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$2.00/NOVEMBER 25 - DECEMBER 1, 2013
It’s a ‘work in progress’ Levies spread
support thin Greater Cleveland Partnership wants calendar that avoids deluge of tax issues By JAY MILLER jmiller@crain.com
CONTRIBUTED PHOTO
After nine consecutive years of losing money, Corporate College was profitable in both fiscal year 2012 and 2013.
Ten years after its launch at Tri-C, Corporate College is finally generating profits; has it turned corner at last? By TIMOTHY MAGAW tmagaw@crain.com
W
hen Cuyahoga Community College announced plans about a decade ago to launch a Corporate College aimed at helping companies devise training programs for their employees, then-Gov. Bob Taft lauded the effort as “visionary” and one that would help the state attract and retain businesses. But 10 years later, Tri-C’s Corporate College, with its main outposts in Warrensville Heights and Westlake, has proven to be a drag on the community college’s coffers by operating in the red for much of its existence. Corporate College’s losses peaked at about $1.3 million in the fiscal year that ended June 30, 2009, and it wasn’t until fiscal 2012 that the endeavor turned a profit. College officials — both past and present — attribute Corporate College’s sustained losses to the costliness of launching a new venture, which then dovetailed into the economic collapse of 2008 and 2009 that forced many companies to axe their discretionary training budgets. Still, Tri-C hasn’t chalked up Corporate College as a failure; the school sees it as a venture that needs tweaking.
47
See PROGRESS Page 8
TWO SCHOOLS OF THOUGHT A look at the gross profits and losses for Cuyahoga Community College’s Corporate College since fiscal year 2009, when the college’s losses peaked at almost $1.3 million:
2009 $1,298,136 loss ■ Revenue: $3,614,049; expenses: $4,912,185
2010
Joe Roman, president of the Greater Cleveland Partnership, the regional chamber of commerce that plays a key role in convincing local businesses to contribute to tax levy campaigns, is concerned about raising political money in an environment where levies compete for taxpayer dollars and few can be called a sure thing. So, with an eye on important tax issues ahead, Mr. Roman and GCP are looking for ways to avoid the type of tax issue congestion that was
■ Revenue: $3,647,554; expenses: $4,218,226
2012
By CHUCK SODER csoder@crain.com
■ Revenue: $3,599,714; expenses: $4,605,473
2011 $570,672 loss
$329,509 profit ■ Revenue: $3,420,227; expenses: $3,090,718
2013 $461,308 profit ■ Revenue: $3,391,026; expenses: $2,929,718
2014
(As of Sept. 30, 2013) $627,917 profit
■ Revenue: $1,015,142; expenses: $387,224 ■ Source: Cuyahoga Community College
See LEVIES Page 17
Three heavyweights seeking startup cash University of Akron, Clinic and UH are asking for combined $60M in state grants
$1,005,758 loss
seen during this month’s elections in Cuyahoga County. The goal is to bring order and efficiency to the fundraising and campaign Roman processes and thus improve the prospects of passing individual levies. One idea, Mr. Roman said, might be working with government officials on a master countywide campaign calendar to schedule and better space out as many tax issues as possible. The decisions to put levy issues on the ballot “at the end of the day will be made by the public officials,” Mr. Roman said. “But I do think the community would benefit from a decade-long, published schedule that would include expiration dates.
Maybe they’ll get together and invent a knee implant coated with a polymer that emits a pain killer with the $180 million they aim to raise. The Cleveland Clinic, University Hospitals and the University of Akron Research Foundation intend to apply for a combined $60 million in state grants set aside for endeavors that could have a big impact on Ohio’s ability to develop high-tech products. The Clinic wants to beef up its ability to commercialize medical implants and other orthopedic products with help from the Ohio Third Frontier economic development
program, according to a letter of intent the hospital system sent to the state. UH aims to do the same with pharmaceuticals, and the Akron foundation is going after advances in advanced materials, according to letters of intent they submitted. But to secure a grant through the Third Frontier’s Technology Commercialization Centers program, each organization would need to come up with $2 for every $1 in state money it receives. That program is designed to fund big projects that will lead to the creation of new technologies and startups. Starting new companies is the main goal of the Clinic’s proposed Ohio Orthopaedic Commercialization Center. And it certainly has the ambition Third Frontier officials want to see when awarding grants: The goal is to “establish Ohio as the new world leader in orthopaedic product commercialization,” the Clinic’s letter stated. See STARTUP Page 4
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SPECIAL SECTION
WHO TO WATCH Crain’s salutes local business leaders who are employing sustainable practices ■ Pages 13-16 PLUS: Q&A WITH EXPERTS IN THE FIELD
Entire contents © 2013 by Crain Communications Inc. Vol. 34, No. 47
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CRAIN’S CLEVELAND BUSINESS
COMING NEXT WEEK Special section: City Living Crain’s will take a look at trends in city living and talk to the occupants of a few of the most recent projects downtown, including Julius Woodley, right, who lives at Reserve Square Apartments.
