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Third Frontier again may aim at bigger grants Investments could better create, attract jobs By CHUCK SODER csoder@crain.com
STEPHEN HERRON PHOTOS
SPECIAL REPORT
HOW A NEW EUCLID AVENUE CHANGED CLEVELAND
Investments. The commission’s goal is to fund more projects like The Ohio Third Frontier the Cleveland-based Global Commission wants to start Cardiovascular Innovation making big grants again. Center, said Dr. Chagnon, The next annual budget who credited the Cleveland for the Third Frontier proClinic-led center with gram — an initiative designed Chagnon helping launch several health to boost Ohio’s economy care-related startups. through investments in technology The commission has yet to — could include $50 million set approve formally its proposed $236 aside for larger projects designed to million budget for fiscal 2013, which help the state establish itself as a began July 1. However, at the strong player in various technology group’s monthly meeting last week, sectors, said Norm Chagnon, deputy it voted to approve the general See GRANTS Page 10 chief of Ohio’s Office of Technology
Cavs planning large Wi-Fi network rollout at The Q By JOEL HAMMOND jmhammond@crain.com
If you have a smart phone and enjoy watching Cleveland Cavaliers, Cleveland Browns or Cleveland Indians games at those teams’ respective venues, you’ve encountered the problem. Upload a photo to Facebook at a Browns home game? Tweet about the Indians from Progressive Field on Opening Day? Send to Instagram
◆ What’s next on the to-do list? ◆ Residents feeling at home ◆ The HealthLine helps ◆ Full coverage: PAGES 11-18 www.CrainsCleveland.com/Euclid
a photo of the Cavaliers’ new court at this Tuesday’s home opener against Washington? Good luck! The Cavaliers, though, have a solution on the way. The team soon will announce a Wi-Fi buildout at Quicken Loans Arena as part of what team spokesman Tad Carper calls a larger digital platform upgrade, details of which still are being ironed out. See WI-FI Page 21
For-profit Chancellor U. cuts oft-critical accreditor, eyes another By TIMOTHY MAGAW tmagaw@crain.com
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Chancellor University in Seven Hills voluntarily is severing ties with its longtime accrediting agency — an organization that has been sharply critical of the operations at the for-profit college formerly known as Myers University.
By Oct. 11 of next year, Chancellor no longer will be accredited by the Higher Learning Commission in Chicago, which twice in the last three years has rapped the university on its knuckles for what the accrediting body characterized as ailing finances, faulty leadership and less-than-stellar academic offerings.
Chancellor president Robert Daugherty, who has maintained the university is improving on all fronts, said in an interview last week that Chancellor was in “active discussions with other accreditors that are more consistent with the mission and values of our university.” However, he wouldn’t disclose those accreditors or describe the ways in
which their approaches would align more closely with Chancellor’s mission. The Higher Learning Commission on two occasions — one as recent as last June — issued “showcause” orders against Chancellor, which required the university to prove it deserved continued accreditation. Without accredited academic
offerings, the university’s students wouldn’t be eligible for federal financial aid — a critical revenue stream for Chancellor and all for-profit colleges. However, the Higher Learning Commission this month lifted its most recent show-cause order, though neither officials at Chancellor nor See CHANCELLOR Page 8
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NEWSPAPER
74470 83781
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INSIDE
Auto recyclers fight a new bill that would allow more access to auctions ■ Page 3 PLUS: MED MART UPDATE ■ CLINIC AND INDIA ■ & MORE
Entire contents © 2012 by Crain Communications Inc. Vol. 33, No. 42
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Booking blues? Not at convention center Event commitments jump; medical mart more than 50% leased By JAY MILLER jmiller@crain.com
leased and filling quickly, Cuyahoga County Council was told last week. At a council meeting last Tuesday, Oct. 23, Jim Bennett, senior vice president of MMPI Inc., the Chicago firm hired by Cuyahoga County to oversee construction and operation of the $465 million project on and under Cleveland’s Mall, was partic-
Nine months from its planned opening, the under-construction Cleveland Convention Center has 44 conventions booked, up from 26 four months earlier, and the adjacent medical mart is more than 50%
ularly optimistic about the medical mart leasing. “It’s moving much faster than a few months ago,” he told council. “We’ll have no problem filling the building.” The complex is scheduled to open in July 2013, ahead of schedule and on budget.
At that meeting, Mr. Bennett said of the 95,000 square feet of leasable space in the medical mart building, 25 tenants have signed leases for a total of 50,000 square feet. He told council that “lurking around” are prospective tenants who Bennett are showing interest in leasing a total of 125,000 square feet — well in excess of the 45,000 square
Automotive recyclers fear effect of new bill
Rebound in auto industry, continued growth in guns fuels Mentor company
Salvagers fight added access to auctions
By DAN SHINGLER dshingler@crain.com
By GINGER CHRIST gchrist@crain.com
T
See SEAL Page 9
DAN SHINGLER
Metal Seal Precision LLC president John Habe IV at the company’s new 160,000-squarefoot space — which won’t be empty for long.
THE WEEK IN QUOTES “That’s all content talking about your brand that you could be missing. In a small market like Cleveland, that’s very important.” — Nader Ali-Hassan, a social media marketing strategist at Cleveland digital marketing firm Rosetta. Page One
See CENTER Page 22
INSIGHT
METAL SEAL FIRES ON ALL CYLINDERS ake a comeback from the automotive industry, mix it with a national obsession with firearms and throw in a little Northeast Ohio machining know-how and technology and you get … big growth for Metal Seal Precision LLC in Mentor. The company is in the midst of moving into new digs — a 160,000-square-foot building on Corporate Boulevard that it bought for $3.4 million at the end of 2011 — so it can move much of its operations under one roof this year and accommodate its recent rapid growth. The company has a 50,000-square-foot operation on Tyler Boulevard in Mentor and a 70,000-square-foot plant in Willoughby. The Willoughby operation will remain open. “Everything from Mentor is coming here, and some of the stuff in Willoughby is coming here,” said Metal Seal president John Habe IV of the new space. The company owns and operates more than 300 pieces of equipment, most of it
feet available. Later, Mr. Bennett told Crain’s that he expects to announce two major tenants this Wednesday, Oct. 31, during the three-day Cleveland Clinic Innovation Summit that starts today, Oct. 29. Mr. Bennett also said he was negotiating with one prospect
“Many of our customers count on us to innovate for them. We’re constantly growing into new markets.” — Blaine Davidson, vice president of sales, Chemical Solvents Inc. Page 9
“This has been the rise and fall and rise again of a great American street.” — Chris Ronayne, president of the nonprofit University Circle Inc. Page 11
“(Civic leaders) wanted connectivity to the major institutions. … What was most important to the community, however, was economic development.” — Joe Calabrese, general manager, Greater Cleveland Regional Transit Authority. Page 16
Auto recyclers in Ohio are trying to dismantle a legislative effort to change rules about who can buy cars at salvage auctions. Senate Bill 273 would allow anyone — including body shops and individual consumers — to bid on cars sold at salvage auctions, a process that for now is restricted to buyers with state-authorized identification cards. Such cards currently are issued only to auto recyclers, but they would be discontinued if the bill passes. Auto recyclers say passage of the bill would give an unfair advantage to unlicensed bidders, who aren’t subject to the same state and federal regulations as salvage dealers on matters such as fencing, liquid disposal and licensing. They also worry the increased competition would hurt their business and raise prices on salvage cars. “We just want a fair playing field,” said Jim McKinney, president of the Ohio Auto and Truck Recyclers Association and general manager of Milliron Auto Parts, an auto recycler in Mansfield. Insurance companies and auto auction operators see things differently, saying, essentially, that the playing field only will be level with passage of SB 273. The bill, sponsored by state Sen. Keith Faber, RCelina, passed the state Senate in April and is set to be voted on by the House after the Nov. 6 elections. “The net effect is (the current system) limits competition,” said Paul Nelson, regional manager for Copart Inc., a Texas-based online reseller of used and salvaged vehicles. Mr. Nelson, whose company runs online salvage auctions across the United States, characterized Ohio as one of the most restrictive states when it comes to salvage auctions. The restricted competition in the current system means insurance and auction companies make less See RECYCLERS Page 20
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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
Fair deal
T
he business sense Jack Schron brings to Cuyahoga County Council is coming in handy in figuring out how and when to spend the revenue the county will rake in from its share of casino taxes. Mr. Schron, the longtime president of tool maker Jergens Inc. in Cleveland, deserves an atta-boy for presenting compromise legislation that takes a cautious, equitable approach to the use of the casino tax windfall. It’s a proposal that gives County Executive Ed FitzGerald much of what he wants when it comes to putting those dollars to work in a targeted way, yet also affords members of County Council the opportunity to tap into a chunk of the money as they see fit. Mr. FitzGerald for months has pushed a plan to direct the casino taxes toward economic development efforts in and around downtown Cleveland. The idea is to leverage that big pot of cash by applying it to projects and initiatives that strengthen the county’s urban core, rather than see it spent in dribs and drabs throughout the county in ways that don’t produce a big impact. Various members of County Council have had their own ideas of how to use the money, which has been estimated at about $10 million a year. They’ve advocated applying the tax revenue to scholarships for county residents and economic development projects countywide. Mr. Schron’s compromise plan gives each side half a loaf, but it doesn’t stop there. It also wisely calls for county officials to wait to spend the casino money until they can get a handle on how much bread there is to dole out. With the amount of tax revenue thrown off by the Cleveland and Toledo casinos declining steadily in the months since they opened last May, it’s hard to know how much money the county can afford to commit to economic development. Under the compromise plan, the county would stash its casino cash away until July 2014; at that point, the money would be available for the next two years for downtown economic development, as Mr. FitzGerald has envisioned. Starting in July 2016, the money would convert to use on a countywide basis. County Council members have reserved the right to spend the casino cash before those dates, but we hope they abide by them. As Mr. Schron knows from his business experience, the more cash reserves the county can store, the greater the likelihood that it will be able to make investments of significance in economic development. That’s Mr. FitzGerald’s goal, and it is one to which all county officials should aspire.
Vote
W
hether you favor a particular political party or are as independent in your thinking as they come, take advantage of your right to vote. In this particular election cycle, every vote is likely to count, not just for candidates but also for various issues on the ballot. So, let your voice be heard.
FROM THE PUBLISHER
Desperate for a strong third candidate
O
h how I wish we had a John Anderson in this year’s presidential race. I would even enjoy a Ross
scads of cash, then founded Perot Systems, built it up, and sold it to Dell for billions. He later became a thorn in the side of the mainstream candidates in the 1996 presPerot. idential race. Heck, I’d even take a Russell Means. We know that no independent or I can imagine what you’re thinking. third-party candidate has won the presWhere the devil is this guy going with idency. We know that the major media this idea? What on earth do a outlets do not consider their congressman, a billionaire and campaigns as seriously as those BRIAN a Native American activist/acmounted by the Republican and TUCKER tor have in common? Democratic parties’ candidates. Russell Means, who led the But what those independent violent, anti-government uprising candidates did was force the at Wounded Knee, S.D. and “mainstream” candidates to later was known for acting as the middle. That’s what I wish well, passed away last week. As we had this year. I heard the news, I realized I I do not believe, and some had forgotten a couple things polls underscore this, that about him, namely that he had Mitt Romney is as personally lived in Fairview Park for four years and conservative as the Tea Party faction has had run for president as an independent. forced him to become in this campaign. John Anderson, a former Illinois conOf course, that has made him change gressman, ran for president as an indepositions regularly and opened him to pendent in the Jimmy Carter-Ronald legitimate criticism. Reagan race. And I also believe Barack Obama is too Ross Perot founded Electronic Data smart to believe that all the ills facing our Systems and sold it to General Motors for country will be solved if we can just get
those wealthy Americans to pay more. Having no independent candidate allows the most extreme (loudest) factions on both sides of the political debate to have a bigger, more influential role. Bill Clinton’s success as a two-term president was in part due to his ability to attract great support from middle-ofthe-road Americans, those smart enough to vote by issue and by candidate irrespective of their political party affiliation. Few people remember George Bush’s leadership on immigration reform and the AIDS epidemic in Africa, two issues not generally associated with the conservative wing of the GOP. That’s what I wish we had in this campaign. Everyone I talk to is fatigued at best — and nauseated at worst — by the non-stop barrage of TV commercials tearing at the other candidate. There is a Libertarian in the race but the major news media give him short shrift because of a lack of money. We need a credible third choice — that would make the two major-party candidates be more thoughtful about what the middle class really wants and needs. ■
THE BIG ISSUE Do your relationships with friends, families or coworkers deteriorate during election season?
TIFFANY GRONN
STEVE GILL
DARLENE MCKINLEY
TIM KALAN
Elyria
Beachwood
Cleveland
Shaker Heights
No. The only person I really talk about the elections with is my husband and we usually agree.
No. I think everybody has their own personal beliefs as to why they’re going to vote the way they are. I don’t think it affects my ability to be friends or to have frank discussions with my relatives.
No, because I don’t talk about elections too much at work or among family.
No. Sometimes (there are) some family squabbles, but for the most part, I try to keep an open mind.
➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.
