Art As Economic Engine: The A and E District Advantage

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As the town council readies to submit an “Intent to Apply” request to the State to designate Chestertown as an Arts and Entertainment District, the Greater Chestertown Initiative (GCI) committee has identified some of the economic advantages to artists, businesses and individuals living and working within an A & E District:

The 2014 legislature defined a Qualified Residing Artists (QRA) as an individual who: owns or rents residential real property in the state; conducts a business in any A&E district; and derives income from the sale or performance within any A&E district, or any artistic work that the individual wrote, composed, or executed, either alone or with others, in an A & E district.

Income Tax Subtraction Modification: Any QRA who resides in Maryland, creates artistic work in any of the 22 A E districts and sells that work in any of the 22 districts will be eligible for the artist’s income tax incentive. The act took effect July 1, 2014 and is applicable to all taxable years beginning After December 31, 2013.

Exemption from Admission and Amusement: In addition, admission and amusement tax gross receipts for any amusement charge levied by an A&E enterprise or any QRA, are exempt for a period of (1-10) years

Property tax credit: Property tax credits are available for the owner of a building located within the A&E District. The building must be partially built or renovated for the use by a Qualified Residing Artist (QRA), or an A&E enterprise can be eligible for a property tax credit for (1-10) years, as long as the building is used by the QRA or an A&E enterprise.

The owner will work with the State Assessment Office to determine the qualified renovations and previous assessment to determine the amount of the credit. If less than the whole building is used by the QRA, the credit is only for the portion used by the QRA. The town may choose any period of time up to 10 years to determine the credit.

 Examples of Property Tax Credit

(It is important to note that these are possible guidelines and may not be the actual percentages sought during the application process and will depend on how the request is packaged. Lani Seikaly, President of RiverArts and spokesperson for Greater Chestertown Initiative wrote to the Spy that the State recommended asking for the highest percentage of property tax credit. The State pointed out that Leonardtown was granted a 100% incentive for all ten years)

 

100% —1st and 2nd years

80% —3rd and 4th years

60% —5th and 6th years

40% —7th and 8th years

20% —9th and 10th years

0% —after 10 years

 

A 2013 Towson State economic analysis of the 22 A&E districts and their impact on jobs, wages and income, maybe be found here:

Form 501ae lists qualifications needed for tax reduction here.

Compiled with research help from Jeff Grotsky, Greater Chestertown Initiative.

Benchworks Names Melissa Johnston as President

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Melissa Johnston

Melissa Johnston

Benchworks is pleased to announce that Melissa Johnston has been named to the position of President. She will be responsible for all agency functions and executing the company’s vision and strategy, as well as overseeing sales and marketing. Melissa will also support Benchworks’ market development initiatives focusing on the Boston, Washington, DC, and Virginia markets.

Previously, Melissa held the title of Senior Vice President at Benchworks. As a member of the leadership team, she helped manage the company’s daily operations, implementing business procedures and controls, and supervised the project management staff. Melissa also directed Benchworks’ pharmaceutical/life science segment serving clients including Shire, West, and Supernus.

Melissa commented on the appointment, saying “I am looking forward to working closely with Thad Bench (CEO) and Renee Bench (Chairman) to help execute the overarching vision and strategy for the Benchworks marketing business unit. This is an exciting time. With our recent acquisition of Safe Chain Solutions and the creation of our consulting division, we continue to expand our support for our pharmaceutical and life science clients as well as build a solid portfolio of middle-market accounts.”

Benchworks CEO Thad Bench said “Melissa’s impressive accomplishments and dynamic work style have earned her this important role. I am confident that under her leadership, Benchworks will flourish and continue to meet and exceed our clients’ expectations as I shift my responsibilities to managing an expanding number of business units. I look forward to working closely with Melissa in her new position.”

Melissa earned a BA in Business and Economics from Washington College. She also completed the Project Management Certificate Program from the University of Delaware.

Benchworks, a comprehensive marketing services firm headquartered in Chestertown, MD, was founded in 1991. The company specializes in the design, production, and launch of complete marketing and branding services. Additional Benchworks operating units include Benchworks Consulting, Safe Chain, and a licensed products division. Clients include a wide variety of companies in the pharmaceutical, beverage, manufacturing, marine, tourism, and education industries in North America and Europe.

