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Vol. 31, No. 45
Fourth Frontier atop FitzGerald’s goals By JAY MILLER jmiller@crain.com
County executive-elect outlines economic development strategy
Cuyahoga County executive-elect Ed FitzGerald won’t take office until Jan. 1, but he’s already thinking about his relationship with the business community and the impact his administration can have on business expansion in the region. In an interview with Crain’s, he said four items are at the top of his business to-do list: ■ Creating a local equivalent of the state of Ohio’s successful Third
Frontier technology develbank as an incentive to opment program. He’s calling promote business expanit the Fourth Frontier and sion. he hopes it will have a $100 ■ Pursuing the elusive million kitty with which to goal of providing “onework. stop shopping” for busi■ Assembling a group nesses seeking to expand of loaned executives who in or move into the county. would consult with county FitzGerald The new county execustaff on economic developtive also has started to talk ment initiatives. about who will be on the new county ■ Using the year-old county land economic development commission.
These proposals mesh to a degree with ideas recommended by a citizen-led county transition advisory group in a report released last September. That group suggested the county’s economic development efforts should be on a financially larger scale than they are currently. In 2009, according to its annual report, the county development department invested $8 million of county money through a
variety of programs and was the conduit for $15 million in state and federal economic development funds.
The next Frontier Developing a $100 million venture fund a la the Third Frontier, however, will depend on Mr. FitzGerald’s ability to cut the cost of running county government. The county transition group estimated that as much as $50 million in savings could be found in the consolidation of county offices See COUNTY Page 5
Colleges fret over Kasich’s education plan Next governor mum on budget blueprint By TIMOTHY MAGAW tmagaw@crain.com
MARC GOLUB
Joe and Debra Lukasik said they had trouble getting a loan to finance the opening of their third Subway store in a concourse at Cleveland Hopkins International Airport, so they pursued money online and secured a $300,000 loan.
MATCH.COM FOR MONEY By MICHELLE PARK mpark@crain.com
New online sites pop up that connect borrowers with banks willing to issue loans
J
oe Lukasik’s search for a business loan in Northeast Ohio didn’t turn up a dime. After the local Subway franchise owner and his loan consultant, Joe Wojtowicz, were denied a loan by more than five local banks, Mr. Lukasik chose not to wait any longer. He said he “robbed” his 401(k) of $100,000 to fund his third Subway shop, at Cleveland
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See BANKS Page 53
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SPECIAL SECTION
This new section features a snapshot of individuals leading NE Ohio into the future ■ Page W-1
Democratic Gov. Ted Strickland made higher education a cornerstone of his administration over the last four years, but uncertainty surrounding Gov.-elect John Kasich’s plans for education has college officials throughout Northeast Ohio champing at the bit for details. Mr. Kasich, a Republican, hasn’t released any particulars about his plans for higher education, and college officials are careful in how they respond to the little they’ve heard. However, the potential fallout from a looming $8 billion shortfall in the state’s next two-year budget, they say, is of paramount concern. “I don’t think it’s a concern about the new administration. It’s a concern See BUDGET Page 6
INSIDE Shifting into high gear Ford Motor Co. is adding a second shift to the company’s Brook Park engine plant, and auto workers hope eventually to see a third shift. Solid demand for Ford’s EcoBoost engine is fueling the added work. Read Dan Shingler’s story on Page 3.
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CORRECTION A Nov. 8, Page One story incorrectly reported the number of letters University Hospitals sent to independent medical providers inviting them to partner on the system’s accountable care project. The number was 5,500.
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NOVEMBER 15-21, 2010
SLOW BUT STEADY Ever so slowly, the grip of the recession is easing. Total compensation costs for private industry workers rose 2% for the 12-month period that ended in September 2010, higher than the 1.2% increase for the 12-month period that ended in September 2009, according to the U.S. Bureau of Labor Statistics. Among industry sectors, manufacturing workers fared best, with an increase of 2.9%. Here’s how the data break down: Percent change for 12 months ended September 2010, September 2009
REGULAR FEATURES
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Industry Manufacturing
Sept. 2010 Sept. 2009 2.9%
1.1%
Trade/transportation/utilities
2.3
0.9
Financial activities
2.1
0.8
Information
2.0
0.7
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1.7
1.2
Education and health services
1.5
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All private industry
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Team NEO: Leads up, final ‘I do’ still tough
INSIGHT
A STORY OF STRIFE, SPIRIT Tiny Ashtabula County village illustrates small towns’ struggles to survive tough economy
Business attraction group sees 20% jump in interested companies By JAY MILLER jmiller@crain.com
By DAN SHINGLER dshingler@crain.com
There’s another sign of an improving economy to report — more companies are talking to Team NEO about bringing operations to Northeast Ohio. But it’s more of a “proceed with caution” signal than a green light. New business leads for the nonprofit business attraction group are up 20% over 2009, according to CEO Tom Waltermire. The numbers are back to the more robust level of 2008. “We’ve got a big pipeline,” Mr. Waltermire said during a briefing with Crain’s editorial staff last Tuesday, Nov. 9. “But it’s tough to get them out the other end. Projects are taking longer; people are cautious.” Mr. Waltermire talked about his organization’s efforts while unveiling its quarterly economic review, a look at how the Northeast Ohio economy is faring. That report’s information on jobs and business activity also shows signs of improvement, with employment up and an improvement in gross regional product, a measure of the dollar value of final goods and services produced in the
O
RWELL — You might think the nation’s housing crisis wouldn’t hit this peaceful rural town, where 1,700 people live an hour east of Cleveland and a world away from real estate markets that bubble and burst. But such is not the case. Orwell’s economy is closely linked with housing and construction, and its people — including its industrious Amish residents — are hurting because of the national and regional slump in homebuilding. “When the economy started taking a slide, we slid with it,” Mayor Larry Bottoms said. The most recent hit was at KraftMaid, which as recently as 2008 employed 1,000 people in Orwell, where it makes cabinets and other See ORWELL Page 54
See LEADS Page 8
INSIDE THE REPORT Inquiries from companies interested in establishing or expanding operations here are up, according to business attraction group Team NEO. Other findings in Team NEO’s quarterly economic review: DAN SHINGLER
Jim Kule, owner of Valley Feed Mill Inc. in Orwell, said he’s negotiated payment plans with his Amish customers in the past, but lately, he’s had to cut off some of those customers because of large unpaid accounts.
THE WEEK IN QUOTES “Until you get on the ground and you really start going through ... and find how much you can save throughout the system, I’m reluctant to throw around numbers.”
“If I understand what (Ohio governor-elect John Kasich) is saying, he knows that higher education is intuitive to the economic recovery of our state.”
— Ed FitzGerald, Cuyahoga County executive-elect. Page One
— Luis Proenza, president, University of Akron. Page One
“Many urban development projects simply would not get done without (tax increment financing).”
“(The East Ninth Street corridor) often is viewed as a passthrough district. ... We need to create vibrancy.”
— George Sarkis, a partner in the Akron and Cleveland offices of the Roetzel & Andress law firm. Page 4
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— David Browning, managing director of the Cleveland office of the CB Richard Ellis real estate brokerage. Page 9
■ the number of people employed in the third quarter was up 22,000 jobs over third quarter 2009; ■ employment is up 80,000 jobs since March 30, when fewer than 1.9 million people were employed; and ■ Northeast Ohio’s gross regional product, according to data from Economy.com, likely will be up 3.6% in 2010.
Jobs roll off Ford Brook Park line Second shift comes back as automaker uses new EcoBoost engine more widely By DAN SHINGLER dshingler@crain.com
Ford Motor Co.’s new motor is powering some job retention at the company’s Brook Park engine works. The plant in December will begin a second shift, and auto workers hope eventually to get a third shift to produce engines around the clock. “A lot of this will be dependent on consumer demand, but they (Ford) are saying for certain that a second shift is going in on Dec. 6,” United Auto Workers Local 1250 president Mike Gammella said. That shift will add around 200 jobs to the engine plant and will help Mr. Gammella to keep employed some of his other union members who lost work when Ford’s adjacent foundry
shut down Oct. 30. The last engine block from the foundry now is preserved at the UAW’s union hall. That closing idled about 300 workers when the foundry finally shut down, but so far all but 38 of them have new jobs waiting for Gammella them at the engine plant, Mr. Gammella said. Those still out of work will have hiring rights and likely be brought back if there are more increases in production, he said. In the meantime, Mr. Gammella said he still is lobbying hard to have Ford also use the Brook Park plant to produce four-cylinder engines. He said he is optimistic that it will, perhaps in 2011. Total employment at Ford’s Brook Park facilities is about 600 and will go up when the second shift starts in December, Mr. Gammella said. The plant has a hit with its EcoBoost engine, a six-cylinder model that uses advanced technology to deliver nearly the same power
characteristics as a larger V-8 engine, but with better fuel efficiency. After selling well in some of Ford’s popular automobiles, the company this year also began putting the engine in its most popular vehicle, the F-150 pickup. That’s the chief reason for the extra shift, said Ford spokeswoman Marcey Evans. “We are adding employees at that plant to handle the volume demands we expect,” Ms. Evans said. In addition to anticipated demand for the EcoBoost in the pickup, engine demand has been up because Ford’s sales generally have been increasing. The company announced its October sales were up 19% from October 2009 and that its sales for the year through October were up 21% from the like period of 2009. The F-150 has done even better and was the first vehicle, from any automaker, to notch sales of more than 400,000 units in 2010, according to Ford. ■
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Judge: Bank stuck with Arcade TIF Economic development officials had feared effects of nullifying $6M bond repayment By STAN BULLARD sbullard@crain.com
Hyatt Regency Cleveland Arcade offers an elegant setting for hotel rooms, hat shops and eateries. But for Bank of America, which has foreclosed on the property, the landmark Arcade promises a dose of bitter pills. Although Cuyahoga County Common Pleas Court Judge Nancy Margaret Russo has approved efforts by Bank of America attorneys to foreclose on the property, she last
month rejected a major concession the lender sought in the Arcade case. Specifically, the bank tried to sidestep continuing the repayment of $6 million in tax increment financing (TIF) bonds used to help pay for a makeover of the century-old Arcade as a Hyatt. Bank of America wants to recoup the last $14 million owed on a $33 million first mortgage taken out by Arcade LLC, the Chicago-based partnership that owns the Arcade. However, the presence of the TIF bonds complicates matters for the
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Charlotte-based bank. Because repayment of the TIF bonds will reduce revenues from the property, prospective buyers in a sheriff’s sale might offer lower prices than they might have otherwise for the Arcade. And if Bank of America is stuck with the Arcade to satisfy the debt — a frequent development these days in foreclosures — it would need to make the TIF payments it sought to shed. A filing by U.S. Bank attorneys, who represented the trust that services the TIF bonds, argued that Bank of America sought the court’s OK to disregard the TIF repayments purely to bolster the property’s value at a sheriff’s sale. Bank of America spokeswoman Shirley Norton declined comment on the ruling. However, the ruling is a relief to economic development types. The city of Cleveland, for one, had supported U.S. Bank’s successful quest to keep the TIF intact. “TIF transactions play a unique and vital role in redevelopment of the community,” wrote Robert Bertovich, an assistant city law director, in a brief supporting U.S. Bank. U.S. Bank and the city argued TIF obligations supersede Bank of America’s first mortgage. Shedding TIF payments could undercut future TIF deals in the region, the city argued. Bank of America attorneys had argued the TIF in this case was structured so it set up the TIF’s repayment as a contract between the city of Cleveland and Cuyahoga County, which levies and collects property taxes. However, Judge Russo agreed with U.S. Bank and the city that repaying the TIF is a duty that goes with the property’s deed. The TIF payments increase yearly, from $15,000 annually to as much as $850,000 in 2029, court records show. George Sarkis, a partner in the Akron and Cleveland offices of the Roetzel & Andress law firm who works in public finance and economic development, said the decision keeps intact a potent tool for revitalizing older urban areas. “Many urban development projects simply would not get done without TIFs,” Mr. Sarkis said. He noted that in his practice, many public authorities turn to TIFs instead of property tax abatements to swing deals. Tax increment financing helps fund a project’s cost by allowing the sale of TIF bonds that will be repaid by additional future property tax receipts produced by the redevelopment or construction project. Judge Russo had ordered the foreclosure of the property last summer but left the TIF decision for later to give the parties more time to argue their positions. Bank of America filed the foreclosure case in 2009 after Arcade LLC, a joint venture of Related Midwest Cos. of Chicago and the Pritzker family, failed to repay the loan when it came due. ■
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KSU, Fingerhut inch toward deal Two sides make progress on university’s plan to make campus upgrades By TIMOTHY MAGAW tmagaw@crain.com
Kent State University’s selfimposed deadline for the state’s approval to sell $210 million of bonds for campus upgrades expired a week ago, but university and state officials are pressing forward and hope to reach a compromise on a plan that likely will be scaled back. The university needs Eric Fingerhut, chancellor of the Ohio Board of Regents, to sign off on the proposal. However, Mr. Fingerhut hasn’t embraced Kent State’s plans to pay back the bonds with revenue from a series of new student fees. According to an e-mailed statement to Crain’s from Kent State spokeswoman Emily Vincent, the university is now “assessing options
for a plan more modest in scope and pace.” She noted that “no specifics have been agreed to at this time.” Paying for academic buildings with student fees is a rarity, as such fees typically are used by colleges to pay for sports complexes and facilities such as student unions. Kent State’s project includes upgrading about 30 buildings across campus that officials said have fallen into disrepair over the years. Mr. Fingerhut has said he is concerned that allowing Kent State to impose an academic buildings fee could lead other universities to do the same, which ultimately could drive up costs for students — a move that would go against the chancellor’s pillar of affordability in his 10-year strategic plan for higher education in Ohio. He also has expressed concern over the cost of attending Kent State’s seven regional campuses. Regardless, university officials have said they needed swift approval from the regents in order to have
ample time to get the bonds to market at a favorable interest rate through the federal Build America Bonds program that expires at year’s end. The chancellor’s refusal to sign off on the plan, university officials said, could threaten thousands of construction jobs and could add as much as $57 million in interest costs if the sale of the bonds is delayed. Rob Evans, a spokesman for the regents, said Mr. Fingerhut met with Kent State president Lester Lefton in mid-October and believes “significant progress was made.” Since then, the regents’ vice chancellor for finance and the university’s chief financial officer have been meeting once or twice a week to hash out the details. Mr. Evans said the regents haven’t seen an updated proposal from Kent State, so he couldn’t speculate on what the changes might include, but he expects the issue to be resolved soon. “It shouldn’t be too much longer for us to get through it,” Mr. Evans said. ■
County: Public-private partnership an aim continued from PAGE 1
mandated by the new county charter that takes effect Jan. 1. But county revenue is sagging, and a potential drop in state aid could force at least some of the savings to be spent on other county programs besides economic development. “I’m hoping we can hit that ($100 million number),” said Mr. FitzGerald, currently the mayor of Lakewood. “But it’s one of those things that until you get on the ground and you really start going through department by department and function by function and find how much you can save throughout the system, I’m reluctant to throw around numbers.” With the Fourth Frontier, Mr. FitzGerald would target county investments to businesses that are seeking to expand operations or that are ready to commercialize products in development. And like the Third Frontier, the county would set up a competitive process for awarding money, rather than simply responding to requests for financing on a rolling basis. “I think the Third Frontier works,” Mr. FitzGerald said. “I think the concept is very sound, and if we can create some budgetary capacity in the county’s budget to fund something like that, I think it could be really effective.” To make the new government more professional, Mr. FitzGerald said he plans to create a loaned executive program that would work with staff members in all parts of county government but would focus particularly on finding business people to consult on economic development projects. “I want to make sure I have significant private-sector participation in the new government,” he said. Asked specifically about the kind of person who will be his director of development, Mr. FitzGerald said his search has begun but declined to identify any candidates. “We’re talking to people in the public and private sector,” he said.
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“I’m not going to have an administration that’s made up just of people who are veterans of the public sector.”
Hammer time Mr. FitzGerald sees in the county land bank an opportunity to assemble vacant parcels into developable industrial sites, urban farms and parks. “I want to see if that can be used as an incentive, or a tool, to promote business expansion,” he said. The Cuyahoga County Land Reutilization Corp. is a government-created nonprofit that can acquire vacant land and rehabilitate or demolish foreclosed and abandoned homes more quickly than traditional tax foreclosure. Done strategically, the land bank can target its acquisitions so it can assemble parcels into developable sites, Mr. FitzGerald maintains. Mr. FitzGerald’s idea of a single business development point of contact would help business owners, real estate brokers and site selectors gain easy access to the incentives and infrastructure improvements available in the county. It also ideally would eliminate the bidding wars that often develop among Cuyahoga County municipalities when businesses go shopping for incentives on their own. The idea was part of the transition group’s recommendations and often has been discussed over the years but never implemented. However, Martin Zanotti, one of the leaders of the county reform movement and a former mayor of Parma Heights, said he believes that if Mr. FitzGerald has $100 million to dole out, the county will be able to get support from the cities in the county. “They haven’t had that hammer in the past,” Mr. Zanotti said. Mr. Zanotti said he also likes Mr. FitzGerald’s plans for the land bank.
Casting a wide net Beyond those specific early initiatives cited by Mr. FitzGerald,
both Mr. Zanotti and Judy Rawson, the former mayor of Shaker Heights, are waiting to see how the county economic development commission develops before giving the incoming county executive their stamp of approval. The pair helped write the county charter that created the new government. The new charter only says the commission will have 15 members, each of whom will represent a specific constituency, meet quarterly and, along with the county executive and director of development, create and continually update a five-year strategic plan for county economic development. The charter gives each of 14 organizations the power to name one member to the commission. Among the organizations with slots on the commission are the mayor of Cleveland, the Cuyahoga County Mayors and Managers Association, the Greater Cleveland Partnership, the Cleveland-Cuyahoga County Port Authority and the North Shore Federation of Labor. Ms. Rawson said she hopes the new county executive will work with those appointing organizations to populate the commission with members with a broad range of skills and perspectives. Especially important are people who will put the interests of the entire county ahead of the interests of the organizations they represent. “I hope he will get together with the appointing authorities to set criteria and to have the necessary levels of professionalism and collaboration and expertise so they’re making their appointments with an eye to having a well-rounded commission,” she said. Matt Carroll, the city of Cleveland health department director who is leading the FitzGerald transition team, said Mr. FitzGerald is talking with all the appointing authorities. Mr. Carroll said he believes those organizations are on the same page as Mr. FitzGerald, “But I don’t think he’ll try to dictate to them on who to appoint.” ■
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Budget: New administration may ease regulations continued from PAGE 1
about the (budget) situation we’re in,” said Bruce Johnson, president of the Inter-University Council, a group representing the state’s public universities. The budget dilemma has college presidents bracing for cuts in their state subsidies, which represent roughly one-third of their individual budgets. The Strickland administration already has delayed a $127.5 million payment to colleges to patch the state’s finances in the current fiscal year, which ends June 30. To put it simply, colleges want more state money or the ability to raise tuition. It’s a delicate balance state officials have faced for years. In Gov. Strickland’s first two years
as governor, for instance, universities agreed to freeze tuition in exchange for stronger financial backing from the state. But in the current budget, the governor permitted colleges to raise tuition 3.5% to offset cuts in state support. “This is a very austere economic climate,” said Luis Proenza, president of the University of Akron. “I would hope there would be some movement toward allowing each institution the (financial) flexibility they might need, but in the context of that affordability or access question.”
Undoing the system? In March 2007, the Legislature passed a law at Gov. Strickland’s urging allowing him to appoint the
state’s higher education chancellor, which elevated the post to a cabinetlevel position. Gov. Strickland tapped a political ally — Eric Fingerhut — for the post, which carries a five-year term. The move essentially politicized the Board of Regents, which traditionally had been a “relatively neutral” governing body, said Ronald Abrams, president of the Ohio Association of Community Colleges. Mr. Fingerhut led a movement to better align the state’s 14 public universities and 23 community colleges into a consortium known as the University System of Ohio. In March 2008, Mr. Fingerhut introduced a 10year plan with the goal of making higher education a better vehicle to
drive the state’s economy. The regents set various measures to gauge their progress through 2017, such as the number of degrees awarded and the percentage of graduates working in Ohio. But with the election of Mr. Kasich, the future of that plan and Mr. Fingerhut’s role could hang in the balance. Mr. Kasich’s spokesman said it was “premature” to offer details about the governor-elect’s views of the chancellor’s strategic plan or his role in the administration, but Dr. Abrams noted that changes likely would come. “The new governor would be expected to put his people in place, and those people would want to put their brand on things,” he said.
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Mr. Fingerhut, whose appointment runs into the summer of 2012, hasn’t stated publicly whether he intends to stay on through the rest of his term. In an e-mailed statement to Crain’s, however, he said he looks forward to working with the incoming governor and noted, “We have made good progress, but much more remains to be done.” It’s likely that the overall goals of the University System — boosting enrollment and graduation rates, to name two — won’t change. “I don’t see the strategic plan as being a partisan issue,” said Morris Beverage, president of Lakeland Community College. “One of the cornerstones of that plan is to get more people in the higher education system so more degrees can be earned.” The route to reaching those objectives, however, might shift to align with Mr. Kasich’s vision for an education system with less bureaucracy and more money in the classroom. Just what that will look like, however, observers only can speculate. “I think the new governor will tinker with that somewhat,” Dr. Proenza said. “I expect there may be some differences in how it will be expressed, but if I understand what he’s saying, he knows that higher education is intuitive to the economic recovery of our state.” Changing the course of the chancellor’s plan only a few years after its inception poses some risk to the progress that has been made in higher education in Ohio, Dr. Abrams noted. Ohio’s shift to a performance-based financing formula, which considers such factors as course and degree completion rather than enrollment in determining how much state support schools receive, has gained national attention, according to Dr. Abrams. “Any time you change direction midstream, you’re going to lose some momentum,” he said.
Loosening the regulations
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Despite the uncertainties surrounding the chancellor and the University System of Ohio, higher education observers expect a Republican administration to be more receptive to easing some of the regulations they say drive up costs. Mr. Kasich, for example, has said he would talk with higher education officials about rules and regulations from which they’d like to be set free. Mr. Johnson noted that the InterUniversity Council’s members primarily are concerned with reforming regulations that dictate the way colleges manage construction projects. Under state law, colleges and universities have a so-called “multiple prime requirement” where they must work directly with several contractors rather than with a single chief contractor to manage construction projects. Ronald Berkman, president of Cleveland State University, said his university is in the midst of a residence hall construction project, and by law, the university is required to separately bid out every aspect of the project — such as plumbing, carpentry and excavation. “We always felt we could do it more effectively and more inexpensively” if the school could work through a single prime contractor, Dr. Berkman said. Mr. Johnson also noted that with the introduction of the University System of Ohio, there has been a “sense of centralized control” of the higher education system, which is something Mr. Kasich might approach differently given his plans to apply competitive business principles to state government. ■
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Leads: Other local, national attraction groups see similar upticks continued from PAGE 3
16 counties of Northeast Ohio that Team NEO serves. Team NEO seeks out and hears from companies that think the time is right to grow, a sentiment that has been suppressed over the last two years. These businesses may be looking to expand geographically or
they simply may be adding capacity. Rarely does Team NEO hear from companies looking for a new corporate headquarters. But while new leads are up, Mr. Waltermire said, companies are taking longer to make final commitments. That’s happening for multiple reasons. More often than in the
past, Mr. Waltermire said, companies come to Team NEO seeking help to complete financing for their new plants and offices, and they often are looking for that money from state or local governments. But even those companies that have their financing lined up are holding off on a relocation or expansion
because of lingering economic uncertainty. “We’re competing against inaction,” Mr. Waltermire said. “Our No. 1 competitor is a company deciding, ‘Uh, let’s not do it right now,’” Mr. Waltermire said. “Our No. 2 competitor is, ‘Let’s go ahead, but let’s do it at home or at one of our existing sites.’” The No. 3 reason for not converting a qualified lead, Mr. Waltermire said, is losing the business to another state.
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In a typical year, Mr. Waltermire said, Team NEO receives inquiries from 80 companies, with 10 companies committing to new operations in Northeast Ohio. Because some companies take more than a year from first contact to final commitment, it’s not accurate to translate those numbers into a batting average. Still, the organization is on track to rebound from last year’s drop in new leads, Mr. Waltermire said. The downside, though, is that the organization is working harder to get those leads to convert into done deals. Team NEO’s experience mirrors a national trend. “Overall, prospect activity is a little more brisk than it has been,” said Ron Starner, executive director of the Industrial Asset Management Council, a Norcross, Ga., association of corporate real estate decision makers. “At the midway point of the year, we saw a pretty significant uptick,” Mr. Starner said. Mr. Starner also confirmed that
companies are more deliberate in making decisions, but he said once they do decide, they move quickly. Vince Adamus, economic development director for the city of Beachwood, also is seeing an acceleration of activity. “Things are starting to percolate,” Mr. said. “People are starting to open up.”
Jobs, output on the rise Beyond its own metrics, Team NEO is reporting that total employment in the 16 Northeast Ohio counties it tracks is up modestly, according to data it buys from Moody’s economy.com. In the third quarter, the number of people employed was up by 22,000 jobs over the like quarter a year ago. For the year, employment is up 80,000 jobs since March 30, when employment reached its nadir. At that point, the number of people employed in the region was less than 1.9 million. At the end of the third quarter, the number approached 1.95 million. In line with those numbers, the unemployment rate dropped slightly, to 9.9% at the end of the third quarter from 10.2% three months earlier. Using a forecast supplied by economy.com, Team NEO reports that Northeast Ohio’s gross regional product in 2010 is projected to increase by 3.6% after a disastrous 2009 when the GRP dropped 6.1%. Economy.com estimates year-end GRP at nearly $170 billion, still well off the high of $177 billion reached in 2005. ■
UPCOMING EVENTS
“I just need to look at my ScoreBoard to know my business is moving in the right direction.”
The last in Crain’s Ideas at Dawn business breakfast series is set for Thursday morning, Nov. 18, at the Ritz-Carlton Cleveland. A panel will discuss planning a profitable exit strategy when selling your business. For more information, visit www.CrainsCleveland.com/
breakfast or call Christian Hendricks at (216) 771-5182. Additionally, Crain’s annual Forty Under 40 reception is Monday, Nov. 22. For more information on our ultimate networking event, visit www.CrainsCleveland.com/ marketing/forty.html.
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Downtown planners seek to rebrand E. 9th corridor Leaders want former financial avenue known as mixed-use NineTwelve District By STAN BULLARD sbullard@crain.com
Downtown Cleveland civic groups and stakeholders quietly are collaborating on a strategy to recast the East Ninth Street corridor as the “NineTwelve District” in hopes of hiking the profile and fortunes of the area formerly known as the city’s Finance District. Joseph Marinucci, president of the Downtown Cleveland Alliance, a nonprofit that coordinates downtown security, sanitation and marketing efforts, on Nov. 4 declined to discuss the plan in detail, saying he and others are still developing a consensus for the initiative. However, Mr. Marinucci told a meeting last month of the NAIOP Northern Ohio real estate group that the plan is to promote mixed uses of space to fill empty offices along the corridor. A goal is to create the kind of activity after business hours that has emerged on East Fourth Street and in the city’s Warehouse District and Tremont neighborhoods. David Browning, managing director of the Cleveland office of the CB Richard Ellis real estate brokerage, said the plan is designed to “create a brand for what we consider the core of downtown.” “It often is viewed as a passthrough district, which fails to consider the quality of organizations and the people that are there,” Mr. Browning said. “We need to create vibrancy and brand that shows good things are happening there.” Mr. Browning declined to expand on the concept, which resulted from efforts that he, Allen Wiant of PlayhouseSquare Real Estate Services and developer Dick Pace began two
years ago in response to the growing vacancy problem on East Ninth. Mr. Pace also declined comment. Mr. Wiant’s return phone call to Crain’s Cleveland Business was missed.
Wide open space The Grubb & Ellis Co. brokerage firm estimates East Ninth Street north of Euclid is nearly 22% vacant, as of the end of September, with two million square feet of empty space in an area with nine million square feet of office space. Paul Westlake, managing partner of the Westlake Reed Leskosky architecture firm, said he is involved in the effort and that it “expresses optimism rather than pessimism about where the district could go.” He said he’s worked on studies of vacant office and retail space and the floor plates of existing buildings to help focus government attention on the former finance district. “It’s like multiple Terminal Towers of vacant space,” Mr. Westlake said, referring to Cleveland’s iconic, 700foot office tower on Public Square The nascent NineTwelve District would stretch from East 12th Street to East Ninth running east to west, and from the lakefront to Euclid Avenue running north to south. That area is outside existing community development corporation areas, such as the Warehouse District, Gateway Neighborhood and PlayhouseSquare. Some of the plans under discussion include seeking city support for street and park improvements and steps to encourage development of mixed-use properties. The latter is because more vacant office space sits in the district than office-tenant expansion and new companies will ever fill.
STAN BULLARD
The proposed NineTwelve District would stretch from East 12th Street to East Ninth running east to west, and from the lakefront to Euclid Avenue running north to south. Mr. Marinucci said publicly at NAIOP that he has met with Chaim Schochet, investment executive for Optima International of Miami,
about Optima’s plans for the Huntington Building in downtown Cleveland. Mr. Schochet did not return two calls last week about the
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Investor ups stake in LNB Bancorp Investor Umberto ON THE WEB Story from strategies, a P. Fedeli again is www.CrainsCleveland.com. merger with urging those who another bank govern and manage Lorain National included. Bank to improve the bank’s perforThere is nothing that can help or mance and seize growth hurt a bank more than opportunities. credit quality, Mr. Fedeli In a filing last Wednessaid in an interview last day, Nov. 10, with the week. He said improving Securities and Exchange credit quality should be Commission, Mr. Fedeli LNB’s No. 1 priority, and asserted that the bank’s he noted work in that diparent company, LNB Banrection has begun, as the corp Inc., must continue to company in its third-quarimprove credit quality sub- Fedeli ter earnings release in stantially and to decrease costs. October stated that its non-performMr. Fedeli, president and CEO of ing assets were down from the secThe Fedeli Group, an insurance ond quarter. brokerage in Independence, and a The nonperforming assets, longtime investor in local banks, however, were up from a year earlier. shared several recommendations in As of Sept. 30, they totaled $45.8 a filing he said was required after he million, or 3.96% of total assets, increased his stake in the company compared with $43 million, or another one percentage point, to 3.65% of total assets, as of Sept. 6.1%, or 474,985 shares. In the 30, 2009. Mr. Fedeli also urged past 60 days, Mr. Fedeli purchased LNB Bancorp to grow revenue by 65,404 shares for an aggregate adding quality loans to its books purchase price of $307,486. and increasing its deposits. There In July, Mr. Fedeli made other are few community banks left in recommendations to the company Northeast Ohio, he said, and Lorain in a filing required after he’d National Bank can take advantage acquired a stake in LNB of more by growing relationships. than 5%. He suggested then that “The best thing they can do is the company reduce the size of its significantly improve performance,” board and explore long-term growth Mr. Fedeli said.
discussion. The Huntington Building, which Optima bought last June, has 300,000 square feet of empty office space and stands to gain thousands more in the next few years. Namesake Huntington Bank plans to move to 200 Public Square. If construction of the Flats East Ninth Neighborhood resumes, the Ernst & Young accounting firm and Tucker Ellis & West law firm will vacate Huntington for an office tower near the Cuyahoga River. Other high vacancy buildings on East Ninth include the former Ameritrust Corp. headquarters building, the 1717 East Ninth St. building that once served as headquarters of the former East Ohio Gas Co., and Key Investment Center, 800 Superior Ave. The latter’s former owner surrendered it to the lender earlier this year. Even with its woes, the corridor still houses thousands of employees at PNC Center, the Anthony J. Celebrezze federal office building and other skyscrapers along its length. East Ninth also passes Progressive Field and ends at the Rock and Roll Hall of Fame and Museum, the home of most of the city’s lakefront development efforts. ■
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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
Get it?