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Crisis situations will happen, so plan accordingly ■ It is critical that organizations of every size heed the crisis planning advice presented in the Oct. 15, Page 17 story, “Reputation-damaging events occur frequently.” In these days of 24/7 instant news, where Twitter and Facebook exponentially amplify crisis situations, organizations must be prepared to vigorously defend their position in a wide variety of venues, as well as media outlets. Underscoring immediacy, your brand can face a significant reputational challenge in the time it takes to bang out a feverish 140-character tweet. Example: one foolish kneejerk post from Kitchen Aid’s Twitter account during the first presidential debate resulted in negative headlines screaming across print, web
LETTER and social media platforms from coast to coast. Kitchen Aid was right in tweeting an immediate apology. When it comes to social media, company leaders no longer have the luxury of gathering around a table to discuss strategy. There’s simply no time. Often, organizations will dutifully create an operational crisis plan, but lack a concomitant crisis communication strategy. What should your organization do? First, create a crisis plan with outside communications counsel who brings an objective viewpoint on your vulnerabilities to the table.
What are the most gut-wrenching scenarios you might have to address and how likely are they to occur? The threat of natural disasters, insider trading, medical mistakes, C-level sexual indiscretion and social media faux pas are enough to keep any CEO awake at night. Having a crisis communication plan is an excellent first step, but can you walk the talk? A plan is no good gathering dust on a shelf — conducting tabletop drills to test the plan and put your staff through the rigors of real-time crisis simulation will improve your chances of responding effectively when the real thing hits. Testing is critical in making sure your team is ready. Third, keep your ear to the rail
with a comprehensive monitoring program that closely watches news content delivery platforms — print, broadcast, web, mobile and social. Respond to trends by evolving your strategy. To be effective, your plan must be a living document. And finally, have third-party crisis counsel audit your current plan as it evolves, to make certain there are no chinks in your armor. When your organization’s reputation is on the line, so is your bottom line. Strategic crisis communication planning is your brand’s most effective insurance policy. Bruce M. Hennes Managing partner Hennes Paynter Communications
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Credit unions seek deeper bonds Membership growing, but institutions’ goals now include usage of diverse services By MICHELLE PARK mpark@crain.com
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Credit unions across Ohio are snaring more new members, or customers, than they have for the better part of a decade, but mere growth in membership isn’t all they seek: A number of local institutions are investing in new systems and services to entice members — new and old — to develop fuller relationships with them. From June 30, 2011, to June 30, 2012, Ohio credit unions added more than 28,000 members, bringing total membership to 2.71 million, the Ohio Credit Union League reported this month. That increase is 47% higher than the 19,000 new members added between June 2010 and June 2011 and is more than three times higher than the 9,000 added between June 2009 and June 2010, according to the league’s data. As Ohio credit union membership
has increased, so too has the average member relationship, the league reported. The metric, which represents the total dollar amount of loan balances and deposits per member, climbed to $12,293 as of June 30 — the highest it has been since at least June 2002 and up 5.9% from $11,603 as of June 30, 2011. “I think that shows that the new members that are coming in are also taking a look at other products and services the credit unions are offering, taking a look at credit unions being their overall financial service provider,” said Patrick Harris, league spokesman. Increasingly, that’s the goal. “Back in the ’80s and ’90s, the (boardroom) discussion may have been, ‘We added this many members,’” said Dave Fearing, senior vice president for credit union support for the Ohio Credit Union League. “Today, there’s a comma and it’s also, ‘Well, how many of these new members have checking accounts and loans and are using our services?’” Nationwide, the rate of credit union membership growth from the second quarter of 2011 to the second quarter this year was the fastest in more than a decade, said Mike Schenk, vice president of economics and statistics for the Credit Union National Association in Washington, D.C. “We think a lot of it has to do with Bank Transfer Day and follow-on activities,” Mr. Schenk said, referring to the event last November that urged bank customers to switch to not-for-profit credit unions. “That single event really has snowballed. It’s created a tremendous amount of interest in and awareness of credit unions.”
With growth comes … From the early 2000s through 2008, credit union membership growth in Ohio was pretty flat and well below the national average, Mr. Harris said. Becoming one-stop shops has enhanced the ability of credit unions to compete and grow, insiders say. GenFed Financial Credit Union in Akron, which grew its membership 9% in the last year, has added mobile banking and remote and mobile deposits over the last couple years, said Kim Pallas, vice president and chief marketing officer. Added Richard Todd, GenFed vice president and chief operations officer, “As we have more members and more demand, we have the ability to have more staff and more services.” GenFed executives attribute much of the institution’s growth to its charter change in spring 2011. With the change, the credit union went from accepting members only from specific employers to accepting members from several counties, including Lorain, Summit and Medina. Also growing is Cleveland-based Century Federal Credit Union, which over the last five years has enjoyed a membership gain of nearly 13%, though most of that increase occurred from 2008 to 2009. That growth required the institution, with nearly $329 million in assets, to become more sophisticated and efficient in operations, said CEO Sharon L. Churchill. To that end, Century Federal a couple years ago bought predictive software that enables it to better understand the effect of rates and products on its balance sheet, she said.
Focus on depth A number of this region’s largest credit unions, though, aren’t posting membership increases. Many of them attribute the lack of gains to their strategy to close inactive accounts in favor of quality, not quantity. “What a lot of credit unions are starting to do is really aggressively look at their product penetration,” the Ohio Credit Union League’s Mr. Fearing said. “It’s not productive to carry a $5 share (deposit) account that doesn’t utilize the services of the credit union.” The Cleveland-based Firefighters Community Credit Union opens roughly 250 to 300 memberships a month, but it also closes about the same number monthly, and sometimes more, executives said. So while the credit union’s five-year membership growth is 6.4%, its membership numbers actually have dropped two consecutive second quarters. However, its second-quarter assets have increased each year since 2009, according to data from the Ohio Credit Union League. In October 2011, Firefighters Community spent about $100,000 on a customer relationship management system to help it study what happens before accounts go dormant and to target offers to customers who only have one account with the institution. “It’s one thing to acquire an account — quite another to acquire a full financial relationship,” said Michelle McGovern, its chief marketing and development officer. “Our strategic focus changed from quantity to quality.” Second-quarter membership at Taleris Credit Union Inc. in Brooklyn Heights was down 32% compared to second quarter 2008, in part because it, too, has been purging inactive accounts, said Robin D. Thomas, president and CEO. The need to improve profit margins drives some of the purge, most of which was executed in 2009 and 2010, Mr. Thomas noted.
Viable option Although credit union membership has grown, the slice of the U.S. financial assets pie that credit unions command remains only about 6.5%, the Credit Union National Association’s Mr. Schenk said. That figure has grown roughly one percentage point since 1992, he noted. Credit union observers are confident their sector’s above-average growth in recent years is sustainable. “I think more and more people will experience the difference … and word of mouth is a strong motivator,” Mr. Schenk said. Firefighters’ Ms. McGovern said she believes growth will be most sustainable in the markets where credit unions offer products a consumer could find at, say, Bank of America. Those that rely on the momentum of Bank Transfer Day likely will not enjoy as much sustained growth, she predicted. Still, the Ohio Credit Union League’s Mr. Harris doesn’t anticipate the bank angst of recent years will lift anytime soon, largely because banks are increasing fees, he said. Credit unions also are increasing fees, he conceded, but more often than not they’re charging less, he said. ■
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Chancellor: Tough times for for-profits continued from PAGE 1
the Higher Learning Commission would say why. The commission was expected to make its final ruling in February about whether Chancellor deserved to remain accredited. Still, the latest show-cause wasn’t lifted without leaving some bruises. Because it was handed down on the verge of peak enrollment season, Mr. Daugherty said, Chancellor didn’t hit its enrollment targets as some prospective students might have been turned off by the Higher Learning Commission’s action. Chancellor projected it would be financially self-sustaining from its operations by December, but the dinged enrollment numbers forced administrators to adjust that fore-
cast to the first quarter of 2013.
Disputing Harkin’s findings According to its website, the Higher Learning Commission has been Chancellor’s accreditor since the late-1970s, when the institution was known as Dyke College. The college changed its name to David N. Myers College in 1996 and then Myers University in 2001. The university was financially hard-pressed but was bailed out in 2008 by private investors, who then converted the institution into a for-profit enterprise known as Chancellor University. Kevin Kinser, an academic who studies for-profit universities at the University at Albany-State Universities of New York, said Chancellor
YOU CAN MOVE YOUR
is a much different institution than the one the Higher Learning Commission had overseen for decades. As such, Mr. Kinser said, it could make sense for Chancellor to seek out accreditors more in line with the university’s current priorities. There are accrediting bodies, for instance, focused on distance learning or business programs. The risk is that Chancellor still could carry the baggage from the times it locked horns with the Higher Learning Commission. “They’re coming in still needing to show cause, so to speak, why a new accreditor would want to take them on,” Mr. Kinser said. Chancellor was also one of 30 for-profit institutions highlighted in a wide-ranging and unflattering report issued last July by Sen. Tom Harkin, an Iowa Democrat, on the for-profit education sector. The report concluded that there were signs Chancellor was “experiencing a crisis in management as it continues to operate at a loss and has failed to attract enough students to generate the revenue it needs to remain solvent.” Mr. Daugherty, however, contends the evidence cited in the report, which took more than two years to compile, is out of date and not a reflection of Chancellor’s current health. Mr. Daugherty said Sen. Harkin’s committee subpoenaed Chancellor for the cited information less than a month after he took the reins of the university in June 2010.
It’s a ‘rebirth’
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Despite Chancellor’s public hardships in recent years, the university is in the midst of a “rebirth,” according to Michele Yurcich, the university’s senior director of marketing and development. Chancellor recently rebranded itself with a new logo and website that Ms. Yurcich said gives the school a “modern” feel. Last year, it also moved from Cleveland’s Midtown area to an office park in Seven Hills off Rockside Road. Chancellor also launched several “niche” academic programs, such as its master’s of management degree in social media, which Mr. Daugherty expects will add steadily to the university’s enrollment, which at present hovers around 400 students. The university in recent months has rolled out a handful of partnerships with employers and community colleges — such as Eastern Gateway Community College in Steubenville and Mountain Empire Community College in Big Stone Gap, Va. — that will allow students to transition to Chancellor to complete bachelor’s degrees. Such arrangements beyond Northeast Ohio are expected to be a boon for the college’s enrollment, as the school looks to grow in a region where the population remains stagnant. Chancellor’s quest for growth — and thus financial stability — comes as the for-profit education business is under duress in the wake of government investigations, intensified pressure from accrediting bodies and an onslaught of negative publicity. Strayer Inc. and Apollo Group Inc. — two giants of the for-profit education business — have seen steep earnings declines. Apollo, which operates the University of Phoenix, recently announced plans to shutter 115 of its locations across the country, including its locations in Independence and Westlake. “They were flying high a few years ago, but now they’re coming back down to earth,” the University of Albany’s Mr. Kinser said. ■
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Seal: Firearms supplies Chemical Solvents sees something special help boost bottom line Despite cost, regulations, CLE outfit tackles blends continued from PAGE 3
machining equipment ranging from lathes to computer-numerically controlled machine tools. It makes a broad range of parts, including housings for sensors that go into trucks and automobiles, parts for firearms such as the popular AR-15 military-style rifle, and couplings that are used to install residential gas meters on new homes. About 60% of its business is automotive, and 20% is firearms parts, Mr. Habe said. Business has been good since the company was formed via the merger of Willoughby-based Arrow Manufacturing with Metal Seal and Products in 2011. Mr. Habe said the deal was done with $5 million in state financing that kept the company in Mentor. The company is on track to book $30 million in sales this year, up 36% from 2011 sales of $22 million, he said. Employment is growing along with sales, he said, and the company currently employs 214 people, up from 135 about one year ago.
Good aim Both of Metal Seal’s major product lines — automotive and firearms parts — have been growing rapidly, but the firearms parts business is by far the fastest-growing portion of his business, Mr. Habe said. The company makes bolt assemblies for rifles made by Sturm Ruger & Co. and by about 15 other makers of versions of the AR-15, which is the semi-automatic, civilian version of the military’s M-16 rifle. Metal Seal started making gun parts in 2009, but already this year its firearms sales are on track to top $6 million, Mr. Habe said. Firearms enthusiasts and those in the industry largely credit concern about gun control — which tends to rise when a Democrat is in the White House — with some of the increased demand for civilian weapons. Gun sales have spiked since President Barack Obama took office and the National Rifle Association warned its members he would be the “most anti-gun president in American history.” So far, that’s proved to be a Chicken Little warning, but it hasn’t slowed demand for weapons. But the president is likely not the only reason for the spike in demand. With shooting sports gaining in popularity, along with concealed carry permits for handguns, the number of background checks requested by Americans attempting to buy guns from licensed dealers already was rising when President Obama took office.
During the second term of George Bush’s presidency, the number of background checks climbed 46% to 12.7 million in 2008 from 8.7 million in 2004. They’ve continued to rise, hitting 16.5 million in 2011, and they’re on track to top that number this year, according to FBI statistics, as they’re up for every month of 2012 so far compared with 2011. In the world of AR rifles — which by their very design require components made to tighter tolerances than many other weapons — the ability to make parts that exactly and consistently meet manufacturer specifications is a big advantage when it comes to growing sales, Mr. Habe said. Others are sharing in Mr. Habe’s growth in the firearms market. Wynn Atterbury, owner of WMD Guns in Stuart, Fla., makes and coats firearms parts for gunmakers and other parts makers such as Metal Seal. Mr. Atterbury said his company has thrived since he opened it 18 months ago, and that he’s been watching the gun business grow for longer than that. “I’ve been in the industry since 2003. Especially with modern sporting rifles, there’s been a very rapid growth phase since then. ... We’re seeing a strong resurgence of handguns and sporting rifles,” Mr. Atterbury said. So far, 2012 is no exception, he said. “Ruger has already surpassed a million guns for the year in sales. The market’s been very strong,” Mr. Atterbury said.
