Crain's Cleveland Business by Crain's Cleveland Business

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$1.50/MARCH 14 - 20, 2011

VOL. 32, NO. 11

Construction jobs conundrum Large-scale commercial projects boost employment in NE Ohio, but whether work is sustainable remains to be seen INSIDE: Construction employment in Northeast Ohio still sags. Page 9

By STAN BULLARD sbullard@crain.com

elders’ torches are blazing again near the Cuyahoga River as the Flats East Bank mixed-use project starts up after a two-year stall. Power shovel operators are razing buildings at the old Cleveland Convention Center to make way for a new one. Scaffolds cling to the

Higbee Building as part of it becomes a Caesars Horseshoe Casino. In the most battered job sector of all — construction — these signs of life in downtown Cleveland are welcome, though they don’t tell the full story. These big projects are

JumpStart model is raising questions Investment group defends setup, plans forum to solicit ideas

See CONSTRUCTION Page 9

By CHUCK SODER csoder@crain.com

MARC GOLUB

Cranes moving dirt at the site of the Cleveland medical mart are a welcome sight for the battered construction industry.

Charter university idea intrigues schools New chancellor sees ways to improve operations By TIMOTHY MAGAW tmagaw@crain.com

NEWSPAPER

71486 01032

Ohio’s new higher education chief has floated the idea of turning some of the state’s public colleges and uni-

versities into quasi-private institutions, and his pitch has piqued the interest of education leaders in the region who would like to be freed from a barrage of red tape. Although the idea still is amorphous, the plan is to allow some institutions to evolve into “charter univer-

Petro

sities,” an arrangement that would offer the schools more autonomy in exchange for a smaller — but predictable — amount of state financial support, according to Jim Petro, who today, March 14, takes over as chancellor of the Ohio Board of Regents.

“What we’d look to do is streamline the operations of universities and give them authority to run on their own judgment,” Mr. Petro told Crain’s Cleveland Business in an interview. Northeast Ohio’s higher education leaders have griped for years about state regulations under which they operate, and they have expressed their desire to function more like private businesses. One such burden See PETRO Page 8

See JUMPSTART Page 6

INSIDE The West Side Market fosters small business development and expansion, and activity is expected to increase as its centennial nears. See Small Business, Page 18.

Looking to save money on your health insurance? Look inside for more details...

Is JumpStart Inc. doing a good job? Three area entrepreneurs have said “no” in a loud way — by sending a long chain of e-mails to business leaders and politicians throughout Northeast Ohio. Among other complaints, they argue in the e-mails that the nonprofit spends too much on salaries, too little on investing and hasn’t created enough jobs. So how does JumpStart, which assists and invests in startup companies in the region, spend its money? And what are the people of Northeast Ohio getting from the organization, which receives much of its money from public sources? In the e-mails, the three entrepreneurs — Visual Evidence/E-Discovery LLC co-founder Ron Copfer, Charitee Golf LLC founder Mike Burkons and Broadband Mechanics founder Marc Canter — asked JumpStart officials to answer a long list of questions revolving around those two themes. In response, JumpStart plans to hold a public forum next Monday, March 21, at Corporate College East. The forum is meant to spur discussion about ideas and opportunities, and “to answer questions about JumpStart given all its changes over the last year,” JumpStart CEO Ray Leach wrote in an e-mail addressed to people associated with the group. The nonprofit has changed in the last couple years. It employs 47, up from 28 when the group filed its IRS Form

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THE NEW NORMAL?

COMING NEXT WEEK

Budgeted salary increases for staff at U.S. companies are rising again, but they still haven’t cracked 3% since the start of the recession in 2008, according to an analysis by Hewitt Associates. The firm reports employers project salary increases of 2.8% this year, higher than each of the last two years but still below the past two decades. Here’s how the budgeted salary increase numbers break down from 2008 to now, and at three-year intervals prior to 2008:

Save your energy Building owners are being challenged by rising energy costs. Forest City Enterprises, for one, has received grants for upgrades at Tower City (right). We analyze the issue and more in next week’s special real estate section. FILE PHOTO/MARC GOLUB

REGULAR FEATURES Best of the Blogs ..................26 Big Issue ..............................11 Classified ..............................25 Editorial ................................10 Going Places ........................16

MARCH 14 - 20, 2011

Letters ..................................10 List: Credit unions..................24 Reporters’ Notebook..............26 The Week ..............................26 What’s New............................26

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Year

Budgeted salary increase

2011

2.8%

2010

2.5

2009

1.8

2008

3.7

2005

3.6

2002

3.6

1999

4.2

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Tuition reimbursement levels drop locally Employers cut back on tool used for recruitment, retention By TIMOTHY MAGAW tmagaw@crain.com

Earning an MBA or law degree on your employer’s tab is becoming a perk of the past, as many Northeast Ohio companies have chosen to trim back their tuition reimbursement programs. Employers long have used such

incentives to recruit and retain talented workers, but the number of local companies offering full tuition reimbursement has declined sharply in response to the crippling recession. A new survey from the Employers Resource Council, a human resources organization in Mayfield Village, found only 17% of local companies

this year are offering such programs, compared with 34% in 2007. Also, the average amount employers are willing to reimburse has fallen markedly, to $2,653 in 2011, down 29% from $3,750 in 2007. Sherwin-Williams Co., for one, has scaled back its tuition reimbursement program, spokesman Mike Conway said. He wouldn’t

specify the breadth of the reduction, but said it was “nothing of major proportions.” The change was due to the economic challenges facing the paintmaker after the downturn hit. Nonetheless, Sherwin-Williams still contributes up to $4,000 a year to each of its employees who continue their education, Mr. Conway said, which is far more than the average amount employers kick in. “The company takes the long

THE WEEK IN QUOTES

view,” Mr. Conway said. “Human capital is one of our most important engines that drive the success and growth of the company. That’s our people. It’s all about our people.” Although not as many companies cover the entirety of the costs of workers’ continuing education, some observers say that change isn’t entirely a bad thing because it forces employees to have a financial stake in their education. See TUITION Page 7

INSIGHT

“In general, there is reason to be more optimistic. These projects are certainly helping. But it’s still insufficient to say we’re busy again.”

OMG: Law firms, banks join push to social media

—Thomas Laird, senior vice president and regional manager of Gilbane Building Co.’s Cleveland office. Page One

Typically conservative companies find value RENDERINGS PROVIDED

“We would like to operate using business principles that involve the least government interference and the least government regulation that adds layers of bureaucracy on top of our own bureaucracy.” — Lester Lefton, president, Kent State University. Page One

“The West Side Market feeds the system and the community. It is really like the sun, and all these businesses are like all these wonderful planets orbiting around the sun.” — Cleveland City Councilman Joe Cimperman. Page 18

“If you somehow get a negative review or message, you’re not just losing one customer. … You’re potentially losing hundreds or thousands.” — Terry Daugherty, an assistant professor in the marketing department at the University of Akron. Page 18

Fairmount Properties’ on-campus projects include a $12 million building at the University of Toledo (above) near the Toledo Mud Hens’ stadium and a $97 million project at the gateway to the University of Rochester and Medical Center in Rochester, N.Y. (below).

A QUICK STUDY In difficult property market, Cleveland developer Fairmount Properties finds refuge on campus By STAN BULLARD sbullard@crain.com

uring the last three years, as the recession and the worst property market of the past half century stymied most realty development, Fairmount Properties used the time to go back to college. The Cleveland-based developer, best known as a partner to Wolstein Group in the $270 million Flats East Bank Neighborhood office-hotel project in downtown, is about to graduate to construction two major mixed-use college town-style devel-

opments and has lined up a third in upstate New York. Fairmount is cued up to start construction by summer — provided it can close financing — on the $30 million downtown Kent revitalization project it has worked on with Kent State University and the city of Kent. It also recently won competitions to develop a $97 million project at the gateway to the University of Rochester and Medical Center in Rochester, N.Y., and a $12 million building with the University of Toledo near the Toledo Mud Hens’ minor league baseball ballpark. See FAIRMOUNT Page 25

By MICHELLE PARK mpark@crain.com

Though many of their rivals remain absent from the electronic marketing frontier, a handful of banks and law firms are jumping on the social media bandwagon. Cleveland’s KeyBank, for one, started tweeting on Twitter in late January and launched its Facebook page in late February. Likewise, Fifth Third Bank started tweeting last November, a few months after the Cincinnati-based bank hired a social media strategist to implement social media programs. Among local law firms, only a few are active in social media, including McDonald Hopkins LLC, Squire, Sanders & Dempsey and Benesch, Friedlander, Coplan & Aronoff LLP. Some other firms, though, are eyeing their options.

INSIDE: Examples of how KeyBank and Fifth Third Bank handle customer service on Twitter. Page 12 A competitive assessment by KeyBank revealed there are many in the financial services sector that don’t have a social media presence, said Karen Haefling, KeyBank’s chief marketing and communications officer. “I would have liked to have been out there a little sooner, but we took the time to make sure we are prepared,” she said. Ms. Haefling noted proudly March 1 that KeyBank’s Facebook page had been “liked” more than 620 times. (Less than a week later, that number topped 700.) That’s important, she said, because the more people engage and interact with a company, the more likely they are to do business with it. “We’re helping clients in a channel that they care about,” Ms. Haefling said. “People are going there to learn about companies. To be absent from that conversation did not seem like a wise strategy.” See SOCIAL Page 12

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Cleveland’s stalled foreclosure lawsuit plays out at film festival But you’ll have to buy a ticket to find out the jury’s verdict By JAY MILLER jmiller@crain.com

Cleveland attorney Josh Cohen may never get a chance to try what would be the biggest case of his career in front of a real jury. But thanks to “Cleveland vs. Wall Street,” a documentary-style film

“We feel if we get a chance to ... corroborate our allegations, that’s when our case will take off.” – Josh Cohen, partner, Cohen, Rosenthal & Kramer LLP, and lead actor in documentary, “Cleveland vs. Wall Street” from Swiss director Jean-Stephane Bron, Mr. Cohen was able to argue before a mock jury that 21 of the nation’s largest commercial and investment banks should bear some financial responsibility for the problems created in Cleveland neighborhoods by the subprime mortgage crisis. Of course, the jury was cast by Mr. Bron, and the trial was held on weekends when real courts are closed. The film will be screened April 2 at the coming Cleveland International Film Festival. “Cleveland vs. Wall Street” was first shown last year at the Cannes Film Festival, where it qualified for the prestigious Directors Fortnight series. Its reviews have been mixed. Said Variety¸ the show-business bible, “(T)he film’s strong suit— namely, that it simply documents the trial as it runs its course — is also its greatest weakness, as the legal proceedings never reach the pitch of an edge-of-your-seat courtroom thriller, and viewers will have to connect some of the dots themselves.” Mr. Cohen asked that the verdict of the mock jury not be disclosed. The real case, which began in Cuyahoga County Common Pleas Court in 2008 before it was moved to U.S. District Court in Cleveland, is City of Cleveland v. Ameriquest, et al. In it, the city argues that the banks created a public nuisance for which Cleveland is entitled compensation. Mr. Cohen, a partner in Cohen, Rosenthal & Kramer LLP in Cleveland’s Warehouse District, is lead counsel for the city in the real case, and, as a result, the star of the documentary. “It’s not a natural thing to be on film, but they did a good job of putting us at ease with the camera,” the veteran attorney said. “When you see the movie for the first time and you see yourself on film, you go, ‘Oh man!” “I’m not giving up my day job,” he added.

Visiting the epicenter

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At the moment, City of Cleveland v. Ameriquest is in appellate limbo because the trial judge dismissed the case in May 2009 on a procedural point. After the federal Sixth Circuit Court of Appeals denied his appeal last July, Mr. Cohen petitioned the U.S. Supreme Court to review that ruling. Mr. Cohen realizes the prospects of the Supreme Court agreeing to hear the case, much less deciding to return the case to the trial court, are small. Still, Mr. Cohen said he hopes the high court will embrace his arguments that the foreclosure

crisis and the deterioration of neighborhoods were a foreseeable consequence of selling mortgages to investors and the banks’ lax lending and processing procedures. “We haven’t gotten a chance to address the merits of the case,” he said. “We just feel if we get a chance to do discovery and get a chance to corroborate our allegations, that’s when our case will take off.” In the meantime, Mr. Cohen took Mr. Bron’s offer to star in the movie, or more accurately, present his case on film. A small news article first piqued the director’s interest in making the movie. “We decided Cleveland was the epicenter of the (mortgage) crisis,” Mr. Bron told an interviewer last August on France 24, an international news service that is broadcast and streamed in three languages. Initially, Mr. Bron hoped to film the actual trial, “but we realized the case would be drawn out and technical.” So he settled for an unscripted mock trial before a jury of eight men and women. He leased out the old Cuyahoga County Court House for three weekends with Thomas Pokorny, a retired Cuyahoga County Common Pleas Court judge, in a featured role as presiding judge. Witnesses included home owners who lost their homes and Cleveland City Councilman Anthony Brancatelli, whose Slavic Village ward has been devastated by the mortgage meltdown. Mr. Cohen also was supported, on screen and off, by Cleveland attorney Mark Stanton, with some assistance from the city’s law department and from Mr. Cohen’s law firm colleagues.

