Crain's Cleveland Business by Crain's Cleveland Business

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VC groups struggle to raise funds Economy improves, but investors leery of portfolios’ so-so returns By CHUCK SODER csoder@crain.com

MARC GOLUB

Mayor Frank Jackson speaks on Friday at the official groundbreaking of downtown Cleveland’s new medical mart and convention center.

JACKSON: FIX SCHOOLS FIRST Mayor says, ‘If we don’t deal with education ... the benefits derived from these other projects will be short-lived.’ By JAY MILLER jmiller@crain.com

rank Jackson had every intention of using a meeting with a reporter to advance his administration’s strategy for attracting new public and private investment to the city. And for much of the 90-minute interview in his corner office in Cleveland City Hall, the city’s mayor laid out a vision for development — much of it facing Lake Erie and the Cuyahoga River — that he hopes will follow the more than $1 billion in downtown construction already under

way or expected in the form of the Flats East Bank mixed-use project, the convention center/medical merchandise mart and the planned casino. But as Mayor Jackson talked about the dirt beginning to be moved on the Mall for the convention center and in the Flats, the conversation turned to what he believes is a major roadblock the area faces — a business and civic community that in his view is unwilling to “tackle education.” The mayor said he was frustrated that he has received no response from community leaders to his annual calls for See JACKSON Page 5

OUR QUOTABLE MAYOR Cleveland Mayor Frank Jackson emphasized in a recent interview with Crain’s that more focus must be placed on the success of area schools. Some of the mayor’s thoughts: ■ “I put the subject (of the schools) on the table every year (in his State of the City address) and I don’t get a peep. I don’t even get criticism.” ■ “The hard, substantive decisions that are left that will ensure the future of the (region) and guarantee population growth — education — (the leadership community as a whole is) refusing to do.” ■ “What (other districts) do ... is compare themselves to Cleveland: ‘Look how much better we’re doing than Cleveland.’”

Stephen Haynes calls it a “gray period.” Venture capital groups in Northeast Ohio and across the nation are finding it hard to raise money despite an improving economy, according to Mr. Haynes, CEO of investment firm Glengary LLC in Cleveland, and other members of the local venture capital community. The main reason: The recession made it hard for them to sell the companies in their portfolios, which is how venture capital groups make money. And without a track record of making money, it’s hard for venture capital groups to attract new capital. Venture capital firms that recently have produced solid profits will be able to attract new money, but firms that are new or that have produced poor returns are in for a big challenge. In the middle are firms with portfolio companies that are young but promising. They may need to wait until they can sell those companies before they can raise more money, Mr. Haynes said. “We’re kind of in that gray period” as an industry, he said. See VC Page 6

ON THE WEB Crain’s podcast goes behind the news On this week’s show, available at Crains Cleveland.com/ podcasts, we tackle the top stories in this week’s paper, plus the future of the medical mart and convention center.

Eaton suit over trade secret theft may be dead due to improprieties Lawyer’s contacts with judge lead to dismissal of company’s case By DAN SHINGLER dshingler@crain.com

Eaton Corp. may have made a billion-dollar blunder in Mississippi. A lawsuit Eaton filed against a competitor over stolen trade secrets was thrown out last month by a

Mississippi circuit court that said the company allowed its attorney to influence a judge improperly. The outcome leaves Eaton preparing to appeal the ruling before the Mississippi Supreme Court in the hope that it can re-file its case. Eaton spokesman Gary Klasen

said last week the company could not comment on estimates by legal observers that the lawsuit might have been worth as much as $1 billion to the company had a ruling been made in its favor. Eaton did not ask for a specific dollar amount in its suit.

Now it stands to receive nothing in a case at least one observer familiar with the Mississippi courts says Eaton could have won on the facts. “There was a lot of merit to Eaton’s case,” said Philip Thomas, a Jackson, Miss., civil litigation attorney and author of a blog called the Mississippi Litigation Review and Commentary. But, because of the improprieties between the judge

and the lawyer Eaton hired, the merits of Eaton’s claims were not a factor in the court’s decision to dismiss the case, Mr. Thomas said. “He basically said, ‘Regardless of your claims, your conduct was so bad that your case is going to be thrown out.’” It is a legal journey Eaton would have rather avoided. See EATON Page 16

NEWSPAPER

71486 01032

SPECIAL SECTION

2010 NEWSMAKERS We identify and profile 10 Northeast Ohioans who made the biggest news and moves last year ■ Pages 11-15 ■

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COMING NEXT WEEK The value of college towns Kent State University and the University of Akron both landed in the top 15 of the most affordable college towns in America, according to a study by Coldwell Banker. Their affordability no doubt adds value to their respective cities’ marketability, but how do they and others affect surrounding housing markets? We explore in our Higher Education section.

REGULAR FEATURES Best of the Blogs .........19 Classified ....................18 Editorial ........................8

Going Places ...............10 Reporters’ Notebook....19 The Week ....................19

WWW.CRAINSCLEVELAND.COM

JANUARY 17 - 23, 2011

ATTENTION BARGAIN HUNTERS Northeast Ohio is home to two of the nation’s three most undervalued housing markets, according to an analysis by Local Market Monitor, a North Carolina firm that provides investors with analyses of housing market conditions. Local Market Monitor comes up with what it calls an “equilibrium price” based on economic and population growth, construction costs, vacancies, household income and interest rates. It also includes an “X Factor” that represents the premium or discount buyers in each market have paid for local homes in the past. By those measures, here are the firm’s five most undervalued housing markets in the country for 2011:

Market

Median home price

% undervalued

Las Vegas

$144,636

27%

Akron

155,673

Cleveland

154,674

Warren, Mich.

111,114

McAllen, Texas

131,871

SOURCE: WWW.LOCALMARKETMONITOR.COM

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editors: Joel Hammond (jmhammond@crain.com) Sports Kathy Carr (kcarr@crain.com) Marketing and food Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Manufacturing Tim Magaw (tmagaw@crain.com) Health care & education Michelle Park (mpark@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing/Events Coordinator: Jessica Snyder (jdsnyder@crain.com) Advertising sales director: Mike Malley (mmalley@crain.com) Account executives: Adam Mandell (amandell@crain.com) Dirk Kruger (dkruger@crain.com) Nicole Mastrangelo (nmastrangelo@crain.com) Dawn Donegan (ddonegan@crain.com) Business development manager & classified advertising: Genny Donley (gdonley@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Production manager: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Circulation manager: Erin Miller (emiller@crain.com) Customer service manager: Brenda Johnson-Brantley (bjohnson-brantley@ crain.com) 1-877-824-9373

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Retail vacancy retreats, albeit slightly Discount store growth, less construction in 2010 contribute to ebb within NE Ohio By STAN BULLARD sbullard@crain.com

Reviewing his company’s annual assessment of retail vacancy rates as 2011 begins, CB Richard Ellis broker

Tom Flynn observes, “It’s not great. It is another way of saying we’ve hit bottom.” Headed down by a hair or the thickness of a butterfly’s wing are others ways to describe the change

during the last year in Northeast Ohio’s retail vacancy rates after what had been a long-term rise in vacancies. A new report by CB Richard Ellis on occupancy levels at shopping centers and big-box stores shows vacancy declined 0.13 percentage points, to 12.36%, as of Jan. 1 from 12.49% on Jan. 1, 2010. Paltry improvement, no doubt. However, the statistic stops a steady

INSIGHT

increase in vacancy rates since 2005, when CB reported a 7.5% retail vacancy level in the region. Mr. Flynn, a senior vice president in CB’s Akron office, said the market benefited from the entry of retailers such as Hobby Lobby and Five Below. It also helped that discounters such as Dollar General Stores and Big Lots added locations or expanded and upgraded in better locations.

Those gains offset losses such as Joseph-Beth Booksellers, which closed at Legacy Village in Lyndhurst, and Kmart stores that shut in Cleveland, Eastlake and Wadsworth. Keith Hamulak, a senior associate in CB’s Cleveland office who works on the report, said just 80,000 square feet of newly occupied selling space nudged the 77 million-square-foot See RETAIL Page 4

CFBank tries to steady performance after shaky quarters with net losses Stock price hovers above Nasdaq minimum By MICHELLE PARK mpark@crain.com

JANET CENTURY

Steve Potash, CEO of Valley View-based OverDrive Inc., says the company has yielded record earnings and revenue from the digital content it distributes through e-books, audio books and other electronic devices.

E-READ ALL ABOUT IT Foray into global markets and partnerships with libraries, retailers a boon for digital content distributor By CHUCK SODER csoder@crain.com

ecord revenue. Record earnings. Record air travel. OverDrive Inc. of Valley View had a big 2010, fueled by a surge in demand for the digital content it distributes and new devices designed to consume it. Much of that demand came from outside the United States. Hence, CEO Steve Potash spent a lot of time on planes last year, visiting the publishers that distribute electronic books, audio books, video and music through OverDrive as well as the libraries, schools and retailers that want the content. “I’ve been spending more time overseas building these partnerships,” Mr. Potash said, See OVERDRIVE Page 6

A letter sent this month to stockholders of Central Federal Corp. outlines how the company and its CFBank unit in Fairlawn have improved their performance, though one bank analyst says they still have more ground to cover than other Northeast Ohio community banks to regain firm footing. Although he agrees there has been progress — a stabilizing of the bank’s nonperforming assets, for one — the analyst, Fred Cummings, characterizes CFBank as “struggling mightily.” Central Federal’s stock price has been low enough that it’s in danger of delisting, and the holding company has yet to repay the U.S. Treasury the $7.2 million it received through the Troubled Asset Relief Program. Central Federal distributed its shareholder letter not long after the

company deferred a TARP dividend payment to the government and received notice from the Nasdaq Stock Market that it could be delisted if it doesn’t regain compliance with the minimum bid price of $1 per share. The price climbed above $1 recently. Interim CEO Eloise L. Mackus noted early in the letter dated Jan. 3 that CFBank maintains well-capitalized status, exceeding regulatory capital requirements. The bank’s total risk-based capital ratio as of last Sept. 30 was 10.5%, higher than the 10% required, she wrote. But regulators prefer “nice cushions” above what’s required, said Mr. Cummings, president of Elizabeth Park Capital Management of Beachwood, an investment management firm focused on opportunities in the financial services sector. He said he’d be surprised if the bank’s regulator hasn’t set a deadline by which it See BANK Page 18

THE WEEK IN QUOTES “Numerous conversations about education have been sparked throughout the city of Cleveland, yet Mayor Jackson is right; these discussions need to go beyond the city and beyond public schools.”

“The industry is taking a hard look at mobile as a tremendous value for readers and as a new opportunity (to generate revenue) for newspapers. New challenges present new opportunities.”

— State Sen. Nina Turner. Page One

— Terrance C.Z. Egger, president and publisher, The Plain Dealer. Page 9

“I met (Dan) Gilbert ... (in 2005). I looked at the people rushing around him and thought, ‘He’s gonna go nuts.’ He’s proven to be an incredible guy.”

“Your physical and mental health can also improve in direct proportion to your charitable activity.”

— John Ferchill, chairman, the Ferchill Group real estate development concern. Page 12

— Lee Seidman, a Newsmaker of 2010 and founder of The Motorcars Group, in announcing with his wife Jane a donation of $42 million to University Hospitals. Page 15

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Global biz specialist buys Leff site Her goal is for East 40th building to house startups By STAN BULLARD sbullard@crain.com

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Radhika Reddy is known for her roles as a specialist in economic development financing and international business. However, she’s adding a new role — commercial real estate operator — as the new owner of the former H. Leff Electric Building near downtown Cleveland. “It was, ‘plan for retirement or do something that will help the region,’ so I’m doing this,” Ms. Reddy said of her plans to transform the former warehouse and office building at 1163 E. 40th St. to Ariel International Center. Ms. Reddy is negotiating for financing and government grants to make improvements to the nearly 70,000-square-foot building. She wouldn’t disclose a budget for renovating the building, which she bought last Nov. 24 for $625,000 from the 1163 Group LLC. The namesake Leff Electric exited the building in 2007 for a Brooklyn Heights location. Ms. Reddy wants to lease offices in the building to startup and early stage companies with global connections or aspirations; she plans on offering shared office services and

advice for businesses interested in exporting or importing. The building’s top floor will become an event center for ethnic meetings and festivals, Ms. Reddy said. “This is one of the few buildings available with a view of the lake,” which she considers essential for a project focused on global markets because Lake Erie is so important geographically, Ms. Reddy said. The building is well known because of a rooftop water tower with the Leff name on it visible from the Shoreway. The center takes its name from Ms. Reddy’s Ariel Ventures LLC, which provides tax and business consulting services and helps business and government groups in using federal New Markets Tax Credits. Ariel Ventures also markets proprietary software used by ventures and investors who take advantage of New Markets Tax Credits. Baiju Shah, president of BioEnterprise Corp., a nonprofit promoting growth of health care companies in the region, is familiar with Ms. Reddy’s plan through his work as chairman of Global Cleveland, which hopes to bolster the region’s attractiveness for talent from abroad. “International businesses have a lot of unique needs, from importing

Retail: ‘Infill’ projects are in continued from PAGE 3

retail market upward. The survey covers shopping centers and big-box stores of 50,000 square feet or more in Cuyahoga, Geauga, Lake, Lorain, Medina, Portage, Stark and Summit

counties. “This year we were not hit by a big-box chain closing multiple stores,” Mr. Hamulak said. The effect is that the shopping center business did not gain big chunks of empty space as it did following past retail retreats.

Construction at a crawl

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The other factor that allowed retail vacancy to decline was little construction of selling space. The virtual disappearance of retail construction is the product of the double whammy of sour retail sales numbers the past few years and the commercial real estate lending crunch that idled developers. Just 541,900 square feet of store space was built in 2010, the smallest figure since CB began the report in the 1980s. By contrast, 2.9 million square feet of retail space was added in 2006, the year with the most retail expansion in the new millennium. Look for even less retail construction this year, as CB forecasts construction of just 395,000 square feet in 2011. Mr. Hamulak said expansions by existing retailers will account for most of that growth. The estimate does not include a plan announced last month by First Interstate Properties Inc. of Lyndhurst to build a big-box shopping center on about 40 acres of the former Oakwood Country Club property that First Interstate recently acquired in South Euclid. First Interstate has yet to win city approvals for the project. CB puts projects into its construction category when real estate

or exporting concerns to navigating U.S. customs laws. There is a lot that an international business needs to understand,” Mr. Shah said. Cory Riordan, executive director of the St. Clair-Superior Development Corp., a nonprofit that assists business and community development in the neighborhood east of downtown, said he believes Ms. Reddy’s plans benefit from proximity to the Tyler Village redevelopment project and the AsiaTown area’s restaurants and businesses. Mr. Riordan said he hopes Ariel International Center might produce companies that would grow into nearby old industrial buildings. Ms. Reddy’s partners in Ariel Ventures, Irene Zawidiwsky and Lynn Seltzer, also are partners in the woman-owned Ariel International Center. For now, Ariel Ventures will maintain its office at One Cleveland Center, she said. Ms. Reddy, who was a banker in India, said she came to the United States in 1989 with just $20 in her purse to attend Case Western Reserve University with a one-year scholarship toward an MBA. She then made her career and life here. “I love the opportunities in the U.S.,” she said. “In this country, if you work hard you can survive and grow. This is my way of giving back to it.” ■

developers turn the first spade of dirt.

