Crain's Cleveland Business

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AS SEEN ON TV Several local business owners are benefiting in different ways because of their exposure on various reality TV shows. Read on in this week’s Small Business cover story on Page 13.

“We were looking for a niche market. We repair our own fleet. Why wouldn’t we repair other people’s boats?” – Ronald Rasmus (below), chairman and CEO, Great Lakes Group

Ford revs up for more jobs in Brook Park Plant set for new engine work; laid-off UAW members have shot at 200 additional positions

MARC GOLUB

By DAN SHINGLER dshingler@crain.com

GREAT LAKES BUOYS TOWING BUSINESS Operation charts progressive course in shipbuilding, vessel repair By JAY MILLER jmiller@crain.com

O 41

n a walking tour of his company’s six-acre — and growing — operation on the old Cuyahoga River channel, Ronald Rasmus, chairman and CEO of Great Lakes Group, can show off his company’s future and its 112-year-old skills with the

sweep of his arm. Its past is represented by one of its red-and-green painted tugs, the Ohio, tied up waiting for repairs. In drydock next to the Ohio is a twomasted wooden sailing ship — the reconstruction of the U.S. Niagara, which helped defeat the British Navy in the Battle of Lake Erie during the War of 1812 — that is in for its See TOWING Page 7

1,500 union members. Well, Christmas finally is coming to Brook Park, Mr. For years, United Auto Gammella now says. Workers Local 1250 presi“We’ve been awarded dent Mike Gammella has the new four-cylinder sounded like a kid who engine,” an excited Mr. helped with the dishes Gammella reported last on Thanksgiving and was Gammella Wednesday, Oct. 5, freshly eager to find out what the back from union bargaining next big holiday would bring. sessions in Detroit. “This is fantastic “I want a new four-cylinder news.” engine,” Mr. Gammella would say, Mr. Gammella has wanted to see over and over again, referring to the such an engine made at the plant work he hoped to get at Ford’s Brook for several reasons, not the least of Park engine plant for his roughly See FORD Page 17

State’s use tax amnesty plan accommodates late filers By MICHELLE PARK mpark@crain.com

Carole Sanderson knows this from recent experience: Business owners who owe back use taxes, or suspect they might, have reason to appreciate the amnesty now offered by the state of Ohio. In what Ms. Sanderson and others call a business-friendly move, the Ohio Department of Taxation on

INSIDE: Which businesses are eligible for tax amnesty, and how do they proceed? Page 21 Oct. 1 rolled out its first use tax amnesty program for businesses that need to catch up on filing and paying the use tax. Use tax is owed by Ohio companies when they do not pay sales tax on a taxable product or service. Under the amnesty program, the See TAX Page 21

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A vacant apartment building is about to undergo a $3 million renovation to meet housing needs for the Detroit Shoreway neighborhood ■ Page 5 PLUS: ATHLETIC DIRECTORS ■ CRUZE ■ & MORE

Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 41

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COMING NEXT WEEK These men and women are right on the money Crain’s for the fifth year will identify and honor a group of the area’s top chief financial officers. For a list of this year’s finalists and coverage of past events, visit www.CrainsCleveland.com/cfo.

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OCTOBER 10 - 16, 2011

WHAT GOES UP ... Workers are paying a lot more for their health insurance this year — but so are employers. A new Henry J. Kaiser Family Foundation study finds that employers are picking up most of the increase in the cost of health insurance in 2011. Average annual health insurance premiums and worker contribution for family coverage, 2009-2011

Year

Total

Worker

Employer

Worker %

2011

$15,073

$4,129

$10,944

27.4%

2010

13,770

3,997

9,773

29.0

2009

13,375

3,515

9,860

26.3

REGULAR FEATURES Best of the Blogs ..........23 Big Issue ......................10 Classified .....................22 Editorial .......................10 From the Publisher .......10

Going Places ................12 List: Accounting companies ...............18 Milestones....................23 Reporters’ Notebook.....23

CRAIN’S ON THE WEB Go behind the news ■ Crain’s weekly podcast offers deeper analysis of each week’s top stories. You can listed by visiting www.CrainsCleveland.com/section/audio.

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Condo market shows signs of improvement Activity quickens at lower price points; higher-end projects move forward, too Story by STAN BULLARD ■ sbullard@crain.com

By TIMOTHY MAGAW tmagaw@crain.com

Jim Pshock never viewed himself as an entrepreneur, especially considering his business plan was rejected by his former employer three times. But after some prodding by his pastor and a little self-examination, Mr. Pshock took the plunge and started his own venture. That was more than three years ago, and Bravo Wellness, Mr. Pshock’s company in Avon, since has grown from a two-employee outfit to one

with about 70 employees and 175 clients around the country. Mr. Pshock said the company, launched in 2008, has seen 300% growth in revenue each year thanks to cash-conscious companies looking for ways to curb Pshock their ballooning health care costs. To help handle its growth, Bravo plans to construct a 32,000square-foot building near its current location in an office park near Chester Road off Interstate 90. The building is slated to open in fall 2012. “I never wanted to be an entrepreneur, but I felt a solution existed for employers that they weren’t educated about,” said Mr. Pshock, Bravo’s owner and CEO. Although he shies away from being dubbed a wellness cop, Mr.

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ndrew Belzinskas recently bought a one-bedroom, apartment-style condo on Kenmore Drive in Euclid for a cool $9,500. Cash. Yet, he fears, “I overpaid for it,” said Mr. Belzinskas of his purchase from the U.S. Department of Housing and Urban Development, a seller of last resort for foreclosed homes with some form of federal mortgage. Mr. Belzinskas now believes he should have paid about $6,000 for the condo because he found its furnace must be replaced. He says See CONDOS Page 19

Business is well at Bravo Wellness Avon company grows as clients seek ways to save on health care, promote better lifestyle

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Pshock said Bravo’s niche is developing wellness toolkits, coordinating health screenings and helping companies reward workers who make healthy lifestyle choices with lower insurance premiums. “Sometimes we’re viewed as an enforcer because that’s what we’re hired to do,” he said. Convincing employees to participate in wellness programs traditionally has been a struggle, Mr. Pshock said, but offering incentives for participants — such as cheaper health insurance premiums — gives those efforts more muscle than, for example, a free T-shirt or other tchotckes. Bravo says it achieves about 97% employee participation in the See WELLNESS Page 22

FILE PHOTO/JASON MILLER

At Bluestone, a condo community in Cleveland Heights developed by homebuilder Ken Lurie and apartment owner David Orlean, construction has started on a new $5 million phase. Six units in that new building already are spoken for by buyers.

INSIGHT

FILE PHOTO/JESSE KRAMER

LaunchHouse’s Todd Goldstein and Dar Caldwell

Shaker incubator eyes more room to launch Founders expanding to hold 10 new companies

THE WEEK IN QUOTES “Our success with the Cruze shows that, when we have a good product, we can be a big contender.” — Chris Perry, global marketing chief, Chevrolet. Page 8

“You have to try to find different ways of raising revenues. As an athletic director and an educator, I’m not necessarily trained to do it, but we have to.” — Jeff Harrison, athletic director, Medina school district. Page 11

By CHUCK SODER csoder@crain.com

“People assume you’re on a reality show and you’re getting paid and becoming a millionaire, but that’s not true.” — Valerie Mayen, owner of Cleveland-based design shop Yellowcake and contestant on Season 8 of “Project Runway.” Page 13

The first time Todd Goldstein and Dar Caldwell held an event to showcase startups in their business incubator, 12 people showed up. How things do change: Two years later, more than 700 people attended the grand opening of their new incubator, Shaker LaunchHouse. One of them was U.S. Sen. Sherrod Brown, D-Avon. Mr. Goldstein still is amazed at how fast interest in LaunchHouse has grown.

“I remember a Shaker Heights cop saying to us, ‘We’ve never had this many people in Shaker for an event,’” he said. And the place already is expanding. LaunchHouse, which is based in a 23,000-square-foot former car dealership, is about to start renovating 5,000 square feet in the dealership’s former service bay to make room for several groups of cubicles that could house up to 10 more companies, each with five employees. They would join more than 60 small companies and organizations See LAUNCH Page 20

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Chemical product maker on the move to Concord De Nora consolidation promotes collaboration By CHUCK SODER csoder@crain.com

On Tuesday, Sept. 27, Jon Fox was scheduled to make the 20-minute drive from the headquarters of De Nora Tech Inc. in Chardon to the De Nora research-and-development center in Fairport Harbor. It’s a common trip. “We do that all the time,” he said. Not for long: Employees in both locations are scheduled to move into a building in Concord Town-

ship over the next few months. The headquarters and the R&D center — both of which are pieces of electrochemical products maker Industrie De Nora of Milan, Italy — employ about 80 people combined. De Nora Tech also has a manufacturing operation in Chardon that will not move. Moving into the Concord Township building will promote collaboration among employees who previously made frequent trips between Chardon and Fairport Harbor, said

Mr. Fox, manager of sales and marketing for De Nora Tech’s oxygen and specialties group, which makes anodes and anode coatings. The building, located at 7590 Discovery Lane, is designed to promote communication among employees, Mr. Fox said. It has multiple conference rooms and gathering areas, and in general it has a more open feel than the company’s existing Northeast Ohio offices. “We’re really going to have a much more collaborative office,” he said. The company also figured it was a good time to buy real estate, given the economic downturn, Mr. Fox added. De Nora Tech bought the Concord Township building for $2.75 million in January and in July sold it to Capannoni USA LLC, which is part of the De Nora family of companies. The 55,000-square-foot structure, which was used by Swagelok Co. of Solon until a few years ago, is a little smaller than the combined footprint of the buildings in Chardon and Fairport Harbor, Mr. Fox said. However, while the De Nora family of companies owns the R&D center, which is for sale, it leases its Chardon offices. In addition to anodes and anode coatings, De Nora Tech makes products for chlorine and alkali producers as well as makers of sodium and potassium chlorate. The R&D center develops technologies related to oxygen depolarized cathodes and provides technical assistance to other Industrie De Nora companies, in addition to other responsibilities. Employees in Chardon will move out at the end of October, and employees at the R&D center will move over the next few months, Mr. Fox said. In the meantime, the company is scanning all its paper files into computers so that the new location won’t need to have “rooms full of file cabinets” like its existing facilities do, Mr. Fox said. “We have 50 years of history in paper,” he said. ■

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Volume 32, Number 41 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $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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West Side apartments set for renovation

An abandoned, 24-suite apartment building called “The Sylvia” on Cleveland’s West Side is about to undergo a $3 million renovation and help meet surging apartment demand in the neighborhood served by the Detroit Shoreway Community Development Organization. “We have people in our office every day looking for apartments,” said Jeff Ramsey, Detroit Shoreway’s executive director. The nonprofit neighborhood group has 211 apartments in buildings it has renovated through the years. All its suites are occupied, so proving demand exists for more low-income rental apartments was simple. However, lining up renovation funds for the three-story brick building at 6010 Franklin Blvd. was not. A $100,000 line of credit from Village Capital, an affiliate of the Neighborhood Progress Inc. financing intermediary, helped the neighborhood group pay insurance and operating costs on the property from 2009 until the project was financed this month. It also covered planning costs for the project. “We’d have had to scrape hard to come up with that operating money,” Mr. Ramsey said.

Detroit Shoreway gained the property itself, which dates from 1926, through a complicated process. After the Sylvia’s owner died in 2009, most tenants moved out as tax and utility bills went unpaid. When Cleveland Municipal Court placed the property in receivership, Detroit Shoreway became its receiver. It bought the property for $32,506 at a Cuyahoga County sheriff’s sale last June 26. The key to getting the rehab going was a $2.35 million award of federal Neighborhood Stabilization Funds from the Cuyahoga County Land Reutilization Corp. It is money that the city of Cleveland and the county jointly received from the U.S. Department of Housing and Urban Development. A bank provided the final piece of financing, though not with a loan. Huntington Bank acquired a federal historic tax credit to provide equity for the project. That yielded $650,000 for the makeover, Mr. Ramsey said. Plans call for Marous Brothers Construction Co. of Willoughby to convert three efficiency apartments in the Sylvia into two-bedroom apartments, a change that will reduce the number of units to 18 suites from 24. One efficiency unit is located in such a place that it cannot be converted to a larger unit, Mr. Ramsey said.

Story from www.CrainsCleveland.com.