CORRECTION ■ The name of a local IBM executive, Maciej Zawadzki, was misspelled in a story about his colleague, Brian Muskoff, who was featured in the Nov. 18 Forty Under 40 section.
REGULAR FEATURES Classified ....................18 Editorial ......................10 From the Publisher ......10 Going Places .................9
Letters ........................11 Milestone ....................19 Reporters’ Notebook....19 Talk on the Web ...........10
WWW.CRAINSCLEVELAND.COM
NOVEMBER 25 - DECEMBER 1, 2013
A GLOBAL PLAYER A new KPMG report on international business location costs that assesses the general tax competitiveness of 55 major international cities gives relatively good marks to Cleveland. The firm looked at the total tax burden faced by companies in the cities, including corporate income taxes, capital taxes, sales taxes, property taxes and miscellaneous local business taxes in 2012. It created a Total Tax Index for each city as a measure of taxes paid by corporations, expressed as a percentage of total taxes paid by corporations in the United States. Thus, a TTI of 100 represents an average tax burden. Here’s a list of the five global cities with the lowest tax burden, plus the five U.S. cities on the global list with the lowest TTI.
Five highest tax burdens City
Total Tax Index
Five lowest tax burdens City
Total Tax Index
1. Chennai, India
46.4
16. Cincinnati
80.8
2. Vancouver
49.2
17. Baltimore
83.3
3. Chengdu, China
51.3
18. Cleveland
85.2
4. Mumbai, India
53.0
19. Atlanta
86.7
5. Toronto
56.0
20. Pittsburgh
89.1
■ Source: KPMG; view the report at tinyurl.com/ls8t2ue
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Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Chris Crain: Executive Vice President, Director of Strategic Operations Brian D. Tucker: Vice president Dave Kamis: Vice president/production & manufacturing Mary Kramer: Group publisher G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Powerful NFL often gets best of cities
HOTEL CONSTRUCTION HEATS UP A look at proposals, openings and remodels, by county (list is not all-encompassing):
Belmont County ■ St. Clairsville: Interstate 70 and Mall Road, about 90 rooms, tentative groundbreaking in March 2014
■ Steubenville: 79-room Microtel Inn & Suites, opened Nov. 18 at 909 Buckeye St.
■ Carrollton: Microtel Inn & Suites, broke ground in October; 100-room Candlewood Suites, broke ground in early November; Days Inn added 16 rooms over the last couple years, which included conversion of conference space and construction of two five-room villas ■ Sherrodsville: Atwood Lake Resort & Golf Club closed in October 2010, but reopened in October 2012 following its gifting to county commissioners
Columbiana County ■ Salem: Land is purchased for a Holiday Inn Express at State Route 14 and Cunningham Road; hotel known as the Timberlanes was bought in July 2012, now undergoing remodeling; purchase agreement is in place for 40-plus acres where a developer wants to build a hotel with a mudroom and lockers, specifically for oil and gas workers
Guernsey County ■ Cambridge: Three hotels are under construction: 77-room Holiday Inn Express,
broke ground on June 1 off Interstate 70 on Southgate Parkway; 79-room Microtel Inn & Suites, slated to open in spring 2014 off Interstate 70 on Georgetown Road; 71-room Sleep Inn, slated to open in spring 2014 off Interstate 70 on Southgate Parkway
Jefferson County
Carroll County
Stark County
Proposed renovation deal between Browns and Cleveland isn’t as burdensome as others
■ Canton: Two hotels at Interstate 77 and Faircrest Avenue: 99-room Fairfield Inn, which broke ground in early October, and a 105-room hotel to break ground in fall 2014 ■ Jackson Township: Holiday Inn remodel, approved in July 2013; Hyatt Place, approved in July 2013; 150-room hotel has conditional approval at Interstate 77 and Shuffel Street; at Dressler Road and Metro Circle, a SpringHill Suites with about 100 rooms is under construction ■ Plain Township: Staybridge Suites, approved in May 2013; Canton Home 2, submitted for December review by the Stark County Regional Planning Commission ■ Lake Township: Comfort SuitesHartville, has conditional approval
