Tuesday, September 30, 2014
Inquirer Daily News

POSTED: Tuesday, September 30, 2014, 1:46 PM
On Tuesday, only chewing tobacco and snus sold in the city of Philadelphia was subject to a special tax. Come Wednesday, Oct. 1, 2014, cigarettes will climb $2 per pack too. (Tim Boyle / Getty Images)

A day before Philadelphia's expanded tobacco tax adds a $2 per cigarette pack levy to the existing three-year-old tax on chewing tobacco, the city's elected Controller, Alan Butkovitz, warns of an unexpected 11% drop in that older tobacco tax's collections, to $650,000 in fiscal 2014, from $728,000 last year. 

Does that tell us anything about whether the city is likely to raise the $90 million it hopes to raise from the smokers' tax in the next year? "It raises a red flag," Butkovitz told me. "We don’t know if people have changed their chewing habit, or if it’s a health thing, or if it has changed people’s traveling-to-shop habits, which would be the biggest alarm."

State smoking tax collections have tended to drop a couple of percentage points a year as fewer people smoke (the state has boosted rates to compensate), but that's "marginal" compared to what's happened with Philly chew, Butkowitz says. It raises again the question debated relentlessly during the cigarette tax struggle: "Will people drive to City Line Ave. to buy a carton of cigarettes at Wawa (where the $2 a pack tax doesn't apply), instead of buying a pack at the 7-11 down the street?" 

POSTED: Tuesday, September 30, 2014, 1:36 PM

Pennsylvania State Sen. Scott Wagner, R-York, the waste-disposal magnate and conservative leader (more on Wagner here and here), sent this letter yesterday to Senate President Sen. Dominic Pileggi, R-Delaware. Wagner urges Pileggi to step down as GOP leader, calls him a "roadblock" stalling pro-employer and anti-union laws, and accuses him of being "heavily influenced" by labor union donors led by Local 98, the International Brotherhood of Electrical Workers' Phliadelphia union headed by John J. Dougherty.

Pileggi promptly forwarded the letter to other Republican Senators, inviting comment. Wagner has now issued a public version of his letter, cutting the references to specific legislation, but adding the names of other suburban Philadelphia Republicans who also got union money. Looks like both factions are counting heads to see who has the votes to run the upper chamber when the Senate reorganizes after the November elections. Wagner's open letter:

I am writing this email to give you an update on the stalled legislative reforms in Harrisburg. As I have mentioned in previous emails, people ask me repeatedly, "Why are we unable to get important reforms passed in Harrisburg?"

POSTED: Monday, September 29, 2014, 1:51 PM

Leaders in the Indian community of Philadelphia were among those in attendance at India prime minister Narendra Modi's events in New York on his first visit to the U.S. last night. "My wife and I attended the dinner last night at the Pierre Hotel," Kris Singh PhD., founder and chief executive at Holtec, the Marlton power plant parts maker, told me. "The Prime Minister gave a short speech -- more like a homily -- and then graciously stood for hours greeting every guest with an Indian 'namaste'' or a Western handshake.

"I found him to be a gifted and charismatic speaker. His line on making India better understood by the rest of the world through increased tourism -- 'Terrorism divides peoples, tourism unites them' -- drew rapturous applause. He spoke in Hindi. I was impressed with his command of Hindi which is not his native language. I, like many others present, believe that Mr. Modi will be transformative force for making India into a more perfect liberal democracy and the country’s economy will be re-energized by his no-nonsense approach to governance.” 

"It was really quite an event -- a frenzied, chaotic, but happy occasion. 20,000 people were screaming in the stands for a rock star, you would have thought," adds Dr. Aseem Shukla, associate professor of surgery at the University of Pennsylvania and cofounder of the the Hindu American Foundation (www.hafsite.org) (corrected). (More about Dr. Shukla and his history with Modi before he was elected Prime Minister earlier this year, here.

POSTED: Monday, September 29, 2014, 11:40 AM

Architects Peter Saylor and Bill Gregg, whose firm SaylorGregg (formerly DagitSaylor) designed the new Karabots Pavilion at the Franklin Institute and other museum, performance, cafeteria and dorm projects for clients including Penn, Swarthmore, UVa and Cornell, have combined with JacobsWyper Archtects to form a single firm, with SaylorGregg operating as a "cell" within JacobsWyper's offices at 1232 Chancellor St., the firms said in a joint statement.

The combination "enables us to compete for larger projects," cofounder Jamie Wyper said in a statement. He and partner Terry Jacobs count drugmakers Novartis, Johnson & Johnson and AstraZeneca; Amtrak and Wawa; and colleges including Princeton, Penn and Swarthmore as clients, as well as LEED projects for clients including the City of Philadelphia. Together the firms employ 32. 

