Crain's Cleveland Business by Crain's Cleveland Business

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$2.00/MARCH 19 - 25, 2012

NorTech to play bigger shale role Group will prepare potential employees, push area companies to supply industry By CHUCK SODER csoder@crain.com

In NorTech’s eyes, shale gas counts as advanced energy. The economic development group aims to help Northeast Ohio capitalize on the anticipated shale gas

boom, a move that represents a change of pace for NorTech. The organization will continue pursuing its main focus, which is to help nascent technology industries take root in Northeast Ohio. The industries to which it gives most of its attention are advanced energy

and flexible electronics. In this case, however, it’s already clear that eastern Ohio is about to undergo a major increase in shale gas drilling. Oil and gas companies are scooping up land, drilling test wells and making big statements about how much money they’ll spend in Ohio over the next few decades. Even so, NorTech has a role to play, said vice president Dave Karpinski, who heads the nonprofit’s Energy Enterprise initiative, which focuses

on creating jobs related to advanced energy. Though evidence suggests that a drilling bonanza is on the way, the oil and gas companies could end up buying parts and services from outof-state companies, Mr. Karpinski said. And many of the new jobs could go to more experienced workers from out of state, he said. NorTech can help solve those problems, he said. The nonprofit

Agencies, businesses collaborating better could solve problems

By CHUCK SODER csoder@crain.com

As fuel prices have continued to rise, Northeast Ohio companies are pushing to develop an alternative using natural gas. PAGE 3 ALSO: ■ Merger activity brisk among credit unions locally and nationally. PAGE 3

Kasich eyes improved work force training

After 26 years, GE engineer’s 106 inventions — and counting — continue to impact company

See PATENTS Page 21

Interest in converting to natural gas cars grows

See SHALE Page 22

PATENTED APPROACH

n high school, Louis Nerone read a manual detailing how to build devices using transistors made by the General Electric Co. It’s no wonder that he’s now the most prolific inventor at GE Lighting. Dr. Nerone received his 106th patent in December, 26 years after he began working for the East Cleveland-based division of GE. Almost all of his inventions are designed to help regulate the flow of electricity through all types of GE light bulbs. They can be found in GE light bulbs all around the world, but they’re not easy to see, given that they’re hidden in the base of lamp, said Dr. Nerone, 61. “The stuff that we work on in here — you don’t even see it,” he said last week from his lab at GE Lighting’s Nela Park campus.

INSIDE

By JAY MILLER jmiller@crain.com

JANET CENTURY

GE Lighting engineer Louis Nerone has 106 patents to his name, one of which being an LED driver (in his right hand and magnified) used in the light engine in his left hand.

Brian Sooy, president and creative director of Sooy+Co of Elyria, understands better than most businesspeople about work force development, since his marketing and design firm has developed communications programs and websites for some of Lorain County’s economic development and job creation organizations. So he knows how tough it is for businesses, government job training agencies and colleges to make sure that students are learning the skills that will produce qualified employees for the jobs companies are trying to fill. Yet it still surprised him that there was a government program to help him hire an unemployed web designer who only was lacking familiarity with a few key software programs his company used. So he called the agency that administered the program, The Employment Network, a Lorain County group that offers the unemployed help with job-search skills and helps employers fill jobs. See TRAINING Page 20

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3/15/2012

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

INSIGHT

Merger opportunities grow for credit unions Tight revenues, burden of regulatory compliance are fueling deals By MICHELLE PARK mpark@crain.com

Ben Laurendeau has engaged in merger talks before, but never three times in three months. Mr. Laurendeau, the president and CEO of Firefighters Community Credit Union in Cleveland, says his institution is considering a trio of mergers. One was approved in February by his board and the other institution’s board, and the deal should close by midyear. Discussions

with the other two continue. All three of the credit unions approached Firefighters Community in recent months. “I can’t remember a time when I’ve ever been having three separate conversations all at the same time,” Mr. Laurendeau said. “It’s never happened for me.” His institution’s discussions are only one indicator of increased merger activity among credit unions in Ohio and nationwide. Of the trend, he said, “I think

some of the small credit unions are beginning to feel defeated.” Many of those turning to mergers are doing so because they lack options for leadership succession and are struggling with unprofitability and the heavy cost of regulatory compliance, industry insiders say. At the same time, the low interest rate environment and low consumer demand have pinched revenues. Data from the National Credit Union Administration reveal a 23% increase in mergers in 2011 from

2010, to 236 from 192. Prior to last year, mergers were on the descent, falling in 2009 and 2010. Many, including Mr. Laurendeau, anticipate merger activity to continue to grow. Couple the merger activity with the lack of new Ohio credit unions being chartered — only one has been chartered by the state in nearly 20 years — and it’s clear their numbers are falling. From 2001 to 2011, the state’s number of credit unions dropped by 204, or more than 35%, to 377, according to Callahan & Associates See MERGERS Page 12

THE WEEK IN QUOTES

— NorTech vice president Dave Karpinski, who leads the nonprofit’s Energy Enterprise initiative. Page One

— Robert Garber, co-managing director of the Cresco brokerage in Independence. Page 15

■ A March 12, Page 3 story on the practice known as “reshoring” misspelled the name of American manufacturing advocate Harry Moser.

Region 3

2011

236

2010

192

2009

237

2008

278

2007

251

“The crystal ball that was fogged over in 2009 became clear.”

■ Lake Erie Monsters senior vice president and chief operating officer Mike Ostrowski’s title was misstated in a March 12, Page 12 story on the Monsters’ ticket prices rising.

Nation

By DAN SHINGLER dshingler@crain.com

— Rich Frank, CEO of Guidestone, which is rebranding itself from its former name, Berea Children’s Home & Family Services. Page 10

CORRECTIONS

Year

As gasoline prices rise, so does interest in fuel system conversion

“As we went into new communities, it became difficult to explain who we were. We had to first explain who we were not.”

— Georgene Crosby, a University Circle resident who took advantage of the Greater Circle Living program. Page 18

The National Credit Union Administration compiles data on credit union merger activity; the data show a jump in 2011 over 2010. (Ohio is in NCUA’s Region 3.)

FUEL SHIFT SEEMS NATURAL

“No one group is poised to do what needs to be done in Ohio.”

“You move to the suburbs, and you’re paying double taxes plus you’ve got the commute. Here, you’ve got everything around you.”

COME TOGETHER

RUGGERO FATICA

s the price of gasoline continues to rise and the price of natural gas continues to fall, the argument for converting vehicles from one fuel to another is becoming more compelling and a few Northeast Ohio entrepreneurs — as well as some established companies — stand to benefit. “Natural gas is a game changer for high-mileage automobiles,” says Brad Trembath, president of NatGasCar LLC in Cleveland, a venture formed in 2008 by local entrepreneur Dan T. Moore to capitalize on fuel-system conversions for vehicles. “An $80 fill-up with gasoline can be reduced to $25 with natural gas,” Mr. Trembath said. “And because natural gas burns clean with 25% less carbon dioxide emissions, less greenhouse gases are emitted into the atmosphere.” That’s pretty much the crux of the argument for folks such as Mr. Trembath and Mr. Moore: Why wouldn’t anyone convert, they ask? They will, they are and they soon will do so in even larger numbers, said

Brad Trembath, president of NatGasCar LLC in Cleveland, says natural gas as an alternative fuel for cars is a “game changer.” He’s pictured here in the back of a converted truck with a gas cylinder.

See NATURAL Page 11

Software firm’s $5M investment timed perfectly By JAY MILLER jmiller@crain.com

Kvamme visit, Silicon Valley ties assist LineStream

An impromptu visit to a local company last summer by Gov. John Kasich’s jobs guru paid a handsome dividend last week. LineStream Technologies Inc., a young Cleveland industrial software firm, announced it landed a $5 million, second-stage investment from U.S. Venture Partners, a Menlo Park, Calif., venture capital firm. “We’re going to be using that

funding to aggressively grow our team,” said company president David Neundorfer. “The timing is absolutely perfect for us to get this funding. We have new opportunities we’re exploring currently with major providers and the workload has been increased dramatically.” Mr. Neundorfer credits Mark Kvamme, president and interim chief investment officer of JobsOhio, with

helping to land the investment. Mr. Kvamme is a former partner in the Silicon Valley venture firm Sequoia Capital who answered a call from his friend Gov. John Kasich in January 2011 to come to Ohio to rebuild the state’s economic development effort as it shifted from a state agency to a private nonprofit. He visited LineStream’s office at the Bloch Building at 2310

Superior Ave. last July 28 as part of a familiarization tour of the state and its emerging businesses. Shortly before Mr. Kvamme’s visit, LineStream had signed a licensing agreement with Texas Instruments Inc., a leading maker of control chips used in motor control systems, that would speed the company’s growth and with that, prompt a need for a capital infusion. “When we met with Mark Kvamme, we had (next-stage) target investors See LINESTREAM Page 8

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CRAIN’S CLEVELAND BUSINESS

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MARCH 19 - 25, 2012

PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

Get radical

onventional thinking won’t save the children who live within the boundaries of the Cleveland Metropolitan School District. It is going to take unconventional measures, such as those proposed by Mayor Frank Jackson in his School Transformation Plan, for Cleveland to have a fighting chance at success in educating its young people. And the only way those measures can be put in place is if members of the General Assembly have the guts to approve legislation that would clear the way for their implementation. Cleveland’s mild-mannered mayor has donned his radical hat in promoting the transformation plan. The Democrat has done so at his political peril because of the potential backlash from organized labor, which views the plan as an attack on age-old work rules that are standard fare for teachers in their collective bargaining agreements. Mayor Jackson is undeterred. So is Cleveland schools CEO Eric Gordon, who told Crain’s the laws and work rules that apply to teachers “were created under a civil service paradigm.” The result of decades of this model is a 275-page contract that shackles the district not only when it comes to personnel decisions, but also in putting together the school calendar and figuring out transportation schedules. “The question I want to ask is, ‘Are these the work rules we need today?’” Mr. Gordon said. Eliminating seniority as the sole criterion for determining which teachers must be let go first when layoffs are necessary is but one aspect of the proposed plan. Mr. Gordon also would like to institute “differential compensation,” where the district could give more pay to teachers who, for example, work with special education students. Besides giving school officials greater collective bargaining room, the plan would set aside a portion of levy proceeds for charter schools that are sponsored by the district. Mayor Jackson sees this revenuesharing arrangement as critical if the district is to get families of the 14,000 Cleveland schoolchildren who already attend charter schools to buy into a levy that the district wants to put on the ballot this fall to help deal with a $65 million deficit. Among the other intriguing elements of the plan is the Transformation Alliance. It would be a group composed of parents, educators, business people and civic leaders who would evaluate district schools — as well as public and private charter schools — on common performance standards. It would recommend which schools should be supported and which should be closed or cut off from public money. However, the plan will go nowhere unless lawmakers in Columbus become radicals, too, and back legislation that would allow its implementation. Democrats will need to act against convention by voting for a bill that unions may not like, while Republicans will need to support the cause of a big-city mayor who’s a Democrat. As they deliberate the measure in coming weeks, they should keep in mind Mayor Jackson’s simple question: “Either this, or what?” The status quo isn’t working. Radical change must come.

FROM THE PUBLISHER

Kasich sticking with what’s worked

and it’s scheduled for a vote. Then, we’ll ast week, our government reporter, run it through our process.” Jay Miller, delved into a nascent That was Linda Woggon, executive movement to convert Ohio vice president for governmental affairs into a so-called “right-to-work” at the Ohio Chamber of Commerce. Joe state, a move that would prohibit forcing Roman, head of the Greater Cleveland workers to pay union dues as a condiPartnership, the region’s chamber of tion of employment. After last fall’s commerce, told Jay that GCP hadn’t blistering defeat of a broad attack on even discussed the idea. government unions by the state Gov. Kasich, who was a vocal Republican leadership, a small BRIAN leader in the anti-union effort conservative GOP faction did TUCKER that was passed as Senate Bill 5 some polling that indicated supbut then defeated by Ohio voters port for a right-to-work law here. last November, seems disinterThat might not be surprising, ested in yet another fight with given the state’s broad base of the state’s unions right now. conservative, Republican voters. When asked by Jay for a comOften, during the debate over ment, the governor’s spokesstate workers’ unions, polling woman, Connie Wehrkamp, showed deep sentiment in favor wrote in an email: “Re-creating of changing the overly generous a jobs-friendly environment is essential benefits — especially the pension to getting Ohio back on track. We’ve funding — in state workers’ contracts. successfully cut taxes, torn down However, that doesn’t translate to regulatory barriers to job creation and business groups’ support, according to replaced our antiquated economic Jay’s reporting, and perhaps this quote development agency with a new, more from his front-page story last week is effective private sector corporation.” the most telling: “We won’t even begin In other words, we’re sticking to our to take a look at it until it’s on the ballot

knitting, and staying with strategies that seem to actually be helping, and that aren’t divisive. Good choice. **** EACH SPRING, WE PARTNER with EDGE, a local economic development organization, to honor the region’s midsize companies that are creating value, wealth and jobs in Northeast Ohio. The intent of the Crain’s Leading EDGE Awards is to applaud the companies that are the true drivers of our economy, and spread the formula of their success to others. Crain’s and EDGE are attempting to identify companies with revenues between $5 million and $750 million that sell at least part of their goods or services outside our region. They are not only creating jobs, but collectively are buying an enormous amount of supplies and services from other businesses here. The intent of the Crain’s Leading EDGE Awards is to honor these companies and show others how they have succeeded. If you know of such a company, nominate them by visiting www.edgef.org. The nomination deadline is the end of the month. ■

THE BIG ISSUE Will Cuyahoga County’s new form of government help prevent the re-emergence of Dimora-style corruption?

SAM THOMAS

KARI SOLOMON

MATT GUNN

BRANDON KELLY

Cleveland

Bedford

No. … You’re dealing with the frailties of the individual. The person. You’d think that under the old structure … that one of the two others (commissioners) would know what’s going on and would have interceded to arrest it.

It’s depending on a lot of things. … The old saying is absolute power corrupts absolutely. As long as that can be prevented I think the new form of government will succeed.