Fake trial is real work The film cuts from courtroom scenes to interviews with homeowners and community activists who are fighting to keep their neighborhoods from crumbling. Though the director chose which witnesses would testify based on their ability to advance the story of his movie, Mr. Cohen took his mock trial preparation seriously. “It’s been an interesting sort of thing,” he said. “The movie was a bigtime commitment.” So he relished the opportunity to present some of the evidence he gathered over the last three years for a case knows he may never get to try. “It became competitive in the way you would in a real trial, though you’re not used to getting two takes or three takes,” he said. “You think you nail something and then you have to do it again.” ■

Volume 32, Number 11 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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Miami-style club, upscale restaurants on tap for Flats East Bank Whether Cleveland can stomach more eateries raises some concern By STAN BULLARD sbullard@crain.com

Smells of fine dining at four restaurants and the sounds of a seasonal riverfront nightclub could emanate from the $270 million Flats East Bank mixed-use project, which is starting to rise near the dirt that is all that remains of the former bars and nightclubs that lined Old River Road. However, the Wolstein Group and Fairmount Properties, the developers of Flats East Bank, do not like the comparison of what they’re planning in downtown Cleveland to the failed Flats district north of Main Avenue they razed three years ago. “This is a completely different kind of setting,” said Randy Ruttenberg, a Fairmount principal. “There is a 150-room hotel, an office building and future residential that will give it a completely different foundation as opposed to a row of clubs. We’re being very careful about our selection of operators. We’re looking to create a unique entertainment destination.” A tantalizing part of the plan calls for an outdoor entertainment area near the project’s planned urban park, sand volleyball courts and a rebuilt riverfront that would offer dining and drinks in a casual, openair setting. The large, green open space of the urban park was substituted for residential portions of Flats East Bank when the original plan for the project was split into phases to reduce its cost and increase the ability to finance it during the recession and credit crunch. The planned nightclub is “the type of club you’d find only in Los Angeles, New York and Miami,” Mr. Ruttenberg said. He compared the concept to Nikki Beach, an oceanfront beach club and entertainment center in the South Beach section of Miami Beach. On the lower level of the building that would house an Aloft Hotel fronting West Tenth Street, plans call for four restaurants. They would include an upscale restaurant featuring steaks, a wine bar with small-plate food offerings, a Thai or Mexican restaurant and a mozzarella bar — an upscale Italian restaurant featuring foods with the distinctive cheese. Another location on West Tenth would house a tavern. Mr. Ruttenberg said in a phone interview last Wednesday, March 9, that Flats East Bank has letters of intent with two of the restaurant operators, but he declined to identify them because the leases are not final. Greater details of the restaurants, such as seat counts, are not set. The potential resurgence of Flats restaurants resurrects the question of how many restaurants downtown Cleveland can support.

How many is too many? Adam Berebitsky, managing director of the SS&G accounting firm’s Cleveland office, said he worries about more restaurants going in downtown as the city’s

population shrinks. He noted some of the Flats East Bank food business may come from the movement to that neighborhood of Ernst & Young and other downtown tenants, the employees of which already are eating somewhere else downtown. “We don’t have as many people living downtown as Chicago, so the restaurants become destinationoriented. They do well Fridays and Saturdays, but there is not enough neighborhood business during the week,” said Mr. Berebitsky, who co-chairs SS&G’s restaurant practice, which serves several hundred restaurants. But, Mr. Berebitsky said, there

may be room for restaurant growth if the new medical merchandise mart and Cleveland Convention Center are successful. “With convention centers, once businesses are done for the day, they entertain their clients at restaurants,” Mr. Berebitsky said. Contractors are at work on an office building, the hotel and parking garages at Flats East Bank after Wolstein Group and Fairmount secured $250 million in financing for the project’s first phase last December. The financing encompasses more than 30 sources of funds, from federal and local grants to a Wells Fargo bank loan. ■

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JumpStart: Backers direct priorities continued from PAGE 1

990 for the year that ended June 30, 2009. Though it has offered assistance and capital to young companies since 2004, it started providing more services in 2008 when it took over operations of the state-financed TechLift Advisors program, now part of a broader program called the JumpStart Entrepreneurial Network. Its duties grew again last year when the federal government and national foundations gave money to JumpStart to help Akron and several cities outside Ohio come up with plans to boost entrepreneurship. Now, through a new initiative called JumpStart America, the organization aims to attract more out-of-state dollars, some of which likely would be spent in Ohio, Mr. Leach said. Those additions partly explain why investments in companies make up a minority of JumpStart’s budget. The nonprofit had invested about $19.5 million in 53 companies as of Dec. 31, 2010, which accounts for 37% of the $52.3 million it has spent since 2004. In the e-mails, Mr. Copfer says several times that the ratio shows a poor use of JumpStart’s budget. “(A)re we just creating a bureaucracy or are we supporting startups with CASH?” wrote Mr. Copfer, who founded multiple IT firms and did early work to help create JumpStart.

The big dog in Columbus Mr. Leach countered that JumpStart’s spending priorities are dictated by its financial backers. One backer, however — the state of Ohio — has

more influence than the rest. Of the $60.1 million committed to JumpStart as of Dec. 31, $27.6 million, or 46%, came from the state’s Third Frontier program, a technology-focused economic development initiative. About half the Third Frontier money is designated for investments, while the other half must pay for services. JumpStart raised the rest of the $60.1 million from foundations, corporations, the federal government and individuals. Most of those dollars, however, are considered matching funds for the Third Frontier grants and must be used for the same purposes. Mr. Leach said he expects the Third Frontier in the future to put more money toward grants that can be used for investments, a move he would support. Third Frontier executive director Norm Chagnon would not confirm that statement, but he did defend the use of Third Frontier money for services, saying they help prepare companies for investment. Mr. Leach agreed, adding that JumpStart can provide services to far more companies than it can finance. “We’re never going to have enough money to invest in enough companies,” Mr. Leach said. JumpStart has leeway as to how it spends its service dollars, however. In the e-mails, Messrs. Copfer, Burkons and Canter take issue with the salaries of JumpStart’s top executives and object that it employs a marketing staff of seven people, including one who splits her time

between two departments. Mr. Leach received about $323,000 in total compensation in the fiscal year that ended June 30, 2010, according to JumpStart’s most recent Form 990. Ten other executives got from $139,000 to $232,000 in total compensation, with their compensation averaging $174,000. To determine salaries, JumpStart’s compensation committee uses survey data showing the salaries of similarsize nonprofits and receives input from consultants, said committee chair Mark Williams. It also reviews the salaries of executives at similar organizations, such as BioEnterprise Corp. of Cleveland and Innovation Works of Pittsburgh, where executives also make six-figure salaries. The method takes into account the idea that people at nonprofits often will work for less because they support the cause, Mr. Williams said. Still, JumpStart needs to pay for good talent, especially when recruiting skills that are not common in the nonprofit world. “The overall philosophy is really to get the right people,” said Mr. Williams, director of corporate strategy for KeyCorp.

Assorted feedback Charles Stack, CEO of digital publishing firm Sideways LLC in Cleveland, described JumpStart’s marketing budget as money wellspent, as it has raised the visibility of entrepreneurship in Northeast Ohio “a thousand percent.” He said JumpStart’s staff also has done “an

MARCH 14 - 20, 2011

A-plus job” helping companies that received JumpStart money after he invested in them. Still, Mr. Stack maintains that JumpStart and other investors are guilty of “investment by committee,” which he says leads them to avoid risk. “If everybody agrees, it’s not a great idea,” he said. Jay Schabel helped spark the chain of e-mails when he told Mr. Canter that JumpStart declined to invest in his company, Polyflow LLC, an Akron firm trying to commercialize a process for turning waste plastic and rubber into fuel. However, Mr. Schabel said in an interview he holds no grudge toward the group, and that JumpStart has done “fantastic” work helping his company find investors and adjust its business plan. Less flattering are the comments of Aaron LeMieux, CEO of Tremont Electric LLC in Cleveland, who said “an overwhelming amount of latent anger” exists toward JumpStart among some in the business community. Mr. LeMieux, who is trying to commercialize a device that uses the power of movement to recharge electronic gadgets, said he sees value in the organization, but it needs to seek more feedback from entrepreneurs. It also should make sure other area investors don’t turn away companies just because they didn’t get JumpStart money, said Mr. LeMieux, noting that JumpStart twice turned down Tremont Electric. Christopher Celeste, co-founder of Findaway World, a Solon company that sells digital audio players under the Playaway brand, also was turned down by JumpStart. He said he used to agree with much of what the

e-mails say, but he changed his mind two years ago, after meeting with Mr. Leach and the JumpStart board. They offered him a leadership position in the organization, which he turned down. Now, Mr. Celeste thinks of the group as more of a service organization than an investor. “It’s not fair to judge them as one when they are in fact the other,” he said.

That engine started yet? To date, companies in JumpStart’s portfolio employ 446 workers, including 330 who were hired after JumpStart invested, said Cathy Belk, JumpStart’s chief relationship officer. As for the services JumpStart provides, 23 of the 43 companies — 53% — that completed a Cleveland State University survey paid for by JumpStart said its assistance was “very valuable” or “moderately valuable” in helping them grow. The rest said the services were “not valuable.” Mr. Leach said the amount of follow-on capital JumpStart’s portfolio companies have raised — $143.4 million as of Dec. 31 — is the best indicator of success, since the average portfolio company is about 3½ years old. But Scott Shane doesn’t like either metric. Most high-potential startups take six to 10 years to create many jobs, said Dr. Shane, an entrepreneurship professor at Case Western Reserve University. As for follow-on financing, “you don’t know whether they wouldn’t have gotten the money anyway.” A better study would compare JumpStart-assisted companies to similar firms that didn’t receive assistance, Dr. Shane said. ■

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Tuition: Schools find companies are more attentive to education continued from PAGE 3

“Employees should have to make some investment on their own,” said Lori Long, a professor of human resources at Baldwin-Wallace College. “Employees will take their education more seriously.” Researchers say companies are increasing the hurdles an employee might need to jump through before they cut checks to cover tuition bills. Companies are more likely to approve the coursework in advance and to require a satisfactory grade for reimbursement, which brings “more accountability from employees to actually generate results,” said Katie Talarico, survey manager at the Employers Resource Council.

Schools take note Business schools have noticed the trend. Michael Devlin, associate dean of executive education at Case Western Reserve University’s Weatherhead School of Management, said the school in fall 2008 — when the economic slump took hold — saw a 15% to 20% enrollment dip in its open enrollment programs, which typically feature short-term courses for professionals looking to bolster their skills. “It was very immediate,” Mr. Devlin said. “I don’t think it was cataclysmic, but it was very noticeable.” Mr. Devlin noted that enrollment has started to rise in the last six to nine months, and there has been more willingness on the part of employers to reimburse tuition once again. It hasn’t rebounded to prerecession levels, Mr. Devlin said, but the growing enrollment is a positive indicator that companies are looking to reinvest in their work force. “They sort of felt they had neglected education, training and development for employees for a long enough period, and they were starting to feel the pinch of that,” Mr. Devlin said. Mr. Devlin said the university during the recession approached several of Weatherhead’s longstanding customers explaining the benefits of

IN BRIEF Class-action settlements trend down in 2010 The number of court-approved securities class action settlements declined in 2010, sinking to the lowest number in more than 10 years, Cornerstone Research Inc. said in an annual report released last week. There were 86 court-approved settlements during 2010, a 15% decline from 2009. Since 2001, the number of cases settled peaked at 119 in 2005. Cornerstone also found that the dollar value of all 2010 settlements dropped to $3.1 billion, down 17% from 2009. However, the decline likely won’t continue, and a difficult economy may have helped reduce the number of approved settlements in 2010, Cornerstone said. “The more likely cause for this decline is a combination of the substantial drop in the number of cases filed during 2006 … and the fact that to date, credit crisis cases have generally taken longer to settle,” the report states. “Since ... credit crisis cases are now becoming a much smaller population of filed cases, the decline in the number of cases settled in 2010 is not expected to persist.” — Business Insurance

its short-term courses in order to build up the ranks of its classes. He, for one, addressed the need for teaching employees how to handle difficult situations such as layoffs and furloughs empathetically — a philosophy addressed in many of the courses at Weatherhead. “We made the case, and I think that helped to not have that dip (in enrollment) be even more dramatic,” Mr. Devlin said. James Martin, associate dean of the Boler School of Business at John Carroll University, said he’s also seen companies cutting back on tuition reimbursement, though it hasn’t affected enrollment in the school’s business programs. As Dr. Martin sees it, offering

tuition bill, and even kicks in for additional education expenses, such as books or other course materials. (It helps, perhaps, that business is good for Cliffs, which saw its 2010 net income hit $1 billion, or about five times its 2009 earnings of $205 million.) “The benefits that the organization offers is one to attract and retain talent and to be very competitive in, not only our industry, but also where we operate,” Cliffs spokeswoman Patricia Persico said. “It’s an investment in the company. You want the best people to be part of your organization. We have a very competitive benefits program.” The Cleveland Clinic nearly doubled its tuition reimbursement

reimbursement programs is a key component to developing a company’s work force. “It sends a strong message how important they are to the company,” Dr. Martin said. “In terms of employment morale and satisfaction with working with an organization, it really does send a message. When a company cuts that, it puts the student in a tough spot.”

Investing in the future However, not all companies have taken a scalpel to their education assistance programs. Cliffs Natural Resources, the Cleveland-based producer of iron ore and metallurgical coal, still reimburses 100% of an employee’s

program in January 2009, offering full-time employees up to $7,500 a year for graduate studies and up to $5,000 a year for undergraduate studies, said Matthew Majernik, executive director of total rewards at the Cleveland Clinic. He said the increase was because the Clinic is aware of the burden rising tuition costs place on its employees and the institution’s desire to train its work force to meet the health care system’s goals. “At that point in time, we made an enhancement to the plan to ensure we had properly skilled employees to help with our overall mission of putting the patient first and our mission of focusing on clinical outcomes,” Mr. Majernik said. ■

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Petro: Colleges seek autonomy, less red tape continued from PAGE 1

with which state-supported colleges grapple is the “multiple prime requirement,” where they must work directly with several contractors rather than with a single contractor to manage construction projects. Also, Mr. Petro noted that competitive bidding requirements and restrictions on real estate transactions potentially could be scaled back under his proposal. Luis Proenza, president of the University of Akron, said he was “very, very positive” on the idea of transforming his college into one of the charter schools. He noted that the multiple prime requirement can add 10% to 20% to the cost of a

construction project. “There’s no question that I have said often and repeatedly and enthusiastically that I would be eager to explore” the idea of charter universities, Dr. Proenza said. Kent State University president Lester Lefton wouldn’t say whether he supported the idea of charter universities, considering a formal proposal hasn’t been introduced to the state Legislature. However, he was keen on the idea of lifting some of the regulations on state colleges. “We would like to operate using business principles that involve the least government interference and the least government regulation that adds layers of bureaucracy on

top of our own bureaucracy,” Dr. Lefton said. “So in general, we’re supportive of the notion of freeing us up from regulation. We think this is a good thing.” Late last year, Kent State was tangled in red tape of its own when Eric Fingerhut, Mr. Petro’s predecessor as head of the Board of Regents, rejected the university’s request to borrow $210 million for a major campus upgrade program that would been financed by new student fees. Depending on how the charter idea pans out, Mr. Petro said, seeking the chancellor’s approval of its financing plan would have been something Kent State possibly could have avoided.