By GINGER CHRIST gchrist@crain.com
Chemical Solvents Inc. is mixing up its sales by focusing on creating specialty blend chemicals rather than its old staple — commodity chemicals. The Cleveland-based chemical distributor is investing more resources into creating specialty blends, which in the last two years have represented a growing part of the company’s business. Its specialty blends are custom-made chemical compounds used in paint thinning, paint purging and metal degreasing, among other things. In 2010, specialty blends were only 20% of Chemical Solvents’ sales. Today, that percentage has climbed to 40% and will continue to increase, according to Blaine Davidson, vice president of sales at Chemical Solvents. Blending business sales have grown 150% in two years. The switch has allowed the 100person Chemical Solvents to hire 10 people in the last two years and to be on the lookout for two more employees. And, while Mr. Davidson refused to share annual revenue, he did say the company this year is on
pace to eclipse its record 2011 sales of $70 million. “We see an increased need for more and more blend and specialty chemicals as customers outsource because of increasing regulations to deal with hazardous chemicals,” Mr. Davidson said. Increased federal regulations have been both a blessing and a curse for Chemical Solvents. While the company must adhere to stricter regulations on emissions, its customers must do so as well. As federal rules make it harder to manufacture blended chemicals, Chemical Solvents is stepping in to take on that business, despite the added headache. “It just increases the cost,” Mr. Davidson said. Because Chemical Solvents specializes in flammable blended chemicals, it is better positioned to handle more stringent regulations than its customers that don’t deal with them on a daily basis, Mr. Davidson said. Chemical Solvents has a dedicated team dealing with regulations to ensure the company remains compliant and performs sampling, Mr. Davidson said.
Its customers include SherwinWilliams Co. and The Blaster Corp. and its competitors are Univar Inc. and Nexeo Solutions Holdings LLC. Part of Chemical Solvents’ growth in its blended chemical business has come from its willingness to perform research and development for its customers, which often leads the company into new markets. “Many of our customers count on us to innovate for them,” Mr. Davidson said. “We’re constantly growing into new markets.” Cleveland-based paintmaker Sherwin-Williams Co. worked with Chemical Solvents’ R&D team to create a new lower VOC (volatile organic compounds) commercial blending formula. The formula, marketed as Sprayon, is used as a cleaner for circuit boards and relay switches, and is made at Sherwin-Williams’ Diversified Brands plant in Bedford Heights. “CSI’s people and technical expertise have been invaluable resources to Sherwin-Williams,” said Mike Conway, spokesman for Sherwin-Williams. Chemical Solvents in August made a $500,000 investment in new equipment, buying a multishaft mixer and more storage tanks to handle increased chemical blend business. The company annually invests $500,000 into new equipment. ■
Newer is better Mr. Habe said he’s also benefiting from investing about $4 million in new machines this year, most of it precision CNC machining equipment. “The other guys have older machines, so they can charge a lower hourly rate,” Mr. Habe said. “But we can hold tighter tolerances than our competition because we have newer technology.” Meanwhile, Metal Seal’s automotive business has come back strong from the industry’s 2009 crash thanks in part to rising automaker volumes. But the company also has benefited from updated vehicle designs, with newer vehicles requiring more sensors that use Metal Seal housings. As pollution control and mileage standards become more stringent, Mr. Habe expects to see even more growth from the automotive sector. “They’re putting more and more sensors on automobiles, and that’s good for us,” he said. ■
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Auto loan delinquencies Grants: Focus on quickness to market rise slightly at big banks continued from PAGE 1
By JIM HENRY Automotive News
Delinquencies on auto loans and charge-offs for bad loans are still quite low, though a trio of the biggest banks in auto lending showed a slight uptick in either delinquencies, charge-offs or both when they released quarterly earnings this month. Some analysts had predicted delinquencies were bound to bottom out soon as auto lenders made more subprime loans and competition forced lenders to loosen standards. Still, any upticks in delinquencies and charge-offs were considerably smaller than the rise in automotive lending at the three banks: Wells Fargo, Chase and Capital One. From a dealership point of view, slightly higher delinquencies and defaults are probably a positive sign. Looser standards mean it’s easier to get customers financed. In the long run, though, higher delinquency rates could encourage lenders to tighten the screws on auto loans again. That time is still a long way off, said Amy Crews Cutts, chief econo-
mist for credit bureau Equifax. “I do not expect higher defaults over the next two years at least,” other than traditional seasonal increases, she said in an email this month. Wells Fargo said its auto-loan originations were $6.3 billion for the quarter, up 20% from a year earlier. Delinquencies of 30 days or more on indirect auto loans were 1.4% of the total, up from 1.3% a year earlier, the bank said. Charge-offs were 0.5%, down from 0.7%. According to Experian Automotive, Wells Fargo was the secondbiggest U.S. auto lender in the second quarter after Ally Financial. Chase’s auto lending unit, Chase Auto Finance, reported its auto-loan originations were $6.3 billion in the third quarter, up 7% from a year earlier. Delinquencies of 30 days or more rose to 1.1% of the total from 1.0% a year earlier. Chargeoffs doubled to 0.7%. Chase was the No. 4 lender overall in the second quarter, Experian said. ■ Jim Henry is a correspondent for Automotive News, a sister publication of Crain’s Cleveland Business.
direction of the Third Frontier program, said Dr. Chagnon, whose office is part of the Ohio Development Services Agency. The agency, which until recently was called the Ohio Department of Development, allotted $50 million for larger Third Frontier investments because multiple commission members have voiced support for the idea of backing bigger projects. “They were for (making) a large, game-changing investment,” he said. The smallest grant the commission likely would make under its new Technology Commercialization Centers program would be around $10 million, though the commission also could decide to give all $50 million to one project — if the right one comes along, Dr. Chagnon said.
The Wright stuff The program would bear a resemblance to the Wright Centers of Innovation Program. Through the Wright Centers program, the Third Frontier Commission in its early years awarded grants ranging from $11 million to $28 million to 13 groups of collaborators. The groups — which consisted of colleges, businesses, hospitals and other research
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institutions — submitted plans stating how they would work together to commercialize new technologies. The commission also made one $60 million grant in 2006, to the Global Cardiovascular Innovation Center, which it labeled a “Wright Mega-Center of Innovation.” Today, the cardiovascular center’s 50,000square-foot headquarters, located on Cedar Avenue across from the Cleveland Clinic, houses several young companies commercializing biomedical technologies. The cardiovascular center claims to have created, attracted or capitalized 40 companies and supported the creation of 500 jobs in Ohio, according to a recent report it provided to the state. That project will serve as a model for the Technology Commercialization Centers program, Dr. Chagnon said. “What appealed to us is how many startup companies were created out of the GCIC,” he said. However, the new program would differ from the Wright Centers program in a few key ways. For one, the new initiative, if approved, would focus on developing technologies that could be turned into products fairly quickly, Dr. Chagnon said. Some previous Wright Center projects focused on opportunities that were “further from the market,” he said. Thus, according to metrics used by the commission, the Wright Centers program hasn’t created as many jobs as some other Third Frontier programs that focus on near-term opportunities. Plus, the Wright Centers program focused on physical infrastructure because its grants typically included state dollars reserved for capital improvement projects. The Technology Commercialization Centers program wouldn’t have that limitation.
Changes afoot
The proposed budget also would make a few other changes: ■ It would set aside $15 million for companies and other organizations that want to create “a critical piece of infrastructure that could be shared,” Dr. Chagnon said. For instance, the commission last week awarded $6 million to Honda, which will use the money to resurface a high-speed test track that could be used by other auto-makers or even the government. That grant provided “a perfect example” of how another new program — the proposed Technology Asset Grants program — would work, he said. ■ The budget included $1 million for marketing, an amount that commissioners are thinking about increasing, Dr. Chagnon said. Though the state of Ohio for years has promoted the Third Frontier through the media, the commission wants to do more traditional marketing to attract investors, entrepreneurs and companies to the state, he said. ■ The budget scrapped two programs that never got off the ground: a $10 million Growth Fund that would have gone toward the creation of investment funds designed to help more established tech companies scale up, and a $1 million Micro Loan Fund, which would have targeted smaller projects. Demand for the Growth Fund dollars dried up because the money was to be awarded in conjunction with grants from a similar federal program; investors have had trouble accessing the federal money, Dr. Chagnon said. The Micro Loan Fund was nixed because it wasn’t a big priority — and because the Third Frontier already has “an awful lot of programs on the books,” he said. ■
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SPECIAL REPORT THE TRANSFORMATION OF EUCLID AVENUE Despite progress, still more to be done Work zones continue to replace dead zones By STAN BULLARD and JAY MILLER sbullard@crain.com, jmiller@crain.com
D STEPHEN HERRON/PLAYHOUSESQUARE
ABOVE: Present-day Euclid Avenue, looking east. BELOW: Roughly the same view, from about 1922. For more photos, go to www.crainscleveland.com/EuclidGallery.
A ‘great American street’ rises Development of HealthLine helps kick off revival of avenue that city’s elite once called home By JAY MILLER and STAN BULLARD jmiller@crain.com, sbullard@crain.com
I
n mid-2011, Cleveland HeartLab Inc. rebuffed a sale that would have moved the young company to Massachusetts, instead deciding it would stay put in Northeast Ohio. The only question was: Where? Having grown from eight employees to 80 in less than two years, the startup needed to leave its incubator space at the Cleveland Clinic. President
and CEO Jake Orville said he first looked at a number of suburban locations. Then he was introduced to Fred Geis, a partner in the Geis Cos. real estate firm. Its Hemingway Development affiliate was beginning construction on the MidTown Tech Park at 6700 Euclid Ave. “It was a perfect match,” Mr. Orville said of the new 128,000square-foot building that ultimately attracted the company to Euclid Avenue. But before that decision ever
could have happened, there had been decades of conversations and collaborations that focused on a new transit line and urban renewal. Those meetings — 2,000 in all, beginning in the 1980s, according to Joe Calabrese, general manager of the Greater Cleveland Regional Transit Authority — are the back story to Mr. Orville’s 2010 decision. First, there was a discussion of a subway under Euclid, then a trolley line. Those options were financially See RISE Page 17
espite the millions poured into projects ranging from the new Museum of Contemporary Art Cleveland to the redo of long-neglected commercial buildings near Public Square as lofts, don’t look for construction crews to disappear from Euclid Avenue any time soon. Consider the new developments of the last few years the opening salvo in efforts to revive the street. Weighing Euclid’s current condition, Cleveland architect Jonathan Sandvick said, “There is an enormous amount to be done. There is more to be done than is done.” His proof: parking lots downtown that give way to fields of empty land east of East 55th Street where buildings once stood. Look in the short term for some major projects to open, among them the $27 million Courtyard by Marriott on Cornell near Euclid this winter and the $50 million Tinkham Veale University Center at Case Western Reserve University’s campus in 2014. Look long-term for others, such as Cleveland State University’s new Center for Health Professions, a $47 million addition to Euclid at East 22nd Street. Still other, bigger plans may take years to reach fruition, if they do. In 1994, Euclid from the Inner Belt near Cleveland State University to Public Square was dubbed a dead zone. Now, the downtown dead zone has diminished to a cluster of eight See NEXT Page 14
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CORRIDOR OF CHANGE A look at how 10 Euclid Avenue locations — both old and an new — are helping to link the corridor’s past to its future. 1
HealthLine, Public Square
Starting at Public Square, the 6.8-mile, 58stop HealthLine passes through and connects seven of the city’s districts: downtown, PlayhouseSquare, Cleveland State, Midtown, Fairfax, University Circle and East Cleveland. Considered a bus-rapid transit, the 4-year-old RTA line is largely credited with many of the infrastructure improvements that have helped spark the corridor’s revitalization. Indeed, during a recent HealthLine tour for a transit contingent visiting from Albuquerque, N.M., RTA general manager Joe Calabrese ticked off all the developments taking place. “People are investing in Euclid Avenue when they had not invested in Euclid Avenue in years,” Mr. Calabrese said.
2
Union Club of Cleveland
The Union Club for more than a century has been the place to be for the city’s movers and shakers — and for the entirety of that time, the organization has called Euclid Avenue home. “There’s hardly a figure in Cleveland’s past that wasn’t a member of the club,” said William H. Coquillette, today’s club president. The organization’s current 85,000-square-foot home was built in 1903, and it now features such amenities as overnight guest rooms, meeting spaces, dining areas, a ballroom and a fitness center. With an eye to the future, the club recently purchased the lot next door, space that
currently is being used for parking. “Euclid Avenue has become more of a destination,” Mr. Coquillette said. “I now feel very good about being located here.”