W
e wish Joseph Regano was right. However, we believe he is not. Mr. Regano is superintendent of the Solon City Schools, and he was quoted last week in a Plain Dealer story that looked at the financial disarray of public education in Ohio. Aware of the rejection by voters of operating levies in many districts, Mr. Regano predicted that school systems will continue to make sacrifices to appease voters who themselves have been victims of job losses and pay cuts. “We all get it,” Mr. Regano is quoted as saying. “You’ll see changes that will reflect what’s happening in the private sector.” We’re not so sure. The basis of our belief is largely anecdotal. However, we know of too many teachers’ unions that dig in their heels when their school boards during contract talks push for employees to cover more of their medical expenses. The same is true when they’re asked to reduce their authorized sick days so that their districts don’t need to hire as many substitute teachers, or to be paid no longer for the sick days they don’t use. We can’t imagine the howling that would take place if school boards were able to unilaterally cut the pay of their salaried employees — something extremely common in the private sector during the economic slump. And heaven forbid someone touch public education’s sacred “35 and out” retirement bonanza, where teachers and administrators can walk away from their jobs in their late 50s and still receive a check equal to a fat majority of their former pay. That’s an unheard-of possibility for most of the taxpayers who ultimately are the source of the money that goes into the State Teachers Retirement System of Ohio. It’s too bad financially strapped school districts can’t file for Chapter 11 bankruptcy protection like private companies can. They’d be able to go through reorganization proceedings that would free them from contracts with terms that are unsustainable in an economic environment where the state can’t serve as a backstop because it, too, is broke. Repeated rejection of operating levies statewide hasn’t produced the radical change in educator compensation that many taxpayers apparently want to see. However, the ludicrous nature of their retirement benefits just may hit educators in the face once they become more aware of how badly the State Teachers Retirement System is underfunded. Before the recession, the number of years it would have taken to pay off the retirement system’s accrued unfunded pension liabilities stood at 41.2 — well above the 30-year statutory maximum set by the state. But, because of the hits the recession dealt to the pension fund’s investments, the system’s unfunded liability from July 2008 to July 2009 nearly doubled to $36.6 billion and the period to fund that liability was deemed to be “infinite.” The latter means that unless changes to the plan are made, the pension fund eventually will be unable to pay benefits. We hate to think it will take a serious threat to their retirement for educators to get the need to take a realistic look at their compensation. But if it is, so be it.
FROM THE PUBLISHER
Rail system fight is a road to nowhere
S
our two states, newly elected GOP governors are opposed to these mandated “high-speed rail” boondoggles. The new governors don’t believe in the efficacy of railroad projects that have own. little chance for long-term success withAnd for those of you familiar with our out ongoing operating subsidies from former mayor, governor and (soon-tostates ill-equipped to add more to their be-former) U.S. senator, you know that plates of unfunded mandates. means being very cautious. Sen. And let’s face it — that’s what Voinovich, while he was in his BRIAN the “3C” program to improve previous offices, reminded us TUCKER service between Cleveland, regularly of the “need to do Columbus and Cincinnati is. more with less,” and intends to Even in densely populated return to his modest home in areas such as England, which Collinwood as he begins the never had a postwar highway next chapter in his life. construction explosion and So I understand that Obama whose residents still live in administration officials don’t densely concentrated areas, want newly elected Republican trains don’t run without subsigovernors throwing wrenches dies. In Ohio, the same fate awaits. into their plans for the stimulus programs John Kasich, Ohio’s governor-elect, designed to lead us into an economic reasked the Obama administration for percovery, especially if the crowing is more mission to use the $400 million approved about scoring political points in anticifor railroad improvements instead for pation of the next presidential election. other needed transportation infrastrucThat said, I’m having problems with ture projects in the Buckeye State. this nonsense going on between WashNo way, said Transportation Secretary ington and Wisconsin, and now Ohio. In ome day, I want to hear a politician — other than George Voinovich — speak about spending the public money as if it was his
Ray LaHood. In a letter to the governorelect, the cabinet member said that $400 million must be spent on Ohio’s part of the planned upgrades to the nation’s rail systems. In other words, “even though this is your money, we’ll be the judge as to how it will be spent.” They dangle the prospect of thousands of construction jobs. Who cares, if it doesn’t change the way we travel (which it won’t) and then saddles us with a service that must be subsidized by ever-stressed state coffers (which it will)? Gov. Strickland, the now-lame duck, says the state will continue with a $25 million phase of engineering and design as long as he’s governor. How many more century-old sewers must cave in and cripple a downtown? How many bridges must collapse? I have to admit that a stimulus spending program seemed to be a good idea when the world’s economy was dangling by a thread. But why couldn’t we be spending that money on things that are in dire need of fixing, rather than on a social experiment disguised as a part of some ill-conceived “energy policy”? ■
THE BIG ISSUE Where should the federal government make cuts if it needs to decrease its spending?
TASSO PARIS
SHELINA HATCHER
DENNIS ROBERTS
MARTIN FAEHNER
Pepper Pike
Cleveland
Mayfield Heights
Strongsville
That’s a tough question, but I would have to go with military costs. I think we’re over-spending on the military and I think we need to get our boys back home where they’ll be safe. And the quicker the better.
I would say roads. Because Medicare? No. Social Security? No. Education? Definitely not. I hate to say that, but I think the other things are more important.
Programs that are deemed inefficient. I can’t say cutting by category makes sense. I think a lot of the categories you probably need. But I’ll bet you there are inefficiencies buried in many of the programs.
I would cut congressional salaries by about 10%. I haven’t had a raise in three years. I still have a job, but I haven’t had a raise in three years. And the same thing for the rest of the federal employees.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
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SPORTSBIZ To submit Northeast Ohio-related sports business news, send an e-mail to assistant editor Joel Hammond at jmhammond@crain.com. Follow him at www.twitter.com /joelhammond. In the latest installment of a weekly Q&A that runs on the SportsBiz blog at CrainsCleveland.com, Jim Juliano, a sports law expert at Cleveland law firm Nicola, Gudbranson & Cooper, Juliano tackles some of the hot topics in sports business today. SportsBiz: The Browns have settled with former wide receiver Joe Jurevicius on a staph infection lawsuit; LeCharles Bentley since has sued. Will there be a similar outcome? Do other cases of staph across the league help the Browns? Jim Juliano: Each case is different. A suit of this nature involves two main questions: liability and damages. Both are open legal questions that the parties may have to litigate through the court system. Very few cases go to trial these days. The court dockets are full, the high expense of litigation faces both parties and the lawyers will be working hard to clarify the facts and legal issues. Chances
ON THE WEB For a daily are very high that the parties will settle the Bentley case rather than go to trial, but we will have to see how it plays out. SportsBiz: You’ve written and research extensively naming rights deals; if Browns owner Randy Lerner ever entertained offers, would he get good ones? Would it be a local company? How much money would it net the team? Jim Juliano: Many factors affect the terms and conditions of a naming rights agreement, such as the perception of the success of the team in the future, the current economy and future outlook, the local and national media coverage of the team and the stadium, and the team’s presence in digital media. A local company that has a national profile would be ideal. Mr. Lerner should have a number of prospects if he so chooses. It is likely that the deal would net several millions of dollars per year over the next five or 10 years. SportsBiz: Crain’s wrote recently about the effects on downtown Cleveland of potential pro sports lockouts. How likely are lockouts in
LETTER
New county government must foster collaboration ■ As the new county administration takes office in January 2011, its ability to collaborate with the myriad of local and regional government entities will, to a great extent, determine whether or not it succeeds as a force for positive change. While the word “ugly” may be too strong, one hardly can deny that politics in this region is far from pretty and intergovernmental collaboration is stuck in this environment. Yet with all the media coverage of corruption in county government, it is easy to forget that the vast majority of public servants in Northeast Ohio are both ethical and competent. It will be a challenge for the new county administration to bridge the credibility gap that currently exists. However, this challenge also presents an opportunity for the new leadership to collaborate with local and regional entities to facilitate economic recovery in Northeast Ohio. Speaking at the First Unitarian Church’s Community Forum, Pepper Pike Mayor Bruce Akers said that Northeast Ohio communities spend too much time competing against one another in the name of economic development. There are more than 55 autonomous cities and villages in Cuyahoga County. The administrative cost of these administrations suggests that “economies of scale” could be achieved through effective collaboration resulting in improved operating efficiency, reduced operating costs, increased expertise and improved services to residents. “These fragmented communities cannot compete in a global economy,” Mayor Akers said. “We’ve got to lose this ‘winner take all’ mentality.” Collaboration is not new to government. Government officials have been collaborating for years as members of professional associa-
tions such as the Cuyahoga County Mayors and City Mangers Association, finance officers, service directors, police chiefs associations and many more. Often, these associations have spawned collaborations that have had a significant and positive impact on the services they provide. Over the past year, the County Reform Commission has sought ideas from hundreds of citizens who have volunteered to serve on committees and work groups that collaborated to provide a host of recommendations to the new administration. These work groups included citizens, county employees, local government officials, academics and the private sector. I had the opportunity to serve on one of these work groups. Involving the citizens in reforming the county is a two-edged sword. It will be essential for the administration to immediately collaborate with these folks and implement their recommendations to the extent practical and assure the people who gave generously of their time, energy and talent that they were taken seriously. Anything less will be correctly perceived as “business as usual.” Tom Cozzens Director Unger International Center for Local Government Leadership Maxine Goodman Levin College of Urban Affairs Cleveland State University
WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: editor@crainscleveland.com
recap of SportsBiz news in Cleveland, log on to www.CrainsCleveland.com.
the NBA and NFL? Jim Juliano: My crystal ball says that lockouts in both the NBA and NFL are quite possible. Both sides are setting aside war chests for a long battle. However, there are several forces at work that would push the parties toward a settlement without a lockout. The players unions and the team owners have invested a great amount of time, effort and money in developing the goodwill of the fan base. The risk of alienating the fan base, even for a short time, would be very high in the event of a lockout in either league. But, fans will get over it. Ultimately, both the players unions and the team owners reap great benefits from not only direct fan revenues (such as ticket sales) but also media rights and digital media revenues. The negotiators work hard, and the parties will come to an agreement eventually, but a lockout in either league would not be a surprise. SportsBiz: You wrote in the spring of finding hidden dollars at ball-
CRAIN’S CLEVELAND BUSINESS parks. In April, Crain’s wrote about the Indians seeking ideas from architectural firms for changes to Progressive Field. Where do you see opportunity for them inside the stadium? Jim Juliano: The Tribe will be playing its 18th season at Progressive Field. It remains a premier ballpark for baseball. First of all, it may be time for some new paint and redecorating. There is no substitute for a clean and shiny ballpark experience. Going a bit further, there is a trend toward enhancing the digital media for spectators. For example, one theory is that the fan experience watching a game on TV is so good that fans are staying away from live games. So in reaction the Indians may want to think about streaming current information to the fans who have handheld devices. If MLB will permit it, the Indians could stream audio commentary, instant statistics and video replays so that a fan at the game will have much more information than appears on the scoreboard. SportsBiz: Auburn’s Cam Newton is the latest college athlete rumored to have some unscrupulous dealings. Is there anything that can be done to stop what seems like a parade of eligibility issues stemming from contact with agents? Or,
11
does anything need to be done? Should college athletes be free agents and college athletics be run like a free market? Jim Juliano: Your questions deal with a combination of ethical and economic pressures that will require coordination among several interest groups. The NCAA has jurisdiction over the college players, but not professional agents. The players unions have jurisdiction over the agents, but not the college players. The leagues have the ability to bargain with the players unions, but not the agents. The team owners have the power to hire or not hire a college player for any reason, but the player’s athletic ability likely will trump behavior problems. No one entity has the ability to control the entire system. If it were possible to coordinate and line up the interests of all of these entities, a comprehensive revision of rules might be possible, but this is unlikely to happen. Personally, I think that college athletes should remain amateur and not be permitted to earn compensation for their services. Others will disagree, and a number of valid arguments are already in play. For the time being, we are going to be living with the case by case enforcement that has been highlighted recently.
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HUDSON FINANCIAL ADVISORS INC.: Janice Cackowski to office manager.
GOING PLACES JOB CHANGES DISTRIBUTION APPLIED INDUSTRIAL TECHNOLOGIES: James A. Jeffiers to area vice president, Midwest area.
EDUCATION CUYAHOGA COMMUNITY COLLEGE: John W. Marr Jr. to dean of academic affairs. LAKE ERIE COLLEGE: Brian Dirk to chief financial officer and associate vice president for finance; Christopher Harris to dean of admissions and financial aid; Susan Licate to director of alumni and public relations; Ruta Greiner to graphics manager; Billie DiLella to coordinator of admissions marketing and recruitment events.
UNIVERSITY OF AKRON: Chand Midha to dean, Buchtel College of Arts and Sciences.
ENGINEERING TIPTON DESIGN AND ENGINEERING: Richard Roman to director of sales.
FINANCE
MCMANUS, DOSEN & CO.: Bryan M. McManus to staff accountant. SS&G: Jesse Ewing to graphic designer; Nannette Robison to senior associate; Deborah Troyan to administrative assistant. SS&G HEALTHCARE SERVICES LLC: Brenda Schnitz to medical billing specialist.
HOME SAVINGS BANK: Colin Boyle to assistant vice president.
WALTHALL, DRAKE & WALLACE LLP: Bruce Bechhold, Bob Sustar, Debbie Fellenstein and Adam Deal.
FINANCIAL SERVICE
HEALTH CARE
CROWE HORWATH LLP: Rebecca Brugler to manager, performance business unit.
KENDAL NORTHERN OHIO: Ellen Pacholski to senior independence administrator.
DEIMLING FORBES & ASSOCIATES INC.: Michael J. Elliott to senior accountant.
LEGAL
NOVEMBER 15-21, 2010
Pike to partner. JOSEPH B. JEROME AND ASSOCIATES: Andrew T. Czarzasty to associate. WESTON HURD LLP: Brandon M. Fairless to associate.
MANUFACTURING GOLDSMITH & EGGLETON INC.: Brian Hill to director of materials. GRAFTECH INTERNATIONAL: Quinn Coburn to vice president, corporate treasury.
NONPROFIT
GALLAGHER SHARP: Michael J.
MAY DUGAN CENTER: Blanca Figueroa to director of operations.
SERVICE PROFORMA: Ed Hainrihar to director of vendor development; Dean Manzetti to director of training; Amy Fulton and
Jeffiers
Boyle
Pike
Martin Kern to sales representatives; Monica Gasbarre to vendor development specialist; Cynthia Cansky, Tyler Ford and Heather Gaski to accounts receivable specialists; Linda Hendricks to business development administrative assistant; Alin Brinda to AX developer; Rebecca Lapka to marketing services client manager; Lindsey Clymer to marketing specialist; Nicole Petras to ecommerce coordinator; Matthew Webber and Jason Clark to conversion specialists; Mira Barry to lead analyst; Lucie Wailani to new owner development administrative assistant; Thomas Boisvert to database specialist.
TECHNOLOGY EMERALD CONSULTING GROUP: Chris O’Neil to managing partner.
BOARDS
Piling the family into the car and driving to the Grand Canyon? Am I wrong to think you’re supposed to relax on vacation?
AMERICAN BOARD OF CRIMINAL LAWYERS: Gerald S. Gold (Gold & Pyle LPA) to president. IDEASTREAM: Robert C. Smith (Spero Smith Investment Advisors) to chair; Edward P. Campbell to immediate past chair; Larry Pollock to treasurer; William R. Stewart to secretary.
AWARDS AMERICAN COLLEGE OF DENTISTS: Ed Hills, D.D.S., (MetroHealth System) was named a fellow. INTERNATIONAL COMMUNITY CORRECTIONS ASSOCIATION: James J. Lawrence (Oriana House Inc.) received the 2010 Margaret Mead Award. MINORITY BUSINESS SOLUTIONS INC.: Hilton O. Smith (Turner Construction Co.) received the Trailblazer Award. NORTHEAST OHIO HISPANIC CHAMBER OF COMMERCE: Ruth Ramos and Tameka L. Taylor (Compass Consulting Services LLC) received the 2010 Female Entrepreneur of the Year Award. SHOES AND CLOTHES FOR KIDS: Theresa Corey Bishop (Dominion) received the 2010 Morrie Sayre Founder’s Award for Outstanding Volunteerism.
Send information for Going Places to dhillyer@crain.com.
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From college presidents to CEOs, there are many people who make Northeast Ohio tick. DAVID ABBOTT Executive director The George Gund Foundation Cleveland Age: 58 Type of organization: Nonprofit Involvement (professional/civic): Chairman, Fund for Our Economic Future; board member, Ohio Grantmakers Forum; Group Plan Commission (appointed by Cleveland Mayor Frank Jackson); chairman, Planning and Urban Design Working Group In the news: In 2010, the George Gund Foundation committed $2.5 million to help launch the Cleveland Schools transformation plan. The foundation anticipates providing an additional $4 million in the second and third years of the plan.
MONTE AHUJA Chairman, board of directors University Hospitals Health System Cleveland Age: 64 Type of organization: Health care Involvement: Founder, board member, Transtar Industries Inc.; United Way Greater Cleveland In the news: Mr. Ahuja’s generosity to University Hospitals helped spawn the underconstruction 144bed Ahuja Medical Center in Beachwood. His family’s $30 million gift in 2006 is one of the largest in the hospital system’s history.
VIRGINIA ALBANESE President, CEO FedEx Custom Critical Green Age: 47 Type of organization: Shipping services Involvement: Chair, Greater Akron Chamber of Commerce; board member, The Boys and Girls Club of The Western Reserve, Akron Children’s Hospital and Akron Community Founda-
tion; member, Akron Tomorrow In the news: “FedEx is honored it was asked to support for the rescue and relocation of the endangered loggerhead sea turtle eggs and will provide transportation in our unique air-ride suspension, temperature-controlled vehicles to provide a safe and secure transportation environment,” said Ms. Albanese, in a July 11 Summit County Citizens Voice story about volunteers relocating hundreds of sea turtle nests away from oil-polluted beaches to Florida’s east coast.
ANTHONY J. ALEXANDER President, CEO, board member FirstEnergy Corp. Akron Age: 59 Type of organization: Utilities Involvement: Board member, Edison Electric Institute, the Association of Edison Illuminating Companies, the Nuclear Energy Institute, the Institute of Nuclear Power Operations and the Ohio Electric Utility Institute In the news: Mr. Alexander has pursued myriad state approvals for the $4.4 billion merger with Allegheny Energy Corp. of Pittsburgh. Mr. Alexander said in September that the merger will “grow our customer base, service area and utility assets; enhance and strengthen our generating fleet; and create significant benefits for our shareholders, customers and employees.”
PHILIP ALEXANDER CEO BrandMuscle Inc. Beachwood Age: 52 Type of organization: Media/marketing Involvement: Visiting committee, Case Western Reserve University Weatherhead School of Management; advisory board, master’s in engineering and management program, offered jointly by CWRU’s engineering and management schools; board member, Northeast Ohio Software Association In the news: “Over the last several
Here’s just a snapshot of some of those who are helping to lead the region into the future.
years, we’ve invested heavily in new technology to support advancements in digital media,” Mr. Alexander said in a company release about its second consecutive Leading EDGE award in May. The company said at the time that the sluggish economy actually helped contribute to a more than 30% increase in revenue last year as BrandMuscle helped other companies cut costs.
ART ANTON President, CEO Swagelok Company Solon Age: 53 Type of organization: Manufacturing Involvement: Board member, Forest City Enterprises Inc., The SherwinWilliams Co., Olympic Steel Inc. and University Hospitals; board chairman, Magnet In the news: Though normally quiet about his own company, Mr. Anton often is in the news as a supporter of manufacturing, including this past June when he gave the keynote address at the annual meeting of Cleveland-based Wire-Net, a manufacturing advocacy group.
REBECCA BAGLEY President, CEO NorTech Cleveland Age: 38 Type of organization: Economic development Involvement: BioEnterprise; advisory council, Sustainable Cleveland 2019; OneCommunity; Wright Center for Sensor Systems Engineering; 2011 class, Leadership Cleveland In the news: Hired last July to lead the technology advocacy group, Ms. Bagley in May set a new course for the organization, one that’s more focused on technologies related to electric vehicles, storing electricity, controlling its distribution and turning waste into energy.
DAVID BEACH Director GreenCityBlueLake Institute of The Cleveland Museum of Natural
History Cleveland Age: 53 Type of organization: Nonprofit Involvement: Greater Ohio Policy Center; council, Sustainable Cleveland 2019; Doan Brook Watershed Partnership; Cleveland EcoVillage; Northeast Ohio Ecosystem Consortium In the news: “The most successful and innovative businesses pay attention to the triple bottom line,” Mr. Beach said in September as keynote speaker of Crain’s second annual Emerald Awards. The triple bottom line he is referring to is people, planet and profits.
JODI BERG President Vitamix Corp. Olmsted Township Age: 45 Type of organization: Manufacturing Involvement: Member, North American Association of Food Equipment Manufacturers; Women’s Foodservice Forum; Housewares Export Council of North America; Direct Marketing Association; International Foodservice Manufacturing Association In the news: Vitamix was one of 22 companies nationwide in 2010 to receive the Presidential “E” Award for contributions to growing U.S. exports. The award is the highest U.S. government honor for increasing exports. By 2009, 30% of the blender maker’s business was in exports, and international sales had increased sixfold since 2005.
RONALD M. BERKMAN President Cleveland State University Cleveland Age: 63 Type of organization: Education Involvement: Board member, BioEnterprise, Greater Cleveland Partnership, NorTech, Rock and Roll Hall of Fame and Museum and United Way In the news: “We’re not going to build for building’s sake, but there’s more
building we can do,” Dr. Berkman said this past spring. Dr. Berkman at the time said university leaders were creating a 10-year campus plan that will include multiuse housing and possibly new classrooms, as well as updated labs and research space.
DANIEL E. BERRY President, CEO MAGNET (Manufacturing Advocacy & Growth Network) Cleveland Age: 62 Type of organization: Economic development, manufacturing Involvement: Board member, NewBridge Cleveland Center for Arts and Technology and Vocational Guidance Services; member, Society of Manufacturing Engineers In the news: Mr. Berry always has been active in high-profile organizations around Northeast Ohio, including as an executive vice president for the Greater Cleveland Partnership. Most recently, he was in the news in April for taking over as CEO of Magnet.
ANNE E. BOMAR Senior vice president, general manager Dominion East Ohio Age: 47 Type of organization: Utilities Involvement: Board member, American Red Cross of Greater Cleveland; co-chair, eastern market region, the 2010 United Way campaign, Greater Cleveland; 2011 class, Leadership Cleveland In the news: A lawyer, she’s a veteran in energy regulation, including nine years spent in Washington, D.C., practicing before the Federal Energy Regulatory Commission.
ROBERT W. BRIGGS President GAR Foundation Akron Age: 69 continued on PAGE W-2
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Type of organization: Nonprofit Involvement: Chair, John S. and James L. Knight Foundation; board member, FirstMerit Corp., Fund for Our Economic Future, Invent Now Inc. In the news: Last year, the GAR Foundation — an Akron-based nonprofit that supports institutions around Summit County — awarded more than $4.5 million in grants to nearly 100 nonprofits in the region. The group’s priorities include education, health and social services, arts and arts education, civic enhancement and nonprofit enhancement.
DON BROWN CEO Arteriocyte Inc. Cleveland Age: 47 Type of organization: Technology Involvement: Ohio Venture Association; BioOhio In the news: The company, which employs more than 70 people, about half of whom are in Cleveland, in October held an open house showing off its new 10,000-square-foot headquarters in the Baker Electric Building.
get tough on China for unfair trade practices. “A significant amount of job losses are caused by unfair trade, and government is just catching up,” Sen. Brown told Crain’s. “The public has known that China’s been gaming the system for years.”
MARC S. BYRNES Chairman, CEO Oswald Companies Cleveland Age: 56 Type of organization: Insurance Involvement: Chair, Cleveland Leadership Center; director, donor chair, executive committee member, United Way of Greater Cleveland; executive committee of the board, 50 Club; Bellefaire JCB In the news: “Like Batman and Robin, they’re a great duo,” Mr. Byrnes said in September as he discussed with Crain’s his naming two presidents of the company instead of one. The presidents are to lead Oswald’s 230plus employee-owners in efforts to increase revenues and improve operational efficiencies, he said.
JOSEPH CALABRESE
SHERROD BROWN Senator, Democrat U.S. Senate Avon Age: 58 Type of organization: Government Involvement: Faith & Politics Institute, Boy Scouts of America In the news: The Democratic senator has been leading an effort to
NOVEMBER 15-21, 2010
CEO, general manager Greater Cleveland Regional Transit Authority Cleveland Age: 58 Type of organization: Transportation Involvement: American Public Transportation Association; United Way; The Old Stone Education Center; Downtown Cleveland Alliance
In the news: Mr. Calabrese fought to avoid RTA fare increases as the system’s revenue declined. “Our priority is to maintain both jobs and transit service,” Mr. Calabrese said in March during negotiations. “We seriously question what the union’s priorities are.” (The contract remains unresolved.)
JOSEPH A. CARRABBA Chairman, president, CEO Cliffs Natural Resources Inc. Cleveland Age: 58 Type of organization: Mining, natural resources Involvement: Board member, Newmont Mining Corp., Denver, Colo.; University Hospitals; and KeyCorp In the news: Cliffs has grown rapidly in recent years, increasing revenues from $1.2 billion in 2004 — when it still was known as Cleveland-Cliffs Inc. — to what is expected to be more than $4 billion this year. Closing $1 billion in acquisitions this year also kept the Cliffs name in headlines.
ROY A. CHURCH President Lorain County Community College Elyria Age: 64 Type of organization: Education Involvement: Co-chair, Ohio Board of Regents’ Articulation and Transfer Council; vice chair, Northeast Ohio Council on Higher Education; funders’ steering committee, Fund for Our Economic Future; co-chair, Innovation
Alliance; Workforce Institute of Lorain County; Team Lorain County In the news: “Utilizing the technologies available has been vital to accommodating the demand,” said Dr. Church this summer referring to student enrollment. LCCC had plans to add this fall eight modular classrooms, which can hold up to 30 students each. At the time, Dr. Church said LCCC is built for about 6,600 students, about half the number enrolled.
PAUL CLARK Regional president, Northern Ohio PNC Financial Services Group Inc. Cleveland Age: 57 Type of organization: Banking Involvement: Board member, Baldwin-Wallace College, Great Lakes Science Center, PlayhouseSquare Foundation, University Circle Inc. and University Hospitals Health System In the news: In September, Mr. Clark offered insight into PNC’s commitment in 2003 to a 10-year, $100 million effort to improve early childhood education. “In our industry, we’re only as good as the communities we serve,” he said. “We have to do things for the future.”
CHRIS COBURN Executive director Cleveland Clinic Innovations Cleveland Age: 53 Type of organization: Technology Involvement: Vice chair, Cuyahoga Arts and Culture; board member, The City Club of Cleveland, Third Frontier Advisory Board, BioEnterprise Corp. and Intelect Medical Inc. In the news: Cleveland Clinic Innovations to date has helped the Clinic turn 33 ideas into spinoff companies and others produce licensing revenue.
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President Wire-Net Cleveland Age: 57 Type of organization: Economic development Involvement: Board of directors, Cleveland Citywide Development Corp. In the news: This summer, Mr. Colm spoke about the type of manufacturing businesses that were adding jobs at the time: “Metal fabricating, forging, some consumer goods companies, manufacturing reps, steel processing — this is really broad based and it’s everything from people bringing back a few folks to a dozen or dozens in some cases.”
CHRIS CONNOR CEO, chairman Sherwin-Williams Co. Cleveland Age: 55 Type of organization: Coatings, related products Involvement: Board member, Eaton Corp., the Greater Cleveland Partner-
ship, the Rock and Roll Hall of Fame and Museum and University Hospitals Health System In the news: Aside from announcing earnings and other corporate developments, Mr. Connor is most visible and often seems most comfortable unveiling the company’s new technologies, such as this year when it unveiled its first “graffiti-proof” coating.
WILLIAM CONSIDINE President, CEO Akron Children’s Hospital Akron Age: 63 Type of organization: Health care Involvement: Austen BioInnovation Institute in Akron; Ohio Children’s Hospital Association; National Association of Children’s Hospitals and Related Institutions; Akron Tomorrow; Team NEO In the news: Mr. Considine is leading the charge at the hospital to forge partnerships and expand the hospital’s footprint throughout Northeast Ohio. The hospital is in the midst of a strategic planning process to boost its revenue and patient roster, as well as to further integrate its 80 locations.
PATRICK AND DANIEL CONWAY Co-owners Great Lakes Brewing Co. Ohio City Age: Patrick, 62; Daniel, 49 Type of organization: Food and beverage Involvement: Variety of environmental and social organizations throughout Northeast Ohio In the news: “We’ve been careful and patient. We don’t want to compromise our quality. I’d say that’s a good strategy after two decades,” said Patrick Conway (top photo), regarding the brewery’s careful expansion strategy over the last 22 years. The brewery is undergoing a $6 million equipment expansion.
DR. DELOS “TOBY” COSGROVE President, CEO Cleveland Clinic Cleveland Age: 70 Type of organization: Health care Involvement: The Greater Cleveland Partnership; Ohio Business Roundtable; Presidents Council; Center for Health Affairs; Cuyahoga Community College In the news: The Cleveland Clinic is in the midst of a $1.2 billion plan to expand its reach continued on NEXT PAGE ➤
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and to some has become a symbol of all things right about health care — a feeling exemplified when President Barack Obama came to town last year to highlight the system during his push for health care reform.
JIM COSSLER CEO, chief evangelist Youngstown Business Incubator Youngstown Age: 55 Type of organization: Economic development Involvement: Advisory council, Youngstown State University S.T.E.M. College; advisory council, Hiram College Center for Integrated Entrepreneurship; advisory board, The University of Akron School of Computer Science; board of visitors, Slippery Rock University Department of Computer Science; advisory board, Western Reserve Public Media In the news: “We want our best and brightest to leave Youngstown. ... We want them to go to Seattle or New York or wherever, and then come back and share everything they learned,” Mr. Cossler was quoted as saying in a May 2010 Inc. magazine article titled “Semper Youngstown: Youngstown, Ohio, of all places, is attempting to reinvent itself as a technology center.”
MARK E. COTICCHIA Vice president for economic development, Research and Technology Management Case Western Reserve University Cleveland Age: 53 Type of organization: Technology Involvement: Board member, BioEnterprise and JumpStart; advisory board member, NorTech; former senior economic development adviser, University System of Ohio; international expert, United Nations World Intellectual Property Organization In the news: A university news release in April announced that Case Western Reserve University had continued its leadership role among Ohio hospitals, universities and research institutes by collecting $35.3 million in licensing revenues over a recent three-year period. Mr. Coticchia said the success was predicated largely upon university leadership realizing the needs and opportunities tied to sound commercialization of cutting-edge research.
ED CRAWFORD CEO, chairman Park-Ohio Holdings Corp. Mayfield Heights Age: 70 Type of organization: Manufacturing Involvement: Involved in efforts to restore the Irish Cultural Garden in Cleveland’s Rockefeller Park, including bringing in a 13,000-pound granite fountain that replicates the one at St. Patrick’s Cathedral in Ireland In the news: “We are pleased to add to our Supply Technologies business an outstanding leadership team and a new list of customers representing some of the elite manufacturers in North America,” Mr. Crawford said in a statement this fall when a Park-Ohio Holdings Corp. subsidiary acquired Assembly Component Systems, a unit of Lawson Products Inc. “Annual revenues from
this transaction are expected to exceed $50 million per year and be immediately accretive to Park-Ohio’s earnings.”