By KEVIN KLEPS kkleps@crain.com
■ Sources: Cambridge/Guernsey County Visitors & Convention Bureau; Canton Community Improvement Corp.; Carroll County Convention & Visitors Bureau; Corporex Capital; Sustainable Opportunity Development Center; Stark and Jefferson counties
STEVE BENNETT
Shale yields hotel gusher Six Ohio counties in Utica region are seeing boom in rooms By MICHELLE PARK LAZETTE mpark@crain.com
In one Ohio county that is home to roughly 30,000 people, the number of hotels open for business is about to double to four. A Candlewood Suites broke ground this
month and construction began last month on a Microtel Inn & Suites in Carrollton, the largest village in agricultural Carroll County. The neighboring counties see it, too: hotels rising from the ground and existing hotels undergoing renovation to make room — or literal-
ly, rooms — for those manning and operating wells and otherwise working in Ohio’s Utica shale region. It is a level of hotel building not seen in years, if ever, for some of these municipalities. In Stark, Carroll, Columbiana,
Jefferson, Guernsey and Belmont counties — which in 2010 had fewer residents collectively (692,459) than the city of Columbus — 10 hotel projects are in various stages of planning, seven hotels have broken ground, two have been remodeled and one opened just last week in Steubenville, in Jefferson County. See BOOMING Page 17
INSIGHT
Charities navigate influential web ratings Nonprofits more conscious of Charity Navigator’s four-star scale and its impact on their bottom lines By TIMOTHY MAGAW tmagaw@crain.com
Charity Navigator, a national nonprofit watchdog, has caught the attention of execu-
3
tives at Northeast Ohio charitable organizations, who say their donors increasingly are flocking to the website for an inside peek at their operations. The website analyzes charities’ publicly
available financial data and assigns a star rating — think music reviews à la Rolling Stone — it believes reflects the nonprofit’s fiscal health and commitment to transparency. In some respects, it could be likened to the popular U.S. News and World Report rankings that hospitals and colleges tend to flaunt, while at the same time bickering behind the scenes about the methodologies used by the magazine. See NONPROFITS Page 6
Joe Banner, a 20-year veteran of NFL front offices in Cleveland and Philadelphia, knows the game. It was with a sly grin, then, that Mr. Banner, standing in front of a gaggle of reporters in the Red Room at Cleveland City Hall last Tuesday, Nov. 19, said Banner Mayor Frank Jackson “kicked our ass” during negotiations toward a financing agreement that would cover $120 million in proposed improvements to FirstEnergy Stadium. The Cleveland Browns’ CEO was eager to tell anyone that the city — if the tentative agreement is approved by Cleveland City Council, possibly as soon as today, Nov. 25 — got a heck of a deal. “I think whether you relate (the agreement) to other NFL teams or whether you relate it to what the city could have been obligated to pay on the lease, I think it’s a very fair deal for the city,” Mr. Banner told a small group of reporters after last week’s press conference. And, relative to stadium renovation agreements between other NFL teams and the cities they call home, Mr. Banner may be right. See NFL Page 12
SOMEONE HAS TO PAY A breakdown of the proposed finances for the Browns’ $120 million renovations to FirstEnergy Stadium: ■ The team: The Browns will pay the entire $120 million up front. The project will be financed by multiple loans, including a $62.5 million, low-interest loan from the NFL. ■ The city: Cleveland will pay the Browns $2 million a year for the next 15 years. In addition, the city will take $12 million from the sin tax fund for future repairs, starting in 2016.