No. ... They’re already having corruption-based issues. The Plain Dealer has already spotted them with the board of revisions. … One (board member) was a Democrat even though she had to be a Republican for the job.

No. At the end of the day people are still going to be people. You’ve got good people, you’ve got bad people. … Business is no different. White collar crime happens every day.

➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.

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WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS

PERSONAL VIEW

Fracking concerns formed out of fear, despite facts By SPENCER ABRAHAM

n Ohio today, fear of the unfamiliar could stand in the way of progress, opportunity and continued economic recovery. Thanks to technological advancements, a vast, resource-rich formation far under Ohio’s surface now is being safely unlocked. The formation, called Utica Shale, could hold untold billions of dollars in American oil and natural gas. Unlike the Marcellus Shale formation — which is located nearby in states such as Pennsylvania and West Virginia, is shallower, and only

Mr. Abraham is the former U.S. Secretary of Energy and currently chairman and CEO of Abraham & Roetzel, a Washington, D.C.-based public affairs firm and a joint venture with the Roetzel & Andress law firm. touches the eastern sliver of Ohio — Utica Shale rests deep inside Ohio’s border and represents an incalculable economic opportunity for the state and its people. What stands between Ohio and these great resources? Fear. Opponents of unconventional oil and natural gas development have

suggested that there is much to dread from the tightly regulated process of extracting oil and natural gas liquids from Utica Shale. Even the name for the drilling process conjures danger — horizontal hydraulic fracturing, or “fracking.” Set aside the fear and rumors, for a moment, and let’s consider the facts. Ohio sits above an immense formation of minerals. Utica Shale is rich with oil and natural gas liquids. Safely recovering these natural resources will bring muchneeded economic activity and prosperity to Ohio and its people. Meanwhile, opponents of domestic

energy development continue to fan the flames of fear in Ohio. Shale development is too exotic, they claim. The regulations are too weak, the opponents assert. We need Washington and the EPA, rather than energy-producing states, to oversee the entire process, they maintain. All groundless fears, all aimed at halting devel-opment that creates jobs and strengthens our energy security. What has been the result of these two conflicting views? Public confusion. A January 2012 Quinnipiac University poll captured the dissonance. See VIEW Page 6

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CRAIN’S CLEVELAND BUSINESS

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MARCH 19 - 25, 2012

Riverside Co. execs on PR offensive Cast negatively by Romney critics, they detail industry success By MICHELLE PARK mpark@crain.com

Behaving like an ostrich during these times won’t cut it, these executives have decided. So, with criticism of the private equity industry at a high as the presidential campaign progresses for Bain Capital co-founder Mitt Romney, the top executives of The Riverside Co. — this region’s most prolific private equity firm — are sticking their collective neck out to shed a positive light on their industry. Leaders, including co-CEO Stewart Kohl and chief operating officer Pam Hendrickson, have appeared on national news shows and have penned guest articles for various publications. The firm also plans to have about 20 CEOs of Riverside portfolio companies visit Capitol Hill in May, since they’ll be in Washington, D.C., anyway for a Riverside leadership summit. “It is hard to get the word out about the positive role of our industry if you have your head in the sand,” Riverside spokesman Graham Hearns said. “I think we’re unique in that we’re trumpeting the success of private equity.”

The Private Equity Growth Capital Council, an industry advocate, in February launched a multimilliondollar effort called “Private Equity at Work” to promote an image of private equity practitioners as job creators who fix and expand the companies they buy to generate returns for their investors. The image campaign is a direct response to political attacks that threaten the industry’s reputation, according to the organization. Riverside has proven to be one of the council’s “most active firms when it comes to telling the private equity story,” said Ken Spain, vice president for public affairs and communications for the council. One of the first two companies profiled in a video case study series is Riverside-owned Universal SmartComp, a Washington, Pa., company that has added 142 new jobs since being acquired by Riverside in 2007. Universal SmartComp is a nationwide physical medicine network solution in the workers’ compensation industry. A number of private equity players have remained noticeably silent, though, despite the surge of criticism by those who paint the industry as a greedy one that slashes jobs while making off with investment returns. “We have been surprised at the reticence of many of our brethren to get out and talk about the good things that they do,” Ms. Hendrickson said.

She ran into that brick wall herself when she tried within the past year to recruit private equity executives to testify on behalf of a bill to exempt private equity from certain regulation. “I called a few firms in Virginia to see if they would be willing to send someone to testify, and the answer was no,” Ms. Hendrickson said. Some firms expressed a concern that their limited partners — that is, investors — might be uncomfortable with them doing so, she noted. The reality is that the vast majority of private equity firms are too busy raising capital and otherwise conducting their investments to get vocal, said Alex Jones, senior analyst and press officer for Preqin, a provider of data and research on private equity and other alternative investments. “There are a few very high-profile examples of ‘white knights’ for private equity. However, the vast majority of private equity firms are too small, lack the time and resources, or are otherwise disinclined to step into political matters,” Mr. Jones said. As of late, though, it does appear that more are willing to talk, Ms. Hendrickson noted. “We as an industry have got to get the research done,” she said. “We’ve got to have more facts,” according to Ms. Hendrickson. “We’ve got to be out there talking about the good things, about what we do, what the purpose is.” ■

View: Shale potential outweighs unknown continued from PAGE 5

Ohioans said the economic benefits of shale development outweigh environmental concerns, 64% to 29%,

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although 72% say they would like to slow deep shale gas drilling until further studies can examine the effects. What’s at stake economically? A lot. The Ohio Department of Natural Resources conservatively estimates that between 1.3 billion and 5.5 billion barrels of oil and between 3.8 trillion and 15.7 trillion cubic feet of natural gas could come from Ohio’s Utica Shale. The oil and gas industry says this development could create more than 200,000 jobs and generate nearly a half-billion dollars in new state revenues. Local communities would benefit from development as well, as millions of dollars are pumped into their economies for infrastructure development. It’s a cascading, private-sector-driven economic stimulus that touches a robust supply chain fueled by small- and medium-size businesses. While shale development — like virtually every other industrial process — does indeed carry some risk, the relevant thing to keep in mind is that hydraulic fracturing has been successfully and safely employed in the United States for more than 60 years. In that time, some 80,000 wells have been fractured in Ohio alone, according to the Ohio Oil and Gas

Association, and not a single case of drinking water contamination can be attributed to fracturing. It is a record to applaud and maintain. Gov. John Kasich has chosen to exercise caution while remaining fiercely pro-economic development in his Utica Shale-related policies. It is a path that Ohio legislators would be wise to follow. As the governor forcefully articulated in his State of the State address: “We cannot let our fears outweigh the potential.” He is absolutely right. Delaying development of Utica Shale indefinitely, or even temporarily, serves no purpose other than to put Ohio behind other energy-producing states and to postpone economic renewal. Legislative leaders in Columbus have a responsibility to advance common sense policies aimed at protecting the environment while providing a regulatory pathway for the industry to move confidently forward. Ohio legislators face a choice this spring as they consider critical legislation to determine the fate of Utica Shale development: They can give into fear, or they can side with progress, private-sector job creation, expanded opportunity for all and a nation that is more energy secure. ■

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

MARCH 19 - 25, 2012

Cliffs’ dividend hike signals shift LineStream: Tech firm After big acquisitions of past, company now will focus on boosting existing business lines By DAN SHINGLER dshingler@crain.com

Shareholders in Cliffs Natural Resources Inc. last week received a cash gift in the form of a huge dividend increase, and the change in philosophy behind that increase might keep paying off for shareholders going forward if the company and analysts are correct. The Cleveland company with a global business that supplies steel mills with iron ore, coal and other raw materials told shareholders they’ll be getting not the usual 28 cents per share in quarterly dividends, but 62.5 cents per share, or $2.50 per year, beginning June 1. That’s an increase of 123%. Even after Cliffs’ stock price jumped $4.64 per share on March 14, the day after the announcement, to $69.55 per share, the new dividend rate still left the stock with a yield of 3.6% — a little more than the current yield on 30-year U.S. Treasury bonds. Cliffs also told shareholders to expect a new era at the company, which will focus on growing its existing business lines and will take a break from making the big acquisitions of

recent years. For instance, Cliffs last year paid $4.9 billion to acquire Consolidated Thompson Iron Mines in Canada. That deal was preceded in 2010 by the $757 million purchase of West Virginia-based INR Energy and an $88 million buyout of its partners in Newfoundland’s Wabush Mines. Those three deals were keys to Cliffs building up its reserves of iron ore, coal and other steelmaking materials. They have given the company plenty to chew on for the foreseeable future, Cliffs CEO Joseph Carrabba told analysts in a March 14 conference call. “Large scale M&A is no longer our priority,” Mr. Carrabba told analysts in a call that was more an institutional love fest than it was a grilling about strategic rationale. At least three analysts personally thanked Mr. Carrabba for boosting the dividend. Mr. Carrabba said he and Cliffs’ management team will focus on improving the performance of their existing operations, especially its North American coal operations, which have been one of the company’s greatest challenges over the last year as that industry has been relatively flat. That’s exactly what analysts and investors wanted to hear, said David MacGregor, president of Longbow Research in Independence, who follows Cliffs. “This is a big positive for Cliffs,” Mr. MacGregor said. “One of the

concerns on the street was that there may be a lack of discipline after some of the deals that have been done. Essentially, what they’re saying is that you don’t have to worry about that.” Cliffs told analysts it will pay down $1 billion in debt over the next five years and have $700 million in cash at the end of 2012. Mr. MacGregor approves of the strategy. “If they’d have had a call and instead of a big dividend increase they had said, ‘We have another big acquisition’ … I think you’d have seen that stock go down by $5, instead of up $5,” Mr. MacGregor said. But it appears Cliffs and its investors are on the same page, as Mr. Carrabba told analysts the company has achieved the scale and diversity it needed with its acquisitions and now is focused on total shareholder return, including further increasing dividend payouts. In the meantime, the company’s new high yield should help buoy its stock price, and perhaps quash talk of another company attempting to buy Cliffs, Mr. MacGregor said. (Though he, for one, didn’t believe that was a threat recently anyway.) And it might be tough for someone else to make more from Cliffs’ assets than the company can on its own, as Cliffs is well run, he said. “It’s really an attractive balance between earnings growth and cash flow,” Mr. MacGregor said. “With most companies you just get one or the other, but not both.” ■

is gaining momentum continued from PAGE 3

on our whiteboard,” Mr. Neundorfer recalled in an interview last week. “And he was looking over my shoulder and saw the list of targets we hadn’t been introduced to — it’s incredibly important when you’re raising money to find a prime introduction from a credible source. “That following week he introduced us to all three companies we had on that list,” he said. One of those companies was U.S. Venture Partners. Mr. Kvamme had a self-deprecating remark at the ready when asked about the LineStream visit. “Every once in a while I do what I say I’m going to do,” he said with a laugh in a phone conversation as he traveled to Gallipolis to meet with leaders of a company there. “I made three or four introductions and everyone was interested and U.S. Venture Partners got to the finish line.”

Ready for takeoff? LineStream was founded in 2008 to take advantage of technology developed by Zhiqiang Gao, associate professor and director of the Applied Control Research Lab at Cleveland State University. LineStream writes software that can be added to the controls of existing electric motor-powered equipment — everything from washing machines to automated industrial equipment — and can reduce power consump-

tion, often dramatically. It got its first funding in 2008 from Cleveland-based Early Stage Partners and was able to pilot its products at a Parker Hannifin Corp. hose-extrusion plant in Ravenna, where its software reduced power consumption by more than 50%. Mr. Neundorfer said he sees an opportunity to grow the company’s business with Texas Instruments, and then grow beyond that. “Anything that’s automated and controlled, our products can add value there,” Mr. Neundorfer said. The transformative value of LineStream’s software is reflected in the company being nominated for a startup of the year award in the 2012 UBM Electronics ACE Awards contest. The winners of that contest, sponsored by UBM Electronics, will be announced March 27. Mr. Neundorfer said he expects the company to double its staff of five by the end of this year and double again by the end of 2013. LineStream recently moved from the Bloch Building to the Western Reserve Building at 1468 West 9th St. in the Warehouse District. “These are the kinds of companies we want to have in Cleveland and Ohio,” Mr. Kvamme said. “If these guys take off, they’ll take off very quickly and help create a real ecosystem (for venture capital development) for us.” ■

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SEC official: Some private Health reforms driving up costs funds need not register And new data show Agency’s myriad protections unnecessary for sophisticated investors, commissioner says By MARK SCHOEFF JR. Investment News

Just as a new regulation requiring private investment funds to register with the U.S. Securities and Exchange Commission is about to go into effect, an agency official said the regulator should consider lifting the mandate on some managers because they cater to sophisticated investors. SEC commissioner Daniel Gallagher said this month that the agency should offer exemptive relief to some of the private equity and hedge funds that the SEC will oversee beginning March 30. The large, opaque funds were put under the SEC’s purview by the Dodd-Frank financial reform law as a way to better monitor systemic risk in the financial system. In remarks to the Investment Adviser Association compliance conference in Arlington, Va., Mr. Gallagher argued that SEC registration would raise costs for the private funds, investors in which often are high-net-worth individuals and are market-savvy.

to $100 million in assets under management will switch from SEC to state registration by this summer. Even as the net number of advisers under the commission’s watch declines, the assets under management that SEC-registered advisers control will increase from $43 trillion to about $47 trillion, according to Mr. Plaze. The upward trend is based in part on the size and complexity of the private funds. Mr. Gallagher said the funds are an important mechanism for raising capital and contributing to economic growth. “Capital formation leads to job creation, which we could use right now,” Mr. Gallagher said. “The commission cannot and should not attempt to eliminate risk taking.”