 

For more information, visit www.benchworks.com, or call 800-536-4670.

 

Spy Chat: Downtown Chestertown Association with Kristen Owen

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Like her famed real estate intuition, out-going Downtown Chestertown Association (D.C.A.) president and realtor Nancy Mcguire hit the bullseye with her recruitment of Chesapeake Bank’s Kristen Owen to succeed her last year. As if sent from the central casting office, Kristen combines an almost perfect profile of the new era of leadership the town is experiencing.

Kirsten, who grew up in Chestertown, comes to her volunteer position with ten years of banking experience, a young family, and a first-hand knowledge of the challenges on High Street. That’s a hard combination to beat when being asked to lead an organization dedicated to supporting the downtown merchants in a town of 5,00o.

In her interview with the Spy, Kristen talks candidly about downtown Chestertown and its various challenges, and equally frank about the future of DCA’s I-sign on Cross Street. But in the end, she also expresses as genuine conviction that Chestertown is finding a way to move forward in a very exciting fashion.

This video is five minutes in length

Maryland Film Tax Credits at Risk; No More Wedding Crashers for Shore

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Frank Underwood may be looking for a new base of operations.

Maryland tax credits worth millions have kept “House of Cards” in the state for three seasons, but a real-world budget crunch may mean Kevin Spacey — who plays the political villain — and rest of the cast and crew will head elsewhere.

A state legislative committee held a public hearing Tuesday on the feasibility of Maryland’s film production tax credit, most notably associated with the Netflix series.

Hannah Byron

Hannah Byron,, assistant secretary for the Maryland Division of Tourism, Film and the Arts

Film productions are exempt from state tax when purchasing goods or services related to the production, but the state is reaping only 10 cents for every dollar it gives up, according to a report from the state’s Department of Legislative Services.

The report concludes that the credit does not promote long-term economic growth for Maryland and recommends that the General Assembly allow the film production activity tax to expire as scheduled on July 1, 2016.

Legislative Services staff members who contributed to the report were present at the meeting to defend their recommendations.

“The current funding amount is about $25 million (per year). But is that what optimizes economic benefits to the state?” said Robert Rehrmann, a policy analyst who contributed to the report.

Film production tax credits have become more popular in the last decade, with 37 states and the District offering some form of incentive in 2014.

In a letter to Gov. Martin O’Malley last year, Charlie Goldstein, senior vice president of MRC Studios, which produces “House of Cards,” warned that if the show does not receive tax credits, they will look to film in another state.

In total for all productions, Maryland has provided or set aside $62.5 million in tax credits from fiscal year 2012 through 2016.

Supporters of the tax say the film industry promotes economic growth in Maryland by bringing in jobs and more local spending, and that we need to offer at least $25 million in credits each year to be competitive with what other states offer.

“For many small businesses in the state, it has made the difference for keeping their doors open, the difference in hiring new staff, or the difference in making capital improvements to their property, ” said Hannah Byron, assistant secretary for the Maryland Division of Tourism, Film and the Arts.

While some small businesses are reaping the benefits, the Department of Legislative Services’ report estimates that Maryland is only getting a 10-cent return for every dollar of tax credits provided to the film industry.

Byron countered that another independent study calculated a return of $1.03 — or 3 percent — on every dollar in credits, and that the Legislative Services report did not focus enough on indirect benefits of production, such as the potential for film tourism.

Still, the report has a few more criticisms, one being that 96.5 percent of all credits are going to only two productions — “House of Cards” and HBO’s “VEEP.”

The report also points out that a few jurisdictions benefit much more than others, and also that the productions are short-lived and will not add any permanent benefit to the economy because jobs provided will be temporary.

Michael Davis, a scenery builder in Maryland for over 27 years, disagreed with this idea Tuesday in testimony before the committee.

“I worked on project after project, sometimes more than one at a time, and other times no work at all … and the pay is at least 30 percent more per hour and we will work 50 to 60 hour per week during a production,” Davis said.

However, Rehrmann reminded, the report shows less than one-tenth of 1 percent of Marylanders are employed by the film industry.