Small business employment index declines

Sylvia building will undergo $3M rehab to serve housing needs in Detroit Shoreway By STAN BULLARD sbullard@crain.com

ON THE WEB

STAN BULLARD

Despite the travails at the property, wood floors and lead-glass cabinets in dining rooms survive in the suites, which originally were designed for people who rode nearby trolleys to work. “We’re out to restore its former glory,” Mr. Ramsey said. Construction started last Thursday, Oct. 6, and the suites will be available for occupancy next spring, with 16 suites reserved for lowincome persons and two marketrate units renting for $450 to $495 monthly. Costs for the project show it is an intimidating process. The nonprofit will put almost $167,000 into each

suite. Ralph McGreevy, executive vice president of the Northeast Ohio Apartment Association, said a forprofit owner still might undertake such a project, but if it was to secure bank financing it would not be able to put that much money into the building nor to create a neighborhood gem. “Detroit Shoreway is a nonprofit and can make a statement,” Mr. McGreevy said. “Its project will help uplift the neighborhood. Imagine the positive impact that a project like this can have on the area. There also weren’t a lot of people lining up to do this type of project.” ■

A barometer of hiring trends among companies with 300 or fewer employees continues to send out discouraging signals. The Small Business Employment Index presented by CBiz Payroll Services, a unit of business services provider CBiz Inc., decreased by 0.81% in September, after posting a decrease of .36% in August. “Consumer demand and the overall economic malaise that permeates most of what Americans are seeing and hearing are the primary contributing factors around the lack of employment growth,” said Philip Noftsinger, business unit president for CBiz Payroll Services. “Until confidence rises ... results like September’s are likely to continue into the foreseeable future.” Of the companies that were surveyed, the data show 26% reported a decrease in employee headcount while 26% increased their staffing. For the third month in a row, hiring in the small business sector trended slightly downward, according to the survey.

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OCTOBER 10 - 16, 2011

SHOWCASE

KPMG’s NE Ohio growth to outpace other areas By MICHELLE PARK mpark@crain.com

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KPMG, one of the Big Four accounting firms, over the next year will grow its staff by a greater amount on a percentage basis in Northeast Ohio than in any of its 20 other major markets, its top executive said last week. With an eye on companies based here and the hundreds of millions of dollars those companies spend on professional services, KPMG plans to add about 20 experienced professionals and at least 50 people total to its Cleveland office over the next 12 months, chairman and CEO John B. Veihmeyer said. The local office currently employs 150, so the additions mean at least 33% job growth for KPMG in this region. Even as many businesses have struggled to grow in these economic times, KPMG in Northeast Ohio saw its revenues rise 26% in the fiscal year ended Sept. 30 over revenues in fiscal 2010. “We think that 26% growth can accelerate dramatically,” Mr. Veihmeyer said. KPMG does not disclose revenue figures for its offices. Mr. Veihmeyer was one of about 20 KPMG senior leaders who gathered last week for the annual meeting of the firm’s board and management committee, not in its U.S. headquarters of New York City,

“We think that ... growth can accelerate dramatically.” – John B. Veihmeyer, chairman and CEO, KPMG but in Cleveland. Their meeting here is a reflection of KPMG’s commitment to investing here, Mr. Veihmeyer said. Last Wednesday, Oct. 5, Mr. Veihmeyer and John S. MacIntosh, managing partner for Northeast Ohio, moderated a panel discussion on business growth in and the attraction of business to Northeast Ohio at the Marriott in downtown Cleveland. The invitation-only event attracted an audience of 80 and involved Lt. Gov. Mary Taylor, recently retired KeyCorp CEO Henry L. Meyer III and other Northeast Ohio business leaders. Firm officials also met separately with a number of local company leaders during their stay. “The real reason for being here is the chance to have that one-onone,” Mr. Veihmeyer said. In his conversations with local business leaders, Mr. Veihmeyer noted, he’s heard many discuss overseas expansion. ■

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Towing: Investment underscores expansion goals continued from PAGE 1

annual inspection, cleaning and painting. Great Lakes Group for nearly 20 years has maintained the ship — a job that includes the engines the company outfitted on the tourist attraction in 1992. The future of the company that formerly carried the name Great Lakes Towing Co., which now is a subsidiary, is represented by two modern marvels. First, there’s the R/V Kaho and R/V Muskie, a matching pair of 70foot-long, all-aluminum research vessels that Great Lakes Group has built for the U.S. Geological Survey. The high-speed, $4.1 million boats will be part of a five-boat fleet gathering fishery and water quality information on the Great Lakes. These are the company’s first allaluminum vessels, which required an investment in new welding equipment and training for its work force. The company supports a training program at Max Hayes High School in Cleveland to ensure it will have a steady flow of new workers and uses Cuyahoga Community College to train longtime employees on aluminum welding techniques. The most important piece of the future, though, is on the dock a few yards from the Geological Survey boats. That would be the new, $8 million, 770-ton mobile hoist that will allow the shipyard to build more than one ship at a time. The company is in the midst of a long-term, $24 million investment that is transforming a formerly ugly spot on the old Cuyahoga River channel into a shipbuilding and vessel maintenance business with a nearly worldwide scope. That’s a big bet for a company with $20 million in annual revenue. The investment, said chairman and CEO Ronald Rasmus, “is a morphing of our business.”

shipyards like them.”

Pulling in contracts Great Lakes Group always has built its own tugs and now it has created a subsidiary, Tugz International LLC, to design and build its own line of commercial tugboats. Last month, the company won a $23 million contract to build two 50-ton tugs for Seacor Holdings Inc., which provides marine services to the oil and gas industries in the Gulf of Mexico. The two tugs will be used for ship docking and escort operations for the Hovensa Oil Refinery in the Virgin Islands. Those two custom-built tugs will be delivered in 2013. The shipyard also is building a

tug on spec and a $900,000, 60-foot workboat that the city of Milwaukee plans to use for icebreaking and salvage and diving operations. Still to come is a $9.6 million, 67,000-square-foot undercover shipyard on two acres at the west end of the Great Lakes Towing complex. This building, along with the mobile hoist, which has a sling to carry boats from the slip to the building, will allow the company to build or repair as many as eight boats at one time. The new building also will include a Rolls-Royce marine service center. Last June, Great Lakes Group signed a long-term agreement with the maker of propulsions systems, including diesel and gas turbines, to operate its Great Lakes repair

and overhaul operation.

Efficiency experts William Friedman, president of the Cleveland-Cuyahoga County Port Authority, who has watched Great Lakes Group since he worked on Indiana’s Lake Michigan ports from 2000 to 2004, believes the company has a winning formula. “Ron (Rasmus) recognized that the towboat business alone couldn’t sustain growth, so they went in the direction of this shipyard and building and repairing vessels,” he said. “I don’t think anybody else on the Great Lakes has combined the shipyard with the marine service business like they have.” Mr. Friedman has been particular-

ly impressed with the company’s ability to sell into the Gulf Coast markets where its union labor costs compete with low-cost, right-towork shipyards in Southern coastal ports. “They’re winning these bids because they must be efficient,” he said. Mr. Rasmus delights in his company’s past. A site tour includes a stop in the board room, which is dominated by a table bought by John D. Rockefeller, one of the company’s incorporators in 1899. But he is more excited about the future, where he foresees getting into building carbon fiber boats someday. He also would like to see Great Lakes Group play a role in the wind turbine business, making barges to haul the turbine pylons to offshore and near-shore wind installations. “I believe in offshore wind,” he said. ■

Good question Mr. Rasmus said the towing business on the Great Lakes — where more than 35 Great Lakes Towing tugs serve 30 major ports — hasn’t been growing. But the business for workboat building and repair looks promising because much of the U.S. fleet of tugboats is aging; as a result, many boats are in need of repair or are reaching the end of their 25- to 30-year life cycles. “We were looking for a niche market,” Mr. Rasmus said. “We repair our own fleet. Why wouldn’t we repair other people’s boats?” So, Mr. Rasmus embarked on an expansion effort that began in 2005 with a new, $3.5 million company headquarters and a work building on a site across the old river channel from the Cargill salt mine. The company secured $600,000 in low-interest loans from both the city of Cleveland and Cuyahoga County to help with the financing of the expansion. It also landed a $6 million loan from the state of Ohio for the mobile hoist. Mr. Rasmus said he expects employment at the company’s Cleveland shipyard to grow to 100 from the current 68. Including its tug workers stationed around the Great Lakes and beyond, the company employs about 125 people. David Krapf, editor-in-chief of WorkBoat magazine and WorkBoat .com of New Orleans, which covers the inland waterways, understands the company’s strategy. “What they’re targeting I think makes sense businesswise,” Mr. Krapf said. “There aren’t too many

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OCTOBER 10 - 16, 2011

With Cruze, GM ‘better armed’ Automaker’s success reflected in sales, decision to add shifts at Lordstown plant

GM’S NUMBERS GAME Some data on the popularity of the Chevrolet Cruze: ■best-selling U.S. compact car since April ■sales through August beat predecessor, Chevy’s Cobalt, by 88% over 2010’s like period ■9.2% of Cruze buyers from March through June formerly owned Toyotas, while 7% owned Hondas previously.

By MIKE COLIAS Automotive News

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Before the launch of the Lordstownbuilt Chevrolet Cruze a year ago, dealer Steve Hurley bought three rival compacts for his customers to comparison shop — a Honda Civic, Ford Focus and Toyota Corolla. “I had never been as confident to put a car up against direct competitors as I was with the Cruze,� says Mr. Hurley, dealer principal of Stingray Chevrolet outside Tampa, Fla. It turned out to be a good bet. The Cruze has shot to the top of the compact market, putting General Motors’ flagship brand in unfamiliar territory. (It last led the segment with the Chevy Cavalier in 1993.) Critics accustomed to panning GM’s small cars have widely praised the Cruze. Consumer Reports, for example, lauded it as “greatly improved� over its predecessor, the Cobalt. The Cruze’s success comes as the compact market grows in size and profitability, with buyers increasingly springing for higher trim levels. The Cruze was the top-selling U.S. compact for five straight months through August, vaulting over the Civic and Corolla as they struggled with earthquake-related parts production shortages. Data show some Japanese-brand buyers strayed to the Cruze, which is now neck-and-neck with the Corolla, the annual sales leader since 2003.

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The stars have aligned for the Cruze so far. But Toyota and Honda production is roaring back. And after a spotty launch with limited availability, Ford Motor Co. is finally boosting stocks of its redesigned Focus. Can the Cruze stay on top and upend the established order in the compact market? “It’s going to be a fight,� says IHS Automotive analyst Aaron Bragman. “But GM comes better armed than it has maybe ever in its history.�

Right place, right time The Cruze has been a home run for GM — sales through August were up 88% over Cobalt sales in the like period a year ago. But the Cruze also has benefited from some right-place, right-time serendipity: ■Production of the Corolla and Civic was roughly cut in half for months after the March earthquake, resulting in scant selection and higher prices. ■The Cruze has been competing largely against long-in-the-tooth rivals. The redesigned Focus and Civic weren’t launched until the spring. The Corolla is old: Its last redesign was in 2007. ■Higher gasoline prices and a wobbly economy have led buyers to smaller cars. In August, three of the five most-shopped cars against the Cruze on TrueCar.com were midsized sedans: the Nissan Altima, Toyota Camry and Chevy Malibu. Data hint that Cruze sales have benefited from rivals’ inventory problems. The percentage of Cruze buyers coming out of Toyota vehicles rose from 7.5% in January and February to 9.2% in March through June, according to research firm R.L. Polk & Co. The Cruze’s conquest rate from Honda rose from 5.8% to 7%. Meanwhile, the Cruze is outselling the Focus and Hyundai Elantra, two rivals unaffected by quake-related shortages. Cruze sales of 169,427 units through August top 133,536 for the Elantra, which also was redesigned for the 2011 model year. The Focus came close to edging the Cruze in May, but the Cruze has extended its lead on Ford’s compact in recent months. George Pipas, Ford’s top sales analyst, said Focus inventory is improving after supplier shortages hampered production. Focus inventory rose to a 33-day supply as of Sept. 1 from 18 days on Aug. 1. Makers of all the top-selling compacts have enjoyed sharply higher prices thanks to nicer interiors and added features such as heated seats and Bluetooth connectivity. The Cruze’s average transaction price of $20,465 in August was 27% higher than the Cobalt’s from two years earlier, TrueCar.com data show. The Focus’ average price, $21,730, jumped 31% over the span.