3
Cowell & Hubbard
Restaurateur Zack Bruell still has patrons come into his newest eatery reminiscing about the purchase of an engagement ring or other piece of jewelry. Once home to the iconic Cowell & Hubbard jewelers, the building was “in shambles” when Mr. Bruell opted to open his fifth Cleveland restaurant in the theater district space. “I could see what the bones were,” he said. Of course, some of those old bones were tougher to handle than others: A safecracker was needed for the 6-foot-tall, 6,000-pound safe found in the old vault. Mr. Bruell said Euclid Avenue is probably the most important street in Cleveland. “This is the spine of the city,” he said. “It’s important that this corridor get back to what it was.”
4
PlayhouseSquare
With 1 million visitors annually attending nearly 1,000 performances, Playhouse Square is the second-largest performing arts center in the country. That’s a big turnaround for a group of theaters that nearly met the wrecking ball. “I’m an optimist,” said Art J. Falco, president and CEO, who started with PlayhouseSquare in 1985 as finance director.
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Mather Mansion
The 43-room Mather Mansion on the campus of Cleveland State University is just as gorgeous today as it must have been in 1910 when it was built for more than $1 million — reportedly the most expensive home on Cleveland’s Millionaires Row. Home to industrialist Samuel Mather (his wife, Flora, died before construction was completed), the house features the detailed craftsmanship typical of its time, much of which is preserved today. Owned by CSU since the 1960s and empty since 2011, the administration now hopes to see the structure converted into a boutique hotel with 50 to 60 guest rooms. The plan had been to have the project completed by fall 2013; however, that timeline may be pushed back as the university is in the midst of firming up plans with a potential developer, said Joe Mosbrook, the school’s director of strategic communications. “The attention to detail is absolutely impeccable throughout the entire place,” he said.
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“I always knew we had the core to become a very dynamic area … it really took private and public working together.” Today, PlayhouseSquare, along with its development arm, is helping to drive much of the change in the surrounding neighborhood, helping to create office, retail and residential space. In its most recent project, PlayhouseSquare partnered with Cleveland State University and the Cleveland Play House for a $32 million capital campaign to create three new theaters in the Allen Theatre complex, as well as a new concourse from the garage.
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Agora complex
Fred Geis, a partner in Streetsborobased Geis Cos. and Hemingway Development, is working to resurrect the onetime Agora complex in a joint venture with the nonprofit development organization MidTown Cleveland. A dozen new tenants, and some 50 people, already work in the structure since Hemingway and MidTown partnered earlier this year. The complex started life as the Metropolitan Theatre, an ornate vaudeville house, in 1913. Later, rock ‘n’ roll greats such as the Beatles and the Rolling Stones performed in the 1,500-seat WHK Ballroom or roamed the halls when the building was home to radio stations WHK and WMMS. Today, small suites go for as little as $600 monthly to land early-stage tech ventures and minorityowned enterprises as tenants. And, in deference to its music heritage, fledgling radio station WLFM 87.7 has moved into the building, and shows still are performed in the concert venue portion of the complex.
7
Pierre’s Ice Cream
Since 1932, Pierre’s Ice Cream has remained within three miles of its original location near East 82nd Street and Euclid. One might even say the latest addition to its campus — a 35,000-square-foot factory that opened in June 2011 — is the cherry on top, proof of the ice cream maker’s commitment to the corridor. Pierre’s current Euclid Avenue site was chosen as its headquarters home in the 1990s, after long-range planning and an exhaustive search for “the optimum location,” said Shelley Roth, Pierre’s president. A site selection made long before revitalization plans were taking hold, Ms. Roth said the company saw beyond boarded-up buildings to
the location’s long-term benefits, including access to freeways and a strong infrastructure. And, of course, there was a little bit of faith in the corridor’s potential. “There was a glowing vision of what Euclid Avenue could be,” she said. “It’s been exciting to witness.”
8
Dunham Tavern Museum
The Dunham Tavern Museum stands as a monument to the past — days when weary stagecoach travelers would stop in for a moment’s rest — yet it’s contributing to the makeup of today’s corridor. As part of a $1.4 million project, the Dunham Tavern Museum this year acquired and demolished a deteriorated industrial building adjacent to the museum. The 2.2-acre parcel, part of the original Dunham tract, will be preserved as green space for public use. Bill Ruper, board president, said the creation of the HealthLine helped tremendously in rejuvenating the area around the circa-1824 structure, which at one point was at risk of being torn down for a used car lot.“Back in the 1980s, no one really wanted to be here,” he said. “We had the vision to see that someday the whole area was going to turn around.”
9
Baker Electric Building
CRAIN’S CLEVELAND BUSINESS
cluding the Community of St. Peter. Richard Y. Pace, CEO of Cumberland Development LLC, purchased the Baker Electric Building in 2006, a decision he said was motivated in part by the Euclid Corridor investment. As one who sees potential in locations that allow workers a place to “live, work, play,” Mr. Pace said the current growth on Euclid Avenue fits the model. “That’s what the promise is of the health-tech corridor,” he said.
10
Museum of Contemporary Art Cleveland
The newest jewel on Euclid Avenue, the Museum of Contemporary Art Cleveland, is using its location as a springboard to its own future. Located on what executive director Jill Snyder calls “the last best location” on University Circle, the nearly 34,000-square-foot, four-story building is 44% larger than the museum’s previous rented space. Ms. Snyder said with the move, the museum’s annual budget will go from $1.6 million to $2.6 million, with earned income increasing from 7% to 25% of the budget. Additionally, yearly attendance is expected to increase threefold from 20,000 to 65,000, driven largely by pedestrian traffic, and 10 fulltime equivalent employees have been added. “I’m so in love with this building,” Ms. Snyder said. “This was a building that was created against all odds.”
The electric vehicle charging station that sits outside the Baker Electric Building is both functional and symbolic of the building’s history. In the early 1900s, it served as a showroom for the Baker Motor Vehicle Car Co.’s electric cars. Today, the space is being used by a number of technology companies, such as stem cell firm Arteriocyte Inc., and as well as other tenants, in-
ON THE WEB: Hear more on video about how these sites are fitting into the future of Euclid Avenue. www.CrainsCleveland.com/EuclidGallery
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HISTORIC
PRESENT DAY
RESIDENTIAL
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CRAIN’S CLEVELAND BUSINESS
SPECIAL REPORT: CORRIDOR OF CHANGE
OCTOBER 29 - NOVEMBER 4, 2012
Developers try to reverse retail decline Next: Work driven by county move, hospitals By STAN BULLARD sbullard@crain.com
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et ready for some new drives in the effort to reverse Euclid Avenue’s long, sad retail decline. Gil Blutrich, president of Torontobased Skyline International Development Inc., said his firm is preparing plans to recast the retail section of the Hyatt Regency Cleveland at the Arcade as a boutique specialty center with a culinary focus. “The idea is to make it a fourseason extension of East Fourth Street,� said Mr. Blutrich, referring to Cleveland-based MRN Ltd.’s
revival of East Fourth as a restaurant and entertainment center with upper-floor lofts. In the case of the Old Arcade, which Skyline bought at a sheriff’s foreclosure sale last December, the upper floors will remain a Hyatt Regency, though it will be renovated. Mr. Blutrich said his firm dropped the idea of installing apartments in part of the hotel because hotel occupancy is up, and he expects more gains after the opening of the medical mart and convention center. He also would like to improve the look of the Arcade’s two retail floors, which have been dogged for years by high vacancy. Skyline aims to start
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seeking tenants and approvals soon and have the redo done in late 2013. Retail space across from the Arcade, at Colonial Marketplace, also is amid a rethinking. Richard Y. Pace, CEO of Clevelandbased Cumberland Development LLC, recently decorated the Colonial Marketplace’s halls with white boards for party-goers to list retail ideas during a gathering to learn what retail uses downtown dwellers would support. Mr. Pace just completed a master lease for Colonial Marketplace’s first-floor retail area. The Colonial Marketplace, which joined the Euclid and Colonial arcades when their upper floors became a Courtyard by Marriott hotel in 2001, also has battled vacancy. Mr. Pace said he plans to employ a lesson he picked up years ago as a Warehouse District landlord: Be flexible on rent or terms rather than have high-cost, but empty, space. MRN, which also has Euclid storefronts such as the Corner Alley bowling alley, recently leased one of its last vacancies to a Chipotle. It is the second national food concern this year on lower Euclid, following a Potbelly Sandwich Shop, which moved into a storefront at Norfolk, Va.-based Harbor Group’s 515 Euclid parking garage. Allen Wiant, vice president of strategic investment at PlayhouseSquare Real Estate Services, has completed an exhaustive inventory of retail spaces downtown to give prospects an idea of what retail spaces are available — even if they are outside the PlayhouseSquare nonprofit development group’s Theater District domain. “I’d like to see them land on Euclid,â€? he said. “This collaboration among property owners is a big change from 20 years ago.â€? â–
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buildings from East 12th to East Ninth streets.
The county’s role Three of the largest properties there are in play, though, thanks to Cuyahoga County’s plan to shed unused real estate and consolidate downtown county offices. That puts back on the market the county-owned Ameritrust complex, which includes the bank rotunda, a 27-story empty office tower and the building at 1010 Euclid Ave., as well as adjoining buildings on Prospect Avenue. Two proposals filed with the county by Landmark Management of Cleveland, the only developer to publicly discuss its bid, call for a $100 million redo of the tower as a hotel and apartments, and 1010 Euclid to lofts. Across the street, the Huntington Building, 916 Euclid Ave., also is in the mix. However, its owner, a company led by Miami-based Optima Management, hopes to see it become a potential home for the county’s consolidated office of 200,000 square feet. What’s next for the Huntington, downtown’s largest office property by square footage, depends on the the county office-space competition. Chaim Schochet, investment executive at Optima, is coy about the company’s plans. “You’ve got to assume we are going after the county,� Mr. Schochet said. “Beyond that, I can’t say anything else about the building’s future. Otherwise, everything is still on the table.� Those alternatives might include a hotel or residential use as well as trimmed-down offices. Also able to accommodate the county is the Halle Building, 1201 Euclid Ave., which owner Forest City Enterprises Inc. has studied converting to apartments. The Clevelandbased developer also filed a bid with the county — for what, it won’t say. Plans are afoot to restore the other four structures as lofts or hotels with first-floor retail. A Kimpton Hotel is bound for the most prominent of the group, the Schofield Building on the southwest corner of East Ninth and Euclid. If those projects go, said Tom Yablonsky, vice president of Downtown Cleveland Alliance and executive director of Historic Gateway Neighborhood, they will solidify a new vision for lower Euclid as a hospitality and residential corridor.
Meeting demands The next major transformation in the works is at and near the Euclid and East 55th Street railroad underpass in Midtown. Although the HealthLine project updated the streetscape, the railroad underpass remains foreboding and makes it harder to see all of Euclid as one development area. Jim Haviland, executive director of MidTown Cleveland, said the nonprofit is “putting our full court press� on to change the forlorn site and iconic bridge. It is seeking a grant to study connectivity and development potential for the underpass and pave the way for state and federal funds. Plans call for painting the bridge, lighting up the underpass and using some space as a “food truck plaza.� Rebranding
the underpass already is under way; MidTown calls it “Penn Square� to recall a train station that once operated there. Just west, Fred Geis, a partner in Streetsboro-based Geis Cos. and Hemingway Development, is working to resurrect the onetime Agora complex in a joint venture with MidTown. On the eastern side of the underpass, acres may someday yield build-to-suit structures for growing companies. Nearby is MidTown Tech Park, a suburban-style flex building Hemingway and the family of high-profile property owner John Coyne and his son, realty broker Terry Coyne, crafted for an urban site at 6700 Euclid. The building and Midtown were chosen as Geis’ foray into the urban Cleveland market because the highway access, visibility and empty land create building opportunities. Mr. Geis said his firm’s investments there total $70 million. And, while he looks forward to adding more new or renovated buildings, he plans to pace them so other developers can finish and lease their projects. “There is demand,� Mr. Geis said, “but there is not unlimited demand.�
Thinking big Farther east, developers hope to break new ground in more ways than one with Intesa, a $110 million office, retail and apartment project in a twin, 10-story tower complex. Proposed by Tony Panzica and Peter Rubin, respectively principals of Panzica Construction of Mayfield Village and Coral Co. of Cleveland, the developers won a University Circle Inc. competition to pursue the Circle Drive site. Intesa might rise just east of Uptown and border a building that the Cleveland Institute of Art plans to build next to its just-renovated Ford studios. Mr. Panzica said talks are under way with several prospective office tenants. Commitments to lease 50% of the planned 131,000 square feet of offices are needed to win financing. Intesa’s first floor will offer retail space, continuing the retail offerings of Uptown. Expect institutions to continue big-ticket alterations to Euclid as well. The Cleveland Clinic Foundation, which acquired the Cleveland Play House building two years ago, will likely use its hallowed theaters as auditoriums. The Play House’s parking lots may yield an educationrelated building for Clinic employees and a parking garage. That’s the word from Bill Peacock, CCF’s chief of operations. Although clinical needs and Clinic finances will drive use and size of new buildings. Mr. Peacock counts six translucent blocks that represent potential future buildings on Clinic grounds visible from Euclid. That is huge; the Clinic now operates a dozen buildings on Euclid. University Hospitals has put finishing touches on a $1 billion building program that, among others, includes Seidman Cancer Center on Euclid. However, Steven Standley, UH chief operating officer, said it may lease office space at Intesa. “We’re just maxed out all the time here,â€? Mr. Standley said. â–
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SPECIAL REPORT: CORRIDOR OF CHANGE
OCTOBER 29 - NOVEMBER 4, 2012
CRAIN’S CLEVELAND BUSINESS
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Residential buildup has Euclid feeling a lot more like home Property owners try to keep pace with growing demand for apartments By STAN BULLARD sbullard@crain.com
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here is a new hot ticket on Cleveland’s Euclid Avenue. Ari Maron, a partner in the family-owned realty developer MRN Ltd., reflects that in the mid-2000s, acquaintances phoned him directly in bids to score scarce seats at shows at the House of Blues in MRN’s East Fourth Street Neighborhood. “Since mid-2010,” Mr. Maron said, “they’ve been calling to ask me to try and help them get into an apartment.” With downtown apartment occupancy at an incredible 97% this June, a little pull can help. Luckily, MRN has 87 suites going into the Rosetta Building, 610 Euclid, that will be available next year. Earlier this month, it also opened another 140 at the Uptown mixed-use retail and residential complex on Euclid. The last few years have spawned an incredible change in context for development on Euclid Avenue, between the city’s two largest employment centers — downtown and University Circle. Chief among the drivers of this transformation is the Greater Cleveland Regional Transit Authority’s HealthLine. Along prettied-up Euclid, new rentals hit the market as the baby boom echo generation, with a taste for urban life, sought housing as the attitude toward home ownership soured. Chris Sledzik, a resident of Statler Arms Apartments, 1127 Euclid Ave., commutes to a suburban job as an account executive at Marcus Thomas LLC and sums up the change succinctly. “There was a whir that became a buzz and is now becoming a roar,” the 27-year-old says of young professionals flocking downtown. The Tallmadge native notes the rent is more than a former Akron house; still, there are benefits, such as the dining and entertainment options. “When I look out the window at the lake in the morning, I know it’s worth it,” he said.