The decision on whether to extend or modify the current tax credit will have to be made by the General Assembly by July 1 and could be influenced by Gov.-elect Larry J. Hogan Jr.

“We’ll take a look at (the report) and have something to talk about later … there’s one governor at a time,” Hogan said Tuesday.

By Dani Shae Thompson

Benchworks Acquires Safe Chain Solutions

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Thad Bench, CEO; Pat Boyd, Executive Director/Partner; Charles Boyd, President

Thad Bench, CEO; Pat Boyd, Executive Director/Partner; Charles Boyd, President

Benchworks is pleased to announce that it has acquired Safe Chain Solutions, a rapidly growing pharmaceutical drug wholesaler serving hospital pharmacies nationwide, with a combination of cash and stock. Safe Chain Solutions has a pharmaceutical distribution facility in Cambridge, Maryland, a sales office in Miami, Florida, and a digital development office in Nagpur, India. Safe Chain Solutions also has a vibrant Third Party Logistics (3PL) business serving a wide variety of clients in the beverage, apparel, and manufacturing sectors.

“The acquisition of Safe Chain Solutions demonstrates our continued commitment to the life science industry,” said Benchworks CEO Thad Bench. “The pharmaceutical division at Safe Chain which is currently engaged in supplying hospital pharmacies will eventually be able to produce patient starter kits and support Rx sample programs for our existing and new pharmaceutical clients upon regulatory approval. This is a significant step in growing our revenues and adding strategic capacity to our family of companies.”

President of Safe Chain Solutions Charles Boyd commented, saying, “We are excited to be aligned with Benchworks and look forward to continuing our rapid growth and expanding our service offering. We could tell almost immediately that Benchworks’ and Safe Chain’s cultures meshed very well.”

Benchworks, a comprehensive marketing services firm headquartered in Chestertown, Maryland, was founded in 1991. The company specializes in the design, production, and launch of complete marketing and branding services. Clients include a wide variety of companies in the pharmaceutical, beverage, manufacturing, and education industries in North America and Europe. Additional Benchworks operating units include Benchworks Consulting and a licensed products division. For additional information, please visit www.benchworks.com or call 800-536-4670.

Exelon Commits to Pepco Charities

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Local charities are looking forward to continued support from Pepco, the region’s oldest utility provider, even as state authorities review a proposed merger with Chicago-based utility Exelon.

Philanthropies were initially concerned that management changes would affect Pepco’s commitment to non-profits. But Exelon has issued assurances that the company will remain committed to Pepco’s 2013 level of philanthropic giving.

That is good news for charities throughout the region.

“I look forward to watching our Pennies for Patients program surpass the million dollar mark,” said Beth Gorman, executive director for the Leukemia and Lymphoma Society, speaking of one of her organization’s regional projects. “With Pepco’s help and commitment I know that we’ll be able to get there.”

The Leukemia and Lymphoma Society is one of the world’s largest health organizations, dedicated to funding blood cancer research and helping patients through more than 60 chapters in the U.S. and Canada.

Pennies for Patients has been around for about two decades. In the metro area, the majority of the approximately 470 participating schools come from Maryland.

In the last two years combined they raised close to $1.7 million by encouraging schoolchildren of all ages to bring spare change and dollars to school to support the society’s mission.

Exelon has pledged a total commitment of about $50 million in charitable contributions over 10 years in the Pepco service territory, which spans D.C., Maryland, Delaware and New Jersey. That’s about equal to the $5 million a year, or so, that Pepco has been giving.

“We’re…going to…continue to work with non-profit partners without missing a beat. We have already been there. And Exelon’s support to what we have been doing is just going to continue,” said Debbi Jarvis, Pepco’s vice president of Corporate Citizenship and Social Responsibility.

Gorman said she would like to see the partnership with Pepco expand.

Each year about 20 local high schools compete against one another in a fundraising effort as part of the Pennies for Patients program.

“In fact, our two top high schools typically come from the Maryland area,” said Gorman, adding that out of all the participating institutions, Walt Whitman and Walter Johnson high schools each raised more than $80,000 this year.

The society’s goal for the program in the upcoming season, which lasts January through April, is $900,000.