Closer to home However, Mr. Flynn said the proposed South Euclid shopping center reflects the main trend that CB expects to see in the region’s retail sphere the next few years: more development in established cities and suburbs. The South Euclid site is considered an “infill opportunity” in the shopping center business because it’s surrounded by thousands of rooftops built over decades as opposed to new projects on former farms in outlying suburbs. Infill projects are attractive to retailers and developers now because they pose less risk as the surrounding market areas are established. In the past decade, Mr. Flynn said, with aggressive new-home construction shifting populations and demographics, retailers and developers gambled on land-rich outlying areas for new locations with the hope sales would improve over time. That’s no longer the case. With vacancy levels still high, there is downward pressure on rents. CB reports asking retail rental rates on a square-foot basis range from $3 to $54, the same this year as last. However, the average asking lease rate fell 4%, to $13.08 a square foot as of Jan. 1 from $13.25 a year ago. The other factor impacting retail occupancy in the future comes from the sharp rise in online purchases. “It will have to have an effect on the bricks-and-mortar stores if it continues to rise,” Mr. Flynn said, though he added that how it will manifest itself is unclear. ■

Volume 32, Number 3 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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Jackson: Mayor likes idea of districts collaborating continued from PAGE 1

school districts in Cuyahoga County to think about ways to improve their quality of education — and to make their dollars go further — by working closely together. “We can do all these groundbreakings,” he said of the downtown projects. “But if we don’t deal with education, then the benefits derived from these other projects will be short-lived. If we deal with education, all this other stuff becomes sustainable.” Mayor Jackson added, “I put the subject on the table every year (in his State of the City address) and I don’t get a peep. I don’t even get criticism.” When the mayor talks about struggling schools, he isn’t just talking about the Cleveland Metropolitan School District, which is under his control. Dealing with education for Mayor Jackson means thinking countywide. He believes many districts in Cuyahoga County are struggling and that cutting administrative costs through collaborations — and perhaps even consolidating districts altogether — will improve the classroom experience.

‘They’ drag their feet While Mayor Jackson believes considerable cost savings can be achieved without consolidating school districts, which generally is considered political poison, he said he finds little support for even a discussion of collaborations such as a countywide school transportation system. “The hard, substantive decisions that are left that will ensure the future of the (region) and guarantee population growth — education — they are refusing to do,” he said. Asked who he was talking about, Mayor Jackson answered: “‘They’ are all segments of the (leadership of the) community, whether they are business, private, public, urban, suburban. If you think this is just a Cleveland problem you are naïve. If you look at (suburban) outcomes in education, their outcomes are in decline. “What (other districts) do in order to make themselves feel better about what they are doing is they compare themselves to Cleveland: ‘Look how much better we’re doing than Cleveland,’ they say.”

Mayor Jackson said that was “an unfair comparison for their children.” “You know why? Because their competition is not Cleveland — it’s Beijing, London, Tokyo and Paris. And when they compare their outcomes to those, they are worse off than Cleveland is to them,” he said. Mayor Jackson said he believed more collaboration on education would educate children more effectively and would not cost communities more money. He stopped short of advocating a single, countywide school district. But he came close. “A countywide system? Not necessarily,” he said. “I’m not trying to make the baby run; it ain’t born yet, you understand? I’m not trying to scare the father. I just want a system and a relationship with other systems that will guarantee a better outcome for children.”

Cleveland-centric Mayor Jackson believes there is low-hanging fruit in the way of collaborative opportunities and that he presented a number of them in his State of the City address last March. In that speech, he cited cost-saving ideas ranging from magnet schools open to students across the county to a single health insurance program for all school employees in the county. While he has not pursued educational collaborations beyond the talking stage, the mayor has gotten support from the business community and his municipal neighbors on other cooperative efforts, including sharing taxes generated by companies that move to Cleveland from elsewhere in the county. The Greater Cleveland Partnership, the region’s leading business organization with more than 11,000 members, has made a commitment to support the Cleveland schools’ transformation plan — the ambitious plan by departing CEO Eugene Sanders to overhaul the school district and improve student achievement. But GCP president Joe Roman said his group has not looked at the issue of collaboration among school districts. Mr. Roman said his group is focusing solely on the Cleveland school system. In December, GCP agreed to play a leadership role in a lobbying effort

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to change teacher seniority rules and it has helped raise $3 million for a science, technology, engineering and mathematics, or STEM, magnet school at General Electric Co.’s Nela Park campus. Mr. Roman said magnet schools could be a good avenue for interdistrict collaboration. “I do think there is opportunity to create institutions of excellence that will naturally break down some of those geographic boundaries because the demand is there,” Mr. Roman said. “And I would offer the STEM school and the Cleveland School of Science and Medicine as examples.”

Emotions run deep A statewide coalition of chambers of commerce that recently laid out in a report various systemic problems with Ohio and local government — it called the state’s local government system “outdated and unsustainable” — chose not to address education (or another big challenge, Medicaid). However, the coalition’s 52-page report, “Redesigning Ohio,” said the chambers were willing to join others in tackling the problems. Meanwhile, some observers see some validity to Mayor Jackson’s frustrations.

State Sen. Nina Turner, for one, agrees with the mayor. “Numerous conversations about education have been sparked throughout the city of Cleveland, yet Mayor Jackson is right; these discussions need to go beyond the city and beyond public schools,” she said in an e-mailed statement. “All our educational vehicles — public, private, parochial, urban and suburban — need to be leveraged to lay the foundation for the educational success of our students.” Others, in off-the-record conversations, acknowledge that districts tend to be protective of their turf. One recently retired district superintendent said he knows active superintendents who see the value in consolidation. But this ex-superintendent said they worry that mentioning it to their school boards — elected officials who have strong emotional ties to their local schools — would cost them their jobs. “One of the key issues in any consolidation comes down to two items: mascot and school colors,” said the former superintendent, who requested anonymity because his conversations with other superintendents were confidential.

Worth a try? Sen. Turner, who intends to re-introduce legislation she co-sponsored last session that would remove some of the barriers to collaboration among local governments and school districts, said she would put district consolidation on the table. “Consolidation would be a difficult undertaking that would require serious courage to address,” she said. “But if we are truly focused on our children’s educational outcomes, it is a worthwhile option to consider.” Another former superintendent, Marty Motsco, who was leader of Bedford’s city schools for a dozen years, said school districts are cooperating with their peers on various levels. She cited the Educational Service Center of Cuyahoga County, which provides administrative support, professional development and specialized educational services to school districts in Cuyahoga County, and the Ohio Schools Council, which offers group purchasing programs to 167 school districts in Northern Ohio, as organizations that offer ways for districts work together. Mayor Jackson closed the interview by saying he intends to throw out his challenge for collaboration among school districts again this year in his State of the City address before the City Club of Cleveland. It tentatively is scheduled for March 3. ■

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VC: Proven track records will help some secure capital continued from PAGE 1

Venture capital firms face other problems related to the recession. In Ohio and the rest of the Midwest, funds that use state dollars to provide seed money to private venture funds are running low on cash. The Ohio Capital Fund, for instance, has only $25 million remaining in its fund, which since 2005 has invested $125 million in venture capital groups with offices in Ohio. Similar programs in Indiana and Michigan are short on cash, too, said Paul Cohn, fund manager for the Ohio Capital Fund, which is financed by state bonds and would cost taxpayers only if its investments lose money. Mr. Cohn is among those who believe it is tougher for venture capital firms to raise money today than it was in early 2009, which wasn’t long after the stock market collapsed. He fears that the fundraising environment won’t improve soon if the Ohio Capital Fund and similar groups aren’t extended. Last May, the Ohio House of Representatives unanimously voted to put another $100 million into the Ohio Capital Fund, but the Senate has yet to vote on the issue. On the plus side, though, another

statewide “fund of funds” will receive more money: The Ohio Public Employees Retirement System last year committed another $100 million to the Ohio-Midwest Fund. “For our regional, Midwestern groups, these state programs have been critical for them reaching critical mass,” Mr. Cohn said. The state money, he said, helps attract additional private investment in venture funds. Mark Heesen, president of the National Venture Capital Association in Arlington, Va., agreed that groups such as the Ohio Capital Fund have been a boon to the venture capital field. Many of them, however, could be on the chopping block as states look to cut their budgets, Mr. Heesen said. “State budgets are really tight right now. You will see some of these programs cut back,” he said.

Downward trend Venture capital groups likely raised between $12 billion and $13 billion in 2010, down from more than $16.5 billion in 2009, Mr. Heesen said, noting that 2010 figures had not been finalized as of last week. The 2010 estimate is less than half the $28.5 billion venture groups

raised in 2008, and it’s barely onethird of the $35.4 million they raised in 2007, based on National Venture Capital Association statistics. Venture groups nationwide recently have been investing more than they’ve been raising, according to the association’s statistics. This year should be better for fundraising, but not by much, Mr. Heesen said. Things won’t really turn around until the limited partners that invest in venture groups see profits. “When they get checks they’ll be more confident about investing in venture capital,” he said. Both Mr. Haynes of Glengary and Jonathan Murray, managing partner at Early Stage Partners in Cleveland, said venture capital groups would suffer because of new regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which will prevent banks from investing in venture firms. Both firms in the past have received financing from banks. Nationwide, however, venture capital groups received a relatively small amount of money from banks over the past decade, Mr. Heesen said. Neither Glengary nor Early Stage Partners is raising money now, though Mr. Murray said the fund-

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raising environment was difficult a year ago, when Early Stage Partners closed its most recent fund.

‘The game has changed’ Chris Coburn, executive director of Cleveland Clinic Innovations, the commercialization arm of the Cleveland Clinic, said he knows of a few firms in Ohio that are struggling to find cash, though he would not provide their names on the record. Mr. Coburn said he expects fundraising problems will force some venture capital groups in Ohio and throughout the country out of business over the next few years. Regardless, the startup companies his organization launches should find money because of Cleveland Clinic Innovations’ track record, he said. Two of its 30-plus

spinout companies have been acquired and one has gone public. “I think that will attract capital,” Mr. Coburn said. Likewise, venture capital groups with strong track records should have little to worry about, said Mr. Murray of Early Stage Partners. Even successful firms, however, may decide to alter their strategies because of the fundraising environment. For instance, Early Stage Partners in the future may pursue money from wealthy individuals or from investment groups overseas. The group today gets most of its money from foundations, funds that invest in multiple venture capital groups, such as the Ohio Capital Fund, and banks. “I think the game has changed,” Mr. Murray said. ■

OverDrive: Investment gives company options continued from PAGE 3

noting that he took three long trips to Asia and visited Europe almost every other month in 2010. Mr. Potash said “explosive interest” from libraries helped push the number of checkouts of OverDrive content to 15 million in 2010 from 8.6 million in 2009, 5.3 million in 2008 and 3 million in 2007. “In many cases institutions are shifting their budgets from print books to digital books,” he said. Many of those checkouts came from other countries, including some where English isn’t the primary language. Last year, about 25% of OverDrive’s new contracts were with libraries and retailers outside the United States, Mr. Potash said. A few years ago that number was less than 5%. All that growth helped OverDrive, which employs about 130 people, hit record revenue and earnings figures last year, Mr. Potash said, though he declined to give dollar figures. Libraries pay OverDrive once to buy a single digital copy of a book, and they can buy access to more copies by paying an annual fee. On the retail side, OverDrive receives money whenever someone buys a book in its digital catalogue. The company also is paid to develop and host web sites for libraries and some retailers.

An aptitude for apps OverDrive has made moves to capitalize on the growing demand for electronic books. The company already has developed applications that allow its content to appear on the iPad, smart phones and devices such as the Barnes & Noble Nook and the Sony Reader. OverDrive also is working with several companies that plan to release tablet computers that would compete with the popular iPad, said Mr. Potash, who earlier this month met with 12 tablet makers at the 2011 Consumer Electronics Show in Las Vegas. Some plan to include functions that would allow the user to hit a “borrow books” button and quickly check out content OverDrive distributes to the user’s local library. “In some cases we are going to be powering some of those destination retail stores,” Mr. Potash said.

“In many cases institutions are shifting their budgets from print books to digital books.” – Steve Potash, CEO, OverDrive Inc. Rising demand for electronic books was one reason Insight Venture Partners decided to make a “major investment” in OverDrive last October, according to a statement the New York-based firm released at the time. An official from Insight did not return a phone message left last Thursday, Jan. 13, to talk about Overdrive. However, in its October statement, the firm also lauded OverDrive’s management team for turning a profit every quarter for five years.

Sony is sold The investment gives OverDrive the option to look at possible acquisitions, Mr. Potash said. It also gives the company the resources to do it right: Insight has a team dedicated to helping portfolio companies make acquisitions, Mr. Potash said. Insight, which makes venture capital and private equity investments, also has helped OverDrive build relationships with other information technology companies in its portfolio, many of which are going through “growing pains” just like OverDrive, Mr. Potash said. “I’m asking those CEOs, ‘How did you establish your business in Tokyo?’” he said. With OverDrive’s help, Sony built into its online “Reader Store” an application to help Reader owners figure out which libraries near them offer OverDrive’s books for download. The files disappear when they are due back to the library. Sony identified OverDrive as a leader in the electronic content field based on its broad base of customers, said Bob Nell, director of business development for Sony’s Reader division. Mr. Nell said he also likes that OverDrive keeps in close touch with its customers. “They had a very strong relationship — I would say almost a personal relationship — with the libraries,” he said. ■

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Arts grantmaker in U.S. chamber backs health law repeal process of gauging community opinion By JESSICA ZIGMOND Modern Healthcare

As receipts from cigarette tax decline, group wants to know how its spending is viewed By TIMOTHY MAGAW tmagaw@crain.com

The public body that doles out grants for arts organizations using proceeds from a 10-year cigarette tax that Cuyahoga County voters approved in 2006 is stepping up efforts to determine whether the community understands how the group works and whether the money is spent wisely. Trustees of Cuyahoga Arts & Culture, the group that determines which organizations and artists receive the cigarette tax money from a pool of applicants, gave the body approval to spend up to $50,000 with Burges & Burges, a Cleveland political consulting firm. Karen Gahl-Mills, executive director of Cuyahoga Arts & Culture, said her agency is “taking the temperature of the community” to determine how its work is perceived. With the help of Burges & Burges, Cuyahoga Arts & Culture put out a survey last month to gauge whether the community understands what the group is and how it works. It also asked about what types of improvements the community might like to see in how the grant money is spent. Ms. Gahl-Mills said her agency hasn’t received the results of the survey, but they will be used mainly for internal purposes.

Crafting a message This is the first time Cuyahoga Arts & Culture has gone to the public to determine what’s known about the agency, said Jonah Weinberg, who joined the group in September as its director of external affairs. He said the first three years of the organization’s tenure were focused on starting grant programs and funneling the money to the community. Mr. Weinberg said the hope is to “craft a clearer message about how that funding we’re collecting is being reinvested in the community.” “Most of what we’ve seen is more or less what we expected,” he said. “Many people have heard the name but don’t know what it is. It has run the gamut from people thinking we’re part of county government to being a nonprofit organization.” In addition to the survey, Burges & Burges conducted interviews with people who supported the tax to get their thoughts on the organization thus far.

BURNING OUT? The 10-year cigarette tax that Cuyahoga County voters approved in 2006 to generate funds for local arts organization is yielding less money each year.

Year

Money raised

2010

$17.46M

2009

18.22

2008

19.54

2007*

18.82

SOURCE: CUYAHOGA ARTS & CULTURE; * — OVER 11 MONTHS; LEVY WENT INTO EFFECT IN FEBRUARY 2007

The information gathered won’t be used necessarily to promote a broader campaign aimed at renewing the tax in 2016, Ms. Gahl-Mills said. Because the group is a political subdivision of the state, there are restrictions on advocacy. That effort largely will be left to other arts groups, such as the nonprofit Community Partnership for Arts and Culture.