The issue of compliance Later in his speech, Mr. Gallagher said the SEC should “find a way to provide more clarity” to the issue of the liability of compliance officers for their firms’ actions. In January, the agency dismissed a case revolving around whether the general counsel of a broker-dealer

“To regulate as if all investors are alike ... would be simplistic and counterproductive.” – Daniel Gallagher, commissioner, U.S. Securities and Exchange Commission “Not all investors need the full protection of securities laws,” said Mr. Gallagher, a Republican commissioner. “To regulate as if all investors are alike … would be simplistic and counterproductive. This expansion of our regulatory reach will not serve to protect retail investors.” However, an SEC staff member who spoke later at the Investment Adviser Association conference cautioned that private funds shouldn’t count on the SEC turning them loose. Robert Plaze, deputy director of the SEC’s Division of Investment Management, said the filing deadline was Feb. 14, which puts it “late in the day” for private funds to appeal their registration. “I would not anticipate broad exemptive relief at this point,” Mr. Plaze said. “If there are any changes in the area, it will be done in Congress.”

Funds sign up About 1,250 private funds have registered with the agency since January, about 300 more than anticipated, according to Mr. Plaze. As the SEC takes them on, about 3,000 investment advisers with $25 million

should have fired a rogue broker rather than recommend that the broker’s supervisors do so. The broker’s managers failed to discipline the broker, who was later convicted of securities fraud. The SEC did not resolve whether legal and compliance officials are supervisors, as an SEC administrative law judge ruled in the case. That judge also found that the broker’s general counsel had done everything he could to address the firm’s situation. Mr. Gallagher, who was forced by the SEC to recuse himself from the January case because of work his previous law firm had done, said compliance personnel should not be deemed supervisors. The added liability may force them to stay in “dark corners” of a firm rather than lead a “culture of compliance. “This creates a dangerous dilemma,” Mr. Gallagher said. “We must strive to ensure that the supervisor liability never deters legal or compliance personnel from diving into the firm’s real-world legal and compliance problems.” ■ Mark Schoeff Jr. is a reporter with Investment News, a sister publication of Crain’s Cleveland Business.

UPCOMING EVENTS NorTech Innovation Awards Crain’s annual reception honoring some of Northeast Ohio’s most promising technology companies and their innovations is this Thursday, March 22, at LaCentre in Westlake. To purchase tickets, visit

www.crainscleveland.com/section/ NORTECH_tickets. The deadline to sign up is this Wednesday, March 21, at noon. For more information, call Jessica D. Snyder at 216-771-5388 or email her at jsnyder@crain.com.

that companies expect their peers to increase employee contributions By MATT DUNNING Business Insurance

While most employers have not yet calculated the financial impact of compliance with the Patient Protection and Affordable Care Act, some estimate that compliance with the law has driven their group health costs up by as much as 5%, according to a Willis Group Holdings P.L.C. survey released this month. The survey, conducted in December by Willis’ New York-based Human Capital Practice division, indicated that only 27% of responding employers have determined what it has cost their company to comply with the health care reform law in the two years since its implementation. Among those employers, more than 55% said their total health care costs had risen at least 2% as a direct result of the reforms. More than 15% of those employers said their costs

have risen in excess of 5% since 2010. To offset those rising expenses, 62% of responding employers said they expect their peers to raise employee contributions for health care coverage. About 56% said they expect other employers to increase their plans’ deductibles and copayments, while 51% said they think employers will shift more of the cost burden for dependent care to their workers. “Now that the health care reform act has entered the implementation phase, the costs and benefits associated with the act are coming into greater focus for employers,” said Jay Kirschbaum, practice leader for Willis Human Capital Practice, in a statement. “The survey suggests employers realize that costs of providing medical benefits will increase and that they will likely have to pass those costs on to their employees,” he said. Among companies that had measured the cost of compliance with the health care reforms, a little more than half said the cost increases had been driven primarily by a provision of the health care reform law requiring employers to offer coverage to employees’ adult children up to age 26.

Almost 37% said the rule eliminating annual and lifetime coverage limits for “essential health benefits” was responsible for their increases. Despite the increased costs, 57% of responding employers said they plan to expand their group health plans to comply with health care reform requirements. About two-thirds said it was unlikely that they would reduce financial support for other employee benefits, such as dental, disability and life insurance, while just 27% said they likely would cut back on contributions to tax-qualified employee benefits such as pensions and 401(k) accounts. “Respondents also indicated the new requirements will force them to think about their benefits in a strategic manner and as part of the total rewards they use to attract, retain and motivate employees,” Mr. Kirschbaum said. More than 2,300 employers responded to the survey, with 69% reporting fewer than 500 full-time employees, Willis said. ■

Matt Dunning is an associate editor with Business Insurance, a sister publication of Crain’s Cleveland Business.

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After scrambling in ’11, Indians alter promotions plan By JOEL HAMMOND jmhammond@crain.com

The Cleveland Indians’ feel-good promotional schedule turned into, at times, a nightmare in 2011 — an experience that has altered significantly how the team constructed its 2012 promotions. Gone are the days of giveaways available to every fan that walks through Progressive Field’s gates. Most of the team’s giveaways — including five bobbleheads, four jerseys, a T-shirt and a player calendar — now will be available to the first 15,000 fans to arrive at the ballpark. In 2011, those for-everyone giveaways, meant to drive attendance and subsequently provide a revenue boost, instead cost the Indians hundreds of thousands of dollars, according to Curtis Danburg, the team’s senior director of communi-

cations. Take, for instance, the Indians’ Shin-Soo Choo T-shirt giveaway last May 21, during a Saturday afternoon home game against the Cincinnati Reds. The Indians, using attendance forecasting models in October 2010, ordered 21,000 Choo T-shirts. The Indians, it turned out, were 27-15 at that point and leading the American League Central Division by six games, and fans were responding. Add in that the team’s games against the Reds traditionally have been some of the year’s best attended, and a promotional disaster ensued. The Tribe had to issue 20,000 rain checks for Choo T-shirts, which now would take another nine to 12 weeks to arrive. Those who didn’t receive those shirts promptly were an unpleasant lot. More problematic, the unit price for each T-shirt doubled, according to Mr. Danburg, because of the

desired quick turnaround. Mr. Danburg said the team, which places its giveaway orders at least six months in advance, didn’t order 40,000 Tshirts right off the bat because if the crowd numbered only 21,000, storage would become an issue. The Indians faced a similar issue with a Bob Feller bronze statue giveaway last July 4. Even during last season the team began to take steps to address the issue. This year, then, giveaways — such as bobbleheads featuring former players Joe Carter, Carlos Baerga, Sandy Alomar and Gaylord Perry, and current shortstop Asdrubal Cabrera, and jerseys featuring Chris Perez, Justin Masterson, Carlos Santana and former pitcher Charlie Nagy — will be limited to the first 15,000 fans. Mr. Danburg said getting fans into the ballpark earlier will be a nice perk, but the main impetus behind the decision was more cost certainty on the team’s end.

But the team isn’t pocketing the savings on promotional items. Instead, it has beefed up its “rally alley” schedule. Those gatherings, on Eagle Avenue between Progressive Field’s left-field bleachers and the parking garage just to the north, feature live music and less expensive stadium food. The Indians have increased the number of rally alleys to 14 from three. The Indians also will spend more on their three concerts this summer after reallocating some giveaway funds. Mr. Danburg explained why. “While we may reach only 15,000 fans with specific giveaways, we’re able to increase the quality and frequency of higher perceived value items such as the bobblehead and jersey series in 2012,” Mr. Danburg said. “We’re also able to re-allocate promotional resources to impact all fans with increased experiential promotions.” ■

THE LUCKY 15K The Indians in 2012 will limit most of their giveaways to the first 15,000 fans through Progressive Field’s gates. A list of those limited giveaways: ■ April 7: player calendar ■ May 5: Chris Perez jersey ■ May 20: Joe Carter bobblehead ■ May 28: Justin Masterson jersey ■ June 3: Carlos Baerga bobblehead ■ June 17: Carlos Santana jersey ■ June 18: Asdrubal Cabrera bobblehead ■ June 20: Indians T-shirt ■ July 4: Sandy Alomar Jr. bobblehead ■ July 22: Charlie Nagy jersey ■ Aug. 12: Gaylord Perry bobblehead

With growing footprint, list of services, Berea nonprofit rebrands By TIMOTHY MAGAW tmagaw@crain.com

For a growing nonprofit that operates across the state and offers more services than just residential treatment, Rich Frank said his group’s moniker, Berea Children’s Home & Family Services, simply no longer made sense. That’s why the organization, which employs about 1,000 people and offers behavioral health and other services in 22 counties, is rebranding itself as Guidestone — a name that Mr. Frank, the group’s

CEO, said should help the nonprofit more easily expand into new markets and overcome the perception that it’s only located in Berea. “As we went into new communities, it became difficult to explain who we were,” he said. “We had to first explain who we were not.” The name change comes at a pivotal time for the nearly 150year-old organization as it looks to expand its footprint across the state — both geographically and in the number of services it provides. To augment its programs and bridge any education gaps, the

organization in August plans to open a charter school, Stepstone Academy, in Cleveland’s Central neighborhood. The school is being developed with the help of Perry White, who founded the Citizens Academy charter school in Cleveland in 1999. “It’s a long-term strategic view in the sense that there’s a deep-held belief that to solve the problems of kids with behavioral needs, we need to start earlier,” said David Zentkovich, chairman of Guidestone’s board of directors. “Education is a key way to break that cycle.”

The group also is in the midst of developing a three-year strategic plan, Mr. Zentkovich said. It’s looking at other nonprofit agencies throughout the state with similar missions with which it could potentially affiliate or even acquire. “I think the organization, the board and everyone else is excited about what this means for us,” he said. “We’re leveraging 150 years of legacy the organization has built and are really excited about rolling it out into different markets.” While he couldn’t offer specific details, Mr. Frank said the idea is to

look at smaller behavioral health organizations “who are looking for somebody to give them economy of scale.” Aside from offering residential treatment and group home options for at-risk youth, the organization offers an array of community-based services such as counseling, mentoring and work force development programs. Most recently, the group affiliated with Seeds of Literacy, an organization based on the West Side of the city that offers GED tutoring and testing. ■

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Natural: Area companies benefit from industry United will decrease capacity continued from PAGE 3

Mr. Moore, who noted that his company has seen interest in the vehicles climb right alongside gasoline prices in recent months. To date, NatGasCar has converted more than 100 vehicles — most of them minivans used as taxis — from gasoline to compressed natural gas, or “CNG” as it’s known in the industry. But it’s only getting started, Mr. Trembath said. His boss, Mr. Moore, said he expects 2012 to be a landmark year for his fledgling company. “We’ll make a profit this year,” Mr. Moore predicts. NatGasCar is taking an expensive approach to the industry, but one that Mr. Moore says is necessary to succeed, especially with originalequipment automakers. It must win U.S. Environmental Protection Agency approval for each vehicle type for which it makes a CNG system — a process Mr. Moore said costs from $100,000 to $150,000 per vehicle model. But, he said, not only does winning the EPA’s blessing enable him to market his system to companies buying fleets of new vehicles, but it also allows him to market to automakers. Becoming a primary supplier of CNG systems to a Detroit 3 automaker would turn NatGasCar into a major company quickly, Mr. Moore said. So far, NatGasCar is capturing headlines in the fuel and commercial vehicle markets as it receives approval for more vehicle systems. Last Monday, March 12, for instance, the EPA approved the company’s conversion system for Dodge Ram pickup trucks. The pickups join the Chrysler Town and Country

human nature,” Mr. Battaglia said.

minivan, the Dodge Avenger, the Chrysler 200, the Volkswagen Routan and the Dodge Journey as vehicles for which NatGasCar’s systems are approved so far, Mr. Moore said. Mr. Moore, among others, thinks companies that own and operate fleets will be best suited to benefit from the first wave of natural gas vehicles. They’ll also have a leg up on consumers because fleet owners can operate their own CNG filling stations, while few commercial gas stations have yet to offer the fuel. Mr. Moore has an answer to that as well: He’s working on a home fueling station that consumers could install in their garages and could use to fill up their own vehicles from their home gas lines.

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A different road There is another path to commercializing CNG vehicles, though, and in Hudson, entrepreneurs Michael Battaglia and partner Nabil Sahlani are trying to take it with a company they’ve formed called CNG-One. The two are focused on more general conversions than NatGasCar, and they offer to convert any vehicle, generally for between $6,000 and $7,000 each. But because they don’t have EPA approval for new vehicles, they’re consigned to working only with used vehicles; new fleets and OEMs are off limits. It has been a bit of a bumpy road, Mr. Battaglia concedes, in terms of convincing the everyday consumer to convert their vehicles the way he had hoped. “I totally misjudged what the public perception would be,” Mr. Battaglia admits. But the company only moved

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Dan T. Moore, who founded NatGasCar LLC, said winning U.S. Environmental Protection Agency approval will be key for the company. That OK will allow it to market its system to companies that buy fleets. into its permanent digs last fall, and Mr. Battaglia says the interest of fleet owners has been strong since gasoline prices started rising. So even though CNG-One only has converted about a dozen vehicles this year, Mr. Battaglia said he’s as confident as ever that the company will meet its goal of doing 188 vehicle conversions over the next 12 months. Fleet owners have been coming to him since gas prices went above $3.50 a gallon, Mr. Battaglia said, and every time gasoline prices go up he hears from more of them. “People we talked to a year ago, now they’re interested — it’s

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United Airlines said it will reduce capacity further in the face of higher fuel prices, which are causing airlines to raise fares. The number of seats will be down 0.5% to 1.5% this year, United Continental Holdings Inc. CEO Jeffery Smisek said last Tuesday, March 13. Previously, United expected capacity to be about flat. “As you raise fares, you burn off a certain amount of demand,” Mr. Smisek told investors at a J.P. Morgan Chase & Co. transportation conference in New York. “As we see changes in demand caused by changes in fares, we’re going to be responsive ... so we can focus on making money.” Fares are up about 4% on average across the industry so far this year, according to Dallas-based FareCompare. Fuel prices have risen 5% this year. United’s CEO said he’s eagerly awaiting delivery later this year of five Boeing 787s, which use less fuel and fly as far as 777s and 747s but offer less capacity. The aircraft, which have been touted as featuring a more comfortable environment for passengers, are expected to be in high demand from fliers, which could bring United more revenue. “It is a spectacular airplane, a game-changing airplane — one that customers want to fly,” Mr. Smisek said. “We hope to revenue-manage that plane differently than we manage the rest of our fleet.” ■

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Mergers: Current climate difficult for smaller credit unions continued from PAGE 3

Inc., a firm that provides analytics to the credit union industry. Nationwide, the number dropped by 3,115, or 30%, to 7,240 credit unions.