Virginia’s experience But, as Dr. Lefton noted, “the devil is in the details.” The form the charter university idea would take depends on how the Legislature receives Mr. Petro’s proposal. Virginia restructured its higher education system in the mid-2000s. The original legislation called for charter universities, but that label later was dropped. Eventually, the state granted some of its public universities varying levels of autonomy in financial matters, construction projects and personnel matters. The universities in Virginia are grateful for the lifting of some regulations, particularly those related

to construction, but officials say the state has reneged on some of its promises because of escape clauses included in the restructuring agreements. “What the state giveth, the state can taketh away,” said Larry Hincker, associate vice president for university relations at Virginia Tech, one of the universities involved in the state’s restructuring. For instance, Mr. Hincker said the Virginia Legislature originally agreed to let the university keep its interest earnings on overnight deposits, but ultimately reversed that decision. The state also reduced payments into the public employees’ retirement system; some of that money was expected to return to the universities, but the state used it to fill other budget gaps. “Everybody seems to forget we have these management agreements, and (lawmakers) start writing legislation like the universities are the way they used to be,” Mr. Hincker said.

It’ll take convincing Mr. Petro has asked the Board of Regents to explore the situation in Virginia further so he can determine the best course of action for Ohio. “It’s the kind of thing that, I think, becomes a worthwhile innovation if it’s working elsewhere,” he said. “You look for best practices in other venues and see if you can adopt them in Ohio.” In Virginia, support to its universities has continued to decline as the state wrestles with its own fiscal woes. In Ohio, higher education leaders are expecting drastic reductions in state subsidies as Gov. John Kasich and the Legislature stare down an estimated $8 billion gap in Ohio’s new two-year budget. Despite the budgetary qualms facing the state’s universities, Mr. Petro said, “revenue shortfalls are always an excellent opportunity to reconfigure your operations.” Others aren’t so sure and aren’t ready to buy into the charter universities concept yet, especially if it means reduced state money. “We support additional autonomy and deregulation, but in terms of there being some kind of price tag for that, I don’t understand the rationale,” said Bruce Johnson, president of the Inter-University Council of Ohio, a group representing the state’s public universities. ■

ON THE WEB

Story from www.CrainsCleveland.com.

Chronos pumps life into insurance firm Chronos Life Group, a portfolio company of private equity firm Kohlberg & Co., has acquired a majority ownership interest in Life Equity LLC, a company in Hudson that buys in-force life insurance policies on behalf of institutional investor clients. Terms were not disclosed. Kyle Kibler, who previously was chief operating officer of Life Equity, succeeds company co-founder Brian Smith as CEO. Chronos said Mr. Smith will remain involved with Life Equity as a member of its board. Chronos said Life Equity operates as a so-called life settlement provider in 42 states. Life Equity also provides services for the post-acquisition management of policy assets.

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Construction: Builders not sure if momentum will last continued from PAGE 1

just starting, and work won’t hit its seasonal stride until summer, so more hiring is at hand — though how long construction jobs can be sustained is another matter. John Kilbane, business manager of Laborers Local 310 in Cleveland, said the convention center job already is providing its share of employment for his members, who do assorted tasks tending to other building trades and asbestos removal. “You don’t see a lot of activity because it’s inside,” Mr. Kilbane said. Among 200 workers at the convention center site, more than 100 laborers are working inside the old building and 30 are above ground, Mr. Kilbane said. They’re the first of 500 laborers who will work on the two-year, $465 million project, which includes a medical merchandise mart. Shortly, 50 laborers in two shifts will start readying four floors of the Higbee Building for transformation to a gaming palace. The work, especially at this time of year, is “very welcome after the blight of the last few years,” Mr. Kilbane said. “This is our downtime due to weather,” he said. “We have about 200 people on the bench — not bad by any means — but without this work, there would be twice that many.” More than 6,500 construction jobs are forecast for the nearly $2 billion construction spree afoot in Northeast Ohio — most of it downtown — that is coming on the heels of the nation’s worst economic downturn in 50 years. Various craftspeople — carpenters, electricians, masons, machine operators and more — will get to work at different intervals as jobs progress over the next few years.

Reversal of fortune For many of these construction workers, it has been a long drought. Team NEO, the regional business attraction group, reports construction and related employment stood at 62,400 jobs last July, when weathersensitive construction peaked for the year. That figure was down nearly 22% from the summer peak of 79,600 jobs in June 2007, before the recession hit the following year. Team NEO’s data is from Bureau of Labor Statistics figures for the Akron, Canton, Cleveland and Youngstown metropolitan statistical areas. However, the big burst of construction in Cleveland is about to reverse that trend line, at least for a time. Loree Soggs, executive secretary of the Cleveland Building Trades Council, which represents multiple unions, envisions a “wonderful sight” when 13 cranes go up later this year to build foundations for the $200 million Inner Belt Bridge across the yawning Cuyahoga River valley. “We’re looking at a minimum of two years of full employment,” Mr. Soggs estimates, as various contractors and trades ramp up. He estimates there is 20% unemployment among the 17,000 workers in his council’s affiliated trades — more than double the general unemployment rate of 9% — and unemployment in some trades tops 40%. Even before the recession hit in late 2008, the volume of heavy construction in Northeast Ohio languished. Now, the region stands to come out of the box stronger than

“It’s not the panacea. It’s not the recovery we are looking for with a variety of jobs. This is a few jobs.” – Tony Panzica, president and CEO, Panzica Construction Co.

‘It’s not the panacea’

most parts of the country as the nation gradually recovers and commercial construction generally remains weak. “We will stack up very well compared to other parts of the country,” Mr. Soggs said. “Some of my counterparts (in other states) have nothing to look forward to.”

Better than half full How deep and broad this boom will be concerns the contractors who own building firms, including some of those who have pieces of the downtown megaprojects. For instance, Thomas Laird, senior vice president and regional manager of Gilbane Building Co.’s Cleveland office, runs the firm that is the general contractor for the $275 million Flats East Bank project. Parking garages, the Ernst & Young Office Tower and the Aloft Hotel are starting to rise from the river valley’s slope at West Tenth Street. And make no mistake — he’s glad for the work. “In general, there is reason to be more optimistic,” Mr. Laird said. “These projects are certainly helping. “But,” Mr. Laird added, “it’s still insufficient to say we’re busy again.” Without this work, Mr. Laird said, “I wouldn’t feel very good,” and he wonders how the big picture for the region will shake out long term beyond downtown for the job market. He notes big projects such as University Hospitals’ Seidman Cancer Center in Cleveland and its Ahuja Medical Center in Beachwood are finished, and other significant health care jobs are winding down. Nonetheless, the uptick is significant for Donley’s Inc., a general contractor and concrete subcontractor based in Valley View. Don Dreier, Donley’s executive vice president, estimates the company’s jobs — parking garages at Flats East Bank, concrete at the Medical Mart and a role as construction manager for the new Museum of Contemporary Art Cleveland at University Circle — means it will hire more than 100 workers in the field this year that have been unemployed since the end of last summer. Donley’s also has added five management jobs. Mr. Dreier estimates when the construction season is in full swing, hiring at Donley’s will be up 10% this

year from last — though last year, Donley’s average work force here was its lowest in the last 15 years.

Ken Simonson, a widely quoted economist at the Associated General Contractors of America trade group in Washington, D.C., said Northeast Ohio’s continued population losses drag down its construction business because the area lacks the population increases that spur expansion in normal times in other parts of the nation. Tony Panzica, president and CEO of Panzica Construction Co. in Mayfield Village, reflects the caution among construction business owners. “We may need one or two people through the year” to run construction jobs, Mr. Panzica said, but he does not plan to add to Panzica’s core, 100-person work force unless he feels better about the strength of the market as a whole going forward. That caution comes from someone who holds the contract to build the 150-room Aloft Hotel at Flats

East Bank. He expects the job, cued for later in the year as foundations and parking garages take shape, to require hiring 15 subcontractors and to employ about 60 trades people. “It’s not the panacea,” Mr. Panzica said of the downtown building projects. “It’s not the recovery we are looking for with a variety of jobs. This is a few jobs.” George Palko, CEO of heavyconstruction firm Great Lakes Construction Co. of Hinckley, likewise said current projects “are not the be-all, end-all. “There’s got to be more to introduce a good slug of confidence to the construction market,” Mr. Palko said. However, Mr. Soggs said the nature of some of the work — the convention center reinvigorating the city’s hotel and restaurant market and the casino creating more permanent jobs — will seed economic growth and, with it, more construction opportunities. ■

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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

No NCR

merican Greetings Corp. is staying in Northeast Ohio — which, frankly, we suspected it would do all along. Then again, it could have pulled an NCR, the company that began life in 1884 as National Cash Register Co., maker of the first mechanical cash register. NCR celebrated its 125th anniversary in 2009 by announcing that it would be moving its corporate headquarters and 1,200 jobs to Duluth, Ga., from Dayton, the town of its birth. It was a shocker to the people of the southwestern Ohio city, and two years later it remains a bitter emotional and economic pill for Dayton to swallow. The possibility of American Greetings becoming the Cleveland area’s version of NCR was raised last November. That’s when the greeting card giant that began life in Cleveland more than 100 years ago said it was considering two locations in the Chicago area along with five locations in Greater Cleveland as potential sites of its world headquarters, where it employs 2,000. The situation reminds us of the classic line delivered by Clint Eastwood as Harry Callahan in the original “Dirty Harry.” In a scene near the start of the film, he exchanges gunfire with a number of bank robbers, and finally ends up standing over a bad guy he has wounded. Harry then says these immortal words: “I know what you’re thinking. ‘Did he fire six shots or only five?’ Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you’ve got to ask yourself one question: ‘Do I feel lucky?’” It’s the question of the hour in economic development circles. When a company that has been a stalwart of the community raises the prospect of leaving, can you afford to rest on the belief that it’s only rattling its sword and never would think of actually cutting its ties? Taxpayers grind their teeth at the sight of companies extracting sweet loans and tax breaks from state and local governments that are eager for the jobs of large employers. They call it corporate welfare. Yet companies the size of American Greetings aren’t beating down the door to come to Northeast Ohio and replace its $150 million payroll. No one wants the next NCR, especially in a state where unemployment still hovers around 9%. So, we must commend Gov. John Kasich for his aggressive courting of American Greetings, and state Sen. Tom Patton for championing House Bill 58; it created a job-retention tax credit for large employers that in the case of American Greetings could be worth as much as $75 million over 15 years should the company make a major capital investment and add to its employee base here. The tax credit is an arrow in the state’s quiver that could be used to retain other big employers, too. We recognize that with an $8 billion deficit at hand in Ohio’s next two-year budget, it’s hard to swallow any sort of tax giveaway. The alternative, though, is risking the loss of the tax-paying jobs of a significant employer. And in a still-tepid economy, we’d rather not rely on luck to keep them.

FROM THE PUBLISHER

Petro should right Fingerhut’s wrong

across the campus. im Petro, the newly appointed state In full disclosure, I served as a trustee chancellor of higher education, has at the time this request was made, and I an opportunity to solve a problem was absolutely floored when the thenas fast as his boss, Gov. John Kasich, chancellor rejected it. His argument was did when Mr. Kasich cleared up a that the university shouldn’t pay for the regulatory mess — in his first days in bonds with its planned student fee; the office — that had been plaguing an Ohio university countered with an offer to company for years. freeze tuition at the regional The new chancellor, a former campuses and with the logic attorney general, state repre- BRIAN that the fees would be modest and sentative and Cuyahoga County TUCKER phased in over several years. commissioner, can undo the After the university repeatedly problems his predecessor caused tailored its proposal to gain for Kent State University when approval, only to be rejected he rejected the university again and again, the message trustees’ plan to do some badly back from the chancellor was needed campus renovations that if the university didn’t like that had been put off for years. it, “vote for the other guy.” Last year, while in the fourth Ohioans voted for the other year of his term as chancellor, guy, who has appointed Mr. Petro to this Eric Fingerhut refused to allow Kent critically important leadership post. Here’s State to take advantage of attractively hoping he sees the wisdom in such an low-interest bond rates (and a stimulus important investment for a university program offered by the Obama administhat serves so many of Northeast Ohio’s tration) to make urgently needed repairs young people. and build a new home for its nationally recognized architecture program, which **** OHIO STATE UNIVERSITY FOOTBALL is currently scattered in several facilities

fans should brace themselves, as should their revered coach, Jim Tressel. I’d be surprised if the NCAA doesn’t penalize the coach further for the latest sad chapter in “tattoogate.” As most everyone knows, the university announced last week that the coach would be suspended for the Buckeyes’ first two games next season and fined $250,000 for failing to inform his bosses when he first learned that several of his key players had sold jerseys and other memorabilia to a shady Columbus tattoo parlor owner. Everyone knows that integrity and trust have been core characteristics of coach Tressel, and have been central to his recruiting success since he arrived in Columbus. I’m certain he knows he faces a long, hard climb back to that lofty position in which he’s long been held by Ohio State football fans. I hope he makes it, because he has brought a lot of pride to OSU, and along the way has helped the university raise a lot of money for non-athletic improvements across the campus. The question is: Will the football program ever be the same? ■

LETTERS

Early stage capital serves crucial purpose ■ The Feb. 28, page 5 story, “Golf tech company hits rough patch” makes an illogical comparison that completely misses the mark. The story compares Charitee Golf LLC, founded by Mike Burkons, to Nine Iron Innovations, a growth business that was funded by both JumpStart and North Coast Angel Fund. It quotes the apparent success that Mr. Burkons (profitable, employing himself and two part-time employees) has had with Charitee Golf to the apparent failure by Nine Iron. This comparison shows a complete lack of understanding of what the purpose of early stage capital is. Early stage capital is meant to fund rapid growth, often at the expense of initial profitability. Most often this is to take advantage of a window of market

opportunity that may be brief. This is a natural tradeoff and one that I am very familiar with. As CEO and founder of OmniVista Software, we took less than $1 million in capital and grew the business to over 30 employees in less than three years before selling it to Best Software in 1999. As CEO of RIS Logic, we took slightly over $2 million in early stage capital and grew the company from two employees to 50 employees in less than three years before selling it to Merge Healthcare. I should add that both companies had barely achieved break-even before they were sold to public technology companies for returns that ranged from 300% to 800% to investors (each in less than three years). So, early stage capital resulted in

economic growth (increase in jobs) and solid returns to investors who undertook the capital risk. That is the way it works. Imagine if the founders of Google or Facebook did not seek early stage capital to accelerate the growth of their business to take advantage of a market opportunity. Imagine if they attempted to grow it slowly and organically (especially with no sources of revenue). The story implies that Nine Iron wasted its precious capital and should have been more cautious. The company invested in technology, sales, and marketing over a four-year period. During that time the company achieved nearly 10 times revenue growth. However, from 2010 to 2011, it became apparent that the company and See LETTERS Page 11

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

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THE BIG ISSUE Are you comfortable with the state of Ohio offering major companies such as American Greetings incredible incentive packages?

