operative in southeast Pa., “The conversation always leads to ‘who’s gonna tell the governor he can’t win?’ And it always ends with everyone saying, ‘Not me.’” So, which GOP names are out there as hypothetical candidates for governor in 2014?

Congressman Jim Gerlach (R-Chester) Why he’d run: Congressman Gerlach’s higher ambitions are an established fact, as is his history of winning campaigns in the competitive Philadelphia suburbs. He ran for governor briefly in 2009 before conceding to Gov. Corbett’s inevitable nomination. Why he wouldn’t: He’s at the point now where he’d have to give up serious House seniority to run for another office. And his district is safe enough now that he can spend more of his free time with his family and less calling strangers to ask for money.

Congressman Mike Kelly (R-Butler) Why he’d run: The outspoken car salesman from western Pa. proved a YouTube hit in his first term and the national appearances (mostly on Fox News but also others) haven’t slowed down. His personal narrative — a businessman punished by government — has strong resonance with the party’s base. Why he wouldn’t: He’s strong on emotional appeal but short on policy nuance, not to mention low statewide name ID. His geographic base is far away from the GOP center of gravity in the state (although moderate Tom Ridge ran from Erie in 1994).

Congressman Pat Meehan (R-Delaware)

Why he’d run: Like Congressman Gerlach, Congressman Meehan briefly floated a bid for governor in 2009. He’s a former prosecutor with a solid base in his suburban Philadelphia district. He’s articulate and has demonstrated bipartisan appeal. Why he wouldn’t run: Delaware County Republicans fought to regain his seat and map-drawers worked to keep it in the GOP column. They’d be loathe to risk it to entertain other ambitions. Plus he’s got a solid profile in the House.

State Senator Dominic Pileggi (R-Delaware) Why he’d run: Majority Leader Pileggi has often given off the vibe that he’d like to take a shot at the office. He has strong bipartisan ties in his swingy southeastern Pa. district. And the recent 0-for-3 in Harrisburg highlighted to many Republicans why it could be a good thing to have an executive who knows the legislative process. Sen. Pileggi, for the record, went 3-for-3. Why he wouldn’t: All the negatives of the legislature, of Harrisburg, of the current GOP regime — Sen. Pileggi could easily be tagged by all three in a general election. He’s the guy behind the proposal to tinker with the electoral college. His record of voting for Rendell-era compromise budgets wouldn’t play well in a primary. And we have a feeling Republicans in the House wouldn’t be thrilled at the idea.

Senator Pat Toomey

Why he’d run: The freshman U.S. Senator would be an obvious choice for the state GOP. He’s established himself as a conservative pragmatist and an effective legislator. He has decent name ID, and he’d also bring $2.4 million to the race. Why he wouldn’t: Sen. Toomey is more comfortable in D.C. than Harrisburg and probably would politely decline the chance to run (although he did briefly seek the office in 2009).

Rob Wonderling, GPCC President and CEO Why he’d run: Mr. Wonderling is a former state Senator from Montgomery County and also the former Deputy Secretary of Transportation under Gov. Ridge. And he has connections. He helms the largest economic development organization in PA in the biggest swing area of PA. Can you say donor networks? Why he wouldn’t: He’s not first in line in his region, let alone statewide. He’d be outranked by several of his prospective competitors. Besides, why leave a good gig in the private sector just to schlep around the state and ask strangers for money six hours a day? There are numerous other Republicans, such as former state Rep. Sam Rohrer and 2012 U.S. Senate hopeful Tom Smith, who could give the race a look in the event that Gov. Corbett decided not to run. The list above is meant to show the likely choices of the party establishment and its donors. Some Republicans see Lt. Gov. Jim Cawley as a potential candidate, but we could think of no feasible scenario where the environment is tough enough that Gov. Corbett would decide to depart the race in 2014, yet good enough that Lt. Gov. Cawley could prevail in a general. This article was originally published on PoliticsPa.com.