THE WEEK IN QUOTES “We’re communicating with the business community. We need to be close to them and understand what their training needs are to be responsive to their needs. It’s easier for a business person to do that.” — Robert Peterson, head of Tri-C’s Corporate College. Page One
“We thought we were the poster boys of following the Green Guides.” — Robert Sinclair, CEO, ECM BioFilms Inc. Page 7
“It’s all about leveraging sustainability to change the way we work.” — Nicole Koharik, global sustainability marketing director, Gojo Industries. Page 13
“It made so much sense to try and incorporate materials that were otherwise going to be thrown away. In Cleveland, we have a surplus of (foreclosed) houses and structures. Why not do something with it? It made too much sense.” — James “Deej” Lincoln, founder, Reclaimed Cleveland. Page 16
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CRAIN’S CLEVELAND BUSINESS
LEASED
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BakerHostetler to merge with Philly firm
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Newmark Grubb Knight Frank is pleased to announce that Edwards Vacuum, Inc has leased 41,591 SF at 7905 Cochran Road. Terry Coyne and Jeff Kennedy represented the Landlord.
NOVEMBER 25 - DECEMBER 1, 2013
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For the first time in more than two decades, BakerHostetler is combining forces with another law firm. The Cleveland firm said it has signed a letter of intent to combine with Philadelphia-based intellectual property firm Woodcock Washburn in a deal scheduled to take effect Jan. 1, subject to an affirmative vote of 151 BakerHostetler partners and 17 Woodcock Washburn partners. The combination would rebrand Woodcock Washburn as BakerHostetler. It would add Woodcock Washburn's three offices — in Atlanta, Philadelphia and Seattle — and 68 attorneys to BakerHostetler, which itself has 11 offices and more than 800 lawyers. The addition of
ON THE WEB Story from: www.crainscleveland.com those lawyers would double BakerHostetler's intellectual property practice to 140. The last merger BakerHostetler completed was with McCutchen, Black, Verleger & Shea in 1990, said Steven Kestner, BakerHostetler's executive partner. “Our growth has been mostly organic or adding groups,� he said. But, this combination, Mr. Kestner noted, was an attractive deal because it adds “a lot of depth� to the firm's intellectual property practice. “The amount of work in the intellectual property space has been
growing over the last few years,â€? Mr. Kestner said. “It's an area that we've been growing in, but we've been doing it in individuals and groups. “It (this merger) increases our capability of working with companies, in particular with technology companies,â€? he added. BakerHostetler has no immediate plans for moving attorneys, and when asked about the potential for layoffs, Mr. Kestner replied, “There's nothing planned at this time.â€? The combination would extend to Woodcock Washburn's clients the tax, business, litigation and other counsel that BakerHostetler offers, Mr. Kestner noted. “They haven't been able to offer that kind of work to their clients,â€? he said of Woodcock Washburn. â–
Startup: Third Frontier’s budget is thin continued from PAGE 1
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The orthopedic center plans to sustain itself by taking equity in its startups and receiving payments from the occasional licensing deal. But it needs cash to get started. With $25 million from the state, the center “will be able to secure major investments from academia, industry, and the clinical community,� according to the Clinic’s letter. Some of the money would be invested in orthopedic companies the center helps launch, and some would be used to hire a director and staff members with experience in developing orthopedic products, the letter stated. PCC Airfoils in Beachwood would be a key partner in the effort. The company focuses mainly on producing aircraft engine parts using an investment casting process, but that same process also is used to make hip and knee implants, according to the Clinic’s letter of intent. The orthopedic center would create a company that would make medical implants, with PCC’s help, the letter stated. Other partners with the Clinic would include Dr. Peter Bonutti, an Illinois-based medical device inventor with local roots, and NineSigma, a Beachwood firm that helps companies with technical problems find businesses that can solve them.
On the pharma front ‌ University Hospitals plans to apply for $25 million in state money and raise another $50 million for its Harrington Discovery Institute. Today, the institute gives grants to researchers developing new drugs, wherever they may be. The new money, however, would allow the organization to recruit more of them to Ohio. Although the institute already connects its “Harrington Scholarsâ€? with industry experts tasked with helping shepherd new drugs toward clinical trials, the new money would let it provide more support services on the ground in Ohio, according to Susan Luria, executive director of the institute. Those services would serve as an incentive for the researchers to stay in Ohio as they commercialize their
drugs. “We’d love to build ‌ a pharmaceutical development infrastructure in the state of Ohio and use resources here,â€? Ms. Luria said, though she declined to provide more detail about the initiative. UH’s letter of intent lists several Ohio companies in the pharmaceutical industry but doesn’t say whether they’ve agreed to collaborate on the project. But one clear partner is BioMotiv, a Shaker Heights company that UH formed when it created the Harrington Discovery Institute last year. Researchers who move to Ohio would have the chance to form closer relationships with BioMotiv, which licenses drugs from researchers around the world and guides them through early clinical trials — a task few investors are willing to finance these days.