In the pipeline Several credit union merger talks are ongoing in Northeast Ohio. Eaton Family Credit Union in Euclid has completed five mergers in the last five years and is in talks with another, initiated by regulators concerned about the smaller credit union’s struggle to grow and its leadership void, said Mike Losneck, CEO of Eaton Family. The institution to be merged has $2 million in assets and recently lost board members, he said. Talks began in early summer 2011, and Mr. Losneck expects the merger to wrap up by June. He would not identify the smaller institution. Ohio’s First Class Credit Union in Cleveland only has paperwork left to complete for its coming merger with the one-employee Lorain County Postal Employees Credit Union in Elyria, said Jeff Spada, general manager of Ohio’s First Class. The deal should close May 1. Mr. Spada’s board felt the merger made sense because it allows Ohio’s

First Class to expand into Lorain County and to offer services and products to the merging institution’s members. Firefighters Community’s Mr. Laurendeau declined to identify the three credit unions he’s talking with, but he said each approached him and is relatively small, roughly $10 million to $15 million in assets. In contrast, Firefighters Community’s assets total about $180 million. “It’s just really tough to make money as a small credit union,” Mr. Laurendeau said. “I think the low interest rates right now make it really tough.” The merger that has been approved involves a Cleveland credit union that has experienced several years of unprofitability, Mr. Laurendeau said. In addition, the institution’s manager was set to retire in early 2012. “I think it’s seen by my board as a healthy growth opportunity,” he said. He and his board are confident that the members of the smaller credit unions Firefighters Community absorbs will be hungry for the wider menu of services and products Firefighters will market to them. The other merger possibilities are

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‘Fighting for survival’ Unless they are liquidated, credit unions are not acquired; they are merged. That’s because credit unions are owned by their members. A vote by the membership of the nonsurviving institution is required unless regulators are forcing their hand. Debbie Matz, chairman of the NCUA, which must approve any merger involving a federally insured credit union, cites economic improvement as a primary factor for the uptick in mergers in 2011. “When the economy is down, I think credit unions are just fighting for survival,” she said. Recently released year-end data reveal that many credit unions improved their performance in 2011 compared with the prior year; their assets, return on assets and membership numbers increased while delinquencies and charge-offs dropped, Ms. Matz said. She expects the uptick in mergers

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an eight-employee Lorain County institution that has experienced negative profitability and a lack of board volunteers, and a Cuyahoga County credit union that also has suffered consecutive years of net losses, Mr. Laurendeau said.

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to continue in 2012 because the economy continues to improve and because “more and more small credit unions are finding it difficult to survive. “Some small credit unions in this very sophisticated marketplace really have a difficult time meeting the needs of their members or attracting new members,” she said. John R. Martin, president and CEO of Emerald Group Credit Union in Garfield Heights, notes that many younger adults “don’t know what a credit union is.” Many credit union leaders, too, are getting older and “have lost their zest for innovation,” he said.

Keeping it in the family Rose Bartolomucci is reaping the benefits of a merger. When the institution she led, Telecommunity Credit Union, merged into Towpath Credit Union of Fairlawn in June 2011, the combined institution was able to consolidate its vendors and manage expenses better, said Ms. Bartolomucci, who succeeded the president and CEO of Towpath in January. Though she’s not seeing heightened profitability yet, Towpath is able to allocate such savings to fund other improvements, such as technology, she said. And whereas Telecommunity couldn’t afford to build a team that included business development and marketing professionals, the combined institution can and has. “Separately, we couldn’t get to that point, but together, we had the skilled, knowledgeable staff to do that,” Ms. Bartolomucci said. When a credit union merges with

another, it’s more likely that their members will continue doing business with a credit union, Mr. Laurendeau said. He’s also hopeful that those credit union members who may have used their small credit union’s accounts passively could begin using a larger credit union’s wider array of offerings more actively. Members of credit unions lose some element of exclusivity when mergers occur, industry insiders acknowledged. “The sad thing is losing the momand-pop credit unions,” said David K. Lawhun, CEO of Steel Valley Federal Credit Union in Cleveland. “It’s sad because it’s the small credit unions that know you personally. You know the member, you know their family. You’re not just a number. You’re someone.” Steel Valley Federal itself completed a merger in October 2011, when it absorbed Brook Park Municipal Employees Federal Credit Union, which had roughly $1 million in assets. That grew Steel Valley to $35 million in assets, Mr. Lawhun said. When small credit unions choose larger merger partners, though, their members typically have something to gain, particularly access to expanded products and services, such as credit cards, certain loan types, and mobile and online banking. “(The merger activity) is good in that we’ll have stronger credit unions that are serving more members and have the capability of providing a wider range of service,” the NCUA’s Ms. Matz said. “But I think it means there will be fewer credit unions and decreased competition in certain marketplaces.” ■

CardioInsight raises $7.5 million CardioInsight CardioInsight ON THE WEB Story from Technologies Inc. of www.CrainsCleveland.com. now is focusing Cleveland has closed on securing U.S. a $7.5 million investment round that Food and Drug Administration it will use to speed up testing and clearance to sell the system in the commercialization of its first United States and demonstrating its product, which produces 3-D maps value, Mr. Mendelsohn said. of the heart as it beats. The ECVUE system uses a vest The money was provided by a mix that gathers electrical data from the of new and existing investors, said body. With the help of specialized Kevin Mendelsohn, vice president of software, those data are combined finance and corporate development. with images from a CT scanner to The company received the Europroduce maps of the heart’s electrical pean Union’s CE Mark certification activity. The maps are meant to help in November. Three hospitals in health care providers more accuEngland, France and Germany are rately guide treatments to areas of already using the ECVUE system on the heart that are not beating proppatients. erly.

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TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

First Fruits Child Care Center LLC 21877 Euclid Ave., Euclid ID: 20-5120191 Date filed: Jan. 24, 2012 Type: Employer’s withholding Amount: $11,821

LIENS FILED

Al Ihsan School Inc. 4600 Rocky River Drive, Cleveland ID: 34-1961620 Date filed: Jan. 20, 2012 Type: Employer’s withholding, unemployment Amount: $11,751

Town N Country Pet Hospital Inc. 21207 Chagrin Blvd., Beachwood ID: 31-1489049 Date filed: Jan. 24, 2012 Type: Employer’s withholding Amount: $13,203

Can-Am Cement P.O. Box 81965, Cleveland ID: 80-0024155 Date filed: Jan. 4, 2012 Type: Employer’s withholding Amount: $11,502

Varrsity Constructors LLC 23209 Miles Road, Suite A, Cleveland ID: 20-5305272 Date filed: Jan. 10, 2012 Type: Employer’s withholding, failure to file complete return Amount: $12,776

R & M Stateline Ltd. 32125 Solon Road, Solon ID: 30-0690025 Date filed: Jan. 24, 2012 Type: Employer’s withholding Amount: $10,074

Climate Comfort Service Co. 6111 Carey Drive, Suite 2, Valley View ID: 90-0496670 Date filed: Jan. 20, 2012 Type: Employer’s withholding Amount: $12,760

Sam-Tom Inc., Royce Security Services 3740 Euclid Ave., Cleveland ID: 34-1965620 Date filed: Jan. 18, 2012 Type: Unemployment Amount: $8,660

Quick Employment LLC P.O. Box 93722, Cleveland ID: 04-3788598 Date filed: Jan. 10, 2012 Type: Employer’s withholding, unemployment Amount: $12,002

Integrity Waterproofing Inc. 1334 Summit Ave., Lakewood ID: 20-2221560 Date filed: Jan. 18, 2012 Type: Employer’s withholding, corporate income Amount: $8,066

Hard Rock Crushing Ltd. 30817 Schwartz Road, Westlake ID: 03-0546173 Date filed: Jan. 18, 2012 Type: Unemployment Amount: $7,908 Protem Homecare LLC 3530 Warrensville Center Road, Suite 200, Shaker Heights ID: 20-3836346 Date filed: Jan. 20, 2012 Type: Unemployment Amount: $7,588 Pizza Dude Ltd. 25431 Hall Drive, Westlake ID: 27-1253286 Date filed: Jan. 10, 2012 Type: Employer’s withholding Amount: $7,250 N F Industries Inc. P.O. Box 31354, Independence ID: 20-1561604 Date filed: Jan. 31, 2012 Type: Failure to file complete return Amount: $5,910 Markiewicz Automotive LLC 5081 Warrensville Center Road, Maple Heights ID: 26-3591657 Date filed: Jan. 24, 2012 Type: Employer’s withholding, employer’s annual federal tax return Amount: $5,313 St. Clair Automotive LLC 21100 Saint Clair Ave., Euclid ID: 34-1910628 Date filed: Jan. 2, 2012 Type: Employer’s withholding Amount: $5,003

LIENS RELEASED Action Staffing Personnel

6100 Rockside Woods Blvd., Suite 350, Independence ID: 34-1573403 Date filed: Aug. 4, 2011 Date released: Jan. 10, 2012 Type: Employer’s withholding Amount: $1,266,034 Anthony Forde DDS Inc. 6820 Ridge Road, Suite 101, Parma ID: 34-1346657 Date filed: Nov. 22, 2011 Date released: Jan. 19, 2012 Type: Employer’s withholding Amount: $14,278 Bad Boy Beepers Inc. 36025 W. 25th St., Cleveland ID: 34-1689175 Date filed: June 4, 2002 Date released: Jan. 18, 2012 Type: Employer’s withholding Amount: $50,607 Bidder Transport Inc. 18401 Maple Heights Blvd., Maple Heights ID: 34-1554376 Date filed: May 12, 2010 Date released: Jan. 24, 2012 Type: Employer’s withholding, failure to file complete return Amount: $16,319 Borowski Enterprises Inc. 5731 Turney Road, Garfield Heights ID: 26-3319420 Date filed: Sept. 28, 2010 Date released: Jan. 31, 2012 Type: Employer’s withholding, unemployment Amount: $5,634 CB Software Systems Inc. 20600 Chagrin Blvd., Suite 1110, Shaker Heights ID: 34-1650560

Date filed: Feb. 9, 2009 Date released: Jan. 10, 2012 Type: Employer’s withholding, unemployment, corporate income Amount: $134,350 John King Tire & Automotive Inc. 5295 Pearl Road, Parma ID: 36-4496357 Date filed: Sept. 26, 2011 Date released: Jan. 10, 2012 Type: Employer’s withholding Amount: $5,240 Ohio Sauce Corp. Hot Sauce Williams 12310 Superior Ave., Cleveland ID: 34-1286996 Date filed: Nov. 3, 2011 Date released: Jan. 4, 2012 Type: Employer’s withholding, unemployment Amount: $31,910

GET DAILY NEWS ALERTS FROM CRAIN’S ! Register for free e-mail alerts and receive: ■ The Morning Roundup: The day’s business news ■ Breaking news alerts: When major news happens, you’ll know ■ Daily headlines: Crain’sproduced news and blog items ■ Small Business report: A weekly guide to small business news

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

GOING PLACES JOB CHANGES CONSTRUCTION RUHLIN CO.: Carey McCullough to site safety specialist; Lana Malone to executive assistant; Megan Hance to financial manager; Tom Hill to superintendent.

EDUCATION BALDWIN-WALLACE COLLEGE: Susan Van Vorst to director, Conservatory of Music. NOTRE DAME-CATHEDRAL LATIN SCHOOL: Elizabeth Maier to director, alumni relations and annual giving.

financial consultant. SKODA MINOTTI: Jill Medovich and Dianne Moore to tax preparers. WINER+BEVILACQUA INC.: Brent R. Thompson to partner.

HOSPITALITY GATEWAY HOSPITALITY GROUP: George Iannacone to regional director, operations and development.

INSURANCE USI INSURANCE MIDWEST: Kate Bang to president, employee benefits; Bill Ryan to chair, Cleveland office.

FEDERAL RESERVE BANK OF CLEVELAND: Susan Steinbrick to senior vice president and CFO.

FINANCIAL SERVICE GREAT LAKES FINANCIAL GROUP: David Peterson to financial analyst; Daniele Betliskey to servicing analyst; Tina Vespucci to marketing director. PINNACLE FINANCIAL GROUP INC.: Brian Stulak to principal. RETIREMENT SOLUTIONS: Zachary Messinger to associate

BROKAW: Troy Walker to director of retail strategy and business development. HIGHLAND PUBLIC RELATIONS: Alan Ashby to senior account executive; Dan Kearsey to graphic designer. STUDIOTHINK: Christin Miller to account coordinator.

REAL ESTATE ALLEGRO REALTY ADVISORS LTD.: Matthew J. Sattler to associate, strategic advisory consulting. CBRE: Brandon Barnett to transaction manager, global corporate services.

SERVICE

ICE MILLER: Jonathon Groza to associate.

INFOCISION MANAGEMENT CORP.: Deloris DeHart to director, new employee training.

WELTMAN, WEINBERG & REIS CO. LPA: Tina Esker to national manager, bankruptcy operations.

KELLY SERVICES INC.: Diana Comstock to partnered staffing manager.

MANUFACTURING

PARTY411 EVENTS: Julie Felder to vice president, corporate and private events.

RPM INTERNATIONAL INC.: Russell L. Gordon to vice president, CFO; Keith R. Smiley to vice president of finance and controller; Matthew T. Ratajczak to vice president of global taxes and treasurer; Barry M. Slifstein to vice president, investor relations and planning.

MARCH 19 - 25, 2012

manager, configuration management.

MARKETING

LEGAL

FINANCE

WWW.CRAINSCLEVELAND.COM

TECHNOLOGY CYGEM INTEGRATED TECHNOLOGY SOLUTIONS: Lisa Caudill to director of operations. OECONNECTION: Chris Parks to

BOARDS ESPERANZA INC.: Felicia Soto (JPMorganChase) to president; Maria L. Haller to first vice president; Maribel Verdon to second vice president; Anibal Estremera to treasurer; Ginny Whipkey to secretary.