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him. It’s the story that won’t go away.” But perhaps the most prominent issue for Gov. Corbett — his big-ticket legislative items have stalled. Transportation funding, privatization of liquor stores and pension reforms have not made enough progress to be considered a victory, three things that would greatly boost Gov. Corbett’s job performance ratings, Mr. Madonna said. State pension contributions rose from $1.1 billion in 2012 to $2.3 billion and is expected to jump to about $4.3 billion in 2016, according to the state’s website. The latest pension reform bill was re-referred to appropriations in June. Liquor privatization revenue would add $1 billion to education funds, but the plan failed to make the state’s budget this year. To help find funding to repair structurally deficient bridges and highly traveled Pennsylvania roads and employ more people to fix that infrastructure, Gov. Corbett proposed reducing the flat tax on gasoline by 17 percent, allocating an additional $1.8 billion for transportation. The bill stalled in the House in June. Pennsylvania Democrats are capitalizing on the momentum from Corbett’s massive cuts to education throughout the state, along with what they say is a sluggish economy, lack of job creation and inability to move his chosen legislative battles forward. “Tom Corbett shouldn’t be surprised only 24 percent of Pennsylvanians believe he deserves to be re-elected. Since he became Governor, Pennsylvania has dropped from 7th in the nation in job creation to 46th, the rest of the nation has created private sector jobs at double the rate of Commonwealth, and 20,000 educators have lost their jobs. Pennsylvania’s had enough of Tom Corbett’s failed leadership,” The Pennsylvania Democratic Party said in an email statement. A recent Washington Post write up in mid July also deemed Pennsylvania the state most likely to see a party switch in the governor’s office, followed by Florida, Maine, Arkansas and Michigan, even throwing out the possibility the Republicans might be better served endorsing another candidate for office. With the gubernatorial election to take place November 2014, Mr. Madonna said there’s an outside chance Gov. Corbett recovers from the public opinion hole he’s in right now,

POLLS ARE JUST A SNAPSHOT AND A PICTURE AT ANY GIVEN MOMENT. THERE ARE LOTS OF REASONS TO BELIEVE HIS RE-ELECT NUMBERS WILL IMPROVE.’ — POLITICAL ANALYST CHARLIE GEROW

behind Democrats in the polls, facing hard elects numbers and a low job performance rating “When it’s all said and done, he’s got a tough row to hoe,” he said. Political analyst Charlie Gerow said it’s too soon to tell whether Corbett will retain or lose office, reiterating governors’ poll numbers are generally low in the first two years in office. “Polls are just a snapshot and a picture at any given moment,” he said. “There are lots of reasons to believe his reelect numbers will improve.” Much of the arguments against Corbett are a matter of opinion, he said. Much of the criticism from the Jerry Sandusky sex abuse case at Penn State was based not on rational concerns, but emotions, and that many people gave Gov. Corbett credit for trying to dismiss the NCAA sanctions against the university, Mr. Gerow said. Right now there is no one candidate for the Democratic ticket, leaving the attention solely on Gov. Corbett, who Mr. Gerow said will have a more focused message when there is another opponent to zero in on. What Gov. Corbett needs to do to bring those approval numbers up are a couple of legislative wins, namely transportation funding for safe roads and bridges throughout the commonwealth. “If he is able to win that fight that will be a big feather in his cap,” Mr.

Gerow said. Gov. Corbett must also capitalize on his personality to engage the voters, touting the number of jobs he’s created in Pennsylvania in the last three years, and keeping his word about not raising taxes. “He created a platform for prosperity for the Commonwealth,” Mr. Gerow said. “The number one issue will be the jobs that were created in Pennsylvania the last three years.” Mr. Madonna agreed, and said if Gov. Corbett wants to change voters’ minds, he needs to explain specific plans and goals, and the rationale behind them, to state residents, along with accomplishing one of his legislative agendas like liquor privatization, pension reform and transportation. Tom Corbett for Governor Campaign Manager Mike Barley said recent polls were each just one of many that would be taken before Election Day, and once Gov. Corbett’s team starts putting an emphasis on trumpeting his record of fewer taxes and more jobs, public opinion will sway in his favor. “The governor’s going to win reelection based on his record,” Mr. Barley said. Campaign managers plan to emphasize the governor eliminating the state’s debt without raising taxes, streamlining government and creating what Gov. Corbett’s office