ALEXANDER “SANDY” CUTLER CEO, chairman Eaton Corp. Cleveland Age: 59 Type of organization: Manufacturing Involvement: Board member, DuPont, KeyCorp, the Greater Cleveland Partnership, United Way Services of Greater Cleveland, the Electrical Manufacturers Club and the Musical Arts Association. In the news: “Our region needs a realistic plan for winning, and needs to have the guts and fortitude to stick to the plan — we need to get back on offense and
stop playing defense,” said Mr. Cutler in regards to the region. Mr. Cutler was one of 30 “difference-makers” profiled as part of Crain’s 30th anniversary.
A. RAY DALTON President, CEO PartsSource Inc. Aurora Age: 54 Type of organization: Medical parts supplier Involvement: Chairman, Medical Growth Fund and the Dalton Family Foundation; board member, Northern Ohio Red Cross and Team NEO; member, Hudson Community Chapel In the news: In addition to leading one of Northeast Ohio’s fastest growing companies, Mr. Dalton helped form the Medical Growth Fund, which invested in
its first two startups in April.
STEVEN M. DETTELBACH U.S. Attorney for the Northern District of Ohio U.S. Justice Department Cleveland Age: 44 Type of organization: Government Involvement: (Mr. Dettelbach had to resign from all boards as part of his job so as to prevent conflicts of interest, according to a spokesman.) In the news: Mr. Dettelbach recently announced he wants local companies to pledge to fight corruption and stand up to dishonest public officials who seek bribes in the course of business, The
W-3
Plain Dealer reported in late October. “I have long held the opinion that this is something we ought to be doing,” he was quoted as saying.
FRANK L. DOUGLAS President, CEO Austen BioInnovation Institute in Akron Akron Age: 67 Type of organization: Technology (collaboration) Involvement: Board member, Multiple Myeloma Research Foundation and Ewing Marion Kauffman Foundation In the news: The state of Ohio in July named the institute its “Hub of Innovation and Opportunity” that will focus on biomaterials commercialization. continued on PAGE W-4
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RICHARD W. DURST President Baldwin-Wallace College Berea Age: 65 Type of organization: Education Involvement: Board member, PlayhouseSquare and The Presidents Council; past president, International Organization of Designers, Theatre Architects and Technology; past executive director, International Council of Fine Arts Deans; past president, United State Institute for Theatre Technology In the news: Baldwin-Wallace was a winner in this year’s Crain’s Emerald Awards program, which honors companies and organizations for their sustainability efforts. “Baldwin-Wallace College’s focus on sustainability is not directed to any particular product, process or service, but seeks to be as comprehensive and institutional as possible,” according to its nomination for the award.
ART J. FALCO President, CEO PlayhouseSquare Foundation Cleveland Age: 57 Type of organization: Cultural institution/real estate Involvement: Board member, Positively Cleveland, the Downtown Cleveland Alliance, the Union Club and the PlayhouseSquare District Development Corp. In the news: Mr. Falco last March received the Richard A. Shatten Professional Leader-
NOVEMBER 15-21, 2010
ship Award from the Greater Cleveland Partnership. The award recognizes those who foster successful publicprivate initiatives in the region. It’s named after Mr. Shatten, a much-admired figure who has been given credit for catalyzing the rebuilding efforts of Cleveland in the 1980s and 1990s.
Technology In the news: The modest economic revival of 2010 brought life back to the Cleveland plant. When no steel was being made in summer 2009, the plant had fewer than 270 people. By summer 2010, employment at the plant was back around 1,100.
UMBERTO P. FEDELI
JOSE FELICIANO
President, CEO The Fedeli Group Independence Age: 50 Type of organization: Insurance Involvement: Director, chairman of government relations, member of the executive committee, Cleveland Clinic Foundation; trustee, Catholic Diocese of Cleveland Foundation; director, Park View Federal Savings Bank In the news: “I’m happy to be a happy, passive investor, but I also have never had a problem with doing the right thing for the right reason,” Mr. Fedeli told Crain’s in August as he discussed his assertion that LNB Bancorp Inc., in which he’d acquired a more than 5% stake, should reduce its number of board members and take other action.
Chairman Hispanic Roundtable of Cleveland Cleveland Age: 60 Type of organization: Nonprofit Involvement: Greater Cleveland Partnership; a White House fellow; past president, Cleveland Bar Association; founder and chairman, Hispanic Roundtable In the news: Mr. Feliciano, also a partner at Baker & Hostetler, in February was appointed to the executive committee of the Transition Advisory Group, a part of the Issue 6 effort to reform Cuyahoga County government.
TERRY FEDOR Vice president, general manager ArcelorMittal Cleveland Cleveland Age: 46 Type of organization: Manufacturing (steel) Involvement: Ohio Steel Council (governor-appointed member); board member, Greater Cleveland Partnership and the Association for Iron & Steel
JOHN FERCHILL Chairman, CEO The Ferchill Group Cleveland Age: 68 Type of organization: Real estate Involvement: Chairman, board of directors, Downtown Cleveland Alliance; member, Downtown Cleveland Improvement Corp.; past chairman, Greater Cleveland Sports Commission and Ohio Canal Corridor In the news: Mr. Ferchill said this spring he became chair of Downtown Cleveland Alliance to do battle over
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bar-crowd rowdiness in the Warehouse District because he does not want to see it go into a Flats-like downspin. Best known the last few years for out-of-town projects, he is currently pursuing multiple projects in the city of Cleveland.
ERIC D. FINGERHUT Chancellor Ohio Board of Regents Columbus Age: 51 Type of organization: Education Involvement: President, board of directors, Congregation Agudas Achim, Columbus; board member, Gross Schechter Day School In the news: Mr. Fingerhut has touted efficiency as part of his strategic plan for higher education in Ohio. “We’re never going to be done … It’s just like every private business that needs to continuously become more productive to increase profits and sales,” he said this fall about the state’s 14 public colleges and universities consolidating some of their administrative services.
ED FITZGERALD County executive-elect Cuyahoga County Cleveland Age: 42 Type of organization: Government Involvement: N/A In the news: On Nov. 2, Mr. FitzGerald, a Democrat and Lakewood mayor, won the race for the new Cuyahoga County executive position. He and the county’s new 11-member council will be sworn in on Jan. 1.
MARK FLEINER CEO Rolls-Royce Fuel Cell Systems (U.S.) Inc. North Canton Age: 44 Type of organization: Technology Involvement: Board member, Canton Regional Chamber of Commerce In the news: The subsidiary of the English jet engine maker in 2009 received a $3 million grant to help finance expansion of its headquarters at Stark State College. That area has become a focal point for Ohio’s fuel cell industry.
CHARLES FOWLER President, CEO Fairmount Minerals Chardon Age: 65 Type of organization: Mining/natural resources Involvement: Board of trustees, Case Western Reserve University; board member, Geauga County YMCA, DDC Clinic for Special Needs Children and the Alzheimer’s Association In the news: Mr. Fowler often appears in public and in
the press as a proponent of business sustainability. This year he also was in the news when he helped sell a controlling interest in Fairmount to New York-based private-equity investors for an undisclosed sum.
DAVID FRANKLIN Executive director Cleveland Museum of Art Cleveland Age: 49 Type of organization: Cultural institution Involvement: N/A In the news: Mr. Franklin took over the job Sept. 20 after serving as deputy director of the National Gallery of Canada. His big task: complete a $350 million renovation and expansion project designed to improve the installation and interpretation of the museum’s collection and to enhance the experience of its visitors.
JEFFREY FRIEDMAN Chairman, president, CEO Associated Estates Realty Corp. Richmond Heights Age: 59 Type of organization: Real estate Involvement: Executive committee, board member, Greater Cleveland Sports Commission; member, National Association of Real Estate Investment Trusts, National Multi-Housing Council, Urban Land Institute, World Presidents’ Organization In the news: The real estate investment trust acquired apartment complexes this year in Dallas, Texas, and Ashburn, Va., and it began development of a 242-unit apartment community in a joint venture in Nashville, Tenn.
WILLIAM FRIEDMAN President Cleveland-Cuyahoga County Port Authority Cleveland Age: 49 Type of organization: Government Involvement: American Association of Port Authorities, American Great Lakes Port Association In the news: Since being named in May as president of the public agency, Mr. Friedman has worked to expand the maritime operations of the Port of Cleveland.
HIROYUKI FUJITA Founder, president, CEO Quality Electrodynamics LLC; eQED, LLC Mayfield Village Age: 44 Type of organization: Manufacturing (medical devices) Involvement: Adjunct professor of physics and radiology, Case Western Reserve University; advisory board member, Inamori International Center continued on NEXT PAGE ➤
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of Ethics and Excellence, CWRU; adjunct professor, School of Information Technology and Electrical Engineering, The University of Queensland; International Society for Magnetic Resonance in Medicine; Japan Society for Magnetic Resonance in Medicine In the news: Dr. Fujita expects Quality Electrodynamics to gain more than it will lose from health reform. He told Crain’s in March that he expects sales of the coils it makes for magnetic resonance imaging machines to increase as more people get health insurance, but he doesn’t believe the product will be taxed because it goes inside other machines.
LYLE G. GANSKE Partner-in-charge Jones Day Cleveland Age: 51 Type of organization: Law Involvement: Board member, Altra Holdings Inc., Rock and Roll Hall of Fame and Museum and Greater Cleveland Partnership (executive committee and co-chair, Commission on Economic Inclusion); executive committee, Resilience Capital Partners; member, Ohio Business Roundtable In the news: A Crain’s report in June 2009 detailed how Jones Day’s profile was growing larger as its bankruptcy and restructuring work expanded to firms such as Lehman Bros. and Chrysler. “We’re very excited to be involved in this,” Mr. Ganske said at the time. “Bankruptcy gets a lot of attention.”
DR. JAY A. GERSHEN
DAN GILBERT
President Northeastern Ohio Universities Colleges of Medicine and Pharmacy Rootstown Age: 64 Type of organization: Education Involvement: Board of directors, Research! America, Sullivan Alliance to Transform America’s Health Professions and Austen BioInnovation Institute in Akron; board of trustees, NorTech and Greater Akron Chamber In the news: “The current name no longer reflects who we are as a university. In addition to a College of Medicine and a College of Pharmacy, we also added a College of Graduate Studies last year. … We are a strong institution with a health sciences curriculum and we want a strong name that reflects who we are and who we serve,” said Dr. Gershen this summer in announcing NEOUCOM’s intention to change its name to Northeast Ohio Medical University.
Owner, Cleveland Cavaliers, Rock Ventures LLC Cleveland Age: 48 Type of organization: Sports Involvement: Cleveland Clinic; Group Plan Commission (appointed by Cleveland Mayor Frank Jackson); Children’s Hospital Foundation, an affiliate of the Washington D.C.based Children’s National Medical Center; Children’s Tumor Foundation; NBA Board of Governors In the news: Mr. Gilbert, in receiving last month the Ruth Ratner Miller Award for contributions to downtown Cleveland, announced he was bringing his Bizdom U — an entrepreneurial incubator already successful in Detroit — to Cleveland in 2011. Mr. Gilbert, who also is behind the development of a casino in Cleveland, made national headlines this summer when, after LeBron James announced he was leaving Cleveland, he fired off a letter pledging to win a championship
before the Miami Heat ever do.
DAVID GILBERT President, CEO Greater Cleveland Sports Commission/Positively Cleveland Cleveland Age: 43 Type of organization: Tourism/event attraction Involvement: Vice chair, International Children’s Games; Jewish Community Federation; Park Synagogue; Cleveland State Athletics In the news: Mr. Gilbert will serve as the chief executive in the “coordinated alliance” of the sports commission and Positively Cleveland, the region’s convention and visitors bureau. Additionally, he will serve on a leadership team for the 2014 Gay Games.
JOSEPH GINGO Chairman, president, CEO A. Schulman Inc. Fairlawn Age: 65
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Type of organization: Manufacturing Involvement: Board member, Veyance Technologies, Purcell Tire & Rubber Co., Akron Tomorrow, The University of Akron Foundation, United Way Services In the news: “I continue to try to reduce my dependency on automotive,” said Mr. Gingo this March. “Let me be clear: I want to stay in automotive, but I want to reduce my dependency on it.” A. Schulman Inc. at the time had announced two acquisitions in the previous four months.
MARC GLASSMAN Owner Marc’s Deep Discount Stores City: Cleveland Age: N/A Type of organization: Retail Involvement: N/A In the news: Notorious for being media shy, Marc Glassman recently has taken to Twitter with posts like: “Come to ‘Marc’s Feed the Children continued on PAGE W-6
STUART GARSON Attorney, party chairman Cuyahoga County Democratic Party Moreland Hills Age: 61 Type of organization: Political party Involvement: Ohio Academy of Trial Lawyers, Cleveland Jewish News, Moreland Hills Planning Commission In the news: Mr. Garson is working to rebuild the reputation of the county’s Democratic party, amid a government scandal that has rocked the region.
FRED AND GREG GEIS Co-owners, Geis Cos. Members, Hemingway Development Inc. Cleveland Age: Fred, 51; Greg, 42 Type of organization: Real estate Involvement: Fred Geis, MidTown Cleveland Inc.; Cleveland Botanical Gardens; Erwin & Katherine Geis Foundation; member, U.S. and Greater Cleveland Green Building Coalitions. Greg Geis, member, NAIOP In the news: With partners, Fred and Greg Geis have been pursuing development of the MidTown Technology Park, an office/lab complex on Euclid Avenue, among other city projects. At a recent real estate trade meeting, Fred Geis said, “I’ve been spending more time with Mayor Jackson than with my girlfriend.” The familyowned Geis Cos. has been the NAIOP trade group’s industrial developer of the year seven times, including in 2010.
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Campaign’ Monday, October 11 at 8:00 am until Thursday, November 25” and “Want your groceries delivered right to your kitchen?? Go to www.marcs .com & make a list, then send a friend or family member to get them!”
ANNE GOODMAN President, CEO Cleveland Foodbank Cleveland Age: 44 Type of organization: Nonprofit Involvement: Feeding America, the Nation’s Foodbank Network; Ohio Association of Second Harvest Food Banks; Western Reserve Academy; The Council of Economic Opportunities of Greater Cleveland; Cuyahoga County FEMA Emergency Food and Shelter board In the news: At the urging of Cuyahoga County officials, Ms. Goodman and leaders from the Hunger Network of Greater Cleveland this year began working more closely in order to further stretch the funding the groups receive from the county. Both have seen increased demands for the services they provide Northeast Ohio communities.
NOVEMBER 15-21, 2010
MARCIE GOODMAN Executive director Cleveland International Film Festival Cleveland Age: 55 Type of organization: Nonprofit/arts Involvement: N/A In the news: What recession? The 34th Cleveland International Film Festival in March 2010 drew a record 71,554 people, a 7% increase from 2009. It screened 153 feature films and 152 short subjects from 84 countries. Attendance at the event has doubled in the last seven years.
JOHN GRABNER President Cardinal Fasteners Bedford Heights Age: 57 Type of organization: Manufacturing Involvement: Board member, membership chairman, the Industrial Fasteners Institute; board member, finance committee, American Wind
Energy Association; sponsorship committee chairman, Bedford Heights Funtown Playground; United Way; development committee, Juvenile Diabetes Research Foundation International In the news: Mr. Grabner and his company have been in the news quite frequently over the last couple of years, most notably for Cardinal’s work in selling into the wind power generation industry. President Barack Obama has used Cardinal as a site for speeches because of its efforts in the wind industry.
ALBERT GREEN CEO Kent Displays Inc. Kent Age: 45 Type of organization: Manufacturing (liquid crystal displays) Involvement: Society of Information Displays; Kent Chamber of Commerce; board member, Flexmatters; adviser, President Obama’s Export Council; adjunct professor, Kent State University In the news: Kent Displays in January released a liquid crystal-based electronic message pad, the first of many products that the company aims to make using its roll-to-roll display manufacturing line.
PAUL G. GREIG Chairman, president, CEO FirstMerit Corp. Akron Age: 54 Type of organization: Banking Involvement: Board member, Greater Cleveland Sports Commission, Musical Arts Association and Akron Tomorrow; co-chairman, American Bankers Council; member, board of governors, Firestone Country Club In the news: Akron-based FirstMerit has made a trio of bank acquisitions in the Chicago market over the last year, and Mr. Greig said the company will continue to look for opportunities in the Windy City and throughout the Midwest. “There’s absolutely no reason to think that we’re done at this point in time,” he said.
JAMES GRIFFITH President, CEO Timken Co. Canton Age: 56 Type of organization: Manufacturing Involvement: President, World Bearing Association; vice president, Management Executives’ Society; board member, US-China Business Council, Goodrich Corp. and the Manufacturing Advocacy and Growth Network In the news: This summer, Timken announced it planned to invest about $50 million in its steel operations in Canton. At the time, Timken said its Steel Group has had a “significant increase in demand across all markets, and 2010 sales are expected to increase by 70% to 80% compared to 2009.”
BRIAN HALL CEO, president Industrial Inventory Solutions LLC Cleveland Age: N/A Type of organization: Transportation Involvement: Presidents Council; Commission on Economic Inclusion;
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Rock and Roll Hall of Fame and Museum In the news: Mr. Hall is part of a group of county reform advocates pushing for diversity in county hiring and contracting in the new county government.
JAMES HAMBRICK President, CEO Lubrizol Corp. Wickliffe Age: 55 Type of organization: Chemicals Involvement: Board member, Hospice of Western Reserve, University Hospital Health Systems, Greater Cleveland Partnership, Northeast Ohio Council on Higher Education and the Cleveland Museum of Natural History In the news: In October, Mr. Hambrick gave analysts a fairly bullish outlook on both the economy and Lubrizol, setting a public goal of increasing the company’s earnings by 80% between 2009 and 2013.
HOWARD “HOBY” HANNA IV President Howard Hanna Ohio Cleveland Age: 38 Type of organization: Real estate Involvement: Board member, Trulia advisory board, Northern Ohio Regional Multiple Listings Service and North Coast Community Homes; member, Greater Cleveland Partnership and Cleveland Clinic Children’s Hospital In the news: On this year’s home-sale market, Mr. Hanna said: “You have parents telling their kids that maybe they should move into that first house or move up. People with kids in their 30s are constantly saying, ‘When I was your age, we had runaway interest rates.’”
HOLLY HARLAN Founder, president Entrepreneurs for Sustainability Cleveland Age: 50 Type of organization: Nonprofit Involvement: Stewardship council, Sustainable Cleveland 2019; Design Lab Advisory Board, Cuyahoga Community continued on NEXT PAGE ➤
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College; advisory committee, GreenCityBlueLake Institute; advisory board, Generation Foundation In the news: Well-known for her various sustainability initiatives and efforts, Ms. Harlan’s organization introduces companies — now with more than 5,000 in its network — to sustainable operations. She was named Crain’s “Green Lantern” award winner at the 2009 Emerald Awards.
KING HILL Founder DigiKnow Cleveland Age: 52 Type of organization: Media/marketing Involvement: Member, Kent State University National Alumni Board; past president, American Advertising Federation/Cleveland In the news: “People who want to use mobile technology and mobile marketing will look for a company that specializes in it,” said Mr. Hill in an April 12 Crain’s story on DigiKnow’s development of a mobile web site and iPhone application for Nestle’s Carnation brand of cooking milks.
Age: 58 Type of organization: Supplier (aircraft parts) Involvement: Trustee, Case Western Reserve University; board of directors, Polypore Inc. In the news: TransDigm has been an aggressive acquirer over the last couple years. In September, it inked a definitive agreement to acquire McKechnie Aerospace Holdings Inc., a privately owned supplier of aerospace products, for $1.27 billion in cash.
DANIEL HURWITZ CEO, president Developers Diversified Realty Corp. Beachwood Age: 46
Type of organization: Real estate Involvement: Board member, U-Store-It Trust Inc., Cleveland; International Council of Shopping Centers trade group; Colgate University; Hawken School; and Neurological Institute, Cleveland Clinic In the news: Mr. Hurwitz took time out from DDR’s push to clean up its balance sheet and complete record volumes of leases to fill empty space to tell a local ICSC meeting last spring that the last few years were a great time to be a young person in the shopping center business. That’s because, “Half the rules are new.”
A.J. HYLAND
CEO Hyland Software Inc. Westlake Age: 39 Type of organization: Technology (software) Involvement: Advisory board member, The Ohio Foundation of Independent Colleges; board member, United Way of Greater Cleveland In the news: The region’s largest software company by employment recently bought two companies, putting its headcount above 1,000. “I think it matters to the region to have a success story,” Mr. Hyland said.
FRANK JACKSON Mayor City of Cleveland
Cleveland Age: 64 Type of organization: Government Involvement: Mayors Against Illegal Guns Coalition In the news: In the midst of a plan to restructure city government, Mayor Jackson most recently has been fighting to keep open the trauma center at Huron Hospital.
JOE KANFER CEO Gojo Industries Akron Age: N/A Type of organization: Manufacturing Involvement: N/A continued on PAGE W-8
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MICHAEL F. HILTON CEO Nordson Corp. Westlake Age: 56 Type of organization: Manufacturing (precision dispensing equipment) Involvement: Co-chair, SEMI ISS committee and member of the association’s North American Advisory Board; member, Manufacturers Alliance/ MAPI GM Council, American Institute of Chemical Engineers and National Investor Relations Institute In the news: Nordson this month closed its acquisition of St. Paul, Minn.based Micromedics Inc., a deal that extends Nordson’s reach in precision dispensing technology and adds to its capabilities in the fast-growing medical device and life sciences markets.
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MIKE HOLMGREN President Cleveland Browns Cleveland Age: 62 Type of organization: Sports Involvement: Medical Teams International, Salvation Army, Hunger Relief, breast cancer awareness In the news: Mr. Holmgren, who took two NFL teams (Green Bay, Seattle) to the Super Bowl as a head coach, was hired in December by Browns owner Randy Lerner and given full authority. Since the season started, he’s remained in the background in an effort not to undermine coach Eric Mangini, but his presence — from a crackdown on lewd behavior in tailgate lots and in the stadium to questions about his return to the sideline — looms large.
W. NICHOLAS HOWLEY Chairman, CEO TransDigm Group Cleveland
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In the news: This fall, GoJo Industries said it reacquired the Purell hand sanitizer brand from Johnson & Johnson’s consumer products division. “This transaction enables GoJo to expand the Purell product line to include effective hand hygiene solutions for every setting — at home, at work and on the go,” Mr. Kanfer said. GoJo invented the Purell brand in 1988 and sold it in 2004.
DOUGLAS KATZ Chef, owner Fire, Food & Drink Shaker Heights Age: 40 Type of organization: Food and beverage Involvement: President, Cleveland Independents; board member, Positively Cleveland; ambassador, Monterey Bay Aquarium Seafood Watch, California In the news: “At Fire, we will continue to serve our loyal Cleveland customers food that is nationally recognized year after year (including a top dining destination named by Travel + Leisure and one of the nation’s best brunches named by O, Oprah’s magazine),” Mr. Katz said this summer.
GULAM KHAN CEO, co-chairman U.S. Endoscopy Mentor Age: 43 Type of organization: Manufacturing
NOVEMBER 15-21, 2010
Endoscopy In the news: U.S. Endoscopy, a company that designs and manufactures products for clinicians in the field of endoscopy, is continuing to pursue expansion plans in Mentor and has narrowed options to a few facilities within close proximity to the company’s main campus.
U.S. representative, Democrat, 10th District U.S. House of Representatives Cleveland Age: 64 Type of organization: Government Involvement: International Alliance of Theatrical Stage Employees In the news: U.S. Rep. Kucinich’s latest skirmishes include efforts to protect homeowners facing foreclosure and support of a discount for all-electric homeowners served by FirstEnergy. On Nov. 2, he won re-election to his eighth term in Congress.
RICHARD J. KRAMER
CHRIS KUENNE
CEO Goodyear Tire & Rubber Co. Akron Age: 47 Type of organization: Manufacturing Involvement: Board of directors, Summa Foundation, Akron Tomorrow, John Carroll University, the Rubber Manufacturers Association and Walsh Jesuit High School In the news: Mr. Kramer was elected chairman of the board effective Oct. 1, succeeding Robert J. Keegan, who stepped down as chairman and a director and retired from the Akronbased tiremaker after seven years at the helm.
Chairman, CEO Rosetta Princeton, N.J. Age: 48 Type of organization: Media/marketing Involvement: Board member, The Princeton Community Foundation and the Princeton Junior School In the news: Acquisitions have helped Rosetta LLC grow to more than 1,000 people from about 600 in July 2008, when it bought Brulant Inc. of Beachwood. Rosetta has added about 50 people to its Northeast Ohio staff since buying Brulant, bringing the company’s local staff to about 400. The company is positioned to expand its presence in the region further now that it is consolidating its three previous Northeast
(medical devices) Involvement: Letter Winners M Club, University of Michigan; associate member, American Society for Gastrointestinal
DENNIS KUCINICH
Ohio offices into new space in downtown Cleveland.
STEVE LATOURETTE U.S. representative, Republican, 14th District U.S. House of Representatives Bainbridge Age: 56 Type of organization: Government Involvement: U.S. Holocaust Memorial Council In the news: U.S. Rep. LaTourette asked President Obama to intervene to keep General Motors dealerships, scheduled for closing, open until an investigation is completed. On Nov. 2, he won re-election to his ninth term in Congress.
RAY LEACH CEO JumpStart Inc. Cleveland Age: 44 Type of organization: Nonprofit (business development) Involvement: American Red Cross, Northeast Ohio; Ohio Venture Association; Northeast Ohio venture capital task force; public policy committee, National Association of Seed and Venture Funds; founding chair, Regional Innovation Acceleration Network In the news: A Cleveland State study released in April found that JumpStart
has generated $267 million in economic activity and helped support 664 jobs here over the past four years. Mr. Leach and his team continued investing throughout the year: They registered their highest fiscal-year total of investments at 13.
LESTER A. LEFTON President Kent State University Kent Age: 64 Type of organization: Education Involvement: NorTech; Greater Akron Chamber; Western Reserve Public Media; Musical Arts Association of the Cleveland Orchestra; Commission on Effective Leadership, American Council on Education In the news: “This is transformational, a really extraordinary makeover of the city,” Mr. Lefton said in regard to a fiveyear, $300 million plan announced in January to transform the city of Kent and the university into more attractive, user-friendly places.
FRANK LINSALATA Chairman, founder Linsalata Capital Partners Mayfield Heights Age: 67 Type of organization: Private equity continued on PAGE W-10
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Involvement: Trustee, past board chair, Case Western Reserve University; emeritus trustee, Laurel School In the news: Speaking to how the private equity business began in Cleveland before the term â&#x20AC;&#x153;private equityâ&#x20AC;? even existed, Jim Marra, who works within the field, remarked to Crainâ&#x20AC;&#x2122;s in January: â&#x20AC;&#x153;It started with Frank Linsalata, David Morgenthaler and those early private equity guys in the late â&#x20AC;&#x2122;70s and early â&#x20AC;&#x2122;80s.â&#x20AC;? Mr. Marra went on to call them â&#x20AC;&#x153;pretty smart guys with a vision of what private equity could do.â&#x20AC;?
RAMON LUGO III Director NASA Glenn Research Center Brook Park Age: 53 Type of organization: Government Involvement: Board member, Greater Cleveland Partnership and NorTech In the news: â&#x20AC;&#x153;This congressional direction is good news for Glenn and Ohio,â&#x20AC;? Mr. Lugo said this fall regarding the NASA budget Congress passed in October.
DENNIS MADDEN Executive director Cleveland Medical Mart & Convention Center Cleveland Age: 54 Type of organization: Convention
NOVEMBER 15-21, 2010
center management Involvement: American Society of Association Executives; Irish American Charitable Fund; Stella Maris Mission; visiting committee, Maxine Goodman Levin College of Urban Affairs, Cleveland State University In the news: MMPI Inc., the Chicagobased developer behind the Medical Mart & Convention Center, said it has received its 40th signed letter of intent from a tenant for permanent showroom space in the medical mart. MMPI said it also has 16 letters of intent for conferences, conventions and trade shows at the complex.
ARI, JORI AND RICK MARON Partners MRN Ltd. Cleveland Age: Ari, 32; Jori, 29; Rick, 62 Type of organization: Real estate Involvement: Ari Maron, board member, Downtown Cleveland Alliance and ParkWorks. In the news: Best known for its East Fourth Street neighborhood in downtown, MRN this year finished the Block Building, a $5 million project that is its last large building rehab on East Fourth between Euclid and Prospect avenues. New projects are taking MRN to Ohio Cityâ&#x20AC;&#x2122;s Market Square and University Circle.
KEVIN MCMULLEN Chairman, CEO Omnova Solutions Inc. Fairlawn Age: 50 Type of organization: Specialty chemicals Involvement: Board of directors, Steris Corp.; trustee, Akron Tomorrow and Ideastream In the news: In September, Omnova announced it had entered into an agreement to buy Franceâ&#x20AC;&#x2122;s Eliokem chemical company for $310 million. â&#x20AC;&#x153;This acquisition will transform Omnova Solutions into a much larger, more diverse specialty chemical and functional surfaces company with significantly enhanced global capability,â&#x20AC;? Mr. McMullen said. â&#x20AC;&#x153;It is an excellent fit with Omnovaâ&#x20AC;&#x2122;s strategy to grow in existing markets, penetrate new adjacent markets and globalize our company.â&#x20AC;?
RICHARD MCQUEEN CEO, president Akron-Canton Airport Plain Township Age: 51 Type of organization: Transportation Involvement: Advisory board, Walsh University; board of trustees, Greater Akron Chamber; Akron/Summit County Convention and Visitors Bureau; Canton Regional Chamber of Commerce; Stark
Development Board In the news: Mr. McQueen took over as CEO after the retirement of the airportâ&#x20AC;&#x2122;s longtime leader, the late Fred Krum, in time to oversee CAK 2018, a 10-year, $110 million capital improvement program. Also, late this year, Southwest Airlines agreed to acquire AirTran Holdings Inc., which operates about a third of the daily departures from Akron-Canton Airport. The full impact of the plan on Akron-Canton is unclear.
HENRY L. MEYER III Chairman, CEO KeyCorp Cleveland Age: 60 Type of organization: Banking Involvement: Board member, United Continental Holdings, University Hospitals Health System, Greater Cleveland Partnership and Northern Ohio Council on Higher Education; member, Federal Advisory Council of the Federal Reserve System In the news: In reporting last month KeyCorpâ&#x20AC;&#x2122;s second straight profitable quarter, Mr. Meyer praised company employees who â&#x20AC;&#x153;have remained focused on serving our clients through what has been the most challenging economic period in decades.â&#x20AC;?
STEVE MILLARD President, executive director Council of Smaller Enterprises Cleveland Age: 42
Type of organization: Business service, advocacy Involvement: National Small Business Association; Presidents Council Foundation; United Way of Greater Cleveland; Chamber of Commerce Executives of Ohio; Community Partnership for Arts and Culture In the news: Mr. Millard and COSE have continued to be a sounding board and advisers for their members, as the recession has hit small businesses hard. Most notably, the organization was outspoken on the potential negative effects of President Barack Obamaâ&#x20AC;&#x2122;s health care reform bill, though eventual tax credits can help COSEâ&#x20AC;&#x2122;s members.