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TERENCE Oâ&#x20AC;&#x2122;BRIEN

JIM JOHNSON

SUSANN GEITHNER

Cleveland

Highland Heights

South Euclid

Lakewood

(Yes), as long as the company states that theyâ&#x20AC;&#x2122;re really dedicated to business in the state and that the companies already have shown themselves to be profitable and have a good track record.

If it makes them stay here and we keep our jobs, then Iâ&#x20AC;&#x2122;m OK with it.

As a general proposition, yes. â&#x20AC;Ś I think that you need to encourage business to be here, set up shop, create jobs for us as opposed to them going somewhere else, but it always depends on the incentive package that they offer.

No. â&#x20AC;Ś Iâ&#x20AC;&#x2122;m from East Germany. â&#x20AC;Ś Companies there got lots of incentives from the government, and what usually happened after that is they forgot all the promises of putting in new jobs â&#x20AC;Ś and moved away after five years.

â&#x17E;¤â&#x17E;¤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.

Hospitals back feds in Va. health reform case By REBECCA VESELY Modern Healthcare

Six major hospital associations have filed an amicus brief in support of the federal government in the case brought by the state of Virginia to repeal the Obama administrationâ&#x20AC;&#x2122;s health care law. The lawâ&#x20AC;&#x2122;s mandate that all Americans carry health insurance is lawful because, whether they purchase health insurance or not, everyone participates in the health care system, argue the American Hospital Association, National Association of

Public Hospitals and Health Systems, Association of American Medical Colleges, Catholic Health Association, Federation of American Hospitals and National Association of Childrenâ&#x20AC;&#x2122;s Hospitals. â&#x20AC;&#x153;By forgoing health insurance, individuals simply shift the burden of their health care payments to others,â&#x20AC;? the hospital groups wrote in the brief. â&#x20AC;&#x153;The health care market is unique in this respect.â&#x20AC;? Last December, a federal judge agreed with Virginia Attorney General Ken Cuccinelli in finding the insurance mandate in the health

reform law unconstitutional. The case is now on appeal. Along with the hospital groups, the main lobbying group for insurers, Americaâ&#x20AC;&#x2122;s Health Insurance Plans, or AHIP, also defended the individual mandate, in a separate brief filed with the court. â&#x20AC;&#x153;Market reforms that are not coupled with an individual mandate are likely to lead to disruption and instability in the health insurance market,â&#x20AC;? AHIP wrote in its brief in support of neither party. â&#x2013;

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is a new type of business incubator or driven by a unique public-private collaboration. Strategic partners nture, include the City of Mentor, CADVenture, Inc. and Lake Erie College â&#x20AC;&#x201C; each contributing an important nutrientt to wth. enhance successful business growth. h are d t i d Weâ&#x20AC;&#x2122;re looking for entrepreneurs who determined to see their innovative ideas blossom into commercially viable product-driven businesses. The Technology Greenhouse provides the ideal environment and all the critical services youâ&#x20AC;&#x2122;ll need, including early-term ďŹ nancial assistance, ofďŹ ce space, state-of-the-art engineering software, technical training, coaching and business plan development. To accelerate your seedling idea into a revenue-generating reality, contact Tom Thielman, program administrator, at (440) 974-5739 or Thielman@cityofmentor.com or visit MentorTechnologyGreenhouse.com.

LETTERS continued from PAGE 10

the golf industry as a whole could not support the ongoing growth necessary to generate adequate investor returns. Consequently, we made a difficult decision to sell the companyâ&#x20AC;&#x2122;s brand and assets. This is not uncommon in the world of early stage companies, where many more fail than succeed. Interestingly, the sale of the assets and brand was made to an individual who will continue to try to grow it as a lifestyle company. This is precisely the kind of company that Mr. Burkons is running in Charitee Golf. There is nothing wrong with lifestyle companies. However, the expectation that they will fuel significant economic growth and create adequate investor returns to offset the risk is not correct. Organizations such as JumpStart and North Coast Angel Fund are making a huge impact in our regional economy. These organizations are a bright light to our regionâ&#x20AC;&#x2122;s economic future and gaining more and more visibility nationally. Organizations are locating in Northeast Ohio due to the desire to take advantage of this capital engine. We need to embrace this engine that will experience both successes and failures.

Dan Quigg Chief executive officer Nine Iron Innovations Inc.

weatherhead

Focus on Kasichâ&#x20AC;&#x2122;s plans â&#x2013; I think Crainâ&#x20AC;&#x2122;s government reporter Jay Miller picked up on an important factor in reporting on Gov. John Kasichâ&#x20AC;&#x2122;s attentiveness to Cleveland, as reflected in your March 7, Page One story, â&#x20AC;&#x153;Clevelandâ&#x20AC;&#x2122;s newest BFF.â&#x20AC;? Mr. Kasich certainly is making former Gov. Ted Strickland look as if the Democrat took this Democratic city for granted too often. However, what is necessary is to keep a watchful eye that what Gov. Kasich does rather than where and how many times he visits. Mr. Kasichâ&#x20AC;&#x2122;s desire to end the estate tax, privatize highways and cut important needs to urban areas in education, libraries and other governmental services may be more damaging to cities than highly visible two-hour visits. I also would have appreciated comments from labor leaders and not simply Cleveland business leaders. Roldo Bartimole Cleveland Heights

WRITE TO US Send your letters to: Mark Dodosh, editor, Crainâ&#x20AC;&#x2122;s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: mdodosh@crain.com

OUR LETTERS CARRY THE STRENGTH OF NUMBERS

Weatherheadâ&#x20AC;&#x2122;s Part-Time MBA program ranked #14 in the nation.

â&#x20AC;&#x201C; Businessweek, â&#x20AC;&#x153;Best Part-Time MBA Programsâ&#x20AC;?

Weatherheadâ&#x20AC;&#x2122;s Executive MBA program ranked #16 among schools in the United States. Worldwide, the program ranked #21. â&#x20AC;&#x201C; Businessweek, â&#x20AC;&#x153;Best Executive MBA Programsâ&#x20AC;?

Learn more about Weatherhead MBA opportunities at weatherhead.case.edu.

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Social: Privilege, regulations cause law firms to be cautious continued from PAGE 3

By contrast, other banks in Northeast Ohio, among them Dollar Bank and FirstMerit, are inactive on Twitter and Facebook. Dollar Bank’s Twitter page exclaimed in July 2009 that the bank “will be coming soon,” but that has been its only tweet to date. Akron-based FirstMerit wrote on its Twitter page that it’s holding its name for now. Neither bank appears to have created a Facebook page. However, Dollar Bank vice president Lawrence F. Slenczka wrote in an e-mail that the bank is in the process of researching the feasibility of incorporating Twitter and Facebook into its marketing and communications.

Caution rules Bryan Huber works with companies to identify and define their online strategies and thus has a front seat to the trends. He’s noticed the banking sector’s increased involvement and law firms’ anxiety. Many companies that deal in the business-to-business realm instead of business-to-consumer have been resistant to the use of social media because the benefits aren’t as obvious to them, said Mr. Huber, chief

interactive officer for Paul Werth Associates, a Columbus communications consulting firm that serves companies throughout the Midwest. Hahn Loeser & Parks LLP is not active in social media, though it has secured a Twitter page in its name. Thomas D. Smanik, its chief operating officer, notes that law firms in particular “by our nature are more cautious about any new technology.” One reason, Mr. Smanik said, is that law firms are subject to restrictions on marketing and advertising imposed by state bar associations. Another is that they must be careful not to establish attorney-client privilege inadvertently through venues such as Twitter and Facebook. The disclaimers many attorneys include in their e-mails, he noted, are hard to include in 140-character tweets. Banks, too, are cautious, emphasizing that clients should not provide account information via social media. Nonetheless, many in law and banking predict more of their brethren over the next year will make themselves known in social media. Although she wasn’t hired exclu-

“Social media is not going to go away. ... We need to be active.” – Carl Grassi, president, McDonald Hopkins sively to build a social media presence for Canton law firm Day Ketterer Ltd., Kirsten Conley spent time in March during her first four days with the firm weighing the pros and cons of doing so. Day Ketterer does not have a Facebook or Twitter page. “My initial challenge with social media for a law firm is you don’t necessarily just want to speak to the largest number of people possible,” said Ms. Conley, director of client development. “I see value to it, but it needs to be approached very carefully.” Hahn Loeser doesn’t have a timeline for building a social media presence, Mr. Smanik said. “We’ll eventually have something out there,” he said. “I think it’s going to be huge,” he added. “But I think it’s going to take time before we figure out how it’s going to become huge.”

have dipped their toes in the social media waters seem pleased with the experience so far. Visible on KeyBank’s Twitter page, for example, are various communications between customer service representatives and customers, happy and disgruntled. During its shorter tenure on Facebook, Key has posted links to news about itself and photographs of one event it hosted. “We do still think that face-toface interactions with our clients are very important,” Ms. Haefling said. “But we’re very excited about this engagement in this new way.” As for McDonald Hopkins, the

Cleveland law firm has been posting regularly to Twitter, Facebook and YouTube for probably the last 18 months, said president Carl J. Grassi. It shares news releases and roundtable invitations, among other items. Mr. Grassi said the firm has seen the value of its efforts in an increased number of unique page views on its web site and a growing number of requests for its content, such as the alerts and special reports it prepares on various legal and legislative topics. “Social media is not going to go away,” Mr. Grassi said. “It’s clearly the way that people are communicating. Therefore, we need to be active.” ■

SOCIAL MEDIA’S GOOD, BAD AND UGLY Who needs a teller window or branch drive-through for customer service? A look at the Twitter pages used by KeyBank and Fifth Third Bank representatives reveals a fair amount of interaction — not all of it pleasant — between the banks and people who tag, or mention, them on their pages. But isn’t that the free-wheeling nature of social media? A recent sampling:

It’s ‘not going to go away’ Those banks and law firms that

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Bridgestone no longer will supply IndyCar After 11 years as auto series’ lone provider, tiremaker’s future in motorsports unclear By TIRE BUSINESS

Bridgestone Americas Tire Operations will stop supplying the IndyCar Series and its companion Firestone Indy Lights racing series with Firestone racing tires at the end of this season. Bridgestone Americas makes Firestone racing tires at its researchand-development center in Akron. The IndyCar Series already is “actively engaged in discussions with other tire manufacturers on opportunities to get involved in our sport as we prepare to debut our new car in 2012,” said IndyCar CEO Randy Bernard, referring to a new chassis and engine formula that takes force next season.

Bridgestone said the decision was reached mutually with IndyCar. The issue has been up in the air since early January after Bridgestone failed to notify the series by the Dec. 31 deadline of its intention to continue the supply contract beyond 2011. Bridgestone did not comment on possible other racing venues it might pursue or whether this means no motorsports activities in North America after this season. The Japanese tiremaker ended its role as the sole tire supplier of the international Formula 1 series after the 2010 season. Firestone has been the series’ sole tire supplier for the past 11 seasons, following Goodyear’s decision to bow out of open-wheel

racing after the 1999 season. Before that it competed with Goodyear for five years both in IndyCar’s predecessor Indy Racing League and the competing Championship Auto Racing Teams series. “During our long history in racing we have met or exceeded all of our motorsports goals,” said Al Speyer, executive director, Firestone Racing, in a prepared statement. “So now it’s time to set new goals — for ourselves and our brands. … The Firestone brand has been, is now and will be an extremely important part of our business,” he said. “We’re very excited about our future prospects to grow the Firestone brand.” The Firestone brand has competed in IndyCar-style racing for more than 60 seasons since its debut at the Indianapolis 500-mile race in 1911. Firestone tires have carried 62 of the Indy 500 winners since then to victory, Bridgestone said. ■

GOING PLACES JOB CHANGES ARCHITECTURE SOL HARRIS/DAY ARCHITECTURE: Bart Remark to project manager; Lisa Webb to project associate.

DISTRIBUTION APPLIED INDUSTRIAL TECHNOLOGIES: Dave Smith to director of corporate purchasing.

EDUCATION KENT STATE UNIVERSITY: W. Grant McGimpsey to vice president for research. LAKE ERIE COLLEGE: Jessica Marker to controller; Robert Mastronicola to coordinator for veteran support services; Dee Dee Bober to director, adult degree completion program.

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BUCKINGHAM, DOOLITTLE & BURROUGHS LLP: Brenda S. Schwartz to partner.

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SPANGENBERG SHIBLEY & LIBER LLP: Nicholas A. DiCello to partner.