estimates more than 110,000 private sector jobs during his first three years in office. “The governor is someone who says what he means. He did exactly what he ran on.” Tackling the issues of liquor privatization and pension reform have been things previous governors have tried, but failed to accomplish. Mr. Barley said if Gov. Corbett makes progress in those arenas, “that will be a great feat for the governor.” Opposing Gov. Corbett are possible Democrats candidates like five-term U.S. Representative for Pennsylvania’s 13th congressional district Allyson Schwartz, who was 12 points ahead of him in a Public Opinion Strategies May poll of voters. Those 600 registered voted polled from April 20 through May 2 via landline and cell phones were asked who they would vote for if the race came down to Corbett and Schwartz, with the Northeast Philadelphia representative capturing 46 percent of the hypothetical vote, while Corbett received just 34 percent. The margin of error is about 4 percent. State Treasurer Rob McCord, along with former state Department of Revenue Secretary Tom Wolf and former state Department of Environmental Protection Secretary Katie McGinty, are all in the race, experts said. Former secretary for the state Department of Environmental Protection John Hanger, and businessman and pastor Max Myers, of Mechanicsburg, have also filed with the department of State. Whoever the Democratic candidate may be, he or she must provide an alternative set of messages, and give more specificity about how it will solve the state’s mounting problems. “They have to spell out a specific agenda,” Mr. Madonna said. “They’re going to have to provide a direction with specificity, along with laying out the differences with Gov. Corbett.” Republicans contend Gov. Corbett’s record and push to prevent tax hikes and create jobs will speak for itself when battling to retain office for another term. “At the end of the day we know what their [Democrats’] playbook is, it’s raising taxes and spending money,” Mr. Barley said. —— Katie Sullivan is a freelance writer living in Scranton, Pa.


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THE BIG PICTURE FOR

CURALATE

Visual marketing and analytics firm Curalate is on its fourth — and biggest — office in little more than a year, at 2401 Walnut Street. Apu Gupta, CEO and co-founder, explains why Philadelphia is the right city for its headquarters. Visit RegionsBusiness.com for the full interview.

What’s the elevator pitch for Curalate? We help brands speak a new language. Fundamentally what’s happening online these days is consumers are frequently communicating about the brands they love using pictures instead of words. Every single tool that’s existed to help brands communicate with consumers is built around text. And we built the first platform that allows brands to understand, communicate, reply essentially to their consumers using images. We help the brands understand those visual conversations and engage with the consumers using pictures, rather than words. What is it about Philadelphia that’s kept you here instead of expanding elsewhere? It’s interesting: We’ve raised two rounds of funding — a $750,000 round and a $3 million round. At one point we were asked, “Why don’t you guys move to [Silicon] Valley?” And we thought a lot about it. Ultimately we made this decision about “Is it better to be closer to your investors or better to be closer to your customers?” And the reality is the vast majority of our business comes off the East coast, it doesn’t come out of San Francisco... For us, what we realized is Philly has just been a really great place to build a startup. The tech community here is incredibly collaborative. We help each other out. It’s very much an environment that lacks sharp elbows. People are very happy to get coffee and come trade notes, that sort of thing. So, that was a big plus in our mind. The other thing is its certainly a lot cheaper here to do business. You can take on 4000 square feet here in Philadelphia for the price of what would be 1500 square feet in New York. That creates a healthier work environment for our employees. And everybody’s much happier as a result. What goals will this new space help Curalate accomplish? We have to continue growing the team as fast as we can. Being able to create a culture that attracts the right people is a very big deal to us... We can get more capital and more brands, but you can’t service the brands or build fast enough for them if you can’t get the people.