DONALD MISHEFF Northeast Ohio managing partner Ernst & Young Cleveland Age: 54 Type of organization: Financial services Involvement: Chairman, Tri-C Foundation; board chairman, Firestone Country Club; chair, finance and audit committee, PlayhouseSquare Foundation; chair, finance committee, Team NEO; finance chair, Group Plan Commission (appointed by Mayor Jackson) In the news: Last March, Mr. Misheff was honored by the Greater Akron Chamber as the sixth recipient of the H. continued on NEXT PAGE â&#x17E;¤
Committed to People, Planet and Prosperity Fairmount Minerals is committed to exceeding customersâ&#x20AC;&#x2122; expectations while fulďŹ lling our economic, social and environmental responsibilities. We work to ensure that our actions positively impact all three pillars of our sustainability focus: People, Planet, Prosperity. We practice sustainability in ways that include: t Being a leader in education and communication t Investing our time, talents and treasure to enhance our communities, locally and globally t Promoting and supporting a healthy balance between community involvement, work and family Fairmount Minerals, headquartered in Chardon, Ohio, is one of the worldâ&#x20AC;&#x2122;s largest producers of industrial sand and coated sand products in North America.
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Peter Burg Economic Development Leadership Award, named in honor of the late CEO of FirstEnergy Corp.
A. MALACHI MIXON Chairman Invacare Corp. Elyria Age: 70 Type of organization: Manufacturing (home health care) Involvement: Board member, SherwinWilliams Co., ParkOhio Holdings Corp. and Primus Venture Partners In the news: Mr. Mixon is recovering from a stroke that caused him to temporarily step aside as chairman and CEO of Invacare. He has returned to his role as chairman and is set to decide by the end of this year as to whether he will return as CEO.
DAN T. MOORE III President Dan T. Moore Cos. Cleveland Age: 70 Type of organization: R&D, acquisition entity, business incubator Involvement: Board of directors, Hawk Corp., Invacare Corp. and Park-Ohio Industries Inc.; board of trustees, Cleveland Clinic Foundation and Cleveland State University In the news: Mr. Moore was on a cross-country motorcycle trip in February when he was in Santiago, Chile, during a magnitude 8.8 earthquake, one of the largest quakes ever recorded.
MARK MORAN CEO MetroHealth Medical Center Cleveland Age: 55 Type of organization: Health care Involvement: United Way of Greater Cleveland In the news: Mr. Moran has helped guide MetroHealth from the pits of a bribery scandal and helped turn around the countysubsidized health system’s finances. Through measured approaches, Mr. Moran eliminated the red ink from the hospital’s books. Just last week, three bond-rating agencies have issued or maintained positive ratings for the MetroHealth System.
FREDERICK R. NANCE Regional managing partner, Squire, Sanders & Dempsey LLP General counsel, Cleveland Browns Cleveland Age: 57 Type of organization: Law Involvement: Trustee, Cleveland Clinic; director, RPM International Inc.; trustee, Cleveland Foundation; trustee, executive committee member, Greater Cleveland Partnership; president, 50 Club of Cleveland In the news: “If we have to share Fred, we are glad it is with a family and organization as important to the Cleveland area as the Lerners and the Browns,”
James J. Maiwurm, chairman of Squire Sanders, said in a statement after the NFL team named Mr. Nance general counsel in December 2009. “We fully understand why the Browns want to draw on Fred’s experience and judgment, for the firm has done the same thing over the years.”
STEPHEN D. NEWLIN Chairman, president, CEO PolyOne Corp. Avon Lake Age: 57 Type of organization: Specialized polymer materials, solutions, services Involvement: Board of directors, Great Lakes Science Center; Ohio Business Roundtable; Triangle Fraternity Men of the Century In the news: “We used to go after volume. But that’s not our game anymore,” Mr. Newlin told Plastics News in late October, speaking about the way the company had made tough choices in 2009, closing an Ontario plant, cutting nearly 400 jobs companywide and refocusing on customer needs.
THE REV. ROBERT L. NIEHOFF President John Carroll University University Heights Age: 57 Type of organization: Education Involvement: Board of directors, Georgetown University; board of trustees, Saint Louis University and Regis University; executive committee, Association of Jesuit Colleges and Universities; National Leadership Roundtable on Church Management In the news: “The fundraising numbers for us were up for the second year in a row,” the Rev. Niehoff said this summer. “It’s been both in dollars and participation rates. Every fundraising category is up.”
DR. STEVEN NISSEN Cardiologist Cleveland Clinic Cleveland Age: 62 Type of organization: Health care Involvement: Academic council, Cleveland Clinic Foundation; Associations of Professors of Cardiology; Association of American Physicians; president, chairman, American College of Cardiology; member, Cardiovascular Renal Drugs Advisory Committee, U.S. Food & Drug Administration In the news: Dr. Nissen, a renowned cardiologist, essentially blew the lid on the controversial diabetes drug Avandia and suggested in a study that the drug raised the risk of heart attacks. The U.S. Food and Drug Administration considered banning the drug, but it since has been restricted for use in patients unable to control their blood sugar with other medications.
MICHAEL PETRAS President, CEO
GE Lighting Cleveland Age: 43 Type of organization: Manufacturing Involvement: Board of governors, treasurer, executive committee, National Electrical Manufacturing Association; board member, United Way of Greater Cleveland and the Greater Cleveland Partnership In the news: Mr. Petras has most recently been touting GE’s latest developments with regards to LED lighting, including announcing new products and agreements with companies such as Walmart, which have pledged to begin using the bulbs.
SANDRA PIANALTO President, CEO Federal Reserve Bank of Cleveland Cleveland Age: 56 Type of organization: Banking Involvement: Vice chairman, Greater Cleveland Partnership; board member, The Cleveland Foundation, Rock and Roll Hall of Fame and Museum and University Hospitals
In the news: Concerned about the impact on small businesses of tighter bank lending standards, the Cleveland Fed under Ms. Pianalto’s direction this year conducted an outreach program to hear about the problem from small business owners and community bankers.
DON PLUSQUELLIC Mayor City of Akron Akron Age: 61 Type of organization: Government Involvement: Mayors for Peace In the news: Unsuccessfully led an effort in November to pass a charter amendment that would allow the city of Akron to divert $13 million in income tax revenue from school construction to safety forces and snow removal. The amendment failed 55% to 45%.
STEVE POTASH President, CEO OverDrive Inc. Valley View Age: 58 Type of organization: Digital media Involvement: Board member, Friends
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of the Cleveland Public Library; Northeast Ohio CEO Roundtable; founding member, International Digital Publishing Forum; member, American Library Association, Park Synagogue In the news: OverDrive in October received a “major investment” from a New York private equity firm that was impressed by the company’s past growth and wants to capitalize on its focus on digital media, an increasingly hot market.
LUIS M. PROENZA President University of Akron Akron Age: 65 Type of organization: Education Involvement: Executive Committee, manufacturing competitive steering committee, Council on Competitiveness; Council on Foreign Relations; Government-University-Industry Research Roundtable, National Academy of Science; program advisory board, National Institute of Standards and continued on PAGE W-12
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NOVEMBER 15-21, 2010
Technology; Akron Tomorrow In the news: “We’ve been able to recruit exceptional individuals who might not have come in a better market,” Dr. Proenza said this spring in noting that the recession benefited the University of Akron, which hired 110 new and replacement faculty members since August 2008.
DAVID PUGH Chairman, CEO Applied Industrial Technologies Cleveland Age: 62 Type of organization: Distributor, industrial products and services Involvement: Board member, Hexcel Corp. and R.W. Beckett Corp.; visiting committee, Fenn College of Engineering, Cleveland State In the news: Applied Industrial Technologies in October reported a big increase in its fiscal first-quarter earnings and has raised its earnings guidance for all of fiscal 2011. “Our sales showed steady growth over prior-year comparables throughout the quarter on the basis of increased demand from the majority of our industrial segments,” Mr. Pugh said. “We see this level of demand continuing for the foreseeable future.”
CLAIBORNE R. “CLAY” RANKIN AIR CHARTER SERVICE AIRCRAFT MANAGEMENT
Congratulations to Howard Hanna, IV on being named to Crain’s Cleveland Business “Who’s Who in Northeast Ohio Business”! We applaud you, Hoby Hanna, for this accomplishment and salute you for your commitment to excellence and outstanding service to our community. Your spirit, drive and dedication has made our company what it is today! Thank you and heartfelt congratulations, Your Howard Hanna Real Estate Family
Managing member North Coast Angel Fund Mayfield Heights Age: 60 Type of organization: Early stage angel investment fund Involvement: Board member, Cleveland
Museum of Natural History, LogicBay Corp., Nacco Materials Handling Group, Neuros Medical Inc. and OnShift Inc. In the news: A Crain’s story in early March found the angel fund Mr. Rankin helps oversee had been steadily busy, with investments in nine companies over the previous nine months.
CHARLES RATNER CEO Forest City Enterprises Inc. Cleveland Age: 69 Type of organization: Real estate Involvement: Member, past board chairman, Cleveland Foundation, Greater Cleveland Partnership, Jewish Community Federation of Cleveland and United Way; board member, American Greetings Corp. In the news: The past two years, Mr. Ratner focused his organization on trimming debt and expenses in the recession and realty credit crunch. His goal in a phrase: be a survivor. Forest City has started construction of the arena at its massive Atlantic Yards development in Brooklyn, N.Y., and leased a site to Cleveland casino operators near Tower City Center.
cash dividend of $1 per common share, Mr. Renwick said in a statement in late October: “The combination of strong operating and investment results has increased our capital to a level that allows us to pay the dividend at this time.”
RONN RICHARD The Cleveland Foundation President, CEO Cleveland Age: 54 Type of organization: Nonprofit Involvement: Board member, Council on Foundations, Finca Vigía (dedicated to preserving Ernest Hemingway’s home in Cuba), Living Cities and Ohio Grantmakers Forum; National Leadership Council, Rainbow Babies & Children’s Hospital In the news: Mr. Richard was named to the list of the 50 most influential nonprofit leaders in the United States by Nonprofit Times. The publication said that Mr. Richard’s “experience in biotech and international relations is pulling together government, nonprofit and for-profit leaders. As the state’s volunteer ‘infrastructure czar,’ and with the foundation’s cash, he has regional and national clout.”
JOSEPH ROMAN
GLENN M. RENWICK President, CEO The Progressive Corp. Mayfield Village Age: 55 Type of organization: Insurance Involvement: N/A In the news: Speaking about the return of about $660 million to company shareholders through an extraordinary
President, CEO Greater Cleveland Partnership Cleveland Age: 54 Type of organization: Nonprofit Involvement: Cleveland Metropolitan Bar Association; Ohio Business Development Coalition; Partners for Livable continued on PAGE W-14
Inspiring minds, transforming lives, AND a great value s Employers hire our students: Within 6 months of graduation, 97% of our students are either working full-time, in graduate school, or fulfilling a commitment to a year of service. s Leaders come from John Carroll: 500 Ohio companies are owned or operated by our alumni. s Recognized value: Student success and generous financial aid earn JCU a top regional spot in the U.S. News and World Report “Best Colleges, Best Values” comparison. The John Carroll experience is more than the quickest path to a degree or getting that first job. We inspire and prepare our students to engage the world as creative, innovative, and ethical leaders in the workplace and throughout their lives.
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Communities; Positively Cleveland; Rock and Roll Hall of Fame and Museum In the news: Mr. Roman and the Greater Cleveland Partnership worked to reassure the community that air service to the city would not be curtailed when it was suggested that Continental Airlines might severely cut its service in the Cleveland market.
CHRISTOPHER RONAYNE President University Circle Inc.
Cleveland Age: 42 Type of organization: Nonprofit Involvement: Holden Parks Trust; CEOs for Cities; American Planning Association; Positively Cleveland; Friends of Cleveland School of the Arts In the news: University Circle Inc. is a nonprofit charged with promoting the
NOVEMBER 15-21, 2010
development of the East Side neighborhood of cultural, educational and health care institutions. Most recently, it was announced that a Courtyard at Marriott hotel would be built in the area.
WALTER ROSEBROUGH CEO Steris Corp. Mentor Age: 56 Type of organization: Manufacturing Involvement: Joerns Healthcare
In the news: The company this spring announced plans to move 240 positions to Mentor from Erie, Pa. The move is part of the sterilization products company’s ongoing effort to increase efficiencies across its global operations.
SCOT M. ROURKE Founding president, CEO OneCommunity Cleveland Age: 41 Type of organization: Nonprofit (information technology) Involvement: Board trustee, Great Lakes Science Center; immediate past board president, Friends of Cleveland School of Arts; board director, Vox Mobile; advisory board, PreEmptive Solutions; children’s indoor and outdoor soccer coach
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In the news: OneCommunity announced in March that it received $18.7 million in stimulus money to provide Internet training to low-income people in Akron, Cleveland and other areas. It planned to teach participants how to use the Internet in productive ways, such as applying for jobs, and how to afford Internet access over the long term.
EUGENE T.W. SANDERS CEO Cleveland Metropolitan School District Cleveland Age: 53 Type of organization: Education Involvement: Member of several boards including the Cleveland Museum of Art, Rock and Roll Hall of Fame, United Way and the Great Lakes Science Center In the news: “This is the most comprehensive reform initiative placed before the business leaders in a generation,” Dr. Sanders recently said. The CEO of the Cleveland Metropolitan School District is hoping to raise as much as $12 million from the business community to help finance his five-year, $72 million transformation plan to remake the struggling school district.
JONATHON SAWYER Chef, owner The Greenhouse Tavern Cleveland Age: 30 Type of organization: Food and beverage Involvement: Slow Foods; Downtown Cleveland Alliance; Culinary Vegetable Institute; duck advisory board, Maple Leaf Farms; Green Building Coalition In the news: “I currently have nine kinds (of vinegar) that are fermenting, from straight red wine to one with late-harvest Riesling. On top of that, there are five kinds that we’re finishing in new-American-oak barrels,” said Mr. Sawyer in a profile on Food & Wine magazine’s web site. The magazine named him one of this year’s best new chefs.
JOSEPH M. SCAMINACE CEO OM Group Solon Age: 55 Type of organization: Specialty chemicals, materials Involvement: Cleveland Clinic Foundation, Parker-Hannifin Corp., Boler Co. In the news: In February, OM Group moved to acquire the advanced battery subsidiary of EaglePicher Corp. for $172 million. “The proposed acquisition of EaglePicher is a logical extension of our portable power platform and is another excellent example of the type of acquisition we seek to transform our business model,” Mr. Scaminace said at the time.
ROBERT N. SCHMIDT Chairman, CEO Cleveland Medical Devices Inc.; Orbital Research Inc.; NeuroWave Systems Inc.; and Flocel Inc. Cleveland area Age: 62 Type of organization: Orbital develops control systems, electronic devices and medical devices; the other companies all develop medical devices Involvement: Board member, National Small Business Association, Small Business Technology Council; advisory board member, biomedical engineering departments at the University of Southern California and Washington University in St. Louis; associate fellow, American Institute of Aeronautics and Astronautics In the news: On a medical device tax in the health care bill President Obama signed in March: “Taxing those growing companies is like taking away food from a teenager. From a growing child.”
BAIJU SHAH President BioEnterprise Corp. Cleveland Age: 39 Type of organization: Health care business accelerator Involvement: Cleveland International Fund, TiE-Ohio (The International Entrepreneurs), Global Cleveland, Summer on the Cuyahoga, Great Lakes Science Center In the news: BioEnterprise reported that Northeast Ohio health care companies raised $77.6 million in venture capital through the first three quarters of the year, which is up from 2009, but down from 2008. “The momentum is once again with us,” Mr. Shah said.
MARK SHAPIRO President Cleveland Indians Cleveland Age: 43 Type of organization: Sports Involvement: Center for Families and Children continued on NEXT PAGE ➤
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In the news: Promoted after the season to team president, Mr. Shapiro was the youngest man named to Major League Baseball Commissioner Bud Selig’s Special Committee for On-Field Matters, charged with improving baseball’s on-field product. (Think instant replay, pace of play, etc.)
CRAIG SHULAR Chairman, CEO GrafTech International Ltd. Parma Age: 58 Type of organization: Manufacturer (graphite, carbon products) Involvement: Board member, Brush Engineered Materials Inc., Junior Achievement of Northern Ohio, Boys & Girls Club of Northern Ohio; member, Blue Coats; leads GrafTech partnership with East Tech High School In the news: “As part of our growth strategy, GrafTech has been committed to applying our core competencies in graphite and carbon solutions to rapidly growing industries such as solar and energy production,” Mr. Shular said in response to his company receiving a $1.15 million grant from the U.S. Department of Energy to construct a high-efficiency thermal storage system for solar power plants.
DR. MARIA SIEMIONOW Professor of surgery, director of plastic surgery research, head of microsurgery training
Cleveland Clinic Cleveland Age: 60 Type of organization: Health care Involvement: Tolera Therapeutics Inc.; Center for Stem Cell and Regenerative Medicine at Case Western Reserve University; Teraphysics Corp.; Composite Tissue Allotransplantation Advisory Council, American Society of Transplantation; American Society for Reconstructive Transplantation In the news: Dr. Siemionow made headlines around the world when she led a team in performing the first successful face transplant in the United States.
DEBRA ADAMS SIMMONS Editor The Plain Dealer Cleveland Age: 46 Type of organization: Media Involvement: Member, board of directors, executive committee, Associated Press Managing Editors; member, American Society of News Editors; vice chairwoman, board of directors, Athena International; vice chair, board of directors, Center for Non-Profit Excellence; chairwoman, board of directors, Youth Excellence Performing Arts Workshop In the news: “Debra was a natural
choice. Her priorities closely align with the paper’s mission of continuing watchdog reporting and emphasizing local coverage,” said Plain Dealer president and publisher Terrance C.Z. Egger, on Ms. Simmons’ recent promotion from managing editor to editor.
RICKY SMITH Director Cleveland Airport System Cleveland Age: 48 Type of organization: Government, transportation Involvement: American Association of Airport Executives, Airport Council International, Airport Minority Advisory Council, Leadership Cleveland In the news: Mr. Smith spearheaded the redesign of the concession program at Cleveland Hopkins International Airport and led the response to the merger of Continental and United airlines.
ROBERT C. SMITH President, CEO Spero-Smith Investment Advisers Inc. Beachwood Age: 57 Type of organization: Financial services Involvement: Board chairman, ideastream and Ohio Northern University; vice chairman, Cleveland-Cuyahoga County Port Authority; chairman, finance com-
mittee, Greater Cleveland Partnership; chairman, investment committee, Ohio Bureau of Workers’ Compensation In the news: As part of a transition in leadership at the Cleveland-Cuyahoga County Port Authority that began with the resignation in November 2009 of CEO Adam Wasserman, Mr. Smith succeeded Richard Knoth as vice chairman of the port board last March.
BARBARA R. SNYDER President Case Western Reserve University Cleveland Age: 55 Type of organization: Education Involvement: Third Frontier advisory board; board of directors, KeyCorp; board of directors, Greater Cleveland Partnership; Council for Higher Education Accreditation; American Law Institute In the news: “We think we have very strong programs in the arts and humanities but they have not been as visible as we think they deserve to be,” said president Snyder in March after the university partnered with The Temple-Tifereth Israel to use a University Circle building as the home of its performing arts programs. Renamed the Milton and Tamar Maltz Center for Performing Arts at The Temple-Tifereth Israel, CWRU had plans to spend $25.6 million to renovate the 86-year-old building.
ALAN SPITZER
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Spitzer Management Inc. Elyria Age: N/A Type of organization: Automotive Involvement: N/A In the news: Mr. Spitzer played a leadership role in the effort to set up an arbitration process for auto dealers being cut by Chrysler and GM. In Spitzer’s case, the 18-store chain wound up with four fewer stores. But Mr. Spitzer expects to gain two more stores in locations outside Cleveland this year.
MARC STEFANSKI Chairman, CEO Third Federal Savings and Loan Association Cleveland Age: 56 Type of organization: Banking Involvement: No outside boards In the news: Last August, Mr. Stefanski told The Plain Dealer he had no idea why the federal Office of Thrift Supervision told Third Federal to stop paying its dividend and to suspend approving new home equity lines of credit. “If we knew what the rules are, that’d be great,” he told the newspaper. “The rules of the game are changing and we don’t know what they are.”
Chairman, CEO
continued on PAGE W-16
Globally recognized Nationally ranked Locally vital Kent State University is the region’s leading public university • Ranked as one of the top 200 universities in the world, by Times Higher Education, London • Named to the top tier of the Best Colleges in the nation by U.S. News & World Report • Generated 1.96 billion in added income to the Northeast Ohio economy • Ohio’s second largest public university • Nearly 200,000 alumni worldwide • Celebrating more than 100 years of excellence in action
Excellence in Action www.kent.edu
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TERRY STEWART President, CEO Rock and Roll Hall of Fame and Museum Cleveland Age: 64 Type of organization: Cultural institution Involvement: Board, Rhythm & Blues Foundation, Philadelphia; Cleveland Film Commission, Positively Cleveland and The Diversity Center of Northeast Ohio. In the news: The New York-based Rock and Roll Hall of Fame Foundation, formed 10 years prior to the Cleveland museum’s opening, made a $5 million gift to the Rock Hall to establish the institution’s first significant endowment.
(welding) Involvement: Manufacturers Alliance/MAPI Presidents Council; member, Gas and Welding Distributors Association; board of governors, National Electrical Manufacturers Association; American Lung Association; Juvenile Diabetes Research Foundation In the news: SmartMoney.com recently included Lincoln in a feature on three big companies thriving without layoffs. The web site noted that Lincoln guarantees employment for workers with at least three years of continuous service and satisfactory performance.
FRANK C. SULLIVAN
President, CEO Summa Health System Akron Age: 58 Type of organization: Health care Involvement: Greater Akron Chamber, Akron Tomorrow, Austen BioInnovation Institute in Akron, Habitat for Humanity in Summit County, Premier Inc. In the news: Summa Health System is integrating its community hospitals and expanding its physician network, installing new technology and testing new reimbursement models through its insurance subsidiary SummaCare.
Chairman, CEO RPM International Inc. Medina Age: 49 Type of organization: Specialty coatings Involvement: Board member, The Timken Co., U.S. Chamber of Commerce, The Cleveland Foundation, the Rock and Roll Hall of Fame and Museum, National Paint & Coatings Association In the news: Mr. Sullivan is most often found in news stories announcing developments at RPM, including earnings, the continuation of the company’s long-standing dividend and acquisitions, such as RPM’s June acquisition of Hummervoll, a Norwegian flooring manufacturer.
JOHN M. STROPKI
ROGER SUSTAR
Chairman, CEO Lincoln Electric Co. Euclid Age: 59 Type of organization: Manufacturing
President Fredon Corp. Mentor Age: 67 Type of organization: Manufacturing
THOMAS J. STRAUSS
NOVEMBER 15-21, 2010
Involvement: Mentor Rotary; Mentor Chamber of Commerce; board of directors, United Way of Lake County; Alliance for Working Together, Lakeland Community College; Gyro Club of Painesville In the news: In 2010, Mr. Sustar has been recognized with the United Way of Lake County Gus Gehring award, the NEO Success award and the Greater Western Reserve Council, Boy Scouts of America Spurgeon award.
BETTY SUTTON U.S. representative, Democrat, 13th District U.S. House of Representatives Copley Age: 57 Type of organization: Government Involvement: N/A In the news: She was the architect of the “cash for clunkers” auto rebate program. On Nov. 2, she won re-election to her third term in Congress.
THOMAS SWIDARSKI President, CEO Diebold Inc. Green Age: 51 Type of organization: Integrated self-service delivery systems Involvement: N/A In the news: Diebold this year announced a multiyear agreement to provide automated teller machine services for ZAO Citibank, Citibank’s subsidiary in Russia. The company is providing ATM outsourcing services for a
RICHARD C. HABER NAMED 2011 LAWYER OF THE YEAR Richard C. Haber, a founding partner of Haber Polk Kabat, LLP, has been recognized by Best Lawyers® as the 2011 Lawyer of the Year in the area of Labor and Employment Law in Cleveland, Ohio. This prestigious honor is only granted to a single lawyer in each specialty in each community.
portion of Citibank Russia’s ATM network.
MICHAEL SYMON Chef, owner, Lola, Lolita and B Spot Celebrity chef, Food Network Cleveland/New York Age: 41 Type of organization: Food/beverage Involvement: Autism Speaks In the news: “The beef cheek pierogi is still one of our best dishes. Lola exploded. Never in my wildest dreams, even based on (sales) projections, did we think we’d be so busy,” said Mr. Symon in Crain’s 30th anniversary issue, about the 1997 opening of Lola, now Lolita, in Tremont.
JASON THERRIEN President thunder::tech Cleveland Age: 31 Type of organization: Media/marketing Involvement: Board member, E CITY; marketing committee member, John Carroll University Entrepreneurs Association; Positively Cleveland; MidTown Cleveland In the news: Thunder::tech has added this year six people to its staff, bringing to 22 its current employment number. The firm also this year entered the Chicago and New York City markets.
JENNIFER THOMAS Program director, Akron John S. and James L. Knight Foundation Akron Age: 46 Type of organization: Nonprofit Involvement: University Park Alliance; Akron’s biomedical corridor; Austen Bioinnovation Institute in Akron In the news: The Knight Foundation has continued its focus on journalism, donating $63,000 to the Cleveland Foundation as part of $3.14 million in grants for the Knight Community Information Challenge; it also gave
$350,000 to the Akron Community Foundation for establishing a digital media academy aimed at training citizen journalists.
JERRY SUE THORNTON President Cuyahoga Community College Cleveland Age: 63 Type of organization: Education Involvement: United Way Services of Greater Cleveland; Rock & Roll Hall of Fame and Museum; Greater Cleveland Partnership; PlayhouseSquare Foundation; Cleveland Museum of Art In the news: “I think community colleges are dream catchers. … A lot of people have dreams and things they would like to do but, without a college education, they can’t do them,” she said in Crain’s 30th anniversary section.
MIKE TRIVISONNO Radio show host WTAM-AM, 1100 Independence Age: N/A Type of organization: Media Involvement: Linda Trivisonno endowment fund, Ireland Cancer Center, University Hospitals In the news: “His success is due to the fact he grew up in Cleveland,” said media analyst John Gorman, in a Sept. 22 Scene profile on Mr. Trivisonno. “He was the average guy in the street. He was an opinionated guy. And the personality just worked. ... With no experience, he parlayed being a caller to a show to become one of the biggest radio personalities in the history of Cleveland.”
THOMAS N. TYRRELL Managing director Collaborx LLC Richfield Age: 65 Type of organization: Identifies, assists for-profit, nonprofit collaboration Involvement: Chairman, Cuyahoga Valley National Park Association Trails Forever Legacy Leadership Team; vice chairman, GLIDE Innovation Fund; board member, Glengary LLC, Lorain continued on NEXT PAGE ➤
In addition to being recognized as 2011 Lawyer of the Year, Mr. Haber also has been recognized by Super Lawyers magazine, for the seventh year in a row, as a “Super Lawyer” in the field of Employment and Labor law, an honor bestowed upon the top 5% of Ohio attorneys who have been practicing for at least 5 years. As well, in 2010, Mr. Haber also was named one of the top 100 lawyers in the State of Ohio by Super Lawyers magazine and listed in the 2010 edition of The Best Lawyers in America published by Best Lawyers® in conjunction with U.S. News Media Group as well as the 2010 edition of Cleveland’s Best Lawyers. In 2009 and again in 2010, Mr. Haber also was chosen as a “Leading Lawyer” in the area of Labor and Employment by Inside Business magazine. Haber Polk Kabat, LLP represents clients in all aspects of labor and employment litigation as well as complex civil litigation. Since it was founded on August 1, 2005, every partner of the firm also has been recognized by Super Lawyers magazine as among the “top attorneys” in their field of practice.
To learn more about Haber Polk Kabat, LLP, visit http://www.haberpolk.com.
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NOVEMBER 15-21, 2010
County Community College Foundation and NorTech In the news: Selected in May by Crain’s as one of Northeast Ohio’s biggest differencemakers over the last 30 years, Mr. Tyrrell stated in his profile: “Money is nice, but if someone comes up 15 years later and says, ‘You’re the best person I’ve ever worked for’ — that’s what it’s all about.”
MICHAEL N. UNGAR Partner and chair of the litigation department, Ulmer & Berne LLP President, Cleveland Metropolitan Bar Association Cleveland Age: 51 Type of organization: Law Involvement: Chair, planning committee, Cleveland Heights In the news: The bar association has a duty, Mr. Ungar told Crain’s in June, to encourage the “best and brightest” candidates to pursue careers on the bench. He created a Judicial Excellence Task Force, charged with spurring more competition for judge positions.
cine, Alliance for Regenerative Medicine; board member, Biotechnology Industry Organization; Greater Cleveland Partnership Mid-Market Involvement Committee In the news: The company’s adult stem cell therapy MultiStem, designed to treat a variety of diseases, has shown positive results in an early clinical trial.
hoping a positive economic outlook that the nonprofit released in August makes his job — attracting big employers to the area — a little easier. That outlook showed that Cleveland hadn’t fallen nearly as far behind in this recession as it did in 1981. “We’re trying to establish the idea that the economy here is better than they thought,” Mr. Waltermire told Crain’s in August.
PAUL VOLPE
DONALD E. WASHKEWICZ
Founding principal, president City Architecture Cleveland Age: 59 Type of organization: Architecture Involvement: Board member, Cleveland Restoration Society, Intermuseum Conservation Association, MidTown Cleveland, and Alta House; planning role for brownfield redevelopment, Cleveland Opportunity Corridor plan; assorted regional planning efforts In the news: City Architecture’s design for the city of Cleveland’s new Collinwood Recreation Center incorporates structural steel of old big box stores on the site as part of the new building.
Chairman, CEO, president Parker Hannifin Corp. Cleveland Age: 60 Type of organization: Manufacturing Involvement: Board member, Greater Cleveland Partnership and MAPI Manufacturers Alliance; education committee, National Fluid Power Association; member, National Association of Manufacturers In the news: According to an analysis published in October by The Wall Street Journal, at Parker “profit more than quadrupled from a year earlier to $222.2 million in the company’s fiscal quarter ended June 30 … But sales grew only 25% to $2.8 billion. The profit surge was aided by all types of cost cutting.”
TOM WALTERMIRE
GIL VAN BOKKELEN CEO Athersys Inc. Cleveland Age: 49 Type of organization: Medical therapies developer Involvement: Chairman, Center for Stem Cells and Regenerative Medicine/ National Center for Regenerative Medi-
CEO Team NEO Cleveland Age: 61 Type of organization: Economic development Involvement: Third Frontier Advisory Board; Business Volunteers Unlimited; Musical Arts Association; Presidents’ Council In the news: Mr. Waltermire is
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ZEV WEISS CEO American Greetings Brooklyn Age: 44 Type of organization: Consumer products/services Involvement: Yeshiva University In the news: “While we continue to
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see an erratic recovery in the economy and its effect on our top line, our team has executed well on cost containment and that execution has directly led to healthy cash flow,” said Mr. Weiss in a statement that was posted as part of a Sept. 29 Crain’s earnings report on the company.
Director Great Lakes Wind Network Cleveland Age: 58 Type of organization: Manufacturer network Involvement: N/A In the news: The group, an arm of manufacturing advocacy organization Magnet, is charged with leading the way for Northeast Ohio companies to supply the expanding wind market.
FRANZ WELSER-MÖST Music director Cleveland Orchestra Cleveland Age: 50 Type of organization: Cultural institution Involvement: General music director, Vienna State Opera In the news: The orchestra, with the help of a $20 million grant from the Milton and Tamar Maltz Family Foundation, is launching an initiative to get more young audience members to Severance Hall.