McCullough Malone

Hance

Hill

Van Vorst

Maier

Groza

Miller

Sattler

EXTENDED HOUSING: Richard Tibbits (RMT Properties) to president; Judy Parmenter to vice president; John Konrad to treasurer; Ellen Forbus to secretary. FIELDSTONE FARM THERAPEUTIC RIDING CENTER: Tom Rathbone to president; Elizabeth Juliano to chair. FIRST CATHOLIC SLOVAK LADIES ASSOCIATION: Cynthia M. Maleski to president; Sue Ann M. Seich to secretary; Stephen C. Hudak to treasurer.

AWARDS AMERICAN INSTITUTE OF ARCHITECTS: Monica Green (Westlake Reed Leskosky) was named a fellow. YWCA GREATER CLEVELAND: Debra Adams Simmons (The Plain Dealer), Nan Cohen (Creekside Financial Advisors), Diane Downing (Huntington National Bank), Lisa Rose (Dix & Eaton Inc.) and Sharon Sobol

Jordan (Center for Families and Children) received the 2012 Women of Achievement Awards; Barbara Danforth (Ratliff and Taylor) received a Lifetime Achievement Award.

Send information for Going Places to dhillyer@crain.com.

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INSIDE

16 RESIDENTIAL DEVELOPERS BUILD WITH GREEN IN MIND.

REAL ESTATE TAKING ACTION IN AKRON Leaders aim to help University Park area catch up to rest of downtown’s revitalization By STAN BULLARD sbullard@crain.com

n the center of Akron, the watery remains of the Ohio Canal and a steep hill have played a defining role in the city’s growth since the 19th century. On one side is downtown Akron. On the other is an area now dubbed University Park, which encompasses 50 blocks bounded by Broadway, Arlington and East Market streets and Interstate 76. With downtown Akron enjoying a buzz thanks to redevelopment projects from Canal Park to Quaker Square, civic leaders are adding University Park to their gaze. University Park has many pluses but lacks the commercial and residential redevelopment of downtown; just one new commercial project of scale rose in University Park during the last realty boom. Spicer Village, a multimillion-dollar mixed-use project with retail and residential units, was the sole urban head-turner. Reversing that trend with new commercial and residential properties is the task of the University Park Alliance, a public-private partnership See AKRON Page 17

WHAT IS THE ALLIANCE?

JANET CENTURY

Eric Johnson, who leads Akron’s University Park Alliance, in front of boards representing four redevelopment districts in UPA’s master plan. In the foreground is a part of a fence by renowned University Park artist Don Drumm.

University Park Alliance is charged with developing new commercial and residential properties in the University Park area of downtown Akron, which encompasses about 50 blocks. Leader Eric Anthony Johnson said

four mixed-use projects already are in the works. The group’s wish list includes 803 residential units, at least one hotel, and nearly 113,000 square feet of retail space and 260,000 square feet of office space.

Commercial brokers optimistic as property markets improve Property trading hands more frequently in industrial, apartment sectors By STAN BULLARD sbullard@crain.com

ike old friends surfacing from the past, some familiar phrases crop up when you ask owners and operators of Northeast Ohio commercial brokerages to describe their businesses: busy, had a good year, expect a better one, optimistic, even bullish. Although woes remain plentiful in the commercial realty world — particularly as many property owners and developers shoulder

heavy debt loads after rents dropped due to the recession — the slow, and now quickening, revival of property markets has lifted the outlook for the region’s brokerages. “We’re pretty busy,” said Robert Garber, co-managing director of the Cresco brokerage in Independence. “Deals are getting made. We handle a lot of multitenant business, and that is keeping gas in the tank.” The yardstick is clear: first, there was the limbo that followed the 2008 banking crisis, then the

stagnation of 2009 that ebbed in 2010 and by 2011, the improving market was no longer a fluke. “The crystal ball that was fogged over in 2009 became clear,” Mr. Garber said. As companies closed or grew to replace defunct competitors, he said, “The business (for brokers) came back.” Michael Glass, the Clevelandbased regional manager for the Cleveland and Columbus offices of Marcus & Millichap, describes the downturn as “being in the shower when the water went off and the

lights went out. But when things picked up, they picked up quickly.” Part of the activity level came back last year when lenders developed an appetite for commercial properties, although they remain picky eaters. The strongest part of the brokerage market is enjoyed by firms with substantial practices serving industrial clients, where leasing is stronger than sales. Next are apartment sales due to high occupancies and rent growth. Office and retail sectors trail the pack.

Changing focuses For brokerages, the key thing is

that property is trading again — and with it, commissions, though they may be smaller for each deal than in the past. A typical thread from the past is missing now: Few firms discuss working with commercial real estate developers, who are more focused on survival than developing projects except for apartments. “Developers are gun-shy,” Mr. Garber said. “I don’t think there is a ton of product on the drawing boards.” That means space users dominate the business. Several brokerages say they have managed to put See BROKERS Page 17

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16 CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

www.BellwetherCap.com

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With a portfolio exceeding $4.2 billion, we are a boutique-style commercial real estate firm focused on financing income properties including Multifamily, Industrial, Retail, Office, Hospitality, Self-Storage, and Parking Facilities. In fact, we offer the deepest pool of lending relationships within in Ohio including FHA, Freddie Mac, Life Insurance Companies, FNMA, CMBS Lenders and Banks.

MARCH 19 - 25, 2012

REAL ESTATE

The 100-acre Lakes of Orange in Orange Village will feature a one-acre lake, gazebo, stream and trail. PHOTO PROVIDED

Vision. Knowledge. People.

Developers build with green in mind

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Planned Lakes of Orange development to include 30-acre conservation area, green residences By KIMBERLY BONVISSUTO clbfreelancer@crain.com

ustainable luxury. Not only is that the tagline for the planned Lakes of Orange community in Orange Village, it’s an example of the way some residential building is trending in Northeast Ohio and around the nation. Many builders and developers who survived the economic downturn of the past few years are embracing green technologies and standards, especially as they encounter a more sophisticated and educated consumer looking for affordable green living. “They want to know the efficiency of the furnace, the type of hot water heater, and they are fully aware of the plumbing system,” said Enzo Perfetto, owner of Enzoco Homes LLC of Munson Township and president of the Home Builders Association (HBA) of Greater Cleveland. “They are coming to the table knowing how to have a good, intelligent dialogue.” In part to appeal to this type of homebuyer, Cleveland-based Kertes Enterprises Inc. is in the

midst of developing the nearly 100-acre Lakes of Orange site into a green development with 156 homes and a 30-acre conservation area with a one-acre lake, gazebo, stream and walking trail. Kertes president Randy Kertesz said his company is “shovel ready” and taking reservations, anticipating breaking ground before the end of this year. Mr. Kertesz said what makes his Lakes of Orange development unique to Ohio is that the homes won’t be the only things built to the National Green Building Standard, a rating system developed by the National Association of Home Builders; the land will be developed in a sustainable way as well. Underground improvements and paving are designed to protect the land’s natural features, including wildlife, water streams and tree root systems.

In the market Mr. Kertesz, who holds the Certified Green Professional designation from the National Association of Home Builders and is a LEED (Leadership in Energy and Environmental Design)-accredited professional, anticipates two to three phases in his development. He said building to green standards adds $5,000 to $10,000 for the average home. The lots in Phase I will go for $125,000 to the upper $150,000s, while housing prices will start in the low- to mid-$400,000 range. The Home Builders Association’s Mr. Perfetto said the green building trend in Northeast Ohio was helped along by the foreclosure crisis. He said the efficiencies available in new home construction — much of it green technology — far outweigh the initial savings of buying a foreclosed or vacant home, or benefiting from a short sale. “Consumers are finally realizing that if I buy an existing home I can throw in new carpet, but I’m still dealing with the old windows, furnace and insulation,” Mr. Perfetto said, adding that most builders have an encouraging sales outlook going into 2012. Jean Sexton, executive officer of the North Coast Building Industry Association based in Lorain County, said while higher-end homes may incorporate the benefits of green building, builders marketing homes in the $200,000 or lower price range aren’t going green. She noted that buyers in that lower price range aren’t looking for a LEED-certified home, but they

are asking for green features, including appliances, water-saving toilets and other smaller-ticket items. “There is so much emphasis on green now, if (homeowners) are at all thinking green, they’ll be asking for green — but it’s not a top priority for them,” Mrs. Sexton said, adding that homebuyers are focused on finding a home they comfortably can afford.

Planting the seeds Meanwhile, municipalities and cities are creating the framework for encouraging green residential building within their communities. Orange Village, for one, implemented a voluntary sustainable building award program — the Orange Goes Green Certification Program — that provides guidelines and sets standards for builders and developers. Building commissioner Louis Hovancsek said three builders, including Kertes, are working on complying with the certification. Jud Kline, senior director of Herschman Architects in Warrensville Heights and president of AIA Ohio, a society of the American Institute of Architects, said the Orange Goes Green initiative grew out of an amalgamation of various green building standards run through the local community’s value system. “Buildings contribute about 60% to the carbon footprint,” Mr. Kline said. “If we’re going to reduce that contribution, we have to really focus on building.” Mr. Kline’s firm, Herschman Architects, also has experience working with another Northeast Ohio city on residential green building standards. It was hired by South Euclid to coordinate the green strategy for the city’s Green Neighborhood Initiative, financed by competitive grant funds from the U.S. Department of Housing and Urban Development’s Neighborhood Stabilization Program and the First Suburbs Development Council’s Vacant Residential Property Fund. That program has two main components — the purchase, rehab and resale of vacant, foreclosed and abandoned homes, and the creation of community gardens and green space. The initiative rehabilitates homes under green building methods and universal design features. The city is about halfway toward its goal of buying 10 homes to rehab; three of the homes have been sold and profits were funneled back into the program for future purchases. ■

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WWW.CRAINSCLEVELAND.COM

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS 17

REAL ESTATE

Akron: Realty partner could open financial doors continued from PAGE 15

organized as a community development corporation that can own and redevelop property. UPAâ&#x20AC;&#x2122;s staff leader is Eric Anthony Johnson, a New Orleans native with a doctorate in urban affairs and public policy and a rĂŠsumĂŠ ranging from economic development in the city of Charlotte, N.C., to the realty manager for the aborted lakefront development plan of the ClevelandCuyahoga County Port Authority. Rather than head to the Sun Belt after Cleveland abandoned that plan, Dr. Johnson landed at UPA where he is again orchestrating a big urban development drive.

Big plans Just over 14 months after Dr. Johnson came on board, significant steps are in place to set the table for redevelopment, and four projects that are part of a longer-term master plan already are moving forward. Beyond describing them as â&#x20AC;&#x153;mixed-useâ&#x20AC;? projects â&#x20AC;&#x201D; usually mixes of retail, office and residential uses in one property â&#x20AC;&#x201D; at four undisclosed locations, Dr. Johnson would offer no more detail. He does point to the wish list, though, for the four projects, which UPA wants up by 2016 â&#x20AC;&#x201D; 803 residential units, at least one hotel and nearly 113,000 square feet of retail and 260,000 square feet of office space. One reason Dr. Johnson declines

to outline site-specific projects is that UPA and potential developers may want to acquire additional land to the sites. Dr. Johnson said one reason he made Akron his next stop after Cleveland after touring the UPA geography was the makeup of its 17-member board. Not only does it include Akron Mayor Donald Plusquellic and Summit County Executive Russell M. Pry, but Thomas Strauss, Summa Health Systemâ&#x20AC;&#x2122;s president and CEO, Luis Proenza, president of the University of Akron and others also are involved. Summa and the University of Akron both are within UPAâ&#x20AC;&#x2122;s turf. â&#x20AC;&#x153;Communities that are organized to reduce fragmentation will flourish in the future,â&#x20AC;? Dr. Johnson said. â&#x20AC;&#x153;Resources are too limited for them otherwise.â&#x20AC;? David Lieberth, deputy mayor of Akron, said UPAâ&#x20AC;&#x2122;s plans are designed so they capitalize on opportunities for both downtown and the UPA despite the geography separating the two. Moreover, University of Akron actions â&#x20AC;&#x201D; from buying the old Polskyâ&#x20AC;&#x2122;s department store in the â&#x20AC;&#x2122;80s to fueling demand for new student-focused housing downtown â&#x20AC;&#x201D; have helped bridge the gap between the two. Mr. Lieberth said Mayor Plusquellic, who was in China last week, supported the UPA plan with a big condition: It had to impact

the city beyond UPA borders.