/Curalate

@Curalate

Curalate.com


24

FINE ESTATES PREVIEW

25 JULY 2013

REGIONSBUSINESS.COM

$1.5M Detailed Artisan Home In Doylestown Craftsman meets artisan in this amazingly detailed Zaveta built home privately set amongst the trees in Doylestown. This highly-detailed designed floor plan has great spaces to live and enjoy any lifestyle. The grand two story library/great room is impressive with a window wall, balcony and two story fireplace — one of four. The first floor master suite has a nice private outdoor courtyard. The second master suite has a delightful sitting room and balcony. The walk-out lower level has a huge entertainment room, exercise room, craft room, office plus full bath. A bonus room on the 2nd level adds plenty of flexible space. Custom woodwork is contained in every room and high quality amenities have been carefully handpicked. This five bedroom, five bathroom single family home is on the market for $1.5 million and is a great option for fine living in the Doylestown area. For more information, please contact Mindy Grossinger of Weidel Realtors at (215) 348-5600


26

25 JULY 2013

REGIONSBUSINESS.COM

REAL ESTATE

Goldtex Renters, Maybe Retailers, Moving In BY GREG MECKSTROTH The saga over developing the Goldtex building at 12th & Wood streets has been one for the ages. As is well known by now, the developer, Post Brothers, battled trade unions who insisted on 100 percent union labor to renovate the former vacant industrial building in the Callowhill Loft District into 189 loft apartments.

After quite a bit of drama, protests, and work interference, the developer finally reached an agreement with the unions and work has since proceeded unhindered. Two months ago, a viewing party was held in the building to show off some of the new apartment units. As of last week, the move-in process for renters is officially under way. Fameco Real Estate is actively working to lease the ground floor

commercial spaces. There are two spaces total, one at 2,145 square feet and the other at 3,430 square feet for a total of 5,575 square feet. Whoever decides to move in to the spaces will join such neighborhood institutions as Cafe Lift, Prohibition Taproom, Bufad, and The Trestle Inn, among others. This article was originally published at PhiladelphiaRealEstate. com.

Right: Retail floor plan of the Gloldtex building (rendering above) SUBMITTED

820 Brushtown Rd, Gwynedd Valley, PA

84 Norristown Rd, Blue Bell, PA 19422

$3.65 M (6005156)

$965,000 (5962964)

5 beds | 6 full, 3 partial baths Timeless & Elegant describe this true estate in prestigious Gwynedd Valley. Built by the builder, for the builder, the residence is sited on over 1.5 acres and offers over 11,000 sf of living space. This home was designed for those with the most discriminating taste and an appreciation for fine living.

5 beds | 5 full, 1 partial baths Meticulously maintained, solid built, Philomeno & Salamone estate home offers nearly 6,000 sq.ft. of living space on 3/4 acres w/3 bay garage. Conveniently located on a private cul de sac in desirable Blue Bell,this home was designed to entertain with its’ custom finishes t/o including newly renovated gourmet kitchen.

1204 Hunt Seat Dr, Lower Gwynedd, PA

936 N Penn Oak Rd, Lower Gwynedd, PA

Nicole Miller-Desantis



   

    (215) 641-2727 (office) (267) 419-1454 (direct)

(215) 850-1305 (cell) (215) 999-5817 (fax)

$1.125 M (6196317)

$948,500 (6196308)

5 beds | 3 full, 1 partial baths Tastefully decorated colonial in desirable Polo Club Estates in the heart of Gwynedd Valley. Sited on over an acre, this well positioned, brightly lit home has improvements throughout. Hardwood flooring, custom paint, newly renovated powder & mud rooms along with numerous other finishes that highlight this beautifully maintained home. 4 beds | 3 full, 2 partial baths Sited on a nearly 1 acre wooded lot in popular Penn Oak, this pretty stone colonial boasts nearly 7,000 sq. ft. of living space w/ its full, finished, walk-out basement. This home offers a bright, open floor plan with access to the outdoors from nearly every room. Kitchen w/ Breakfast Room is welcoming and provides access to large, rear deck for easy entertaining.