Auto critics tout the Cruze’s sleek design, smooth ride, high mpg and vastly improved interior vs. the Cobalt. But similar praise is heaped on the Focus, Elantra and other rivals. Bob Lutz, GM’s former product chief whose team developed the Cruze, thinks the car’s slightly bigger size is a key differentiator. “The Cruze was designed inside and out to look like it’s a half-class higher than it actually is, and people see it that way,� Mr. Lutz said in a recent interview. GM says Cruze sales are especially hot on the West Coast, historically a weak spot for Chevrolet: Cruze sales through August were up more than fourfold in California from Cobalt sales a year earlier. GM doesn’t expect to dominate the compact market once rivals’ inventories return, spokeswoman Annalisa Bluhm said. But “we still expect to be fighting it out for segment leadership each month.� Not everyone is convinced that Chevrolet has made a lasting dent in the customer bases of its Japanese rivals. R.L. Polk loyalty consultant Deepti Patel said: “They’ve capitalized on the low inventories ... but I don’t think this spike will last for Cruze.�

Rivals hit back Toyota and Honda plants are nearing full throttle after suffering six months of parts shortages. Analysts expect them to return armed with big incentives to win back customers. That will test the restraint of GM executives, who for months have boasted that they finally have a compact car that commands a higher price. Another potential hurdle: GM’s manufacturing capacity. As of Sept. 1, there was a thin 33-day supply of the Cruze. The Lordstown plant that makes the car is working three shifts and added Saturday shifts this month and next. Continued growth in demand for the Cruze or a rebound in the overall market could send GM scrambling to increase Cruze production. GM North America President Mark Reuss has said that if needed GM could shift overflow production of the Cruze to the company’s Orion Township assembly plant in suburban Detroit, which will make the upcoming Buick Verano on the same platform. For now, Chevy execs can bask in being on top. Chris Perry, Chevrolet’s global marketing chief, said: “Our success with the Cruze shows that, when we have a good product, we can be a big contender.â€? As for Florida dealer Mr. Hurley’s Cruze Challenge, he ended the comparison test drives last spring. He said: “Everybody knows about the Cruze now.â€? â–

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CSA expands industrial labs in Independence New digs will test alternatively powered vehicles By DAN SHINGLER dshingler@crain.com

Independence for the CSA! No, it isn’t a rebel battle cry. It’s a description of a small victory for the Cleveland suburb, which is seeing increased investment on the part of CSA International. Known before it went international as the Canadian Standards Association, CSA does all sorts of testing on consumer goods and industrial products. Its trademark “SA� encircled by the letter “C� is found on many products, similar to the “UL� used by its competitor, Underwriters Laboratories. CSA is spending about $500,000 to build four new labs in its existing 128,000-square-foot building, where it already tests a host of electrical and gas-powered devices. For example, you can find a sturdy gas grill sitting in a wind tunnel at the facility, where it’s tested for its ability to be lit and function even on the breeziest of Memorial Days. The four new labs will test components used in hydrogen-powered vehicles and the systems that fuel them, said CSA vice president Rich Weiser. In one, a machine couples and decouples two fittings, subjecting them to high pressure during each

connection to test their reliability. The new labs also can test systems used in vehicles powered by natural gas. Hydrogen and natural gas vehicles represent efforts to replace gasoline-powered vehicles as part of a national push toward renewable energy sources. But hydrogen gas is handled at pressures of 10,000 pounds per square inch, compared with only about 3,500 psi for natural gas systems. So, a lab that can test hydrogen systems also can work with natural gas components, Mr. Weiser said. The new labs won’t mean new jobs, at least at first, he said. Some of the facility’s approximately 150 existing employees will be assigned to them, Mr. Weiser said. But they do represent a further investment in Independence, where CSA has had operations since 1969, and they’re welcome by the city, said Independence Mayor Gregory Kurtz. Mayor Kurtz said when he was young, he and his friends always wondered what went on at the mysterious CSA facility, which is set well back in the trees from its entrance on East Pleasant Valley Road. Now, he said he knows what they do — and recognizes its importance. “They keep bringing employees here,â€? Mayor Kurtz said. â–

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PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

On and on

C

leanup on aisle 5 ... and 8 ... and 17 ... and 24. Yes, the process of mopping up the multiple messes left behind by the former leaders of Cuyahoga County government goes on and on — thankfully. We continue to be impressed with County Executive Ed FitzGerald and his team as they deal on a variety of fronts with bringing order and discipline to the way the business of government is conducted in Cuyahoga County. Their methodical and purposeful approach contrasts sharply with the looseygoosey and, as we now know, often unscrupulous manner of running county government that was the rule rather than the exception under predecessors of Mr. FitzGerald & Co. Among the biggest, and best, changes is the process for determining residential property values for property tax purposes. Frank Russo, the disgraced former county auditor who was sentenced to a couple decades in prison after pleading guilty last year to various corruptionrelated offenses, relied largely on unqualified county employees to conduct residential real estate appraisals. By contrast, Mr. FitzGerald has contracted with nearly three dozen professional appraisers in an attempt to restore confidence among homeowners in the fairness and accuracy of the appraisal process. “We can’t change what happened in the past,” Mr. FitzGerald recently told The Plain Dealer. “But we’ve tried to set as high a standard as anywhere in Ohio.” Mr. FitzGerald and his team also can’t change the county’s past failure to comply with a state law that forbids classified civil service employees from also holding elected office or serving in partisan political positions, such as a precinct committee member. However, last week, the county took a big step to right that wrong. It informed nearly 50 employees that they had until the end of this week to choose between keeping their county jobs or holding on to their partisan political posts and being fired by the county. The above developments are in keeping with the tight ship Mr. FitzGerald has run since he became the county’s first solo executive nine months ago under the new county charter. There was no guarantee that the new county executive and the 11-member County Council would be any more effective in running the county than the cast of characters under the old form of government, with its three-member board of commissioners and its multiple elected department heads. We’re still not prepared to nominate any of the new leaders for sainthood. However, they seem in most of their dealings to be putting the interests of the citizens of Cuyahoga County ahead of their own. That’s something that wasn’t the case over the last decade or so. At Mr. FitzGerald’s inauguration last January, former congressman Louis Stokes — the man who swore him in — said the new leader was “armed with experience, integrity and the intellect to lead Cuyahoga County to a new, exciting and successful form of government.” Mr. FitzGerald and his colaborers deserve credit for turning Mr. Stokes’ words from prophesy to reality.

FROM THE PUBLISHER

Jobs’ impact felt beyond Silicon Valley

L

genius that was Steve Jobs. He knew ast week, as I heard the news of consumers would love products that Apple founder Steve Jobs’ death, married technology with artistic design. I quickly forwarded the New York That evening also brought back a vivid Times news alert to our children, memory of my earliest days, literally, because it seemed the right thing to do. with Crain’s Cleveland Business. I had Upon reflection, I find that decision been hired as the newspaper’s editor, might be the simplest way to describe his leaving Southern California and my siximpact on our society — namely, that I year career with the Associated would even consider sending a Press behind. I had been on the news story about the death of a BRIAN job no more than a couple business executive to the kids. TUCKER months when I received a teleOldest daughter Meredith, phone call in my office. working in Ohio politics, sent a On the other end of the line simple message: “Wow, unbewas a public relations executive lievable, but expected at the same for Apple, who had accompatime. I’m thankful for people like nied then-CEO John Sculley to him to show us greatness doesn’t Cleveland, where he was delivonly lie in our past, but also in ering a speech. Mr. Sculley had our present. Very sad. been plucked in 1983 from “Also kind of incredible that PepsiCo by Mr. Jobs as the experienced as I write this I am touching one Apple manager Apple needed. product and have two others in reach.” “We’d like to give one of your reporters Wow, indeed. I can’t even count how some time with Mr. Sculley for an intermany Apple products we own, when you view,” the PR person told me. When I consider how many “hand-me-down” answered that we weren’t interested, music players my wife, Janet, and I use there was an uncomfortable pause in the once the kids are on to the next coolest conversation. “i-product.” But that is the core of the

“It’s not that I don’t appreciate the fact that you thought about Crain’s,” I told him. “It’s just that we only have so many reporters and only so much space, and our subscribers can read about Mr. Sculley and Apple in many national business publications.” That was the first time I uttered this phrase, which I’ve used to describe our editorial philosophy countless times since that day. “In order for us to best serve our audience,” I told him, “we are going to have to be fiercely parochial.” Crain’s value proposition is telling Northeast Ohioans about the companies, executives and business issues that dominate our local marketplace. We can’t waste precious resources on stories that don’t have a strong local connection. Things changed. Mr. Sculley ended up being replaced by Mr. Jobs, who engineered, arguably, the greatest business revival in American history. But as for Crain’s Cleveland Business, our editorial philosophy remains unchanged; we remain committed to fierce parochialism because that’s how we can best serve you. ■

THE BIG ISSUE Are you willing to buy locally even if it means not getting the cheapest price?

MAGGIE IRIZARRY

JEREMY FLACK

KATHY AKEY

JUDGE STUART A. FRIEDMAN

Lakewood

Cleveland

Painesville

Cleveland

Probably not. Price matters. (Price) would be the determining factor, the deal-breaker.

Absolutely. You’ve got to support the ’hood. It’s like when you’re in the fraternity, right? You’ve got to support your own. That’s easy.

Yes, but it depends on how expensive it is compared with other (products or services.) It’s more about paying attention to what I’m getting and how much I’m paying for it.

Sure. I think it’s important to support local business, whether it’s local farmers, local stores. They’re the people who are keeping the local economy running.

➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.

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As budgets tighten, high school ADs’ duties now broader Mr. Jantz said he signed up his first partner, a local Marco’s Pizza franchise, over the summer. Marco’s receives signage and public-address mentions at all Midview events. “Traffic (at Marco’s) after our first home game there was intense,” he said. “People want to patronize companies who help the community.” Besides, he said, “There’s a lot of people in those stands, more so than a lot of small colleges. “I look at advertisers and I think it’s a no-brainer for them to be in these stadiums,” Mr. Jantz said.

With funds becoming more scarce, roles shift to include development, marketing By JOEL HAMMOND jmhammond@crain.com

Creg Jantz spent a Monday afternoon last month deluged by rain and phone calls, and contending with fragile feelings. Such is life for a high school athletic director, as the late-day rainstorm forced the administrator at Midview High School, located in Eaton Township in southeastern Lorain County, to reschedule golf and tennis matches and soccer games — and the inevitable calls of football favoritism when other sports that use the football field are postponed. Now, though, with school district funds hard to come by, the duties of athletic directors — not just at Midview, but from Medina to Lorain and Bay Village in between — have expanded from rescheduling rainouts to new roles that include marketing manager and chief development director. It isn’t that Mr. Jantz (pronounced “yonce”), a 1989 Midview graduate who excelled in basketball and baseball, can’t handle the shift. For the 11 years prior to his return to Midview for the 2010-11 school year, he worked in the sports information office at Case Western Reserve University and also taught a sports management class at the university’s Weatherhead School of Management. Nonetheless, that experience hasn’t lessened the challenges he faces. “We’re the biggest school in (the West Shore Conference), but it’s just me” overseeing all sports from seventh through 12th grades, he said. “We don’t have a middle school athletic director. So the struggle now is finding the time to make these efforts happen.” And the money, too.

Trolling for dollars The budget binds many school districts find themselves in after Gov. John Kasich’s massive cuts to education in the state’s latest twoyear budget have manifest themselves in the form of higher fees for extracurricular activities, from clubs on the low end to sports on the high. Tim Stried, the Ohio High School

Athletic Association’s communications officer, told Sports Business Journal last month that in the 201011 school year, 44% of the state’s 1,604 public schools had pay-to-play requirements, and that this school year, the number likely would move above half. The Medina school district might have some of the steepest rates in the state: Athletic director Jeff Harrison said the district charges $660 per athlete per sport, with no caps. Those fees help offset some of the estimated $500,000 the district pays in supplemental coaching contracts and transportation costs each year, Mr. Harrison said. The rest is paid for by the school district, with the Medina booster club raising about $100,000 each year to cover the cost of uniforms and other perks for athletes. That leaves about $200,000 Mr. Harrison must cover for facility usage — think golf courses, for instance — officials and other items. Mr. Harrison said many people don’t realize referees cost his district about $50,000 per school year for his 23 programs from grades 7 through 12. So, he “hits the streets,” in his words, looking for partnerships with local businesses. Mr. Harrison helps the school’s booster club identify and pitch Medina businesses on supporting the school’s athletic programs, and uses Medina’s annual wrestling invitational, which draws 40 schools — the bulk of which come from more than 50 miles away — as a point of emphasis when pitching potential sponsors about the exposure they can gain from their connection to the sports program. “A school district’s athletic department is the front porch,” he said. “Eighty percent of our community knows what’s going on in our schools through what happens on the field. I have to use that to make connections with local companies.” His efforts this year yielded a $13,000 donation from Frontier Communications, a tech company with its Northeast Ohio office in Medina. Frontier then provided its ticketing software for all Medina athletic events;

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In search of ROI

MARC GOLUB

Creg Jantz, the athletic director at Midview High School in Lorain County, said fundraising, marketing and development now are bigger parts of his job. each ticket has a Frontier logo. “You have to try to find different ways of raising revenues,” Mr. Harrison said. “As an athletic director and an educator, I’m not necessarily trained to do it, but we have to.”

