Hartford Business Journal

10 Hartford Business Journal • February 29, 2016 www.HartfordBusiness.com operations to Connecticut from Israel. Rebecca "Becky" Nolan is vice president of business development at MetroHartford Alliance, the region's business promoter. Nolan has worked closely with CERC, DECD and other state agencies and nonprofits since 2011 to elevate Connecticut's economic vis- ibility among U.S. trade allies globally. That Israel has emerged, along with Ger- many, the United Kingdom, Italy, as well as several other Middle Eastern nations, as Con- necticut's economic partners partly reflects the synergies of both, Nolan said. For example, Connecticut is home to bio- pharmas such as New Haven's Alexion Phar- maceuticals and German drugmaker Boeh- ringer-Ingelheim's U.S. arm is in Norwalk; medical-device maker Covidien has a manufac- turing facility in North Haven. Software devel- opment, particularly products for protecting online access and information, are the province of many Connecticut and Israeli startups. Making connections Genesis for Connecticut's mounting inter- est among Israeli entrepreneurs can be traced to a series of "summits'' coordinted by Metro- Hartford Alliance and others, including Con- necticut's Jewish diaspora, to match those Israeli firms, many of which coveted doing business with or in the U.S., with Connecti- cut entrepreneurs who could facilitate them. Held annually in various Connecticut locales starting in 2011, the summits also featured Connecticut Innovations Inc. — the state's quasi-public venture capital investor — the state labor department, plus this state's leading research universities, UConn and Yale. The first summit, held in May 2011 at East Hartford's Goodwin College, drew between 80 to 100 attendees, along with Israel's economic minister, according to Laura Zimmerman, plan- ning-community development vice president for the Jewish Federation of Greater Hartford. The second, in June 2012, at East Hartford's Rentschler Field drew more than 150; the third, in June 2013, drew more than 200 to Walling- ford's Oakdale Theater, Zimmerman said. This year's summit is set for May 11 at Infinity Music Hall & Bistro in downtown Hartford. Spurred by response to and attendance at those summits, DECD Commissioner Catherine Smith in Dec. 2013 led a group of fewer than a dozen people on an economic mission to Israel. Two months earlier, UConn President Susan B. Herbst and retired men's basketball coach Jim Calhoun led an academic mission to the country. "I got the idea that it was probably good to get over there right away,'' said Smith, who said she encountered a highly entrepreneur- ial Israeli culture, where business incubators "are on every corner, practically." Connecticut and Israel, she said, share overlap in several technology spheres, includ- ing development of green technologies involv- ing fuel cells and water treatment. They, too, have in common genomic, stem-cell and immu- nological research, as well as aerospace and advanced manufacturing technologies. According to DECD, Connecticut's trade volume with Israel is growing. In 2015, Israel ranked 17th as a destination for state-pro- duced goods, with commodity exports to Isra- el totaling more than $118 million, a 16 percent gain from 2014, agency data shows. By com- parison, France, Germany, Canada, United Arab Emirates and Mexico were the top five destinations last year for Connecticut commodity exports. Encouraging more Israeli firms to come to Connecticut, Smith said, fits with the state's broader strat- egy to enhance and promote its interna- tional-business devel- opment aims as much as the state advocates for advancement of its home-grown busi- nesses. DECD has since hired an Israeli- based consultant to advocate on its behalf. Efforts bear fruit In March 2014, a few months after Smith and her trade delegation visited Israel, Applango debuted its U.S. headquarters in the Stamford Innovation Center. Founder/ President Daniel Sarfati said one of Applan- go's Connecticut investors urged him to ditch rival pitches from Delaware, New Jersey and Pennsylvania to come here. The same uniden- tified investor also introduced Applango to DECD, which provided a $100,000 grant used to hire four workers in Stamford, Sarfati said. Sarfati said an East Coast location, more so than one on the opposite coast, offered him convenient access to direct flights to and from Israel, via New York's Kennedy International Airport. Once a month, Sar- fati or someone else at Applango must fly to and from the Israeli capitol, Tel Aviv. Also, a seven-hour East Coast time difference with Israel vs. a 10-hour West Coast lag makes it easier to conduct business, he said. Moreover, Sarfati relocated his three school- age children to Connecticut, where he was encouraged to find a Jewish cultural infrastruc- ture, including schools and synagogues, that could, he said, "help them with a soft landing.'' "It's a good place for us to be,'' Sarfati said. Biological Industries chose Connecticut for some of the same reasons as Applango, said Marketing Director Tanya Potcova, includ- ing nearer access to its primary U.S. market. Founded 30 years ago, BI's catalog contains some 500 varieties of cell cultures used to grow human and animal cells for biologic research, of which about 489 are distributed from its 3,500-square-foot refrigerated storage-distri- bution facility in Cromwell, Potcova said. Biological Industries has a local tie to the region through a Windsor business that owns a stake in the company, she said. But the oppor- tunity to be nearer, Potcova said, to research schools and talent farms like UConn and Yale, plus