Blue Bell Office 686 Dekalb Pike Blue Bell, PA 19422


25 JULY 2013

REGIONSBUSINESS.COM

REAL ESTATE

27

Proposal: Using Art To Show Energy Usage THE KEY IS TO MAKE ENERGY CONSUMPTION VISIBLE FOR PEOPLE.’ — TIM MCDONALD, ONION FLATS PRICIPAL

Ridge Flats, located at the site of the former Rivage Ballroom in East Falls, will consist of 146 apartment units.

BY KELLIE PATRICK GATES

T

he 146-unit apartment building Onion Flats hopes to build on Ridge Avenue in East Falls crossed another hurdle last week, when the Philadelphia City Planning Commission recommended that the Zoning Board of Adjustment grant variances the project needs. Called Ridge Flats, the project would be built to “passive house” standards: a hyper-efficient building standard intended to produce a “net zero” energy impact. It would be the largest passive house certified building in the country, said Tim McDonald, a principal at Onion Flats. And a public art instillation will encourage residents to help the conservation effort by displaying their energy use. After the PCPC meeting, Mr. McDonald and Howard Steinberg, also an

Onion Flats principal, explained that the key to the passive house standards is constructing a highly insulated, air-tight building envelope, so the indoor spaces are easier to keep cool or warm. Air comes in only through an exchange system, which Mr. Steinberg said also leads to better indoor air quality. This building style, which is common in Germany but not so much here, leads to much lower energy consumption, Mr. McDonald said. The roof style will also allow for a solar array, and the goal is that those panels will generate at least as much energy as the building uses, Mr. Steinberg said. The power will be sold to the utility company, and that money will offset building energy costs. Those savings will be passed to residents as well, but Onion Flats is still working out the details of how that will work. Even with energy saving construction, human beings impact energy usage. Under Onion Flats’ plans,

PLAN PHILLY

Ridge Flats residents will have individual electric bills and pay more or less depending on usage. With electric bills that will be a fraction of a bill in a typically built apartment even for relative energy hogs, Mr. McDonald said his company wanted something other than a financial incentive for conservation. Onion Flats is hiring an artist to design a piece of artwork that incorporates the energy-usage data of each unit. Residents will be able to see how much power they are using, in relation to others. “The key is to make energy consumption visible for people,” Mr. McDonald said. Otherwise, it’s something that is abstract and out of mind of most people, he said. An artist was expected to be chosen this week. The zoning relief Onion Flats needs to build is mostly related to height, parking and loading. On paper, the discrepancy in park-

ing looks enormous. Onion Flats proposes 120 parking spaces for the fivestory building, which includes 9,300 square feet of retail on the ground floor. Required parking: 695 spaces. Planner Paula Brumbelow pointed out the underlying zoning, CMX 2.5, requires no parking. But the East Falls neighborhood zoning overlay requires four spaces for every 1,000 feet of floor area, regardless of use. The PCPC not only decided that much parking was in no way needed, but Chairman Alan Greenberger said planning should talk to East Falls about changing the requirement. The project’s ZBA hearing is set for August 7. If everything goes as Onion Flats hopes, construction on the one- and two-bedroom units should begin in the first quarter of 2014 and take about a year to complete. The rent would range from about $1,300 to about $2,000. This article originally appeared on Plan Philly at PlanPhilly.com.