RAPID MARKETPLACE LLC: Eric Gogolek to national account manager.

STARK&KNOLL LPA: Michael T. Altvater to associate.

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BNY MELLON WEALTH MANAGEMENT: Ronald Ambrogio to regional president; Ron Ulle to senior director of portfolio management.

D’AMORE TATMAN GROUP LLC: David M. D’Amore and Joseph C. Detrow to staff accountants. MALONEY + NOVOTNY LLC: Sherri R. Bates to principal.

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U.S. BANK: Robert Dracon Jr. and Kiley Smith to business client relationship managers.

BOBER MARKEY FEDOROVICH: Robert M. Burak to partner.

METROHEALTH: Dr. Jeremy M. Lipman, Department of Surgery; Dr. Catherine C. Fallick, Heart & Vascular Center; Dr. Sean Nagel, Department of Neurosurgery; Dr. Kermit W. Fox III, MetroHealth Rehabilitation Institute of Ohio; Dr. Ali Totonchi, Division of Plastic Surgery; Dr. Joseph Golish, Division of Pulmonary, Critical Care and Sleep Medicine.

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MARKETING ROSENBERG ADVERTISING: Jessica Keefer to social media strategist; Lisa Holliday to administrative assistant.

REAL ESTATE CUTLER REAL ESTATE: Jim Hinton to manager, Stow; Andy Camp to manager, Dressler office. TRANSACTION REALTY: Vito Dipierro to sales associate. WESTFIELD: Steve Greenberger to vice president, construction.

SERVICE NATIONAL MORTUARY SHIPPING: Angela Berwald to co-owner.

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NEIGHBORHOOD HOUSING SERVICES OF GREATER CLEVELAND: Jeff Marshall (Transtar Industries) to president; Amy Fulford to first vice president; Lisa Behm to second vice president; Kirby Freeman to treasurer; Lisa Nelson to secretary.

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CRAIN’S CLEVELAND BUSINESS

INSIDE

21 TAX TIPS: HEALTH REFORM TAX LAWS STILL CHANGING.

MARCH 14 - 20, 2011

SMALL BUSINESS

WEST SIDE STORY Iconic Cleveland institution cultivates small business growth, expansion By KATHY AMES CARR kcarr@crain.com

or nearly 100 years, the West Side Market has anchored the community surrounding West 25th Street and Lorain Avenue. Through it all, the iconic public marketplace has been the engine behind the surrounding community’s economy, feeding the prosperity of everything from butcher stands to surrounding restaurants and retail shops. Proprietors and neighborhood advocates alike say the West Side Market is a magnet for small business development and economic growth because the city-owned and

Crain’s video To watch local restaurateur Sam McNulty discuss expansion plans, and West Side Market vendors share their market stories, visit www.CrainsCleveland .com/MarketVideo managed institution attracts consumers from throughout Northeast Ohio and beyond. Indeed, Ohio City stakeholders believe the area — now more formally branded as the “Market District” — is on the cusp of further gentrification as the West Side Market approaches See MARKET Page 20

BLOG COVERAGE The West Side Market’s manager, Christine Zuniga Eadie (below), addresses the long-standing institution’s economic role as its centennial approaches. Read the Q&A in Kathy Ames Carr’s What’s Cooking blog at www.CrainsCleveland.com/Market.

KATHY AMES CARR CITY OF CLEVELAND PHOTOGRAPHIC BUREAU

In many ways, the 99-year-old West Side Market is at the center of Ohio City’s economic development and rejuvenation, although stakeholders are working on ways to bolster the facility’s integration into the local food system.

Online reviews impact an operation’s image Social media present opportunities to address comments By TIMOTHY MAGAW tmagaw@crain.com

he chatter on social media channels has been known to incite revolutions, derail celebrities’ careers and

even catapult little-known figures to stardom. And local businesses should take note: What’s being said on sites such as Twitter and Facebook can make or break you. Sure, hordes of media or protesters aren’t likely to flank a local restaurant because of an overcooked piece of meat or some shoddy service, but a few scribbles on a web site can have a lasting impact on whether someone ponies up some cash. Daniel Deagan, who owns

Deagan’s Kitchen & Bar in Lakewood, knows not all of his patrons are going to openly share their displeasure with their server. Rather, they might flock to web sites such as the microblogging portal Twitter or Yelp.com, a site where users can post short reviews about their experiences at restaurants, stores or other service providers. Mr. Deagan’s restaurant opened in September, so generating positive feedback is an important factor in solidifying a customer base. He

checks Twitter and Yelp daily to see what he’s doing right and, perhaps, wrong. One customer, for example, chided the restaurant for the size of its cheese plates while another wasn’t satisfied with the quality of its french fries. Mr. Deagan personally replied to both, explaining the high prices for the quality cheeses he serves and that the restaurant was in the process of buying a new fryer. “We might do some things wrong, and I want to see if I can fix

them,” Mr. Deagan said. Still, Mr. Deagan must be doing something right — his restaurant boasts a four-star rating on Yelp and a 93% approval rating on UrbanSpoon, another popular rating web site. Terry Daugherty, an assistant professor in the marketing department at the University of Akron, said it’s naïve to think sites such as Yelp or Twitter can’t impact a business. The Internet, he noted, has accelerated the speed at which communication and the transmission of information takes place. “If you somehow get a negative See REVIEW Page 22

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20 CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

MARCH 14 - 20, 2011

SMALL BUSINESS

Market: Centennial to mark past, economic future continued from PAGE 18

its centennial in 2012. “We wouldn’t be where we are without the West Side Market,” said Jeff Campbell, who owns three stands at the 60,000-square-foot market, including Campbell’s Popcorn Shop. “It’s been an incubator for so many small businesses like mine.” Mr. Campbell’s is one of many small businesses that got its start at the West Side Market and then broadened its reach. He has plans to expand to a nearby storefront to accommodate demand from wholesale accounts, and similar examples of growth abound: Cuyahoga Heights-based produce supplier Premier Produce also has roots at the market, as did Chuppa’s Market Place before expanding in 2006 into its own storefront in Parma. “For every one of these stories, there’s 100,” said Eric Wobser, executive director of Ohio City Near West Development Corp., who also pointed to the growth of Ohio City Pasta, founded in 1990 by chef Gary Thomas. That business now distributes thousands of pounds of fresh pasta within a six-state region, including Ohio. “This is a very unique and welloperated urban area,” said Sam McNulty, who is about to open his fourth Ohio City business in the neighborhood surrounding the

C A S H

KATHY AMES CARR PHOTOS

Jeff Campbell owns three stands at the market, including Campbell’s Popcorn Shop, and is expanding into a nearby 2,000-square-foot space.

Tom Dunderman, owner of The Basketeria, partners with local farmers to provide fresh produce.

market. “The West Side Market plays a large role in that. Everything’s right here. If it doesn’t exist in Ohio City, it doesn’t exist.”

Ohio City Near West Development Corp. The West Side Market is fueling the area’s economic growth because small businesses want to be where people eat, shop and live, business owner Mr. McNulty said. “There’s a synergy here because of that density,” he said. Indeed, sales growth at Mr. McNulty’s three nearby establishments — Bar Cento, Bier Markt and Speakeasy, which all opened within the past five years — prompted the proprietor to move ahead on his latest project, the 15,000-square-foot, Joe DeCaro, a fourth-generation owner of DeCaro’s 700-seat Market produce, says he expects to hand down his stand to Garden Brewery & his daughter, Melissa, when he retires. The produce Distillery, which is stand opened in 1934. expected to open this year next to the market. “We’ve seen sales can more readily be integrated in growth of more than 400% over the West Side Market. The study the last five years,” Mr. McNulty should be completed this summer. said. “There’s still a market for “We’re looking at ways to incorexpansion.” porate more complementary Meanwhile, tenants such as surrounding businesses into the Penzeys Spices and Crop Bar & operation,” Ms. Zuniga Eadie said. Bistro are taking up shop in the But fueling the local food system United Bank Building at West 25th extends beyond what the vendors Street and Lorain Avenue, which is offer. undergoing a $20 million renovaMr. Cimperman, whose Ward 3 tion by Cleveland developer MRN includes Ohio City, said he still is Ltd. befuddled by how many Northeast Ohioans never have shopped at Local, local, local the market. One way the market can increase “Chefs from Great Britain and all its contribution to the region’s over the world know about it,” he economy is by offering more local said. “People take for granted that food, said Christine Zuniga Eadie, it’s here.” West Side Market manager. But Cleveland city officials are “Local food is a source of pride,” working on raising the market’s she said. “A number of vendors visibility to attract more residents have moved in that direction, and businesses, he said. including Ohio City Pasta, “The enhancement of economic Sideshow, Foster’s Meats and development will only continue as Jorgensen’s Apiary. We’ll be looking the centennial approaches,” Mr. at ways to promote those vendors Cimperman said. “The West Side who offer fresh, local products.” Market feeds the system and the In fact, $12,000 of the Charter community. One money has been allocated to “It is really like the sun, and all E4S, a local economic developthese businesses are like all these ment organization, which will use wonderful planets orbiting around the funds to study how local food the sun.” ■

‘Market for expansion’ The Ohio City Near West Development Corp. is using the market’s 100-year anniversary not only as a chance to acknowledge the institution’s storied past, but to emphasize the role it will play in accelerating the neighborhood’s economic

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future. The nonprofit and Clevelandbased Charter One Bank last Wednesday, March 9, announced the winners of an Ohio City Market District Small Business Development Grant Competition, which is intended to foster the development of small businesses and entrepreneurial initiatives around the West Side Market. “That money will increase tenfold with the return on investment,” Cleveland City Councilman Joe Cimperman said. Mr. Campbell, of Campbell’s Popcorn Shop, was one of the grant recipients, with a $15,000 award that will facilitate the development of a 2,000-square-foot shop just south of Lorain Avenue on West 25th Street. Other grant recipients are: ■ Fit Personal Studio & Yoga ($10,000), for a hybrid fitness center and personal training studio. ■ Joy Machines Bike Shop ($9,000), which will offer a selection of refurbished and new bicycles. ■ Southern Hospitality Restaurant ($7,000), which will serve a farm-to-table menu melding traditional foods and drinks with a contemporary urban twist. ■ The Urban Orchid ($3,000), for a new upscale boutique floral shop. ■ R3 Domain ($3,000), which will design, manufacture and sell accessory pieces, furniture and gift items crafted from materials sourced from demolished homes and buildings throughout Northeast Ohio. ■ Salty Not Sweet ($3,000), which will enable the seller of local handmade goods to conduct handcrafting art classes. The grant funds are part of a $130,000 total commitment from Charter One for its Growing Communities initiative. Ohio City Near West is branding the Market District as the hub of a regional food system. The Ohio City Market District is defined as the area around West Side Market, from West 24th to West 28th streets between Jay Avenue at the north end and Chatham Avenue at the south end. The seven winning businesses will occupy six vacant storefronts, leaving the Market District with seven remaining vacancies out of a total of 63 storefronts, according to

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MARCH 14 - 20, 2011

WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS 21

SMALL BUSINESS

Be aware of any health reform-related tax changes

s the practical realities of health care reform begin to sink in, authorities are taking steps to roll back some of the more onerous tax reporting requirements the reform originally imposed. Most notably, the House of Representatives is considering a repeal of the 1099 reporting requirement contained in the Patient Protection and Affordable Care Act that was signed into law in March 2010. The House Committee on Ways and Means recently recommended a new law to the full House, and the Senate is working on a similar measure. As a way to raise revenue to support broader health care coverage, Congress included in the health reform bill a requirement that all “persons” (including corporations) engaged in a trade or business issue 1099 forms to any provider of goods or services for whom payments over the course of the year exceed $600. Currently, companies are required to issue 1099s to independent contractors to help the Internal Revenue Service keep tabs on selfemployed individuals and to ensure they are reporting their income and paying taxes appropriately. By extending the reporting requirement to a much broader range of businesses, Congress hoped to improve business income reporting and raise some $17 billion over 10 years to help pay for the bill’s health care initiatives. The business community, however, erupted into protest. Whatever the objective of the requirement, the practical reality is that it would bury tax staff and the IRS in an unimaginable heap of paperwork. It doesn’t take long for any business, regardless of size, to hit a $600 threshold for doing business with a given vendor. To require all of that activity to be reported to the IRS would, in essence, require companies of any size to report virtually every transaction that is undertaken in the routine course of business. The burden of such voluminous reporting easily would outweigh whatever incremental revenue the government might expect to raise. In a separate but related matter, the IRS has delayed for at least a year the requirement for all companies to report the value of any health benefit they provide to employees on their W-2 forms. The law originally required companies to begin reporting on the W-2 form the value of health benefits — including any health, medical and vision coverage, but not any flexible spending arrangement — beginning with the 2011 tax year. Congress added the reporting requirement in the health reform bill not because it’s taxable, but to start drawing attention to the untaxed value of health benefits. Business and labor advocates have pushed back, describing the requirement as burdensome and unnecessary. The IRS announced recently that it would give companies another year to get their payroll systems prepared to meet the new reporting requirement. The reporting is voluntary in 2011, but still required for 2012. The IRS issued some guidance in late 2010, but it came a little too late to be helpful with implementation.

PETERDEMARCO

TAX TIPS The delay gives employers, software providers and third-party service providers, like payroll services, additional time to prepare for and

implement the new reporting process. Most companies still have a lot of questions about how to establish values for health benefits, especially when they offer benefits through a multi-employer plan in which the distinction between cost and value can be a little more difficult to determine. The IRS and the U.S. Treasury are expected to issue further guidance on these and other questions to help smooth over implementation in 2012. Of course, the delay also gives more time for business and labor

advocates to continue to press for permanent relief from the reporting requirement. Congress has a longrange plan to eventually begin taxing the value of health benefits provided to employees, beginning with “Cadillac” plans, or those that provide especially generous benefits, in 2018. Congress tends to view health benefits as an untaxed form of compensation, but it expects plenty of objections to taxing health insurance. It established the reporting requirement with health reform to help employees begin to

grasp the value of the untaxed benefit they receive. While business owners hope for permanent relief from both of these reporting requirements, they still are required by law. It’s important to watch for developments, but it’s also still important to continue preparing to comply with both of them. ■ Mr. DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.

