1. Strategic Importance of Wall Street West Lehigh Valley Community Forum August 23, 2007 Luc M. Miron DCED Technology Investment Office

2. Key Component of the Rapidly Evolving “Innovation Economy” Opportunity + Competitive Advantage Strategic Importance of Wall Street West

7. Two (2) Components –“Economic Development” Component (Wall Street West) synchronousExtend synchronous fiber optic connectivity between Northeast PA (NEPA) and NYC –“Workforce Development” Component (WIRED) Federal DOL program - successful $15M grant award Goal: Implement a transformational regional strategy through the intersection of workforce/economic development objectives around Wall Street West remote facilities Wall Street West / WIRED Initiative

8. Project Impetus –September 11 terrorist attacks caused major interruptions –Demonstrated vulnerabilities of US financial system –Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System (April 3, 2003) –DCED/Commonwealth commitment to implement –WIRED funding – $15 million federal DOL grant Wall Street West: Impetus for Project

9. S.E.C. Recommendations (Sound Practices): 1.Identify clearing and settlement activities in support of critical financial markets 2.Determine appropriate recovery and resumption objectives for clearing and settlement activities in support of critical markets 3.Maintain sufficient geographically dispersed resources to meet recovery and resumption objectives 4.Routinely use or test recovery and resumption arrangements Interagency Sound Practices White Paper

10. Two types of data processing lead to two different requirements 1. Batch Processing - Typical of most banks, and some insurance companies (asynchronous) Requirement is for space, power, and bandwidth, no inherent latency limitations 2. Real Time Processing - Typical of brokerage houses and mutual funds (synchronous) All transactions must be mirrored in real time This translates to maximum latency of roughly 6 milliseconds; this latency corresponds to 125 route miles or less of fiber Law of Physics

11. Attractiveness of NEPA. NYC Proximity to NYC –within 125 fiber miles Separate power grid from NYC Different water shed Potential labor pool; fastest growing counties in PA “Business Case”: lower realty costs, labor costs, etc Availability of potential locations Critical mass of back office industry peers

12. Pennsylvania’s Strategy Elements: –Focus –Research & Commercialization –Capital –Workforce –Infrastructure

13. Focus: IBM Global Competitiveness Report Identified four growth-oriented industry clusters and 11 subclusters: –Life sciences Integrated Biopharma Manufacturing Biotech Research Medical Equipment and Devices –High technology Next Generation Electronics Alternative Energy –Advanced manufacturing and materials Powdered Metals Agro-Food Processing Prefabricated Housing –Business services Creative Industries Regional Headquarters Financial Services/back office/transactions

14. Targeted Business Development Competitive Cluster Test Sub-sector A. Life SciencesA1. Integrated bio-pharma manufacturing A3. Medical equipment & devices A2. Biotech researchA4. Advanced medical devices B. ‘High technology’B1. Next generation electronicsB5. Alternative energy-solar panels B2. Alternative energy-wind bladesB6. Alternative energy-waste coal B3. Alternative energy-wind generators B7. Alternative energy-bio fuel B4. Alternative energy-wind turbines C. Advanced manufacturing & materials C1. Powdered metalsC4. Tooling/metal fabrication C2. Agro-food processingC5. Fine chemicals C3. Prefabricated housingC6. Defense production D. Business servicesD1. Creative industriesD4. Financial services/back office D2. Regional HQD5. Printing/publishing D3. Financial services/transactions

17. Cost-Quality Ranking

18. Pennsylvania’s Strategy Elements: –Focus –Research & Commercialization –Capital –Workforce –Infrastructure

19. Research: Economic Engine & Leverage Effect –260 Colleges and Universities –Pennsylvania ranks fourth in academic Research and Development and its world-class academic/research institutions garner substantial NIH funding-- $1.4 billion in 2004. More than 22,000 students received degrees in the engineering and sciences fields. Pennsylvania provides over $130 million to academic research projects each year.

20. Job Creation – approximately 36 jobs per $1 million of research + Construction and service sector positions + Indirect jobs (multiplier effect) Increase the number of start-ups and the number of company attractions to the state through enhanced research pipeline Innovation in existing companies Research is a Powerful Tool

21. Commercialization: Keystone Innovation Zones –Capitalizes on the Commonwealth’s greatest asset – our young and talented graduates and our world-class college and university system. –Designates zones in colleges and university communities that will foster innovation and create entrepreneurial opportunities to keep young, talented graduates in Pennsylvania. Pennsylvania Provides: –Operational funding for public/private partnership, incubators –“Starter Kits”: Funding for university technology transfer and key faculty hires –Tax credits for start-ups –Capital for growth