28

25 JULY 2013

REGIONSBUSINESS.COM

OPINION

Smartphones: The New Economic Equalizers

Steven Scott Bradley is chairman of the AfricanAmerican Chamber of Commerce of Pennsylvania, New Jersey and Delaware.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Much has been written, spoken and undertaken in order to address Philadelphia’s “digital divide” — the gap in Internet access between low-income families and their more financially stable peers. Through its Internet Essentials program, Comcast has made progress in closing the gap. The Freedom Rings Partnership, spearheaded by Drexel University and the Urban Affairs Coalition, and Connect2Compete also deserve credit for the valuable work they’ve done. But where those initiatives connect families to the Internet in their homes, I suggest that Delaware Valley business leaders, elected officials and non-profits should also consider the economic equalizers that are smartphones. Let’s focus on handhelds in addition to households. Consider: For the first time since the Pew Research Center started tracking the country’s mobile habits, more than half (56 percent) of American adults are smartphone users, according to a report released last month. Among households whose annual income is less than $30,000, 43 percent use smartphones. As do 59 percent of respondents from urban areas, 64 percent of African Americans and 60 percent of Hispanics. According to AT&T’s 2013 Small Business Technology Poll, the percentage of small business owners using smartphones to help manage their businesses has doubled over the last five years (from 42 percent to 85 percent). There’s little doubt that these numbers, all of which are on the rise, are attributable to the sheer power of today’s devices, which offer the capabilities of a personal computer almost anywhere we go and at any moment. Not only are more and more Americans ditching landlines all together (34 percent, according to a recent FCC study), but they’re also using smartphones as

BY THE NUMBERS

56%

American adults who are smartphone users, according to the Pew Research Center

43%

FLICKR.COM/RICKYROMERO

their primary source of Internet access. It’s no surprise that the technology industry evolves quickly. Unfortunately, so do the problems plaguing it. As more people use smartphones as their primary voice and Internet vehicles, we should do everything we can to ensure that low-income and minority users have access to as many affordable options as possible. How? For one thing, our elected officials must pursue policies that encourage continued competition in the mobile industry. That effort should start with a close look at how the U.S. International Trade Commission (ITC) is handling the ongoing patent disputes among mobile manufacturers. For example, the ITC will soon deliver a legal ruling that could allow Apple to essentially control the market on smartphones that look a certain way — those with a rectangular shape, rounded corners and flat-front surfaces. If Apple’s claim is successful — an announcement is expected at the beginning of August — the ITC has the power to ban the import of Samsung smartphones that incorporate these commonbecause-they’re-functional features.

From there, it’s conceivable that Apple will pursue similar rulings against manufacturers like HTC, Sony and Nokia. Such efforts would further upend the competitive conditions that have kept prices low for consumers and ensured that smart phones remain available to the lowincome, urban families most hamstrung by the digital divide. On the other hand, continued access to affordable smart phones (and through them, the Internet) will allow more local workers to apply for jobs, work remotely and acquire skills and knowledge to help advance their careers. It’ll help more consumers find lower prices. More patients will be able to make better decisions about their medical needs. All of which will benefit Philadelphia’s education, healthcare and hospitalitydriven economy. Competition is the best way to support business development, generate job growth (as manufacturers and carriers persistently seek innovative breakthroughs) and keep prices low — here in the Philadelphia region and elsewhere. Smart phones can be a significant part of that growth, while also helping to bridge the digital divide. The question is: Will those in charge finally make the connection?

Households with an annual income of less than $30,000 that use smartphones

64%

African-American respondents who use smartphones

60%

Hispanic respondents who use smartphones

42%

Small business owners who used smartphones to help manage their business in 2008, according to AT&T’s Small Business Technology Poll

85%

Small business owners who use smartphones to help manage their business in 2013

34%

Americans who have stopped using a landline altogether, according to the Federal Communications Commission


29

25 JULY 2013

REGIONSBUSINESS.COM

OPINION COMMENTARY FROM ACROSS THE WEB

Bringing Manufacturing Back To America

Rising Tuition Pricing Many Out Of Higher Ed

Today, there are not enough institutions training young people to participate in the high-skill manufacturing sector, even though the National Association of Colleges and Employers reports that the higher paying entry level jobs go to those with industrial and manufacturing degrees. Therefore, we must direct our attention to making sure manufacturers have access to a skilled workforce by encouraging and supporting technical and scientific education. Long ago, American ingenuity, innovation and an acknowledged productive workforce established the United States as the No. 1 manufacturing country. Now, I would like to see us, once again, be a world leader and the best place in the world to manufacture.