Euclid wasn’t built in a day Cleveland’s residential revival was more than just good fortune. “This city has made its own luck,” said architect Jonathan Sandvick, whose firm specializes in preserving old buildings. Before the HealthLine opened in 2008, the city had spent decades fostering the downtown residential population. Mechanisms for redeveloping commercial buildings as apartments were painstakingly worked out after 1992. Developers, accountants, lenders and city officials learned how to cobble together federal historic tax credits and multiple money sources to finance projects. That expertise bore fruit on Euclid in anticipation of the HealthLine and in the years since. Additionally, Tom Yablonsky, a vice president of the Downtown Cleveland Alliance and executive director of the Historic Gateway Neighborhood nonprofit, said Euclid’s status as the city’s historic main street played a big role in how things shook out for the new bus/rapid transit line. Although skyscrapers and tall
buildings line Euclid downtown, a profusion of two- to four-story buildings survived from the 19th century. “It still had the scale and look of an old commercial street,” Mr. Yablonsky said. “It’s very pedestrianfriendly. Give life to the upper floors, and the (street-level) floors come back.” Ironically, the idea of converting old Euclid buildings to residential use was crafted in a study the city of Cleveland commissioned in 2000 as a way to bolster the office market, Mr. Sandvick said.
History in the making The next step came in 2006 as all of lower Euclid became a historic district so buildings could qualify for federal historic tax credits because they contributed to the district as a whole. That meant buildings would not have to qualify individually for credits. That opened the door for some major projects, such as the onetime Taylor department store to The Residences at Six Six Eight apartments, which had been so altered in two office makeovers it would not have won historic tax credits. Planners and officials added an extra incentive. Ohio’s new state historic preservation tax credit helped developers as lending tightened up. Thirteen residential projects between Cleveland State and Public Square are among 24 there that have received such credits since their 2007 inception, according to a study by Historic Gateway and the Historic Warehouse District Development Corporation. K&D Group, the Willoughbybased owner of more than 9,000 apartments in Northeast Ohio, undertook the project at 668 Euclid as the street went through its bus/rapid rejuvenation. At a cost of $65 million, it was one of the last large projects undertaken before the financial collapse in 2008. Now, as lenders start funding again, K&D is undertaking one of the newest residential projects near Euclid, converting offices in the Hanna Building Annex on East 14th Street to 102 apartments. Doug Price, K&D’s CEO, said there is a simple reason his firm came back for another project downtown. “There’s just no demand for suites in the suburbs,” Mr. Price said. “However, in downtown you are adding new residents every day.”
ON THE WEB For smart phone users, scan this QR, or “quick response” code, with any QR code reader to view photos of some residential options along Euclid. contemporary architecture also breathes new life to Euclid with a classic concept: first-floor storefronts underneath apartments. MRN pursued Uptown with CWRU and UCI because it decided to follow public transit lines from downtown. Mr. Maron said Uptown offered a walkable neighborhood with downtown-like attractions. The residential component of the project is 80% leased, MRN said. Among other pioneering projects near Euclid at University Circle are the first 12 units of 59 at Fairview Park-based WXZ Development Inc.’s Hazel 8. WXZ also plans more rentals near its recently sold-out Circle 118 condos at East 118th Street and Euclid. WXZ is long-established in the suburbs, but CEO Jim Wymer called
STEPHEN HERRON
The Statler Arms, on Euclid Avenue at East 12th Street, is one of a growing list of residential options. University Circle “a wonderful pocket” in the city because of its strong demographics. Another project farther east at University Circle, Circle East, is fully leased after a July opening. Since the project used federal funds, tenants must meet moderate income restrictions, but can rent townhouses that cost $200,000 to build for as little as $960 monthly. Wes Finch, CEO of Finch Group,
said Circle East was possible because the HealthLine fixed up the street’s look. His prior project at University Circle, the renovation of Park Lane Villa as market-rate apartments, catered to University Circle’s own strengths. “This is an area with great job concentration and job creation and little housing,” said the Boca Raton, Fla.-based Mr. Finch. “I believe Cleveland is one of the best-kept secrets in the country.” ■
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All on board Cleveland State and Case Western Reserve universities also embraced goals to reshape the environments on Euclid near their campuses, which added housing and commercial uses as well as college buildings. Additionally, University Circle Inc., the nonprofit development group that serves the cultural, educational and medical hub, set a goal of adding 1,000 units of housing; it’s now half there. Where adaptive reuse provided the mechanism for downtown, University Circle lacked the same stock of old commercial buildings, so construction came to the fore. Among the results is Uptown, which MRN built on both sides of Euclid Avenue at Mayfield Road in a deal with UCI and CWRU. The
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CRAIN’S CLEVELAND BUSINESS
SPECIAL REPORT: CORRIDOR OF CHANGE
OCTOBER 29 - NOVEMBER 4, 2012
HealthLine serves as catalyst Economic development along Euclid follows debut of hybrid transit By JAY MILLER jmiller@crain.com
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t’s Aug. 28 and Joe Calabrese is playing tour guide. As he’s been doing several times a month since the HealthLine opened in October 2008, the general manager of the Greater Cleveland Regional Transit Authority has a microphone in his hand. He’s ticking off the specs of the $850,000 HealthLine vehicle he’s standing in to a group of seven
Australian transit officials seated on plush blue seats. The Aussies, like transit officials from Nashville, Tenn.; Albuquerque, N.M.; and elsewhere, have come to town to see what all the HealthLine fuss is about. Cleveland is one of several stops on the group’s U.S. tour following a transit convention in Las Vegas. As Mr. Calabrese describes the 63-foot-long, bend-in-the-middle vehicle, he points out that, despite its rubber wheels, it’s a bit like a
ON THE WEB Go to www.Crains Cleveland.com/ EuclidGallery for a video of our ridealong on the HealthLine and other multimedia features. STEPHEN HERRON
subway car. It has doors left and right — five in all — so passengers can board on either side, depending on the station configuration, and it offers level entry — especially important for wheelchairs — from elevated platforms. Bigger than a standard bus, it carries 100 passengers — 47 seated, 53 standing — and is powered by a hybrid diesel-electric motor. Because of computer-timed lights, it moves up and down Euclid Avenue faster than a bus, shaving 12 minutes off the 32-minute bus ride from Public Square to University Circle. As Mr. Calabrese signals the operator, the vehicle moves off for a trip up Euclid Avenue. Earlier, in a training room at RTA headquarters on West Sixth Street in Cleveland, Mr. Calabrese briefed the group on the history of the $200 million HealthLine and the thinking behind its creation. The line, he said, was from its beginnings in the 1980s seen as more than just a transit line. “(Civic leaders) wanted connectivity to the major institutions along the corridor,� he said. “What was most important to the community, however, was economic development.�
A long road Indeed, developer Fred Geis said the transit project “gave companies
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a focal point for everyone to steer toward.� Mr. Geis is part of family-owned Geis Cos. and a principal in Hemingway Development Corp. of Streetsboro, which is developing MidTown Tech Park, a multi-building research/incubator complex at 6700 Euclid. Estimates of the construction and development under way or planned over the next few years along the Euclid Avenue corridor top $6.3 billion, and the new line also is succeeding in boosting transit ridership along Euclid. Planners began to think about linking the city’s two major employment centers — downtown and University Circle — in the early 1970s. A 1972 study by the Cleveland/ Seven County Transportation/Land Use Study, the predecessor of the Northeast Ohio Areawide Coordinating Agency, a regional planning organization, maps out a “Euclid Transit Corridor� between downtown Cleveland and University Circle. Well-known urban planner Lawrence Halprin picked up on the concept in his 1975 city master plan, the socalled Halprin Study, commissioned by the Cleveland Foundation. A decade later, the Greater Cleveland Regional Transit Authority and NOACA in a 1982 study identified the Euclid corridor as the part of town most in need of transportation improvements and gave a name that stuck for a decade — the “Dual Hub Corridor.�
A different route A more comprehensive study by the city planning department in 1985 proposed several options, including a rail line that would include a short subway section that surfaced at the edge of downtown for a street-car-like run to University Circle. RTA and the city for several years sought federal money for a $600 million subway/rail line. But the Federal Transit Administration (FTA) wouldn’t go for it. So planners turned to a new concept gaining acceptance in Europe and South America — the bus-rapid transit, a rubber-wheeled vehicle that used city streets but operated more like a street car. The community wanted something more than a prosaic bus line, since the goal was putting young professionals, who would be working at high-tech or biomedical businesses, in the seats. “But we wanted something as rail-like as possible,� Mr. Calabrese told the Australians. “Something fast, simple, safe and first class.� In addition to the transit improvements, however, community leaders saw the need for the physical rebuilding of the streets and sidewalks. An even higher priority was the desire to build something that would spur new development of abandoned properties and the renovation of aging buildings. The total cost of the plan accepted by the FTA was $200 million, with at
TRACKING HEALTHLINE’S RIDERSHIP Passenger traffic on RTA’s HealthLine steadily has increased since its inception in October 2008.
Time period
Number
Oct. 07-Sept. 08
2.60 million*
Oct. 08-Sept. 09
3.76 million
Oct. 09-Sept. 10
4.13 million
Oct. 10-Sept. 11
4.37 million
Oct. 11-Sept. 12
4.59 million
* RIDERSHIP PRE-HEALTHLINE ON THE NO. 6 LINE
least $50 million going for streetscape improvements — everything from new pavement and sidewalks to new lighting and even artist-designed trash cans. The utilities took the happenstance of torn-up streets to upgrade telephone, fiber-optic, water and sewer lines. That extensive roadway rebuilding may have been the only downside to the project — it tore up sidewalks and sections of pavement sometimes for months, hurting retail businesses along Euclid and inconveniencing drivers and pedestrians.
‘As good as we’ve seen’ Joe Marinucci, president and CEO, Downtown Cleveland Alliance, said the public’s sometimes negative reaction to construction of the HealthLine and its long-term disruption of Euclid surprised him. “It really showed us how important Euclid is to the community,â€? he said. The HealthLine name itself is an indicator of the impact the line is having. In spring 2008, shortly before what was then being called the Silver Line was to open, the Cleveland Clinic and University Hospitals, the two major health care institutions along the line, paid RTA for naming rights. The two hospitals agreed to pay a total of $6.25 million over 25 years to brand the line. The international Institute for Transportation & Development Policy last year put the HealthLine at the top of its list of U.S. bus-rapid transit systems. The organization, which advocates for environmentally sound transportation planning worldwide, cheered the use of off-board fare collection, the smart use of dedicated bus lanes, center-road transit stations and platform boarding, which allows wheelchairs to enter and exit without special equipment. That kind of transit industry and urban planning praise is what brought the Australians to Cleveland, and it’s what brings transit officials to town several times a month. “Across the board, we’re looking at a whole variety of systems,â€? said Michael Apps, executive director of Australia’s Bus Industry Confederation after his tour. “This is as good as we’ve seen, if not the best.â€? â–
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SPECIAL REPORT: CORRIDOR OF CHANGE
OCTOBER 29 - NOVEMBER 4, 2012
CRAIN’S CLEVELAND BUSINESS
Rise: Midtown sees fruits of Euclid Avenue labor continued from PAGE 11
out of reach. Finally, a solution was found in creating what’s known as a bus-rapid transit line. It was the first move in the modern-day transformation of what historically has been Cleveland’s main street — long ago home to Millionaires Row and once a downtown destination for the city’s elite. “This has been the rise and fall and rise again of a great American street,” said Chris Ronayne, president of the nonprofit University Circle Inc.