22. Erie WarrenMcKeanPotterTiogaBradford Susquehanna Wayne Pike Monroe Carbon Bucks Montgomery Phila. Delaware Chester Berks Lancaster York Adams Franklin FultonBedford Somerset Fayette Greene Washington Beaver Allegheny Butler Lawrence Mercer Crawford Venango Forest Clarion Armstrong Westmoreland Indiana Jefferson Clearfield Huntingdon Centre Mifflin Juniata Perry Cumberland Dauphin Lebanon Schuylkill Snyder Union Lycoming Sullivan Wyoming Luzerne Columbia Lackawanna Lehigh Northumberland Clinton Cameron Northampton Montour Cambri a Blair Elk

23. Pennsylvania’s Strategy Elements: –Focus –Research & Commercialization –Capital –Workforce –Infrastructure

24. Capital Goal is to encourage and partner with private sector to fill gaps Early Stage –Ben Franklin Technology Partners –Venture Capital: $60 million state investment generated $240 million in new capital. Growth Stage: –Venture Capital: $310 million state investment will generate $900 million in new capital. Maturity and Reinvention –Working Capital Second Stage Loan Guarantee + PNC’s Pennsylvania Working Capital Growth Fund = $200 million –Construction PIDA + Sovereign Bank’s Pennsylvania Small Business Growth Lending Program –Machinery and Equipment Core Industries + Citizens Job Bank

25. Technology-based Economic Development Tools Along the Continuum

26. Pennsylvania’s Strategy Elements: –Focus –Research & Commercialization –Capital –Workforce –Infrastructure

27. Workforce: Advanced technology “knowledge workers” to retain and attract high-tech employers Without a highly skilled workforce, employers in life sciences, information technology, advanced manufacturing and business services are less likely to locate in Pennsylvania. PA needs to capitalize on a solid base of students and research activity; translating it into new “family sustaining” employment.

28. Through WIRED (Workforce Innovation in Regional Economic Development) initiative, the U.S. DOL will invest $195 million in thirteen regional economies NEPA is one of 13 national awards in 1 st cycle funding- $15 million over next 3 years (“A WIRED Wall Street West”) Regional transformational strategy involving economic development, workforce development and education Workforce: WIRED Grant

29. Pennsylvania’s Strategy Elements: –Focus –Research & Commercialization –Capital –Workforce –Infrastructure

30. Infrastructure/Sites More than $1 billion in infrastructure improvement funding available through the Economic Stimulus Package. Used for acquisition/site preparation/on- site infrastructure/construction Focus on brownfield sites

31. The Business Case DCED IBM Global Competitiveness Study identifies Financial Services as a key growth industry where PA has a competitive advantage Moran, Stahl & Boyer, LLC: 25,000 residents in Northeast PA employed in the Financial Services and Insurance Industry (Bank of America; Sallie Mae; Wachovia; Sovereign; PNC Bank; Prudential Financial, etc.) U.S. Dept of Labor Financial Services Factbook 2005: Financial Services and Insurance constitute nearly 8% of PA Gross State Product ($36 B) U.S. Dept of Labor Financial Services Factbook 2006: Financial Services and Insurance Industry will grow by 12% to 2012

32. The Business Case New York Times 12/05: “Allentown, Bethlehem and Easton drew 14,000 new residents from the New York Metro Area in 2005 -- doubling migration numbers from 1998.” Penn State Data Center: Pike County led all PA counties in population increase from ‘04 to ‘05, followed by Monroe County. Pike has also been the fastest growing PA county since 2000, up 21.7 %, +10,035 persons, followed by Monroe, up 17.7 %, +24,547 Penn’s Northeast: “Locating a 500-employee business unit in Northeast PA (vs NY/NJ Metro) would save the company $83 M over 5 years in taxes, payroll and real estate costs -- if located in a KOEZ, $165 M by 2013”

33. “Build It and More Will Come” Lackawanna & Luzerne Counties Back office operations, data center, business processes, insurance, etc 15,077 employees (source: Penn’s Northeast) Lehigh Valley Call centers, back office operations, etc 10,016 employees (source: Lehigh Valley EDC) Financial Services Industry in NEPA Region

34. Wall Street West/WIRED Key Deliverables 5 to 10 mid- to large-sized financial services firms establishing or growing operations in NEPA Creation of approximately 1,000 jobs and training 1,500+ during the WIRED grant period Branding NEPA as industry standard for business continuity and disaster recovery while bolstering NYC as ‘financial services capital’ of the world NEPA business growth in financial services and in all vendor support operations to the industry

35. Wall Street West leads to other opportunities –Data centric or data intensive needs And it’s also about “Main Street” –Improving “last mile” situation in NEPA And It Gets Better…