A compromise deal on student loans that would hold down loan rates...was reached in the Senate. A final vote is expected this week, well before students returning to campus have to sign their loan agreements. Under the deal, undergraduates this fall could borrow at a 3.9 percent interest rate. Graduate students would have access to loans at 5.4 percent, and parents would be able to borrow at 6.4 percent. ...But that news fails to ease for students and their families the burden of college costs that continue to rise out of reach. College expenses have become outrageously high over the past decade, fueled in part by the “easy money” of student loans and government financial aid. Schools haven’t had much incentive to rein in costs. And so tuition increases have far outpaced the rate of inflation.

CONGRESSMAN MIKE FITZPATRICK, BUCKS COUNTY COURIER TIMES, 21 JULY 2013

Hydraulic Fracturing Well Regulated, Despite Critics While there may be different points of view regarding hydraulic fracturing, there is only one set of facts. And the facts present a very different picture than the one painted by anti-energy activists. Attempts to stop natural gas development rest on the false premise that hydraulic fracturing is a new, under-regulated technology. In reality, hydraulic fracturing is rigorously regulated by state agencies and federal laws overseeing oil and natural gas development. In addition, strict standards are developed by the oil and natural gas industry in collaboration with specialists who best understand the unique geology and hydrology of their communities. Just days ago, the American Petroleum Institute convened a symposium with 600 such experts as part of its ongoing system to continually review and improve hydraulic fracturing standards. STEPHANIE WISSMAN, EXECUTIVE DIRECTOR,

DELAWARE COUNTY TIMES EDITORIAL, 23 JULY 2013

Sweating at @TheOvalPHL, Philly’s latest popup on the Parkway. Have you been? Do you like it? @EMALEIGH

@bewellphilly

Woot woot! The Schuylkill River Trail was named among the best urban bike paths in the U.S.!

ASSOCIATED PETROLEUM INDUSTRIES OF PA,

DAVID S. COHEN,

THE PATRIOT-NEWS

THE PHILADELPHIA INQUIRER

23 JULY 2013

22 JULY 2013

REGION’S BUSINESS A JOURNAL OF BUSINESS AND POLITICS © COPYRIGHT 2013 INDEPENDENCE MEDIA 350 SENTRY PARKWAY, BLDG. 630, SUITE 100C BLUE BELL, PA 19422 (610) 572-7112 | WWW.REGIONSBUSINESS.COM

Less than a week until tickets go on sale! Links and announcements soon. <3 23 JULY 2013

23 JULY 2013

Need Plan B For Schools The cigarette tax is dead. In its place, Harrisburg allowed the city to borrow $50 million on a continued increase in the city sales tax, allocated a $45 million refund from the federal government to city schools, and increased its own contribution by just $2 million. Along with the city’s slightly increased $30 million estimated from increased tax collection, that brings the combined government contribution to $127 million, about 70 percent of the SRC’s request from government. The schools cannot function with this insufficient amount of money. The state House, not usually overly generous with Philadelphia, understands this and met in a rare recess session last week to hammer out the kinks in the state plan. The overall state plan is inadequate, but Harrisburg at least showed the urgency needed to tackle this problem.

@phlgeekawards

@visitphilly

@Quorum_Sc Applications for @PhilaPACT IMPACT Conf. are due 8/30. Apply for this opportunity to be a Featured Company!

This Thursday, July 25, is a glam evening of drinks, food, music and fashion for the Jewish holiday of Love: http://vstphl.ly/17APW33

23 JULY 2013

23 JULY 2013

@meetPHL

@CityCouncilBlog

PHL welcomes @NatUrbanLeague @ULPhilly So happy you’re here to #redeemthedream in PHL! Attendees follow @discoverPHL & @PHLVisitorCntr

Discontent over the appeals of firefighters’ arb award makes plenty of sense. A Charter amendment is a rather sweeping change, though.