Return on investment Today, sleek, 63-foot-long HealthLine vehicles glide smoothly along Euclid Avenue like a rapid transit or streetcar of old, though they travel on rubber tires. Based purely on its transit benefits, the HealthLine might be worth the $200 million investment from federal, state and local governments. The real return, however, is better measured in broader economic terms, in well-paying jobs created or dollars invested by the private sector in physical development. By that measure, the HealthLine, which just started its fifth year of operation, is looking like a runaway success. Estimates vary, and continue to grow, but every tally of the value of the more than 100 new building or renovation projects under way, or on a clear path to groundbreaking, is approaching, if not topping, $6 billion. Some on that list, especially new buildings at the Cleveland Clinic and University Hospitals Case Medical Center, certainly would have happened without a new Euclid Avenue. But others — the MidTown Tech Park, expansion plans by the Cleveland Institute of Art, the
renovation of an old department store into residences at 668 Euclid — were drawn to their locations by the HealthLine. “It was a catalyst in the purest sense,” said Hunter Morrison, Cleveland’s planning director from 1981 to 2002, the critical planning years for the HealthLine. “It’s the combination of the (stylish vehicles), quality infrastructure, the discussions that went on (over the years of planning), the decision of the city to change the zoning code and the willingness of the major institutions to engage in the planning process.” As they considered the transit improvements, planners also picked up on a number of design principles broadly called “The New Urbanism,” a concept that promotes mass transit and believes that bringing activity as close to the street as possible invites foot traffic. New zoning and design guidelines were implemented, such as bringing buildings right to the sidewalk. The result: There is no chance demolished buildings can be replaced by car dealerships, fast food restaurants or parking lots. It also meant a sprucing up of the streetscape. Bike lanes were added and Cleveland Public Art (now LAND Studio), a nonprofit that advocates for and even commissions art for streets and building exteriors, was brought into the planning. Euclid now has 1,500 new trees and benches and even fanciful stainless steel waste containers — all of which attract foot traffic.
ON THE WEB For smart phone users, scan this QR, or “quick response” code, with any QR code reader to view historic photos of Euclid Avenue. since funding for the HealthLine was secured, old commercial buildings have been renovated and residential development is returning. “Is it worth it? Yes,” said James Haviland, executive director of MidTown Cleveland Inc., a development nonprofit. “Real estate values have doubled, and we’ve seen average lease rates rise from $10 or $11 a square foot to $12.50 a square foot. In addition, Midtown is at the center of a stretch of Euclid, from Cleveland State University to University Circle, that has been given a shiny, new identity — the “Health-Tech Corridor,” for which the city of Cleveland and Cuyahoga County in 2010 pledged a variety of incentives. Later that year, the state of Ohio jumped in designating the corridor an “Ohio Hub of Opportunity and Innovation,” which brought with it priority status for state development grants and loans.
Along with the new designation as a center for health care and biomedical businesses, the hospitals agreed to encourage their vendors to set up operations along the corridor. Similar things were happening elsewhere along the route. The hospitals re-oriented their expansion plans to conform to the Euclid corridor plan. And in 2007, Case Western Reserve University, with a commitment from downtown developer MRN Ltd., pulled the trigger on a plan to develop 8½ acres at Euclid and Ford Road into a mixed-use district called Uptown that would combine housing, retail shops, cafes and restaurants. The Museum of Contemporary Art and the Cleveland Institute of Art jumped in and, according to Mr. Ronayne, by the time Uptown is finished — with 250 residential units and more than 100,000 square feet of retail — the intersection will see $250 million in investment. “I think prospects are better today for that entire area than they have been for the last 50 years or so,” said John Wheeler, the CWRU’s senior vice president for administration. “I think you could honestly say the HealthLine sparked a lot of that. “We would not have had the
No place is the HealthLine having more impact than in Midtown, a neighborhood that slowly had been struggling against decline for several decades. In the years
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Avenue for change At Public Square, development there, notably a clutch of new restaurants, including the East Fourth Street restaurant row, owe a debt to the HealthLine, though other improvements, notably the Horseshoe Casino Cleveland, certainly share the credit. In between, Cleveland State University brought the front door of its law school down to the sidewalk and built its new College of Education and Human Services building against the Euclid Avenue sidewalk just east of East 24th Street. Also, as part of its plan to become a more residential campus, the university put new housing across the street right up to the sidewalk. Chris Warren, the city of Cleveland’s chief of regional development, believes the HealthLine can spur the growth of Cleveland State University and the nondescript neighborhood around it, into what he calls “College Town,” a lively vibrant mixed-use neighborhood. “In five years we could see a (new) identity for a state university that stretches from Payne Avenue on the north to Carnegie Avenue on the south,” he said. “If that happens it will feed everything else (in the area around the university).” ■
When It Gets Down to Business… Solon Gets It! The City of Solon welcomes these new businesses:
W
partners without the HealthLine,” he said.
The Solon Select is a distinguished group of more than 800 businesses that have chosen to locate in the City of Solon.
Lighting the fire
Furry Friends Animal Clinic Ire Magna Liberty Mutual Insurance Medra Marketing Inc. Securro Family Insurance Solon Nail Streak Investments Ulta Beauty WRIS Web Services
And thanks these real estate professionals for bringing new business to Solon: Jeffrey Calig - NAI Daus Eliot Kijewski - CRESCO Real Estate Robert Walick - The Mid-America Management Corporation
Solon’s Got It!
Prime industrial, office and retail sites at www.solonohio.org City of Solon • 34200 Bainbridge Road • Solon, Ohio 44139 • 440.337.1313 Peggy Weil Dorfman, Economic Development Manager • pweil@solonohio.org
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SPECIAL REPORT: CORRIDOR OF CHANGE
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Nonprofits a driving force behind Euclid redevelopment Organizations fix buildings, provide services and do whatever they can to promote private projects By JAY MILLER jmiller@crain.com
I
n January, members of the LoConti family surprised community advocates and music fans alike when they agreed to make a donation of their four-story Agora Ballroom and office complex so that Hemingway Development, a division of Geis Cos. of Streetsboro, could redevelop the 99-yearold entertainment industry land-
mark at 5000 Euclid Ave. At the time, Hank LoConti told Cleveland Magazine that he thought donating the $6 million property could play a role in making over the Agora’s Euclid and East 55th Street neighborhood. Fred Geis, a partner in Hemingway, said his firm hopes to refurbish the building and bring in creative businesses — ones that would be attracted to a unique property.
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It’s a big win for a section of the Euclid corridor that for decades has lacked focus and seen its building stock decline. But it would not have happened without MidTown Cleveland Inc., one of a strong cadre of nonprofit organizations that is helping to sustain and improve the city’s neighborhoods and provide private developers technical support in operating within an aging city. As a nonprofit, MidTown Cleveland could receive the building donation and turn around and lease it to Hemingway Development.
Making a mark The 30-year-old MidTown Cleveland is one of several nonprofits that have played key roles in the development of the Euclid corridor. Most, like MidTown Cleveland, are community development corporations, or CDCs. But both the arts-oriented PlayhouseSquare and the Cleveland Foundation, long known for its support of the arts and health and social services, also have played key roles in shaping the transit corridor. These organizations, and others like them, have given the city a reputation as having one of the best — if not the best — groups of community development nonprofits in the country. “Our observation from a national perspective is that Cleveland absolutely has one of the more advanced, effective community development corporation systems in the country, particularly for a city of Cleveland’s size,” said Mark McDermott, a Cleveland-based vice president of Enterprise Community Partners. “We’re looked to by other
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“Cleveland absolutely has one of the more advanced, effective community development corporation systems in the country, particularly for a city of Cleveland’s size.” – Mark McDermott, vice president, Enterprise Community Partners cities and other funders who are interested in how to do this right and have local nonprofits that are really effective.” Washington, D.C.-based Enterprise Community Partners was founded by James Rouse, a shopping center and housing developer, to help communities and their nonprofits develop and finance affordable housing and other services for inner-city neighborhoods. Through a dozen regional offices across the country, it also provides loans and tax credit equity through a for-profit subsidiary. It recently invested in the Uptown development at University Circle. Depending on the neighborhood and the particular organization’s history, these nonprofits may work on rehabbing or building new housing; reducing crime; advocating for (or opposing) the building of new highways; buying land and holding it for later development; or running critical neighborhood services, such as day care centers or arts programs. They sustain themselves with foundation funding, membership dues and federal community development grants, and they have won the trust and support of banks and other lenders when it comes time to move a project from the planning stage to execution.
Different roles, same mission Chris Warren, Cleveland Mayor Frank Jackson’s chief of regional development, said these nonprofits bring together in their neighborhoods an unparalleled set of experienced, sophisticated and legitimate stakeholders. “That’s enormously important to us,” he said. “The professional skill sets held by a number of CDCs in this area are unique in the country.” Mr. Warren is himself a product of the Cleveland community development system. He was the founding director of Tremont West Development Corp. Across the country, most CDCs emphasize housing programs of one stripe or another. Along the Euclid corridor, though, these organizations have more commercial interests. In addition to MidTown Cleveland, four other organizations have played important roles in the planning and execution of development plans along the Euclid corridor — the Downtown Cleveland Alliance, the Historic Gateway Neighborhood, PlayhouseSquare and University Circle Inc. Each plays a different role, depending on the needs of its stretch of the corridor. Downtown Cleveland Alliance and the Historic Gateway Neighborhood, unlike MidTown, can’t afford to buy and hold expensive properties in the heart of the city. Instead, the two related organizations have helped developers by orchestrating the creation of landmark districts, such as lower Euclid. That kind of designation, which requires a sophisticated application and approval by the city’s landmark commission, makes it easier for a developer to qualify a building for federal and state historic tax
ON THE WEB For smart phone users, scan this QR, or “quick response” code, with any QR code reader to view a gallery of present-day photos of the Euclid Avenue corridor. And to view our earlier special report, on West 25th Street and the Market District in Cleveland’s Ohio City neighborhood, visit www.CrainsCleveland.com/W25th. credits. PlayhouseSquare, in addition to operating theaters, is a land assembler and property owner. After the owner donated the six-story One Playhouse Square Building to PlayhouseSquare’s foundation, it partnered with ideastream, the operator of radio’s WCPN and WVIZ-TV, to create the Idea Center, which opened in 2006 and offers arts education programs and is home to the public broadcasting stations.
Long-range planning Beyond MidTown, which focuses on the two-square-mile area between the Inner Belt on the west and the Cleveland Clinic on the east, is University Circle Inc., the granddaddy of the CDCs. It was created by philanthropists in 1957 to bring some administrative order to the educational and arts organizations in a one-squaremile area around University Circle. The plan was for it to operate parking garages and shuttle bus service and provide public safety and landscaping for the 30-plus institutions within its bounds. By 1990, though, it had broadened its scope — reaching beyond its original boundaries — and taken on the role of being an economic catalyst for the broader neighborhood. In 2007, the nonprofit started a fundraising campaign, “Bring Back Euclid Avenue,” for new tourist way-finding signs, street lighting and a visitor center, knowing that Euclid Avenue soon would be transformed. In addition, its ownership of parking lot land is providing some of the footprint for the Uptown development. The Cleveland Foundation, though not focused on a particular neighborhood, has played a key role in the planning and execution of the Euclid corridor project. Since 2007, the foundation has targeted $25.3 million to the corridor, including a $1.6 million grant to help construct the new Museum of Contemporary Art in University Circle, a $1.9 million grant to the Downtown Cleveland Alliance to support its efforts to remake Euclid Avenue from Public Square to PlayhouseSquare and a $4 million loan to help MRN Ltd. develop the Uptown retail and residential district in University Circle. “It was very proactive on our part,” said Lillian Kuri, the foundation’s program director for architecture, urban design and sustainable development. “It was very much a six- or seven-year strategic focus.” ■
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JOHN CARROLL UNIVERSITY: Joan Coyne to assistant dean, graduate business programs, Boler School of Business.
BUCKEYE INDUSTRIES: Carmen Siciliano to sales professional.
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FINANCE LORAIN NATIONAL BANK: Leah Goodrich to assistant vice president and branch manager, North Ridgeville. S&T BANK: Stephen Hendricks to senior vice president, commercial lending and regional manager; Jamie Taylor to vice president, commercial lending; Steven Zickefoose to senior vice president, commercial lending.
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LEAGUE PARK ADVISORS: Karim Botros to director.
GOVERNMENT CUYAHOGA COUNTY: Gregory Zucca to senior development finance analyst, Department of Development.
HEALTH CARE BRAVO WELLNESS: Cheryl Tidwell to executive vice president, business development. EMERITUS AT CANTON: Carol Lynn Capocci to life enrichment director.
INSURANCE MEDICAL MUTUAL: Ray Mueller to executive vice president, chief financial officer.
LEGAL DODD, L’HOMMEDIEU & MCGRIEVY LLC: Anthony J. Viola to of counsel. FISHER & PHILLIPS LLP: Stefanie Baker to associate.
MANUFACTURING LINCOLN ELECTRIC CO.: Bruce Chantry to director of marketing, North America. PSC METALS INC.: Ricardo Iriart to chief financial officer.
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MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES: Michael L. Glass to national director, National Manufactured Home Communities Group.