Dwindling resources Revenue from the tax levy has declined over the last three years, which was expected as the number of smokers continued to decrease. In 2010, the levy brought in about $17.5 million, down from $18.2 million in 2009. Mr. Weinberg said the group expects the tax to bring in about $10 million per year by 2016, the year the levy is expected to sunset. As the cigarette tax revenue dwindles and grants ultimately shrink, Mr. Weinberg said Cuyahoga Arts & Culture plans to use some of the revenue to create systems that would allow some arts organizations to be more sustainable through some sort of shared services arrangement. Though no formal proposals have been made, one example would be a shared ticketing system among some of the theater organizations so they wouldn’t need to stomach the cost of installing a system on their own. Thomas Schorgl, president and CEO of Community Partnership for Arts and Culture, said the cigarette tax money “has been extremely important to sustaining most, if not all, of those organizations when it comes to their ability to provide programs and services and, for some, to keep doors open.” ■

IN BRIEF Small businesses focusing more on marketing Small business owners plan to ramp up their marketing and businessdevelopment efforts aggressively this year, according to a new study from online business community Manta Media. According to Manta’s survey, conducted in December, 77% of the 766 respondents polled plan to spend to expand their businesses this year. That response compares with 85% who reported across-the-board cuts

in 2010. Of those who plan to expand their businesses, 47% said marketing and sales are their top budget priorities. Social media, however, remain questionable marketing channels for small businesses with limited resources. While 42% said they find social media useful to connect with customers, only 14% said they plan to utilize them in the near future. — BtoB, Crain’s sister publication

The U.S. Chamber of Commerce said it supports congressional efforts to repeal the Patient Protection and Affordable Care Act, and will work to curb government regulation that the organization maintains poses the single biggest challenge to jobs, global competitiveness and the future of American enterprise. That was the message last week from Thomas Donohue, president and CEO of the U.S. Chamber — which represents more than 3 million

American businesses — during his annual “State of American Business” address in Washington, D.C. Mr. Donohue said regulations at the federal level fill 150,000 pages and cost Americans $1.7 trillion a year. He cited the health reform law as one example, saying it creates 159 agencies, commissions, panels and other bodies and grants “extraordinary powers” to the Department of Health and Human Services. “By mid-December, HHS had already granted 222 waivers to the law — a revealing acknowledgement that the law is unworkable,” Mr.

Donohue said to a full audience in the Chamber’s historic Hall of Flags public meeting room. “And, with key provisions under challenge in the courts by states and others, it’s time in my opinion to go back to the drawing board.” A vote on whether to repeal the Affordable Care Act was scheduled for last Wednesday, Jan. 12, in the House, but was postponed after the Jan. 8 shooting spree in Arizona. ■

Jessica Zigmond is a reporter with Modern Healthcare, a sister publication of Crain’s Cleveland Business.

Study shows steady five-year rise for HSAs By JESSICA ZIGMOND Modern Healthcare

The number of health savings accounts and health reimbursement arrangements have increased steadily over the last five years, to 5.7 million in 2010 from 1.2 million in 2006, according to a new study from the nonprofit Employee Benefit Research Institute. Likewise, assets in these accounts

have climbed to $7.7 billion in 2010 from $835.4 million in 2006. “HRAs and HSAs are relatively new, but a growing percentage of the population has held them for a number of years,” the study said. “In 2006, 15% of the population with an HRA or HSA had held an account for less than six months; 42% for six months to a year; and 30% for one to two years,” the study said. “By 2010, 8% had held them

for less than six months; 19% for six months to a year; and 35% for one to two years.” The study also found that people who exercised, did not smoke and were not obese had high account balances and higher rollovers than those with less healthy behaviors. “It was found that individuals who used cost or quality information had higher account balances and higher rollovers,” the study said. ■

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PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Sensible step

ohn Kasich as an orator won’t make anyone forget Barack Obama. The new governor’s inauguration speech last Monday wasn’t particularly inspiring. However, we did find uplifting how little time he wasted in getting down to the business of helping Ohio’s small businesses get down to their business. One of Gov. Kasich’s first acts of office last week was to charge Lieutenant Gov. Mary Taylor with leading his Common Sense Initiative, an effort to examine the economic impact of Ohio’s regulatory policies on the state’s small businesses and their ability to create jobs. The governor’s executive order called for creation of a Common Sense Initiative Office that would review rules and regulations from cabinet-level agencies and state boards and commissions and would serve as a point of contact for small businesses to voice concerns about the implementation of any new rule or regulation. A key goal of the office would be to force directors of state agencies to balance the objectives of their rules and regulations with the costs of compliance by the regulated parties. The executive order states that agencies should consider as early as possible in the development of regulations the perspectives of small business, adding, “All efforts shall be made to choose the regulation that accomplishes the regulatory objective and is least burdensome on small business.” Once the office is up and running, it should give individual small businesses the pipeline they need to let government officials know their concerns about the rules Columbus is hatching. It should be a welcome avenue for reducing red tape and needless regulations that harm rather than help the business environment of the state.

Ed squared

wo heads are better than one, or so the saying goes. In the case of the new Cuyahoga County government, however, we believe two Eds will be better than one in bringing about greater cooperation among the cities and towns within the county’s borders. To be less cryptic, we like the decision of county Executive Ed FitzGerald to name fellow Democrat Ed Jerse as the county’s first regional collaboration director. Mr. Jerse was a solid legislator during the 10 years he served as a state representative in the General Assembly. He’s a bright, affable and straight-talking guy who understands the challenges the county and its communities face and should serve as a good bridge builder in his new role. The trick for Mr. Jerse and others who advocate for a greater sharing of resources among the county’s municipalities will be to get individual communities to think beyond their own narrow interests. The pressure many towns feel today to balance their budgets should help advance this effort. It seems an opportune time for Mr. Jerse to leverage their need to economize with the objectives of his job.

FROM THE PUBLISHER

Kasich’s challenges are quite a story

week for my column criticizing Mr. f anything tells the story of the kind Kasich for his early decision (later of pressure Gov. John Kasich faces reversed) to close his swearing-in cereas Ohio’s chief executive, it was mony to the news media. these headlines from one of our But that’s what we should become Morning Roundup e-mail news reports accustomed to in this new era of state last week: governance, and it’s a far cry from the “Report critical of privatizing developstyle of his Democratic predecessor, Ted ment” — The Dayton Business Journal Strickland. Some will like it and “Kasich lobbies Chrysler, GM will applaud Mr. Kasich’s decifor new manufacturing jobs” — BRIAN siveness and candor. Others The Toledo Blade TUCKER will criticize him for ignoring On that same day, The Plain how appearance often can Dealer’s top story went at the influence people and events as four-day governor with this powerfully as words or actions. headline: “Meet Kasich’s cabinet Gov. Kasich doesn’t seem so far: 20 appointments, zero overwhelmed by the task he diversity.” faces, and that’s good. He will And none of the stories even need immense dedication to mentioned the budget deficit the task at hand if he hopes to facing this new administration steer Ohio on a new course. The fact that that has been estimated to be at least $8 Ohio’s populace is at a national and billion. global disadvantage — being, in general Welcome to the hot seat, governor. terms, poorer, older and less-educated And you thought Congress, or high— is something he cannot change, at profile investment banking, was tough. least in the short term. Truth be told, this governor — like all The challenges he and the legislature before him — will make mistakes. His face are immense, and we should be style is to be decisive, even at the risk of pulling for them, regardless of party style points. A reader berated me last

affiliation. Even though his Republican Party controls both houses and holds all state offices, he will need support from the other party to ensure that change is permanent, and that their reforms — if they offer real, long-term potential (think Third Frontier) — remain in place regardless of what party is in power. **** I WAS PRETTY CRITICAL of Cleveland Mayor Frank Jackson and his administration’s performance — or lack of it — during the December snowstorm that paralyzed the city at rush hour. So, in fairness, it seems he and his staff should be complimented for learning from that mess and responding with changes. Last week, as a similar snow hit downtown for much of the day, the mayor’s office issued an alert to all downtown employers about plans to keep the intersections open and traffic flowing onto the interstates. The notification explained where police would be directing traffic and reminded folks that they’d be cited for clogging up intersections. It worked, and showed that this mayor and his team can learn from mistakes. Well done. ■

LETTER

Sewer district is not wasting away money ■ Regarding Henry Holtkamp’s Jan. 10 Letter to the Editor, “EPA missteps lead to rise in sewer bills,” I’d like to address the misinformation stated in the letter. 1. Mr. Holtkamp erroneously states that the Northeast Ohio Regional Sewer District has not only “frittered away billions of public dollars,” but not dealt with the problem of combined sewers “responsibly and proactively.” In actuality, his statements couldn’t be further from the truth. In 1972, when the Clean Water Act was passed, approximately 10 billion gallons of combined sewage was discharged each year; today, that number is 4.5 billion gallons. To date, we have invested billions of dollars to improve our region’s infrastructure; we have improved our wastewater treatment

plants, maintained and built 267 miles of interceptor and relief sewers, and addressed the issue of combined sewer overflows (CSOs), which discharge raw sewage into the environment during heavy rain events. Our long-term plan — a 25-year, $3 billion infrastructure improvement program dubbed Project Clean Lake — will further reduce CSOs to fewer than 500 million gallons by capturing and treating 98% of all combined sewage that enters the combined sewer system. In addition, the sewer district was able to negotiate green infrastructure components in the long-term plan. This will allow a reduction in the longterm cost of the program while enhancing neighborhoods, providing economic development opportunities and rebuilding

our community. 2. Reducing the amount of raw sewage — human waste — from entering local waterways is federal law. It cannot be ignored. We’re not alone. Nearly 800 other communities in the nation are negotiating or have negotiated a CSO plan with the government. We did not have the option to tell the EPA that we would not comply with the law, Mr. Holtkamp. We would have been sued and we would have lost. 3. The sewer district is a political subdivision of the state of Ohio and not governed by the Cuyahoga County commissioners, Mr. Holtkamp. We are a true regional entity that serves more than 1 million people in all or part of 62 communities throughout four counties. See LETTER Page 9

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THE BIG ISSUE Do you think the political discourse in the country has become too inflammatory? Why or why not? FRANK KRAJENKE

CHRISTAL COAKLEY

ELIZABETH MEINKE

STEVE CASIERE

Cleveland

It’s as if people are not interested in the greater good. They’re more interested in their own political perspective, and I think it’s dividing the country and unfortunately it’s causing a lot of tension.

I believe it’s become too inflammatory because we equate political opponents on a personal level. … So we’ve taken all of our dislike for somebody’s ideology and their thoughts, and we’ve made it a dislike for the person and who they are.

Cleveland Heights

Instead of people debating the issues, I think a lot of times it becomes personal and it’s a matter of putting down the opposition rather than stating your case and basing it on facts.

Lyndhurst

No, I think it’s remained the same throughout history. I think the media outlets — visual media outlets, particularly — amplify it.

➤➤ View more of these comments by visiting the Multimedia section at www.CrainsCleveland.com.

As print circulation slides, Plain Dealer eyes future in mobile Publisher, new editor say even as media landscape shifts, core mission remains same By KATHY AMES CARR kcarr@crain.com

A hardback book in the executive rotunda offices of The Plain Dealer chronicles some of the newspaper’s most noteworthy front pages of the 20th century, from the Titanic’s sinking in 1912 to the Indians’ last World Series win in 1948 and Richard Nixon’s resignation in 1974. During most of its 169-year history, the newsprint format of Ohio’s largest newspaper largely has remained unchanged. With the advent of the digital information age, though, the publication and others throughout the nation have become their own stories of adapting to a world where free content in cyberspace reigns, and print advertising and paid circulation wane. Yet even as change surrounds The Plain Dealer from every angle, its executive leadership — which includes new editor Debra Adams Simmons — says the organization remains committed to its core mission of delivering the news through watchdog reporting and local coverage, just with added ways through which to deliver that content. “We will have more tools to tell our stories,” Ms. Adams Simmons said. Ms. Adams Simmons and Plain Dealer president and publisher Terrance C.Z. Egger said the newspaper’s goal is to find more streams of advertising revenue while expanding

its audience by developing more mobile products. “The industry is taking a hard look at mobile as a tremendous value for readers and as a new opportunity (to generate revenue) for newspapers,” Mr. Egger said. “New challenges present new opportunities.”

Tough circulation sledding The Plain Dealer’s strategy is consistent with other newspapers around the nation as they struggle to retain readers amid declining print circulation. Even as The Plain Dealer has been lauded for its coverage of the corruption plaguing Cuyahoga County government, both its daily and Sunday circulation have continued to erode. Its average daily circulation as of Sept. 30, 2010, stood at 252,608, down 25.5% from 339,054 as of Sept. 30, 2005. The newspaper’s average Sunday circulation during the same five-year period was down 23.8%, to 348,324 from 457,050. The paper during that time frame has seen both its total and newsroom staff size shrink, though Mr. Egger declined to provide specific numbers. Since the mid-2000s, newspapers overall have experienced about a 30% to 35% decline in staff size through layoffs and attrition, and those numbers often are higher at metro papers, said

begin to gain traction in 2012.

Adapting to an app world

Egger

Adams Simmons

Rick Edmonds, a media business analyst for Poynter, a nonprofit journalism school in St. Petersburg, Fla. Meanwhile, newspaper advertising and subscription revenue have plummeted as both readers and advertisers migrated to the Internet from traditional media. The Plain Dealer does not disclose its advertising revenue. According to newspaper industry magazine Editor & Publisher, which references a June 2010 PricewaterhouseCoopers report, print ad revenue for newspapers in the United States dropped by nearly 47% from 2005 to 2009 — from $49.7 billion to $26.4 billion — and should continue to fall through 2012. Over the same period, digital ad revenue rose by 33%, but still amounted to just $2.7 billion in 2009. According to Editor & Publisher’s June 15 story, PricewaterhouseCoopers predicts another 19% drop in print advertising revenue and a 9% decline in circulation revenue through 2012 before a healthier economy starts to stabilize the industry. Digital ad revenue, meanwhile, is expected to decline about 8% from 2009 to 2011 but should

Letter: Loss of funding contributes to costs continued from PAGE 8

4. True, sewer district bills are expected to double in the next five years; they will be triple when Project Clean Lake is completed in 2035. Some of the increase in rates is due to Project Clean Lake, but increased rates also pay for the increased costs of treating wastewater, as well as the maintenance and enhancement of our sewer system. It should be noted, too, that, up until the early 1990s, the sewer district and its customers benefited from nearly $600 million in federal

funding, which helped to keep sewer rates low throughout the first two decades of the sewer district’s existence. That funding stream no longer exists. Perhaps, instead of encouraging local and federal leaders to stop this program, a program that will reduce the amount of human waste entering local waterways, we can ask our elected officials for the necessary funding to address this and other critical infrastructure issues. We are doing our part to keep our Great Lake great and we are

extremely mindful of watching our customers’ dollars. To say otherwise would be woefully inaccurate.

Rather than lament the bad news, The Plain Dealer sees opportunity as the media landscape changes. Both The Plain Dealer and its sister company, Cleveland.com, which posts most of the newspaper’s content online, say they plan to do more than just post stories on Cleveland.com in order to target a larger audience and more advertisers, even from outside markets. “We started focusing heavily on digital last year,” said Denise Polverine, editor of Cleveland.com. “We launched the iPhone app in fall, and it’s already been downloaded more than 12,568 times.” Ms. Polverine said New Jerseybased Advance Internet, Cleveland.com’s parent company, will continue developing apps for mobile devices beyond the iPhone. She said both Cleveland.com and Advance Internet also are developing topical apps, which would provide users with stories and information on topic-specific subjects such as a championship game or the Gulf Coast oil spill, and did not rule out the possibility of the company charging to download those apps.