Pepco became involved with the program three years ago, Gorman said.

In addition to a direct contribution of about $45,000 a year, Pepco has provided a summer internship to one student from the school that raises the most money, Jarvis said.

“Over the next five years, Exelon alone on the utility side of the business will be investing $16 billion in the communities we serve,” said Chris Crane, Exelon’s CEO, when questioned about implications of the acquisition for the local philanthropies at an October event in Washington.

The Federal Energy Regulatory Commission approved the proposed merger of Exelon Corporation and Pepco Holdings last Thursday.

The company is now awaiting approvals on the deal from public utility commissions in the district, Maryland, Delaware and New Jersey.

According to the Maryland Public Service Commission, the next set of hearings where public comments about the merger will be heard are scheduled for January.

By Yevgeniy Trapeznikov
Capital News Service

Oyster Aquaculture in MD, VA Hits Snags in 2014

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Oyster aquaculture production continues to rev up the seaside economies in Maryland and Virginia, but the need for better leasing laws and procedures coupled with a tough year for hatcheries slowed production in 2014.

Hatcheries from Maryland to North Carolina experienced water-quality problems, and scientists haven’t figured out why. Unlike in 2011, when hatchery managers and scientists blamed a slog of freshwater from hurricanes for poor production, this year’s problems seem site-specific.

Technicians at the Horn Point Laboratories warm up the water to induce spawning in brood stock oysters in 2010. Production was down about 30 percent in 2014. (Dave Harp)

Technicians at the Horn Point Laboratories warm up the water to induce spawning in brood stock oysters in 2010. Production was down about 30 percent in 2014. (Dave Harp)

At the University of Maryland’s Horn Point Hatchery in Cambridge, production was down about 30 percent, according to Don Webster, an extension agent who specializes in aquaculture. Horn Point is the largest hatchery in Maryland, and the state owns and operates it. Unlike many private hatcheries, Horn Point’s is loaded with top-notch equipment and several filtration systems. Webster said Horn Point staff consulted with oyster experts elsewhere, but couldn’t figure out the problem, which lasted from May until July.

“This was the first time we’d seen it widespread, and for that long,” Webster said. “Nothing seemed to work on it.”

Horn Point will close the year with about 900 million spat, which oyster farmers and the state plant on the bottom after the larvae set on oyster shells. In 2013, Horn Point announced it produced more than 1 billion spat, more than any other hatchery in the country. That was after several years in the 500-million range.

Spat-on-shell is how most oysters are grown in Maryland and Virginia’s aquaculture operations. These oysters largely go to the shucking house market.

In Virginia, the half-dozen private hatcheries cater to both the spat-on-shell market and those who grow individual oysters in floats and cages. They fared better than Horn Point overall, said Jim Wesson, who is the head of conservation and replenishment for the Virginia Marine Resources Commission.

But individual hatcheries had their own crises. One on the Eastern Shore lost several days of production because a neighbor removed creosote from pilings during the spawning season.

Another, on Gywnn’s Island, was having its most productive year on record until the Virginia Department of Transportation began sandblasting paint off the island’s tiny bridge. Two days later, nothing would grow, Wesson said.

When asked what specifically killed the larvae, which are extremely sensitive, Wesson said it was a combination of the zinc, copper and cadmium in the paint and stripping materials, all of which got into the water.

“If you had to list things that would kill an oyster larvae, those would be on it,” he said. “Whatever this was, it was messing up their digestion. You could see it in the microscope. The metals are definitely there.”

State officials persuaded the transportation department to halt the project, and production resumed. But much had been lost because of the timing of the painting. Wesson said his department is trying to educate environmental engineers so they plan around the spawning season. Had the bridge been painted anytime between July and December, he said, the larvae probably wouldn’t have been harmed.

Despite the setback, oyster aquaculture in both states seems to be steady, with the Chesapeake Bay bivalves in both states plentiful enough to send to Louisiana for shucking.