A little bit of help Despite this generally being one of the least opportune times to launch realty programs of scope, Dr. Johnson and his staff are undertaking no little plans. UPA has selected as its realty development partner KUD International LLC, a United States real estate development arm of the Japanese construction and realty conglomerate Kajima Corp., a Japanese concern that is one of the worldâ&#x20AC;&#x2122;s largest builders and developers. Dr. Johnson said KUD will help UPA advance its agenda on many levels. At the get-go last month, KUD signing on helped UPA broadcast through the media its plans worldwide. News of the association last October meant mentions of the 50-block UPA plan ran in cities from New York to Chicago and Tokyo to Mumbai. Part of it also is clout: KUDâ&#x20AC;&#x2122;s parent is a billion-dollar construction concern active in 20 countries. Dr. Johnson said KUD will offer up a project manager to assist UPA on each development project, and it will supplement the allianceâ&#x20AC;&#x2122;s limited staff of six. Moreover, KUD will provide financing and construction guarantees for projects UPA undertakes in its district. â&#x20AC;&#x153;A local developer may have a nice plan for a project,â&#x20AC;? he said, â&#x20AC;&#x153;but may not have the financing

Brokers: Receivership work has helped continued from PAGE 15

together record years â&#x20AC;&#x201D; primarily by their agents slugging it out harder than in the past, Cresco and Marcus & Millichap among them. More typical is the way Geoffrey Coyle, managing director of the OstendorfMorris Co. brokerage, puts it. â&#x20AC;&#x153;We made money in 2010 and made more in 2011,â&#x20AC;? Mr. Coyle said, though he declined to disclose revenue figures. â&#x20AC;&#x153;I attribute that to the changed market, low interest rates and hard-working brokers.â&#x20AC;? David Browning, managing director of the Cleveland-Akron offices of CBRE, said he is â&#x20AC;&#x153;bullish about 2012.â&#x20AC;? That says a lot because the officeâ&#x20AC;&#x2122;s revenue climbed 10% in 2011, and brokerage revenue alone climbed 20% the same year. He anticipates another gain this year and expects an improving market to â&#x20AC;&#x153;lift all boatsâ&#x20AC;? in the industry. CBRE has shifted focus from commission-oriented transactional work to being a service provider. For example, it manages some 13 million square feet of office space in Northeast Ohio and does a variety of work for corporations. That meant half the business in the office in 2011 was contractual â&#x20AC;&#x201D; and recurring business â&#x20AC;&#x201D; and just 50% due to commissions. Different strategies also are bearing fruit. Corporate service practices, which provide corporations one-stop shopping for their real estate needs, are on the grow and put local brokers afield in Europe and Asia. In CBREâ&#x20AC;&#x2122;s case, its corporate services practice just added its fifth person here. Meanwhile, the corpo-

rate services practice was OstendorfMorrisâ&#x20AC;&#x2122;s busiest segment, Mr. Coyle said, with 11 people pursuing deals internationally last year and just added one agent, a prior intern. At Chartwell Group of Cleveland, traditional work representing tenants has been supplemented by an aggressive auction practice so that all 15 of its agents are trained in auctions or supporting them. David Wagner, Chartwellâ&#x20AC;&#x2122;s co-managing director, said of the head of its auction unit, â&#x20AC;&#x153;We give Gordon Greene big hugs every day.â&#x20AC;? Another niche reflecting the downturn is receivership work, managing properties for the courts or lenders and perhaps disposing of them. Chartwell, Mr. Wagner said, strongly pursues such game; in 2005, the brokerage did three receivership assignments a year. Now it has 14.

Connecting the dots While renewed lending helped business, Marcus & Millichapâ&#x20AC;&#x2122;s Mr. Glass said the passage of time helped the firm, which specializes strictly in buying and selling commercial properties and eschews leasing or management. He said his 15 agents here â&#x20AC;&#x201D; soon to be 16 â&#x20AC;&#x201D; survived through tenacity and â&#x20AC;&#x153;staying engagedâ&#x20AC;? with prospects. NAI Daus, the 12-agent Beachwood brokerage, also hopes to add as many as five agents this year. Despite that, most brokers expect their overall ranks to thin in a commission-based, shrinking industry requiring ever-new tech skills. â&#x20AC;&#x153;Not everyone,â&#x20AC;? Mr. Glass said, â&#x20AC;&#x153;has been able to connect all the dots.â&#x20AC;? â&#x2013;

capability for it. Here is KUD, which has financing relationships and can provide guarantees that will help secure financing.â&#x20AC;? For KUD, the Akron alliance offered an opportunity to work collaboratively to produce projects which may involve local developers and others, said Tom Winter, KUD senior vice president. He said KUD is looking at ground-up construction for the four opportunities Dr. Johnson discussed, and some enlist local firms. At least one expert sees the KUD role as vital to the nascent efforts of UPA.

Steve Strnisha, a finance expert who specializes in complex urban projects and is now a senior executive with the Cleveland International Fund, which provides international investors with U.S. financing opportunities, said the KUD association would open lendersâ&#x20AC;&#x2122; doors. â&#x20AC;&#x153;A construction cost and guarantee is absolutely critical to any project of scale from a lendersâ&#x20AC;&#x2122; perspective,â&#x20AC;? Mr. Strnisha said. â&#x20AC;&#x153;It shows there is a commitment to bring in a project at a given price. You donâ&#x20AC;&#x2122;t want to have to go to the developer or the developerâ&#x20AC;&#x2122;s partners to come in with more money if itâ&#x20AC;&#x2122;s needed.â&#x20AC;? â&#x2013;

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18 CRAIN’S CLEVELAND BUSINESS

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MARCH 19 - 25, 2012

REAL ESTATE

Incentives designed to bring residents to University Circle As more housing options are added, Greater Circle Living relaunch planned By CHRISSY KADLECK clbfreelancer@crain.com

eorgene Crosby never had to be sold on University Circle. A lifelong resident of Cleveland, she loved the museums, and Severance Hall, and she was the go-to person for her colleagues at University Hospitals when they needed suggestions on where to take people visiting the city. It wasn’t until September 2008, though, that the then-57-year-old bought into urban living, purchasing a three-bedroom home in Woodhaven, a Zaremba development in the Fairfax neighborhood. As luck would have it, her new home was in one of seven target neighborhoods of the Greater Circle Living program, which launched only months prior to her purchase and is designed to improve access to affordable housing for the 50,000 employees in University Circle. The housing program, created by a coalition of philanthropic, public and private partners in the Circle, offers financial incentives to invest in the surrounding neighborhoods with forgivable loans for home purchases, rental assistance and exterior home renovations. Ms. Crosby’s well-timed purchase netted her an unexpected $15,000 in forgivable loans as long as she continues to live in the home and work in University Circle for five years after the loan’s closing. “I would recommend this program to anyone, and I have had a

couple individuals ask me about this and I tell them, ‘You work for this hospital, right? You move to the suburbs, and you’re paying double taxes plus you’ve got the commute. Here, you’ve got everything around you — you’re close to the hospital, the museums, you’ve got Severance Hall,’” she said. Ms. Crosby is one of 20 full-time employees at University Hospitals who have taken advantage of the Greater Circle Living program through the end of 2011, said Denise Siddiq, benefits specialist at University Hospitals. There have been 10 home purchases, three exterior renovations and seven rental grants. “It is an excellent benefit; those are 10 people who purchased homes who may not have been able to without the help of University Hospitals, so I am ecstatic about those numbers,” she said. “Do we want them to grow? Absolutely. And we are always looking at ways to market the program to our employees so we can get even more participation.”

Relaunch in the works The program is funded by the Cleveland Foundation, the Kent H. Smith Charitable Trust and the Surdna Foundation, as well as anchor institutions such as Case Western Reserve University, Cleveland Clinic, Cleveland Museum of Art, Judson at University Circle and University Hospitals. Greater Circle Living is open to full-time employees of any of the 35-plus nonprofit institutions in

University Circle. Those people can qualify for a $5,000 forgivable home loan. Employees of anchor institutions, such as CWRU, the Clinic or University Hospitals, are eligible for up to $15,000 for a home purchase. It is marketed by University Circle Inc., administered by Fairfax Renaissance Development Corp. and targets seven neighborhoods: Glenville, East Cleveland, Little Italy, Fairfax, Buckeye-Shaker, Hough and University Circle. Wyonette Cheairs, program administrator of the Greater Circle Living Program, declined to reveal total participation numbers of the program in advance of a relaunch of the program that is expected to happen in June or July. “All of our partners believe that the program has been successful, and that’s why we are doing a relaunch and improve upon it,” she said. Ms. Cheairs said she believes the program has been successful helping people move to the area and in attracting new developments. “The Greater Circle Living program kicked off right before the downturn in the real estate market. So while we’ve had dozens of participants from all of the anchor institutions, we’d like to see more people take advantage of the program,” said India Pierce Lee, program director for neighborhoods, housing and community development at the Cleveland Foundation, in an email statement. “With that in mind, the Cleveland Foundation is working with our partners to encourage changes to

RESULTS.

the participation rules to open up the program to more employees from the area’s institutions,” she said. “With so many new housing projects in the finishing stages in the Greater University Circle area right now, excitement about living there is growing, and it’s a great time to relaunch the program.” John Wheeler, senior vice president of administration at Case Western Reserve University, said while not as many employees have taken advantage of the program as they had hoped, they will continue to support Greater Circle Living. Since the program’s inception, 26 CWRU employees have participated, resulting in seven home purchases, six home improvement/ exterior repairs and 13 rentals.

Development abounds Chris Ronayne, president at University Circle Inc., said, “At the end of the day, Greater Circle Living is a selling point for us to revitalize urban neighborhoods by putting our monies where our mouth is. This program has helped us revitalize neighborhoods but it has also helped us make a market for the developers to invest.” He said there are 180 new units of apartments that will be available in the next four months. The three projects include: Uptown, 101 modern apartments at Euclid Avenue and Mayfield Road, anchored by MOCA Cleveland and the Cleveland Museum of Art; Hazel 8, which will be about 60 luxury apartments; and Circle East, 20 new townhome-style apartments by developer Wesley Finch. Mr. Finch, chairman of The Finch

Exposure

Group, is a Florida-based developer who has been bullish on Cleveland since his first development here in the 1990s. His company developed Park Lane Villa, 96 luxury apartments that opened in University Circle in 2008, and in June will open Circle East in East Cleveland, just eight-tenths of a mile from the entrance of University Hospitals. “Cleveland is booming, period,” he said. “There is no asterisk after that statement. We did a study last year with UCI … and it determined there is pent-up demand for an additional 750 rental units to be built in University Circle, you could fill them up.” He said the Greater Circle Living program is attractive to developers and tenants looking to sign a lease. He expects 90% of the new tenants at Circle East will take advantage of the rental assistance option.

Better with time Lynn Ross, executive director for the ULI Terwilliger Center for Housing, which is based in Washington, D.C., said live-near-yourwork programs have been gaining popularity since the 1990s. Ms. Ross said the Greater Circle Living program is exciting because it includes a rental component, which often is not included. She said the programs can be effective in stabilizing work forces and neighborhoods, but can take five to seven years to achieve “concrete results.” “It is typically a slow build,” she said. “These aren’t programs where there is a quick fix for communities or where you are going to see results the next year, what you see are results over time.” ■

Expertise

Results

Marcus & Millichap Cleveland is closing more investment sales transactions than any other ﬁrm in the Midwest. Below is a Sampling of Our Current Listings.

Since 1958, the attorneys of Reminger have been dedicated to meeting the needs of large corporations, small businesses and individuals. In that time, we have grown from one office to a leading law firm with 10 offices, 28 practice groups and nearly 300 employees. Our objective is the same whether handling litigation or providing informed counsel: to achieve the best results for our clients - successfully, professionally and efficiently. RESULTS. PERIOD. It’s more than just our motto, it’s our passion. To learn more, contact Managing Partner Stephen E. Walters in our Cleveland office.

Olmstead Falls, OH Mobile Home Park 141 Units $4,650,000 Agents: Jon McClellan, Kyle Baskin

Garfield Heights, OH Apartments 324 Units Request for Offer Agents: Michael Barron, Dan Burkons, Josh Wintermute

Cleveland, OH Apartments 64 Units $1,600,000 Agent: Ben Baker

Chardon, OH Shopping Center 37,813 SF $5,500,000 Agents: Scott Wiles, Craig Fuller, Erin Patton

Stephen E. Walters

To Access the Investment Market, Contact the Market Leader.

Michael L. Glass Vice President/Regional Manager Cleveland Office (216) 264-2050 mglass@marcusmillichap.com

Offices Nationwide

www.MarcusMillichap.com

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

WWW.CRAINSCLEVELAND.COM

SHOPPING CENTERS RANKED BY TOTAL RETAIL AREA

Shopping center Address Rank Phone/Website

Total retail area (square feet)

Total number of stores(1) Anchor tenants

Year opened

Owner

Leasing agent Phone number

Westfield SouthPark I-71 & Route 82, Strongsville 44136 (440) 238-9000/www.westfield.com/southpark

1,626,198

189

Dillard's, Sears, JCPenney, Macy's, Kohl's, Dick's Sporting Goods, Cinemark Theatres

1996

Westfield Corp.

Teri Robson (440) 734-6304

Eastwood Mall 5555 Youngstown-Warren Road, Niles 44446 (330) 652-6980/www.cafarocompany.com

1,459,168

210

JCPenney, Macy's, Dillard's, Target, Sears, Old Navy, food court, Ollie's, DFW

1969

The Cafaro Co.

Mark Marini (330) 747-2661

Westfield Great Northern 4954 Great Northern Mall, North Olmsted 44070 (440) 734-6304/www.westfield.com/greatnorthern

1,228,969

143

Dillard's, JCPenney, Macy's, Sears, Dick's Sporting Goods

1976

Westfield Corp.

Marjorie Shaw (440) 734-6304

Great Lakes Mall 7850 Mentor Ave., Mentor 44060 (440) 255-6900/www.shopgreatlakesmall.com

1,202,370

146

Dillard's, JCPenney, Macy's, Sears

1961

Simon Property Group Inc.

Pervis Bearden (317) 263-7608

Southern Park Mall 7401 Market St., Youngstown 44512 (330) 758-4511 /www.simon.com

1,156,635

120

Dillard's, JCPenney, Macy's, Sears, Tinseltown Cinema

1970

Simon Property Group Inc.

Jeff Rudd (317) 685-7339

Midway Mall 3343 Midway Mall, Elyria 44035 (440) 324-6610/www.midwaymallshopping.com

1,105,000

141

Best Buy, JCPenney, Macy's, Sears, Staples

1967

Gary McEnteer (440) 324-6763

Sandusky Mall Complex 4314 Milan Road, Sandusky 44870 (419) 626-8575/www.cafarocompany.com

1,093,871

113

JCPenney, Macy's, Sears, Elder-Beerman, T.J.Maxx, Best Buy, Old Navy, Dick's Sporting Goods, Target, Cinemark

1976

The Cafaro Co.

Mark Marini (330) 747-2661

Crocker Park Crocker & Detroit Roads, Westlake 44145 (216) 464-2860/www.crockerpark.com

1,000,000

Dick's Sporting Goods, Barnes & Noble, H&M, Urban Outfitters, Arhaus

2004

Crocker Park LLC

Carla Lally, (216) 292-0248; Jeremy Bates, (216) 292-0239

Parmatown Mall 7899 W. Ridgewood Drive, Parma 44129 (440) 885-2090/www.parmatown.com

992,000

149

Macy's, JCPenney, Walmart, Dick's Sporting Goods

1960

Parmatown One LLC

David Krone (216) 464-5900 x235

Beachwood Place 26300 Cedar Road, Beachwood 44122 (216) 464-9460/www.beachwoodplace.com

975,000

Dillard's, Saks Fifth Avenue, Nordstrom

1978

General Growth Properties

Rob Clarke

Richmond Town Square 691 Richmond Road, Richmond Heights 44143 (440) 449-3200 /www.shoprichmondtownsquare.com

877,450

JCPenney, Regal Cinemas, Macy's, Sears

1966

Simon Property Group Inc.