From the editorial side, Ms. Adams Simmons said The Plain Dealer under her stewardship will continue to be accessible and accountable by relaying through various formats its coverage of Northeast Ohio government, the state’s budget crisis, emerging industries and sports. She became editor last Nov. 6, after former editor Susan Goldberg announced she was leaving to become an executive editor in California for Bloomberg News. Ms. Adams Simmons was promoted from managing editor, and joined The Plain Dealer in 2007. She previously was editor of the Akron Beacon Journal. She also has worked at the Detroit Free Press, Virginian-Pilot, Hartford Courant and Syracuse Herald-Journal. Even with all the content available through additional platforms, it remains to be seen whether revenue from digital products will pick up the slack for newspapers from classified and other print advertising losses, Poynter’s Mr. Edmonds said. “Mobile web sites, tablets, apps and e-editions will provide additional revenue sources, but each one won’t save the industry,” Mr. Edmonds said. ■

“ I was trying to close three deals but each one had a major hurdle. I called for coaching to work out a successful strategy. That was my million-dollar day.” Bob Perritt President R. J. Perritt Homes 7 employees

Jennifer Elting Public information specialist Northeast Ohio Regional Sewer District

WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: editor@crainscleveland.com

INTERESTED? CALL TODAY, 440 575-7000 ~OR~ FOR MORE FROM OTHER COMPANIES VISIT W W W . S A L E S C O N C E P T S I N C .C O M

SELL MORE.

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GOING PLACES Schaffer to directors; Lori M. Crow to associate director; Lindsay Turbow and Kathryn Berta to associates.

JOB CHANGES FINANCE FEDERAL RESERVE BANK OF CLEVELAND: Todd Clark to vice president.

HEALTH CARE

FINANCIAL SERVICE CARD, PALMER, SIBBISON & CO.: Arthur P. Ward Jr. to tax director and shareholder; Elizabeth A. Kroll and Katelyn M. Gongos to supervisors; Tyler Martin to staff accountant. RETIREMENT SOLUTIONS: Matt Feda to associate financial consultant. SS&G: Michelle Pawlowski to manager; Mary Jo Dolson, Henry J. Grzes, Lewis Baum and Teresa J.

operations; Katie Lownes to director of sales planning; Doug Kuczynski to vice president, Third Party Administration sales and health care industry market leader; Kevin Luterjung to executive vice president, managed care; Michael Ross to director of commercial underwriting.

CAMBRIDGE HOME HEALTH CARE: Barbra Riggleman to regional director of operations and quality improvement; Gladys Bujak to administrative assistant for quality improvement; Laurita Ware to administrative assistant; Jayne Kirchner to office assistant; Donna Hostetler to director of nursing, Ravenna.

LEGAL

INSURANCE

MANUFACTURING

MEDICAL MUTUAL OF OHIO: Renee Rupp to vice president,

PRESTOLITE PERFORMANCE: Steve Campbell to president.

JONES DAY: Lisa S. Lathrop and Ryan T. Routh to partners. THOMPSON HINE LLP: Sarah C. Flannery to partners. TUCKER ELLIS & WEST LLP: Michael Brink, Ayesha Bell Hardaway, Jennifer Stueber and Jane Warner to counsel.

JANUARY 17 - 23, 2011

NONPROFIT CLEVELAND FOUNDATION: Robert Eckardt to executive vice president. DRESS FOR SUCCESS CLEVELAND: Melony J. Butler to executive director.

REAL ESTATE

Butler

ASSOCIATED ESTATES REALTY CORP.: Bradley A. Van Auken to vice president, general counsel and secretary; Martin A. Fishman to senior adviser.

TODAY’S BUSINESS PRODUCTS: Marjorie Townsend to sales training coordinator.

SERVICE ADVANCE PAYROLL FUNDING LTD: Joel Adelman to CEO; Adam Stern to president. ALEX N. SILL CO.: Michael Perlmuter to executive vice president, general counsel.

Perlmuter

Bittle

TECHNOLOGY LORICUS INC.: Adam Davies to support engineer. MCPC INC.: Peter DiMarco to executive vice president of sales. OECONNECTION: Philip Firrell to vice president, international.

TRANSPORTATION GREAT LAKES TOWING CO.: Joseph Starck Jr. to president; George Sogor to executive vice president and CFO; Ronald Rasmus to chairman.

BOARDS THE ARC OF GREATER CLEVELAND: Mark Hicks (Vantage Financial Group Inc.) to president; Amy Boyd-Kirksey to vice president; Janice PaulCanfield to treasurer; Jamie Debenham to secretary; Dr. Carl V. Tyler Jr. to at-large member.

Piling the family into the car and driving to the Grand Canyon? Am I wrong to think you’re supposed to relax on vacation?

CLEVELAND EXECUTIVES ASSOCIATION: Todd Lessig (Pring Roofing) to chairman; Sam A. Misseri to president; Scott Altman to vice president; Sally Levine to secretary; George Tamas to adviser/treasurer. NORTHERN OHIO REGIONAL MULTIPLE LISTING SERVICE: Karen O’Donnell to chairwoman; Dennis Steed to vice chairman; Alan Hallock to treasurer. WEST TECH ALUMNI ASSOCIATION INC.: Bonnie Dangler to vice president; Marc V. Kepler to treasurer.

AWARDS AMERICAN ASSOCIATION FOR THE ADVANCEMENT OF SCIENCE: Mrityunjay Singh (Ohio Aerospace Institute) was named a fellow.

RUBBER & PLASTICS NEWS: Edward L. Bittle (Seal Master Corp. and Elbex Corp.) received the 2010 Executive of the Year Award. Send information for Going Places to dhillyer@crain.com.

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SPECIAL EDITION: TOP NEWSMAKERS OF 2010 $1.50/JANUARY 17 - 23, 2011

Greig leads COUNTY IN FITZGERALD’S HANDS FirstMerit Former Lakewood mayor must restore faith eroded by corruption PAGE 12 push into Seidmans Despite Cavaliers’ tumble, Windy City Gilbert remains optimistic transform PAGE 13 Owner still committed to Cleveland as casino takes shape PAGE 12 health care PAGE 15 Holmgren Hyland becomes KEYCORP EXEC provides a ‘leader’ in doc SET TO MAKE American stability management field CLE HISTORY Greetings Mooney on tap to be region’s first mulls move for Browns Westlake software company top female public company CEO Next up: a new coach battles big boys, holds its own

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Future of HQ unclear

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ur Top 10 Newsmakers of 2010 are no strangers to making headlines. From a bank CEO to a county executive, these people were the driving forces behind many of the past year’s top stories.

ALEXANDER TIMELINE

ANTHONY ALEXANDER CEO, FirstEnergy Corp. By AMY ANN STOESSEL astoessel@crain.com

f all goes as planned, Anthony J. Alexander will be leading one of the largest electric companies in the country at this time next year. Mr. Alexander, in his current position since January 2004, is on tap to head the company formed by the merger of FirstEnergy and Allegheny Energy Inc. of Greensburg, Pa. The Akron-headquartered utility announced early in 2010 plans to purchase Allegheny, and the deal subsequently received approval later in the year and is expected to

■ Feb. 11: FirstEnergy announces it had agreed to buy Allegheny Energy Inc. of Greensburg, Pa., in an $8.5 billion transaction that would create one of the largest electric companies in the country. ■ March 3: The Public Utilities Commission of Ohio votes to require First Energy Corp. to restore rate discounts for the utility’s customers living in all-electric homes. ■ June 21: FirstEnergy announces that it plans to move up by more than two years the replacement of the reactor head at the company’s close in the first half of 2011. The new company will consist of 10 operating utilities in seven states serving more than 6 million customers. It would have about $16 billion in annual revenue and $1.4 billion in annual net income, based on figures from FirstEnergy and Allegheny as of Dec. 31, 2009. Current plans call for the combined company to retain the FirstEnergy name and continue to be headquartered in Akron. Mr. Alexander, of course, is no

CARRABBA TIMELINE Davis-Besse Nuclear Power Station in Oak Harbor. The company said its First Energy Nuclear Operating Co. subsidiary plans to shut down the 908-megawatt unit in fall 2011 to install a new reactor head. ■ Dec. 16: FirstEnergy and Allegheny Energy Inc. jointly announce they have received approval from the Federal Energy Regulatory Commission for their proposed merger. The merger is expected to close in the first half of 2011, subject to customary closing conditions, including approvals. stranger to leading a large firm: FirstEnergy already was ranked 9th in the state and 179th nationwide on last year’s Fortune 500 list with $12.9 billion in revenue before the deal with Allegheny. That said, he also is no doubt familiar with having his company in the spotlight. In addition to news of the pending merger in 2010, FirstEnergy made headlines due to its decision to make changes to discounts for the See ALEXANDER Page 14

JOSEPH CARRABBA CEO, Cliffs Natural Resources By DAN SHINGLER dshingler@crain.com

f Cleveland has a corporate constant gardener, it’s Joseph Carrabba. The CEO of Cliffs Natural Resources has a green thumb, to be sure — whether you count his success in new growth he’s nurtured from his company or by the hue of the money it makes. Because, whether it’s coal, iron ore or money, Cliffs seems to have perfected ways to make it by the ton. For Mr. Carrabba, 2010 was a year of both harvesting and planting, as he made acquisitions to secure the

■ Jan. 10: Cliffs announces it has received shareholder approval to take over Canada’s Freewest Resources for $240 million, giving Cliffs access to deposits of Canadian chromite, used in stainless steel. ■ Feb. 1: Cliffs completes acquisition of Canada’s Wabush Mines from U.S. Steel and ArcelorMittal, for $88 million. ■ July 6: After a contentious hostile takeover attempt, Cliffs gains control of Canada’s Spider Resources for $125 million, increasing its Canadian chromite reserves. ■ July 6: Cliffs announces it is acquiring Virginia-based INR Energy for $757 million, increasing its metallurgical coal business. ■ Dec. 20: After two years, Australian government allows Cliffs to develop iron ore reserves in Western Australia. company’s long-term future, while capitalizing on its existing operations to maximize current profits. Take a look at Cliffs’ most recent financials and you’ll see the results See CARRABBA Page 14

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CRAIN’S CLEVELAND BUSINESS

JANUARY 17 - 23, 2011

GILBERT TIMELINE

EDFITZGERALD

DANGILBERT

New Cuyahoga County executive

Majority owner, Cleveland Cavaliers; Rock Gaming LLC; Quicken Loans Inc.

By JAY MILLER jmiller@crain.com

By STAN BULLARD sbullard@crain.com

n opponent to a citizeninitiated proposal to reform county government when it was put on the ballot in 2009, Lakewood Mayor Ed FitzGerald was the first to announce his candidacy for the top job in the government he had rebuffed. The election drew a crowded field but none of the candidates seemed to ignite voters. That was partly because the election lacked some who might have been stars — former Parma Heights Mayor Martin Zanotti, state Sen. Nina Turner and Cleveland City Councilman Joe Cimperman among them. Said more than one observer, commenting on the difficulty of managing such a major transition of a government: “There are a lot of people who would like to be Cuyahoga County’s second county executive.” Mr. FitzGerald won endorsement from the Cuyahoga County Democratic Party and cruised to a comfortable victory. He took 45% of the vote in the heavily Democratic county, beating second-place Matt Dolan, the Republican candidate, by 14 points. But not every Democrat jumped on the FitzGerald bandwagon. Several leading Democrats, including Mr. Zanotti, who was a leader of the reform movement that was opposed by the party, threw their support to Mr. Dolan. Mr. Zanotti said Mr. FitzGerald’s failure to support the reform charter that voters approved by a 2-1 margin in November 2009 played a role in his decision to support Mr. Dolan. Others, in confidential conversations, called him arrogant and opportunistic, pointing out he will be leaving his post as mayor of Lake-

D JAY MILLER

At a Dec. 16 news conference, Ed FitzGerald (third from left) announced the new Cuyahoga County government will get help from a group of volunteer executives loaned from the area's private companies and nonprofit organizations. wood before his only term expires. But Mr. FitzGerald moved quickly after winning election to build a reputation as a reformer and burnish the image of a county government that has been corroded by the ongoing corruption scandal. A week after the election, he added a former FBI agent to his transition team to conduct what he called an “integrity audit,” designed to find any evidence of misconduct by county employees and to find any sloppy fiscal practices. A permanent inspector general will continue to monitor county government and its employees in the new government. Mr. FitzGerald also said he hoped to improve the county’s relationship with the business community by streamlining those county practices that might hinder businesses with the help of loaned executives from the business community. He also said he hoped to create a technology assistance program of as much as $100 million that he said he would call the “Fourth Frontier,” an allusion to the state of Ohio’s successful Third Frontier program. And less than two weeks after his election victory he was meeting

“Our efforts focus not only on day-to-day operations but long range goals.”

FITZGERALD TIMELINE ■ Feb. 16: In the first debate among three early-announcing candidates for Cuyahoga County executive — at a meeting of the Northeast Ohio Apartment Association — Lakewood Mayor Ed FitzGerald is quoted by The Plain Dealer as saying, “”We’ve got to end this corruption scandal. We need to make sure this never happens again. I think I have the right résumé to do that.” ■ July 28: Mr. FitzGerald first floats the idea of a county loaned executive program that would recruit business leaders for short stints advising the new county government. ■ Sept. 7: In a four-way Democratic primary race with a low turnout, Mr. FitzGerald collected 49% of the vote to gain the party’s nomination to be the first Cuyahoga County executive. ■ Nov. 2: Mr. FitzGerald is elected the county’s first executive, taking 45% of the vote in a six-way general election. ■ Dec. 6: A new county organization chart is unveiled. With seven elected department heads eliminated, Mr. FitzGerald proposes to create several new top positions, including chief information officer, regional collaboration director and inspector general. He also will create a chief of staff position as well as four deputy chiefs of staff.

with executives of American Greetings Corp. to persuade the company to keep its headquarters in the county.

What he said ■ Statement from Mr. FitzGerald in announcing his plan to run for county executive, Dec. 17, 2009: “The people of this county are fed up, and they should be. They need and they want a county government which is honest, effective, efficient, competent and innovative.”

What others are saying Pete Constantino Partner

216.831.7171 www.cp-advisors.com

■ Paul Clark, Northern Ohio regional president, PNC Bank: “We’re just excited that there is this outreach to the private sector,” Mr. Clark said regarding Mr. FitzGerald’s loaned executive program. ■ Cleveland Mayor Frank Jackson: “I’m in on that,” Mayor Jackson said when asked about Mr. FitzGerald’s plans to work with the county’s cities and villages on economic development and on collaborating to provide higherquality services.

an Gilbert is a sore loser. At least that is how some of the nation’s sportswriters and the NBA, which fined him for it, viewed the majority owner of the Cleveland Cavaliers for his furious letter after LeBron James left for the Miami Heat. However, many Northeast Ohioans loved the emotional display in his angry epithet over the epic loss. Mr. Gilbert prizes the response so much he said he preserved hundreds of consoling and encouraging letters in binders. “If you ever have a doubt about Cleveland surviving you need to read these letters,” he told a downtown Cleveland luncheon last fall. He said fan response gives insight into the region’s strength of character and a way to get “energized to win.” Although the loss of the selfappointed “king” followed another disappointing court season as the basketball team’s winning record led to another playoff knockoff, Mr. Gilbert has tried to rebuild. He has hired a new coach and taken other steps in a so-far unsuccessful bid to keep the team competitive. The team’s viability post-LeBron is critical to attendance levels that are important to downtown nightlife. Meanwhile, Mr. Gilbert’s Rock Gaming and Penn National Gaming plowed forward in capitalizing on a big 2009 victory at the polls to legalize casino gaming in Ohio. The $600 million casino that Rock Gaming plans to build in downtown Cleveland on Huron Road near Tower City Center made it through key planning steps. Rock unveiled last year it is considering opening a temporary casino in the Higbee Building this year, and it reached agreements with landowner Forest City Enterprises Inc. to establish a site for the casino that is scheduled to open in 2013. Design work is under way for the permanent casino which is expected to create 1,500 jobs associated with gaming. Glitzy videos of the proposed casino hit local TV news big time last year in a city short of downtown construction projects for a decade. Mr. Gilbert also planted another seed intended to help downtown Cleveland. In October, as he received the Ruth Ratner Miller Award from the Downtown Cleveland Alliance for the benefits he’s already brought to downtown, he

■ May 13: Boston Celtics scuttle Cavs’ playoff hopes. ■ July 8: LeBron James announces he is Miami-bound in a nationally televised spectacle. Owner Dan Gilbert releases a screed that triggers a $100,000 fine from the NBA. ■ Aug. 12: Rock Gaming LLC, Mr. Gilbert’s casino concern, and Harrah’s Entertainment Inc. announce plans to partner in the downtown Cleveland casino. Rock also voices interest in possibly opening a temporary casino in the Higbee Building until a $600 million casino is constructed. ■ Aug. 19: Forest City Enterprises Inc. and Rock Gaming announce that agreements were put in place for Rock to buy 16 acres and air rights next to Tower City Center and the Cuyahoga River for Cleveland’s permanent casino. ■ Oct. 28: Mr. Gilbert announces plans to bring Bizdom U, a boot camp to help budding business owners develop business plans, to Cleveland.

announced plans to add a Bizdom U chapter here. The nonprofit, which Mr. Gilbert describes as “Green Beret-type training” for people starting businesses, is part of his way of reviving older urban areas. In his hometown of Detroit, the effort has spawned 10 new businesses since 2007. Also in Detroit, Mr. Gilbert moved Quicken Loans and associated ventures from the suburbs to a downtown building. That tower cost a pittance — Mr. Gilbert puts it at just $8 a square foot — and he said it proves profit and altruism can coincide.