having practically next door Jackson Lab- oratory, another producer-supplier of research media, and other health-research vendors close by was too good to ignore. "It's time to brand build,'' she said of BI's plan to leverage its Connecticut presence to make its name and products more familiar to the U.S. market. Currently, BI employs five in Cromwell but eventually plans to expand that to eight, with the hiring of more scientists and sales staff who would be stationed across the country, Potcova said. A key partner in Connecticut's commer- cial Israeli recruitment has been the Jewish Federation of Greater Hartford, according to DECD's Smith and others. Aside from a lead role in marshalling summit resources and participants, the West Hartford advocacy-education organization has eagerly awaited arrival to Connecticut of Israeli companies, said Zimmerman, the Jewish Federation vice president. The Federation, too, serves as a cultural touchstone for those Israeli firms that want to know more about the cultures and life- styles in the Connecticut and U.S. before they leap, Zimmerman said. "No. 1, it's about jobs for Connecticut. It's our home as well,'' she said. "We want a strong Hartford. We want a strong Connecticut.'' n "It's a competitive environment just for interns, for accounting grads, they're well- paid positions," Kindelan said. "We always have to be competitive and evaluate what the market is doing. The competition has not been stagnant there." The internships are mutually beneficial, said Rose Swiatkiewicz, marketing director at CohnReznick. "It's a great opportunity for students to come in because they're here for a number of weeks, to really see what the environment is like, what the culture is like to work here," she said. "It also gives our team a really good chance to evaluate them not only from their technical skills, but are they a good fit." Central Connecticut State University student Hannah Phelan said the experience, guidance, support and training she's receiving as a CohnReznick intern is invaluable. "I absolutely love it," she said from her 12th- floor cubicle on a busy mid-February Friday. "I don't know what more I could really ask for." The junior accounting intern said the experience is affirming her career choice. CohnReznick has hired interns season- ally for 25 years, and other seasonal staff for about 15 years, Kindelan said. However, the number of people hired seasonally each year has increased significantly. Richard Buggy, office managing part- ner and tax partner at Crowe Horwath LLP, which Buggy's former firm, Saslow, Lufkin & Buggy LLP in Simsbury, joined last July, underscored the tight competition for interns. He has two this season, both seniors, and has good luck converting interns into full- time staffers. "It's a total battle for talent, at this point," Buggy said. "There are just not enough people to go around." It's hard to compete against the Big Four accounting firms, which tend to get first choice at big schools like UConn, he said. "I think joining Crowe, which is a much big- ger firm than what we were … we've gotten some additional clout," Buggy said. "Hopefully that will help us compete for some of those bodies." Tax trends As firms deepen their benches, they're also facing new tax changes. There are new reporting requirements, for example, under the Affordable Care Act, forcing large employers to file 1095 C and 1094 C forms. Congress in December also passed a tax extender bill. Provisions of note that were extended, said Michael D'Addio, principal of tax and business services in Marcum's New Haven office, include bonus depreciation remaining at 50 percent for 2015, which was retroactive, and staying at 50 percent for two more years before lowering to 40 percent and 30 percent the two years after that. Another significant provision is the quali- fied charitable distribution from IRAs, he said. People over 70 1/2 can give $100,000 directly from their IRAs to charity, so they don't have to pick that up in income and take a deduction. As a result, the direct transfer is not a taxable item, D'Addio said. Also important this year are new rules from the IRS regarding Form 8971, dealing with beneficiaries acquiring property from a decedent, an issue affecting accounting and legal firms that do a lot of estates, he said. CohnReznick's Kindelan said Congress's approval of the tax extenders, many through the next two years, was important for giving taxpayers predictability. "The intent of having these programs is to provide incentive to invest … and if taxpay- ers didn't have certainty as far as whether a program was going to exist, they might be less apt to invest in a certain area," he said. CohnReznick has been focused on a num- ber of areas for clients this year, including miti- gating the 3.8 percent net investment income tax that is imposed on net investment income; unitary tax rules and how they apply to Con- necticut corporations; and ensuring clients are aware of and taking advantage of appropriate tax incentives and credits, Kindelan said. n from page 1 from page 8 Accounting firms face last-minute tax changes BI, Applango among newcomers CT's Top Export Destinations Rank Country 2014 Exports 2015 Exports 1 France $2,210,749,225 $1,932,116,604 2 Germany $1,711,873,865 $1,652,983,205 3 Canada $1,913,691,439 $1,622,647,340 4 United Arab Emirates $1,141,955,865 $1,592,052,102 5 Mexico $1,280,694,019 $1,319,616,765 6 China $907,301,045 $1,029,900,955 17 Israel $102,236,739 $118,680,218 S O U R C E : C T D E P T . O F E C O N O M I C A N D C O M M U N I T Y D E V E L O P M E N T

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