Cutting a deal with Marco’s There are places to call for help. Home Team Marketing, based in Cleveland, counts 225 Northeast Ohio high schools as clients. The company signs up regional and national companies as sponsors, then establishes their presence at high school football and basketball games and other events. Home Team has grown to 29 employees locally and 50 nationwide, with offices in eight U.S. cities. It splits advertising revenues evenly with its partner high schools. Midview has used the company in the past and likely will again during basketball season, but Mr.

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Jantz said he sees more do-it-yourself opportunities at the local level for raising revenue — and where an outside company such as Home Team Marketing doesn’t keep half of it. So, Mr. Jantz, like Medina’s Mr. Harrison, dons a marketer’s hat for hours at a time these days. Mr. Jantz said he does most of his pitching to area businesses during the summer, but he hopes to sneak in some pitches this year between fall and winter seasons — though he hopes that period is shortened by the Middies’ football team making the Division II, Region 6 playoffs. He appeals to businesses’ responsibility in the community, though he also is armed with a rendering of the football stadium’s press box adorned with a specific company’s logo. Midview’s elementary, middle and high schools are at one site, and he touts the many sets of eyeballs that would see that logo each day.

In the Lorain City School District, which in 2010 combined its two large high schools, Admiral King and Southview, into one, athletic director Bryan Koury said the district’s booster club now is paying more for necessities than luxuries, such as warmups and other perks it has covered in the past. An example: When the schools combined, the weight room at George Daniel Field, where the team plays its football games, lacked enough space for the now 120-player program. The booster club paid for an auxiliary storage unit, as the district “wasn’t in a position to do it,” Mr. Koury said. He said the consolidation has helped some businesses rejoin the sponsorship fold, as the acrimonious divide between King and Southview made some companies leery of choosing one side or the other. But there also is a shift in what the companies that do partner with the district are looking for out of their deals, Mr. Koury said. “In the past, these businesses have had discretionary funds they would use to help the team and the kids,” he said. “Now, they’re looking more at their return on investment, and it’s a harder sell.” ■

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GOING PLACES JOB CHANGES EDUCATION KENT STATE UNIVERSITY: Leo Plante to the Goodyear Executive Professor, College of Business Administration.

HEALTH CARE CLEVELAND CLINIC: Dr. Donald E. Long to medical director, Chagrin Falls Family Health Center; Dr. Daniel M. Sullivan to medical director, Solon Family Health Center. METROHEALTH SYSTEM: Dr. Christopher Brandt to chair, Department of Surgery.

LEGAL BENESCH: Tamar Gontovnik to associate. WALTER & HAVERFIELD LLP: Nathan A. Felker to partner.

MARKETING BROWNFLYNN: Christopher Thomas to senior consultant; Margaret Balewski to senior administrative assistant; Marissa Beechuk to analyst.

NONPROFIT INTERNATIONAL WOMEN’S AIR AND SPACE MUSEUM: Suzie Dills to executive director.

PLAYHOUSESQUARE: Patricia Gaul to senior vice president, business and general counsel; Gina Vernaci to senior vice president, theater operations; Tim Birch to vice president, retail sales, sponsorship and technology; Tom Einhouse to vice president, facilities and capital; Colleen Porter to vice president, community engagement and education; Autumn Kiser to vice president, ticket sales and marketing; Michelle Meers to vice president, human resources; Michelle Ryan Stewart to vice president, development. PRESIDENTS’ COUNCIL FOUNDATION: Nicole M. Bell to executive director.

TEAM NORTHEAST OHIO: Christine Nelson to vice president, regional business development, JobsOhio Regional office; Camille Billups to director, business attraction and minority owned business specialist; Rick Seifritz to director, research; Mary Cierebeij to manager, business attraction.

REAL ESTATE ALBRECHT INC.: Joe Albrecht to vice president, retail properties. ALLEGRO REALTY ADVISORS: Adam M. Wolinetz to manager, corporate services.

SIGNET DEVELOPMENT: Jerel Klue to principal.

RETAIL EZ ENERGY USA INC.: Joe Schag to controller; Tiffany Konkol to payroll and treasury specialist; Michelle Weckstein to director, human resources.

SERVICE IMAGE GROUP: Bruce J. Felber to director, marketing and sales support.

TECHNOLOGY OECONNECTION: Geo Money to marketing manager. PARAGON CONSULTING INC.: Joshuwa Jenkins to senior developer; Kim Wright to developer; Robbi Armstrong to project manager; Sue Bene to human resources management and benefits specialist.

“I’m six-foot-five and even I felt like the phone company l o o k e d d o w n o n m e . S w i t c h i n g t o C o x c h a n g e d t h a t .”

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BOARDS AKRON BAR ASSOCIATION: Michael L. Robinson to president; Jack Weisensell to president-elect; Darrin R. Toney to secretary; Blake R. Gerney to treasurer. AMERICAN BOARD OF TRIAL ADVOCATES, OHIO CHAPTER: William Hawal (Spangenberg Shibley & Liber LLP) to president. NATIONAL COUNCIL ON AGING: Richard Browdie (Benjamin Rose Institute on Aging) to chairman.

AWARDS CATHOLIC LAWYERS GUILD OF THE DIOCESE OF CLEVELAND: Geoffrey S. Mearns (Cleveland State University) received the 2011 St. Thomas More Award. KENT STATE UNIVERSITY, COLLEGE OF EDUCATION, HEALTH AND HUMAN SERVICES: Donald Coffee received the 2011 Centennial Alumni Award; Gerald H. Read received the 2011 Distinguished Service to EHHS Award (posthumous award) PHOTOSHOP WORLD: Jason Feiler (Kalman & Pabst Photo Group) received a Guru Award for Best of Show.

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SMALL BUSINESS

INSIDE

15 TAX TIPS: COURT CASE ADDRESSES LLC CHALLENGES.

Businesses shop beyond NE Ohio for expansion With local market tapped out, firms cast larger net for growth By TIMOTHY MAGAW tmagaw@crain.com

W

LAUREN RAFFERTY ILLUSTRATION

ith mounting pressures facing their home bases, a number of businesses that have called Northeast Ohio home for decades are setting up shop outside the Buckeye State in an effort to continue to grow their companies. Worry not; they aren’t closing their doors in Northeast Ohio. It’s just that opportunities to take their companies to the next level are hard to come by in their own backyards. Business experts cite Northeast Ohio’s stagnant population growth as the key factor in why some look elsewhere to expand. In many cases, the market is saturated, offering little room for growth. The housing crunch also has resulted in little migration within the confines of the region, leading to fewer opportunities for expansion close to home. “In retail, that never bodes well,” said Tom Heinen, co-president of Heinen’s Fine Foods, which is based in Warrensville Heights. “If you’re going to continue to grow, at some point you have to look elsewhere.” Those factors led Tom and his brother, Jeff, to look to the Village of Barrington in suburban Chicago for See EXPAND Page 16

From Cleveland-area restaurateurs to real estate types, area proprietors enter reality show spotlight By KATHY AMES CARR kcarr@crain.com

R

eality TV shows bait us with action, drama and suspense, and within a commercial’s notice, we’re usually hooked. And there can be even another layer of intrigue when local business owners play starring or supporting roles on national network favorites,

such as HGTV’s “House Hunters,” DIY’s “House Crashers” or The Food Network’s “Restaurant: Impossible.” These Northeast Ohio proprietors often find themselves reeled into their own new realities — worlds in which they are benefiting because of the increased exposure afforded to their businesses once filming commences and the TV shows air. See REALITY Page 14

The following local business owners appear in the above illustration, clockwise from top left: ■ Jacquelyn Romanin, Chris Hodgson and Catie Hodgson on the Food Network’s “Great Food Truck Race” ■ Robert Irvine of The Food Network’s “Restaurant: Impossible” with Mad Cactus owner Tom Krukemeyer ■ Hurst Remodeling team with DIY Network host Josh Temple ■ Re/Max agent Katy Dix Brahler on HGTV’s “House Hunters” ■ Yellowcake designer Valerie Mayen, on Lifetime’s “Project Runway” PHOTO CREDITS: FOOD NETWORK; BOB URBAN; HURST REMODELING; RE/MAX; BARBARA NITKE/LIFETIME TELEVISION

MOVING FORWARD Thinking about expanding your small business beyond Ohio’s borders? Here are a few questions to consider: ■ Is the new market significantly different than the current market in which you operate? Can you adjust? ■ Does the work force in the new market carry the necessary skills to conduct business? ■ Are the right suppliers available? ■ Are customer demographics different than the current market? ■ Who are your competitors, and is there room for a new player? ■ What are the regulatory hurdles in the new market? ■ Do you have enough cash to support the operation while it gets off the ground? SOURCE: LEROY BROOKS, PROFESSOR OF FINANCE AT JOHN CARROLL UNIVERSITY

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SMALL BUSINESS

Reality: Exposure boosts firms’ credibility continued from PAGE 13

“Has my business increased? Yes, definitely,” said Katy Dix Brahler of Rocky River-based Re/Max, who has appeared as a real estate agent on HGTV’s “House Hunters.” “I get more calls from out-of-state buyers who saw me on TV and want me to represent them or want to get on TV.” Local business owners such as Ms. Brahler acknowledge the longterm gains in new leads and heightened credibility that result from being seen on TV but they also point to the potential nick in interim business due to the associated time investment. “It was exciting, but it took up a lot of my time,” said Valerie Mayen, owner of Cleveland-based design shop Yellowcake, about her experience as a contestant on Season 8 of Lifetime’s “Project Runway,” which aired in 2010. “People assume you’re on a reality show and you’re getting paid and becoming a millionaire, but that’s not true. “I was essentially sewing for six months for free” and continuing to manage client orders back home, Ms. Mayen said.

Agents of change Re/Max’s Ms. Brahler said she first was contacted by HGTV after program producers stumbled upon her website during an online search for Cleveland-based real estate agent candidates for “House Hunters.” The phone interview and subsequent video she was required to send in wasn’t the most time-consuming part of the experience;

rather, she and her clients had to wait on the home-buying process because producers had a tough time getting the clearance to film in Cleveland. “There was a lot of red tape,” she said. “Now, it’s a lot better.” After a little more than two months of waiting, Ms. Brahler filmed the segment, which aired in 2009. “It’s a full five days of filming,” she said, noting assistants helped managed her day-to-day clients during that time. Ms. Brahler’s second appearance on “House Hunters” aired this past September and featured her friend Gene Finn, who also is Kent State University’s vice president for institutional advancement. Mr. Finn ultimately selected a home in Pepper Pike. “It was great exposure for Kent State,” said Ms. Brahler, who now markets herself online as “Your Cleveland-area HGTV ‘House Hunters’ Realtor.” “We also filmed one of my listings in Westlake (during the shoot with Mr. Finn). It sold quickly afterward.” The shows’ airings have proven to be a boon to business, with prospective sellers and buyers — many of whom are out of town and looking to relocate — calling Ms. Brahler for representation. “A lot of Realtors have phoned me, too, and said, ‘What do I need to do to get on TV?’” she said. “I tell them, ‘You can’t be scared to be in front of the cameras.’” The cameras didn’t scare Tom Krukemeyer, owner of Mad Cactus in Strongsville, who agreed to subject his restaurant to the intense

criticism of the Food Network’s “Restaurant: Impossible” host Robert Irvine. “We didn’t get along,” Mr. Krukemeyer said. Program producers for three days in August filmed the segment that will air Nov. 2. During that time, Mr. Irvine worked with restaurant staff to revamp the ailing Tex-Mex eatery into a more contemporary concept. “Our sales have been up 20% since they left,” Mr. Krukemeyer said. “I think we’ll really see an influx of business once the show airs.” Part of the revamp included the launch of a website that features the restaurant’s ancillary products, such as T-shirts and dry rubs. “I think we’re going to hit a home run with the website once people from all over the world see what we have to offer after the show airs,” Mr. Krukemeyer said.