What he said ■ To fans about LeBron’s exit, July 8: “You simply don’t deserve this kind of cowardly betrayal. You have given so much and deserve so much more.” (Mr. Gilbert also vowed his ownership would not betray the city and fans. That is an interesting comment to a town that witnessed long-term Browns owner Art Modell ship its beloved football franchise to Baltimore, forcing it to win the name back.)

What others are saying ■ John Ferchill, chairman of the Cleveland-based Ferchill Group real estate development concern: “I met Gilbert two months after he acquired the ownership of the Cavaliers (in 2005). I looked at the people rushing around him and thought, ‘He’s gonna go nuts.’ He’s proven to be an incredible guy. He does nothing that is not first-class.” ■ Steve Greenberg, an investment banker with New York Citybased Allen & Co.: “He’s not laid back, but he very much believes in hiring very competent people and empowering them to do their jobs, understanding their thinking and then letting them go do their jobs.”

CRAIN’S TOP ’10 WEB STORIES This being our review of 2010’s top newsmakers, here’s a look at our top 10 most-trafficked stories on CrainsCleveland.com, which brings readers business news from across Northeast Ohio throughout each day. 1. Aug. 12: “Dan Gilbert’s Rock

Gaming, Harrah’s Entertainment agree to develop Cleveland, Cincinnati casinos.” 2. Sept. 23: “Cleveland Indians plan winter tubing, skating activities at Progressive Field.” 3. Sept. 15: “Jimmy Dimora, continued on PAGE 15

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CRAIN’S CLEVELAND BUSINESS

HOLMGREN TIMELINE

MIKEHOLMGREN FILE PHOTO/JANET CENTURY

President, Cleveland Browns By JOEL HAMMOND jmhammond@crain.com

GREIG TIMELINE

PAULGREIG President and CEO, FirstMerit Corp. By MICHELLE PARK mpark@crain.com

espite a sluggish economy and fierce competition in the most overbanked region in the country, FirstMerit Corp. chairman, president and CEO Paul G. Greig and his team didn’t hold back in 2010: They spent the year expanding. FirstMerit last year closed a trio of bank acquisitions in Chicago, which amassed the Akron-based bank approximately $4 billion in assets and 54 branches. The bank later consolidated that number to 47 because of some branches’ proximity to each other, spokesman Rob Townsend said, noting, however, that there were no job losses. FirstMerit’s newly amassed Chicago-area assets account for a quarter of FirstMerit’s assets, which total $14.4 billion. As a result of the expansion, the bank commanded 1.27% of the deposit market share in Chicago as of June 30, Mr. Townsend said. All the while, the bank didn’t lose sight of its home turf. FirstMerit has grown its average deposit market share by nearly 1% in Cleveland, Canton, Toledo and Akron between June 30, 2009, and June 30, 2010, said Tony Davis, managing director in bank research for Stifel, Nicolaus & Co. in Richmond, Va., who cited Federal Deposit Insurance Corp. data. Meanwhile, four of its competitors — PNC, KeyBank, Fifth Third and Huntington — lost an average 1% market share in the same markets, according to Mr. Davis. The 12 states considered to be in the Midwest are home to 23% of the U.S. population and 45% of America’s banks, Mr. Davis said. So FirstMerit has made “a pretty big move” and achieved a “pretty impressive accomplishment” to grow the way it has in the markets it has, Mr. Davis said. Mr. Greig, who spent 28 years of his banking career in the Chicago market, assumed the leading role at FirstMerit in May 2006. From the get-go, Mr. Davis said, Mr. Greig focused on improving FirstMerit’s credit quality, which had not been good, and its underwriting. It wasn’t just important to the new CEO that loan officers grew the number of loans; it was important that they grew loans that would produce profit for the company, Mr. Davis said. So Mr. Greig made loan officers accountable for that profitability by building it into the compensation scheme, Mr. Davis said. “Their credit performance over the last several years, they really

■ January: FirstMerit Corp. receives regulatory approval for its November 2009 purchase of 24 Chicago-area bank branches of First Bank of St. Louis, Mo. The bank also acquires $1.2 billion in deposits from First Bank and an asset-based loan business that was an affiliate of the bank. ■ February: FirstMerit scoops up another four branches in the Chicago area, adding those of the failed George Washington Savings Bank in a deal assisted by the Federal Deposit Insurance Corp. The same weekend, the bank converts the systems of the 24 branches it purchased from First Bank. ■ May: The Akron bank makes its third Chicago acquisition since late 2009, buying Midwest Bank & Trust Co. It is FirstMerit’s second takeover of a failed bank assisted by the FDIC. The acquisition of the bank, which had more than $3 billion in assets and 26 branches, bumps FirstMerit up to 54 branches and 1.46% of the deposit market share in the Chicago Metropolitan Statistical Area. As of June 30, its deposit market share was 1.27%. have distinguished themselves,” Mr. Davis said of FirstMerit. “And that is a direct consequence of the policies and procedures and controls Paul has implemented.” Bank analysts, including Mr. Davis, expect FirstMerit to continue to eye expansion in the Chicago market. For his part, Mr. Greig has confirmed the bank still is looking for opportunities there and throughout the Midwest. Even with his eyes on other markets, Mr. Greig told this newspaper last year that he and the bank have “unwavering support” for Ohio and that the company will be based in Akron as it is today.

What he said ■ Mr. Greig, speaking of the bank’s desire to absorb what’s been brought on board while continuing to look for other opportunities in the Midwest, in a May 24 Crain’s Cleveland Business article: “There’s absolutely no reason to think that we’re done at this point in time. We have limited ourselves to good strategic acquisitions with good financial returns.”

What others are saying ■ Tony Davis, managing director in bank research for Stifel, Nicolaus & Co. Richmond, Va.: “In a part of the country that is severely overbanked, being able to accumulate that degree of market share in the period of a year is what it’s all about,” Mr. Davis said, speaking to the way FirstMerit Corp. increased its average deposit market share in Cleveland, Canton, Toledo and Akron at the same time four competitors’ average market share dropped.

hen Mike Holmgren was named the Browns’ president in late December 2009, the team was in disarray. The Browns stood 3-11 in Eric Mangini’s first year, and the coach — fired by the New York Jets two weeks before being handpicked by absentee Browns owner Randy Lerner — was in over his head. A month earlier, the team fired general manager George Kokinis, who later sued the Browns for breach of contract. (The parties settled.) This newspaper published a story, illustrated by a Browns fan with a paper grocery bag over his head and headline, “Can’t Bear to Watch,” with comments from season ticket holders like, “I don’t consider myself a stupid person, yet the Browns are going out of their way to make me feel like one.” But it all seems like a distant memory, doesn’t it? Sure, Mr. Mangini still lost his job on Jan. 3, but either way, fans seem calmer, and certainly more confident in the team’s future, all for one reason: the new boss. As he pointed out in his introductory news conference with Cleveland media, Mr. Holmgren has done the turnaround thing before, first with the San Francisco 49ers as an assistant, then with the Green Bay Packers and Seattle Seahawks as head coach. And he said the prospect of rejuvenating the downtrodden Browns was one of the main factors in his taking the job. In his first season, he made strides. He immediately hired Tom Heckert as the Browns’ new general manager, and Mr. Heckert mostly has struck gold: His top two draft picks have been immediate contributors, and cornerback Joe Haden likely will get Rookie of the Year votes. Free-agent signings, too, have been crucial, and the team appears to have its quarterback of the future — third-round choice Colt McCoy, hand-picked by Mr. Holmgren in his self-described role of “tiebreaker” in the Browns’ front office. Off the field, too, the Browns have worked to reconnect with their fans. The Browns hired five “ticket service representatives,” charged with enhancing the team’s customer service, and each season ticket holder now has a designated account representative. Later, the team took an unheard-of action: It offered certain former season ticket holders the chance to come back without repaying their personal seat licenses, which can range from $375 to $1,500. Downtown Cleveland officials and business owners, too, are watching the Browns’ progress, as game days bring thousands of consumers into the city’s restaurants, bars, shops and hotels.

What he said ■ Introductory conference call

■ Jan. 7: Mr. Holmgren announces Browns coach Eric Mangini will return for a second season after the team wins its final four games and finishes the 2009 season 5-11. ■ Jan. 11: Mr. Holmgren hires Philadelphia Eagles general manager Tom Heckert as the Browns’ general manager; Mr. Heckert’s father worked as a scout for the Browns under coach Sam Rutigliano in the 1980s. ■ April 23: The Browns, after passing twice earlier in the NFL Draft, select Colt McCoy in the third round, with the 85th overall pick. Mr. Holmgren said he’d leave the draft to Mr. Heckert but was heavily involved in the drafting of McCoy, according

with Cleveland-area media, Dec. 28, 2009: “I want to do what is right for the Cleveland Browns. That’s my charge. I want to get the team’s record better. I want the organization to be functioning properly. I want the fans to be proud of their team. I know we have a great fan base. They’ve been very loyal. I want to make them proud of their football team again.”

What others are saying ■ Fred Nance, general counsel, Cleveland Browns, and partner, Squire, Sanders & Dempsey: “I can sum up (the difference this year) in one word: credibility. Although the changes didn’t happen instantaneously, it was like flipping on a light switch in a dark room. First of all, we’ve been able to attract top front-office staff from all over the country.

to reports. ■ May 28: Local media report Mr. Holmgren strips Hall of Fame running back and outspoken Jim Brown of his title of “executive adviser,” kicking off a months-long saga that ends with Mr. Brown’s absence from a September ceremony unveiling the Browns’ new Ring of Honor. ■ July 31: Mr. Holmgren unveils his “Home-Field Advantage” plan, in which the Browns would make a more concerted effort to curtail unruly behavior in the stands at Cleveland Browns Stadium. ■ Jan. 3, 2011: Mr. Holmgren fires Mr. Mangini after a second straight 5-11 season, this one ending in four straight losses.

“And we’ve re-engaged with sponsors, business partners, suite patrons and season ticket holders. All of those groups have a belief that we are making meaningful progress.” ■ Jim Liberatore, president of SportsTime Ohio, which carries some Browns programming: “The town has a sense of hope, that, ‘OK, this is a guy who knows what he’s doing.’ Even when they’re losing now, fans think, ‘We’re on the right track because of him.’ “There was a time when Browns management felt like, ‘We just put the helmets on the field and we sell tickets.’ That’s exactly what someone said to me three years ago. ‘If those orange helmets are on the field, and there is cold beer, we’ll sell tickets.’ “These guys want to have a deeper appreciation of the fans.”

NEW YEAR NEW RULES SAME TEAM

www.herbruckalder.com 216.623.2600 1 1 0 0 S U PE R I O R AV E N U E E A S T, S U I T E 1 7 0 0 • C L EV E L A N D , O H I O 4 4 1 1 4 - 2 5 2 1

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A.J.HYLAND CEO, Hyland Software Inc. By CHUCK SODER csoder@crain.com

yland Software Inc. is much smaller than some of its competitors in the document management software industry, but it’s working on that. The Westlake firm in September bought Hershey Systems of Santa Fe Springs, Calif., and Computer Systems Co. of Strongsville, which had filed for bankruptcy. Plus, in March it bought eWebHealth of Reading, Mass. Those purchases — which account for three of the five acquisitions Hyland Software has made since July 2008 — put the company past 1,000 employees, most of whom work at the company’s headquarters. Still, the firm, led by CEO A.J. Hyland, remains significantly smaller than some of its rivals, which include Microsoft, IBM and Oracle. Even the next biggest independent document management software provider, Open Text Corp. of Waterloo, Canada, is significantly larger, with 3,400 employees and $912 million in revenue in the fiscal year that ended June 30, 2010. Hyland Software, meanwhile, brought in $155 million in revenue in the 12 months ending Sept. 30, 2010, according to a report from Moody’s Investors Service. That figure, which doesn’t include the company’s September acquisitions, is up from $133 million in calendar 2009. The company’s growth — and growth plans — impressed Gartner Inc. In 2010, the business research firm for the first time labeled Hyland Software a “leader” in the enterprise content management industry. Gartner in past years had relegated Hyland Software to “challenger” status, which put the company above several competitors but below Microsoft, Open Text and a few other major industry players. In the 2010 report, Gartner said Hyland Software has “strong management, a clear strategy, happy customers and a vertical-

ALEXANDER continued from PAGE 11

owners of all-electric homes. Not surprisingly, homeowners and legislators alike expressed outrage when electric bills skyrocketed. In March, the Public Utilities Commission of Ohio voted to require FirstEnergy to restore the discounts until a long-term solution could be determined. Meanwhile, the utility also announced that it had moved up plans by two years to replace the reactor head at its Davis-Besse nuclear power plant near Toledo — a location that previously had been a source of trouble. The company previously was widely criticized for its failure to detect a badly corroded containment cap at the same site. FirstEnergy also is working on advancing technology and energyefficiency standards, announcing in June that it would put $57.4 million in grants toward smart-grid technologies to improve the reliability and interactivity of its electric distribution network. The utility also continues to develop initiatives designed to comply with a state law to reduce total energy usage by its consumer base.

What he said ■ In a FirstEnergy statement announcing the deal with Allegheny

JANUARY 17 - 23, 2011

HYLAND TIMELINE

MOONEY TIMELINE

■ March 1: Hyland Software buys eWebHealth of Reading, Mass. The acquired company, which employs about 30, serves small and midsize hospitals. ■ August: Hyland Software opens a data center in Australia, one of a handful it plans to open across the world. ■ Sept. 1: The company acquires Hershey Systems, which employs about 30 in Santa Fe Springs, Calif., and three other offices. The purchase adds 200 higher education institutions to Hyland’s customer base. ■ Sept. 24: Hyland Software acquires Computer Systems Co. Inc. The Strongsville firm had been in Chapter 11 bankruptcy, and employed about 100 people at the time.

■ Nov. 18: KeyCorp announces that on May 1, Beth Mooney, vice chairwoman of KeyCorp and leader of Key’s Community Banking business, will replace Henry L. Meyer III as KeyCorp chairman and CEO. In the interim, she will serve as president and COO and as a member of the KeyCorp Board of Directors. ■ Dec. 1: Ms. Mooney appoints two veteran Key executives to lead the company’s major business divisions: Christopher M. Gorman was named president of Key Corporate Bank; and William R. Koehler was named president of Key Community Bank. Both positions report to Ms. Mooney.