Laws in both Maryland and Virginia have focused on making it easier for entrepreneurs to enter the oyster farming business. In 2009, Maryland passed a law legalizing oyster aquaculture in every county and requiring oyster lease-holders to work the leases they had or lose them. Now, Maryland has 318 shellfish aquaculture leases on nearly 4,000 acres. Karl Roscher, who manages aquaculture at the Maryland Department of Natural Resources, said he’s not certain how many jobs have been created. But the department has permitted and registered more than 1,400 individuals to have some role in leased-bottom aquaculture.

This number is poised to grow, as the department is reviewing 77 lease applications. Since the law changed, Maryland officials have struggled with the time it takes to issue leases, which has been up to a year and even longer in some cases. State officials have said they would like to reduce the time to three months, which is the average time in Virginia. The difference between the states is in the oversight of the Army Corps of Engineers. The Baltimore District’s review process takes much longer than the Norfolk District’s, even though the Baltimore district did adopt some of Virginia’s permitting practices.

Also helping Maryland’s numbers of aquaculture operations grow are several state programs that help watermen transition to aquaculture. Low-interest loans are available through the state agency, Maryland Agricultural and Resource-Based Industry Development Corp. Several programs within the Maryland Department of Agriculture have funded capital investments in oyster farms. Webster runs a remote-setting training program that teaches budding aquaculturists how to set oyster larvae on shells. He has established 32 tanks in 10 locations.

Virginia’s government has also invested in cultivating its oyster industry, and used some of the $15 million crab disaster funds it got in 2009 to help watermen buy materials and build cages.

In the past, Maryland has looked south and groused that Virginia had a better system for setting up and cultivating an aquaculture industry. A private oyster fishery, which is largely spat-on-shell aquaculture, has been thriving in Virginia for more than a century. It has 100,000 acres under lease. Last year’s combined public and private harvest topped $22 million, with the private leases comprising more than half of that.

But Virginia’s famed structure has hit a snag. It has no use-it-or-lose-it law. Anyone who pays the $500 application fee can get a lease of up to 250 acres and keep it for 10 years. It costs $1.50 per acre. After that, they have to show a plan to plant shellfish, but even that requirement is full of loopholes, Wesson said.

About five years ago, Wesson noticed many waterfront homeowners applied for large leases in front of properties with the hope of blocking would-be farmers from trying to plant oysters there. Those applicants are still holding on to those acres, many of which could be productive and contribute to both the ecology and the economy.

But another group has emerged: Poachers. They apply for leases on dead bottom just to have access to good bottom, so they can steal the crop. They will take oysters from private beds or the public bottom, Wesson said.

Many farmers will have oysters reach market size in March or April, but they won’t harvest them until the summer, when the wild fishery no longer operates and the price is high. Longtime watermen know that, he said, and will poach the crop and take the lower price. And they can see the police coming, if they’re on the waterways, and get away quickly.

Wesson said he can spot the applicants who are not serious; they’re asking for large plots, of 100 acres or more, and they’ll often apply for one in their name and then their spouse’s name. He knows they won’t plant the leases; there isn’t enough shell in the Chesapeake Bay for that kind of acreage.

Those who are serious about getting into the business will ask for one or two acres; those that are already in it might ask for 25 to 50. In the real industry, Wesson said, the trend is to get smaller; in “the lawless one,” as he calls it, it’s to get bigger.

Wesson is hoping to make the law change at an administrative level. If it’s not, he said, the commission will work through the legislature.

“It’s not doom and gloom. People are making money and people are doing this. But if we don’t get those loopholes closed up it’s going to get worse,” Wesson said. “We have got to change that old law.”

By Rona Kobell
Bay Journal News Service

WC’s Dattagupta Honored by Alma Mater for Success in “Art and Science” of Enrollment

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Satyajit Dattagupta, the vice president for enrollment management at Washington College

Satyajit Dattagupta, the vice president for enrollment management at Washington College

Satyajit Dattagupta, the vice president for enrollment management at Washington College, has received the “Graduate of the Last Decade,” Award from his alma mater, Southwestern Minnesota State University. Dattagupta was recognized October 10 at a special luncheon during Homecoming at the University.

The Graduate of the Last Decade (GOLD) Award is presented to an individual who has distinguished himself or herself in the decade since graduating. Dattagupta received his undergraduate degree in Computer Science from SMSU in 2004, and earned his MBA there in 2007.