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Life and Disability products underwritten by Anthem Life Insurance Company. Anthem Blue Cross and Blue Shield is the trade name of: In Colorado and Nevada: Rocky Mountain Hospital and Medical Service, Inc. In Connecticut: Anthem Health Plans, Inc. In Indiana: Anthem Insurance Companies, Inc. In Kentucky: Anthem Health Plans of Kentucky, Inc. In Maine: Anthem Health Plans of Maine, Inc. In Missouri (excluding 30 counties in the Kansas City area): RightCHOICE® Managed Care, Inc. (RIT), Healthy Alliance® Life Insurance Company (HALIC), and HMO Missouri, Inc. RIT and certain affiliates administer non-HMO benefits underwritten by HALIC and HMO benefits underwritten by HMO Missouri, Inc. RIT and certain affiliates only provide administrative services for self-funded plans and do not underwrite benefits. In New Hampshire: Anthem Health Plans of New Hampshire, Inc. In Ohio: Community Insurance Company. In Virginia: Anthem Health Plans of Virginia, Inc. trades as Anthem Blue Cross and Blue Shield in Virginia, and its service area is all of Virginia except for the City of Fairfax, the Town of Vienna, and the area east of State Route 123. In Wisconsin: Blue Cross Blue Shield of Wisconsin (“BCBSWi”), which underwrites or administers the PPO and indemnity policies; Compcare Health Services Insurance Corporation (“Compcare”), which underwrites or administers the HMO policies; and Compcare and BCBSWi collectively, which underwrite or administer the POS policies. Independent licensees of the Blue Cross and Blue Shield Association. ® ANTHEM is a registered trademark of Anthem Insurance Companies, Inc. The Blue Cross and Blue Shield names and symbols are registered marks of the Blue Cross and Blue Shield Association. OH_CrainsCleveBiz_031411

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22 CRAIN’S CLEVELAND BUSINESS

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MARCH 14 - 20, 2011

SMALL BUSINESS

Do your homework before buying into a franchise Some eager proprietors end up in vulnerable position by not adequately researching market

hen a person is unemployed for a considerable period of time, just the thought of going another few weeks or months without a paycheck is enough to cause otherwise rational-thinking people to agree to deals from which they otherwise would have walked away. Over the past few years I have counseled many people on various franchise deals, ranging from sub shops and dry-cleaning operations to carpet-cleaning enterprises. The upfront cost can range from as little as a few thousand dollars to as much as several hundred thousand dollars. While a few of the deals reviewed were good and made sense for that particular individual, many of these great opportunities were questionable, even in good economic times, let alone today. In many cases, the people were simply paying money to buy themselves a job. At best, after all was said and spent, what remained at the end of the month often was equivalent to what they would have earned working for someone else. At worst, the franchisee made nothing, lost their initial investment and was on

the hook for additional debts. They actually were worse off than had they done nothing. That said, for those who are considering buying a franchise, here are some things to consider: ■ First and foremost, ensure that there is adequate demand for the product or service. You should always do your own market research. How many other products/services are in the same geographic market? How are they performing? Could the area support yet another direct competitor? Is your offering a necessity or a luxury? People are not as likely to pay for something that in a pinch they can do for themselves or do completely without. Many franchises tend to do well only during good economic times. ■ What do you know about running a business? Just because you can bake a great pizza or fix a computer does not mean you actually can run a business. Have you ever managed, hired and fired employees? Are you familiar with labor laws and regulations? Can you create and execute a solid business plan? ■ What do you know about sales

NEW NAME SAME TEAM

LESSZARKA

ADVISER and marketing? These are just a few issues business owners must deal with daily. If you do not have the experience to successfully lead the troops, then you will need to find and hire someone who can. ■ In addition to the franchise fee, you will most likely have additional startup expenses. Most people dramatically underestimate these add-on costs. Some of it could be for cosmetic improvements to an office or storefront, but in many cases, the “surprises” are related to compliance with disability access improvements, which can be costly. ■ Many franchise deals require additional outlays for equipment and inventory. You also may incur additional licensing fees, building and business permits, or health department permits. In most cases you probably will also incur some legal or accounting fees. ■ Be realistic as to when you may expect positive net cash flow.

Thinking ahead to bring national employee benefit resources to Northeast Ohio.

■ The source of funding your deal also is critical. With bank credit still relatively tight, many people turn to their 401(k)s or IRAs as a way to finance a new business venture. In the end, what originally might have appeared to be an “easy decision” ultimately could wind up being a very painful lesson. Since retirement savings normally consist of pre-tax contributions and growth, most of the funds withdrawn will be taxable. In addition, if you are under 59½ you also may be subject to a 10% IRS early withdrawal penalty. Depending on your tax bracket, it could cost you over $65,000 to end up with the $100,000 for your franchise fee! ■ A vital step is to talk to several people who have already bought the same franchise. Were

all the franchisor’s promises kept? Did they receive their money’s worth from the franchise fee? Could they have done it without the franchise? How accurate were the estimated startup expenses? Were there any big surprises? Above all, would they do it again? Unfortunately, we all have seen at least a few storefronts open, just to see them close a few months later. In many cases, it was not because they didn’t have a good product or service; they just couldn’t survive long enough to develop a deep customer base. Establishing a successful business takes time and careful planning. You really need to do your homework, and talk to objective professionals before taking the leap. ■ Mr. Szarka, certified financial planner and chartered financial consultant, is CEO, founder and co-owner of Szarka Financial Management in North Olmsted. He is an investment advisory representative offering securities and investment advisory services through FSC Securities Corp., member FINRA/SIPC registered investment adviser. Szarka Financial Management is not affiliated with FSC or registered as a brokerdealer or investment adviser.

Review: Ignoring comments hurts the most continued from PAGE 18

review or message, you’re not just losing one customer,” Dr. Daugherty said. “You’re potentially losing hundreds or thousands.”

A lurking temptation

Herbruck Alder is proud to join the Gallagher Benefit Services, Inc. team.

You may have several weeks or months, during which ongoing expenses can be incurred, such as salaries and inventory, with little or no profits for you. Will your financial situation allow you to be that patient? You should develop a contingency pool of money in the event that your business does not start generating a profit according to your original projected business plan. Running out of cash is the “kiss of death” for many new businesses.

The impact of online reviews can tempt some business owners to anonymously post positive feedback online, but marketing experts caution against such moves. Aside from the possibility of being unmasked and putting one’s reputation at stake, phony endorsements could result in a slap on the wrist from the Federal Trade Commission, the agency that regulates deceptive trade practices. In August, the FTC settled with a public relations agency hired by a video game company to post positive reviews for a product on Apple’s iTunes store. The agency determined that the reviews violated long-held principles of “truth in advertising.” Alexa Marinos, an account manager at the digital marketing agency thunder::tech in Cleveland, said the wiser approach is to reply to the negative reviews to see if the situation can be remedied. It’s not

necessarily about being defensive, she noted, but rather about making the situation right. Many of the web sites allow business owners to reply to a review or privately message the patron. “It’s really easy for a restaurant owner or someone assigned to handle customer service from the digital side of things,” Ms. Marinos said. “Because it is small, that one person can really have an effect on their business.” However, not all business owners feel the need to personally reply to every nitpicky comment. Joshua Montague, who co-owns Lilly Handmade Chocolates along with his wife, Amanda, said doing so would go against the concept of sites such as Yelp. It’s a place for consumers to voice their opinions — not the business owner, he added. “That’s something you handle personally if the person comes back,” Mr. Montague said.

Here to stay Most importantly, and perhaps quite obviously, businesses need to have a good product and strong customer service, according to Dr. Daugherty, but monitoring and

responding to what’s being said in cyberspace can go a long way. “It’s not that a negative review or post will instantaneously hurt your business,” he said. “Ignoring it will hurt the most.” For Richard Turnbull, the growing number of online reviews has become increasingly important, especially since the recession hit. The owner of the Stone Gables Bed and Breakfast in Cleveland’s Ohio City neighborhood said people are flocking to sites such as TripAdvisor. com before making a decision how to spend their money. “People are more picky with what they’re doing with their money,” said Mr. Turnbull, adding that about 90% of his guests say they chose his bed and breakfast because of a review they read online. Social media portals have become a growing factor in businesses’ marketing strategies, and experts say those that fail to ride the digital wave do so at their own peril. “We’ve definitely embraced it,” Mr. Montague said about his business’ use. “We’re of that generation, and I can see other generations like my parents using it, too. They get it.” ■

HEALTH CARE HEROES Formerly

w w w. h e r b r u c k a l d e r. c o m 2 1 6 - 6 2 3 - 2 6 0 0 1100 SUPERIOR AVENUE EAST, SUITE 1700 CLEVELAND, OHIO 44114-2521

Crain’s Cleveland Business on May 2 will publish its Health Care Heroes section, and we’re seeking nominations to help identify honorees among the dedicated professionals who work in Northeast Ohio’s world-class medical and wellness communities.

The nomination period runs through March 25. Crain’s will honor people and institutions in the following categories: Advancements in Health Care, Allied Health, Health Care Advocate, Nurse, Physician and Volunteer.

New this year to the section is a category called Wellness that will honor the region’s Healthiest Employer. To nominate your hero, go to www.CrainsCleveland.com/ HealthCareHeroes.

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CRAIN’S CLEVELAND BUSINESS 23

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SMALL BUSINESS faith, coverage disputes and professional liability.

GRANDOPENINGS CRAFTY GOODNESS 15621 Madison Ave. Lakewood 44107 www.craftygoodnesscleveland .com www.facebook.com/ craftygoodnesscleveland www.twitter.com/CGCleveland Crafty Goodness is a new retail establishment in Lakewood that is owned by Chris Sorensen and Joanna and Matthew Orgovan. Crafty Goodness carries only locally made goods from artisans who reside in Northeast Ohio. More than 60 artists from seven Northeast Ohio counties are represented. An extensive art gallery adorns the walls of Crafty Goodness, representing a number of artists, some who already have gained recognition and some who are up-and-coming. Traditional canvas and panel art, 3-D mixed-media pieces, photographic compositions, uniquely applied original screen prints and wood-carved and burned wall decorations are among the art pieces available at the shop. Crafty Goodness also specializes in hosting a variety of art- and craft-related classes that consumers of all ages can take. The majority of classes are organized in a make-and-take format, in which each student takes his or her creation home. 216-226-4880 craftygoodnesscleveland@yahoo.com

EXPRESS MESSENGER 4765 E. 131st St.

Express Messenger is a boutique, concierge messenger and courier service owned by Cindy Halle and Broock Munro. The business specializes in the following services: local and regional deliveries; logistical distribution solutions; same-day route delivery solutions; time-critical parts and supplies warehousing and fulfillment; and outsourcing of delivery, mailroom, shipping and receiving.

■ SALADS AND SWEETS: Two locally-

RED INK COMMUNICATIONS LLC 2926 State Road, Unit 123 Cuyahoga Falls 44223 www.redinkcomm.com

Lakewoodbased Crafty Goodness carries only locally made goods from artisans who reside in Northeast Ohio.

Phone 216-662-7252 or 216-798-5375 Fax 216-662-9101 info@expressmessengerllc.com

HOLLINGER STRATEGIES 6009 Landerhaven Drive, A1 Mayfield Heights 44124 Hollinger Strategies, under the direction of firm president Tiffany L. Hollinger, aims to provide a holistic, goals-based approach to financial planning for individuals and business owners. The firm’s scope of services includes investments (stocks, bonds, mutual funds and annuities), retirement planning (401(k), IRAs, rollovers and pensions), estate planning (wills, trusts and power of attorney) and insurance (life, health, long-term care and disability). Ms. Hollinger has more than 15 years of financial service experience, having worked in the Washington, D.C., area for the past five years. 440-681-2285 info@H-Strategies.com

PHOTO PROVIDED

CROSSFIT INDEPENDENCE 5572 Brecksville Road Independence 44131 www.crossfit-independence.com Local fitness professional Joel Woods has opened CrossFit Independence, a 4,400-square-foot facility. CrossFit is labeled as the “Sport of Fitness,” with dynamic methods, movements, group classes and coaching. Mr. Woods says he was drawn to CrossFit because of its approach to building fitness communities of people who work together, encourage each other and embrace the CrossFit fitness lifestyle.

Salad Co. was founded last year by Joe Joltin. The ETON location will be the company’s third in Northeast Ohio, with storefront locations (both approximately 900 square feet) in North Olmsted and Strongsville. Plans call for Vegan Sweet Tooth and Chop It Salad Co. to open jointly in May.

815 Superior Ave., 1615 Superior Building Cleveland 44114 www.asmtlaw.com

330-883-5655 matt@redinkcomm.com

Ankuda, Stadler, Moeller & Tyminski LLC is a civil litigation defense firm focused on the defense of insurance carriers, their insureds, self-insureds and businesses. The firm defends matters stemming from catastrophic loss, product defect, trucking and transportation, construction errors and omissions, automobile liability, homeowner liability, first and third-party bad

To submit a new business, send the following information by e-mail to Amy Ann Stoessel at astoessel@ crain.com: business name; address; city and ZIP; web site; brief description of business; business phone number; business fax number; business e-mail address; and date that business opened. Call 216-771-5155 with questions.

PHOTO PROVIDED

Mom's Gourmet co-founders Sally Koepke (left), and her mother, Pat Hurley owned stores are scheduled to open at ETON Chagrin Boulevard. Vegan Sweet Tooth specializes in vegan, diabetic and gluten-free desserts. The specialty bakery is owned by Rebecca Bryan, a trained pastry chef and a 2008 graduate of Johnson & Wales, and Tiffany O’Neill, who studied commercial photography at Ohio University. Chop It Salad Co., meanwhile, will offer signature and create-your-own salads and wraps made to order by a personal chopper using specialty knives. Based in Independence, Chop It

Crain’s Small Business Report, sponsored by COSE, brings you the latest news and trends that affect small companies and the entrepreneurial economy. If you already receive Crain’s daily and weekly e-mail news alerts, you’ll

Creating Value.