Getting with the program Fahrenheit chef and owner Rocco Whalen said he’s anticipating that Northeast Ohio as a whole will benefit from more Food Network coverage when the “docu-series” he’s currently filming airs in February. Mr. Whalen is one of a handful of chefs from around the Midwest and eastern seaboard chosen by the Food Network to illuminate viewers to their respective regions’ assets. “My segment is about culture, Cleveland and community,” said Mr. Whalen, who will be showcasing suburbs and businesses throughout Northeast Ohio such as his restaurant’s Tremont neighbor,

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Tools of the trade Pat G. Hurst, vice president and owner of Middleburg Heights-based Hurst Remodeling, said he believes his firm will get “quite a bit of mileage” out of marketing and publicity associated with filming a DIY Network program that airs Jan. 16. Like Re/Max’s Ms. Brahler, Hurst was discovered through its website. The remodeler’s capabilities intrigued DIY Network, which scouted this year Cleveland-area companies that could handle a three-day home rebuild in Tremont for a “House Crashers” segment, Mr. Hurst said. “It’s interesting working with a production company,” he said. “Even on Day One, everyone’s ready to go, and it’s like, ‘Get your mikes on,’ and the sound guy has to get ready. There’s this whole new layer to it.” The firm, which hadn’t been on national TV before, nailed the three-day rebuild. “At the end of Day Three, our firm’s production manager was in shock, almost in tears,” Mr. Hurst said. “Even the production company was shocked.” While it’s still too early to determine how Hurst Remodeling will be impacted long-term, an immediate payoff transpired — camaraderie. “We were united under one goal — to get this done in three days. It was a huge team-building exercise,” Mr. Hurst said, “Would I do it again? Yeah, I think I would.” ■

IN BRIEF ■ CHANGE OF SCENERY: Roop & Co., a strategic integrated communication agency, has moved its offices to a 3,500-square-foot space in the Terminal Tower. “We were quite happy in the original Roop & Co. offices in the Huntington Building for 15 years, but with the planned move of some of the building’s major tenants, and with a great deal of uncertainty regarding the building’s future, we thought it best to move,” said Jim Roop, president, Roop & Co. “We looked at several locations, but it was hard to beat the 360-degree views of Cleveland from the 38th floor of Terminal Tower.” ■ ONLINE AWAKENING: The Reiki Awakening Academy, under the direction of director Alice Langholt, is taking intuitive development,

Reiki training, energy healing, aromatherapy and other alternative healing practices to a new realm. Ms. Langholt has started an online training institute, with online classes meeting via Wiziq.com, an online classroom website. The Reiki Awakening Academy maintains a physical location in Northeast Ohio, with local classes held at the Insight Wellness and Learning Center in Warrensville Heights. ■ SEEING THE LIGHT: Kent Craig has opened FirstLight HomeCare Twinsburg at 9241 Ravenna Road, Suite C-10. FirstLight is a provider of professional, nonmedical, in-home care for seniors and others who need assistance. Mr. Craig’s operation serves all of Summit County. There also are FirstLight franchise locations in Westlake and Chardon.

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Banyan Tree, an upscale boutique. Meanwhile, chef Chris Hodgson said it’s too soon to tell whether his operation will accelerate beyond the speed of notoriety he already has gained locally since he rolled out his first food truck last year. Mr. Hodgson, who made it to the finals of the Food Network’s “Great Food Truck Race,” however, said his focus wasn’t on promoting his business on TV, nor was it the show’s $100,000 grand prize. Rather, the experience was all about championing Cleveland. “It was about the city we come from,” said Mr. Hodgson, whose truck was edged out by The Lime Truck from California. He’s now working on opening his own bricksand-mortar store. Ms. Mayen has similar plans to open her own storefront next year because of the influx in orders she has garnered since her “Project Runway” appearance. “It’s been lucrative in terms of my notoriety and credibility,” Ms. Mayen said. For Mr. Hodgson, Ms. Mayen and other business owners who become overnight TV celebrities, it’s important to market the experiences appropriately in order to extend the short-term publicity jolt, said Ted Mandell, a faculty member who specializes in pop culture and reality TV at the University of Notre Dame in Indiana. “You have to strike while the iron’s hot,” he said. “You

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SMALL BUSINESS

Court case highlights ambiguity of LLC-related taxes

D

espite the benefits of using a limited liability company to operate a business, advisers usually will warn the business owner that one significant drawback of operating a business as an LLC is that taxable income allocated to owners who are active in the business is subject to self-employment taxes. This tax is imposed on all allocations of income, not just on the income or cash actually distributed. While several strategies exist to mitigate the exposure to this tax, a recent U.S. Tax Court case has introduced additional uncertainty into the utilization of these strategies, and it raises additional questions in an already uncertain area of taxation. It is clear that self-employment income includes a person’s allocation of income from a trade or business carried on by a partnership, including an LLC, of which such person is a partner or member. There is an exception to this rule for limited partners. Unfortunately, the rules addressing who can qualify as a limited partner were developed before LLCs even were in existence, so there is little guidance on the issue of when an LLC member is treated as a limited partner for selfemployment tax purposes. In 1997, the IRS issued regulations providing that an individual, including an LLC member, would be treated as a limited partner unless any one of the following was true: ■ the individual has personal liability for the debts of or claims against the partnership by reason of being a partner; ■ the individual has authority to contract on behalf of the partnership under applicable state law governing the entity; ■ the individual participates in the partnership’s business for more than 500 hours during the partnership’s tax year. The 1997 regulations provided several exceptions to these rules that give rise to planning opportunities for LLC members. For instance, those who do not qualify as a limited partner under the above tests, but who own more than one class of interest in the partnership, can avoid self-employment tax on the portion of LLC income allocated to their separate “investment class” of LLC interest, provided that other members qualifying as limited partners own at least 20% of the LLC interests with identical rights and obligations. This is a common sense approach that bifurcates an active owner’s interest in an LLC between income that is a return on actual investment and income that’s payment for services. Complaints about these regulations prompted Congress to order the IRS not to finalize them. There has been no additional guidance so many practitioners rely on these regulations even though they remain proposed and not final. Although the exceptions contained in these regulations often are used, a recent U.S. Tax Court case indicates that taxpayers should use caution when relying on these regulations and the related exceptions. In this case, a group of lawyers asserted that allocations of income from their legal practice were not subject to self-employment tax

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inal general partnership interest that allowed them to exercise management rights. The lawyers paid self-employment tax only on the income allocated to this relatively small general partnership interest. The court held against the lawyers. It based its analysis mainly on the plain meaning of the term “limited partner,” and focused on the legislative history of the exception from self-employment tax for limited partners that predated the regulations discussed above. In this case, the court found that limited partners essentially are

passive investors, in that they are not able to exercise any management authority, and their partnership income essentially was a return on their investment. Applying this to the lawyers, the tax court said they were not limited partners, so all their income allocation should be subject to selfemployment tax. The 1997 regulations were not a part of the analysis. The result in this case is not surprising because personal service income (as in the case of the law firm) will always be self-employment income. The fact that the tax

court took a more simplistic, historical approach to its analysis raises the question of whether reliance on the proposed regulations and the exceptions therein would be respected if challenged by the IRS. As a consequence, self-employed business owners face uncertainty on this issue and will need to look at planning strategies beyond the proposed regulations to clearly delineate what LLC income is subject to self-employment taxes. ■ Mr. Grassi is president of McDonald Hopkins LLC.

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Expand: Building brand in new market key part of strategy continued from PAGE 13

their next grocery store. The store, slated to open next summer, will be the pair’s 18th store and first outside Ohio. The Heinen brothers aren’t alone, as several businesses — from retail shops to restaurants — have set their sights beyond Ohio in hopes of giving business a boost. Still, it’s not an easy sell, as it requires careful planning — and a bit of luck — to get it right, according to William Baker, chairman of the University of Akron’s department of marketing. “The difficulty for companies is understanding the true opportunities out there or whether they’re just chasing a pipe dream,” Dr. Baker said.

Assessing the situation Cleveland-based Danny Vegh’s Home Entertainment, which has served Northeast Ohio’s billiards needs for the last 50 years, recently opened its first out-of-state location in Milwaukee — something CEO Kathy Vegh said was her “intention for many, many years.” “I think right now because of where the economy is and where the market is, we are very well represented in all areas of Northeast Ohio,” Ms. Vegh said. “Oversaturating ourselves might be useful to the consumer but, frankly, is detrimental to our business.”

As part of the decision to expand beyond Ohio, Ms. Vegh said the company carefully analyzed Milwaukee as a potential market. For example, she said the demographics are similar to those of Cleveland. The competitive landscape there is quite weak and many of the company’s vendors are near Milwaukee. LeRoy Brooks, a finance professor at John Carroll University, said it’s important to take note of the competition and thinking a business that works in Northeast Ohio will take off elsewhere could be wishful thinking. It’s often wise, he noted, to consult outside experts when looking to expand. “You can get pretty smug in your own market after a while,” Dr. Brooks said. “You need to listen when you’re in a new market. To me, you have to have some competitive advantage or at least be able to take market share away from others.” Bob Armington thought his snowboard and ski and business in Akron, Sun Valley Sports, could hold some competitive advantage in Indianapolis since he saw his only potential competitor in that area, Dick’s Sporting Goods, as lacking in the ski arena. Though Mr. Armington said the Indianapolis market isn’t as dense with skiers as Northeast Ohio, he

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believes there’s enough of a market to support a single shop, which opened last week. “We can’t really get much more (in Northeast Ohio),” said Mr. Armington, the vice president of Sun Valley’s umbrella company, Buckeye Sports Center Inc. “If we want to grow, the only way to do that is to branch out.” Meanwhile, Scott Burford opened his first Metro Burger location in Akron about three years ago, and while business has been going well, investors haven’t approached him about opening up other restaurants locally. However, he’s fielded inquiries from elsewhere in the country and has plans to open stores in New Jersey, Florida and other locales in

order to keep building Metro Burger. In addition to its Akron store, the company operates a location in Lake Mary, Fla., which opened within the last year. “It’s tough to justify investing,” said Mr. Burford, Metro Burger’s CEO. “You have to be in some area with some change or growth or a combination of the two. That just doesn’t seem to be happening here.”

What’s in a name? One of the challenges for any business looking to expand beyond its comfort zone is translating a well-established brand from one market to another, according to Dr. Baker. For example, the Danny Vegh’s and Heinen’s names might not carry the same cachet in their new locales. Dr. Baker said establishing some sort of communications effort is a vital step in securing one’s place in an otherwise foreign territory. He suggested getting the word out through trade shows or an Internet presence to spread brand awareness. “They must be able to build up

the integrity of the brand and educate the potential customer about what makes it better,” Dr. Baker said. “They’re going to have to add some value by doing something better or a similar job at a lower price.” Ms. Vegh admits that cementing the Danny Vegh’s brand into the mind of Milwaukeeans is a lofty task, but noted that the company has had its fair share of good press coverage in the region and has partnerships in the pipeline to spread awareness. “I’m prepared for the fact it’ll take time to build our brand,” she said. “There’s nothing about a quality-oriented company that happens overnight.” Dr. Brooks noted that while there’s often a bit of hubris involved in a company’s decision to open in new locations, taking a close look at the many issues that could arise is important in avoiding the potential doom of any new venture. “Even if you’re an established company, when you’re going into a new place, it’s basically a startup with a lot of uncertainties of any new startup,” he said. ■

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Taqueria Junction is a modern Mexican restaurant with a full bar, open starting at 4 p.m. Monday through Saturday. “Reception has been unbelievable,” general manager Jim Vecchio said of the restaurant’s opening in Olmsted Falls. “It’s been a warming introduction to the neighborhood.” Mr. Vecchio said the restaurant, which also serves some food that is not of the Mexican variety, offers daily specials such as free children’s meals on Mondays and special Taco Tuesdays.

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KIDDIE KARGO 8068 Columbia Road Olmsted Falls 44138 www.kiddiekargo.com Owned by sisters Nicole Rutkowski and Mary Hamric, Kiddie Kargo is a reseller of children’s clothes. The store, located in the Grand Pacific Junction shopping district, sells everything from high chairs to strollers to toys and books; it buys items direct from sellers, rather than on consignment. Store hours are 10 a.m. to 6 p.m. Monday through Saturday. The store is closed Sunday. 440-235-2700 To submit a new business, send the following by email to Amy Ann Stoessel at astoessel@crain.com: business name; address; city and ZIP; website; brief description of business; business phone number; business fax number; business email address; and date that business opened.