BRAD WHITEHEAD President Fund for Our Economic Future Cleveland Age: 50 Type of organization: Nonprofit Involvement: Brookings Metropolitan Advisory Council, Cleveland State University Levin School Visiting Committee, RiverGate Development Committee In the news: The effort to land a $4.25 million grant from the federal U.S. Sustainable Communities Program was led by the Fund for Our Economic Future and its member institutions.
PAUL WESTLAKE Managing partner Westlake Reed Leskosky Cleveland Age: 58 Type of organization: Architecture Involvement: Board chairman, Cleveland Arts Prize; board member, Musical Arts Association and Maltz Museum of Jewish Heritage; member, U.S. General Services Administration National Peer Review Committee and Cleveland Clinic Arts in Medicine Institute In the news: Building Information Modeling software and other technology “will separate the winners and the losers” in the architecture business, Mr. Westlake said.
In the news: The family-owned Wolstein Group and partner Fairmount Properties of Cleveland pushed to assemble a new financing package for the $250 million Flats East Bank Neighborhood and Ernst & Young Tower office building.
THOMAS F. ZENTY III CEO University Hospitals Cleveland Age: 54 Type of organization: Health care Involvement: American Hospital Association; Greater Cleveland Partnership; the Urban League; BioEnterprise; Cuyahoga Community College Foundation In the news: University Hospitals is in the midst of a $1.2 billion renovation and construction project, which brought the region’s first freestanding cancer hospital to Case Medical Center and is creating the 144bed Ahuja Medical Center in Beachwood.
SCOTT WOLSTEIN
HOW THEY WERE SELECTED
President, Wolstein Group Executive chairman, Developers Diversified Realty Corp. Beachwood Age: 58 Type of organization: Real estate Involvement: Board member, National Association of Real Estate Investment Trusts and Real Estate Roundtable national trade groups, Case Western Reserve University, Greater Cleveland Partnership and Cleveland Development Advisors
There were no specific criteria used in selecting the “Who’s Who: 150 Names to Know,” nor were they chosen through a selection or nomination process. Rather, the editorial staff collectively gathered the names, taking into consideration each person’s role in Northeast Ohio and that of their organization. An effort also was made to include a range of people, businesses and industries. For space considerations, professional and civic organization involvement was limited to five listings per person.
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ESTATE PLANNING
S-2 November 15-21, 2010
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TABLEOFCONTENTS Help us connect people to the wonders of the universe
BETHEFUTURE To learn more about estate planning and life income gifts to the Museum, contact Sheryl Hoffman, Director of Major & Planned Gifts at (216) 231-4600, ext. 3310 or shoffman@cmnh.org www.cmnh.org
Overview and trends
Charitable giving
Business succession
S-3
Estate plan checkup
S-8
S-3 S-4 S-6
Ohio Legacy Trust
S-13 Ownership transfer S-14 Other stakeholders
S-9
Changes in the law Family gifting
Best practices
S-6 S-7 S-8
Philanthropy Life insurance Donor-advised funds Three-part plan
S-10 Gift annuities Lead trusts
Fiduciary responsibilities
S-11 The
Choosing a lawyer Proper asset titling
S-12 Dynasty trusts S-13 GRATs
Choosing trustees
rewards of giving
S-17
Help elderly relatives craft estate plan
Retirement plans
S-15 Taxes Roth IRAs
S-16 Trusteed IRAs
Education
S-16 Funding options S-17 529 plans Related topics
S-18 International estate planning Fine art appraisals
S-19 Split-dollar plans Insurance assets
PRESIDENT’S LETTER
Uncertainty presents opportunity Real Estate/Construction John Funk, Director of Real Estate Practice
Property is as unique as its owner. Our clients benefit from our depth of industry knowledge and our commitment to offering personalized attention and insightful solutions. The knowledge of a trusted advisor can make the difference between a strong or shaky foundation. The Maloney + Novotny Real Estate Practice combines a wealth of experience with a passion for understanding the ever-changing landscape involved in property development, ownership and management.
T
he Estate Planning Since the Council’s Council of CleveEstate Planning Section land, in conjunclast appeared in November tion with Crain’s 2009, the financial world Cleveland Business, is in which we live continues pleased to present the to change. A change in annual Estate Planning estate and gift tax laws Section. It is the council’s looms and domestic RADD RIEBE goal to offer the commueconomic performance nity valuable information remains sluggish. related to financial, retirement, Despite uncertainty, the need insurance, business succession, and for the preservation of assets built estate and charitable planning. over a lifetime for the benefit of The articles and commentary on family, heirs or charities is ongoing. the pages that follow have been Evaluating how your personal provided by some of Northeast objectives for leaving a legacy Ohio’s most experienced profeshave been affected by the change sionals in these fields. in laws and market conditions Estate planning is one of the should include consulting with most overlooked areas of personal professionals to advise you on financial management. It is the methods, techniques and estimated that more than 120 documents available to meet million Americans do not have your goals. If you are concerned up-to-date estate plans to protect about transitioning a familythemselves or their families in owned business, planning for the event of sickness, accident or retirement, creating a legacy for untimely death. Each year, this your family, or fulfilling philancosts wasted dollars and hours of thropic goals, the articles in this hardship which can be materially section will address these issues minimized with advanced planand the benefits of receiving ning and action. comprehensive tax and estate
planning advice as part of the planning process. The Estate Planning Council of Cleveland is composed of a diverse array of more than 440 professionals working in the Greater Cleveland area, including attorneys, accountants, bankers and trust officers, financial planners, insurance agents, appraisers and representatives from charitable organizations. Our members are ready to provide you with thoughtful, tax-effective and valuebased planning. Our Council’s web site (www.epccleveland.org) can be a useful resource to locate professionals to assist you with all of your planning needs. We are pleased to be able to share the insights and commentary of our members and other area practitioners with you in this annual publication. We hope that you will find the information insightful, helpful and valuable. ■
Radd L. Riebe is president of the Estate Planning Council of Cleveland and a managing director at Stout Risius Ross, Inc. in Cleveland.
SPECIAL NOTE + Business Advisors and Certified Public Accountants
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Consult an attorney and financial advisers to evaluate individual estate planning needs. IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with IRS requirements, we inform you that this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or (b) promoting, marketing or recommending to another party any transaction or matter discussed herein.
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November 15-21, 2010
S-3
OVERVIEW AND TRENDS
Protect asset health by giving estate plan a checkup
W
hether you consider yourself rich or poor, when you die you will leave behind assets. Your estate might include cash and investments, real estate, tangible personal property, or even an interest in an operating business. At its most basic level, an estate plan determines how your assets will be distributed to your heirs after you die. “An estate plan isn’t just about assets, it is also about people. And when you add taxes to the mix, a process that could have been fairly simple has the tendency
Proposed trust statute targets asset protection
T
he Ohio Legacy Trust Committee, a committee of the Ohio State Bar Association, is seeking legislation in Ohio that would allow the creation of asset protection trusts. ■ What is asset protection? Asset protection planning is simply the rearranging of someone’s assets to minimize the chance of loss from future litigation claims. ■ Why does Ohio need this? To date, 11 states have adopted asset protection trust legislation. Ohio residents are establishing trusts in these states and relocating themselves and their assets to those states in order to take full advantage of those states’ laws. ■ What are the provisions of the statute? The act enables a person to establish an irrevocable trust, place assets into that trust and still benefit from those assets through the actions of one or more trustees. The person establishing the trust must create an affidavit and aver in it that the transfer will not render the person insolvent, defraud his creditors, or be done prior to filing for bankruptcy. The person must identify pending or threatened court actions. A qualified trustee must serve during administration of the trust. The trustee cannot be the person establishing the trust but can be an Ohio resident or an entity authorized to act as trustee in Ohio. The person establishing the trust can retain certain rights without those rights being construed as having retained the power to revoke the trust. The statute describes how and under what circumstances creditors have access to the assets in the trust. The proposed statute draws from the best of the other states’ laws and will allow Ohio to retain good citizens and their assets. ■
Joanne E. Hindel is chair of the OSBA Legacy Trust Committee and vice president and senior personal trust officer for Fifth Third Bank. Contact her at 216-274-5633 or e-mail joanne.hindel@53.com.
to become quite com(financial) power of plex,” said Joseph M. attorney, health care Mentrek of Meaden & power of attorney and a Moore. “So even if you living will (if desired). already have an estate plan, More complex family or it is imperative that you financial situations may revisit that plan to ensure require the use of a trust that it remains relevant.” or series of trusts to effecJust like an annual visit JOSEPH tively accomplish your to your physician, a peri- MENTREK goals. An estate plan odic review of your estate checkup involves a thorplan can either reinforce that all ough review of all of these docuis well, or it can uncover the need ments and determining whether for additional attention to return the plan matches your wishes. your plan to a healthy state. In addition to the implemenA basic estate plan should include tation or review of your docua valid will, durable general ments, your estate plan checkup
should look at the effect of related issues such as the desirability of life insurance, disability or longterm care insurance, as well as the impact of pre-nuptial or buysell agreements, or other documents that affect your assets. The uncertainty regarding federal estate tax laws makes matters even more challenging. And in an election year, it is anyone’s guess as to what, if any, action Congress will take. Many older plans may not have been drafted with this veritable roller coaster in mind. Consequently, the terms of your
existing plan may be open to interpretations that could lead to a vastly different result from what you originally anticipated. There may never be a better time to schedule a checkup with your planner. The time you spend will give you peace of mind, knowing that your financial affairs are in order and that you have adequately and appropriately provided for your family. ■
Joseph Mentrek is vice president with Meaden & Moore Financial Services. Contact him at 216-928-5343.
THE ESTATE PLANNING COUNCIL OF CLEVELAND President Radd L. Riebe Tanzie D. Adams Kelly G. Adelman Charles F. Adler, III Richard A. Ahrens Thomas D. Anderson Graham T. Andrews Oakley V. Andrews Gordon A. Anhold Gary S. Archdeacon Kemper D. Arnold Rosanne J. Aumiller James S. Aussem P. Thomas Austin Charles J. Avarello Molly Balunek Peter Balunek Alexander D. Barclay Lawrence C. Barrett Russell Bauman Stephen Baumgarten Edward J. Bell Michael D. Benson Gina Marie Bevack Mohammed J. Bidar Gary B. Bilchik John J. Bindas James A. Blue Alane Boffa Jason Bogniard Daniel L. Bonder Christ Boukis Laura Bozell Caprice H. Bragg Herbert L. Braverman Christopher P. Bray James R. Bright Susan Brooks Don P. Brown C. Richard Brubaker Robert M. Brucken Armond D. Budish Martin J. Burke, Jr. Eileen M. Burkhart J. Donald Cairns Peter H. Calfee Carl Camillo Nancy H. Canary William G. Caster Sal A. Catalano James R. Chriszt Trevor R. Chuna Mark A. Ciulla R. Michael Cole Warren Coleman Andrew R. Connors Jeffrey P. Consolo David E. Cook James I. W. Corcoran Heather A. Cornell Christy Corrao Greg S. Cowan Steven Cox Thomas H. Craft Jean M. Cullen M. Patricia Culler Rand M. Curtiss Cheryl A. D'Amico Jason S. Damicone Stephen M. Darlington Doris A. Seifert Day Holly N. Denham Rebecca Dent Thomas A. DeWerth Carina S. Diamond David S. Dickenson, II James G. Dickinson Gary L. Dinner
Vice President Lisa H. Michel
Secretary Marie L. Monago
Jeannemarie DiPadova Nick DiSanto Lynda Doland Kara Downing Timothy Doyle Emily A. Drake William A. Duncan James R. Dunn Catherine S. Eclavea Howard B. Edelstein Elaine Beth Eisner Michael E. Ernewein Patrick J. Ertle Christopher M. Essig Heather R. Ettinger Susan M. Evans Darren A. Ewaska Frank Fantozzi Charles E. Federanich William C. Ferry J. Paul Fidler Julie A. Fischer Mary Kay Flaherty Robert E. Fleck Kimberly A. Florcosky Robert B. Ford Judson Forner Kevin J. Forney Patricia L. Fries William H. Fulton Naomi D. Ganoe Beverly Gans Stacey M. Gardella Stephen H. Gariepy Rao K. Garuda Richard Gary James E. Gaydosh Christopher Geiss Thomas M. Genco Arthur E. Gibbs, III Thomas C. Gilchrist Stephanie M. Glavinos Catherine Klima Gletherow Ronald J. Gogul James A. Goldsmith Susan S. Goldstein Tom S. Goodman Scott Goyetche Alexandra Gray Karen Greco Marianne Grega Sally Gries Nancy Hancock Griffith Charles M. Grimm Alan Gross James P. Gruber Timothy R. Haber Patrick A. Hammer Ronald F. Hanson Dana G. Hastings Douglas R. Hastings Lawrence H. Hatch Robert A. Hauptman Janet W. Havener Albert G. Hehr, III Theodore N. Hellmuth Kimberly Heman James M. Henretta James R. Hickey Mark W. Hicks Jean M. Hillman Joanne Hindel Kenneth G. Hochman Mark L. Hoffman Doris Hogan Ronald D. Holman Harold L. Hom
Treasurer Beth M. Korth
Robert S. Horbaly James M. Horkey Brent R. Horvath Michael J. Horvitz Stuart M. Horwitz George A. Jacobs Paula Jagelewski Christopher P. Jakyma Barbara Bellin Janovitz Robert B. Jensen Theodore T. Jones James O. Judd Matthew F. Kadish Stephen L. Kadish Ronald L. Kahn Joseph W. Kampman Karen J. Kannenberg Amy A. Kapostasy Kimon P. Karas William E. Karnatz, Sr. William E. Karnatz, Jr. Bernard L. Karr Howard Kass Edmund G. Kauntz Theresa M. Kean John D. Kedzior Michele Keith Lesley Keller Lisa M. Kerr Veena Khanna Dorothea J. Kingsbury Richard B. Kiplinger Raymond G. Klinc Paul S. Klug Victor G. Kmetich Erik R. Kneip Daniel R. Kohler James R. Komos Thomas H. Konkoly William H. Koptis Harvey Kotler Roy A. Krall Frank C. Krasovec, Jr. Peter G. Kratt Eugene A. Kratus Thomas W. Krause Bruce A. Kretch James B. Krost Deviani Kuhar Craig A. Kukla Thomas J. LaFond William P. Lange Gary E. Lanzen Donald Laubacher Daniel J. Lauletta Herbert B. Levine Wendy S. Lewis Keith M. Lichtcsien James Lineweaver David F. Long Ted S. Lorenzen Sandra C. Lucas Charles S. Lurie Robert M. Lustig Matthew J. D. Lynch James M. Mackey David S. Maher Stanley J. Majkrzak Laura Malone Karen T. Manning Wentworth J. Marshall, Jr. Melissa L. Marvin Douglas Mathey Michael W. Matile Mark J. McCandless Nancy McCann Karen M. McCarthy
Crain’s Cleveland Business Custom Publishing
Program Chair Jennifer A. Savage Larry E. McCoy Daniel J. McGuire Joseph M. Mentrek Mark A. Mihalik Lawrence Mihevic Charles M. Miller Richard S. Milligan William M. Mills Daniel F. Miltner Wayne D. Minich Ginger F. Mlakar M. Elizabeth Monihan Michael J. Monroe Kenneth R. Morgan Philip G. Moshier Susan C. Murphy Hoyt C. Murray Norman T. Musial Christine Myers Jodi Marie Nead Lisa Wheeler Neely Robert Nemeth Michael T. Novak Stephen M. Nowak Anthony J. Nuccio Eric A. Nye Michael J. O'Brien Lacie L. O'Daire Linda M. Olejko Lauren Anne Olsen Leslie A. O'Malley Charles J. O'Toole Jodi L. Penwell Michael D. Pepe Dominic V. Perry Alex S. Petrus Craig S. Petti Daniel W. Phillips Thomas Pillari Gregory M. Pinter John W. Pinter Douglas A. Piper Candace M. Pollock Mary Ellen Potter Douglas Price Maria E. Quinn Susan Racey Jeffrey H. Reitzes Linda M. Rich R. Andrew Richner Elton H. Riemer Kathleen K. Riley Michael G. Riley Frank M. Rizzo Lisa Roberts-Mamone Kenneth L. Rogat James D. Roseman Carrie A. Rosko Edmund W. Rothschild Larry Rothstein Rennie C. Rutman Patrick J. Saccogna Robert Sanders Ronald S. Schickler Bradley Schlang Dennis F. Schwartz Vassie Scott, Jr. June A. Seech John S. Seich Sally Sharaba Andrea M. Shea Stanley E. Shearer John F. Shelley Lea R. Sheptak Nick Shofar Roger L. Shumaker Dennis J. Siciliano
Immediate Past President Erica E. McGregor Scott C. Silverman Sandra M. Skocir Mark A. Skvoretz Michael J. Sliman John M. Slivka Martha B. Sluka N. Lindsey Smith Cristin Snodgrass Michael L. Solomon Michael T. Sommerfeld Richard T. Spotz, Jr. William L Spring M. Randal Stancik Cindy L. Steeb Kimberly Stein Laurie G. Steiner Saul Stephens E. Roger Stewart John M. Stickney Thomas M. Stickney Robin R. Stiller Robert H. Stock Thomas B. Strauchon John E. Sullivan, III Linda DelaCourt Summers Scott Swartz Joseph N. Swiderski Natalie Bell Takacs Yeshwant K. Tamaskar John R. Telich, Sr. Mark M. Tepper Barbara Ann Theofilos Donald A. Thompson Donna Thrane Philip Tobin Thomas L. Tobin Eric Tolbert Floyd A. Trouten, III Mark A. Trubiano John R. Tullio, Jr. Diann Vajskop Robert A. Valente Missia H. Vaselaney Joseph Frank Verciglio Catherine Veres Anthony Viola Mary Eileen Vitale Michael A. Walczak Kimberly A. K. Walrod Robert W. Wasacz Neil R. Waxman Ronald F. Wayne Michael L. Wear Stephen D. Webster David G. Weibel Paul A. Weick Jeffry L. Weiler Richard Weinberg Katherine E. Wensink Elizabeth Wettach-Ganocy Marcia J. Wexberg Terrence B. Whalen Sharon Kai Whitacre Geoffrey B.C. Williams LeeDaun Williams Teresa M. Wisniewski Nelson J. Wittenmyer Matthew D. Wojtowicz Alan E. Yanowitz James D. Yurman Jeffrey M. Zabor Michael J. Zeleznik David M. Zolt Jack Zugay Shawn D. Zurat Gary A. Zwick Donald F. Zwilling
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ESTATE PLANNING
S-4 November 15-21, 2010
OVERVIEW AND TRENDS
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ast year at this time, the possibility remained that Congress would act to prevent the 2011 resurrection of a much lower federal estate tax exemption and a much higher federal estate tax rate. No such action was taken, and none is likely before Jan. 1. Thus, many who did not need to implement estate plans in prior years may need to do so to avoid the imposition of a combined federal and state estate tax at a rate that could exceed 60%. In 2009, couples or individuals with a net worth of $3.5 million or less generally could pass assets to heirs free of federal estate tax (FET) even if they did no estate planning. While there would likely still be Ohio estate tax (the exemption remains $338,333), the highest marginal Ohio estate tax rate remains 7%. Thus, although estate planning among
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those with a net worth less than $3.5 million still was necessary to avoid the 7% Ohio estate tax and the other non-tax negative consequences that come with a lack of estate planning. For many, no estate planning was required to prevent the imposition of the FET (which was levied at a maximum rate of 45%). As of Jan. 1, that will no longer be the case. Who needs to seriously consider implementing an estate plan in 2011? ■ Those who live in Ohio (individuals or couples) with a net worth exceeding $338,333; and individuals or couples (irrespective of domicile) with a net worth exceeding $1 million. ■ Owners of interests in closely-held businesses who need to plan for liquidity to pay the increased estate tax that will be due at death. This should involve ensuring
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Our Estate Planning Group focuses on maximizing opportunities and minimizing risks so you can focus on your business. Our Estate Planning team members, including .JDLFZ 1PF, &SJLB )BVQU, &E )FSUFOTUFJO and 4UFWF $PY, have your back. To learn more, call Steve directly at 330.849.6714 or visit ralaw.com/estate_planning.
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goals with no certainty as to the tax consequences of any planning step. Still, interesting developments have occurred in this unprecedented environment. For the past 10 years of federal estate tax phase-out, business owners interested in passing on the business to the next generation were generally reluctant to make gifts to family members, particularly those that would require payment of gift tax. But if anything is certain, it is that the federal estate tax repeal will last, at most, only one more calendar quarter. The short odds are on a re-enactment of the $3.5 million applicable estate tax exemption and 45% estate PATRICIA tax rate. By conPACENTA trast, this year’s gift tax rate is only 35%. Even if that rate is increased retroactively, transferring the family business to the next generation during the owner’s life — even at the cost of gift tax — now may be compelling. Although legislation restricting valuation discounts for transfers of closely held businesses has been introduced, it appears to have little traction at present. Minority ownership valuation discounts continue to be upheld by the courts. A low growth, low interest rate economic climate is excellent for structuring gifts and/or sales of minority business interests. Since estate tax repeal after 2010 is but a dim dream, strong incentive exists to take advantage of the current environment for lifetime gifts.
Patricia Pacenta is shareholder, Trusts and Estates, Buckingham, Doolittle & Burroughs, LLP. Contact her at 330-3765000 or e-mail ppacenta@bdblaw.com.
Crain’s Cleveland Business Custom Publishing
that the entities’ governing documents and the owners’ personal estate plan documents (and any redemption agreements) are coordinated and carefully crafted to permit qualification under Section 6166 of the Internal Revenue Code (IRC). This will enable FET deferral for up to nearly 15 years, and under Section 303 of the IRC for potentially income tax free (or at least capital gain treatment of) movements of cash from the companies to the estates of the deceased owners irrespective of the owners’ basis in the interests before death and/or the existence of retained earnings. ■ Those with wealth in excess of their projected needs, who may wish to reconsider gifting. ■ Those who need to engage in estate planning to address non-taxrelated yet potentially very costly See CONGRESS Page S-20
KEY SCENARIOS THAT COULD IMPACT PLANS ■ Although unlikely, Congress could reinstate an estate tax retroactive to Jan. 1, 2010, at a 55% tax rate for assets in excess of $1 million. If a retroactive tax is enacted, the courts will need to determine whether the tax is constitutional, further delaying the known tax consequences for 2010 decedents. ■ With the estate tax on hiatus in 2010, estate assets of 2010 decedents do not receive a fully automatic stepped-up cost basis. Determining the cost basis going forward may be difficult and confusing. ■ The cumulative aggregate exemption for taxable gifts is $1 million through 2010. Gifts in excess of the cumulative exemption are taxed at 35%, excluding gifts up to $13,000 per recipient. ■ An extension of the 2001 and 2003 tax cuts is likely for the middle class. An extension of the tax cuts for taxpayers in the top income tax bracket is undecided. ■ The top income tax rate of 39.6% will be reinstated on Jan. 1, 2011, long-term capital gain rates will rise to 20% and dividends will be taxed at the top ordinary income rate (instead of the long-term capital gains rate). The Obama administration’s budget calls for taxing both dividends and long-term capital gains at 20%. Some suggest there will be a compromise. ■ Additional taxes will be imposed in 2013 on high-income people by The Patient Protection and Affordable Care Act of 2010.
Linda M. Olejko, CFP is vice president, Business Development at Glenmede. Contact her at 216-5147876 or linda.olejko@glenmede.com.
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OVERVIEW
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BEST PRACTICES
The best of times to make gifts Trustees must adhere
W
ith a nod to Victor Hugoâ&#x20AC;&#x2122;s â&#x20AC;&#x153;A Tale of Two Cities,â&#x20AC;? the recent economic woes again emphasize the â&#x20AC;&#x153;it was the best of times, it was the worst of timesâ&#x20AC;? dichotomy, making now an ideal time to consider tax efficient family gift opportunities: LOW INTEREST RATES AND LOW ASSET VALUES. Interest rates and asset values have not recovered from their pre-recession levels. In particular, real estate values remain severely down in value. The Federal Reserveâ&#x20AC;&#x2122;s monetary policies and general economic sluggishness contribute to these conditions. When these conditions will reverse is unknown, but the correct answer is a multimilliondollar one for family gifts. VALUATION DISCOUNTS AVAILABLE: The environment for valuation discounts is subject to proposals circulating in Congress. The past spendthrift ways of Congress are expected to man-
ifest themselves in the pursuit of additional taxes. More tax dollars will be sought through rate increases and rule changes. One of those rule changes calls for cutting or eliminating valuation discounts (frequently 25%-45% under current law) for intra-family transfers. If such legislation is enacted, the cost to families making gifts to heirs will increase substantially. TAX RATES INCREASE NEXT YEAR: Gift tax rates are scheduled to increase from a top rate today of 35% to 55% in 2011. A taxable gift of a $1 million asset transferred to children in 2010 might be valued for gift tax purposes at $650,000 (after discount) and incur gift taxes at 35% ($227,500). That same gift in 2011 may be valued at $1 million (assuming discounts are prohibited by law) with a tax rate of 55% ($550,000). The gift
taxes payable in 2010 could be less than half of those for the same transaction in 2011, if the worstcase scenario from Congress unfolds. Rarely do conditions align to create the perfect storm for taxpayers to make transfers of interests to family members, but 2010 appears to be one of those times. If one is convinced that the future will bring higher tax rates, new limitations on discounts for family transfers and economic recovery, the opportunity presented this year to take advantage of low tax rates and low values is not likely to be repeated anytime soon. â&#x2013;
Radd Riebe is managing director of the Valuation and Financial Opinions Group at Stout Risius Ross, Inc., Cleveland. Contact him at 216-373-2998 or visit www.srr.com.
University Hospitals Makes the Difference.
Fergus Family Gift BeneďŹ ts Maternal-Fetal Care
to strict fiduciary duties
T
he Uniform Prudent Investor Act (UPIA) instructs trustees on the duties they must perform to meet the fiduciary duties they assume once they become a trustee for a trust. When trusts contain a variety of investments or when they contain assets worth a large amount of money, these duties can seem time-consuming and complicated. Each state has laws that establish the standards trustees must follow. A trustee who doesnâ&#x20AC;&#x2122;t meet these standards can be held personally responsible for trust losses. To maximize benefits for the trust beneficiaries, and to reduce personal liability for trust losses, trustees need to: â&#x2013; Understand the objectives and terms of the trust. Are the trust assets designed to provide for estate liquidity, contribute to a charitable organization or perhaps care for a disabled child? â&#x2013; Develop a reasonable investment strategy. How much financial risk is the trust willing to take to reach its goals? â&#x2013; Adopt a written management statement. If the trust contains a life insurance policy, this becomes a policy management statement and describes what type of coverage is expected. Should the
policy last longer than the life expectancy of the insured? Should it be a paid-up policy or will the trust expect to pay premiums on the policy for a number of years? â&#x2013; Implement the strategy with the appropriate products. Once the objectives and terms of the trust are understood, what assets should the trust own to meet them? â&#x2013; Regularly review policies and investments and make changes as needed. This process should be documented. The UPIA allows a trustee to delegate investment and management functions to an objective third-party professional. The trustee is not liable for the decisions or actions of that professional, but is still responsible for periodically reviewing any thirdpartyâ&#x20AC;&#x2122;s performance. Attorneys, trust officers and non-professional trustees can benefit by working with a trust adviser who specializes in a specific asset â&#x20AC;&#x201D; for example, life insurance. This trust adviser will bring industry-specific knowledge and experience to the case to help ensure the trust is managed properly and according to the law. â&#x2013;
Mike Pepe, CLU, is founder of The TOLI Group. Contact him at 216-325-1686.
ADVISORS TO INDIVIDUALS AND BUSINESSES ON THE PRESERVATION, PROTECTION AND RESOLUTION OF MATTERS INVOLVING: Estate and Trust Administration Estate Planning Succession Planning
Guardianships Adoptions Probate and Trust Litigation
Angela G. Carlin
Jeanne V. Gordon
Mary and Terry Fergus and Family
Terry Fergus and family wanted to honor wife and mother Mary Fergus for her many years of dedication as a neonatal nurse. Their generous gift created the Mary D. Fergus Endowed Chair in Maternal-Fetal Medicine that will advance care for high-risk pregnancies at University Hospitals.
Karen A. Davey
Jerrold L. Goldstein
Gary W. Johnson
Roy A. Krall
â&#x20AC;&#x153;It is a great pleasure to give a gift in honor of my wife, Mary, for her many years of dedication, caring for the sickest of babies,â&#x20AC;? said Mr. Fergus. At University Hospitals, the Diamond Legacy Society recognizes and celebrates individuals, like Mary and Terry Fergus, who leave a meaningful legacy for future generations.
Eugene A. Kratus
Samuel J. Lauricia III
Shawn W. Maestle
Paul Y. Shapiro
Joseph B. Swartz
Contact a UH gift planning professional to work with you and your advisor in customizing a gift plan to create your own personal legacy at University Hospitals. Call 216-983-2200 or visit uhgiving.org.
The Tower at Erieview 1301 East 9th Street, Suite 1900 Cleveland, Ohio 44114-1862 TEL s FAX
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November 15-21, 2010
S-7
BEST PRACTICES
Poor asset titling can foil legacy
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he first step in any estate plan is having one, but even the most detailed of plans may be completely bypassed if the assets included in it are not titled properly. It is important for individuals to understand that a will controls only the disposition of assets held in their individual name. Assets that pass by contract, such as life insurance or retirement accounts, are controlled by the beneficiary designation, not a provision in the will. Therefore, knowing what your assets are, how they are titled and following through to ensure correct titling is critical to your legacy. Avoid these common titling mistakes: ■ Joint and survivorship assets. At death, these assets pass by contract to the surviving owner. We often see a client who has a joint account with a caretaker child. Unfortunately, many clients do not realize that this means that those assets pass only to that one child at the client’s death. As drafted, the estate plan may provide a detailed plan for taking
CHECKLIST Tips for avoiding asset titling mistakes: ■ Ask your financial adviser to provide a summary detailing the transfer of your assets at your death based on how your assets are currently titled so you can determine what changes may be needed. ■ Choose advisers with whom you are comfortable, and then be open and honest about your wishes and the details of all of your accounts. Select advisers who will be objective and not driven by commission. ■ Ensure your financial adviser is working closely with your attorney and accountant, and that all are fully informed of your wishes and plans. ■ Regularly revisit all aspects of your estate plan, including the titling of assets. Any life-changing event or tax law change should be a trigger.
care of a second spouse as well as the children from a prior marriage. However, if assets are titled in joint and survivorship form with the second spouse, the children from the prior marriage can be effectively disinherited. This unfortunate scenario can lead See TITLING Page S-20
How to choose a good attorney
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he federal estate and gift tax system has changed dramatically over the past year. While it is unknown what the tax system will be in 2011 and beyond, this year offers opportunities to reduce taxes that may not exist in the future. While your estate planning attorney must have a thorough knowledge of complicated tax and related laws, and be an artful drafter of documents, the attorney’s personal attributes are just as important. You should be comfortable having a thoughtful discussion about the personal aspects of your life with your attorney. Consider whether your attorney: ■ Really cares about your concerns. For you to feel comfortable discussing personal issues, you should feel that your attorney is truly interested in helping you. A good estate planner must care about the client and empathize with the client’s concerns. ■ Provides a fixed-fee option. Clients often get nervous about contacting their attorney too often. They fear that “the clock is ticking” and they will be charged extra if they ask questions. Paying a fixed fee to prepare your basic estate documents allows you to discuss your estate planning
concerns and questions in detail, without fear of incurring additional legal fees. ■ Offers to meet you outside of the office. Talking about dying is difficult, and discussing personal aspects of your life in an office setting can be uncomfortable. Your attorney should be willing to meet you at your home or in another setting that is comfortable for you. ■ Finds the personal side of estate planning rewarding and takes pride in his or her work. Some attorneys get bored preparing wills and trusts for hundreds of clients each year. Good estate planning attorneys provide their clients with excellent service because they find the personal relationships they develop rewarding and often become the estate planner for several generations and related members of the same family. ■ Is a good listener. Your attorney must truly understand not only the information you convey but also the concerns and questions you express. Successful estate planning may require you to think about your relationships and attitude toward money in a way that you never have before; and your attorney should be sensitive to your issues and help you address them.