BETHMOONEY Incoming chairwoman/CEO, KeyCorp By KATHY AMES CARR kcarr@crain.com

market focus.” It lauded the company’s sales growth, efforts to expand internationally and its success selling an online version of its flagship document management software, OnBase. The company plans to keep making acquisitions, growing internationally and promoting OnBase OnLine, with the goal of eventually surpassing Open Text to become the largest independent company in the industry. Reports that Moody’s and Standard & Poor’s Ratings Services released in November detailed Hyland Software’s plans to take on $225 million in debt to fund a $131 million dividend payment to shareholders and refinance existing loans. The dividend recap deal was designed to give the company’s investors an immediate return, though it comes at the expense of the company’s balance sheet, according to analysts. The proposed deal shows, however, that the company’s investors have confidence in its performance, the analysts said.

What he said ■ Article appearing in Crain’s Cleveland Business, May 24: “I think it matters to the region to have a success story.”

What others are saying ■ Bob Parry, director of planning and economic development for the city of Westlake: “They’re probably up to 800 or so jobs. It’s hard to keep track because they keep adding every year. … It’s a great company. It’s meant a lot to the city and the growth of the city. … (A.J. Hyland) certainly is a great officer and company owner.”

Energy, Feb. 11: “This combination supports our strategy of being a leading regional energy provider, focused on both regulated utility operations and our competitive generation business. Simply put, it provides a far better platform for growth than either company would have been capable of achieving on a stand-alone basis.”

What others are saying ■ Rick Rebadow, executive vice president, Greater Akron Chamber: “They have a significant corporate presence… He really is a great supporter and ambassador for Northeast Ohio … during a period of what we just experienced in the economy, (FirstEnergy’s) actually growing.” ■ Thomas R. Kuhn, president of the Washington, D.C.-based Edison Electric Institute, the association of U.S. shareholder-owned electric companies: “The steady progress of the merger and its expected closing early this year are a testament to Tony’s abilities as a CEO. As evidenced by the numerous approvals and agreements the merging companies have received from state utilities commissions and the federal government, Tony has displayed terrific leadership in ensuring the new company will better serve its customers, shareholders and the electricity marketplace.”

eth Mooney on May 1 will become the first woman CEO of a top 20 U.S. bank. As the incoming chairwoman and CEO of KeyCorp, Ms. Mooney also will become the first female CEO of a publicly traded company in Northeast Ohio in a move that also illustrates the overall progression of women in executive leadership roles. Gender aside, her experience and accomplishments have formed a natural path toward stewardship of one of the nation’s largest banks. Ms. Mooney, who currently is president, chief operating officer and a member of the KeyCorp Board of Directors, has more than 30 years of experience in retail banking, commercial lending and real estate financing. She will step into the new position as chairwoman and CEO upon the same-day retirement of current KeyCorp chairman and CEO Henry L. Meyer III, who said he’s seen during his tenure the bank grow from a “small, $1.5 billion Cleveland bank to one of the largest banks in the country with $95 billion in assets today.” “Beth Mooney is a proven and outstanding leader,” Mr. Meyer said in a Nov. 18 KeyCorp statement. “She and her team are the architects of our successful (Key) Community Banking strategy. The ability to now further align (Key) Community Banking with the solid expertise and products of (Key) National Banking will create a powerful lever to drive Key’s future growth and success.” Prior to joining Key in April 2006, Ms. Mooney was chief financial officer of AmSouth Bancorporation, now Regions Financial Corp. She held line management positions at major financial services companies, including Citicorp Real Estate Inc. and Bank One Corp., where she eventually became president of that company’s Ohio operations.

CARRABBA continued from PAGE 11

of his handiwork. For the quarter ended Sept. 20, 2010, Cliffs had revenues of $1.34 billion and net income of $297.4 million. Those revenues were more than double what they were for the same quarter of 2009 and net income was up more than 400%, from just $58.8 million for the period. It’s not short-term bounce back from the recession either. In 2006, the year before Mr. Carrabba took over as CEO, Cliffs earned only $274.5 million on revenues of just more than $1.95 billion. In other words, under Mr. Carrabba, Cliffs is making more in a quarter than it made in a year before he took over. Cliffs quietly has become one of Cleveland’s most successful companies — but locally, it’s gotten little notice outside of corporate circles. That even prompted the company to engage in an advertising campaign after LeBron James left the Cavaliers, asking Northeast Ohio residents to “witness” the success of a hometown company with at least some of the obsession with which they worshipped the basketball star. That was far from a self-serving ad in the eyes of many — it didn’t sell an extra pound of ore or coal, but did a lot to tout Cleveland as a

Ms. Mooney graduated in 1977 from the University of Texas and earned her master’s in business administration from Southern Methodist University in 1983. She currently is board chairwoman of Neighborhood Progress Inc.; trustee and treasurer of the board of the Musical Arts Association; and a trustee of the Cleveland Clinic Foundation; United Way of Greater Cleveland; and ideastream.

What she said ■ Statement from Ms. Mooney, Nov. 18: “The opportunity to lead Key is tremendously exciting. Henry has given us a wonderful foundation to build upon. … Key is uniquely positioned as a relationship focused bank — delivering award-winning service using client insights, industry expertise and product specialization. We have a very strong team in both Community and National banking and together — as ‘One Key’ — we’re committed to growth and solid returns for our investors.”

What others are saying ■ Alexander “Sandy” Cutler, KeyCorp’s lead director: “Beth’s knowledge of the industry, and more specifically KeyCorp, will ensure that we have a seamless transition next spring.” ■ Kevin Jacques, the Boynton D. Murch chair in finance, Baldwin-Wallace College: “While this is a significant accomplishment in breaking the stereotype, I think in the next decade we will see a number of women ascend to become CEOs of large multibillion-dollar financial institutions. I say this because from my experience at the U.S. Treasury in Washington, D.C., there are a number of very accomplished women throughout the banking and financial industry.”

viable home for a major corporation, said David MacGregor, an analyst who follows Cliffs for Longbow Research in Independence. Outside Cleveland, though, Cliffs’ success has hardly gone unnoticed. The company’s stock had a big year in 2010 and has more than doubled since the summer of 2009, when it hit lows of just less than $24 a share. Lately, a share of Cliffs would cost an investor a bit more than $80. Neither Cliffs nor its CEO, now 58, show any signs of slowing down. Cliffs has become a major world supplier of both ore and metallurgical coal and it made major moves to cement that position in 2010, including a string of acquisitions that the firm seems to be continuing. It’s been buying up coal mines in Virginia, chromite deposits in Canada — and whatever else it can find that fits in with its global strategy. Not bad, especially considering most of these activities once were not even part of Cliffs’ core business. Under the name Cleveland Cliffs until 2008 — and the leadership of other CEOs — Cliffs was once a shipping company with its fortunes firmly moored to the steel industry in America’s Midwest. Under the leadership of Mr. Carrabba and his team, the company has successfully followed the world’s steel making capacity to

China, Brazil and other markets, ensuring that it would not become obsolete or irrelevant even if its once-core industry did just that.

What he said ■ Conference call with securities analysts, July 29: “Overall, when taking into consideration what has transpired over the past two years within the world economies and the related effect this volatility has had on the commodity markets, I believe our company has done a remarkable job responding to the ebbs and flows that present themselves on a day-to-day basis. … It has been a very busy year thus far here at Cliffs, and I would like to acknowledge our entire management team for their tireless commitment to execution. We are more energized and excited than ever to continue executing our proven strategy.”

What they are saying ■ David MacGregor, securities analyst, Longbow Research: “He’s a quality guy. He’s a good CEO and he’s done a lot in taking Cliffs forward . . . And he’s probably not yet gotten the recognition he deserves. . . He’s built a much stronger organization people-wise in 2010. That’s something, in a time when the Street is focused on ‘what have you done for us lately’ in terms of earnings growth.”

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JANUARY 17 - 23, 2011

LEE/JANE SEIDMAN Health care philanthropists By TIMOTHY MAGAW tmagaw@crain.com

ee Seidman, founder of The Motorcars Group, and his wife, Jane, aren’t health care experts or hospital executives, but their generosity has been felt throughout the Cleveland health care market with a series of transformational, multimilliondollar donations to the region’s medical juggernauts. They haven’t picked sides between University Hospitals and the Cleveland Clinic — the two major, competing Cleveland-area health care systems — and have donated millions of dollars to each. In fact, their names will grace two of the area’s newest health care facilities: Hillcrest Hospital’s new 72-bed patient tower and University Hospitals’ new cancer hospital. But for the Seidmans, who both are lifelong Clevelanders, it’s not about having their names plastered on the area’s newest medical facilities. Rather, it’s about fostering a philanthropic spirit in the region that encourages people to dig deep into their pockets and financially support the institutions that have made Northeast Ohio a medical destination. At a November event announcing the Seidmans’ $42 million gift to University Hospitals, Mr. Seidman pulled out a home plate from a baseball field and encouraged the crowd to “step up to the plate and hit a philanthropic home run.” The Seidmans have personal connections with both University Hospitals and the Cleveland Clinic. Both were born at UH MacDonald Women’s Hospital. Also, in 2008, the couple donated $1 million to UH Rainbow Babies & Children’s Hospital for an endowed position to study pediatric cancer. Meanwhile, six of the couple’s nine grandchildren were born at the Clinic’s Hillcrest Hospital, where the Seidmans recently pledged $6 million for a new patient tower. Additionally, the couple pledged $17 million to the

SEIDMANS TIMELINE

WEISS TIMELINE

■ Nov. 17: The Cleveland Clinic opens the Jane and Lee Seidman Tower at Hillcrest Hospital in Mayfield Heights. In 2009, the Seidmans had pledged $6 million for Hillcrest’s $163 million expansion project. ■ Nov. 29: University Hospitals announced the largest gift in the health care system’s history — a $42 million donation from the Seidmans. In their honor, University Hospitals named its new, $268 million cancer hospital on Euclid Avenue after the couple. In 2008, the couple also donated $1 million to create an endowed position to study childhood cancer.

■ Jan. 7: American Greetings confirms it’s undertaking a search for a new corporate headquarters that may take it out of its longtime Brooklyn home. In a memo to employees, the company cites a June 2009 income tax hike in Brooklyn that increased the tax rate to 2.5% from 2%. ■ April 22: The company reports a fourth-quarter profit compared to a year-earlier loss, when the company absorbed a sizable charge for writing down goodwill and other intangible assets. For the full fiscal year, American Greetings earned $81.6 million, or $2.03 a share, compared with a loss of $227.8 million, or $4.89 a share, in the

Clinic in 2006 to endow a chair in functional neurosurgery and to advance research and patient care in areas dealing with the heart and the brain. Indeed, the Seidmans have become a key stakeholder in the future of health care in Northeast Ohio, and their generosity is likely to be appreciated for years to come.

What they said ■ Mr. Seidman at the announcement of the couple’s $42 million gift to University Hospitals, Nov. 29: “Your physical and mental health can also improve in direct proportion to your charitable activity. That message from us to you sums up our entire challenge.” ■ Mrs. Seidman, on Nov. 29, regarding University Hospitals’ new cancer hospital: “When I look at this building and its stateof-the-art technology and the level of the people who will work there, I think of my dad, who died of cancer at age 56. He never got to see his own grandchildren. With the staff and technology of this center, many grandparents will live to see their grandchildren grow and prosper.”

What others are saying ■ Jeff Leimgruber, president of Hillcrest Hospital: “They’re fabulous supporters and role models for other members of our community who could also be generous to efforts in their own backyard. “They’ve been tremendously successful, and now they’re being tremendously generous to their community. Wherever they give it, is their choice, but we’re glad we’re part of it.” ■ Dr. Fred Rothstein, president of UH Case Medical Center: “What are most important to them are family and friends and making a difference in the lives of people. “They are incredibly giving but very receptive. They are a really unique couple with a great sense of humor. They’re very committed to the areas where they feel they can make the most difference.”

CRAIN’S TOP ’10 WEB STORIES continued from PAGE 12

others charged in Cuyahoga County corruption investigation.” 4. Oct. 19: “375 laid-off GM workers from Michigan must transfer to Lordstown Assembly Plant.” 5. Aug. 25, SportsBiz blog: “The Cavaliers have a new market: Ottawa.” 6. June 18: “Report: CEO of American Greetings’ digital subsidiary leaves company.” 7. July 8: “Nevada Supreme Court upholds $32 million judgment against

CRAIN’S CLEVELAND BUSINESS

Goodyear.” 8. Sept. 9: “Frank Russo resigns as Cuyahoga County auditor amid federal bribery charges.” 9. Nov. 9: “Cleveland Clinic announces plans to cut about 200 positions.” 10. June 23: “Earthquake felt in Northeast Ohio brings out social media creativity.” Visit CrainsCleveland.com throughout each day for breaking Northeast Ohio business news.

ZEVWEISS CEO, American Greetings Corp. By SCOTT SUTTELL ssuttell@crain.com

y the end of next month, Northeast Ohio will know if it’s going to contend with another high-profile departure — this one with far bigger economic ramifications than a basketball star leaving for South Beach. American Greetings Corp. announced last November that it’s considering seven sites — including two in the Chicago area — for its corporate headquarters. The greeting card company and its CEO, Zev Weiss, expect to make a decision by February, which marks the end of American Greetings’ fiscal year. The stakes, of course, are huge. American Greetings has about 2,000 employees in Brooklyn, and its local annual payroll is more than $150 million. Five of the seven sites under consideration are in Northeast Ohio, including the existing Brooklyn headquarters. Mr. Weiss, as CEO, will drive the headquarters decision, but he has been conspicuously silent on the matter. The company’s Nov. 19 announcement of its headquarters site search included no comments from Mr. Weiss and instead featured Brian McGrath, American Greetings’ senior vice president of human resources. American Greetings in January 2010 sent a memo to employees indicating the company was exploring a move from Brooklyn because the suburb in spring 2009 voted to raise its payroll tax by 25%, to 2.5% from 2%. Taxes might have been the springboard for American Greetings’ headquarters space exploration, but they weren’t the only factor. Also weighing in the company’s decision are the costs of a new or renovated facility, moving costs, employee recruitment and what Mr. McGrath called “the enhancement of the company’s creative environment and culture” as American Greetings contends with changes in the greeting card industry and seeks ways to bolster its electronic greetings business. To that end, Mr. Weiss told securities analysts in a conference call last month that American Greetings is committed to being an industry leader in technology initiatives. What he outlined is pretty amazing: patented cards that feature full-color LCD displays and high-quality audio; a new collection of cards called “Illuminotes” that feature a unique card fold and a light that is diffused through a frosted vellum window; and another collection of cards called “Flipbook” that Mr. Weiss said boasts “an entertaining animation produced by rapidly flipping thin sheets to reveal a design sure to delight any child.” That’s the future of the business. Northeast Ohio will find out soon enough whether it’s the future of

American Greetings.

What he said ■ Statement from Mr. Weiss in

a conference call with analysts, Dec. 22: “Our feeling is, wherever we can get the best content to present the best greeting card offering in the marketplace, we are going to get that content whether that’s inside our company or if there are people that we can go to on the outside who can do some unique and exciting things for us, we will do that as well.” (Mr. Weiss has not commented publicly about the possible headquarters move.)

What others are saying ■ Brian McGrath, senior vice

president of human resources at American Greetings: “We are an

previous fiscal year. ■ June 22: American Greetings introduces greeting cards that let the sender or recipient download a song from Apple’s iTunes. American Greetings says the complete line includes 36 cards, each with a code redeemable for a song download from iTunes. ■ Nov. 19: The company announces it’s considering seven sites — including two in the Chicago area — for its corporate headquarters. A decision is expected by the end of February. Gov. John Kasich and Cuyahoga County Executive Ed FitzGerald both met with American Greetings officials in November to discuss the situation. evolving company in a changing industry, and we must adapt our headquarters building — whether it remains in Brooklyn or is relocated — to most efficiently accommodate us today and in the future. Competitive businesses that wish to remain successful must adjust and position themselves for the future, and that’s what American Greetings is doing by conducting an exhaustive examination of our workplace needs.” ■ Cuyahoga County Executive Ed FitzGerald: “A major mandate of the new government in Cuyahoga County is to take a leadership role in economic development. There is no higher priority for my incoming administration than to retain a stalwart Fortune 500 company like American Greetings in our community.”