■ DEVELOPING STORY: Training@ Work, LLC, a Twinsburg-based training and consulting business, is launching the Training@Work Professional Development Institute to help organizations of all sizes develop their employees. Workshops will begin in early April and will focus on the core skills such as communication, change management, conflict management and time management. Each of these topics will have one workshop for people of all levels of experience and one specifically for supervisors and managers. ■ GETTING BIGGER: Semco Carbon has moved into a new 40,000-squarefoot facility in Lorain, more than doubling its space from its previous location. The firm, founded in 1971, provides custom graphite machining services to a variety of markets, including solar, aerospace, glass, casting/forging and heat treating. The company, located in Lorain for the past 20 years, currently employs about 25, and there are plans to hire additional machinists.

SMALL BUSINESS REPORT Crain’s Cleveland Business recently launched a free weekly newsletter that provides readers with information about small business and entrepreneurship in Northeast Ohio and beyond. Every Thursday at noon, the

ANKUDA, STADLER, MOELLER & TYMINSKI LLC

Red Ink Communications is a copywriting and marketing communications firm serving the advertising industry and marketing clients, with an emphasis on the plastics and building products industries. Red Ink provides full-service writing and editing for a variety of projects, including web site development, informational brochures and newsletters, news releases, video scripts, white papers, promotional materials, advertisements and more. Matt Griswold is Red Ink’s president and owner. Mr. Griswold’s editorial experience includes work for the Akron-based Plastics News, The Bradenton Herald in Bradenton, Fla., and for The Quad City Times in Davenport, Iowa.

440-506-3088 joel@crossfit-independence.com

S H O R T TA K E S ■ MOTHER ALWAYS KNOWS BEST: For years, Northeast Ohio residents Sally Koepke and her mother, Pat Hurley, have shared a passion for cooking. Today, that interest is starting to spice up gourmet food and gift shops in a growing number of states. Recently, two Cleveland-area Whole Foods Markets, a Columbus Whole Foods Market and two Cincinnati Whole Foods Markets began stocking the Newburybased Mom’s Gourmet custom-made seasonings and sauce. Other recent retail additions have included Whole Foods Market’s mid-Atlantic region, a chain of markets in Michigan as well as a retailer in New Mexico. The products — which have names like Wow-A Chihuahua and Black Dog Belly Rub — also have been picked up by gourmet food and gift shops in Pennsylvania, Virginia, Georgia, Maryland, Wisconsin, California and Michigan, as well as the District of Columbia. Initially, the duo’s efforts were given as gifts to family and friends under the moniker “Mom’s Gourmet.” In 2008, the pair decided to take their creations to the commercial stage. Ms. Koepke also is principal partner with McHale & Koepke Communications, a Solon-based marketing and communications firm.

Phone 216-772-3112 Fax 216-672-4459

Cleveland 44105 www.expressmessengerllc.com

automatically receive the new Crain’s Small Business Report. But if you aren’t already receiving our e-mails — and come on, they’re free — you can do so by visiting www.CrainsCleveland.com/ signup.

What do You Value? Maybe it’s advice from accounting and tax professionals to help your business grow and thrive.

We Value that too. 216.241.3272 or www.meadenmoore.com

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

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MARCH 14 - 20, 2011

CREDIT UNIONS

RANKED BY DEC. 31, 2010 ASSETS

Name Address Rank Phone/Web site

Assets (millions) Dec. 31, 2010 Dec. 31, 2009

% change

Loans (millions) Dec. 31, 2010

Shares & deposits (millions) Number of Dec. 31, 2010 members

Membership groups

Top executive Title

Seven Seventeen Credit Union 3181 Larchmont Ave. NE, Warren 44483 (330) 372-8100/www.sscu.net

$759.1

$765.3

-0.8%

$494.7

672.6

73,761

Live, work, worship, attend school in Trumbull, Mahoning, Columbiana, Portage or central Stark County communities

Gary Soukenik CEO

Century Federal Credit Union 1240 E. Ninth St., Room 719, Cleveland 44199 (216) 535-3200/www.cenfedcu.org

$312.7

$310.2

0.8%

$217.4

286.9

26,196

Open to federal government agencies and any Northeast Ohio business, association, municipality or educational institution

Tony Coniglio president, CEO

Firestone Federal Credit Union 1200 Firestone Pkwy., Akron 44317 (330) 379-6400/www.fofcu.com

$242.2

$233.7

3.6%

$45.6

209.2

12,908

Bridgestone/Firestone employees

Wayne A. Chapman president, CEO

Firefighters Community Credit Union 2300 St. Clair Ave., Cleveland 44114 (216) 621-4644/www.ffcommunity.com

$177.0

$139.3

27.0%

$127.4

156.9

24,930

Open to everyone in Cuyahoga and Lake counties

Ben Laurendeau president, CEO

GenFed Federal Credit Union 85 Massillon Road, Akron 44312 (330) 784-5451/www.genfed.com

$174.8

$171.7

1.8%

$105.9

145.8

19,434

Ford, ASW, Reiter Dairy, Quality Mold, Rubbermaid and many other local companies

Joyce R. Jones president, CEO

BFG Federal Credit Union 445 S. Main St., Akron 44311 (330) 374-2990/www.bfgfcu.org

$168.2

$172.5

-2.5%

$102.9

149.5

28,454

Individuals who live, work, worship, volunteer or attend school in Summit County

Michael J. Owens president, CEO

Cardinal Community Credit Union 8500 Westport Drive, Mentor 44060 (440) 266-2200/www.cardinalcu.com

$153.7

$160.7

-4.4%

$76.9

136.2

17,400

All who work, live, attend school or worship Christine Blake in Cuyahoga, Lake, Geauga and Ashtabula president, CEO counties

Ohio Catholic Federal Credit Union 13623 Rockside Road, Garfield Heights 44125 (216) 663-6800/www.ohiocatholicfcu.com

$150.6

$141.2

6.6%

$97.7

137.2

17,950

Any person connected with the Catholic Diocese of Cleveland and/or Diocesan parishes, schools, or organizations

Randall A. Trimm CEO

Lormet Community Federal Credit Union 2051 Cooper Foster Park Road, Amherst 44001 (440) 960-6600/www.lormet.com

$144.3

$140.1

3.0%

$79.6

125.1

20,900

Lorain County residents

Daniel R. Cwalina president, CEO

Associated School Employees Credit Union 1690 S. Canfield Niles Road, Youngstown 44515 (330) 792-4000/www.asecu.com

$144.2

$147.5

-2.3%

$83.6

127.9

22,216

Lives, works, worships or attends school in Michael Kurish Mahoning, Trumbull or Columbiana counties president, CEO

Vacationland Federal Credit Union 2409 East Perkins Ave., Sandusky 44870 (419) 625-9025/www.vlfcu.org

$137.8

$131.6

4.7%

$80.5

124.7

15,442

Lives, works, worships or attends school in Kevin Ralofsky Erie County CEO

School Employees Lorain County Credit Union Inc. 340 Griswold Road, Elyria 44035 (440) 324-3400/www.selccu.org

$133.9

$129.5

3.4%

$69.5

122.9

11,775

Employees of educational entities in Lorain County, other miscellaneous employer groups

CSE Federal Credit Union (1) 1380 Market Ave. North, Canton 44714 (330) 452-9801/www.csefcu.com

$130.5

$116.3

12.2%

$92.9

118.4

25,886

Open to persons who live, work, worship or R. Stanley Barnes attend school in Stark County CEO

Ohio Educational Credit Union 2554 E. 22nd St., Cleveland 44115 (216) 621-6296/www.ohioedcu.com

$114.8

$111.6

2.8%

$92.3

104.5

20,473

Employees, students and alumni of public and private schools and colleges in Ohio

Jerome R. Valco CEO

PSE Credit Union Inc. 5225 Regency Drive, Parma 44129 (440) 843-8300/www.psecreditunion.org

$106.3

$102.0

4.2%

$53.3

93.6

22,372

Anyone who lives, works, worships or attends school in Cuyahoga or Medina counties

Janice L. Thomas president, CEO

Stark Federal Credit Union(1) 4100 Dressler Road NW, Canton 44718 (330) 493-8325/www.starkcu.org

$95.4

$91.2

4.5%

$32.5

83.7

12,293

Anyone who lives, works, worships or attends school in Stark or Carroll counties

Nino J. Gemma president, CEO

Best Reward Credit Union 5681 Smith Road, Brook Park 44142 (216) 367-8000/www.bestrewardcu.coop

$95.1

$104.4

-9.0%

$36.2

75.0

13,350

Those who live, work, worship or attend school in Cuyahoga, Lake, Geauga, Medina, Summit, Lorain, and Portage counties

John J. Shirilla president, CEO

Golden Circle Credit Union(1) 4118 Lincolnway E., Massillon 44646 (330) 479-3130/http://goldencirclecu.com

$94.9

$98.1

-3.3%

$31.7

78.9

14,982

Live in Stark County

Jeffrey McClain CEO

Cleveland Selfreliance Federal Credit Union 6108 State Road, Parma 44134 (440) 884-9111/www.clevelandselfreliance.com

$81.9

$77.8

5.2%

$46.4

68.6

4,407

Ukrainian American community

Orest Liscynesky treasurer, manager

Buckeye State Credit Union 155 E. Voris St., Akron 44311 (330) 253-9197/www.buckeyecu.org

$77.9

$78.0

-0.0%

$45.9

64.4

19,124

Community membership in Shaker Heights and Summit, Stark, and Lake counties

N. Sue Preston CEO

Lakeview Federal Credit Union 2909 State Road, Ashtabula 44004 (440) 998-2707 /www.lakeviewfcu.com

$75.8

$70.0

8.2%

$48.0

66.2

8,180

Live, work or worship in Ashtabula County

Sherry S. Cornell CEO

Towpath Credit Union(2) 645 N. Main St., Akron 44310 (330) 664-4700/www.towpathcu.com

$72.2

$67.7

6.6%

$31.8

63.4

11,932

Lives, works, worships or attends school in Alan McArthur Akron, Fairlawn, Cuyahoga Falls, Bath and CEO townships of Copley and Richfield

Taleris Credit Union Inc. 1250 E. Granger Road, Cleveland 44131 (216) 739-2300/www.taleriscu.org

$71.5

$76.4

-6.4%

$34.3

58.1

11,887

Individuals who live, work, worship or attend school in Cuyahoga County and select groups and organizations

Unity Catholic Federal Credit Union 5839 Ridge Road , Parma 44129 (440) 886-2558/www.unitycatholiccu.org

$65.6

$64.4

1.8%

$29.3

59.6

11,194

Parishioners, families, students, employees Tamlyn M. Straightand organizations within the Catholic Schervish Diocese of Cleveland CEO

Community First(1) 2043 E. Prospect Road, Ashtabula 44004 (440) 997-5919/www.hereforeveryoneonline.com

$64.4

$62.5

3.0%

$24.6

53.9

6,359

Live, work, worship in Ashtabula County

Mike Riesterer CEO

Community One Credit Union of Ohio 6583 Frank Ave. NW, North Canton 44720 (330) 305-3050/www.c1cu.com

$60.3

$57.7

4.4%

$23.2

55.8

5,300

Serving Stark County

Evelyn L. Canterbury president, CEO

Medina County Federal Credit Union 1353 Reimer Road, Wadsworth 44281 (330) 334-1023/www.mcfcu.com

$56.0

$52.1

7.5%

$25.7

49.1

7,482

Open to anyone who lives, worships or educates in Medina County

Bud Herrle chairman

Eaton Family Credit Union 333 Babbitt Road, Euclid 44123 (216) 920-2000/www.eatonfamilycu.com

$48.2

$41.7

15.7%

$31.6

43.7

11,857

Eaton Corp., City of Euclid, Lake County, family of existing members

Michael Losneck CEO

Community Star Credit Union 832 Cleveland St., Elyria 44035 (440) 365-7342/www.commstar.org

$47.4

$47.2

0.3%

$33.6

43.8

9,241

Membership is open to the public

Ernie Jackson president, CEO

Emerald Group Credit Union Inc. 5422 E. 96th St., Suite 110, Garfield Heights 44125 (216) 581-5581/www.emeraldgcu.com

$46.8

$42.2

10.9%

$32.0

42.1

8,610

Individuals who live, work, worship or attend school in Cuyahoga County

John R. Martin CEO

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. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Information is from the National Credit Union Administration, www.ncua.gov. (2) Financial data is from American Share Insurance, www.americanshare.com. Membership number from www.creditunions.com.

Brent T. Binkley president, CEO

Robin D. Thomas president, CEO

RESEARCHED BY Deborah W. Hillyer

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Fairmount: Quick work plays well at Hiram continued from PAGE 3

Fairmountâ&#x20AC;&#x2122;s Kent plan calls for construction of three multi-story buildings with retail space at street level and office space and marketrate apartments on upper floors. Mr. Ruttenberg is confident financing for the Kent project can be closed soon, in part because Fairmount and partner Premier Development Co. of Cleveland have raised the equity for the project and leased 87% of the 197,000-squarefoot complex. Pizzuti Development Co. of Columbus is developing a hotel and conference center as part of the complex. Tenants lined up for Kent include an Aladdinâ&#x20AC;&#x2122;s Eatery, a Brico Italian restaurant and Daveâ&#x20AC;&#x2122;s Cosmic Subs. A unit of Kent-based Davey Tree Co. and Ametek Technical & Industrial Products, a Kent-based unit of Berwyn, Pa.-based Ametek, also have leased most of the office space. â&#x20AC;&#x153;Kent is a unique market,â&#x20AC;? Mr. Ruttenberg said. â&#x20AC;&#x153;There is a supply deficit in so many key retail areas, but you canâ&#x20AC;&#x2122;t simply count on the university to be the sole traffic driver.â&#x20AC;? For example, at one of Fairmountâ&#x20AC;&#x2122;s early university projects at Virginia Tech in Blacksburg, Va., the Cold-

Randy Ruttenberg, a Fairmount principal, said the firm targeted universities as a potential market in 2006, well prior to the downturn, because they present similarities to urban redevelopment projects and offer opportunities for prospective national and regional tenants the firmâ&#x20AC;&#x2122;s principals knew. Not all the effort went into typical development tasks; Mr. Ruttenberg and others describe working in the world of academia as a high barrierto-entry market that requires complicated land assembly and other obstacles compared with greenfield development. â&#x20AC;&#x153;We learned how to speak and perform in the college vernacular,â&#x20AC;? Mr. Ruttenberg said of the university market. â&#x20AC;&#x153;Working in a university setting requires patience and transparency. While there are better ways to make money in our industry, it allows us to make contributions and receive minimum acceptable returns.â&#x20AC;?