23 JULY 2013

23 JULY 2013

@hollyotterbein

@BPC_Bipartisan

The rallies against #phillyeducation budget cuts go on. Two today: One at LOVE Park, another at Gov. Corbett’s Philly GOP event tonight.

22% of men have considered running for office. Only 8% of women have done the same: http://bit.ly/167UvCk #EngageUSA 23 JULY 2013

23 JULY 2013

@meechone

@ChargeItSpot

Expect a song on how she hates Philly in four/five months. RT @taylorswift13: Philadelphia. Seriously. I love you.

Do you like beer? We do! ChargeItSpot will be making waves at @TheOvalPHL’s beer garden this Thursday!

EDITORIAL BOARD CEO and President James D. McDonald Managing Editor Terrence J. Casey Associate Editor Rich Coleman

23 JULY 2013

23 JULY 2013

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


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25 JULY 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

40,000

18

Number of new single family housing permits filed in Detroit

706,585 4,456,428

Detroit population as of 2011

Detroit population as of 2000

20%

Detroit’s unemployment rate

15,000

$18,000,000,000

People employed by the 93 Science Center graduate companies located in the Greater Philadelphia region

Detroit’s debt (including pension liabilities)

39%

36%

City budget spent on debt and pensions

Detroit poverty rate

$50,200

$25,193

Median single-family owner-occupied home value in Detroit

Median household Income in Detroit

$3,690,000,000

$2,310,000,000

$1,000,000,000

$1,400,000,000

Profits for the Pennsylvania Lottery in 2012

$9.4B

Annual regional economic output generated by Science Center graduate and resident organizations

FLICKR.COM/WALLYG

Sales for the Pennsylvania Lottery in 2012

Regional jobs overall generated by graduate and resident organizations that started at the University City Science Center, according to its 2013 Annual Review

Sales for the Pennsylvania Lottery’s Instant Games in 2012

Sales for the Pennsylvania Lottery’s Terminal Games (Powerball, Mega Millions, etc.) in 2012

FLICKR.COM/WILDHABER

350+

Organizations graduated from the Science Center since 1963

$89,000

Average salary of employees at Science Center graduate companies


$25,000 CASH IS KING GIVEAWAY

LY L A T O T

FRIDAY, JULY 26 • 5PM – 10PM Earn entries now – July 26 for your chance at the $25,000 GRAND PRIZE! Two finalists selected every 30 minutes on giveaway day; Grand Prize Winner crowned at 10pm!

80’S OUTDOOR FILM FESTIVAL

Free movies under the stars every Saturday night at Parx East Picnic Grove!

SATURDAY, JULY 27 BACK TO THE FUTURE

Plus 80’s trivia games, giveaways & totally tubular prizes!

NOW OPEN AT PARX CASINO!

One winner every 15 minutes plays 80’s movie trivia for a chance at free slot play or match play prizes!

GRAND OPENING JULY 29TH! Open for lunch & dinner, 7days a week.

Open for lunch & dinner, 7days a week.

Visit parxcasino.com/calendar for full band list!

SATURDAY, JULY 27 • 6PM – 2AM

THE WORLD’S GREATEST HOT SANDWICH® IS COMING TO PARX!

Delicious Chinese cuisine and new signature menu items created by renowned restaurateur, Michael Chow!

THIS WEEKEND AT 360!

TOTALLY 80’S SATURDAYS

FRIDAY, JULY 26 Gypsy Wisdom & DJ Sev One

PARXCASINO.COM •

SATURDAY, JULY 27 • Sidearm Duo, Green Eggs & DJ Eric Vanderslice

MANAGEMENT RESERVES THE RIGHT TO CHANGE OR CANCEL THESE PROMOTIONS AT ANY TIME. MUST BE PRESENT TO WIN. VISIT XCLUB FOR ADDITIONAL DETAILS, RULES AND REGULATIONS. MUST BE 21 OR OLDER TO ENTER PARX CASINO. GAMBLING PROBLEM? CALL 1.800.GAMBLER


Region's Business July 25  

Region's Business is a journal of business and politics in the Philadelphia region

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