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JANUARY 17 - 23, 2011

Eaton: Company says it was unaware of alleged impropriety continued from PAGE 1

According to statements by Eaton and court documents in Mississippi, the trip began in 2002 when six Eaton employees in that state left the company. They joined a competitor, North Carolina-based Frisby Aerospace, which now is known as Triumph Actuation Systems as a result of a subsequent acquisition. Eaton alleges in a civil lawsuit originally filed in July 2004 in Hinds County Circuit Court that five of the employees took thousands of pages of technical documents and drawings, representing intellectual property owned by Eaton. Even federal prosecutors appear to agree with Eaton on those aspects of the case. A federal criminal case against the five accused of stealing Eaton’s trade secrets has been on hold while the civil trial progressed. But in July 2009, the U.S. Attorney’s Office in Jackson, Miss., filed a bill of particulars that supports at least some of Eaton’s claims. That document claims that, in some cases, the defendants “falsely stated that they had returned all Eaton Aerospace properties,” while in other instances they admitted to federal investigators that they not only took Eaton’s documents, but

also altered them later with Frisby’s own proprietary markings and used them in designing equipment for Frisby. All along the way, the two companies have continued to compete for the business of companies such as Airbus and Boeing, with Eaton maintaining that Frisby/Triumph has benefitted from the alleged theft. Eaton hasn’t put a specific dollar figure on the loss it believes it has suffered because of the alleged theft, but indicated it is substantial. “Eaton estimates its annual sales volume of the affected products is about $150 million,” the company stated in a 2004 position paper it released to Mississippi media in 2004 and which it provided last week to Crain’s Cleveland Business. “The value of the intellectual property stolen and measured in terms of replacement cost is substantially in excess of $200 million.” In an e-mail interview last week, Eaton’s spokesman, Mr. Klasen, wrote, “Thousands of documents were taken and some were used to compete against Eaton.”

Enter Mr. Peters Eaton’s civil case against Frisby/ Triumph and its five former

employees bumped along through the court system for more than six years, and Eaton took a few jolts along the way before the case went into the ditch last month. In January 2006, the defendants in the case filed a motion to dismiss and sought sanctions against Eaton, claiming the company made discovery violations that included illegally paying a witness in the case. An investigation into that matter by the court found that, in discovery, Eaton’s “answers were ‘truly false’ in an ‘intentional effort to mislead,’” according to court documents. Ultimately, on Jan. 6, 2010, the court levied a $1.56 million sanction against Eaton for the violations. In early 2007, Eaton added Ed Peters to the local attorneys it was using on the case. Mr. Peters was a well-known southern lawyer who also was well-acquainted with Bobby DeLaughter, the judge hearing Eaton’s case. Mr. Peters previously had been the district attorney in Hines County and had been Mr. DeLaughter’s boss in the county prosecutor’s office when Mr. DeLaughter was an assistant prosecutor there. In that role, Mr. DeLaughter gained fame

when he prosecuted Klansman Byron De La Beckwith for the 1963 killing of civil rights leader Medgar Evers in a landmark 1993 case. Eaton’s hiring of Mr. Peters was brought to light when the defendants in its case complained. They filed a motion on Jan. 24, 2008, alleging that not only had Eaton hired Mr. Peters without disclosing it, but that Mr. Peters also was engaging in illegal ex-parte communications with Judge DeLaughter and was influencing the case in Eaton’s favor.

There went the judge Mr. Peters and Judge DeLaughter also were embroiled in an entirely different case in which Mr. Peters was accused of influencing the judge. That matter ultimately resulted in Mr. DeLaughter going to prison in January 2010 (he since has been moved to a halfway house.) As for Mr. Peters, he surrendered his law license in January 2009. As a result of his legal entanglements, Judge DeLaughter recused himself from Eaton’s case, citing the amount of time he was spending with federal investigators in January 2008. That paved the way for a new judge — Senior Circuit Court Judge W. Swan Yerger — to take over Eaton’s case against Frisby and its former employees. Judge Yerger was assigned the case on Jan. 14, 2008. Judge Yerger was given the task of determining whether the case should be dismissed because of Mr. Peters’ contact with Judge DeLaughter. After taking over the case, the new judge was inundated with motions, appeals and reports from “Special Masters” helping him to adjudicate what he said was the most complex case of his career. On Dec. 22, 2010, his gavel came down hard on Eaton. “The shocking facts of Peters’ ex-parte contacts with Judge DeLaughter, the clear knowledge by Eaton, as shown, with ‘red flags’ being raised, Eaton’s failure to take any corrective action and, instead, ‘looking away,’ require that this court ‘protect the integrity of the court and the judicial process,’ by imposing the most severe sanctions available,” Judge Yerger wrote in dismissing all of Eaton’s claims.

Stern words for Eaton That’s about as hard as a case can crash in Mississippi, said Mr. Thomas, the Jackson attorney who has had a field day blogging about the case. He predicts Eaton will have a tough time getting its case back in court. “I think Eaton will appeal to the Mississippi Supreme Court, but I think they’ll lose,” Mr. Thomas said. “This judicial scandal that we had, involving Peters and others, really gave the state of Mississippi a black eye. The Supreme Court is very sensitive to that . . . that’s why I think it will rule against them on appeal.” For Eaton, no small amount of money is at stake because the company it was suing was no turnip. Wayne, Pa.-based Triumph Group, parent company of Triumph Actuation, had revenues of $1.3 billion for its fiscal year that ended March 31, 2010. Since then, it has made acquisitions to more than double its size and is on track to book revenues of more than $3 billion in its current year, said a company spokesman who declined to comment on the matter with Eaton specifically. Mr. Klasen said last week that Eaton will appeal the case to the Mississippi Supreme Court. Mr. Klasen said Eaton could provide only limited information on pending litigation — and Triumph still has a counterclaim pending against Eaton in the original suit. However, Mr. Klasen said Eaton strongly disagrees with Judge Yerger’s ruling. Eaton was not aware that Mr. Peters was engaging in improper conduct with the judge on its case, Mr. Klasen said. The size of its case might bode well for Eaton, Mr. Thomas said. By dismissing the case altogether, the sanction levied against Eaton is the entire amount it could have won, and in this case that amount might be too heavy a penalty, even considering the judge’s findings. However, Judge Yerger indicated in his ruling he had considered that very issue. “As the old adage goes, ‘The punishment should fit the crime.’ In the subject case, the Court is not faced with a ‘crime’ but instead is faced with the most serious type of fraud, ‘fraud against the court,’” he wrote. ■

IN BRIEF Demand will rise for green packaging Cleveland researchers say recycled material will have most appeal Demand for green packaging will increase about 3.9% per year over the next three years, a market research firm says in a new analysis and white paper. The Freedonia Group, a research firm based in Cleveland, said packaging using recycled content, reusable or degradable material will have a market value of $41.7 billion by 2014 and consume 58 billion pounds of material annually. The company is selling its white paper, but released some data for free. As the green packaging market grows, it will become more competitive with traditional resins, the research firm said, driven partly by the desire of brand owners to improve their products’ environmental footprint. The company also expects food-service bans of polystyrene foam to grow. — Waste & Recycling News

■ TRUCKING REBOUNDS: North America’s trucking industry appears to be starting a rebound, based on rising orders for Class 8 vehicles and commercial trailers, according to a leading transportation research company’s latest data. ACT Research Co. projects that 2010 production of Class 8 vehicles will reach about 154,500 units, up 31% from a relatively weak 2009 but still well below traditional replacement demand. The growth was predicated largely on a surge in orders in the fourth quarter, ACT said. ACT forecasts that demand will continue to ramp up over the next two years, with production in 2012 and 2013 exceeding 300,000 units. This reflects the industry’s move to replace aging vehicles after deferring such actions for the past two years, ACT said. — Tire Business

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WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

LARGEST ARCHITECTURAL FIRMS RANKED BY LOCAL REGISTERED ARCHITECTS

Name of firm Address Rank Phone/Web site

Local registered architects 12-1-2010 12-1-2009

Total staff

Local office revenue (millions) 2010

2009

Major current projects

Top local executive Title

Westlake Reed Leskosky 925 Euclid Ave., Suite 1900, Cleveland 44115 (216) 522-1350/www.wrldesign.com

170

$26.5

$24.0

PlayhouseSquare theaters; Cleveland Clinic Twinsburg Medical Campus and Hillcrest Hospital expansion; Rock and Roll Hall of Fame and Museum; Pro Football Hall of Fame

Paul E. Westlake Jr. managing principal

Herschman Architects Inc. 25001 Emery Road, Suite 400, Cleveland 44128 (216) 223-3200/www.herschmanarchitects.com

$8.0

$7.0

Cleveland Cavaliers Team Shop; Dick's Sporting Goods; HH Gregg; Best Buy; Gold's Gym; Petsmart; Shoreway Industrial Park; Tower City Green Exchange; Menorah Park Child Care Center.

Mike Crislip president

Bostwick Design Partnership 2729 Prospect Ave., Cleveland 44115 (216) 621-7900/www.bostwickdesign.com

$5.4

$6.1

Cuyahoga Cty. Public Library; Cleveland Clinic Multidisciplinary Center for Simulation; State University of New York, College of Optometry; Cleveland Clinic Las Vegas, development plan; Case Western Reserve Univ., College of Law

Robert L. Bostwick president and director of design

KA Architecture 1468 W. Ninth St., Suite 600, Cleveland 44113 (216) 781-9144/www.kainc.com

Annapolis Towne Centre, Parole, Md., mixed use town center, including retail and residential; Woodmore Towne Centre, Glenarden, Md., mixed use development

James B. Heller president

Middough Inc. 1901 E. 13th St., Cleveland 44114 (216) 367-6000/www.middough.com

800

$95.0

Wal-Mart Urban Store, Austin, Texas; V & M STAR, pipe mill project, Youngstown; Progressive Insurance, Cleveland campus, interior renovation program; PlayhouseSquare

Charles L. Krzysiak vice president

URS Corp. 1375 Euclid Ave., Suite 600, Cleveland 44115 (216) 622-2400/www.urscorp.com

616

$112.4

$105.4

Cleveland Clinic, Richard E. Jacobs Family Health Center and Ambulatory Surgery Center; Cleveland Clinic Global Cardiovascular Innovation Center; Cuyahoga Community College Health Career and Technology Building

Gary R. Hribar, vp, URS division; William Colt, senior vice president

Braun & Steidl Architects Inc. 1041 W. Market St., Akron 44313 (330) 864-7755/www.bsa-net.com

$5.0

Cleveland State University, Student Center; Cuyahoga Community College, Emerging Technology and Energy Center; Courtyard by Marriott, University Circle; Hyatt Hotel, Los Angeles

Charles Louis Schreckenberger president

Domokur Architects 4651 Medina Road, Akron 44321 (330) 666-7878/www.domokur.com

$6.6

$3.3

Lorain Metro Parks; Kent State University; Girl Scouts of Eastern Pennsylvania; Michael Domokur J.M. Smucker Co.; North Central State; Girl Scouts of Central Illinois; Capital owner Camps

Hasenstab Architects Inc. 190 N. Union St., Suite 400, Akron 44304 (330) 434-4464/www.hainc.cc

$4.7

$5.3

Austen BioInnovation Institute, Akron; Kent State/Salem, Health & Science Building; ODMH, Northcoast Behavioral Hospital; Akron Zoo improvements; Summa/Green, emergency department

Mark A. Ohlinger president

GPD Group 520 S. Main St., Suite 2531, Akron 44311 (800) 955-4731/www.gpdgroup.com

270

$36.0

$33.0

Akron Public Schools; Lakewood Schools; Berea Schools; JoAnn Stores; PNC

Dave Granger president

Bialosky + Partners Architects LLC 2775 S. Moreland Blvd., Cleveland 44120 (216) 752-8750/www.bialosky.com

OSU Mason Hall; LCCC Culinary School; Orange Village service center; GCRTA, Brookpark Station; 401 Lofts Apartments; Ennis Court Chapel; North Brunswick Transit Village; Pura Veda Restaurant

Jack A. Bialosky Jr. senior principal

Burt Hill, A Stantec Company 3700 Park East Drive, Suite 200, Beachwood 44122 (216) 454-2150/www.burthill.com

$7.0

$5.1

Ohio State University, Chemical and Biomolecular Engineering and Chemistry Bldg.; Beachwood HS renovation; College of Education, Univ. of Akron; Cleveland Institute of Art Expansion; Rocky River Schools; Euclid City Schools

Michael Reagan, vp, science and technology; Michael R. Carter, managing principal

Perspectus Architecture 13212 Shaker Square, Suite 204, Cleveland 44120 (216) 752-1800/www.perspectusarch.com

Master planning and design services for public and private health care, Lawrence Fischer university, governmental and sports/recreation facilities clients throughout the William Ayars Midwest principals

Richard L. Bowen + Associates Inc. 13000 Shaker Blvd., Cleveland 44120 (216) 491-9300/www.rlba.com

Portage County Kent Municipal Courthouse; Medina County, transit facility; Vitamix expansion; Cuyahoga Community College, Western Campus D Wing; GCRTA, E. 55th Street Rapid Station

TDA 4135 Erie St., Willoughby 44094 (440) 269-2266/www.thendesign.com

$4.5

$4.4

GaREAT Sports Complex, aquatics facility; Mayfield City Schools; Brooklyn City Robert A. Fiala Schools; Cloverleaf Local Schools; Riverside Local Schools; Dalton Local managing partner Schools; Conrad’s; Lake MetroParks; Phoenix Medical Building, Detroit

Vocon 3142 Prospect Ave., Cleveland 44115 (216) 588-0800/www.vocon.com

$18.0

$14.0

KeyBank; Goodyear Tire & Rubber Co.; Huntington Bank; Willis; IMG; Greater Cleveland Partnership

Deborah V. Donley principal

Robert P. Madison International Inc. 2930 Euclid Ave., Cleveland 44115 (216) 861-8195/www.rpmadison.com

$2.6

$2.5

Cuyahoga Community College, Center for Creative Arts; CMSD, Almira K-8 School; AMSD, Sieberling K-8 School; Cuyahoga County, executive chambers

Robert P. Madison chairman, CEO

Dorsky + Yue International 23240 Chagrin Blvd., Suite 325, Cleveland 44122 (216) 468-1850/www.dorskyyue.com

Seasons of Tuxedo regional center, Manitoba, Canada; Nanuet Mall, NY, Simon Property; Crystal City hi-rise, Va.; Pabst Farms Town Center, Wis.; Pompano Beach Library/Cultural Center, Fla.; Medical Office Building, Miami

William Dorsky managing principal

Harris/Day Architecture 3722 Whipple Road, NW, Canton 44718 (330) 493-3722/www.harrisday.com

$4.1

$2.5

Stark State College, Business Entrepreneur Center; Bridgestone Technical Center; Aultman Hospice; Green Local Schools K-5 and 6-12; Akron Canton Airport concourse security; MVNU, School of Nursing

R. Jeffrey Day president

HWH Architects Engineers Planners Inc. 1300 E. Ninth St., Suite 900, Cleveland 44114 (216) 875-4000/www.hwhaep.com

110

Cleveland Metroparks; GE Lighting, Nela Park; GE Learning Center, Erie, Pa.; Goodyear Tire & Rubber Co., PuLanDian, Dalian, China and Santiago, Chile

Peter P. Jancar chairman

Makovich Pusti Architects Inc. 111 Front St., Berea 44017 (440) 891-8910/www.mparc.com

Veterans Affairs Wade Park, surgical services initiative and research laboratories; Cleveland Clinic, behavioral health; Youngstown Air Reserve

Ronald J. Makovich president

Richard Fleischman + Partners Architects Inc. 1020 Huron Road, Suite 101, Cleveland 44115 (216) 771-0090/www.studiorfa.com

$2.5

$1.7

University of Cincinnati; J.W. Peck Federal Building, Cincinnati; University Circle, United Methodist Church

Richard Fleischman president

Strollo Architects 20 W. Federal St., Suite 604, Youngstown 44503 (330) 743-1177/www.strolloarchitects.com

$3.0

$3.5

Youngstown State University, Williamson College of Business Administration; Partners for Urology Health; Windsor House, assisted living facilities

Gregg Strollo, president, principal; Rodney Lamberson, exec. vice president, principal

ADA Architects Inc. 17710 Detroit Ave., Lakewood 44107 (216) 521-5134/www.adaarchitects.cc

Robert Acciarri Martin Strelau Kurt Schmitz Dan Saleet principals

The Austin Co. 6095 Parkland Blvd., Cleveland 44124 (440) 544-2600/www.theaustin.com

$45.0

$44.6

Allen Foods, bakery plant; Hills Pet Nutrition, plant; BASF, laboratory project; Mitsubishi Power Systems, gas turbine plant

Michael G. Pierce president

C.C. Hodgson Architectural Group 23240 Chagrin Blvd., Suite 350, Cleveland 44122 (216) 593-0057/www.ccharch.com

Parmatown Amenities Center; Mary Rose Estates; Weils, rehab pavilion; Veterans Affairs, dementia units, Martinsburg, W.Va.; Lifespace Communities. Cornelia C. Hodgson Friendship Village, Pa., and Harbour’s Edge, Fla.; Greenfields of Geneva CCRC, president Ill.