Beyond the schools Demolition of multiple old buildings in the downtown Kent project already is under way.

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water Creek and Talbotâ&#x20AC;&#x2122;s womenâ&#x20AC;&#x2122;s stores serve the general community. A key part of the planned Toledo project is a two-level Barnes & Noble Bookstore, which occupies 16,000 square feet of that developmentâ&#x20AC;&#x2122;s 20,000 square-foot retail component, which will have apartments on the upper floors. â&#x20AC;&#x153;With these bookstores, there is a growing trend to bring the university bookstore out of the student center to help anchor college town projects,â&#x20AC;? Mr. Ruttenberg said. â&#x20AC;&#x153;They will also serve as the community bookstore with community-oriented events, such as childrenâ&#x20AC;&#x2122;s story times.â&#x20AC;?

Size advantage Rochester provides an opportunity Mr. Ruttenberg relishes because it provides the largest site Fairmount has worked on in a university setting â&#x20AC;&#x201D; 16 acres now devoted to parking lots and several old buildings. Thanks to the size of the parcel, the project will encompass about 500,000 square feet of ground-level retail, office and residential use. From the universityâ&#x20AC;&#x2122;s side, the projects offer a chance to leverage their strength and sometimes unused

land to greater advantage in the competitive higher education arena. Ronald Paprocki, senior vice president of administration and finance at the University of Rochester, said the institution sought to develop the site to shape the environment at its doorstep. â&#x20AC;&#x153;Our campus is embedded in the city of Rochester,â&#x20AC;? Mr. Paprocki said. â&#x20AC;&#x153;To have safe, vibrant neighborhoods around our university is important to our staff. Having amenities for students and the staff is also important.â&#x20AC;? Fairmount was selected for the project through a competitive process that attracted nine developers. â&#x20AC;&#x153;We selected Fairmount because of the business terms â&#x20AC;&#x201D; it is shouldering the financial risk of the project â&#x20AC;&#x201D; and the energy and effort they put into the process,â&#x20AC;? Mr. Paprocki said. â&#x20AC;&#x153;They got immediately what we are trying to accomplish. They reached out to the neighbors and the city in an impressive way.â&#x20AC;?

A change of pace While long deliberations are typical for such undertakings, Hiram College president Thomas Chema prized Fairmountâ&#x20AC;&#x2122;s ability to get a project done quickly. In September 2008, another developer was unable to get funding

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for a planned residential development in Hiram, while the college needed units to house a rapidly growing enrollment. Mr. Chema said Fairmount quickly prepared and executed a plan to build a townhouse-style development housing 140 students on college-owned land. By August 2009, the $6.5 million complex was ready. While Mr. Chema said Fairmountâ&#x20AC;&#x2122;s ability to move quickly was important for Hiramâ&#x20AC;&#x2122;s situation, itâ&#x20AC;&#x2122;s atypical in academia, especially for harddriving types such as realty developers. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s probably frustrating for them,â&#x20AC;? Mr. Chema said. â&#x20AC;&#x153;The academy moves so slowly. Itâ&#x20AC;&#x2122;s not like working for a government or corporate CEO. There are so many stakeholders to satisfy, such as students here who want to have a voice and some role for the faculty. The effect is to slow everything down.â&#x20AC;? For his part, Mr. Ruttenberg said he believes he could build a huge shopping center in less time than the typical, smaller, university mixed-use project takes. However, few such things took shape recently. Moreover, Fairmount likes the niche so much it will remain in the university marketplace. It regularly attends higher education summits and trade fairs to prospect for more projects. â&#x2013;

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THEINSIDER

THEWEEK MARCH 7 - 13 The big story: American Greetings Corp. announced that Ohio will remain part of its address, but the company isn’t ready to fill in the exact city in Northeast Ohio that will serve as its corporate home. CEO Zev Weiss wouldn’t put a specific date on when American Greetings will make its final headquarters decision. With two Chicago-area sites ruled out, American Greetings is considering five local locations: Brooklyn, which has been in its home for 50 years, as well as Beachwood, Brecksville, Independence and Westlake. See editorial, Page 10 Stay tuned: Gov. John Kasich in his first State of the State speech confirmed that the budget he will deliver to the General Assembly this week must close an $8 billion gap. Although he said he planned a significant restructuring of government, he only briefly discussed those plans. Those details will wait until Mr. Kasich delivers his budget on Tuesday. After briefly recounting successes in the first seven weeks of his administration, Gov. Kasich focused on his long-term goals. “You ain’t seen nothing yet,” he said.

Staying the course: First Interstate Properties Ltd. plans to exercise its option to buy the 90-acre Cleveland Heights portion of the former Oakwood Country Club. Lyndhurst-based First Interstate last December bought about 63 acres of the defunct Oakwood course in South Euclid to develop a shopping center and to donate part of the land to the suburb for a park. First Interstate president Mitchell Schneider said the developer is continuing to look at Oakwood’s former clubhouse and surrounding area as a campus-like senior citizen housing development, though it’s still fine-tuning plans. On the move: Michael B. Petras Jr., a career General Electric Co. executive who most recently was president and CEO of GE Lighting, is taking the top executive post at the company that owns Edgepark Medical Supplies and Independence Medical in Northeast Ohio. HGI Global Holdings Inc., a provider of specialty medical products to patients with Petras chronic diseases, named Mr. Petras its CEO effective March 21. Maryrose Sylvester, a 23-year GE veteran, was named to replace Mr. Petras at GE Lighting. Passing grade: After months of uncertainty about its future, Chancellor University in Cleveland announced it has maintained its accreditation. The Higher Learning Commission in Chicago — the accrediting body for the for-profit institution — issued Chancellor a “show-cause” order in February 2010, which gave the university almost a year to show it’s deserving of continued accreditation. The commission questioned whether Chancellor met accreditation criteria related to board governance, finances and assessment of student learning. The commission instituted a review process that gave the school several months to improve its operations and finances. That process culminated in the decision to remove Chancellor from show-cause status. This and that: The Federal Aviation Administration awarded the city of Cleveland nearly $20 million to improve the runway safety area at Cleveland Hopkins International Airport. … Linda L. Bluso, partner-in-charge for the Cleveland office of Brouse McDowell, will take over as head of Baldwin-Wallace College’s division of business administration — one of the largest programs of its kind in the state. Ms. Bluso starts at Baldwin-Wallace April 1, but will continue to be of counsel with Brouse McDowell.

To keep up with local business news as it happens, visit www.CrainsCleveland.com.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

CWRU law students reap client tidy sum ■ Case Western Reserve University School of Law students last month obtained the largest jury verdict in the Milton A. Kramer Law Clinic’s history: $1.12 million. A Cuyahoga County jury awarded the money to a family victimized by a fraudulent home-repair and financing scheme. Three pairs of law clinic interns — most recently current third-year students Brant DiChiera and Jennifer Hadley — have handled the case since September 2008 under the supervision of clinic professor Andrew Pollis. The case was tried Feb. 10 before Cuyahoga County Visiting Judge John E. Corrigan. Mr. DiChiera and Ms. Hadley handled most of the trial, from jury selection to closing arguments. Hearing the verdict read, and realizing the jury was granting the money requested and more, was exciting, said Mr. DiChiera, who’s set to graduate in May. “It was a great experience,” he said. “In this case, we had the opportunity to go all the way to trial, to have it in front of eight jurors. That’s something most law students never get to experience. “The economy for a lot of jobs is really terrible right now,” Mr. DiChiera added. “Obviously, this adds something on our résumé that not a lot of people are going to have.” The other students who handled the case are: Aaron Minc and Alix Emerson, Class of 2010, and Nakedra Byrd and the late

WHAT’S NEW

Michael Spivak, Class of 2009. The law clinic provides legal services to members of the community unable to afford legal counsel. — Michelle Park

Ah, for those heady days before the recession ■ Endowments at Northeast Ohio’s public and private universities are on the rebound, but they still haven’t recovered fully from the crippling recession. Case Western Reserve University’s endowment recorded a 10.5% return on investments in 2010, which brought the endowment’s total assets as of Dec. 31 back to about $1.6 billion, according to chief investment officer Sally Staley. It’ll take about a year and a half of similar returns to bring the endowment back to the level before the stock market plummeted in 2008, she said. CWRU was able to rebuild its endowment by restructuring its portfolio to deliver more consistent and reliable returns instead of just maximizing total return at any cost, Ms. Staley said. “We’ve done a good job,” Ms. Staley said. “We’ve protected the university from the volatility of the financial markets.” Other universities reported similar returns. Among them was Kent State, which saw its endowment rise about 15% in 2010 to finish the year with total assets of $109.1 million. That’s a far cry from 2009, when Kent State’s endowment saw a 20% decline. Gene Finn, Kent State’s vice president for institutional advancement, said the endowment is

Schools can learn a thing or two from these programs

TCP, a maker of energy-efficient lighting products, hopes consumers take a shine to its new TruDim CFL series, billed as the first fully dimmable compact fluorescent lamps available in the United States. The CFL design “greatly improves the dimming range, warm-up time and life expectancy of current dimmable CFL technology,” according to TCP. “This is really an exciting improvement,” says Ellis Yan, CEO of TCP. “For the first time, we have energy-efficient CFLs that dim to the same low levels as incandescent bulbs.” The TruDim lamps offer a long life — rated at 12,000 hours under normal use, TCP says. TCP says the lamps incorporate the company’s digital InstaBright technology, which allows full brightness 75% faster than comparable CFLs. TruDim also allows for turning on the lights at a low-dimming level, eliminating the need to set the dimmer to full-on when the lights are turned on, the company says. TruDim CFLs are available in 16 watt R30, in a variety of color temperatures, from soft white 2700-Kelvin to daylight 6500-Kelvin. For information, visit www.tcpi.com. Send new product information to managing editor Scott Suttell at ssuttell@crain.com.

Pension consultant sets up downstate outpost ■ Trinity Pension Consultants Inc. in Montrose has expanded into Columbus. The third-party administration firm planned the move for more than a year and now has a full-time retirement plan consultant working from its new office there, said Anthony Warren, principal. This summer, Mr. Warren’s business partner, Kevin Bergdorf, also will make the move to Columbus to add sales support and “credibility and seriousness” to the venture, Mr. Warren said. The opening of the Columbus office is part of recent growth for Trinity, which opened in 2006. Last August, the company moved its offices from a 1,500-square-foot location in Fairlawn to one in Montrose that measures 5,000 square feet. It also has hired four people in the past nine months. The firm will focus on creating brand recognition in the Columbus and Cincinnati markets, Mr. Warren said. — Michelle Park

BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.

COMPANY: TCP Inc., Aurora PRODUCT: TruDim CFL Series

“definitely headed in the right direction.” College endowments in the aggregate saw positive returns from every asset class except for real estate over the last fiscal year, which ended in June, according to a recent survey from the National Association of College and University Business Officers Commonfund Study of Endowments. Domestic equities provided some of the largest gains, with increases of up to 15.6%, while investments in non-campus real estate delivered a negative 15.8% return. — Timothy Magaw

■ Bloomberg Businessweek ranked the 50 best undergraduate business programs in the United States, and two of them are in Ohio. At No. 22 was Miami University, where 69.7% of students land internships and 87% land jobs, with median starting salaries of $47,438, according to the magazine. Top industries for students there are accounting, financial services and consumer products/retail. Case Western Reserve University was ranked No. 40. The magazine said 76% of its students land internships, while 71% land jobs with median salaries of $45,000. Top industries are financial services, technology, science and manufacturing. Bloomberg Businessweek ranks undergraduate business programs in nine areas, including surveys of senior business majors and corporate recruiters, median starting salaries for graduates, and the number of alumni each program sends to top MBA programs. It also calculates an academic quality rating for each program by combining average SAT scores, student-faculty ratios, class size in core business courses, the percentage of students with internships, and the number of hours students devote to class work.

Many NE Ohio companies are doing admirable work ■ Fortune magazine released its annual list of the country’s most admired companies, and several Ohio firms made the cut.

The list is based on surveys of business people. Twelve Ohio companies ranked among the top six for their particular industries, including Goodyear Tire & Rubber Co. (No. 2), Eaton Corp. (No. 4) and Parker Hannifin Corp. (No. 6). Two other Northeast Ohio giants — FirstEnergy Corp. and KeyCorp — each ranked as the 10th most-admired company in their industries. The country’s most-admired company: Apple. (And you have to admire the knack the company has for extracting money from consumers who must have the latest shiny gadget.)

If only all the stocks in your portfolio performed this well ■ March 9 was the two-year anniversary of the stock market bottom in the recession, and the MarketBeat blog at The Wall Street Journal took a look at the 30 biggest movers off that floor. Cleveland-based mining company Cliffs Natural Resources Inc. was one of the big winners, rising 629.6% to $94.56 per share on March 1 of this year from $12.96 on March 9, 2009, according to statistics compiled by S&P Indices. That rise was good for 12th place on the list. Two other Ohio-based companies made the top 30: Fifth Third at No. 3, up 904%, and Huntington Bancshares at No. 21, up 508.3%. Commercial real estate brokerage CB Richard Ellis, which has offices in Cleveland and Akron, jumped 807.4%, while Ford Motor Co. rose 742.5% per share. For the full report, visit http://tinyurl.com/4w88yg7.

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