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Ford: National UAW first must ratify proposed contract continued from PAGE 1

which is that it means continued work for his members. The membership includes about 350 people who now work on six-cylinder Duratec engines in Brook Park but are expected to see their work on that engine cease next year unless its production run is extended. Mr. Gammella said he expects all 350 of the Duratec workers to shift over to the new engine. He expects the new engine to blunt the effects of job losses at Ford elsewhere, such as in Walton Hills, where a plant closing announced last week is expected to result in about 400 layoffs over the next four years. “Those people have opportunities here as well, and that’s important,” said Mr. Gammella, adding that union rules will give preferential treatment to laid-off UAW members in hiring for the new engine’s production line. Mr. Gammella estimated that, on top of his 350 workers at the Duratec plant, another 200 would be needed to staff the line making the new four-cylinder engine.

Small is beautiful Mr. Gammella has been lobbying for a small engine since gas prices shot up in 2008 and buyers began looking for more fuel-efficient vehicles. He said he believes that trend is still in place and will continue — and notes that it’s been one reason that Ford’s EcoBoost engine, also made in Brook Park, has been a popular option for buyers. That engine uses a turbo-charger to get V8-like power from a V6 engine, without sacrificing overall fuel economy. The plant getting a new engine also could help other local manufacturers. Some of them say an engine is the best part of an automobile to make, because of its many parts and the complex nature of its manufacturing process.

ON THE WEB

Story from www.CrainsCleveland.com.

Ex-tennis pro nets Bainbridge club The Wembley Club, a private tennis and swim club in Bainbridge, has been sold to a former professional tennis player. Owner Marc Duvin said he has sold the club to Rob Janecek, who played on the ATP Tour from 1987 to 1992 and again from 1995 to 1998. Mr. Janecek also served as an assistant tennis coach at Vanderbilt University. Terms were not disclosed. Mr. Duvin said Mr. Janecek plans to broaden the club’s programming, with a special emphasis, of course, on tennis. For instance, he said Mr. Janecek has “ideas for great programming” related to tennis instruction for juniors, “taking it to a level we haven’t seen in Cleveland.” Mr. Duvin and a partner have owned the club since 2001. Mr. Duvin said his ownership of the club “was more about a passion for the club than for a financial home run.” He said he and his partner “both have other opportunities … that were going to be difficult to do with the club in our possession.”

Drabik Manufacturing, a machining and fabrication shop on Cleveland’s West Side, not far from Ford’s Brook Park plant, often does work for new plants that need large gears, rollers or other pieces of equipment made for their startup. It may or may not get work directly from Ford, said owner James Drabik, but he likes knowing that Ford is ramping up yet more production nearby. “Hell yeah, it’s good news,” Mr. Drabik said. “Even if I don’t get work directly from it, it will trickle down to us. We need more plants to start expanding like this.” Ford officials declined to comment on the matter, pending approval of

fully took on production of the EcoBoost engine in 2009. He said he has no doubt that Ford has been closely monitoring the quality of that new engine and that its satisfaction with it played a part in the decision to bring more work to Brook Park. “Quality is very important to Ford,” Mr. Gammella said. “If we were building junk, they wouldn’t award us anything; we’d be shut down.” He also noted the investment slated for Brook Park — more than $250 million — is the secondlargest amount that Ford said it will invest in any of its 10 enginemaking plants around the country. Its willingness to spend that much money is a good sign it intends to

the automaker’s proposed new contract with the UAW, and referred all questions to the union. Mr. Gammella said the only thing standing between his plant and the new engine work at this point is the national UAW’s ratification of the new Ford contract, which includes bringing the engine to Brook Park. The union is to vote on that contract next Monday, Oct. 17. National UAW leaders have said they expect the contract to be approved by their members.

Quality first Mr. Gammella said the credit for the new engine coming to Brook Park goes to his members, who success-

keep Brook Park for the long haul, he said. “That’s real commitment. I’ll just leave it there,” he said. While market conditions ultimately will determine demand, Ford told the union it thinks it will produce about 260,000 of the fourcylinder engines per year, which is more than the 250,000 Duratec engines it now makes in Brook Park, Mr. Gammella said. A date for the start of production has not been set, but Mr. Gammella estimated it would take a year or slightly longer to tool up for the new engine from scratch in the now-vacant portions of its main plant in Brook Park. ■

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LARGEST ACCOUNTING FIRMS RANKED BY NUMBER OF LOCAL CPAS(1)

Number of local CPAs Name Address Rank Phone/Web site

8/31/2011

8/31/2010

% change

Number of local degreed professionals 8/31/2011

Full-time permanent local employees 8/31/2011

Practice personnel engaged in Auditaccounting

Tax

Consulting

Other

Top local executive Title

1

Ernst & Young LLP 925 Euclid Ave., Suite 1300, Cleveland 44115 (216) 861-5000/www.ey.com

222

222

0.0%

887

1,195

245

115

155

680

Donald T. Misheff Northeast Ohio managing partner

2

PricewaterhouseCoopers LLP 200 Public Square, 18th floor, Cleveland 44114 (216) 875-3000/www.pwc.com

165

161

2.5%

304

315

205

81

0

40

Bob Saada, Lake Erie market and Cleveland office managing partner

3

SS&G 32125 Solon Road, Cleveland 44139 (440) 248-8787/www.ssandg.com

121

113

7.1%

371

353

98

86

170

70

Gary S. Shamis managing director

4

Deloitte 127 Public Square, Suite 3300, Cleveland 44114 (216) 589-1300/www.deloitte.com

115

130

-11.5%

405

443

125

60

185

4

Craig Donnan managing partner

5

Cohen & Co. 1350 Euclid Ave., Suite 800, Cleveland 44115 (216) 579-1040/www.cohencpa.com

100

96

4.2%

178

196

77

45

44

30

Randall S. Myeroff president, CEO

5

KPMG LLP 1375 E. Ninth St., Suite 2600, Cleveland 44114 (216) 696-9100/www.us.kpmg.com

100

100

0.0%

166

176

60

10

90

16

John S. MacIntosh managing partner

7

Meaden & Moore LLP 1100 Superior Ave., Suite 1100, Cleveland 44114 (216) 241-3272/www.meadenmoore.com

82

80

2.5%

116

130

52

26

32

20

James P. Carulas CEO

8

Maloney + Novotny LLC 1111 Superior Ave., seventh floor, Cleveland 44114 (216) 363-0100/www.maloneynovotny.com

61

67

-9.0%

90

110

NA

NA

NA

NA

Matthew J. Maloney managing shareholder

9

Grant Thornton LLP 1228 Euclid Ave., Suite 800, Cleveland 44115 (216) 771-1400/www.grantthornton.com

59

48

22.9%

102

110

56

32

9

13

Daniel S. Zittnan managing partner

10

Skoda Minotti 6685 Beta Drive, Mayfield Village 44143 (440) 449-6800/www.skodaminotti.com

55

55

0.0%

110

124

47

25

39

13

Gregory J. Skoda chairman

11

CBiz Inc. 6050 Oak Tree Blvd. S., Suite 500, Cleveland 44131 (216) 447-9000/www.cbiz.com

51

56

-8.9%

125

176

13

22

49

113

Steven L. Gerard chairman, CEO

11

McGladrey 1001 Lakeside Ave., Suite 1400, Cleveland 44114 (216) 523-1900/www.mcgladrey.com

51

45

13.3%

65

75

39

19

2

NA

Donna Sciarappa managing director

YOUR BUSINESS IS OUR BUSINESS ˜—Â?ŠŒÂ?Čą ŠĴ‘Ž ȹ Š•˜—Ž¢ȹƸȹ––Š•˜—Ž¢Č“–Š•˜—Ž¢Â—˜Â&#x;˜Â?—¢ǯŒ˜–ȹƸȹĹ˜Ĺ—ĹœÇŻĹ™ĹœĹ™ÇŻĹ–Ĺ—Ĺ–Ĺ–

13

Bruner-Cox LLP 388 S. Main St., Suite 403, Akron 44311 (330) 376-0100/www.brunercox.com

50

50

0.0%

83

103

32

32

20

19

Steven O. Pittman managing partner

14

Hill Barth & King 7680 Market St., Boardman 44512 (330) 758-8613/www.hbkcpa.com

42

38

10.5%

52

70

275

NA

NA

NA

Phillip L. Wilson COO

15

Apple Growth Partners 1540 W. Market St., Akron 44313 (330) 867-7350/www.applegrowth.com

38

38

0.0%

73

84

29

39

36

20

David J. Gaino chairman

15

Howard, Wershbale & Co. 23240 Chagrin Blvd., Cleveland 44122 (216) 831-1200/www.hwco.com

38

37

2.7%

63

69

22

20

14

7

Stephen E. Stanisa president, CEO

17

Bober, Markey, Fedorovich & Co. 3421 Ridgewood Road, Suite 300, Akron 44333 (330) 762-9785/www.bobermarkey.com

35

35

0.0%

65

70

42

18

5

NA

18

Ciuni & Panichi Inc. 25201 Chagrin Blvd., Suite 200, Cleveland 44122 (216) 831-7171/www.cp-advisors.com

34

34

0.0%

51

58

28

14

10

6

Charles M. Ciuni chairman

19

Barnes Wendling CPAs Inc. 1215 Superior Ave., Suite 400, Cleveland 44114 (216) 566-9000/www.barneswendling.com

32

32

0.0%

60

60

37

18

7

13

Jeffrey D. Neuman president

20

BCG & Co. 1735 Merriman Road, Akron 44313 (330) 864-6661/www.bcgcompany.com

31

29

6.9%

60

76

16

28

21

0

David A. Brockman president

21

Walthall Drake & Wallace LLP 6300 Rockside Road, Suite 100, Cleveland 44131 (216) 573-2330/www.walthall.com

30

32

-6.3%

40

48

30

7

3

NA

22

Zinner & Co. LLP 29125 Chagrin Blvd., Pepper Pike 44122 (216) 831-0733/www.zinnerco.com

24

24

0.0%

26

31

14

12

4

1

Robin L. Baum managing partner

23

Hobe & Lucas CPAs Inc. 4807 Rockside Road, Suite 510, Independence 44131 (216) 524-8900/www.hobe.com

21

21

0.0%

29

34

23

3

2

1

Jerome J. Lucas president, COO

23

Pease & Associates Inc. 1422 Euclid Ave., Suite 801, Cleveland 44115 (216) 348-9600/www.peasecpa.com

21

21

0.0%

41

48

17

22

2

7

Joseph V. Pease Jr. president

23

Rea & Associates Inc. 7325 Production Drive, Suite C, Mentor 44060 (440) 266-0077/www.reacpa.com

21

17

23.5%

31

200

20

17

2

1

Ryan Dumermuth Mentor office manager

26

Corrigan Krause 2055 Crocker Road, Suite 300, Westlake 44145 (440) 471-0800/www.corrigankrause.com

19

19

0.0%

28

32

NA

NA

NA

NA

26

Four-Fifteen Group 4100 Holiday St., Canton 44718 (330) 492-0094/www.415group.com

19

21

-9.5%

40

42

10

20

7

5

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. (1) Local refers to our fifteen county business list coverage area in Northeast Ohio.

Richard C. Fedorovich CEO, managing partner

Richard T. Lash chairman

Thomas L. Harrison managing director Frank J. Monaco managing partner

RESEARCHED BY Deborah W. Hillyer

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CRAIN’S CLEVELAND BUSINESS

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19

Condos: Inventory levels dropping continued from PAGE 3

that’s typical of 1960-vintage properties that can be had for so little. With sales activity improving at the low end of the market and real estate developers reviving projects at the opposite end of the price spectrum, condo and townhouse sales may be emerging from the doldrums after the housing collapse that struck the region in 2005, long before the Great Recession of 2008 made housing a national problem. However, as the long, slow economic recovery and volatile stock market show, any revival may not be immune to setbacks. According to statistics from the Northern Ohio Regional Multiple Listing Service (NORMLS), condo sales through August, the most recent period available, had tipped into positive territory, edging up 1.9% to 1,965 units from 1,929 units in last year’s like period. Sales through August last year were up 16% from 1,663 in the like period in 2009, but that was due to a first-time homebuyer tax credit goosing sales to new buyers and allowing empty nesters to downsize after they finally could shed their larger single-family homes. By contrast, the larger singlefamily residential market continued to slide; it was down 3.1% to 19,704 sold listings through August this year from 20,331 in 2010’s like period.