Tony Pestyk (440) 449-3201

Chapel Hill Mall 2000 Brittain Road, Suite 830, Akron 44310 (330) 633-7100/www.chapelhillmall.com

838,092

JCPenney, Macy's, Sears

1966

CBL & Associates Properties Inc.

Sherry Rawson (423) 553-8735

Ashtabula Towne Square(2) 3315 N. Ridge Road E, Ashtabula 44004 (440) 998-2020/www.ashtabulatownesquare.com

827,075

Sears, JCPenney, Kmart

1992

Cabot Investment Properties LLC

Rudy McCarthy (814) 532-6112

The Strip I-77 & Portage Road, North Canton 44720 (216) 464-2860/www.starkenterprises.com

800,000

Lowe's, Walmart, Giant Eagle, Best Buy, Books A Million, Bed Bath & Beyond

1996

The Strip Delaware LLC

Carla Lally, (216) 464-2860; Lidia Richani, (216) 292-0265

Westfield Belden Village 4230 Belden Village St. NW, Canton 44718 (330) 494-8815/http://westfield.com/beldenvillage

798,893

100

Dillard's, Sears, Macy's

1970

Westfield Corp.

Hunter Lawrence (440) 734-6304

Southgate USA Shopping Center 20950 Libby Road, Maple Heights 44137 (216) 663-3850/www.southgateusa.com

788,130

Home Depot, Giant Eagle, Southgate Bowling Lanes, Cuyahoga County Department of Human Services

1955

SG USA Ltd.

Tim Soeder (330) 374-6350

Summit Mall 3265 W. Market St., Akron 44333 (330) 867-6997/www.simon.com

766,324

120

Dillard's Men and Home, Dillard's Women, Macy's

1965

Simon Property Group Inc.

Tim A Hill, (330) 867-6997; Pervis Bearden, (317) 263-7608

Crossings at Golden Link Aurora Road & state Route 8, Macedonia 44056 (216) 464-5900/www.thekronegroup.com

725,000

Target, Lowe's, Giant Eagle, Great Escape

2004

RLP Group

Southland Shopping Center Pearl Road & W. 130th St., Middleburg Heights 44130 (888) 457-2877/www.brixmor.com

700,369

Giant Eagle, Burlington Coat Factory, Marc's, BJ's Wholesale Club, Jo-Ann Fabric and Craft, Marshalls, Office Max, Petco

1950

Brixmor Property Group

Ron McGehee (513) 341-1317

Steelyard Commons 3447 Steelyard Drive, Cleveland 44109 (216) 381-2900/www.first-interstate.com

696,142

Walmart Supercenter, The Home Depot, Target, Best Buy

2007

First Interstate Properties Ltd.

Randy Goodman (216) 381-8200

The Cascades of Brimfield 3975 Cascades Blvd., Kent 44240 (216) 896-5609/www.kowitpassov.com

650,000

Walmart Supercenter, Lowe's, Kohl's, Marshall's, Applebee's, Dollar Tree, Home Savings & Loan

2006

3D Cascades LLC

Carla Massara (216) 896-5609

University Square Warrensville Ctr. Rd. & Cedar Ave., University Hts. 44118 (216) 297-9510/www.inlandgroup.com

650,000

Target, Macy's, Jo-Ann Superstore, Pier I, T.J.Maxx & More

2003

Inland US Management LLC

Brian Dorr (216) 297-9510

Severance Town Center 3640 Mayfield Road, Cleveland Heights 44118 (216) 381-5762/www.pinetreecommercial.com

633,000

Walmart, Home Depot, Dave's Markets, Regal Cinemas

1963

Pine Tree Commercial Realty LLC

Randy Markowitz (216) 496-4445

Avon Commons 35974 Detroit Road, Avon 44011 (216) 381-2900/www.first-interstate.com

631,646

Heinen's, Home Depot, Kohl's, Target, Costco

2000

First Interstate Properties Ltd.

Steve Altemare (216) 381-8200

Great Northern Plazas 25859 Great Northern Shopping Center, North Olmsted 44070 (216) 755-5500/www.ddr.com

627,060

Home Depot, Marc's, Jo-Ann Fabric and Craft, Best Buy, Bed Bath & Beyond, K & G Menswear, DSW, PetSmart, Big Lots

DDR Corp.

Rob McGovern (216) 755-6435

Legacy Village 25001 Cedar Road, Lyndhurst 44124 (216) 382-3871/www.legacy-village.com

595,942

Dick's Sporting Goods, Giant Eagle, Crate and Barrel, Nordstrom Rack

2003

Legacy Village Investors LLC

Marcie B. Gilmore (216) 381-2900

Belden Park Crossings 5496 Dressler Road, North Canton 44720 (216) 755-5500/www.ddr.com

593,610

Target, Kohl's, Dick's Sporting Goods, Value City Furniture, Jo-Ann Fabric and Craft, DSW, hhgregg, PetSmart

1997

DDR Corp.

Rob McGovern (216) 755-6435

Marketplace at Four Corners Aurora Road & Marketplace Drive, Bainbridge 44202 (561) 629-5520/www.mpgpropertygroup.com

579,488

Kohl's, Marshalls, Walmart Supercenter, Babies R Us, Famous Footwear, Michaels, Dick's Sporting Goods, Big Lots

2002

MPG Property Group

Brad Kowit (216) 514-5100

Ridge Park Square I-480 and Ridge Road, Brooklyn 44144 (216) 464-5255/www.zeislermorgan.com

563,672

Lowe's, Marc's, T.J.Maxx, AMC Theatre, Bed Bath & Beyond, Michaels

1987

Ridge Park Square LLC

Shannon P. Blackwell (216) 464-5256

Macedonia Commons 8210 Macedonia Commons Blvd., Macedonia 44056 (216) 755-5500/www.ddr.com

543,987

Walmart, Home Depot, Kohl's, Hobby Lobby, Cinemark 15, PetSmart, Champs Sports

1994

DDR Corp.

Peter LaRose (216) 755-6580

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Information may be from www.costar.com. (2) Information is from www.costar.com and/or shopping center and management company websites.

RESEARCHED BY Deborah W. Hillyer

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Training: Governor’s ideal programs driven by demand continued from PAGE 1

“We found we could get reimbursement for on-the-job training,” Mr. Sooy said. A federal On-the-Job Training National Emergency Grant would cover the cost of training the new hire. “That was great for us because he did need some additional skills.” Many, including Gov. John Kasich, believe the state’s educational system and job-training programs haven’t been as successful as they need to be in turning out job candidates with the skills desired by businesses. So Gov. Kasich is making a transformation of the state’s work force development programs a top priority

for 2012, an effort to encourage businesses and public job-training agencies to work together to have the right educational programs in place when the demand for training arrives.

Programs under review In his “Mid-Biennium Review” released last week, the governor included a pledge to bring the state’s 77 work force programs — now scattered across 13 state agencies — under one umbrella in the governor’s new Office of Workforce Transformation. The goal is to be more demand-driven, which is government-speak for doing a better job of listening to what businesses

want from government educational and work force programs. That plan reviews nearly every aspect of the education and training process, from kindergarten through workplace training programs for the unemployed. At the same time, the governor created the Executive Workforce Board, which will bring businesspeople into the state work force planning process to help create a unified job training budget and measure the success of state programs. The governor believes the state needs to hear more from employers about what they need, and while it hasn’t been easy, the business community is beginning to get more

involved. “Oftentimes, we’re all so busy doing what we have to do that we don’t spend the time doing what we really need to do,” said Kevin Goodman, a partner and managing director of business development at BlueBridge Networks LLC, a Cleveland firm that provides data center services. “Oftentimes affecting change is only lip service because people are busy.” Mr. Goodman is a member of the board of the Regional Information Technology Engagement, or RITE, Board, a nonprofit group created in 2009 of business information technology leaders. Many members are chief information or chief technology

“We can fill our lowerlevel jobs in this economy. Where we do need the focus from government, it’s on capacity and education.” – Judy Murphy, vice president of human resources, Southwest General Health Center officers who are working to close the gap between the low supply and high demand for IT workers in Northeast Ohio. “This particular group shows a serious commitment on the part of employers like Cleveland Clinic and Eaton Corp. to make (talent) available here” in Northeast Ohio, Mr. Goodman said. “We’re synced with what the state is doing,” said Courtney DeOreo, the RITE Board’s project administrator. But she said her group sees a need for the state to go beyond its shortterm interest in how many people are being trained, to determine what is the capacity to train according to the needs of the employers and whether or not people are getting jobs related to their training. “We’re also looking holistically at the emerging work force,” she said. “(Employers) want the candidate with the blend of technical and leadership skills.”

Beyond IT The health care industry also is getting better organized and raising its voice. A group of health systems in the region in 2008 created the Northeast Ohio Health Science and Innovation Coalition to focus their work on improving the health care work force. Members include Cleveland Clinic, Louis Stokes Cleveland VA Medical Center, MetroHealth System, Southwest General Health Center, Summa Health System and University Hospitals. This group, too, is encouraged by what Gov. Kasich is trying to do. “We see a place (for our employers) at the governor’s Executive Workforce Board,” said Allison Motz, executive director of the organization. “We hope it’s really employer-driven.” Ms. Motz said the hospitals see their greatest need as finding training dollars to move people now in entrylevel jobs up the ladder, freeing those lower-level jobs up for people currently unemployed but who are ready for a first job in a hospital. There also is a big need in health care to fill the pipeline with people trained to be nurses. Judy Murphy, vice president of human resources at Southwest General Health Center in Middleburg Heights, pointed to the Clinic’s announcement last week of a job fair because it needs to hire 600 registered nurses. “We can fill our lower-level jobs in this economy,” she said. “Where we do need the focus from government, it’s on capacity and education.” She said the region and state need more nursing programs, whether they are two-year or bachelor’s degree programs. “This isn’t a new problem,” she said. “We had a little bit of a reprieve because many of the baby boomers didn’t retire because of the economy. But as the economy picks up and people retire, it will surface again as a huge problem.” ■

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

WXZ after Patents: Engineer guides next generation of inventor East Side RTA site continued from PAGE 1

By STAN BULLARD sbullard@crain.com

Residential and commercial builder WXZ Development Inc. of Fairview Park soon might land more land for another project in Cleveland’s University Circle. The board of the Greater Cleveland Regional Transit Authority on Tuesday, March 20, is scheduled to review a request to sell a vacant, nearly halfacre site at 1641 E. 118th St. to WXZ. Board action will depend on if the proposed sale is approved in an executive session for real estate prior to the board meeting, according to RTA spokeswoman Mary McCahon. The site was used long ago as a bus turnaround and layover site. It’s one of many sites that RTA wants to shed because they no longer are needed, Ms. McCahon said. James Wymer, CEO of WXZ, confirmed in an email last Friday, March 16, that WXZ is pursuing the parcel. He wrote that the developer sees it as a way to “continue our Circle 118 strategy.” Circle 118 is WXZ’s industrial-designed condo and rental development further south at East 118th and Euclid Avenue. Mr. Wymer declined to discuss specific plans until after RTA acts. Ms. McCahon said RTA understands WXZ plans a development of apartments and condos as part of a mixed-use project. Chris Ronayne, president of University Circle Inc., which oversees development plans and management of the area, said UCI wants to see the site developed and encouraged RTA to sell it when it decided it was of no use. “We see it as a high-density residential development with as many as 20 units,” Mr. Ronayne said. “It would meet demand of graduate students, faculty and eds and meds workers for housing near work at the circle.” Such a project would cost more than $2.5 million to develop using industry estimates for a project of that scope. RTA declined to say how much the developer agreed to pay for the property, but RTA’s website and an online listing on LoopNet say the parcel carries an asking price of $165,000. ■

Even so, his innovations have made a huge impact on GE Lighting. For instance, many of GE’s linear fluorescent lamps still use the UltraMax-brand ballast that Dr. Nerone developed more than a decade ago. The ballast contains an instant-start device adapted from technology used by GE’s compact fluorescent bulbs. That product, released in 2002, was more efficient, cheaper and had fewer technical problems than ballasts used in GE’s previous linear fluorescent ballasts, which it was buying from another company. A few years earlier, he developed a new transistor for GE’s lineup of CFLs. The transistor not only cost less than the old one, but it was smaller and was designed in a way that would stop it from shorting out. Almost all GE-brand CFLs today use a variation of the technology, he said. Dr. Nerone, who describes himself as an introvert, said he loves being able to improve products that provide light — something that people everywhere need. “Lighting is a very noble thing to do,” he said.

fascinated him, even though Dr. Nerone, then a student at St. Edward High School, didn’t understand the principles behind them. It’s important, he said, that kids are given a chance to work on projects like the ones he did in Cub Scouts. “You have to get them interested to the point where they have to know how something works,” said Dr. Nerone, who earned his bachelor’s, master’s and doctorate degrees in electrical engineering from Cleveland State University.

Dimming the lights at age 62 He does his part to educate the next generation of engineers, said Nina Scheidegger, an electrical engi-

neer who started working at GE Lighting as an intern three years ago. Dr. Nerone gives her guidance on how to approach problems but doesn’t solve them for her, she said, adding that he has taught her there is always a way to make a product better, even if nothing appears to be wrong with it. “He’s a great teacher and a great mentor, not to mention a great innovator,” Ms. Scheidegger said. Dr. Nerone, who also teaches a power electronics class at Cleveland State, said other people’s names are listed alongside his on more than half of his patents, though he noted that he led many of the teams that earned them.