CBLH Design Inc. 7850 Freeway Circle, Cleveland 44130 (440) 243-2000/www.cblhdesign.com

BGSU; Tri-C; Cuyahoga County Public Library; Cuyahoga Falls Library; Elyria Memorial Hospital; Mercy Medical Ctr.; MetroHealth; NEOUCOM; OSU Medical Ctr.; University Hospitals, University of Toledo Medical Ctr.; V.A. Medical Ctr.

Marc B. Bittinger, Timothy S. Hunsicker, Michael D. Liezert, principals

Herman Gibans Fodor Inc.-Architects 1939 W. 25th St., Suite 300, Cleveland 44113 (216) 696-3460/www.hgfarchitects.com

$2.2

$2.3

Mount Saint Joseph Nursing Home; Slovene Home for the Aged; Kendal at Oberlin, expansion; Benjamin Rose Institute on Aging, office building; Emerald Alliance V, permanent supportive housing

James G. Herman president

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.

Richard L. Bowen president

RESEARCHED BY Deborah W. Hillyer

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JANUARY 17 - 23, 2011

Bank: Letter to stockholders touts improved third quarter continued from PAGE 3

Mackus said in the telephone interview. CFBank and Central Federal currently are not the target of public enforcement actions. Asked for her reaction to Mr. Cummings’ statement that the bank should raise at least $3 million, Ms. Mackus replied, “I would characterize it as one fund manager’s opinion.” There are a number of banks in similar straits across the country, Mr. Cummings said — thinly capitalized, trading at depressed stock prices. But he believes other Northeast Ohio community banks are in better shape than CFBank.

must raise capital and believes the company should raise a minimum of $3 million in capital, based on its balance sheet. The Central Federal board is considering alternatives for increasing stockholder value, one of which is raising capital, Ms. Mackus said during a Jan. 7 telephone interview. Another is a bank or holding company merger, she added. Whether the Office of Thrift Supervision has asked Central Federal to raise capital is “really not something I can talk about,” Ms.

Contact: Phone: Fax: E-mail:

Genny Donley (216) 771-5172 (216) 694-4264 gdonley@crain.com

Lorain National Bank still owes TARP money but is profitable, Mr. Cummings noted. In its latest quarterly report in November to the Securities and Exchange Commission, PVF Capital Corp., the parent of Park View Federal Savings Bank in Solon, indicated that “now that the company successfully completed its common stock offering and exceeds the capital ratio requirements” of an order by the Office of Thrift Supervision, it would seek new commercial and industrial loans. Park View Federal has roughly three times the assets of CFBank, which

has assets of $285 million. Lorain National has $1.15 billion in assets.

Red ink shrinks Although CFBank continues to operate at a net loss, Ms. Mackus noted in the letter to stockholders that the net loss had been reduced significantly to $232,000 in the third quarter of 2010 from $5.6 million in the second quarter. The net loss for the third quarter of 2009 was $6.7 million. Net charge-offs also were lower in the third quarter of 2010 than they were a year ago, and the ratio

REAL ESTATE

AUCTION

of nonperforming assets to total assets improved, too. “I’d hate to claim one quarter as a turnaround,” Ms. Mackus said. “But it is a positive trend.” In addition, in the first days of this year, the price of Central Federal stock improved rapidly, closing at $1.11 last Wednesday, Jan. 12, up 76% from its closing price of 63 cents on Dec. 17, the date of the delisting notice from Nasdaq. To regain compliance, the closing bid price must be at least $1 a share for a minimum of 10 consecutive business days prior to June 15. ■

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CEO – Cleveland, OH Faith Community United Credit Union is seeking an individual to fill its CEO/Treasurer position. Faith Community is a Community Development Credit Union with approximately $12 million in assets located in Cleveland, Ohio. The ideal, successful candidate must be a visionary, ready and willing to take advantage of technological advancements in the financial industry, increase viability and reduce risks. A thorough knowledge of the credit union industry, at least 5 years of relevant experience and/or degreed college level education are preferred. The chosen candidate will also need to demonstrate effective board communication, management of risks and comfort with strategic planning initiatives for future aspirations of the credit union. Please submit an Application Packet, including a cover letter with salary requirements and resume with at least three (3) references, via regular U.S. mail to Matthew Jackson at 323 West Lakeside Avenue, Suite 420, Cleveland, Ohio, 44113. Application packets will be accepted until February 1, 2011.

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JANUARY 17 - 23, 2011

CRAIN’S CLEVELAND BUSINESS

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THEINSIDER

THEWEEK

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

JANUARY 10 - 16

That’s the way the ball bounces

The big story: Iron ore producer Cliffs Natural Resources Inc. entered into a definitive agreement to buy Canada’s Consolidated Thompson Iron Mines Ltd. for $4.95 billion in a deal that would give the company greater access to international markets, particularly in fastgrowing Asia. Cliffs said the deal is expected to be “modestly accretive” to its earnings per share and cash flow in 2011 and 2012. The transaction is expected to close in the second quarter of this year.

■ The tweet came through Wednesday afternoon, about nine hours after I made one of the snowiest and dangerous commutes I’ve encountered in my nearly five years in Cleveland. “SABR announces to members (it) will be moving (its) headquarters from Cleveland to Phoenix.” Leaving for the desert on a snowy day? Who among us hasn’t thought of the same thing? The four-employee Society of American Baseball Research, headquartered since 1990 in the Caxton Building on Huron Road near Progressive Field, cited the Phoenix area quickly becoming a baseball center: Fifteen Major League Baseball teams now play in the Cactus League, centered around Phoenix, and the Arizona Diamondbacks, the Arizona Fall League and MLB’s Western Operations office are located in the area. “In Phoenix, SABR will have the opportunity to be a major player in the baseball world year-round,” wrote Andy McCue, SABR’s board president, to members. SABR, formed in 1971, has 6,700 members and fosters “the research, preservation and dissemination of the history and record of baseball.” Marc Appleman, the society’s executive director, said he will relocate to Phoenix. — Joel Hammond

A bumpy ride?: John Kasich was sworn in as Ohio’s 69th governor. He told supporters in Columbus, “Get ready for an exciting time, put on the seat belts.” Although he did not set out his specific plans for state government at his inauguration, Gov. Kasich already has begun to make good on some of his campaign promises. He has appointed Mark Kvamme, a partner in Sequoia Capital of Menlo Kasich Park, Calif., to dismantle the state Department of Development and to create a nonprofit to attract new businesses and jobs to the state. Mr. Kvamme will be paid $1 and will spend five to seven months creating the JobsOhio organization to guide Ohio’s economic development strategy. Talk about regionalism: The Cleveland Clinic and MedStar Health, the largest health care provider in the Maryland and Washington, D.C., areas, agreed to create what they’re calling an Innovation Alliance to benefit patients through collaborative research, clinical investigation and commercialization efforts. Through the collaboration, the Clinic and MedStar could work together on research, clinical trials and grant applications, and they even could form spinoff companies that use technology from both institutions. The deal also might help investors in one region find good investments in the other.

A fresh look: Great Lakes Mall owner Simon Property Group of Indianapolis said it plans a major renovation of the mall in Mentor, which turns 50 this year. Renovations will include new features such as redesigned building entrances, landscaping, flooring and lighting. A dollar figure for the improvements, which are slated for completion in 2011, was not disclosed. The 1.3 million-square-foot mall last was renovated in 1989.

Conventional wisdom: Kalahari Resort in Sandusky plans to break ground in March on a $22 million expansion that will more than double the size of its 95,000-square-foot convention center. The 120,000-square-foot addition will bring Kalahari’s convention center total square footage to 215,000. It will include a 38,000-square-foot grand ballroom/expo center, a 12,000-square-foot junior ballroom, 14 meeting rooms, a 4,000-square-foot themed outdoor plaza connected to an indoor ballroom, and 30,000 square feet of pre-function space. The expansion will increase Kalahari’s meeting capacity to 5,200 attendees from 2,200.

Starting over: The Cleveland Browns hired St. Louis Rams offensive coordinator Pat Shurmur to be their 13th full-time head coach. Mr. Shurmur, 45, joined the Rams in 2009. Previously, he was an assistant with the Philadelphia Eagles for 10 seasons. The connections between Mr. Shurmur and the Browns’ current front office are many. Mr. Shurmur’s uncle, the late Fritz Shurmur, was the Packers’ defensive coordinator for the Green Bay Packers for five seasons when Mike Holmgren, the Browns’ president, was the Packers’ head coach.

■ A newly formed southwest Florida bank has its roots in Northeast Ohio money.

A group of Cleveland-area investors led by A. Malachi Mixon III, Invacare Corp. board chairman, raised about half the roughly $27 million used to organize Encore National Bank, said Tom Ray, president and CEO. Encore National opened for business Jan. 1 after a new holding company, Ovation Holdings Inc., acquired in late December the one-office National Bank of Southwest Florida in Port Charlotte and four Florida branches of Houston-based Encore Banks, N.A. The resulting Encore National is a fivebranch, full-service institution with nearly $240 million in total assets and $24 million in capital, Mr. Ray said. Mr. Mixon is lead director of the Ovation board, and five other Cleveland businessmen also serve on the board. Mr. Mixon said he’d been looking to invest for years in the Naples, Fla., area — where he owns a home —and noted many of the other Cleveland investors own homes there, too. “A lot of people feel now is the worst time to invest in a bank because of so many bad loans, on real estate especially,” he said. But Mr. Mixon said he didn’t feel hesitant and noted that “when everybody else is heading north, I run south.” The newly formed bank, both Messrs. Mixon and Ray noted, is not plagued by problem loans like other institutions in Florida and elsewhere. Mr. Mixon envisions the bank will be an active lender, a place where entrepreneurs

MILESTONES

BEST OF THE BLOGS

COMPANY: Bruml Capital Corp., Cleveland THE OCCASION: Its 25th anniversary

Excerpts from recent blog entries on CrainsCleveland.com.

Mal Mixon banks on Florida investment

Bruml Capital Corp. and its founder, owner and president, Robert Bruml, will mark the firm’s 25th anniversary in February. Bruml Capital is an investment banking firm that serves the middle market. The fiveperson company, located in the Ohio Savings Plaza Building in downtown Cleveland, generally works with private and public corporations on transactions ranging in size from $10 million to $100 million. Its advisory activities include mergers and acquisitions, corporate finance and valuations. Visit www.BrumlCapital.com for information.

COMPANY: West Side Skates, Lakewood THE OCCASION: Its 15th anniversary This is a store that proves the real estate cliché — location, location, location. It recently celebrated 15 years in business on Madison Avenue just across the street from Lakewood High School, which makes it fertile ground for skateboarding clientele in need of boards, shoes, clothes and related gear. West Side Skates is owned and operated by skateboarders, and a recent expansion has made room for skate events, video premieres and demonstrations. For information, visit www.WestSide Skates.net. Send information about milestones and new products to managing editor Scott Suttell at ssuttell@crain.com

Read all about it: Our city is a literary hot spot ■ If you’re reading this, consider yourself among the people who make Cleveland one of the country’s most literate cities. USA Today reported on a study by Central Connecticut State University that ranks “the culture and resources for reading” in the nation’s 75 largest metro areas. The study looked at measures for six items — newspapers, bookstores, magazines, education, libraries and the Internet — to “determine what resources are available in each city and the extent to which its inhabitants take advantage of them,” USA Today noted. By these measures, Cleveland ranked 14th nationwide, down from 13th in 2009. Ohio is a relative hotbed for reading, as Cincinnati ranked 11th and Columbus was 16th. One reason for that strong performance: the state’s culture of excellent library systems. The three most literate cities in the country, according to the study, are Washington, D.C., Seattle and Minneapolis. USA Today reported that the study identifies “worrisome trends” consistent with other national research, including “declines in newspaper circulation and book-buying, along with sluggish growth in educational attainment.” Increases in Internet usage and stable library patronage “aren’t offsetting those declines,” the newspaper concluded.

State film tax credit might be out of the picture ■ Variety raised the possibility that Ohio’s

go to borrow money. “I’m not trying to take on Bank of America,” he said. “We just want to have a good community bank in the area.” — Michelle Park

Seven questions, hundreds of answers ■ Carl Grassi, president of McDonald Hopkins, believes asking seven questions will enable the Cleveland-based law firm to better serve its clients. For the first time, McDonald Hopkins is conducting a business outlook survey, asking respondents, among other things, to reveal what they expect in the way of business conditions and to identify the top challenges their organizations face in 2011. The seven-question survey also asks whether businesses anticipate increasing their employment in the new year. “With that information, we believe we’ll have a better sense of what they perceive and ... can continue to be responsive as business and legal advisers,” Mr. Grassi said. So far, the responses have been “terrific,” numbering more than 350 in the first five days, Mr. Grassi said. The distribution list included a few thousand clients and friends of the firm. The survey was distributed in early January via e-mail, and the results will be released via a client alert by the end of the month. Results will be posted on the firm’s web site. The responses may guide the topics and issues explored in future client alerts, Mr. Grassi said. — Michelle Park

tax incentive for moviemakers might be a casualty of the state’s budget problems. The entertainment industry trade paper reported that Jeremy Henthorn and his staff at the Ohio Film Office resigned as part of the transition to Gov. John Kasich. Mr. Henthorn told Variety that Gov. Kasich “has a restructuring plan, and part of the restructuring plan has to do with — in one way, shape or form — the film office.” As for what the change means for the future of tax incentives, he said, “It really is going to depend on what the new governor’s vision for production in the state of Ohio is.” Ohio’s current tax incentives provide a 25% rebate on expenditures in the state with an additional 10% for the wages of Ohio native cast and crew. Mr. Henthorn told Variety that the incentives are guaranteed through April, but he is unsure whether the office will have staffing to promote or enforce them.

If you like a bargain, Ohio is the place to be ■ Midwestern cities, including Cleveland, are value central. So said Forbes.com in a ranking of the country’s Best Bargain Cities. The list is based on factors including the median asking price of homes on the market, median salaries of workers with bachelor’s degrees or higher, the cost-ofliving index and local unemployment rates. Using that numerical cocktail, Forbes.com declared Omaha, Neb., as the country’s best bargain. (No wonder Warren Buffet loves it.) Other Midwestern cities are all over the list. Ohio is well represented, as Cincinnati is No. 5, Cleveland is No. 8 and Columbus is No. 13. Also in the top 10 are Indianapolis, No. 4, and Minneapolis-St. Paul, at No. 7.

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