Supply, demand edge closer The other side of the condo and townhouse equation is that the inventory of those units finally is declining. Year-to-date new listings in the NORMLS category now stand at 5,204 through August, down 11% from 5,836 in the first eight months of 2010, which essentially was unchanged from 5,831 units in the like period of 2009. Condo inventory also is moving somewhat closer to actual sales. For example, the Zillow realty data website last Friday, Oct. 7, listed 35 condos for sale in Euclid compared with 18 sales over the last nine months.

In Rocky River, 75 condos are for sale compared with 45 sales in the last nine months. However, in condo- and apartment-rich Lakewood, condo listings numbered 85 compared with 25 sales over the last nine months. Much of the activity is at the low end of the price range as investors and bargain hunters seek foreclosed condos, townhouses and other units that often trade for less than new cars. Consider a recent Twitter tweet by a Cleveland woman: “Housing in Cleveland is so cheap that my friend is selling a condo for $20,000. And it’s near the lake.” However, there also is activity at higher price points, which is prompting developers to put new products on the market.

Not blue at Bluestone At the Bluestone Community, a development in Cleveland Heights by homebuilder Ken Lurie and apartment owner David Orlean, construction is under way on a new, $5 million phase, and buyers have bought in advance the six suites in the first building of this phase. Project manager Eric Lee said the developers already are laying foundations — before cold weather sets in — to prepare additional units for the spring. Bluestone’s latest offering differs from its prior, four-story loft building with 21 units and its cluster homes in an arts-and-crafts style with attached two-car garages. Dubbed “Chicago style” and designed by City Architecture of Cleveland, the new phase consists of smaller, semi-attached townhouses with three stories and a single garage and an outdoor parking space. “We are building what people want to buy,” Mr. Lee said. “Most buyers want maintenance-free living (in a condo) in a house version. Clevelanders want their own garages and a little seclusion.” The Chicago-style units cost $209,000 to $289,000; by contrast, the 14 artsand-crafts style units all have been

sold for between $346,000 to $430,000. The developers are using a one-acre site at Bluestone originally designed for another loft building with 22 units; the land now will house 16 townhouses instead. The bulk of Bluestone’s buyers, Mr. Lee said, are doctors ranging from residents to new staff physicians at University Circle health care institutions who have moved to Cleveland from other areas. Quality is his focus, Mr. Lee said, and most of his buyers want to be the first person to live in a property with colors and finishes of their choosing. When talk turns to price cuts, Mr. Lee has a ready answer that reflects the times: “If you want to steal a house, go someplace else.” In a similar vein, Developer Andrew Brickman is down to one $400,000 unit available for sale in the upscale 27 Coltman project in Cleveland’s Little Italy neighborhood, where he has sold 26 homes on Coltman Road since 2008. Over in Rocky River, he’s preparing to launch the next building in the Eleven River condo project.

Picking up the leftovers Not all stories are so pleasant, though. For instance, condo units at Avalon Station in Shaker Heights are back on the market after price cuts and a laborious takeover by its lender. In Rocky River, the remaining unsold units of the 11-unit Beachcliff Row Condominiums have been bought by WXZ Development from the original developer. WXZ paid $1.2 million for the nine unsold units and a site that is approved for 16 more suites. WXZ President James Wymer said in an email that it has not decided whether to continue condos at the project or shift to apartment rentals; WXZ does both. ■

Andrew Brickman, the developer behind 27 Coltman in Little Italy and Eleven River in Rocky River. Only one unit remains at 27 Coltman condo project, while at Eleven River, Mr. Brickman is preparing to begin another phase. FILE PHOTO/MARC GOLUB

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OCTOBER 10 - 16, 2011

Launch: Communication with other entrepreneurs can help continued from PAGE 3

that pay to rent space at LaunchHouse. So why all the interest in a fairly young incubator that has yet to produce a company that employs more than a handful of people? Two years ago, Paul Allen didn’t see why Messrs. Goldstein and Caldwell were so excited about the idea. He used to tell Mr. Goldstein to just forget about it and start his own business. Now Mr. Allen, a serial entrepreneur who lived in Silicon Valley for eight years, sees things differently. LaunchHouse, he said, has created a place where creative people with big ideas can meet and learn from one another. Silicon Valley, New York City and Boston don’t need such places because, in those cities, entrepreneurs are everywhere. In places such as Cleveland, though, they need a home, said Mr. Allen, who spent six months as interim director of LaunchHouse. Hence the demand for the incubator, where most people rent desks in one big room filled with white boards. “You attract creative people. You attract risk takers. You attract people with complementary knowledge

and skills,” he said.

A sustainable path Others are excited about LaunchHouse’s prospects, too. Among them is Jim Cossler, “chief evangelist” for the Youngstown Business Incubator. His incubator for several years has been attracting attention to Youngstown, partly because the software companies it houses have grown to fill multiple buildings along West Federal Street, and partly because of its highly collaborative culture. Though the two incubators are different —Youngstown’s focuses just on one industry, business-tobusiness software, and its companies rent more traditional offices — Mr. Cossler expects LaunchHouse to do well, too. He cited the long list of mentors who work with companies in the incubator, many of whom are well-known names in the region’s business community. He also pointed to Messrs. Goldstein and Caldwell themselves. “I’m not sure that you can find two people more passionate than Dar and Todd,” Mr. Cossler said. “They just breathe it. Hopefully, they can sustain it.” They founded the incubator as

Goldstein, Caldwell & Associates Inc. The for-profit company in 2008 began investing in startups, a few thousands dollars at a time. Some of the startups set up shop in the Goldstein Caldwell headquarters, a massively cramped, 700-squarefoot office above a pizza parlor in University Heights. The company moved twice over the next three years before settling in at the former Zalud Oldsmobile dealership at the corner of Lee Road and Chagrin Boulevard. With the move, Goldstein Caldwell became the for-profit investment arm of Shaker LaunchHouse, a nonprofit. The city of Shaker Heights, which recruited LaunchHouse to the site to help create more jobs in the largely residential city, has spent $500,000 to renovate the city-owned building and gave the incubator four years of free rent in exchange for equity in its investments. Though LaunchHouse still is hunting for donations, grants and other support, Mr. Goldstein expects LaunchHouse by January to start bringing in enough revenue to cover its costs. LaunchHouse — which rents out desks for $100 per month and offices for $500 per

month — has seven paid employees, some of whom work part time. Messrs. Goldstein and Caldwell are not among them. They aim to make money through LaunchHouse’s forprofit investments. “We are a very, very lean operation,” Mr. Goldstein said.

Peer review Dave Crain, director of entrepreneurship at Magnet, a Cleveland incubator for manufacturing companies, said LaunchHouse might be creating a conflict of interest by investing in the companies in its incubator, given that investors and entrepreneurs don’t always have the same goals. Nonetheless, Mr. Crain praised the culture of collaboration LaunchHouse has built in Shaker Heights. Though Mr. Crain works to build bridges among Magnet’s tenants, the young information technology companies that make up many of LaunchHouse’s clients may have more to gain from collaboration, he said. Crosspollination opportunities are harder to find in later-stage companies in other industries because their needs are more specialized, Mr. Crain said. “What’s ultimately going to make them successful is not whether they talk to someone else in my incubator,” he said. Simply working alongside other entrepreneurs is big benefit, especially for the many young people at LaunchHouse, said Bob Sopko,

manager of strategic technology partnerships at Case Western Reserve University. At LaunchHouse, young entrepreneurs constantly are exposed to peers who have gone through the same challenges they face, said Mr. Sopko, a LaunchHouse mentor and a board member at solar technology firm Sunflower Solutions, which received one of LaunchHouse’s first investments. Plus, entrepreneurs just like hanging out with like-minded people, Mr. Sopko said. He knows firsthand: He used to visit LaunchHouse twice a week and usually would get sucked into a long conversation. “I wanted to hang around,” he said. Through LaunchHouse, Rick Pollack — who is among the incubator’s tenants that have at least a few gray hairs — has met too many collaborators to list. He mentioned a 3-D graphics company, a manufacturing engineer and a fluent Chinese speaker who might help him import parts for his company, which makes 3-D printers designed to turn ideas for products into prototypes. The company, Maker Gear LLC, has space at LaunchHouse but operates mainly out of Mr. Pollack’s Shaker Heights home. He aims to add manufacturing in LaunchHouse’s service bay as the company expands. In time, other LaunchHouse companies will expand, too, he said. “A lot of it just needs time to take root and grow,” he said. ■

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21

Tax: Programs gain traction as way to collect revenues continued from PAGE 1

state will limit its look back on taxes owed to January 2009, shaving several years off the department’s typical seven-year audit. That cutoff could mean “drastic savings” for some businesses, said Keri Boergert, tax manager for Skoda Minotti, a CPA, business and financial advisory firm based in Mayfield Village. The state also will waive penalties and interest on back use taxes for those who are eligible (see accompanying box). “Be thankful,” says Ms. Sanderson, partner and chief financial officer of Herschman Architects Inc. in Warrensville Heights, which came under a use tax audit in January 2010. “You’re going to save the money for all the research and exhuming all the files. You’ll save attorneys’ fees. This is really going to help.” Though her firm can participate in the new program, the state’s leniency comes after Ms. Sanderson spent nights and weekends at the copier, producing five, three-ring binders of invoices dating back to 2003. Still, she noted, the amnesty program likely will save her firm money. Its use tax liability has not been determined, but she knows it owed the state $835 in 2010.

“You’re going to save the money. ... This is really going to help.” – Carole Sanderson, partner and CFO, Herschman Architects Inc. in the past five years as additional sources of revenue for governments because tax revenues have declined, said Marj Kruse, Ohio’s deputy tax commissioner for audit and compliance. The programs accelerate the collection of revenue and infuse it into current budgets, she said. Ohio also has a general tax amnesty program set to begin next May that pertains to both business and personal taxes. The state last

offered such a general program in 2006, and this program is nearly identical to that one, Mr. Testa said. About 16,000 businesses are registered currently to file use tax, and most of them are larger businesses, Mr. Testa said. There’s no estimate for how many businesses are not registered but should be. “It could end up being very small,” Mr. Testa said. “We just don’t have any way of determining that. We know there are some because there are those that have been found during audit procedures.” State officials did not have an estimate for how much tax revenue the state may collect through the amnesty program. ■

PAY IT FORWARD Wondering whether your firm is eligible for use tax amnesty and how you should proceed? Here are the details: ■ Who: Both those who are unregistered and registered to file use tax are eligible for use tax amnesty. However, interest will be charged and payment plans aren’t available to those who have been registered. A payment plan is available for previously unregistered filers if the use tax liability tops $1,000. Businesses that were under audit when the program began will be

afforded amnesty benefits, depending on the circumstances. (Willful evasion of the law precludes participation.) Also, taxpayers who have been assessed for unpaid use tax in the past are not eligible for amnesty. ■ How: To participate in the amnesty program or for more information, access tax.ohio.gov. A spreadsheet on the website assists taxpayers in determining their use tax liability. Then, to register and make payments, visit business.ohio.gov. ■ Deadline: The amnesty program runs through May 1, 2013. SOURCE: OHIO DEPARTMENT OF TAXATION

Out of the darkness Different from the voluntary disclosure program publicized earlier this year by the state, the amnesty program was driven by legislators who asked the tax department to make its so-called crackdown friendlier, said Joe Testa, Ohio’s tax commissioner. Though the use tax has been law since 1936, the department found businesses “seemed to be very much in the dark about it,” Mr. Testa said. Before the state initiated its audit of Herschman Architects, Ms. Sanderson said she had no idea she needed to file use tax returns. Other business owners she’s talked to also weren’t aware, she said. Skoda Minotti is contacting most, if not all, of its clients to make sure they take advantage of the amnesty program where applicable, said Amy Gibson, senior tax manager. A lot of companies handle use and sales taxes themselves, she noted. “Most states don’t waive all penalties and all interest, and allow you to go under a payment plan, and limit the look back to such a short period,” Ms. Gibson said. “We’ve seen a lot of amnesty programs through the state, and as far as I’m concerned, this is the best one we have seen.” More often than not, the Department of Taxation will find a use tax liability, Ms. Boergert said. “There are very few people that they go in and don’t find anything that they’re doing wrong,” she said. Mario J. Fazio, a tax partner with law firm Meyers, Roman, Friedberg & Lewis in Woodmere, agreed that the amnesty program presents a great opportunity for businesses. “It’s a quick way to get these cases resolved, and it’s such a reduction in the amount of liability,” said Mr. Fazio, who has assisted Herschman Architects through its audit and has a couple other clients undergoing tax use audits. “Our message is, ‘Now’s the time to get back into compliance, get the house in order,’” Mr. Fazio said.