The award recognizes Dattagupta’s accomplishments in the area of higher-education admissions, a field that has fascinated him since his undergraduate days working for the SMSU Web site. “I was working with the Web office and I had all these great opportunities,” he says. “One was building an enrollment management system for the Office of Admission. I got intrigued by that; I wanted to have a career in that field.”

Before coming to Washington College in summer of 2013, Dattagupta held the positions of Associate Director of Admission and Coordinator of Technology at DePauw University in Greencastle, Ind. and Executive Director of the Office of College Enrollment at University of Rochester (N.Y.). His background in computer science and his ability to find meaning in mountains of data have been integral to his work in enrollment management, which he describes as a marriage of art and science. “You need to take the data and make information,” he says. At Washington College, he moved quickly to bring the production of all admissions marketing materials in-house, spearheaded the creation of a new Visitors Center in the Casey Academic Center, and led his department to meet its recruiting goals for the Class of 2018 despite a challenging environment nationwide.

Dattagupta, a native of Mumbai, Maharashtra, India, says he is humbled by the GOLD Award from his alma mater. “SMSU did so much for me,” he said. “It was the start of so much for me.” Dattagupta’s wife, Priyanka Sharma, is a 2008 graduate of SMSU. The couple lives in Chestertown.

Supreme Court to Hear Case on Right of States to Tax Out-of-State Income

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The U.S. Supreme Court is set to hear a case involving a Maryland couple who believe their out-of-state income should not be taxed by their state of residence.

Brian and Karen Wynne of Howard County argue the income they earn in several other states through Maxim Healthcare Services Inc., a company Mr. Wynne partially owns, should not be taxed by Maryland if they pay the income taxes in those other states.

Maryland has an out-of-state income tax credit that can be used to offset state income taxes. But there is no equivalent credit that can be used to offset county income taxes, so counties can tax the out-of-state income.

According to court documents, Comptroller of the Treasury of Maryland v. Wynne (No. 13-485) asks the question: “Does the United States Constitution prohibit a state from taxing all income of its residents — wherever earned — by mandating a credit for taxes paid on income in other states?”

The Wynnes argued in Maryland Tax Court that the partial credit violates the dormant Commerce Clause.

University of Maryland Carey School of Law Professor Mark Graber said the dormant Commerce Clause says “there are some state regulations of interstate commerce that are unconstitutional even when Congress does not act.”

“So there is no federal law that prohibits or requires states to give tax credits for taxes paid in other states,” Graber said. “But the claim the Wynnes are making is that, in fact, Maryland’s failure to do so sufficiently burdens interstate commerce.”

When the Maryland Tax Court sided with the comptroller, the Wynnes appealed to the Maryland Court of Appeals, the state’s highest court, which sided with them.

Dominic Perella, the Wynne’s counsel, said his client believes he “shouldn’t have to pay double taxes” and that the way Maryland structures its taxes punishes him for growing a successful business.

But Maryland has argued in court documents that, among other points, it has the right as a sovereign state to tax the entirety of its residents’ income, regardless of where the income was generated or if taxes on that income were paid in other states. The Maryland Attorney General’s office said it does not comment on pending litigation.

A brief filed by organizations representing local governments also contends that counties would suffer if they offered credits against county income tax for income earned out-of-state.

“There would be significant financial implications for counties,” said Andrea Mansfield, legislative director of the Maryland Association of Counties.

According to the brief, if the Supreme Court sides with the Wynnes, estimates from the comptroller’s office are that it could cost local governments $120 million in retroactive refunds, and could reduce local income tax revenues by about $50 million annually going forward.

The Bureau of Revenue Estimates says the initial cost to local governments could actually be higher – $190 million plus interest in protected claims and retroactive refunds.

Graber said if that happens, the Maryland tax bill for all residents who earn out-of-state income will go down.

“Conversely, the revenue obtained by Maryland will also go down,” Graber said.

He said if the high court sides with Maryland, life will probably go on as usual as the Supreme Court has in the past left states alone to tax the income of their residents as they see fit.

The Supreme Court begins its next session Monday. This case is set to be argued Nov. 12.

By Ashley S. Westerman
Capital News Service