POSTED: Monday, September 29, 2014, 10:52 AM

Capmark Financial Group Inc., the Horsham company that was formerly General Motors Acceptance Corp.'s commercial  mortgage business, says it has agreed to buy Bluestem Brands, Inc., the Eden Prairie, Minn. company that operates the online and direct-mail retailers Fingerhut and Gettington.com, which specialize in lower-income consumers, plus Bluestem's PayCheck Direct employee-purchase system, for $565 million in cash.

As part of the deal, Steve Nave, Bluestem’s Chief Executive Officer, will become Capmark's new CEO and a director. Capmark's present CEO Bill Gallagher and chief operating officer Tom Fairfield will continue to manage Capmark's remaining commercial finance assets, while Gene Davis will remain Executive Chairman. Centerbridge Partners LP, which agreed to invest in Capmark in May, will name some other directors for the board.

In a statement, Davis called the Bluestem and Fingerhut deal "another step in (Capmark's) continuing efforts to maximize value for shareholders." Fairfield was not immediately available for comment on the impact of the deal on Capmark's remaining Horsham employees. 

POSTED: Monday, September 29, 2014, 10:14 AM

Comcast's 337-page complaint to the Federal Communications about Netflix and other critics of its planned acquisition of TimeWarner Cable last week was called "disingenuous" by my colleague Jeff Gelles here, and "uncharacteristic," "ballistic" and "off the rails" by David Carr in the New York Times, who also compared Comcast's "chief lobbyist," executive vice president David L. Cohen, to "a bully."

Leaving aside the question of whether the "ferocity" of Comcast's pushback is, as Carr strangely claims, unusual for the company, Carr makes an interesting claim: that mounting a big public case against its business critics and accusing them of "extortion," as Cohen did, is a political mistake that has "overjoyed" Comcast's opponents.

Even when Comcast is right about its business critics' bald self-interest, Carr tells us, "in terms of the public debate, Comcast is at a disadvantage. From the consumer perspective, Netflix provides a wide array of programming for $8 a month, and Discovery delivers abundant reality programming along with lots of furry and furious animals. Comcast is the cable guy with the drooping pants, the one who collects money for everyone else by issuing big, fat monthly bills — and then sends much of it right back out the door to programmers." By crying Victim! so loudly, Carr claims "Comcast seemed defensive and frantic... Their response could create more problems than it’s worth."

POSTED: Thursday, September 25, 2014, 2:38 PM

"It's rather gratifying to see a lot of the old team coming back," says Philadelphia accounting entrepreneur Jim Smart. It's seven years since he sold his former firm, 650-employee Smart Business Advisory and Consulting, to private-equity investors for $60 million in cash plus $45 million in leveraged buyout debt. It's four years since he joined Richard Devine as founding partners of SmartDevine, which has grown to nearly 100 people, many of them veterans of the prior Smart firm.

The old Smart firm was the largest accounting firm based in Philadelphia at the time of its sale, not as large (with 350 local staff) as the local offices of PricewaterhouseCoopers or some of the other Big Four international firms, but larger than the local outposts of second-tier U.S. firms like BDO or Grant Thornton. After the pending merger of Center City-based ParenteBeard into Baker Tilly Virchow Krause of Chicago, Smart will again head one of the biggest accounting-based firms in the city. Smart has added its first branch, in King of Prussia, headed by John McLaughlin, another Smart veteran (via BDO). . 

"The continuing regulation and complexity has driven a consolidation," says Smart. "Our former firm grew because the Big 8 consolidated to the Big 4, and that created opportunities. Today you have a true oligopoy of the Big 4, and it's a quantum leap down to the next level. Clients don't like oligopolies. They look for an alternative service provider.  

POSTED: Thursday, September 25, 2014, 1:20 PM

Robert Ciaruffoli, boss of ParenteBeard LLC, which he built through mergers into the biggest accounting firm in Philadelphia after moving here from Wilkes-Barre 10 years ago, agreed to talk about his firm's recent decision to merge into Baker Tilly Virchow Krause LLP, a larger Chicago firm that is part of the same global network of firms, Baker Tilly International. Edited transcript:

Are you merging because it's the only way you could find to grow? Our strategy has been consistent for many years: You can start from scratch. Or you can join somebody and get there a heck of a lot faster.

We've done both over the years. We started some offices from scratch. In my opinion it was a heck of a lot easier to do that 20 years ago than today. There was less technology. There was a heck of a lot less regulation.

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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