■ Works for a law firm that values estate planning. Some law firms minimize the value of estate planning because it may not bring in the attention or money other specialized areas of the law garner. Your attorney should work at a firm that values the importance of estate planning and estate planning clients. ■ Maintains a relationship with you after your documents are prepared. Your attorney should keep you informed of significant changes in the law and remind you to review your documents periodically. Good estate planners value the relationships they maintain with their clients over many years. ■ Estate planning involves listening, giving advice and helping clients make the correct choices for their unique circumstances. Being a good estate planner requires more than having a thorough knowledge of tax laws and being skilled at drafting documents. It involves compassion, empathy and understanding. You should be confident that your estate planner possesses all of these attributes. ■
Barbara Bellin Janovitz is chair of Reminger Co., LPA’s Estate Planning Group. Contact her at 216-430-2178 or bjanovitz@reminger.com.
A CALFEE ATTORNEY knows that industry expertise is the key to valuable counsel.
We work hard every day to earn the title of trusted advisor. By immersing ourselves in your industry, we can better understand the complexities and nuances of your organization. This commitment allows a Calfee attorney to offer true value: interpreting the law to help you achieve your business objectives.
Calfee, Halter & Griswold LLP www.calfee.com
Crain’s Cleveland Business Custom Publishing
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best judgment in deciding when and how to distribute the assets. Factors to consider in choosing a trustee are: size and duration of the trust; needs of the beneficiaries; assets expected to be held; the relationships among the trustee and the beneficiaries; and the tax consequences. Only corporations that have been granted trust authority by a state can serve as a trustee. There are generally no restrictions on an individual serving as trustee. CORPORATE. Choosing a corporate trustee has several advantages: professional expertise, continuity, impartiality and accountability. The problem with choosing a corporate trustee is cost, high employee turnover and takeovers. A corporate trustee may lack the ability to deal with closely held business interests, real estate and other special assets.
INDIVIDUAL. An individual trustee often has personal knowledge of the grantor’s purposes in creating the trust. Individuals, however, may not be able to fulfill the duties because of death, disability or retirement. Individual trustees have to call upon the services of investment professionals and accountants to fulfill their obligations. CO-TRUSTEES. Many of these advantages and problems can be managed through the use of individual and corporate co-trustees. An individual can be named as trust adviser and be given the authority to veto or direct investments, vote the shares of closelyheld stock or give approval to discretionary distributions to beneficiaries. ■
James G. Dickinson is a partner with Cavitch, Familo & Durkin. Contact him at 216-621-7860 or jdickinson@cavitch.com.
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hoosing a trustee is the single most important decision most people will make in creating their estate plans. An incompetent or uninterested trustee can ruin even the best plans. “After 34 years of advising clients on their estate plans,” said Jim Dickinson, a board certified specialist in estate planning, probate and trust law, “I am still unable to name the ideal trustee. Each situation must be analyzed based upon a number of factors.” A trustee must have the ability to assemble and to manage a prudent, well-diversified portfolio of assets that will serve the needs of the trust beneficiaries; must send periodic reports to the beneficiaries; and file state and federal income tax returns. The trustee will follow the instructions contained in the trust agreement and use its
T 216.621.7860 F 216.621.3415 W www.cavitch.com
Many options can help achieve estate goals
G
iving through estate plans or life income gifts may be suitable for individuals who would like to support a charity, but need income from their assets during their lifetime. The most common form of a planned gift is a bequest contained in a person’s will or revocable living trust. General bequests leave funds or property to a charity without designating its use. Other bequest types may direct a percentage of a person’s estate to charity or allow for the charity to receive residual funds after payment of debts, taxes or administration fees. If you want to receive numerous tax and financial benefits by creating a life income gift, you may want to explore creating a charitable gift annuity or a charitable remainder trust. When a donor makes an irrevocable contribution of assets to fund the trust or annuity, he or she will receive an immediate income tax deduction for part of the contribution’s value and income for life or a term between one to 20 years. When the trust or annuity ends, the remaining assets go to the designated charity. GIFT ANNUITIES provide older donors who give cash, securities, real estate or personal property with fixed annual payments that start at a time specified by the donor. Gift annuities are beneficial to donors who want to receive income from assets that have risen sharply in value, such as stock. The charity will guarantee the donor a fixed annual income for the rest of his or her life and assist the donor in avoiding capital gains tax. The donor also receives an income tax break on a portion of the earnings from an annuity,
THE BENEFITS Individuals of all ages should explore the potential benefits of various estate planning strategies to determine which tools best fit their needs. Benefits vary, and many gifts can do the following: ■ Provide regular payments for you and/or your spouse or other beneficiary; ■ Reduce your taxes through charitable income tax deduction; ■ Reduce or avoid capital gains taxes; or ■ Save estate and gift taxes.
depending on the donor’s age. CHARITABLE REMAINDER TRUSTS allow donors to receive income tax deductions and escape capital gains taxes. The assets can be invested to earn a lower rate of return when the donor is younger and later can be shifted to earn a higher rate, providing more income in the donor’s later years. Charitable lead trusts make an agreed payment to the charity for a specific term of years or lifetime. Thereafter, the assets are either returned to the person who created the trust (who is eligible to receive an income tax deduction when the trust is created or passed on to children) or a designated heir. Applicable estate or gift taxes on the value of the gift to the child or other heir are reduced or completely eliminated. ■
Advancement Department, Diabetes Association of Greater Cleveland.
Crain’s Cleveland Business Custom Publishing
Life insurance can benefit your charity of choice
M
ost consider life insurance a way to protect the family should the insured pass away; but life insurance can be an effective way to make a charitable gift. With the return of some form of estate tax next year, many are acting now to remove assets from their estate to minimize the anticipated impact. Life insurance is one such asset that is included in the taxable estate if the insured is the policy owner at the time of death. To avoid estate tax, an individual with charitable intent could consider arranging a gift of life insurance now. There are two basic approaches to using life insurance as a charitable gift: Make a gift of an existing policy or establish a new one. A gift of an existing policy should be considered when the policy is no longer needed for its original purpose. The simplest way to make this gift is to name the organization receiving the gift as charitable beneficiary and assign ownership to it. A donor also could establish a new life insurance policy. In Ohio, a donor first should establish the policy in his or her name and designate the charity as the beneficiary before transferring ownership. Once the policy is in place, ownership can be changed to the charity. ■
Anne Corrette is manager of Gift Planning Services at Cleveland Clinic. Contact her at 216-444-1251.
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S-9
CHARITABLE GIVING VEHICLES
Donor-advised funds boost charitable benefits
F
or most families, every holiday season is the same — turkey, trimmings, family and charity. According to The Giving USA Foundation, Americans gave more than $227 billion to charity last year, mostly in the form of cash. While that can be the quickest and easiest gift, too few donors consider the tax advantages of contributing assets such as publicly traded securities, closely held stock or real estate. By giving such assets into a donor-advised fund, a donor can essentially
Donor-advised funds are like a charitable investment account. “pre-fund” multiple years of giving while receiving a tax benefit of a significant charitable gift in a year that it may really be beneficial. Donor-advised funds are like a charitable investment account. Appreciated assets, such as marketable securities, can be contributed free of capital gains tax, allowing the full gift to be used over an extended period of time for grants to numerous
charities. Donor-advised funds can be established with an initial gift as low as $10,000. “Although much of America’s wealth is comprised of appreciated assets, both liquid and less-liquid, few Americans consider donating such assets,” said Phil Tobin, chairman and CEO of American Endowment Foundation. “Giving appreciated assets to a donoradvised fund gives the donor
tremendous flexibility in supporting his or her favorite charitable interests, while enjoying the best tax benefits available.” Donor-advised funds are an excellent alternative to a family creating a private foundation. They are becoming the fastestgrowing form of family philanthropy because they can be used by families that don’t have exorbitant wealth. Other advantages can include the ease in establishing a fund, the lack of administrative burden, greater privacy and a greater charitable deduction of
Implement a three-part estate plan
market instead of cost basis. Donors typically establish a donor-advised fund to act as a multigenerational family fund for their charitable giving. The account can be personalized with a family name (e.g., “The Smith Family Foundation”), involve family members in recommending grants, and name successor advisers. Depending on the sponsoring organization, the fund can last into perpetuity. Both the investments and the charities can be changed at any time to ensure the most charitable growth and the changing charitable desires of the family.
investments | trust | banking
“I
t’s time to put your affairs in order.” Usually, this intimidating phrase means it’s time to prepare a will, or to dictate how our assets will be handled after death. While these arrangements are important, successful estate planning involves more than finances. An effective estate plan should include three essential elements: a financial plan, an advance care plan and an ethical will. Taking the time to create a three-part estate plan can have a tremendous impact on quality of life, particularly if you or a loved one is facing a serious illness. Each aspect of estate planning offers a time for reflection and celebration. FINANCIAL PLAN: Financial planning is primarily asset distribution and requires specialized legal and financial assistance. Wills and trusts allow us to continue to care for the people and charitable organizations that we value most and ensure that our lifelong legacy of hard work will live on. It is vital to appoint a trusted financial power of attorney who will make decisions on your behalf, if needed. Property inheritance issues can be loaded with emotion, but it is often easier to have the “money talk” with family and friends than to have the “what if” talk. ADVANCE CARE: Your advanced care plan focuses on the medical “what ifs” that can occur at the end of life. “What if I get an infection? Do I want antibiotics?” “What if I can’t swallow? Do I want intravenous nutrition?” These are difficult questions. But imagine how difficult it would be for your family and friends to answer them for you during a medical crisis. Would they agree on your course of treatment? The greatest gift you can give your loved ones is to relieve them of the burden of making uninformed choices on your behalf. Your advanced care plan should include a living will declaration as well as a health care power of attorney. These documents will be consulted only if you can’t communicate your wishes. Creating an advance care plan takes effort and the courage to have
does your financial advisor know the score? A well-planned financial life has all the complexity – and the fluidity – of a symphony orchestra. Real life is complicated. People come to Key Private Bank for the simplified sophistication we bring to their financial lives. Our team can help you achieve what matters most to you, delivering strategic advice and objective wealth management solutions based on a fiduciary standard of care that puts your interests before our own. Your finances, your life – in tune, on key – for generations.
go to keyprivatebank.com call Louisa Guthrie, Key Private Bank Executive at 216-828-7877
Bank and trust products from KeyBank National Association, Member FDIC and Equal Housing Lender. Investment products are: NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE • NOT A DEPOSIT • NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY Key.com is a federally registered service mark of KeyCorp. ©2010 KeyCorp. KeyBank is Member FDIC.
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S-10 November 15-21, 2010
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Your Partner in Legacy Planning Provided as a public service of the Ohio Presbyterian Retirement Services Foundation. For more information about our work in northeast Ohio supporting Breckenridge Village and Senior Independence, please call Jim Hickey at (440) 942-4342.
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payments starting immediately. Charitable Gift Annuity Many people wish to support (CGA) gives you fixed and those in need but are attractive payuncomfortable parting ments for life, with a large sum of cash regardless of changes in inin todayâ&#x20AC;&#x2122;s economy, even terest rates. More imporif the income generated tantly, it provides a way from it would increase. to make a meaningful, enHere are a few creative during gift to a nonprofit ways to fund a CGA: organization. A CGA may be right for you if: JAMES REAL ESTATE: The â&#x2013; You want to support HICKEY mere thought of marketa charitable organization. ing and selling a home, vacation â&#x2013; You want income that is unproperty or other holdings during affected by changes in the economy. a lagging real estate market can be â&#x2013; You want to maintain, and exhausting. An alternative to possibly increase, income received selling the property would be to from your assets. use it to fund a CGA. Organizaâ&#x2013; You want income tax relief tions may set CGA rates on a casethis year. by-case basis for gifts of real estate, relative to the anticipated risk and HOW IT WORKS: Through a expense to the organization for simple contract, you agree to holding and selling the property. donate cash, stocks or other assets to a charitable organization. In LIFE INSURANCE: If you own return, the organization agrees to an insurance policy that you no pay you (and someone else, if you longer need, use this â&#x20AC;&#x153;hidden assetâ&#x20AC;? choose) a fixed amount each year to fund a CGA and turn this policy for the rest of your life. into income. CGA payments are partially taxfree. The contract pays a set amount STOCKS: When appreciated for one or two lives, and provides stocks are used to fund a CGA, current and future savings on you gain a charitable tax deducincome taxes. If you prefer, you tion while amortizing capital may defer payments. Because rates gains taxes on the appreciation are based on age, the future annual over your life expectancy. This payout rate can be considerably higher than the rate of annuity See CHARITABLE Page S-20
HOW DOES AN ANNUITY WORK? A charitable annuity allows individuals to support a charity while receiving a cash reward for years to come. It is a great way to give a donation and pay yourself back over time, while reducing your tax bill. For example: Mary, 68, provides a one-time cash donation of $5,000 to the charity of her choice. Her annuity rate of return, determined by the American Council of Gift Annuities based on her age, gift amount and other factors, is 5.5%. The rate is fixed over her lifetime. Her tax deduction the first year is $1,847. She will receive $275 every year ($180 tax-free, $95 ordinary income). â&#x20AC;&#x153;Annuities provide a competitive and reliable rate of return and allow donors to support their favorite charities at the same time,â&#x20AC;? said Kerry A. Mink, development manager of the Benjamin Rose Institute. *Calculations are for illustrative purposes and should not be considered legal, accounting or other professional advice. Actual benefits may vary depending on the timing of the gift.
Kerry A. Mink, Esq., is development manager of the Benjamin Rose Institute. Contact her at 216-3731607.
CLTs ideal in current climate
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haritable lead trusts (CLTs) are excellent estate and tax-planning tools for individuals with large estates who wish to maximize wealth transfer to their heirs and make a generous gift to their favorite charity. By taking advantage of current market conditions, or appreciation of those assets, including low interest rates and are distributed to the donorâ&#x20AC;&#x2122;s depressed asset values, CLTs help heirs. donors make lemonade CLTs are best suited for out of the â&#x20AC;&#x153;lemonâ&#x20AC;? donors who can afford to economy. set aside a portion of Charitable lead trusts their assets for a certain are irrevocable trusts number of years. Donors established either during are able to use these the donorâ&#x20AC;&#x2122;s life or upon trusts to remove wealth death to benefit both from their estates and charitable and non-charipass it tax-free to their table beneficiaries. Upon heirs. CLTs also are ideal PATRICIA creation, the donor trans- FRIES for donors who have fers assets into the trust. assets, such as securities Thereafter, the donorâ&#x20AC;&#x2122;s or real estate, that are expected to chosen charitable organization(s) increase in value over the term of receives â&#x20AC;&#x153;leadâ&#x20AC;? distributions (fixed the trust. or percentage) each year for either Thanks to current market the donorâ&#x20AC;&#x2122;s life or a term of years. conditions, it is a great time to These annual gifts from the trust establish a charitable lead trust. can be designated to support the The IRS has lowered its special donorâ&#x20AC;&#x2122;s chosen program or capital rate used to predict how much project and, if done during life, the assets will grow while in trust. can have an immediate and transThis special â&#x20AC;&#x153;hurdleâ&#x20AC;? rate has formative impact. been at historic lows (2% in At the end of the trust term, the October), which makes charitable trust assets, including the growth lead trusts very attractive.
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In addition, asset values should recover over the coming years. The growth in trust assets is likely to outpace the low IRS â&#x20AC;&#x153;hurdleâ&#x20AC;? rate, and this value will pass tax-free to the donorâ&#x20AC;&#x2122;s heirs. Proposed federal estate tax changes could mean that establishing a CLT is an even more attractive estate and tax-planning tool. Congress allowed federal estate taxes to lapse in 2010. However, this is a short-term reprieve. Congress may reinstate estate taxes at the former levels or change the rules. Even if Congress takes no action, estate taxes will automatically return â&#x20AC;&#x201D; at more burdensome levels â&#x20AC;&#x201D; on Jan. 1. Charitable lead trusts and other estate planning strategies will be more important than ever. â&#x2013;
Patricia Fries is the senior gift planning officer for University Hospitals, including both the main campus and the community hospitals. Contact her at 216-8440430.
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November 15-21, 2010
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CHARITABLE GIVING VEHICLES
Gifting to charity can leave a lasting legacy
T
he decision to create a legacy gift — be it a charitable trust, a bequest of cash or transfer of tangible property, naming an organization as a beneficiary in a retirement account or life insurance policy, or establishing a charitable gift annuity — is an important milestone. A legacy gift not only speaks to the donor’s commitment to an organization, but also illustrates the donor’s philosophy about living, giving and his or her hopes for future generations. Considering what is best for both the individuals making the gift, as well as the organization, is a key element in establishing a planned gift. While some donors have the means to immediately create a trust, others may only be able to attain their philanthropic dreams in increments. Some may be interested in earned income during their lifetime, while others may be interested in providing for a loved one — as well as a charity. The ability to work with donors in a creative and collabo-
rative fashion helps to ensure that their gift — and the method of the gift — accomplishes their goals. It is also important to have donors work with their attorneys and financial planners in a collaborative manner, which often can lead to greater gifts and greater satisfaction for the donors. Making a legacy gift is an important life statement, one that should be personally rewarding and deeply gratifying. Often, nonprofit staff learns about a bequest gift only after a donor has died. By working with the organization in advance, donors can ensure their wishes are fulfilled — and it gives the organization the opportunity to express how important these gifts are to the sustainability of the organization and ensuring its mission. ■
Sheryl Hoffman is director of Government Relations, Major & Planned Gifts for the Cleveland Museum of Natural History. Contact her at 216-231-4600 ext. 3310 or visit www.cmnh.org.
TIPS FOR SELECTING A CHARITY Selecting a nonprofit to include in your estate plan is a personal experience. When selecting charities, I highly recommend that donors consider: ■ Do you want your gift to be revocable or irrevocable? ■ How well do you know the charity or charities? ■ How well does its mission align with your values and goals in life? ■ Do you have an established relationship with the charity? ■ What do you know about the longevity/sustainability of the charity? ■ How well has it handled its finances? ■ How well is it meeting its mission? ■ What impact do you think your gift will have? Is it a large institution to which you plan to leave a
small gift — or a large gift? Or is it a small organization to which you plan to leave a large gift — or a small gift? The size and capacity of the organization may be greatly impacted by your gift. Can it carry out your desires? ■ Do you want your gift to go to a specific purpose within the charity, or would you prefer the charity determine how to best use your gift? If you would like your gift to
provide for a specific project, a certain term of years or other designated purpose, you should meet with the charity to be sure it can carry out your wishes and that your estate plans and MOU specifically reflect your wishes. ■ Is the charity able to accept your gift if you are donating tangible property? For example, leaving a house to an organization that does not have the capacity to maintain the property or to sell the property immediately may actually be more of a liability than a gift. Make sure your gift is something your charity can accept and from which it can benefit. ■ Do you want to make provisions if the charity’s program no longer exists? Do you want the charity to designate the funds to a similar program or problem it is now undertaking? — Sheryl Hoffman
MY BENESCH MY TEAM
Live for today. Plan for tomorrow.
What good are we doing? “In the quiet hours when we are alone and there is nobody to tell us what fine fellows we are, we come sometimes upon a moment in which we wonder, not how much money we are earning, nor how famous we have become, but what good we are doing.” — A.A. Milne
T
here are many ways to make estate plans, and many charitable planning techniques to consider when determining the best way to include a gift as part of an estate plan. However, before that process begins, one or more organizations need to be identified as gift recipients, which often is easier said than done. For some people, it is a clear choice; others need guidance and direction from their advisers. Anyone connected to the gift planning process knows how meaningful it is to help someone establish a planned gift. In many cases, planned gifts fulfill financial and emotional needs. For example, I have the privi-
lege of working with someone who is just as thrilled with the rate of her charitable gift annuity as she is with knowing that her donation will ultimately support fishing in Cleveland Metroparks, which was a passion of her late husband. I also have had the opportunity to work with multiple generations of one family to create an endowed program that perpetuates the beliefs of its family matriarch. Northeast Ohio’s long-standing tradition of making the quality of life a priority has allowed nonprofit organizations to effectively fulfill their mission throughout the region. Through listening to the people we are working with and providing research assistance, we have the unique opportunity to help them improve and preserve the quality of life throughout greater Cleveland. ■
For all the time and effort you’ve put into building your wealth, you deserve peace of mind in return. The kind that comes from knowing your assets are protected, your wealth will be distributed as you wish, and your future is as secure as you can make it.
Gary B. Bilchik, Partner Co-Chair, Estate Planning and Probate Practice Group Licensed to practice law in Ohio and Florida
Whether you need to build an estate plan from scratch, or ensure your current plan is in sync with today’s rapidly changing laws, our attorneys can help. We have the specialized knowledge and experience to manage all aspects of your estate. Deviani M. Kuhar, Partner Co-Chair, Estate Planning & Probate Practice Group Licensed to practice law in Ohio
We can assist in these areas and help you manage your assets in ways that will minimize the probate administration process.
Karen J. Kannenberg, CFRE, is manager of Gift and Donor Development for Cleveland Metroparks. Contact her at 216-635-3217.
IS AN ESOP RIGHT FOR YOUR COMPANY? Find out by contacting our ESOP experts today.
25 years
Have you considered how taxes will impact your wealth? Do you have a business succession plan in place? Are you sure that your assets have been aligned properly with your estate plan? Have you planned for charitable gifts…long-term care…incapacity?
Nick D. Shofar, Associate, Estate Planning and Probate Practice Group, Licensed to practice law in Ohio
Live for today…plan for tomorrow. Talk to us about how to get started.
Ray Lampner Ray.Lampner@bcgcompany.com Doug Mathey Doug.Mathey@bcgcompany.com
Caring People. Shaping Futures.
certified public accounting and IT consulting firm
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CHARITABLE GIVING VEHICLES
Tired of paying for trades instead of guidance?
Dynasty trusts a valuable vehicle, even sans estate tax
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FeeÇŚonly, independent, objective investment advice Â&#x160;Â&#x2021; Â&#x192;Â&#x2039;Â&#x201D;Â&#x2122;Â&#x192;Â&#x203A;Â&#x2022; Â&#x2014;Â&#x2039;Â&#x17D;Â&#x2020;Â&#x2039;Â?Â&#x2030; ;͸Ͳͳ Â&#x201D;Â&#x2021;Â&#x2021;Â? Â&#x2018;Â&#x192;Â&#x2020;ÇĄ Â&#x2014;Â&#x2039;Â&#x2013;Â&#x2021; ͳͲʹ Â&#x17D;Â&#x2021;Â&#x2DC;Â&#x2021;Â&#x17D;Â&#x192;Â?Â&#x2020;ÇĄ ͜͜ͳʹʹnj͚͡ͳ͝ ʹͳ͸Ǥ͜͸͜Ǥ͸ʹ͸͸ Â&#x2122;Â&#x2122;Â&#x2122;ǤÂ&#x2022;Â&#x2019;Â&#x2021;Â&#x201D;Â&#x2018;Â&#x2022;Â?Â&#x2039;Â&#x2013;Â&#x160;ǤÂ&#x2026;Â&#x2018;Â?
Secure Your Future and Leave A Legacy of Learning and Living Your planned gift to the Diabetes Association of Greater Cleveland (DAGC) will ensure that current and future generations of children, youth and adults living with diabetes in Northeast Ohio receive the education and support they need to learn more, take charge, and live well with the disease. One hundred percent of your investment stays right here in our community to improve the quality of life for your friends and family members with diabetes.
To learn how DAGC can help you meet your financial and philanthropic goals, contact Helen Dumski, President & CEO at (216) 591-0800 or visit www.dagc.org.
hen the repeal of federal estate tax first became a possibility, one of my partners said to me, â&#x20AC;&#x153;Donâ&#x20AC;&#x2122;t worry about your career. The golden age of trusts was long before there ever was an estate tax.â&#x20AC;? Most estate planners would agree that some form of federal estate tax will continue to exist; however, the possibility of an estate tax repeal has led many to focus on the non-tax benefits of various estate planning techniques, including dynasty trusts. Dynasty trusts can provide at least three distinct benefits: ASSET PROTECTION: Generally, throughout the United States, it has been the rule that a selfsettled trust (a trust that provides a beneficial interest to the grantor of the trust) may be reached by the grantorâ&#x20AC;&#x2122;s creditors. Some states like Alaska and Delaware allow the creation of self-settled trusts that are creditor-proof. Ohio has proposed similar legislation. As our society has become more litigious, asset protection has become a
Most estate planners would agree that some form of federal estate tax will exist. greater concern for many clients. Although it is difficult to achieve asset protection planning for oneself, it is relatively simple to make oneâ&#x20AC;&#x2122;s children or other heirs creditor-proof by using a dynasty trust. In many cases, the trust can be structured to allow a beneficiary to act as his or her own trustee and still receive this benefit. DIVORCE/REMARRIAGE PROTECTION: Under most circumstances, a dynasty trust can be used to protect a beneficiary from a divorcing spouse. Although inheritances are separate property (non-marital property), assets that are co-mingled may lose their ability to be identified. Many times the client will want an heir to keep his or her non-marital property separate; but in reality, that may be difficult. The separation of property may create a wedge
between the couple, leading to marital discord. If the assets are in a trust, even if the beneficiary is the trustee or co-trustee, the beneficiary can make his or her deceased parents or the trust the â&#x20AC;&#x153;bad guy.â&#x20AC;? In the case of an heir who is single or divorced and contemplating marriage, a dynasty trust may alleviate the need for a prenuptial agreement, where the beneficiaryâ&#x20AC;&#x2122;s own assets are not significant. BLOODLINE: Many clients express the desire that their wealth stay in the family. A typical pattern is for the trust to be held for the benefit of the grantorâ&#x20AC;&#x2122;s child during his or her lifetime; and then, at his or her death, for the trust to be held or distributed to the childâ&#x20AC;&#x2122;s lineal descendants. If the child has no children, a dynasty trust allows a parent to provide for his or her child but still control the ultimate distribution of the assets. â&#x2013;
Missia H. Vaselaney is a partner with Taft Stettinius & Hollister LLP. Contact her at 216-706-3956 or mvaselaney @taftlaw.com.
Bloodline trusts protect family, goals
T
oo often people focus only on tax planning when they have their estate planning documents
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prepared. Although federal or state estate tax planning is important, nontax issues can be just as important. How do you ensure that your estate passes to your children and is protected from their creditors or a divorce? How do you make sure your estate ultimately passes to your grandchildren and not to your son- or daughter-in-law? The bloodline trust is a tool that can make sure these goals are satisfied. A typical trust might provide that upon the death of the parents the assets in the trust pay out to the children when they reach certain ages. Once the money is distributed out of the trust to the children, it could be subject to creditor or divorce claims. Also, on the death of the child, the childâ&#x20AC;&#x2122;s estate plan probably provides that the son- or daughterin-law inherits your money. If your son- or daughter-in-law spends the money or remarries and leaves it to the new spouse, this money may never reach your grandchild.
Even if your child provides in his will that the inherited assets pass to the children, the in-law still would have a right to receive a portion of the probate estate. However, a bloodline trust provides that the assets are held in trust for the life of your child and eventually pass directly to your grandchildren on the death of your child. Your child still will have access to the money in the trust and can even be the trustee. However, if assets are held in trust for a child, the assets will not be subject to most creditor claims (except the IRS, the state of Ohio and child support) â&#x20AC;&#x201D; including alimony payments. More importantly, the trust will provide that upon your childâ&#x20AC;&#x2122;s death the assets must go to your grandchild and not to your son- or daughter-in-law. The bloodline trust also can be used in business succession planning to make sure that the business remains in the family. â&#x2013;
Mike Solomon is a partner with Budish, Solomon, Steiner & Peck, Ltd. Contact him at 216-245-0185.
Budish, Solomon, Steiner & Peck, Ltd. Attorneys at Law
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Elder law, estate planning, business law, real estate, taxation, pension and profit sharing, succession planning, probate, government benefits, health care and litigation. Armond D. Budish â&#x20AC;˘ Michael L. Solomon Jennifer E. Peck â&#x20AC;˘ Laurie G. Steiner â&#x20AC;˘ Stanley M. Fisher 23240 Chagrin Boulevard, Suite 450 â&#x2013; Beachwood, Ohio 44122-5404 Phone: (216) 765-0123 â&#x2013; Fax: (216) 595-2787 info@budishandsolomon.com â&#x2013; www.budishandsolomon.com
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CHARITABLE GIVING VEHICLES
November 15-21, 2010
S-13
BUSINESS SUCCESSION PLANNING
Formulate solid strategy before transferring company ownership There are many tactics that business owners can employ as they craft a carefully considered succession plan. Regardless of the choice of planning tools, consider the following to pave the way for a successful transition:
1 Grantor retained annuity trusts: heads you win, tails you tie Rates should motivate investors
G
rantor retained annuity trusts (GRATs) are used to make future gifts of appreciating property to family and friends on a virtually tax-free basis. The current historically low interest rates make GRATs more attractive than ever. GRATs are irrevocable trusts where assets are transferred. In exchange for the assets, the transferor receives an annuity STEVEN that pays back a fixed amount each year. The transferor sets the annuity amount and the length of time (or term) of the trust. The transferor pays a gift tax on the current fair market value of the trust assets, minus the value of the grantorâ&#x20AC;&#x2122;s retained annuity interest. If the GRAT is structured so that the value of the retained annuity is equal to the value of the property transferred, there is no gift tax consequence. GRATs structured this way are called â&#x20AC;&#x153;zeroed-outâ&#x20AC;? GRATs. When zeroing out a GRAT, the annuity amount is calculated using a rate set by the IRS (the section 7520 rate) for the month of the transfer. The â&#x20AC;&#x153;hurdle rateâ&#x20AC;? is the assumed rate of return for the assets. For October, the hurdle rate was 2%, which tied the lowest rate in history. The annuity amount is paid to the transferor during the term of the GRAT, and any property remaining in the trust at the end of the GRAT term passes to the beneficiaries gift tax-free. If the GRAT assets produce a return in excess
of the hurdle rate, the increase in value is passed to the beneficiaries free of gift tax. Therefore, assets likely to appreciate at a rate higher than the hurdle rate are ideal for use with GRATs. However, there is a catch. If the transferor dies during the GRAT term, the value of the remainder interest in the trust is included in the transferorâ&#x20AC;&#x2122;s taxable estate. To minimize the risk that the COX assets will be taxed in the transferorâ&#x20AC;&#x2122;s estate, multiple short-term GRATs are often used. When structured correctly, GRATs offer little risk. If the assets in the GRAT do not appreciate at a rate that exceeds the hurdle rate, the GRAT fails, but the transferor receives all of the assets transferred to the GRAT in the form of annuity payments. If the transferor does not survive the annuity term, the GRAT fails at least in part, but again, the transferor (or the transferorâ&#x20AC;&#x2122;s estate) is no worse off from a tax perspective than if the GRAT had never been created. Soon, this strategy may be too good to be true. Changes to the Internal Revenue Code may reduce the benefits of GRATs by requiring a minimum remainder interest and a longer term. Because it is expected that any legislation would exclude existing GRATs, opportunities exist and should be seized quickly. â&#x2013;
Steven St. L. Cox is a partner with Roetzel & Andress. Contact him at 330-8496714 or scox@ralaw.com.