His stack of patents likely will continue to grow, but not by leaps and bounds: Dr. Nerone is on the verge of retiring — sort of. He plans to start working just two or three days a week starting in May, just after he turns 62. Afterward, Dr. Nerone, who lives in Brecksville with his wife, Stephanie, will have more time to read books on his Nook and use his rowing machine, which he bought after back problems forced him to stop running. But he’s not ready to retire for real just yet, he said, alluding to the many lighting challenges he still wants to solve. “There’s no shortage of problems,” he said. ■

Pack mentality Like many engineers, Dr. Nerone said he spent much of his childhood tearing things apart to see how they work. But he wasn’t born with the tinkering bug. The Cleveland native said it was his experience in Cub Scouts that sparked his curiosity in technology. Every month, he and his fellow Scouts would get together at one of their homes to work on projects. Maybe they’d build model airplanes or make ash trays out of clay, Dr. Nerone said, laughing about how that would never be allowed today. But it was when they built simple crystal radios that his interest in engineering really took hold. He was amazed that by assembling a few simple parts he could listen to the radio through a pair of headphones in the garage of his home on West 114th Street. “I could pick up three or four stations with it,” he said. “I had to ground the thing to the water pipe.” That interest in radios evolved into an interest in transistor amplifiers, which in turn led him to a GE manual describing how to use the company’s transistors. The diagrams

Another little-known fact:

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Volume 33, Number 12 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 © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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Shale: Group already focused on clean water continued from PAGE 1

underground shale rock formations. Plus, the rising interest in shale gas is one reason why NorTech has increased its focus on clean water technologies, said vice president Byron Clayton, who leads NorTech’s effort to build a flexible electronics cluster in Northeast Ohio. Oil and gas companies use a high-pressure mixture that typically consists of water, sand and chemical additives to fracture shale rock formations and extract the gas. Most of the water that comes out during and after the process is treated by companies like ABSMaterials Inc. of Wooster. NorTech is in the process of putting together a road map that will detail which companies and organizations in the region already have expertise related to clean water technologies, and it will describe

also plans to help area companies that are developing technologies related to shale gas. “No one group is poised to do what needs to be done in Ohio,” he said.

Drawing the roadmap NorTech’s shale-related work already has begun. The organization is one of several working with Jobs Ohio — a nonprofit that last year took over many of the state’s economic development duties — to find ways to help Ohio companies provide the products and services that the oil and gas companies will need. NorTech has started facilitating meetings with colleges and career centers interested in educating people to fill jobs related to shale gas, a name for the gases trapped below

Contact: Phone: Fax: E-mail:

Toni Coleman (216) 522-1383 (216) 694-4264 tcoleman@crain.com

the market for such technologies, as well as the competitive landscape. The road map will focus on technologies that can clean water tainted by industrial processes and those that can help manage storm water, said Dr. Clayton, who added that the focus on water technologies came about partly because of rising regional interest in protecting and maximizing the use of Northeast Ohio’s abundant freshwater resources. The road map isn’t done, but Dr. Clayton said he already knows of many local companies and organizations with expertise in cleaning water.“We know about cleaning up industrial waste out of water,” he said. Once the road map is complete, NorTech will organize a series of meetings between stakeholders to inform them and get them to col-

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laborate. NorTech eventually might push for environmental regulations that would provide opportunities for those companies, Dr. Clayton added. The nonprofit also might draft a road map designed to help the region capitalize on the demand for technologies related to extracting and processing shale gas, Mr. Karpinski said. There are opportunities for firms that make advanced materials and industrial control systems, he said.

Learn from experience For now, though, the main goal of NorTech’s shale gas effort is to help local suppliers and workers benefit from the anticipated drilling boom, which could generate anywhere from 20,000 to 200,000 jobs over the next few years, depending on the study. For instance, on behalf of JobsOhio, NorTech last week led a group of several organizations to Washington County, Pennsylvania, to talk to people there about how Pennsylva-

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nia handled its shale gas drilling boom, which started earlier. One person they talked to was Steve Forde, vice president of policy and communications for the Marcellus Shale Coalition of Canonsburg, Pa. The Youngstown native said it is “critical” that Ohio prepare its work force and supply chain for the upcoming increase in shale gas drilling. Pennsylvania could have done a better job on the work force front, he said: The group last year did a survey showing that seven of 10 shale gas jobs in the state are filled by people from Pennsylvania. The ratio was much lower back in 2008, he estimated, adding that he didn’t have figures for previous years. Likewise, if Ohio wants to get the most out of the anticipated shale gas boom, it will need to get organized, Mr. Karpinski said. “It’s not just going to happen,” he said. ■

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THEINSIDER

THEWEEK MARCH 12 – 18 The big story: Existing investors in ViewRay Inc. pumped another $16 million into the medical imaging company based in Oakwood Village to help it accelerate sales of its first product later this year. ViewRay will use the money to hire people in sales, marketing and service positions. Although one customer already is using ViewRay’s MRI-guided radiation therapy system for research purposes, the company is preparing for a broader product launch. ViewRay is waiting for the U.S. Food and Drug Administration to give it approval to sell its system for use on patients. Money talks: KeyCorp said its board authorized a common stock repurchase program that clears the way for the company to buy back up to $344 million of its shares. The banking company also announced it will evaluate an increase in the company’s quarterly common stock dividend at its regular meeting in May. Both actions were part of the company’s capital plan, which was submitted to the Federal Reserve. The Fed has notified KeyCorp that it has no objections to the capital actions described in the plan.

Hire power: Cleveland Clinic will play host to a nursing job fair later this month in an effort to fill current positions and “proactively (prepare) for the changing landscape of the health care industry.” The Clinic plans to hire 600 nurses over the three-day event, March 28-30 at Cleveland Browns Stadium. The hospital system said in a news release that candidates — who must be certified registered nurses — can apply for up to three positions within the system and, if qualified, will receive contingent offers by the event’s close.

A fresh look: Kent State University plans to give its main campus in Kent a facelift, though the plan is a scaled-back version of a previous proposal that stalled because of a lack of support for a student fee that would have financed much of it. University trustees authorized the issuance of $170 million in general receipt bonds — about $40 million less than the bond sale originally proposed in late 2009 — to finance the construction initiative. A student fee is not part of the new plan.

Ready for R&D: Parker Hannifin Corp.’s Parflex Division in Ravenna could receive a $2.3 million state grant that it would use to consolidate the division’s research and development in the city. The Ohio Third Frontier Commission will award the money if Parker Hannifin makes an official commitment to move forward with plans to create the Parflex Advanced Polymer Research and Manufacturing Innovation Center. Parker Hannifin estimates that the consolidation would create 34 jobs in Ohio and retain 304. A deal that produces smiles: The Riverside Co. acquired DentalPlans .com, a direct-to-consumer marketing and e-commerce platform for dental savings plans. Terms were not disclosed. DentalPlans .com, based in Plantation, Fla., provides online tools that help consumers select the best savings plans for them.

This and that: Investment management firm Apollo Global Management LLC agreed to acquire indoor water park operator Great Wolf Resorts Inc., which has properties in Sandusky and Mason, Ohio, near Cincinnati, for about $700 million. … Positively Cleveland and other civic groups are about to unveil a plan aimed at strengthening Cleveland as a tourism destination. The Destination Cleveland Travel + Tourism Outcomes Launch will take place March 27 at the House of Blues.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Ohio tax laggards put amnesty offer to good use

filed through the Ohio Business Gateway. For more information, visit www.tax.ohio .gov. —Michelle Park

■ Between Oct. 1, when the state rolled out its first use tax amnesty program, and March 14, more than 900 use tax amnesty returns have been filed for liabilities totaling nearly $5.5 million, a Crain’s inquiry to the Ohio Department of Taxation revealed. Asked whether that’s more, less or about what the state expected, department spokesman Gary Gudmundson replied that the state had no expectation as to how many taxpayers would come forward. “Unlike other amnesty programs, the primary purpose of consumers’ use tax amnesty was to educate the business owners,” he said. “No revenue target was established.” Use tax is owed by Ohio individuals and businesses when they do not pay sales tax on a taxable product or service. Most of the 915 use tax amnesty returns were filed electronically, though roughly 85 paper applications were received. The man keying in those paper reports said that a number of the businesses filing are medical in nature, including dental and medical practices and veterinarians, Mr. Gudmundson said. Of course, that’s a small sample of the returns received, he noted. Some amnesty filers have paid their liabilities up front, while others have arranged for payment plans, Mr. Gudmundson said. The use tax amnesty program continues through May 1, 2013. Applications may be

■ If only he spoke Taiwanese. Silico Corp. founder John Cachat said he shut down the small business process software company last fall after the company’s Taiwanese investors had a change of heart. The investors originally wanted to finance the Cleveland company — which aggressively competed with IQS Inc. of North Olmsted, a business process software company Mr. Cachat founded in 1988 — partly because doing so would have helped one of them get a visa to live in the United States. When they lost interest in the visa, however, they lost interest in financing Silico, Mr. Cachat said, noting that he might’ve been able to convince them to stay with the company if he spoke their language. Silico had five employees in September 2011. He shut it down shortly thereafter. Mr. Cachat said he could have kept the company open, but he chose instead to pursue another opportunity: The CEO of KeyedIn Solutions Inc. of Minneapolis reached out to him to see if he’d be interested in joining the company, a 1-year-old business process software and consulting firm with about 60 employees. Among them is chief financial officer Karen Adame of Medina,

MILESTONE

BEST OF THE BLOGS

THE COMPANY: Walter & Haverfield LLP THE OCCASION: Its 80th anniversary

Excerpts from recent blog entries on CrainsCleveland.com.

One of downtown Cleveland’s longtime institutions, Walter & Haverfield LLP, this year marks eight decades of practicing law in Northeast Ohio. In 1932, recent law school graduates Paul W. Walter and D. Rusk Haverfield met at an Ohio Bar Association meeting. Soon after, they joined fellow attorney Joseph Poe to open Walter, Haverfield and Poe in the Leader Building. The firm became involved in municipal, county, state and national government law work — a practice that remains strong to this day, with representation of numerous municipalities growing steadily since the early 1940s. By this time, the firm also had begun its labor law representation, another longstanding practice group. Cascarilla At the start of World War II, Mr. Poe left the firm, resulting in a name change to Walter & Haverfield. In the 1950s, the firm moved from the Leader Building to the Terminal Tower. During the 1960s, it made another name change — to Walter, Haverfield, Buescher & Chockley — to recognize the contributions of Loyal V. Buescher and F. Wilson Chockley Jr. It grew steadily, and by the end of the 1990s, it had more than 50 attorneys. In 1992, both of the original founding namesake partners died, and as a tribute, the firm name reverted back to Walter & Haverfield. Today, under the leadership of managing partner Ralph Cascarilla, Walter & Haverfield has a roster of 50 attorneys in offices at The Tower at Erieview. For information, visit www.WalterHav.com.

Overseas investors don’t see value in financing Silico

Another good reason to call NE Ohio home ■ Ohioans pay among the lowest auto insurance rates in the country. Forbes.com noted that a just-released study from Insure.com finds Ohioans on average pay $1,099 a year to insure their cars, the seventh-lowest rate nationwide. (Maine is cheapest, at $889.) Louisiana residents pay the most, at $2,536 a year. The website reported that while car insurance costs “are largely based on a motorist’s driving record and personal profile, annual miles driven and what he or she drives, all else being equal car insurance rates will vary from one state to another for a variety of socio-political reasons.” Amy Danise, editorial director of Insure.com, told Forbes.com these factors include a state’s insurance regulations, the level of competition among carriers, and severe weather that can produce aboveaverage claims.

Cleveland makes a fashion statement ■ T-shirts increasingly are becoming expressions of urban pride, according to a story from TheAtlanticCities.com, and both Cleveland and Toledo are major participants. “From Buffalo to Austin, Boston to Detroit, there are dozens of T-shirt companies selling slogan-decorated apparel that appeals both to locals and to people who’ve moved away,” the story noted. But beyond showing support, urban T-shirts also have become a ticket to entrepreneurship.

who, like Mr. Cachat, works from home. Now, as the company’s vice president of business development, Mr. Cachat said he’s happy to be part of a capable executive team as opposed to trying to start a company from scratch. “I used to have to do all this by myself,” he said. — Chuck Soder

She’s trying to be a credit to aggregators ■ Many credit union executives begin their days scanning various sources for industry news, but emails often are deleted and links not followed, meaning the information doesn’t reach its intended audience. Tammy Holtzmeier would know: She’s the former CEO of a federally chartered credit union in Toledo. So Ms. Holtzmeier has built something she believes will do a better job of keeping executives in the loop. CUhomepage, slated to launch in midApril, is an aggregator of news and information that concerns both credit unions and banks. In essence, it pulls into one place many of the pieces people use to consume industry news, such as publications and widgets. The site also will create content. “The problem that I observed was that in banking, we tend to look to our left and look to our right and keep a very small circle for the publications that we read,” Ms. Holtzmeier said. “Bankers tend to read banking publications, and that’s it.” The site is in beta stage, and more than 200 testers are using it, she said. It’s developed out of Westlake. — Michelle Park

Among the best-known players in the Midwest is the CLE Clothing Co., at 342 Euclid Ave., whose shirts and other gear aim to instill pride in Clevelanders. “Its collection, sold online and in two stores, includes its basic CLE T-shirt as well as men’s briefs with the Ohio map,” TheAtlanticCities.com reported. A slideshow listing some of the site’s favorite T-shirts included one from CLE Clothing that lists city names in striking typeface: London, Paris, Cleveland, New York, Barcelona. Another shirt featured in the slideshow, from Jupmode in Toledo, contained the following simple, but effective message: “You will do better in Toledo.”

It’s fair to call this a pretty good decade ■ If it weren’t for Apple, Cliffs Natural Resources Inc. would have been the fastest-rising stock of the last 10 years. TheStreet.com said Cliffs, a coal and iron ore mining company, has seen its stock rise 3,150% in the past decade, good for second place on the list. Only Apple, with a 4,900% increase, has been better for investors. TheStreet.com noted that Cliffs’ stock price “has struggled over the past year as demand for steel and iron ore in China has moderated. More recently, iron ore prices have declined, which doesn’t bode well for margins.” However, it said recent policy actions in China — particularly lowering the required reserve ratio for banks — “have been encouraging, and some think steel demand is nearing a bottom.” The website also cited a Merrill Lynch report stating that the Chinese government “could soon announce water infrastructure projects, rail expansions, nuclear plants, and other energy-related projects” — all of which are steel-intensive.

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