SIGNET JEWELERS LTD.: James Grant to vice president, investor relations; Christina Janice to vice president, human resources compliance and associate general counsel.
TECHNOLOGY OECONNECTION: Tom Strain to manager, applications. PREDICTIVE SERVICE: Ralph DeLisio to executive vice president.
UTILITY FIRSTENERGY CORP.: Jon Taylor to vice president, assistant controller; Jason Lisowski to assistant controller, FirstEnergySolutions/FirstEnergy Generation; Kelley Mendenhall to vice president, strategy and planning, FirstEnergy Solutions; Trent Smith to vice president, sales and marketing, FirstEnergy Solutions; Don Moul to vice president, commodity operations, FirstEnergy Solutions; John Skory to regional president, CEI; Dave Karafa to regional president, Ohio Edison.
BOARDS HELP FOUNDATION INC.: Michael C. Brink (Tucker Ellis) to president; Julie Ann Sweet-Buntin to past president; Eric R. Chance and Tara Nieberding to vice presidents; William T. Beargie Jr. to secretary; JoAnn C. Hirsh to treasurer.
AWARDS CONTENT MARKETING INSTITUTE: Jackie Bebenroth (Muse Content Group) received the Content Marketing Leader of the Year Award.
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OHIO HOTEL & LODGING ASSOCIATION: Antoinette Wimberly (InterContinental Suites Hotel) received the Supervisor/Manager of the Year Award, City of Cleveland.
Send information for Going Places to dhillyer@crain.com.
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Two Solon tech firms add space By STAN BULLARD sbullard@crain.com
Call it the Solon shuffle. Through an affiliate, Solon-based Pressco Technology Inc. paid $1.46 million on Oct. 15 for the 26,000square-foot former Valtronic Technologies Inc. building at 6168 Cochran Road in Solon. Valtronic bought a larger building nearby on Fountain Parkway earlier this year. Pressco also is nearby at leased space in Weston’s Bentley Park, 29200 Aurora Road. David W. Cochran, Pressco vice president of strategic initiatives, said in an interview last Friday, Oct. 26, that the company will retain its Bentley Park operations. It will use the newly purchased building for research and development and to expand its operations. He said the additional building already was outfitted for its electronics-oriented work. Pressco provides high-speed vision inspection systems for the food, beverage and container markets. Peggy Weil Dorfman, the city of Solon’s economic development manager, had predicted the Cochran Road building would not linger long on the market after Valtronic announced its move in the spring. She estimated a 6% vacancy rate at midyear in Solon from 7% at the end of 2011. Solon enjoys a tighter market than the region generally, which has a 9% industrial vacancy rate, reports realty data firm CoStar. “It’s just what we love to see — companies in Solon expanding in Solon,” she said. ■
Allan Shaneyfelt, the operations manager at Broken Wheel Auto Parts & Wrecking in Cleveland, says he worries about safety if those who face fewer regulations than registered buyers are allowed to participate in auto auctions. MCKINLEY WILEY
Recyclers: If auctions open, prices could rise continued from PAGE 3
on the salvage cars they sell, Mr. Nelson said. Roughly 100,000 scrapped cars are sold each year at Ohio salvage auctions to a pool of 1,000 licensed buyers, according to Mike Toman of The Success Group, a Columbusbased group lobbying in favor of SB 273.
Over the moon Mr. Toman used college football games as a way to illustrate the logic
behind the bill. If Ohio State University could sell seats at its 102,000-seat Ohio Stadium only to 1,000 licensed fans, the university would be at the mercy of those fans in terms of pricing, he said. In much the same way, auto auction operators — and the insurance agencies that sell cars to those operators — are receiving lower prices for cars because of the limited market of buyers, Mr. Toman maintains. Mr. McKinney said auto prices typically rise 20% in states that have opened auto auctions to everyone. However, those higher prices, while beneficial to auction and insurance companies, will mean higher operating costs for auto recyclers already dealing with lower sales, according to Allan Shaneyfelt, operations manager at Broken Wheel Auto Parts & Wrecking Inc. in Cleveland. “Bids would go (to) the moon,” Mr. Shaneyfelt said.Opening the pool of buyers to individuals and body shops raises concerns about
safety for Mr. Shaneyfelt. For a car to be deemed a salvage vehicle, the cost to repair the car typically is greater than the value of the car, he said. In letting individuals take salvage cars to their backyards to repair them, there’s a good chance the repairers would cut corners and sacrifice safety, he said. “This is how people get hurt,” Mr. Shaneyfelt said. “We’ve seen some shady, shady things.” However, Copart’s Mr. Nelson said there are enough safeguards built into the bill to avoid such problems. The legislation requires auction operators to register car purchasers with the Bureau of Motor Vehicles. Existing law already requires buyers of cars from auctions to have vehicles inspected by the Ohio State Highway Patrol before they’re taken on the road.
‘David versus Goliath’ The only way for auto recyclers to deal with the higher prices for cars that would result from the bill’s
passage would be by absorbing those costs or cutting staff, the recyclers’ association Mr. McKinney said. Salvage dealers are limited by what prices they can charge for used parts by the cost of new auto parts. “It’s going to cost jobs for our industry,” Mr. McKinney said. Milliron Auto Parts in the past year has had to lay off six people — the first time the company has had to cut its now 26-person work force in its 58-year history — because of 2011’s mild winter and the weakening economy. Likewise, Broken Wheel in the last year laid off three people, leaving it with a 10-person staff, Mr. Shaneyfelt said. If SB 273 goes into effect, Mr. McKinney estimates Milliron would need to cut another 20% of its staff because it would be buying fewer cars at higher costs. “This is kind of a David versus Goliath fight,” Mr. McKinney said. “It’s very difficult to fight the insurance companies and the auction houses. We’re just small guys trying to make a living.”
Consider the consumer
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There are 794 licensed auto recyclers in Ohio, according to the Ohio Auto and Truck Recyclers Association. They employ an average of 10 to 15 people, Mr. McKinney said. Sales at Milliron and other auto recyclers across the states are down about 25% so far this year from 2011, he said. “Now is not the time for this,” Mr. McKinney said of the bill. “If you do it now, you’re going to put a lot of these businesses out.” The insurance companies disagree. Chuck Crist, Progressive Corp.’s claims business leader for Ohio, Michigan and West Virginia, said if insurance companies are able to receive higher prices for the cars they sell at auctions, consumers in Ohio could see lower rates on their insurance bills. Added Charlie Conover, Ohio product manager for Progressive, in speaking of the effects of the limited competition at Ohio auctions, “This is something being borne on the consumer.” ■
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Wi-Fi: Offering high-density access no small, inexpensive task continued from PAGE 1
“This process has moved in stages, which has been unavoidable due to the complexity and size of the project,” Mr. Carper said. “More than likely, we will have a ‘1.0 version’ and then work toward a more comprehensive ‘2.0’ version after that.” The complexity also results in a big price tag, as many previous Wi-Fi projects have ventured into the low- to high-seven-figure range. The Orlando Magic, for instance, paid $2 million for Wi-Fi at their Amway Arena before the 2011-12 season, and paid another $400,000 for upgrades this offseason after fans experienced some lag time. Some NFL teams have spent even more. Before this season, the NFL launched a pilot Wi-Fi program at five stadiums: Lucas Oil Stadium in Indianapolis; MetLife Stadium in East Rutherford, N.J.; the New Orleans Saints’ Mercedes-Benz Superdome; Gillette Stadium in Foxboro, Mass.; and the Panthers’ Bank of America Stadium in Charlotte. The installation at the Superdome originally included 600 access points and cost $8 million, according to published reports; an upgrade will bring that number to about 1,000. Andover, Mass.-based Enterasys Networks, which handled the Patriots’ installation, said their project was a multimillion-dollar deal. The NFL originally planned to extend the Wi-Fi program to all teams by next season, but instead is monitoring the success or lack thereof of those five installations, all of which all have been different in scope and used different telecommunications partners.
included in the league’s pilot program, according to company spokesman Jason King — has developed a more intensive Wi-Fi solution. The company installs miles of copper wiring, which serves as the power supply for the access points and carries data from the air into the wired grid at the stadium and onto the Internet. The difference lies in the number of access points; Enterasys says its solution features about one-third the number of other projects, which can help control costs. No matter which route a team goes, the technology allows for realtime monitoring and assistance capabilities. Mr. Girt said teams can track which areas carry the most
traffic and then can enhance network capability in higher-traffic areas or can install more access points in a second phase of sorts, like the Cavs are planning and the Magic were forced to carry out. Enterasys, too, tracks usage and says its network at Gillette reached as many as 15,000 concurrent users at the team’s most recent home game, Oct. 21 against the New York Jets. (In a sign of the times, Enterasys — which can track who is using what kind of device — said 111 of those people used BlackBerrys.) Enterasys monitors social media during games and reacts to complaints about service, which at times can amount to a fan simply not knowing how to connect to the
Wi-Fi. It also employs a “Wi-Fi coaching staff” — employees in red jackets walking the concourses to answer questions and help fans who may need it.
Team opportunity Elsewhere in town, teams have Wi-Fi on their respective radars. Browns spokesman Neal Gulkis said the team continues to investigate the issue, and while ideally it would like to install the technology at Cleveland Browns Stadium this year, more likely would do a 2013 rollout. The Indians also have the Wi-Fi issue is “on the radar,” according to team spokesman Curtis Danburg, but there’s no definitive timeframe for a decision.
They’d be wise to move forward, said Nader Ali-Hassan, a social media marketing strategist at Cleveland digital marketing firm Rosetta. Mr. Ali-Hassan said teams lose marketing opportunities when their fans enter their venues knowing they’re going to be disconnected for the duration of the game. “That’s all content talking about your brand that you could be missing,” Mr. Ali-Hassan said. “In a small market like Cleveland, that’s very important.” Plus, teams must make the gameday experience enjoyable. “If you’re unable to check fantasy teams, or social media, at stadiums, that’s a huge problem for fans and teams,” Mr. Ali-Hassan said. ■
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No easy process In some instances, the Wi-Fi is run through data connections already present at a venue, only expanded by a team’s telecommunications partner. That partner then studies seating configurations to best place hundreds of access points throughout a building or stadium. Generally, an access point would serve about 100 users, said Chuck Girt of Cleveland-based OneCommunity, a nonprofit that provides large-scale broadband access. Of course, not all 20,562 fans at Quicken Loans Arena on Tuesday night will be looking to access the Internet all at once. But teams can tailor their networks to offer better capabilities in locker rooms, press boxes or premium seating areas, such as the 96 suites at Quicken Loans Arena where more sophisticated devices and applications, such as iPads for ordering food and drinks, are in use. Mr. Girt said a large-scale project like at The Q would need to be at least a 100-megabit connection, while a typical residential connection is one megabit. Some of OneCommunity’s ultra-high-speed projects approach 10 gigabits, with faster speeds on the horizon. Enterasys — which currently is talking with other NFL teams not
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Center: Med mart name still likely to change continued from PAGE 3
that was interested in a full floor of the four-story building “and another one called the other day and said, ‘How about 12,000 square feet?’ ” Apart from a handful of local nonprofits, MMPI has not announced the names of the tenants of the medical mart, saying those announcements will be made when the tenants are ready. Many in the community were disappointed when the early confirmed tenants were announced, because the list lacked any of the well-known medical equipment companies that medical mart promoters had said would flock to this new medical purchasing concept. Now, however, Mr. Bennett says that situation has been turned around. He told County Council that MMPI has a list of 84 active prospects for the building, 46 of which he described as prominent firms outside Northeast Ohio. Prior to Mr. Bennett’s arrival, MMPI had released a roster of tenants that listed mostly local institutions, including Cleveland State University, Cuyahoga Community College and the nonprofit BioEnterprise Corp. “If there was a worry, we’re pretty comfortable we’ve gone beyond that,” Mr. Bennett told council. As a result of the more robust leasing environment, Mr. Bennett said, MMPI can hold the line on lease rates. It no longer is offering a discount of as much as 50% from the advertised rate of $26 a square foot for long-term leases. However, it does offer modest signing discounts and allowances for tenant improvements — measures that are typical in the real estate business.
Events add up The
medical
mart
building
ON THE WEB
Story from www.CrainsCleveland.com.
TransDigm scoops up Goodrich unit
“When you have a plan and a strategy, people respond better. There is much greater willingness to commit.” – Jim Bennett, senior vice president, MMPI Inc. increasingly is seen as an adjunct to the 235,000-square-foot convention center, which puts Cleveland back in the regional and national convention business. The aging and outdated convention center this new complex replaces was uncompetitive. Mr. Bennett told County Council that 17 conventions are booked into the new hall for the last half of 2013, and 12 are set for 2014. That’s 10 more and four more, respectively, than were booked when Mr. Bennett updated council four months ago. Trade associations and convention planners typically book three to four years in advance, though some groups book for more than a single year. For example, the Ohio Music Educators Association announced in August that it would bring its annual convention — with about 9,000 attendees — to the new convention center in 2015, 2017 and 2019. Mr. Bennett also reported MMPI has 40 convention bookings pending. The pace of bookings should quicken, because meeting planners hesitate to commit before they can see a finished building. The Cleveland trade show complex is getting a break in that regard, though. The International Medical Meeting Professionals Association is holding its annual meeting in Cleveland next May, bringing about 200 people. That’s before the center opens, but association president Scott Graham said the group wanted to come to Cleveland and he expects the group will get a hard-hat tour of the nearly finished building. “We’re excited,” Mr. Graham said.