Experienced Estate Planners Squire Sandersâ&#x20AC;&#x2122; private client and estate planning lawyers advise on the personal, financial and estate planning needs of clients around the world. In this highly personalized service area, our lawyers have the experience to deftly handle sensitive situations.
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Succession of ownership. Who will take over, and how will they pay for the added stake in the company? What roles will the spouse and any children play in the succession, if at all? If a child will not be active in ownership and management, how will (or will) they be provided for? Business succession planning can bring family dynamics into play â&#x20AC;&#x201D; and those dynamics cannot be discounted.
2
Age of interested parties. Sometimes you know who is likely to die first. What happens in the event that your appointed successor passes away before you?
3
Management. How will management be affected by the new owner? Will the new owner manage the business, or will there be owners who are not managers? Will you lose quality managers because they are not part of the ownership group? How will the change affect employees?
7 8
Succession triggers. What events will put the plan into action?
Equity. How and when will the new owners receive equity in the company? Is it an all-or-nothing situation? Do they earn or purchase equity over time? How much equity is the current owner willing to part with now and later?
4
Control vs. ownership. Some ownership interests have a control component and others do not, such as voting vs. non-voting ownership interests.
5
Plan review. How often do you need to review a succession plan? If one is put in place, what flexibility do you want to retain for changes?
6
Tax issues. Upon ownership transfer, what income, gift and/or estate tax ramifications come into play? Who should bear the burden of such taxes?
9
Realistic valuations. What you think your company is worth â&#x20AC;&#x201D; and its true worth â&#x20AC;&#x201D; may not match up. Make sure the succession plan is based on the realistic value of the company.
10
Vision. What is the goal for all involved?
James Goldsmith is a partner and chair of the Trusts & Estates Group for Ulmer & Berne LLP. Contact him at 216-5837114 or jgoldsmith@ulmer.com.
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20101115-NEWS--44-NAT-CCI-CL_--
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BUSINESS SUCCESSION PLANNING
Employee ownership plan may be viable exit strategy
W
hen considering the options relating to transitioning out of your business, an Employee Stock Ownership Plan (ESOP) should be in the running. An ESOP allows employees to become owners in the company. Below are answers to the common questions and concerns when considering an ESOP:
Nature ... a gift to preserve! You can preserve the future of Cleveland Metroparks. The Emerald Necklace Endowment Fund of Cleveland Metroparks has been established within The Cleveland Foundation to protect and preserve the "Emerald Necklace" for generations to come.
For more information on how you can preserve and protect Cleveland Metroparks, call Karen Kannenberg, CFRE, at 216-635-3217 or visit clevelandmetroparks.com and click "get involved."
Q: I am only looking to diversify my holding and am not interested in selling the entire company. Is an ESOP still a possibility? A: An ESOP can be used to buy a percentage or all of the shares of the privately held company. There are fiduciary responsibilities, and a formal business valuation will need to be prepared to confirm the purchase price. If the transaction involves less than 50% of the voting stock of the company, a minority interest discount will need to be considered. Q: What can I do to ensure my employees continue their employment after I exit my business? A: A concern of many owners is that they will sell the company and the new owner will drastically change the operations. Although the company needs to be run intelligently and efficiently, it is now owned by the employees you hired. If the ESOP is rolled out properly, you will hopefully see a cultural change within the company once employees fully realize addi-
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tional gains will increase the value of the company â&#x20AC;&#x201D; and they share in that increase. Training employees on the benefits and future potential stock buyouts at retirement is extremely important. Q: Is there a way to defer the tax associated with the sale? A: If the ESOP acquires shares in a â&#x20AC;&#x153;Câ&#x20AC;? Corporation, the tax associated with the sale may be deferred using a Section 1042 Rollover. The rollover can defer income tax permanently, and allows the owner to hold the reinvested share until death and receive a basis step-up at the time of the transfer of the replacement property to the heirs. As long as the ESOP acquires at least a 30% interest in each class of outstanding stock, the seller may reinvest the sale proceeds into qualified replacement property. Qualified replacement property would include stocks and bonds of domestic operating companies. â&#x20AC;&#x153;Sâ&#x20AC;? Corporations have less favorable tax benefits (such as no section 1042 rollover or dividend deduction); however, shares of the S Corp.â&#x20AC;&#x2122;s earnings to the ESOP are completely tax-free, as are distributions made to the ESOP. Q: Are there tax advantages for the company after forming the ESOP? A: Yes, and they can be significant. A few advantages are that
employer contributions to the ESOP are tax deductible (subject to percentage limitations) and dividends paid on ESOP-held stock may be deductible. Q: How do I know if an ESOP makes sense for my company? A: Although an ESOP can be a very useful vehicle, it comes with a complex set of rules. However, ESOPs create an ownership culture within a closely-held business, which is important for the longevity of the company. Make sure you are aware of the complexities and do research and due diligence prior to making this commitment. The first step is a feasibility study that should be prepared by an expert that has experience with ESOPs. ESOPs are often the most advantageous way an owner can achieve liquidity and gain from favorable tax deferrals. Setting up an ESOP requires a well-planned tax strategy designed around meeting the ownerâ&#x20AC;&#x2122;s goals for the company and his or her future. â&#x2013;
Doug Mathey, CPA, MT, is director of BCG & Companyâ&#x20AC;&#x2122;s tax services department. Contact him at 330-572-8050 or Douglas.Mathey@BCGCompany.com. Ray Lampner, CPA, ABV, CVA, is director of BCG & Companyâ&#x20AC;&#x2122;s entrepreneurial services department. Contact him at 330-572-8014 or Raymond.Lampner@ bcgcompany.com.
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legacy Capture memories. Make health care choices. Create a lasting philanthropicc tradition. Hospice of the Western Reserve helps patients and families take steps that prepare them for the final stages in life. To start your three-part estate plan, or to plan a gift with us, contact
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RETIREMENT PLANS Prudent planning that takes into consideration all of your estate planning goals can minimize the impact of estate and income taxes on your heirs.
Review retirement plans to minimize tax consequences
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raditional IRAs and qualified plans like 401(k)s and 403(b)s can be great retirement planning tools. However, the benefits to your heirs can be greatly reduced when you consider the potential estate and income tax consequences of retirement assets at your death. Whereas assets held in a personal brokerage account receive a “step-up” in basis at your death that can minimize the potential capital gains tax consequences to heirs, retirement plan assets retain their ordinary income tax implications. Prudent planning that considers all of your estate planning goals can minimize the impact of estate and income taxes on your heirs. BENEFICIARIES: Who you name as the IRA beneficiary will determine the estate tax consequences and how long income taxes can be deferred. Designating a younger generation as beneficiaries of your traditional IRA (if financially able to bypass spouse) allows them to stretch the minimum distributions (and the income tax consequences) over their lifetimes. If you intend to leave money to charity, consider naming it as your IRA beneficiary since the bequest may qualify for an estate tax exemption and pass to the charity income-tax free. Failing to designate a beneficiary or not updating the designation when a beneficiary predeceases you could have unfa-
vorable consequences because the entire balance of your retirement plan may have to be distributed to your estate or to your beneficiaries within the first five years of death. CONVERSIONS: If you believe there is a significant chance that you would not need funds from the IRA to meet your living expenses, consider converting at least some part of your IRA to a Roth IRA. You will have to include the taxable portion of any conversion amount on your income tax return, but it will generally provide for tax-free withdrawals to your beneficiaries.
Window closing on Roth conversions 2010 presents chance to spread out taxes on IRA
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he end of 2010 is fast approaching, and with it the end of the opportunity to make a Roth IRA conversion and spread the tax over 2011 and 2012. The income limits on who is eligible to convert to a Roth IRA were lifted effective Jan. 1, 2010. Anyone, no matter how much their income is, can make a conversion. The decision to convert is whether it is better to pay tax on your IRA today or when you actually withdraw the funds in the future. Income tax is not the only issue, however; if structured properly, the conversion can be used to transfer wealth to your heirs. Why would you want to pay tax today rather than at retirement? Generally distributions from a Roth IRA are tax-free. By making a
Matthew S. Olver, CFP, is senior VP of Spero-Smith Investment Advisers, Inc. Contact him at 800-794-7545.
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David O. Reyes, CPA, is shareholder with Maloney & Novotny, LLC. Contact him at 216-363-0100 or e-mail dreyes@maloneynovotny.com.
Financial advisors help you protect your wealth. We can help you preserve your legacy.
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NEW OPPORTUNITIES: A new wrinkle to Roth conversions was added Sept. 27, when Presi-
dent Barack Obama signed the Small Business Jobs Act of 2010. The law includes a provision that allows participants in 401(k), 403(b) and 457(b) plans to convert eligible account balances to a Roth account within the same plan. Participants no longer will be required to remove the money and roll the funds over to an IRA. To facilitate an in-plan conversion the plan must already have a Roth contribution feature. Plans that do not accept Roth contributions would have to be amended to add this feature. Additionally, to make an in-plan conversion the participant must have had a distributable event under the plans terms. A plan sponsor may decide to expand its distribution options, such as adding an in-service distribution feature to allow participants to take advantage of this new provision. ■
INSURANCE: Recouping dollars lost to income or estate taxes through insurance requires the use of more expensive permanent insurance since it needs to stay in effect throughout your life. Survivorship, or second-to-die, insurance is best to cover the lives of a married couple. Insurance benefits you the most if you both die prematurely and only paid a few premiums. “Some people are shocked to hear how much of their IRA assets could be lost to estate and income taxes at death,” says Kara Downing, portfolio manager at Spero-Smith Investment Advisers, Inc. “But with proper planning, you can minimize their impact.” ■
Supporting and Realizing Value
■■
conversion now, the money transferred to the Roth IRA grows tax-free in the same manner as a traditional IRA. The tradeoff is that distributions to you and your beneficiaries are tax-free. For example, if your money remains in the Roth IRA for more years (unlike traditional IRAs, Roth IRAs do not require distributions to begin at age 70½), you could double or triple today’s value while paying tax only on its value at the time of conversion. A special rule applies for 2010 conversions in which the tax is deferred and the taxable income is split between 2011 and 2012. The conversion must be made by Dec. 31, 2010. You can decide whether to pay the tax on your 2010 return or spread it out over 2011 and 2012, by the due date (with extensions) of your 2010 tax return. After 2010, the ability to spread the tax is no longer available.
Business Valuation Sale Advisory and Succession Planning Discount Studies (FLP/LLC) Expert Testimony Real Estate Appraisal
Radd L. Riebe, JD, ASA ■ 216.373.2998 ■ rriebe@srr.com www.srr.com
A donor advised fund is an exciting opportunity to engage your family in philanthropy. Making your grant recommendations a family project teaches children and grandchildren the value of giving to community and presents an occasion to learn more about the needs of those who have less, and about the valuable organizations that serve those needs. There is no better way to ensure your values are passed on than by demonstrating those values through conversations about philanthropy. Establish a donor advised fund with the Jewish Federation and see how, together as a family, you can help make the world a better place. 25701 Science Park Drive · Cleveland, Ohio 44122 216.593.2900 · www.jewishcleveland.org 5234
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RETIREMENT PLANS
Trusteed IRA can skirt issues often associated with stretch IRAs
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any financial and tax advisers have touted the glory of tax deferred compounding with “stretch” IRA planning. A “stretch” IRA simply means that a beneficiary has the option to defer withdrawals over the maximum amount of time permitted under IRS distribution tables. The problem with these projections is that beneficiaries frequently waste this opportunity and withdraw more than this — often the entire amount — after the IRA owner’s death. How many 18-year-olds inheriting a $1 million IRA would spend 1/65 (percentage based on 65-year life expectancy) or $13,485 in the first year? The “stretch” becomes a “blowout,” and the long-term projections become more myth than reality. Naming a separate trust as beneficiary can prevent the beneficiary from squandering the
stretch opportunity. Unfortunately, many trusts do not qualify for the longest “stretch” income tax deferral. A trust that is ideal for ordinary estate planning may be inappropriate to hold retirement plan or IRA assets. If the trust does not meet IRS guidelines, the IRA may have to be distributed within as soon as five years after death. TRUSTEED IRA SOLUTION: A trusteed IRA can combine the tax benefits of an IRA with the estate planning benefits of a trust. Using this strategy, an IRA owner, working with his or her estate planning attorney, customizes the beneficiary designation to match the family situation. This flexibility allows an owner to encourage continued tax deferral by limiting a beneficiary to the minimum required distributions, but with trustee discretion to go beyond this for reasons established by the owner. This ensures the “stretch out” actually happens
in a manner appropriate to a beneficiary’s needs. A trusteed IRA also can allow an owner to control who the beneficiary is allowed to appoint as his or her beneficiary, allowing a hard-earned retirement legacy to stay in the owner’s family. This can be ideal for second-marriage and blended-family situations. Unfortunately, only a handful of providers offer a sophisticated trusteed IRA solution. Trusteed IRAs are ideal for those with rollover-eligible profit sharing, 401(k), 403(b) or Keogh plans or any IRAs larger than $500,000, who want to ensure the strongest tax deferral and asset protection for their beneficiaries. ■
Thomas A. Danford is vice president of Key Private Bank. Daniel F. Miltner, CFP, is senior vice president of Key Private Bank. Contact Miltner at 440-788-4490 or Daniel_F_Miltner@KeyBank.com, or visit www.keyprivatebank.com.
EDUCATION
Alleviate education sticker shock
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he total cost of a four-year degree for someone born this year could be more than $300,000. This projection, in conjunction with the current economy, is enough to make any parent panic — and does
Are you on track with your financial plan? Come talk with one of our 50 professionals about: – financial planning – investment planning – insurance – group health – qualified retirement plans Call Jeremy Newton today at (440)683-9200
not even include the cost benefit only one or a of the increasingly group of beneficiaries. mandatory graduate Depending on its strucdegree. Parents are faced ture, contributions can with the daunting quesqualify for the gift tax tion of how to finance annual exclusion, which is such an undertaking, currently $13,000 ($26,000 especially when they may for a married couple) per still be paying off their beneficiary per year. CRISTIN own college loans. FortuThe terms of the trust SNODGRASS nately, there are a number can vary the timing of of options, especially if planning distributions and the purposes begins early. for which they can be made, allowing for greater flexibility in 529 PLANS: One of the most the future use of the trust assets. prevalent college funding tools is However, assets will not accumulate the 529 plan, which is a stateon a pre-tax basis, and depending sponsored investment vehicle. on the trust’s structure, either the The primary benefits include trust, the beneficiary or the grantor tax-free growth while the account will be liable for the income tax. accumulates and the ability to make tax-free withdrawals from COVERDELL EDUCATIONAL the account for qualified higher SAVINGS ACCOUNT: Contribueducation expenses. Such expenses tions are limited to $2,000 per include tuition, books, fees, student per year and may not be supplies and, in some cases, room made after the beneficiary reaches and board, at any eligible educaage 18. The account grows tax free, tional institution in the country. and distributions for qualified Any other withdrawal from the expenses at eligible educational plan is subject to a 10% penalty institutions are also tax free. It in ordinary income taxes (at the may be used for primary and recipient’s rate) on the earnings secondary education as well as portion of the withdrawal. higher education, but benefits may sunset for ESAs as of 2011 IRREVOCABLE TRUSTS: unless Congress acts. See STICKER Page S-20 Irrevocable trusts can be set up to
www.cedarbrookfinancial.com Securities offered through Securities America, Inc., member FINRA/SIPC. Advisory Services offered through Securities America Advisors, Inc., an SEC Registered Investment Advisor. Cedar Brook Financial Partners LLC and Securities America companies are not affiliated.
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November 15-21, 2010
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EDUCATION
529 accounts provide savings benefits
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s we approach the fourth quarter of 2010, we are confronted with much uncertainty as to the future of the federal estate tax. This quandary has led me to seek solutions that address my clients’ estate planning goals but also provide the flexibility to respond to changes that may occur after the new law is settled. One strategy is the gift and estate tax treatment of 529 saving accounts. There are two basic distinct types of 529 plans: tuition prepayment plans, and college savings and investment plans. In addition to growing free of federal and state annual taxation, 529 accounts can be spent free of federal and state taxes for qualified educational expenses; and the laws setting up many plans offer account protection from creditors. Although contributors don’t receive a federal income tax deduction for the contribution, the earnings aren’t taxed while the funds are in the program.
The account owner can change the beneficiary or roll over the funds to another plan for the same or a different beneficiary without income tax consequences. Additionally, there are no income limits on contributions. One of the least understood benefits of 529 plans is the account owner’s ability to maintain control over the accounts. This is possible because funding a 529 account is deemed a “gift” to the designated beneficiary of the account even though such beneficiary never has any right or entitlement to control over or legal interest in such account. Individuals are allowed to access four future years of their annual exclusion, currently $13,000, to utilize five years at once — meaning an individual could contribute $65,000 and joint tax return filers could contribute
Ensure right plan is in place for elderly relatives
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6300 Rockside Road Suite 100 Independence OH 44131 $130,000 to each 529 account during one year or on one occasion. Assets in a 529 plan could impact the beneficiary’s ability to qualify for grants and student aid. Investors should consider the investment objectives, risks, charges and expenses associated with 529 plans carefully before investing. However, few strategies seem to offer as much control and benefits, and in these uncertain times this may prove to be uniquely valuable for many. ■
216-573-2330 walthall.com
Contact Colin O. Anderson of Vantage Financial Group at 216-642-8037 or e-mail canderson@vanfin.com. Resources provided by Chris Stack, Esq.
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LEGACY
Preserving the past, enriching the present, inspiring the future
Let us help create your legacy. Contact Executive Director Stephen W. Madewell at 440-639-7275.
Encourage discussions early on
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any of us struggle every day to make certain we are financially sound and have our estates in order. What about Mom and Dad? Or Aunt Mary? Many elderly are depending on the 55-plus generation for guidance and/or care. Over the years, I followed the philosophy that if I needed to review my financial items or permanent documents, I knew that my mom and dad also needed to review theirs. Discussions with elderly relatives always should begin sooner rather than later. It is much easier to talk about life-changing decisions when there is no pressure to do so. What documents to consider The first step to begin the process is to gather copies of all permanent documents. You should gather: ■ Wills and trusts ■ Powers of attorney ■ Advance directives ■ Living will ■ Durable power of attorney for health care ■ Insurance policies ■ Basis of any assets they may have inherited ■ A list of all advisers and phone numbers ■ A list of all assets and liabilities
(a current tax return will help with this). A downloadable Excel file to document this information, as well as other worksheets, is available at www.walthall.com/practice _groups/financial_planning. Reviewing these documents is your next step. It is important to understand what your relatives want you to know, and what they don’t. If you are the executor/ executrix, it is advisable to understand the estate situation along with any undocumented wishes. Forgotten tasks An often overlooked task is the review of the Medicare Part D option for prescription drugs. These plans change annually, and as a result, the options must be reviewed annually. The program at www.medicare.gov allows you to maintain and save a list of medications, and review and choose the most suitable plan. Adding this decision to the energy choice decisions, the elderly are justified in feeling overwhelmed. Although deathbed planning can be done, do you want to use your final moments with your loved ones to address financial questions? ■
What do You value?
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Whether it’s retiring in comfort, educating your children or grandchildren or helping your loved ones, being able to live those values and fulfill your dreams lies in setting goals and carefully planning a course of action. Call 216.241.3272 to talk to a Meaden & Moore professional about protecting what you value.
Cindy Kula, CPA/PFS, CFP, is director of tax services and chairperson of the financial planning group, Walthall, Drake & Wallace LLP CPAs. Visit www.walthall.com/news for more information and upcoming seminars.
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OHIO and FLORIDA ESTATE PLANNING and PROBATE
Nancy H. Canary, Esq. CLEVELAND, OH - P: 216/226/7466 F: 216/226/7426 PALM BEACH, FL - P: 561/833/5900 F: 561/833/5951 E-mail: NACanary@cs.com
GIVING. Meet Barbara Bellin Janovitz. In addition to being the Chair of the Estate Planning Group at Reminger, Barbara also gives freely of her time on behalf of vital causes in our community like the Cleveland Clinic Taussig Cancer Institute, the Golden Age Centers of Greater Cleveland and the Different Needz Foundation. Barbaraâ&#x20AC;&#x2122;s talents and spirit benefit her clients and our community every day.
Barbara Bellin Janovitz 216.430.2178 bjanovitz@reminger.com
Results. Period. www.reminger.com
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International estate planning requires special considerations
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n todayâ&#x20AC;&#x2122;s international countries, in most cases a business community, jurisdiction on the foreign business Organisation for Ecoowners and execunomic Co-Operation and tives often diversify their Developmentâ&#x20AC;&#x2122;s â&#x20AC;&#x153;white business activities and listâ&#x20AC;?â&#x20AC;&#x201D; those countries investments globally. that have substantially These individuals implemented the interJEFFREY should have a comprenational standard for the LEVIN hensive personal estate exchange of information plan for their worldwide among tax authorities â&#x20AC;&#x201D; assets. An overall plan would, at is preferred. the appropriate time, control the The selection of a knowledgetransfer of those assets to family able and experienced corporate members or charities with minifiduciary to administer the estate mal, if any, transfer tax costs, plan is also crucial. depending on the jurisdictions Customization of a discreinvolved. tionary foreign trust can be Among the tools frequently accomplished in several ways. used to accomplish estateDepending on the controlling tax planning goals are foreign discrelaws, one or more beneficiaries tionary trusts and foundations. could be given a general, limited From a U.S. tax standpoint, these or special power of appointment entities are often viewed as over some or all of the trust potentially abusive and are not income and corpus. favored by the IRS. Such a power would allow beneficiaries to exercise a significant For non-U.S. citizens and residegree of control over the trust dents, they can be â&#x20AC;&#x153;customizedâ&#x20AC;? for independent of the authority each particular client and family exercised by the trustee. In some situation and, more importantly, cases, especially where a U.S. citipermit significant flexibility in zen or resident could be a current their administration. In this case, or future beneficiary, such broad the selection of the appropriate powers may not be advisable and corporate fiduciary and the jurislimitations should be considered. diction for the foreign entity is In those cases, a trust protector extremely important. could be designated to provide Today, with increased internaoversight of and guidance for the tional emphasis on financial trustee. In addition, the protector transparency and the exchange could be given the authority to of tax information between
remove and replace the trustee should the need arise. The protector could be a senior family member, a family adviser or a close family friend who knows the family members and would be expected to act in the familyâ&#x20AC;&#x2122;s best interests. Another approach is to establish a â&#x20AC;&#x153;family council,â&#x20AC;? which could function as a collective protector. Finally, in appropriate situations and jurisdictions, the family could establish a private trust company, controlled by the family, to serve as the corporate trustee. The formation, funding and administration of these foreign discretionary entities can be complicated and involve the commercial and tax laws and treaties of several countries. Experienced international legal and tax counsel should be consulted in advance to assist with the implementation of a comprehensive plan with the least amount of tax and transfer costs. Finally, the international estate plan needs to be reviewed periodically and, where necessary, revised to address changes in the laws of the relevant jurisdictions, the composition of the family and the countries of their residence and domicile. â&#x2013;
Jeffrey S. Levin is a partner with Squire, Sanders & Dempsey LLP Contact him at 212-872-9840.
FINE ART, COLLECTIBLES AND THE FEDERAL ESTATE TAX
Safeguard against tax implications OUR INDEPENDENCE IS YOUR PEACE OF MIND :H DUH *OHQPHGH Âł ZH¡UH VWURQJ Ă&#x20AC;QDQFLDOO\ VRXQG DQG SURXGO\ LQGHSHQGHQW $QG ZH LQWHQG WR VWD\ WKDW ZD\ %HLQJ SULYDWHO\ RZQHG SODFHV XV LQ D SRVLWLRQ RI VWUHQJWK 8QOLNH SXEOLFO\ KHOG FRPSDQLHV ZH DUH QRW GULYHQ WR FKDVH VKRUW WHUP SURĂ&#x20AC;WV ,QVWHDG LQGHSHQGHQFH JLYHV XV D VHFXUH ORQJ WHUP RXWORRN 2XU DFKLHYHPHQW LV PHDVXUHG VROHO\ E\ KRZ ZH PDQDJH ZHDOWK IURP RQH JHQHUDWLRQ WR WKH QH[W )RXQGHG DV D WUXVW FRPSDQ\ PRUH WKDQ \HDUV DJR ZH¡YH JXLGHG IDPLOLHV IDPLO\ RIĂ&#x20AC;FHV DQG HQGRZPHQWV DQG IRXQGDWLRQV ZLWK WLPH WHVWHG DGYLFH DQG VRSKLVWLFDWHG LQYHVWPHQW PDQDJHPHQW 7RGD\ ZH KDYH PRUH WKDQ ELOOLRQ LQ DVVHWV XQGHU PDQDJHPHQW IRU FOLHQWV DFURVV WKH FRXQWU\ DQG DEURDG 7R ZRUN ZLWK D SDUWQHU GHGLFDWHG WR LQVSLULQJ WUXVW Âł FRPH WR *OHQPHGH
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ollectors of fine art and other collectibles should prepare for the return of the federal estate tax by obtaining a current appraisal of their collections. Premier quality fine art and collectibles not only have maintained their value, but many may have increased significantly during these economically troubled times. As a result, art and collectibles may comprise a much larger portion of your taxable estate. The time is right to obtain a current fair market value appraisal of your collection and to schedule a meeting with your estate planners to review your plan. Significant changes may be essential to maximize estate tax savings and meet personal objectives. In a recent appraisal update we performed to evaluate a 5-year-old appraisal, we discovered that a pair of Art Deco American bronze sculptures had increased in value from $85,000 to $850,000 each over the five-year period. In light of the possibility of such significant increases in value, a prompt appraisal update is essential. An additional reason for scheduling an appraisal now is to obtain authentication of high value items. In my experience, most major collections contain one or more items that are fake.
Art and collectibles may now comprise a much larger portion of your taxable estate. Fakes in your collection will be assumed to be authentic and will be valued as such by most appraisers. As fakes, they may be worth 10% or less of the value of the authentic work. You will have paid federal estate tax on a â&#x20AC;&#x153;phantom value.â&#x20AC;? Most appraisers are not able to obtain proper authentication. When such items are subsequently offered for sale or donation and authentication will be required, the work will be found to be fake and of little or no value. Likewise, collectibles may have been stolen in the past. That means that the collector has â&#x20AC;&#x153;hot propertyâ&#x20AC;? to which he or she does not have any legal rights. If the collectorâ&#x20AC;&#x2122;s title and ownership of the work is in question, the item has no value for estate or tax purposes. If the issue of prior theft is not addressed by the appraiser, the appraisal will mislead the collector and result in potentially serious economic harm when the work finally surfaces in
Crainâ&#x20AC;&#x2122;s Cleveland Business Custom Publishing
â&#x2013; Fakes in your collection will be assumed to be authentic and will be valued as such by most appraisers. â&#x2013; If the title and ownership of the work is in question, the item has no value for estate or tax purposes.
a public market. Select an appraiser who is an expert in the area of prior theft, stolen property, ownership rights, and performs due diligence in this field. To assure the highest quality professional appraisal, and to avoid any personal liability from the appraiser selection process, choose only an IRS-qualified appraiser who is a certified member of the American Society of Appraisers (ASA), Appraisers Association of America (AAA) and International Society of Appraisers (ISA). Verify that the appraiser selected carries at least $1 million in Errors and Omissions insurance, which is your backstop in the event of a serious appraisal valuation error. â&#x2013;
James Corcoranâ&#x20AC;&#x2122;s appraisals are certified by AAA, ASA and ISA. For over 30 years his firm, Corcoran Appraisal Group, has maintained substantial Errors and Omissions insurance coverage with St. Paul Insurance Company.
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November 15-21, 2010
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INSURANCE PLANS
Split-dollar plans can be costly
S
plit-dollar life insurance plans had frequently been used to fund estate tax liquidity until the IRS issued new rules in 2002. Many people still have not addressed these tax implications, and this could have detrimental effects for themselves and their families. Most of these plans created a sharing of the costs and benefits between a business owner’s company and his or her insurance trust (ILIT). Under the new rules, participants may be able to continue using the low economic benefit cost (EBC) to measure the benefit, but as one gets older these costs can become astronomical. If this plan is eventually terminated by repaying all premium advances back to the company,
the new rules make the cash value fully taxable as ordinary income. Furthermore, if the policy is held in a trust, it may also be considered a taxable gift. One exit strategy is to change from the EBC approach to a “loan regime” and instead pay annual interest costs, which are presently very low. This would potentially remove the taint of future taxation upon plan termination. If ongoing premiums are still due, you can continue loaning the premium, which also will increase annual loan interest costs. Alternatively, you can freeze the loan and fund future premiums with third-party premium financing or an enhanced gifting strategy. Funding the repayment to the company may also be a challenge
Insurance is a critical piece of the asset plan
O
out” covers select verlooking employees. Business insurance assets overhead coverage pays may be like for ongoing non-owner driving at night costs. Buy/sell funding without headlights. Swallow pays a benefit agreed to hard, grip the wheel tight, between partners when and hope there isn’t a one becomes disabled. sharp curve in the road. ■ Life insurance can The risk management HOWARD be a portfolio diversifier portion of your portfolio SLATER unlike any other. Appliis arguably the critical cations are similar to disability piece of a balanced estate plan. coverage and then some. Its most Understanding the characteristics important characteristic is terrific of these assets and how to utilize leverage. One dollar in premium them can put you in a position to buys multiple times in coverage. maximize your estate. Here are some A life insurance policy with a insurance products to consider: guaranteed death benefit is perfect ■ Disability coverage protects for gifting. Life insurance can be your ability to generate income. used to replace what will be lost Individuals can purchase a disability in taxes and long-term care costs. policy with the highest level of Purchasing a policy at a younger coverage. These individual poliage can ensure future insurability cies can offer flexibility such as and secure credit. Insurance guarincreasing future coverage withantees are only as good as the out medical underwriting and paying ability of the carrier, so may have tax-free benefits. Purinformed choices mean smart chasing an individual disability diversification and wealth transfer. policy prior to securing employer■ Coming to grips with mortaloffered group coverage is wise beity may be an emotional hurdle. cause of coordination of coverage Long-term care (LTC) insurance and the ability to maximize beneprotects against rising costs that fits. Business owners can choose accompany our last years of life, many applications. Key person potentially preserving a sizable coverage protects vital employees portion of your estate. Traditional and can be offered as part of a See INSURANCE Page S-20 retention package. Group “carve
CORCORAN
given that few plans ever considered repayment, and poor policy performance has even impacted plans that did anticipate repayment or “rollout.” Sometimes a Grantor Retained Annuity Trust can be used to interject cash into an ILIT, and this then can be used to repay the company. Usually life insurance is an integral part of the estate plan. Therefore, a proper analysis of the split-dollar agreement, the life insurance policy and the overall wealth transfer plan is essential to developing an appropriate split-dollar exit strategy. ■
The TOLI Group’s sole focus is the creation of the greatest possible benefit for trust grantors and beneficiaries, while reducing risk and providing fiduciary prudence for both professional and non-professional trustees. We have developed a unique process that attempts to ensure, on an annual basis that the assests being protected in the trust are well managed and on track to deliver their intended purpose.
Larry Rothstein, CLU, is a partner with Insurance Management Consultants, LLC. Contact him at 440-801-1800 or lrothstein@imcwealth.com.