Chasing revenue Nationwide, tax amnesty programs have become more common

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Wellness: Bravo’s programs put clients ‘in the driver’s seat’ continued from PAGE 3

Contact: Phone: Fax: E-mail:

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

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was instituted. “We’re very pleased with the results that we’ve been able to keep health premiums pretty flat,” Ms. Murphy said. “They’ve – Jim Pshock, founder, Bravo Wellness been flat to the organization and flat to the majority of employees, and discounted gym memberships. with the exception being those who Judy Murphy, the health sysare not meeting our wellness hopes.” tem’s executive director of human Something new resources, couldn’t provide a dollar With Bravo now in full swing, Mr. figure for how much money SouthPshock is taking a step back from west General had saved through the day-to-day operations of the the program. However, she noted company and has hired David R. that the employee health assessCampbell as its new president. Prements revealed significant weight viously, Mr. Campbell was chief loss and improved blood pressure operating officer and chief financial among participants after the program

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“We’re just scratching the surface. There’s proof of concept and scalability.”

“It was becoming quickly understandable that most health care spending went toward lifestyle-related problems that were largely preventable,” he said. “We put employers in the driver’s seat.” Southwest General Health System in Middleburg Heights hired Bravo to conduct its wellness operation because of the company’s ability to design a program and measure the results. Bravo helped Southwest General establish its employee communications around the program, deliver health screenings and track the results of wellness initiatives, such as Weight Watchers

programs it offers with a return on investment of about $400 per employee, per year. “Like it or not, this is working,” Mr. Pshock said. In 2007, the U.S. Department of Labor issued regulations that made it possible for employers to differentiate employee health care contributions based on each employee’s lifestyle choices — a practice that had been illegal. The new rule went relatively unnoticed, Mr. Pshock said, and given the financial crunch many companies were facing, he zeroed in on the opportunity.

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officer of Independence based-Life Line Screening, which provides mobile medical screening services nationally. Mr. Pshock will focus more on IncentiSoft Solutions, a Bravo subsidiary formed in May. IncentiSoft offers information technology products on an à la carte basis for wellness companies, insurance companies, health systems and others to handle the back end of their wellness programs so that results can be tracked. “Although this is an impressive story, we’re just scratching the surface,” Mr. Pshock said. “There’s proof of concept and scalability.” ■

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OCTOBER 10 - 16, 2011

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THEINSIDER

THEWEEK OCTOBER 3 – 9 The big story: One Cleveland-area company agreed to buy another in a $486 million deal. Polymer producer PolyOne Corp. in Avon Lake plans to acquire ColorMatrix Group Inc., a supplier of liquid colorants, additives and fluoropolymers that is based in Berea. ColorMatrix had sales of nearly $197 million and earnings before interest, taxes, depreciation and amortization of $43.6 million in the 12 months that ended last June 30. “Our purchase price of $486 million recognizes the earnings and growth potential of this specialty business,” said Stephen Newlin, PolyOne chairman, president and CEO. Time for a facelift: A joint venture of Sage Hospitality of Denver and Optima Management Co. of Miami plans a $64 million renovation of the Crowne Plaza Cleveland City Centre hotel to convert it to a Westin hotel after buying the property. Sage, which will manage the hotel at 777 E. St. Clair Ave., will close the property in mid-November for the massive renovation and reopen it under the luxury Westin flag in July 2013. That timetable means the hotel should reopen shortly before the scheduled completion of the Cleveland Medical Mart and Convention Center across East Sixth Street from the hotel.

Clear vision: Invacare Corp.’s chairman and former CEO, A. Malachi Mixon III, and his wife, Barbara, donated $3 million to the Cleveland Clinic’s Cole Eye Institute to establish an endowed faculty position in recognition of the sight-saving treatment the entrepreneur received. Dr. Daniel Martin, chairman of Cole Eye Institute, will be the first person to hold the position endowed by Mr. Mixon, who served as chairman of the Clinic’s board of directors from 2003 to 2010.

Safe Harbor: Harbor Group International, a real estate owner and operator in Norfolk, Va., closed on its acquisition of the 10-story parking garage at 515 Euclid Ave. from the estate of AmTrust Financial Corp. Harbor paid $8.15 million at an auction for the 525-space garage, which cost $20 million to construct in 2005. T. Richard Litton Jr., Harbor Group president, said Harbor Group acquired the garage based on the revenue it will produce from parking vehicles and by leasing vacant retail space on its first floor. Class act:

Cleveland Mayor Frank Jackson announced a collaborative effort among 15 grant-making bodies, the state’s colleges and universities and other civic organizations that aims to boost college attainment in the city. Known as the Higher Education Compact of Greater Cleveland, the effort will develop roadmaps for each participating organization to provide better support for students earning degrees. It also will work with students to ensure they’re ready for college and increase community awareness about why college is important.

This and that: The Cleveland Cavaliers named John Michael as their new radio play-by-play announcer, replacing the legendary Joe Tait. Mr. Michael served as the Lake Erie Monsters’ playby-play man from 2007-09 before being hired by Fox Sports Ohio to host home postgame shows and to conduct rinkside reporting for Columbus Blue Jackets games. … Nextant Aerospace, a company at Cuyahoga County Airport that remanufactures aircraft, said it received Federal Aviation Administration certification for its Nextant 400XT aircraft, which it describes as the world’s first completely remanufactured business jet.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

A one-in-a-million event? Not hardly

2011, the S&P ranged from a high of 1,138.99 to a low of 1,098.92, so the probability of the index finishing at 1,099.23 that day was one in 4,007. So, to determine the chance that the index would close at the same level on both days, you’d need to multiply 1/5568 (the first probability) times 1/4007 (the second probability). The answer is one in 22,310,976. Of course, the above methodology excludes all the closing numbers that the S&P index could have been on those dates had we considered that the index could have soared above or fallen below its high and low points on both days. And we won’t even go into how odd it is that the match occurred on the same date. But Mr. Luce is right — the odds are very low. Very, very, very low. — Mark Dodosh

■ Brent Luce, a portfolio manager at Lakefront Partners L.P. in Beachwood, made an interesting observation last week in his Lakefront Daily Blog about a rare occurrence with the Standard & Poor’s 500 stock index. Under the header “Coincidence,” Mr. Luce noted that the S&P 500 closed at the same exact level on Oct. 3, 2011, as it did on Oct. 3, 2008. “The odds of this occurring are very low,” Mr. Luce wrote. “I roughly estimated the odds at about 1 in 20,000 in my head.” Well, there’s no precise way to determine the chances that the index would finish three years apart to the day at 1,099.23. But it’s a bit higher than Mr. Luce’s quick estimate. With the aid of Dr. Linda Quinn, college associate lecturer in the mathematics department at Cleveland State University and a specialist in statistics, we took a swing at figuring out the probability of identical S&P closes on those two dates — though even our number drastically underestimates how rare an event it truly is. If you limit the universe of possible closing levels on Oct. 3, 2008, for the S&P 500 to a range of 1,153.82 — its high for that day — and its low of 1,098.14, the probability of the index finishing at 1,099.23 that day was one in 5,568 (the difference between the high and low adjusted for removing the decimal point.) Using the same parameters for Oct. 3,

■ More than 5,000 people have registered to purchase tickets before the general public for the Ohio State-Michigan hockey game set for Sunday, Jan. 15, at Progressive Field. The event will conclude the Indians’ second annual “Snow Days” attraction at the ballpark. The Indians formally announced the event — dubbed “The Frozen Diamond Faceoff” — on Aug. 11, and offered fans the chance to register to buy tickets before the general public. Those public sales will begin Nov. 14, though Indians spokesman Curtis Danburg said the

MILESTONES

BEST OF THE BLOGS

Interest aplenty in Frozen Diamond Faceoff

team still was working out details on when registrants would have first crack. Mr. Danburg said the team has been selling group ticket packages since the details became official, and was happy with the response to the registration opportunity. All but a chunk of the bleacher section of the 43,000-seat ballpark are up for grabs; those bleacher seats will be occupied by a giant tubing slide extending from that section onto the field. — Joel Hammond

At Kent State, drink up on your own dime ■ First a hiring freeze, then a 3.5% tuition hike and now no more free coffee. Times are tough in higher education, especially considering that the Monday morning chat by the water cooler at Kent State University just got a bit more expensive. Kent State controller Tammy Slusser sent an e-mail to university employees last week reminding them that “beverages purchased with University funds provided solely for employee consumption is prohibited.” According to the e-mail obtained by Crain’s, some of the university’s employees wanted to keep using their department’s coffee vendors and water coolers, which Ms. Slusser obliged — provided department heads collect the cash from employees to reimburse Kent State for the expenses. Serving beverages to visitors on the university’s tab is still permitted. Employees also are forbidden from buying paper plates and utensils for department parties, according to the university’s updated hospitality policy. — Timothy Magaw

Excerpts from recent blog entries on CrainsCleveland.com.

Reuters noted. Other CEOs “have urged people to tune out the recession worries that have contributed to market volatility,” according to the news service. For instance, General Electric Co. CEO Jeff Immelt in August told students at Dartmouth ■ If you were told the American Mustache College, “My advice to you is that your life Institute has compiled a list of America’s 10 would be better if you didn’t watch TV or most mustache-friendly cities, how likely read the paper.” Reuters do you suppose it is that said the line “has (since) Cleveland made the list? become a regular feature of “An absolute certainty,” his public comments.” you say? Right! Mr. Klein told Reuters the Cleveland is seventh on the mismatch is to be expected list. Chicago is first, followed from a group whose jobs by Houston, Pittsburgh, include trying to drive up Oklahoma City, Detroit and their companies’ stock prices. Milwaukee. “They have to be cheerHow’d the group compile Peter Kirsanow, a partner in the leaders; that’s part of their this list? “AMI researchers inter- labor and employment prac- jobs. And it’s part of our jobs viewed 200 Mustached tice group at Benesch, concurs. to be professional skeptics,” Mr. Klein said. “There’s a lot Americans in each of 100 of denial that goes on until there’s no more high-performing U.S. municipalities to deterdenial. ... As an investor you have to really mine what makes their municipal region a discount a lot of that stuff as you hear it.” flavor saving destination based on five key indicators: Employment, Transportation, Entertainment/Sport, Culinary, and Education,” according to the institute.

In Cleveland, keep a stiff (and hairy) upper lip

mbi | 2km’s Cleveland headquarters

THE COMPANY: mbi | k2m THE OCCASION: Its 10th anniversary Director and founder Scott C. Maloney, a LEED-accredited architect, describes mbi | k2m as “a high-growth, entrepreneurial firm” with specializations in architecture, interior design, sustainability and ADA assessments, among other skills. Since its founding, the firm says it has expanded through “strategic acquisition and organically growing markets across the eastern United States.” It also has offices in Charlotte, N.C.; Key West, Fla.; and Washington, D.C. The firm has a staff of 25 professionals. For information, go to www.mbi-k2m.com.

THE COMPANY: Mussun Sales Inc., Cleveland THE OCCASION: Its 60th anniversary The company, a manufacturer’s representative and distributor for the heating, ventilating and air conditioning industry, was founded in 1951 by William G. Mussun Jr. with a sales office for a half-dozen product lines in the Hanna Building in downtown Cleveland. In 1993 the company’s headquarters moved to its current location, a 50,000-square-foot warehouse on Carnegie Avenue. It also has a warehouse in Columbus. For information, visit www.mussun.com.

Sounds like this is a must-see for movie buffs

The CEO discount is applied when they speak ■ Peter Klein, a senior portfolio manager at Fifth Third Asset Management in Cleveland, gets candid in a Reuters story about U.S. CEOs’ view that the economy “deteriorated sharply in the third quarter.” The story said the Business Roundtable’s CEO Economic Outlook index “dropped ... to 77.6, its lowest reading since the fourth quarter of 2009.” The darkening collective view from the 140 CEOs surveyed from Aug. 29 through Sept. 16 “is at odds with the rosier picture that individual executives present to investors,”

■ “Take Shelter,” a movie shot mostly in Northeast Ohio and produced by local filmmaker Tyler Davidson, has opened in Los Angeles and New York to great reviews. The film stars Oscar nominee Michael Shannon as a man plagued by nightmares of an apocalyptic storm. Bloomberg’s review called it “ingeniously frightening.” In The Wall Street Journal, Joe Morgenstern said it’s “a dazzling piece of filmmaking” by director Jeff Nichols and that Mr. Shannon gives a “towering performance.” Salon.com critic Andrew O’Hehir went big and said it’s the best American film so far this year. “Take Shelter” is set to open in Cleveland in late October.

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