“We think that Cleveland is a great spot. Most (medical meetings) are the perfect size for (the new convention center); they average about 2,000 attendees.”
What’s in a name? While it is probably most important that Cleveland has a new, attractive convention center, the adjacent medical mart building always has been the more intriguing and risky part of the project. Initially, the county and MMPI expected the medical mart would be for the health care industry what MMPI’s Chicago Merchandise Mart is for the furniture industry — a national focal point where doctors and people who outfit hospitals with beds, MRI equipment and even waiting room furniture would browse dozens of vendor showrooms or sales offices, thus saving themselves trips to the series of trade shows that accompany medical meetings and conventions. But now the thinking is that the building will serve as a catalyst for showing the industry the latest in medical and health care equipment. In addition to showrooms staffed by individual companies, the building will be a place where groups of companies can collaborate on large demonstration exhibits, such as what MMPI is calling “the operating room of the future” or state-of-theart patient exam room. It also will have space for continuous medical and health care education programs. Another part of that strategy for the building likely will be to drop the term “medical mart.”
Mr. Bennett told County Council that members of his health care industry advisory committee and others in the local medical community think the current name doesn’t reflect accurately the repurposed building. “When are you going to start calling it something more like it is?” Mr. Bennett said he hears frequently. “Typically, they come back with something like, ‘health innovation center.’”
TransDigm Group Inc. said it has entered into a definitive agreement with United Technologies Corp. to acquire the pump and engine control systems business of Goodrich Corp. for about $236 million in cash. Goodrich Pump & Engine Control Systems is based in West Hartford, Conn., and makes proprietary aerospace fuel systems for the business jet, helicopter, military and commercial markets. Among the engine platforms using its products are the General Electric T700, the Honeywell T55, the Rolls-Royce M250, the Williams FJ44 family, the Turbomeca Arrius/Arriel, and the Pratt Whitney Canada 210 engines. United Technologies obtained the business when it acquired Goodrich Corp. at midyear. TransDigm said the acquired company is expected to have 2012 revenues of $195 million, with EBITDA (earnings before interest, taxes, depreciation and amortization) roughly in the low teens as a percent of revenue. Aftermarket revenues make up 55% of its revenue. W. Nicholas Howley, chairman and CEO of TransDigm Group, said the Goodrich unit’s products “are both a good fit with our overall strategy and also allow us to expand ... on a number of substantial engine applications.”
Now you’re thinking The more upbeat outlook for the medical mart largely is the result of the strategic rethinking that began evolving last spring. The impetus for this change has come from Mr. Bennett, who last April joined MMPI as Clevelandbased senior vice president. A management consultant for most of his career, Mr. Bennett has brought his talents as a specialist in strategic planning to the project. As a result, the convention center and medical mart now have everything from mission and vision statements to a group of strategic priorities and “organizational capacity requirements.” In language drawn from the strategic plan, Mr. Bennett told County Council the goal is to “aspire to show the best of what is possible today in health care innovation, education and commerce.” This new focus, Mr. Bennett believes, is a key to the turnaround. “When you have a plan and a strategy, people respond better,” he said. “There is much greater willingness to commit.” ■
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OCTOBER 29 - NOVEMBER 4, 2012
CRAIN’S CLEVELAND BUSINESS
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THEINSIDER
THEWEEK OCTOBER 22 - 28 The big story: Diebold Inc. is suspending indefinitely its plans to construct a new global headquarters in Green. “As we’ve been analyzing our near- and long-term growth priorities, it has become clear that investing more than $100 million in a headquarters facility is not economically feasible given the other priorities for the business at this time,” said Thomas W. Swidarski, Diebold’s president and CEO. The maker of automated teller machines, bank security equipment and Swidarski electronic voting machines said it “has no plans to pursue new construction options for its global headquarters, either in Ohio or elsewhere, and is committed to remaining in its current location” in Green.
Seeking a spark: PolyOne Corp. agreed to acquire Spartech Corp. of Clayton, Mo., a producer of plastic sheet, compounds and packaging. Under terms of the acquisition agreement, Spartech stockholders will receive $2.67 in cash and 0.3167 shares of PolyOne common stock for each share of Spartech common stock they own. PolyOne put the total transaction value at about $393 million, including the assumption of Spartech’s net debt of $142 million. In the nine months that ended Aug. 4, Spartech reported earnings of nearly $3.3 million, or 10 cents a share, on sales of $862.6 million.
Have a heart program:
The Cleveland Clinic’s lauded heart care program continues to extend its footprint, as the health system inked a deal to offer its cardiac services at Saint Vincent Health Center in Erie, Pa. The affiliation is the heart program’s 10th beyond state lines and will take effect Dec. 1. As part of the arrangement, the Clinic will lend its expertise in the field to Saint Vincent’s cardiologists. In addition, Saint Vincent’s heart and vascular specialists will participate in training, conferences and educational programs provided by the Clinic.
Poised for growth: Diversified manufacturer Ametek Inc. of Berwyn, Pa., bought Micro-Poise Measurement Systems LLC, a Streetsboro company that provides test and measurement equipment for the tire industry, for $170 million in cash. Micro-Poise is expected to post sales of $125 million this year. In addition to the Streetsboro headquarters, Micro-Poise has plants in Troy, Mich.; Beijing, China; and Lübeck, Germany. The Streetsboro company will become part of Ametek’s Electronic Instruments Group, which posted sales of $1.6 billion in 2011 — nearly half of Ametek’s $3.4 billion in sales last year.
This deal’s a gem: Signet Jewelers Ltd., the parent company of Sterling Jewelers in Akron, signed a definitive agreement to acquire Chicagobased Ultra Stores Inc. from Crystal Financial LLC and its other stockholders for about $57 million in cash. Signet said it will not assume any debt in connection with the acquisition. Ultra Stores, founded in 1991, is a jewelry retailer operating primarily in outlet centers, as well as in licensed jewelry departments.
Talk it out: American Greetings Corp. said its board of directors formed a special committee of independent directors to consider, among other things, the proposal made by members of the Weiss family and certain related parties to take the company private. The Weiss family has proposed buying all the Class A and Class B common shares of American Greetings that it does not already own for $17.18 a share. American Greetings said the special committee also is authorized to review and evaluate other options available to the company.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
McDonald Hopkins hosts its troops
University of Phoenix to ground two outposts
■ It isn’t unheard of for a law firm to host events and retreats for partners, according to most in the local legal community, but few can lay claim to doing this. McDonald Hopkins LLC this past weekend spent roughly $200,000 to have all its employees — partners, associates, administration and staff — partake in a weekend of entertainment and programming in Cleveland, its headquarters city, said Carl J. Grassi, president. Not only did the law firm fund the transportation and lodging for its 102 out-of-town employees, it paid for the trip for their accompanying spouses and significant others, too. Called “Stronger Together,” the weekendlong event coincided with the start of the new fiscal year for the 265-employee firm and was the first all-firm event like it in McDonald Hopkins’ more than 80-year history, Mr. Grassi said. Altogether, more than 400 attended. Among the events was dinner at the firm’s office Friday, a private party Saturday at Pickwick & Frolic Restaurant & Club and a program called “When Generations Collide,” presented by a company called BridgeWorks about multigenerational gaps and how to bridge them. Asked about the expenditures for travel, lodging and food, Mr. Grassi said, “Actually, it’s not that bad when you consider what it costs us when we go out of town. We feel very strongly about bringing the money back into the city and having people enjoy it.” — Michelle Park
■ Apollo Group Inc., the parent company of the for-profit University of Phoenix, plans to close 115 locations across the country, including two in the Cleveland market. An Apollo Group spokesman confirmed the company plans to “phase out” the university’s operations at its learning centers in Westlake and Independence sometime next year. The University of Phoenix will continue to operate its campus in Beachwood, he added. The decision affects fewer than 100 students. “At the end of the day, it came down to the demand and use by students,” said Apollo Group spokesman Ryan Rauzon. “We’re just not seeing the traffic and the use of those facilities. We can better allocate those resources online.” While the university has stopped enrolling students at the Westlake and Independence locations, the students still can use the facilities for now. University of Phoenix students enrolled at the Westlake and Independence locations are encouraged to talk with their academic counselors or call 1-866-992-3302 to determine how the planned closure might affect them. Planned closures, companywide layoffs and other cost-reduction initiatives are expected to affect Apollo Group’s operating expenses by at least $300 million by fiscal 2014. Nationwide, the closures are expected to affect 13,000 students, or about 4% of the
WHAT’S NEW
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
THE COMPANY: The David Round Co., Streetsboro THE PRODUCT: All-stainless articulating jib cranes The company says its new line of jib cranes is designed specifically for pharmaceutical manufacturing. The cranes “are ideal for lifting bulk bags or other materials up to 1,000 lbs. in clean room environments,” according to the company. “Explosion proof models of these jib cranes are available to meet the electrical standards required in hazardous environment processing areas.” David Round says the jib cranes feature fully enclosed mechanical components, including a wire rope hoist, gearbox and motor drum. Lift height and boom/knuckle configurations can be varied to meet customer specifications. In addition, structural components “are prepared with a glass bead finish that is applied in a dedicated in-house metal treatment facility,” the company says. “This results in smoother, more hygienic surfaces that are free of imperfections such as weld scars.” David Round was founded in 1869. In addition to its line of specialized clean roomgrade products, it makes standard chain hoists, jib cranes, winches and tractor drives. For information, visit www.DavidRound.com. Send information about new products to managing editor Scott Suttell at ssuttell@crain .com.
There’s nothing super about these figures ■ Our politicized debate about health care doesn’t usually get around to this subject: people known as “super-utilizers,” who place a huge and costly burden on the medical system. “Simply put, super-utilizers are people who overuse emergency departments and hospital inpatient services, making more visits to those facilities in a month than some people make in a lifetime,” The Washington Post reported. Cleveland is one of six communities, The Post noted, in which the Robert Wood Johnson Foundation has made a total of $2.1 million in grants to address super-utilizer situations. Susan Mende, a senior program officer at the foundation, told the newspaper these patients suffer from “multiple chronic complex diseases, including mental health issues” along with “really difficult social situations” such as inadequate — or nonexistent — housing. They also lack a primary care physician or other medical home, so their health care is haphazard and uncoordinated, Mr. Mende said. The Post said the first task facing grant recipients is to identify super-utilizers by “looking at emergency room data across multiple hospitals.” Figuring out how to serve this population more efficiently is critical, the foundation said, because the sickest 5% of U.S. patients account for more than 60% of health care costs.
Don’t feel bad about your 40-hour work week ■ That guy (or woman) who tells you he (or
university’s enrollment. — Timothy Magaw
Cleveland Clinic India isn’t on the horizon ■ The Indian government was ready to offer the Cleveland Clinic 50 acres of land in Punjab to build a sprawling health center, according to an account in The Indian Express, an English-language daily newspaper published in India. But it’s a match that isn’t in the offing. While the Clinic has expressed interest in extending its footprint overseas, as demonstrated by its planned hospital in Abu Dhabi, the health care juggernaut doesn’t appear to be interested in the Indian proposition. “We have no plans to move forward on this,” Clinic spokeswoman Eileen Sheil said in an email. The Indian government apparently was interested in luring the Clinic to its soil because of the health system’s reputation as one of the world’s best cardiac care hospitals. “Punjab is leading the country in cardiac diseases mainly due to lavish eating habits,” deputy chief minister Sukhbir Singh Badal was quoted in the Express as saying. “To have a hospital like Cleveland Clinic here for cardiac care and research makes sense.” Meanwhile, the Clinic’s first overseas endeavor — a 360-bed, multispecialty hospital in Abu Dhabi, United Arab Emirates — is expected to open late next year. The Clinic signed a 15-year agreement with Mubadala Development to manage the hospital. — Timothy Magaw
she) works 60-plus hours a week is probably lying. Harvard Business Review said people “overstate the number of weekly hours they ‘usually’ work by 5% to 10%, with those on the higher end being more likely to overestimate,” according to a University of Maryland study. “By examining U.S. workers’ time diaries, the researchers found that people who say they usually work 55 to 64 hours per week are off by an average of about 10 hours; people who say they work 65 to 74 hours are overstating by about 20 hours,” Harvard Business Review said. Respondents may inflate their estimates because of a desire to appear industrious, the research suggests.
In fashion, at least, Cavaliers lead the league ■ The 2012-13 NBA season hasn’t started yet, but the Cleveland Cavaliers already are big winners. In the new “NBA Uniform Power Rankings” on Grantland.com, the Cavaliers were at the top. “If you’re playing basketball in Cleveland, you should be the happiest player in the NBA. You should. For a decade, it was maroon, maroon, maroon — and what happened? You got marooned,” wrote Grantland.com’s Wesley Morris. “It’s been two years since you-know-who left. It’s time for a new you, and here it is: French’s mustard with Heinz script,” he added. “It’s young, it’s exciting, and when I see it I immediately want to put the whole thing on my hot dog. It’s only an alternate uniform, it’s true. But it’s one that says things are looking up: We’ve still got Kyrie Irving, and we just know he’ll be thrilled to spend many nights for many years wearing this and not totally ripping our hearts out. Right, Kyrie?”
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