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Taft celebrates its 125th Advent of personal computing Cleveland Cavaliers enter the NBA Astronauts walk on the moon Mack Swigert authors Taft-Hartley Labor Act Robert A. Taft elected to U.S. Senate Elliott Ness becomes Safety Director of Cleveland Firm is founded
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ESTATE PLANNING
S-20 November 15-21, 2010
DONOR Continued from Page S-9
Charitable giving can be quite personal. A donor-advised fund enables you to select recognition or privacy as desired, based upon the needs of your family. Not everyone may have assets other than cash to give, and there always will be families that are going to feel more comfortable gifting with cash they have on hand at the time they are ready to
CONGRESS Continued from Page S-4
issues such as: ■ Avoiding the publicity, time and cost otherwise engendered by the need for a probate court to become involved in one’s affairs upon incapacity or death. (Note: Contrary to popular belief, a spouse cannot automatically handle the affairs of an incapacitated spouse unless certain estate plan documents have been executed.) ■ Selecting the person who will act as the guardian of minor children. Without proper estate plan
give. Any gift in any format is always appreciated and always needed by a great number of organizations. However, if you are looking to be more strategic, maximize your benefits and create a legacy, donor-advised funds may be worth exploring. ■
Laura Malone is director of gift planning with the American Endowment Foundation, an IRS-recognized, 501(c)(3) public charity and independent sponsor of donor advised funds. Contact her at 877599-8903 or visit www.aefonline.org.
documents, a probate court will select the guardian. ■ Protecting inheritances from certain creditors and creditors of beneficiaries (including divorcing spouses, in-laws and judgment creditors). ■ Allowing for the management of assets for the benefit of beneficiaries beyond their 21st birthday. Without the requisite documents, most inheritances must be distributed in full by the time a beneficiary turns 21. ■
Rennie Rutman is counsel at Tucker Ellis & West LLP. Contact her at 216-6964749.
TITLING Continued from Page S-7
to costly and unnecessary litigation. ■ Estate tax. Beginning Jan. 1, 2011, each individual will have a $1 million exemption from the federal estate tax, making the titling of property even more important. For higher net worth couples, each spouse should have sufficient assets in his or her own name to fully utilize each exemption. If all assets are in joint and survivorship form,
STICKER Continued from Page S-16
UNIFORM TRANSFERS TO MINORS ACCOUNT: With this account, the minor is the deemed owner and the custodian controls the property until the minor reaches the legal age. Distributions must be made for the minor’s benefit, which includes education. DIRECT PAYMENTS: Another funding route is direct payment to the educational institution. This can be done by someone other than the parents. Direct payments, for tuition and fees only,
STICKER
Advertisement the legacy intended for their family may be inadvertently subject to federal estate tax, with up to 55% potentially going to the government. ■ Old documents. Our vault is filled with documents, many of which are old insurance trusts that have never been revoked. A client may create new documents but fail to revoke old ones, leaving policy proceeds paying to the old plan. It can result in a trust funded with insurance proceeds that no longer pay in the manner intended.
■ Tax implications. Titling of assets can affect which beneficiaries bear the tax burden when you are gone. Discuss with your estate planning attorney the use of a tax apportionment clause so that the burden of tax payments is directed where you want it. ■
are not subject to gift tax, and can be made in addition to any annual exclusion gift without using any of the donor’s $1 million gift tax lifetime credit. This option can be advantageous for someone trying to reduce the size of their taxable estate. Other funding methods include prepaid tuition plans, and tuition and gift annuities. With all funding methods, consider the effect on financial aid availability. ■
INSURANCE
Cristin R. Snodgrass is an attorney in Calfee, Halter & Griswold LLP’s Estate and Succession Planning practice. Contact her at 216-622-8503 or csnodgrass@calfee.com.
CHARITABLE
Anne Carnahan is a vice president and senior trust adviser with PNC Wealth Management. Contact her at 216-2222894. Nicole Bornhorst is a vice president and senior wealth planner for PNC Wealth Management. Contact her at 216-222-9038.
Continued from Page S-19
LTC insurance can be purchased by an individual, business partnership or employer-paid contributory arrangement. Policies are generally structured as reimbursement or indemnification type. You may not have the asset base to selfinsure. Various hybrid products offer solutions such as life insurance contracts with long-term care provisions. Review the policy with your agent or adviser to understand benefits and limitations.
Various hybrid contracts offer solutions such as life insurance contracts.
Continued from Page S-10
works even if your stocks have lost value but are still worth more than when you first purchased them. You can sell the devalued stocks and donate the proceeds toward a CGA, claiming a loss on your taxes while receiving a charitable deduction and gaining income for life. Ask your favorite charitable organization to discuss options that may be right for you. ■
James R. Hickey, CFRE, CAP, is gift planning director for the OPRS Foundation. Contact him at 440-942-4342, x1506.
HOSPICE Continued from Page S-9
difficult “what if” conversations. ETHICAL WILL: Many ethical wills are simple letters; some are video journals; others are gathered as scrapbook-style assemblages. Each is a journey through a lifetime —records of love, wishes and gratitude. We all have stories that should become part of a collective memory. Your ethical will is an irreplaceable inheritance. From the child putting his first dollar into a savings account to the newlyweds preparing to buy their first house, our society places great value in planning for the future. But few of us feel comfortable discussing how we wish to be remembered or what we hope for in that final human experience, our dying. Each of us has a unique legacy to share. With good planning, we can pass it on. ■
David A. Simpson, LSW, is CEO of Hospice of the Western Reserve. Contact him at 216-383-2222 or visit www.hospicewr.org/legacy.
Crain’s Cleveland Business Custom Publishing
■ Changes to health-care insurance means choices are critical. Companies may now offer consumer-driven health plans combining high-deductible health insurance plans with tax-advantaged health savings accounts (HSAs). Tax-advantaged HSAs allow you to deposit tax-deductible funds into an account to pay for current health care needs and save for future bills. It’s like an IRA account for medical expenses. Put away the max amount, use cash flow to pay medical bills, and the HSA grows tax-free to cover medical costs in retirement. In an era of diminished consumer control, this is appealing if you have time to manage it. If eligible for Medicare, don’t procrastinate. Using resources like pharmacies, medical providers and AARP help make appropriate choices. ■ Property/casualty insurance protects material assets. Smart choices could save hundreds a year, thousands over a lifetime. Applications are diverse, ranging from car, home and renters to collectibles, art and jewelry. Don’t be a victim of the vexing claims process. Inventory your valuables using photos, video and independent appraisals. Workers compensation, business income/interruption losses, excess liability and identity theft losses are other asset protection coverages. Always check the financial strength of the carrier before purchasing. Choose wisely, rest easy. ■
Howard Slater is a founding partner and financial planner of Cedar Brook Financial Partners, LLC. Securities offered through Securities America, Inc. For more information, contact Laura Sheridan at 216-548-6780 or e-mail laura @vivalabrand.com.
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NOVEMBER 15-21, 2010
E!CLEVELAND Every Thursday, Crain’s sends to more than 20,000 readers an arts and leisure e-mail called e!Cleveland. The e-mail highlights at least 10 events worth your time outside work. We’re fortunate in Northeast Ohio to have a vibrant arts community, and each edition of the e-mail features a mix of local music, theater, dance, film and other activities. To sign up for this and all our e-mails, visit www.CrainsCleveland .com and click the “Register for Crain’s alerts” icon at the top left of the home page. It’s free. If you have events you’d like us to consider for inclusion in future editions of the e-mail, send information to managing editor Scott Suttell at ssuttell@crain.com. Here’s a taste of what makes it into the e-mail each week:
State of the Hart Event: “Frederick Hart: A Collection of Important Works” Venue: Contessa Gallery, Legacy Village, 24667 Cedar Road, Lyndhurst When: Now through Dec. 31 Why you might be interested: If you like your art dramatic. Officials at Contessa say Mr. Hart, who lived from 1943 to 1999, created sculpture that is “timeless, important and enduring. It strives to restore wholeness and beauty of authentic humanness and bring emotional and moral health, dignity and integrity to the human form and the mystery of the human spirit.” Sweeping terms, but not undeserved for an artist whose work is both traditional in representing human figures but radical in its sensuality and innovating in its materials. On the web: www.ContessaGallery .com
The fur will fly Event: “Extreme Mammals” Venue: Cleveland Museum of Natural History When: Now through April 17, 2011 Why you might be interested: If you can appreciate some evolutionary development that’s way outside the box. “Extreme Mammals: The Biggest, Smallest and Most Amazing Mammals of All Time,” looks at some strange cases — a mammal so small that it could stand on the tip of a pencil eraser, an armadillo with horns and a whale with legs among them. Most of these creatures are so unfamiliar to us that there are no common names for them. Their bizarre characteristics “provide a fascinating entrée into the world of adaptations, evolution and phylogeny over millions of years,” the museum says. On the web: www.cmnh.org
Get ready for the road Event: “Fire and Folly” Venue: First United Methodist Church, Akron, and St. Paul’s Episcopal Church, Cleveland Heights When: Tuesday, Nov. 16, at 7:30 p.m. (Akron); Thursday, Nov. 18, at 7:30 p.m., and Friday, Nov. 19, at 8 p.m. (Cleveland Heights) Why you might be interested: If you want to check out a Northeast Ohio export. Soprano Sophie Daneman and Apollo’s Fire music director Jeannette Sorrell “bring feminine passion to works inspired by the ancient tales of love and loss,” according to the baroque orchestra. Ms. Daneman “evokes the heroines of antiquity in arias by Handel and Rameau,” while Ms. Sorrell and
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Apollo’s Fire “set sparks flying with sparkling chaconnes, as well as Vivaldi’s fiery Concerto for Four Violins and the wild La Folia (“Madness”).” This trans-Atlantic collaboration heads to Europe following these Northeast Ohio performances. On the web: www .apollosfire.org
Scary story Event: Speech by author Roxana Saberi Venue: Abrahamic Center, Notre Dame College, South Euclid When: Wednesday, Nov. 17, at 7 p.m. Why you might be interested: If you’re riveted by tales of injustice. Ms. Saberi, an Iranian-American, spent 100 days in an Iranian jail cell
Why you might be interested:If you’re a musical adventurer with global tastes. Pink Martini, a delightful 12-piece instrumental group from Portland, Ore., “enthusiastically performs every genre of music from jazz and Latino rhythms, Japanese pop, disco, French cabaret and movie themes to old-school classic,” PlayhouseSquare says. If Wikipedia is to be trusted, Pink Martini’s Thomas Lauderdale has described the band’s sound as “music of the world without being world music. If the United Nations had a house band in 1962, hopefully Pink Martini would be that band.” On the web: www.Playhouse Square.org
in early 2009. She was working as a freelance journalist in Iran when she was arrested and charged with espionage. Ms. Saberi denied the charges but was sentenced to an eight-year prison term. Eventually, her sentence was reduced and Ms. Saberi was released in May 2009. In her book, “Between Two Worlds: My Life and Captivity in Iran,” Ms. Saberi tells the story of her arrest, captivity and release, and shares the struggles and courage of her cellmates who inspired her along the way. On the web: www.NotreDame College.edu
Toast of the town Event:Performance by Pink Martini Venue: Palace Theater, PlayhouseSquare When:Thursday, Nov. 18, at 7:30 p.m.
Erudite theater Event: “Eurydice” Venue: Eldred Theater, 2070
Adelbert Road, Cleveland When: Thursday, Nov. 18, through Sunday, Nov. 21 Why you might be interested: If you want to brush up on your Greek mythology. The theater department at Case Western Reserve University tackles the tale of Orpheus and his descent to Hades to rescue his love Eurydice, in a work re-imagined by highly regarded playwright Sarah Ruhl. This modern version of the ancient Greek fable is told from the perspective of Eurydice herself “and centers on what she learns of love, loss and the power of memory during her time in the Underworld,” Case says. In Ms. Ruhl’s notes for the play, she says Eurydice and Orpheus “should be played as though they are a little too young and a little too in love.” On the web: http://theater.case .edu/season.php
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Banks: Lenders broaden borrower reach continued from PAGE 1
Hopkins International Airport, while Mr. Wojtowicz continued the hunt for money. This time around, the consultant took a different tack. He placed the request for a loan before banks hundreds of miles away — without traveling a mile. In mid-October, Mr. Lukasik closed on a $300,000 loan with a Chicago bank in a deal struck on BoeFly, a new Internet site. Mr. Wojtowicz has dealt in small business lending for more than 30 years and said it never has been as tough or time-consuming to obtain a business loan as in recent years. That situation makes it necessary to shop loans to as large an audience as possible, and the Internet, he said, is an increasingly useful tool for doing so. The state of Ohio apparently agrees. According to James Raussen, director of insurance and financial development for the state Department of Development, Ohio last month became the first state to offer an online match service for lenders and borrowers. The program launched Oct. 7. Though the Internet is now regarded as a nontraditional channel for securing business loans, Mr. Raussen, Mr. Wojtowicz and others predict it won’t be for long.
‘A new era’ Ohio’s free web site is called the Ohio Business Lending Clearinghouse, and already — just five weeks after its launch — the site has recorded nearly 2,400 hits, Mr. Raussen said. Of those who visited the site, more than 400 potential borrowers created profiles for lenders to read, and of those, 88 were selected by lenders for full review of credit scores, tax returns and collateral, among other things. No loans have yet been made through the clearinghouse, Mr. Raussen said. However, the site has enlisted some larger lenders, including KeyBank, Fifth Third and Huntington, and Mr. Raussen said some credit unions also have expressed interest. Stories of small business credit struggles were the genesis of the state’s new web site, Mr. Raussen said, noting the state has received numerous letters from business owners who’ve faced lending challenges. “This is what’s so exciting about this: It allows a small business a larger audience quickly and efficiently, and it doesn’t take away from the day-today operations of trying to grow and expand their business,” he said. Mr. Raussen said lenders also like it because it’s simple. “They’re getting an opportunity to meet new businesses that normally they may not have exposure to,” Mr. Raussen said. “We got to make it easier for businesses,” he said. “That’s the bottom line. This is a new era.”
Matchmaker, matchmaker Dionte Graves didn’t bother applying to local banks when he needed money last fall for new snowplow equipment to expand his Beachwood business, AMG Management Solutions LLC, which maintains foreclosed properties. Knowing he needed only a couple thousand dollars and wanting to avoid both the documentation a bank would require and the troubles he’d heard others were experiencing
in securing loans, the former banking professional logged online. Through a Google search, Mr. Graves discovered a site, Lending Club, and 10 days after he applied for a loan, he’d received an infusion of $4,750 into his bank account. Mr. Graves acknowledged the 16% interest rate is about what he’d pay on a credit card, but noted that credit card rates can fluctuate. The new snowplow he bought probably increased the workload capacity of his four-man company 25% to 30%, he said. Mr. Graves is among a rising number of business people using the Internet to secure loans, according to activity reported by such matchmaking sites. Launched last March, BoeFly has had posted on its site $592 million in financing requests, including requests totaling more than $20 million by borrowers and loan brokers in Ohio, said Mike Rozman, executive vice president of BoeFly. The site does not track actual loans made. Internet matchmaking “is brand new in business lending, but really, we’re picking an idea that’s played across other industries very well,” Mr. Rozman noted, citing online dating sites and personal mortgage sites, such as LendingTree. BoeFly focuses exclusively on business lending. It allows borrowers to post requests for financing for a one-time, $99 fee, Mr. Rozman said. BoeFly then uses lender preferences to match requests with lenders, which include banks and non-bank financiers. Lending Club, which began in May 2007, and another site called Prosper are different in that they connect business owners with individual investors, not institutions. Lending Club said 945 business loans totaling nearly $11.3 million had been arranged through the site as of Nov. 5. Of those, 26 loans totaling nearly $400,000 were made to borrowers in Ohio — 10 of them this year, Lending Club spokesman Nate Purpura said. Prosper reported its site since 2007 has facilitated $20 million in small business loans, including $557,000 lent to Ohio borrowers.
Old news? Not yet, but soon Though he said he can’t cite data that demonstrate it, William Dennis, senior research fellow with the National Federation of Independent Business Research Foundation, said he’s heard anecdotally and read in academic literature that more businesses are using the Internet to find the money they need. An NFIB Research Foundation survey of more than 750 employers revealed in 2006 that 15% of business owners had applied for credit online, but the data offer only a snapshot and the question hasn’t been asked since, Mr. Dennis said. The growth of online lending marketplaces poses some issues, Mr. Dennis said. For one, longdistance lending limits a bank’s ability to assess the quality of certain collateral, such as real estate. He and others stressed the need for small businesses and lenders to do their due diligence. Many agree, though, that the use of the Internet will go mainstream. Mr. Rozman of BoeFly said he believes the activity his site is seeing is a reaction not only to the lending crunch but also to a systemic problem. “The old way of doing things was
MONEY STILL IS CHANGING HANDS In what may seem an odd twist, Internet sites such as BoeFly and the Ohio Business Lending Clearinghouse that connect banks and borrowers support and contradict the perception that banks aren’t lending to small businesses. On the one hand, there are borrowers such as local Subway franchise owner Joe Lukasik who say they turned to an Internet matchmaker because they’d been denied by local banks. On the other hand, the presence of banks that are seeking borrowers online proves some are lending. According to bank spokespeople, Huntington Bank has increased its business lending in the Cleveland market by 30% in the first three quarters of 2010 over the like period
massively inefficient,” he said. Lenders employed an “army of development officers in order to find borrowers,” Mr. Rozman said, while borrowers sometimes knocked on many doors without obtaining the money they need. All the while, potential borrowers had their credit
last year. KeyBank estimated an increase of 220% over the same period — a jump that is largely the result of how much activity had slowed in 2009 when “everybody was hunkered down in survival mode,” said Matthew R. Wyner, senior vice president and business banking executive for Northeast Ohio. “We’re definitely seeing people get off the sidelines,” Mr. Wyner said, though not to pre-recession levels. The Federal Reserve Board’s most recent Senior Loan Officer Opinion Survey on Bank Lending Practices in July was the first to show an easing of standards on small business loans since late 2006 — “a modest unwinding of the widespread tightening that occurred over the past few years,” it read.
records pulled multiple times, which can hurt credit scores. To Raymond Keating, chief economist for the Small Business and Entrepreneurship Council, which is based outside Washington, D.C., the use of the Internet is a natural progression.
53
“The Internet’s been a wonderful development for everybody, but particularly small businesses,” Mr. Keating said. “It shouldn’t surprise us that it’s (being used for) finding credit. They’re finding their customers there, they’re finding their suppliers there — ‘OK, let me see, where I can get the best deal on credit?’ “Next year,” Mr. Keating predicted, “this will be old news.”
Already a convert The Subway shop owner, Mr. Lukasik, and his wife Debra have found more than one purpose for the loan they secured with First Capital Bank in Chicago, a division of First Colorado National Bank. They’ve paid bills for the build-out and equipment for their newest location, which opened in November 2009, and also reconsolidated their business debt, decreasing six monthly payments to one. The result: lower interest rates that have freed up $6,000 to $8,000 in cash flow a month, Mr. Lukasik said. Mr. Lukasik said he and his wife always are looking for new franchise opportunities. The next time they seek a business loan, he noted without hesitation, they’ll log online to find one. “Unfortunately, sometimes your local banks don’t understand your business,” Mr. Lukasik said. “You have more options going through the Internet, by far.” ■
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materials for homebuilders. But the housing bust has led to layoffs at the KraftMaid plant, including 145 announced at the end of last month. Today, KraftMaid employs 450 at its Orwell plant, Mayor Bottoms said. That decline is a big factor in the town’s annual income tax receipts being lopped down to an expected $650,000 this year from nearly $1.2 million in 2008. To make ends meet, Mayor Bottoms said the village has cut just about every expense except its police patrols, and even there, officers now must make do without a clerk and handle paperwork themselves. But KraftMaid was just the latest in a string of manufacturing opera-
tions to shut down in and around Orwell in recent years, said Jack Scott, whose family has run the town’s General Motors dealership since his grandfather opened it in the 1930s. There was K.D. Manufacturing — a John Deere supplier — that went out of business three years ago, taking 200 jobs with it. The Champion Steel mill closed a couple years earlier, idling more than 100 workers. Mr. Scott also has seen other auto dealers shut down, though that was many years ago. “There used to be four car dealers in town. Now we’re the only one,” he said.
Pain for the Amish This time, though, the downturn
is hitting parts of the Orwell economy that often were insulated from the recessions of the past. The Amish in particular have felt its pain, because nearly everything the Amish do — outside of farming for their own needs — revolves around construction, said Kevin Mitchell, branch manager for The Middlefield Banking Co. in Orwell. Mr. Mitchell said most Amish either are carpenters, work in other construction trades, make cabinets or run lumber operations, and all those fields are tied to home building. Many are doing whatever they can to keep working, which often means traveling great distances to job sites, Mr. Mitchell said. Amish
carpenters and other craftsmen who used to find work locally, or perhaps in Cleveland, now must go elsewhere.
China just called and you sold them your company for three yuan and a hot dog. (oops)
“They’re going to Pittsburgh, even Cincinnati. It’s crazy,” Mr. Mitchell said. For non-Amish — known as Yankees in Amish parts — driving the vans that take the Amish to and from their work sites has become a job classification in and of itself as a result of the increased distances they must go, Mr. Mitchell said. While the Amish are more selfsufficient than most people, they still are a huge part of the local economy, and they’re becoming more so as more Amish move to the area and buy land. Mr. Mitchell said half or more of his bank branch’s business is with the Amish, who borrow money for purposes such as new buggies and sawmill equipment. So, when the Amish suffer, so do other local businesses. “We’ve realized the fact that the Amish are hurting more here, too,” said Jim Kule, owner of Valley Feed Mill Inc. in Orwell. Mr. Kule said he often delivers the Amish their feed and other supplies when they aren’t around to pay for it, and he gives them credit and collects later. But lately, Mr. Kule said he’s had to cut off some of his Amish customers because the amounts outstanding on their accounts were growing too large. “So many are carpenters or construction workers,” Mr. Kule said. “They’re not working right now, so they owe us a lot of money.”
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It’s not that the Amish aren’t the hard-working people most outsiders take them to be. Indeed, Mr. Mitchell said there’s a distinct difference between an Amish borrower and most Yankee borrowers when a loan goes bad. “When the Amish can’t pay, they come to you,” not the other way around, he said. And no one expects the Amish to stay down — they’ll bounce back faster than most if the housing market comes back, because of their skill levels and work ethic, most in Orwell predict. As for the town itself, it won’t get to the point where it has four car dealerships again, but most in Orwell predict they’ll get through the recession. Mr. Scott said sales of his GM dealership, though still down from 2008, have picked up considerably from last year. He figures his son, George, will be the fourth generation to be able to run the dealership. “I don’t know if there will be a fifth, though,” he said. Mayor Bottoms said Orwell is facing a tough time, but no more than some other places. Its people are resilient and will pull through, he said. “We’re hanging in there,” he said. “We don’t have a choice.” ■
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THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
NOVEMBER 8 - 14
Police weed out pot ‘grow house’ in Flats
The big story: United Continental Holdings Inc. CEO Jeff Smisek delivered a message to the business community of Cleveland with warmth and affection for the city, which has had a long relationship as a hub for the pre-merger Continental Airlines. But Mr. Smisek’s underlying message was clear: If the hub here doesn’t make money, Cleveland won’t be a hub any longer. Speaking at a Jones Day luncheon, Mr. Smisek said several times, “We are committed to Cleveland.” The key for Cleveland, he said, “is to have a level of business travel so that we can have either consistent profitability or have that hub’s profitability in a clear line of sight (ahead).” Mr. Smisek added, “Every hub needs to earn its value every day.”
■ Cleveland police allege that a building on the 2300 block of Scranton Avenue in the Flats served another business purpose besides a new home for a heating and air conditioning business and an old furnace salvage yard that Tim West told Crain’s about in an Oct. 11 story on the future of the Flats. Cleveland police said in a news release last Friday that officers armed with search warrants had removed 1,000 suspected marijuana plants and indoor gardening equipment from the 2300 block of Scranton Avenue. That’s the site of the building Mr. West and brother Todd bought for $110,000 earlier this year. Cleveland and Westlake police, who participated in the investigation, also searched the Westlake homes of the brothers. Both men were arrested Nov. 5, charged with alleged cultivation of marijuana, and released Nov. 8 on bond, according to court records. Cleveland police said they plan to present additional information to the Cuyahoga County Grand Jury. Cleveland police said they also seized “thousands of dollars” at the alleged “grow house.” It just goes to prove there is money in the Flats. The discovery also may explain why Tim West worried about burglars hitting the structure when interviewed by Crain’s about the duo’s planned use of the old factory for their Any Heating & Air Con-
Out with the scalpel: The Cleveland Clinic notified employees of plans to eliminate about 200 positions across the entire health system. The move comes as the Clinic looks to consolidate more of its services and create “centers of excellence” across the health system. The personnel cuts include both administrative and clinical staff. Clinic spokeswoman Eileen Sheil said employees who are laid off will have “substantial time” to apply for the several hundred jobs currently open at either the Clinic’s main campus or its nine regional hospitals.
Howdy, partner: Squire, Sanders & Dempsey LLP and Hammonds LLP of the United Kingdom will merge effective Jan. 1. The combined firm will have 1,275 lawyers in 37 offices and 17 countries. Squire Sanders chairman James J. Maiwurm will be global chief executive and chairman. Peter Crossley, managing partner of Hammonds, will be managing partner for Europe. The combined firm will operate under the Squire Sanders name except in countries where Hammonds already operates. In those markets, it will use the name Squire Sanders Hammond.
Closing the book: The recession and changes in the way consumers read and buy books led to a Chapter 11 bankruptcy filing by the Joseph-Beth Group and a plan to close the bookseller’s 26,000square-foot store at Legacy Village in Lyndhurst. Neil Van Uum, owner of Cincinnati-based JosephBeth, said the bankruptcy filing was caused by the economic downturn coupled with a move by many buyers to electronic books readable on devices. Inventory liquidation sales will begin at the Legacy Village store this week and will continue until the store closes in December. End of the line: Timken Co. said Michael C. Arnold, executive vice president and president of the company’s Bearings and Power Transmission Group, intends to leave Timken at the end of the year. Chicago-based Ryerson, a privately held processor and distributor of metals in North America, named Mr. Arnold, 54, as its president and CEO effective Jan. 10. Mr. Arnold officially will retire from Timken on Dec. 31 after more than 31 years with the company. Swing for the fences: Radio Systems Corp. of Knoxville, Tenn., the maker of Invisible Fence brand pet products, bought JGB Distributing Inc. of Chesterland, the largest distributor of those products. Terms weren’t disclosed. Bill Miltz, CEO of the 85-employee JGB Distributing, will remain in that position as the company becomes part of Radio Systems. JGB provides Invisible Fence products and services to more than 105 dealers in 22 states and 11 Canadian provinces and territories.
WHAT’S NEW
Wall Street Reform and Consumer Protection Act that became law in July. — Dan Shingler
Akron, Kent make grade of affordable college towns
ditioning business. — Stan Bullard
Some frank talk about Dodd-Frank reform act ■ Well, someone, at least, is reading those laws that Washington is passing. Businesses have some new federal rules to contend with when it comes to dealing with their shareholders, and Jeff Morgan, CEO of the National Investor Relations Institute in Washington, D.C., is coming to Cleveland to explain some of them. Sherwin-Williams Co. is sponsoring Mr. Morgan’s visit so he can talk to local investor relations officials and other executives about new regulations that affect executive compensation; the rules include some that give shareholders a larger voice in such matters. Mr. Morgan will be in town this Tuesday, Nov. 16, and much of his talk will center on changes brought on by the Dodd-Frank
BEST OF THE BLOGS Excerpts from blog entries on CrainsCleveland.com.
Dems and the GOP can agree on this: We’re glad it’s over
COMPANY: Waltco Lift Corp., Tallmadge PRODUCT: Heavy-duty, level-ride HLF liftgate model Waltco, a designer, manufacturer and marketer of hydraulic liftgates for trucks and trailers, says the new HLF liftgate offers a simpler design from the company’s previous LPF model and maximizes performance for a variety of truck and trailer uses. The HLF series also offers “ease of installation, as well as a lower cost of maintenance and operation, which translates to a higher return on investment,” Waltco says. The company says the HLF model increases lift capacity to 5,000 pounds and offers a larger standard aluminum platform — 60 inches deep by 84 inches wide. A heavier, standard 3/8-inch bed extension offers greater strength, Waltco says, and a simplified parallel arm eliminates the previous model’s sliding parallel arm and springs, which makes installation simpler. The new model also boasts grease fittings and maintenance-free bearings at all major hinge points. For information, visit www.Waltco.com. Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
■ Though their football records aren’t something to gloat about, Kent State University and University of Akron students have one reason to smile: They live in two of the most affordable college towns in the country, according to a recent study. Coldwell Banker Real Estate, a worldwide real estate firm, reported that Akron and Kent are two of the top 10 most affordable housing markets near colleges, according to a study of 120 Football Bowl Subdivision schools. The average home listing in Akron was $139,711, while Kent’s was $153,662, according to the study. Those prices are a far cry from the most expensive markets, the steepest being Palo Alto, Calif., near Stanford University, where the average home listing reaches more than $1.3 million. The most affordable market is near Ball State University in Muncie, Ind., where the average listing is $105,115. The study also revealed that many students’ parents are buying houses for their children while they attend college rather than spending money on rent or dorm fees. And despite the real estate downturn, 73% of Coldwell Banker’s real estate agents reported seeing a significant number of investors buying homes near college campuses and renting them to people in the community. — Timothy Magaw
■ If you felt assaulted by political ads prior to the election, well, you were. Media Life magazine last week passed along data from Nielsen that show a record number of ads aired during October, even more than in 2008, a presidential election year. “Nielsen estimates that 1.48 million political ads aired on television last month, more than the 1.41 million that aired in the same month two years ago, when John McCain and Barack Obama were running for president,” the magazine reported. Ohioans were subjected to more political ads than any other state. Nielsen figures showed that Cleveland and Columbus ranked first and second in terms of percentage of total ads that were political, both exceeding 23%.
Talk is cheap, but his idea is a money saver ■ Cost-cutting — or at least talk of it — is all the rage in the federal government these days, and a Cleveland resident is making a major contribution to the discussion. The Washington Post reported that the White House last week started touting four money-saving ideas proposed by federal workers. “The four ideas, gleaned from about 18,000 submissions, are part of the second annual White House Save Award, a contest that seeks cost-cutting ideas from rank-and-
file federal employees,” The Post reported. The general public and federal employees will be able to vote on the four top ideas in an online poll. The worker who submitted the winning idea will meet with President Barack Obama, who then plans to include the winning idea in his proposed fiscal 2012 budget, the newspaper reports. Paul Behe, a paralegal specialist for the Department of Homeland Security in Cleveland, suggested the department “should advertise property seized by U.S. Customs and Border Protection online instead of in newspapers, saving the agency both time and money.” Mr. Behe said his office has more than 900 cases of seized property waiting in storage to be processed and advertised. Voting on Mr. Behe’s idea and the three others will be done at www.SaveAward.gov.
In D.C., Forest City heeds lessons of past 30 years ■ Forest City Enterprises Inc.’s big Washington, D.C., project called The Yards was mentioned in a fascinating Slate.com feature on how improvements in urban design are making cities denser and more vibrant. The feature is adapted from a new book, “Makeshift Metropolis: Ideas about Cities,” by Witold Rybczynski. In text that accompanies a slideshow, Mr. Rybczynski wrote that Forest City’s D.C. project “demonstrates what we have learned about urban redevelopment in the last three decades: Density promotes urban vitality; mixing residences and offices creates diversity; recycling historic buildings … helps to make an authentic sense of place; it’s better to place urban amenities such as shopping, a marina and a waterside park in close proximity; and it’s fine to mix different functions.”
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