Materials event The University of Akron Research Foundation plans to apply for $10 million in state money and raise $20 million more to create the Polymeric & Engineered Materials Technology Commercialization Center. An Akron firm called Acquire Investments LLC would help the foundation raise the money. The center would provide entrepreneurs with mentoring and between $25,000 and $200,000 of “nonequity� financing that they could use to demonstrate what their materials can do. The center also would have an equity fund that would invest between $200,000 and $1 million in “companies approaching market entry or seeking rapid growth,� according to the foundation’s letter of intent. But the center won’t just wait for entrepreneurs to show up with interesting technologies. The foundation — which helps the university commercialize its inventions — already has started to hunt for ideas inside and outside the University of Akron, according to George Newkome, vice president for research and dean of the university’s graduate school. Ohio has a huge base of advanced material companies that own “tons of intellectual property
that they may never use,� Dr. Newkome said. For instance, the foundation last year worked with bearings maker Timken Co. to form Akron Surface Technologies Inc. The startup’s first task is to find new markets for a coating that made Timken’s strongest roller bearings last four times longer. Some advanced materials companies already receive assistance from nonprofit JumpStart Inc. and other organizations that have sprung up to help entrepreneurs over the past decade. However, those groups don’t have the University of Akron’s polymer expertise. Plus, many of those programs focus more on information technology companies, which cost less to start, Dr. Newkome said. “It’s a lot easier to put an app out and make money than it is to set up a polymer company,� he said.
The money crunch Today, there isn’t enough money in the Third Frontier’s Technology Commercialization Centers program to give the three organizations all the dollars they want, but that situation soon could change. There is just $50 million in the program’s budget for 2013, but it will receive another $50 million in 2014 if the Third Frontier Commission doesn’t adjust the program. No other organizations have letters of intent listed on the Third Frontier website. Kent State University thought about applying to the program to fund a new center that aims to develop expertise and supply chain resources related to the manufacturing of flexible electronic products. However, the university didn’t yet have the partnerships in place to meet the program’s fundraising requirements, according to Grant McGimpsey, vice president of research and sponsored programs at Kent State. Instead, the school is applying for a $500,000 planning grant from the National Institute of Standards and Technology. “Their requirements (for the Technology Commercialization Centers program) are pretty steep, financially,â€? Mr. McGimpsey said. â–
Volume 34, Number 47 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2013 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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CRAIN’S CLEVELAND BUSINESS
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The Boys & Girls Clubs of Cleveland and the Cleveland Foundation both earned four-star ratings from Charity Navigator.
Nonprofits: Potential donors should go well beyond score when doing research continued from PAGE 3
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Last year, Charity Navigator had more than 6.2 million visits to its website. It also claims to influence about $10 billion of charitable donations each year. Now, the website says, it’s planning to take an even closer look at nonprofits and is developing an algorithm it says will measure a charity’s results and outcomes. The website says it is interested in whether these results are “providing a social value.” Unsurprisingly, nonprofits — and there are many in Northeast Ohio, all with differing missions — are concerned about how Charity Navigator could score the work they do for the community. For instance, do you grade a museum based on the number of people who flock through its doors each year and ignore the other outreach efforts that often are part of its mission? The same could be said for a food bank, the mission of which often goes beyond the number of people served. “Those are all so subjective,” said Bill Kitson, president and CEO of United Way of Greater Cleveland, which boasts a three-star rating on Charity Navigator’s four-star scale. “It’s going to be hard to put that in a grid and spit out a number.” However, nonprofits for the most part aren’t about to thumb their noses at Charity Navigator and ignore its potential impact on their ability to secure big-ticket gifts. The Cleveland Museum of Natural History, for one, launched a successful effort recently to boost its Charity Navigator score to the coveted four stars. One way it boosted its score was by steering money typically used for administrative expenses into other areas, such as research. The museum, which is in the midst of a $125 million capital campaign, plans to tout the upgrade in its fundraising appeals. “More and more individual donors, foundation donors and even corporations to some extent pay attention to the Navigator
score,” said Peter Anagnostos, the museum’s chief development officer. “As dollars become scarcer and therefore more competitive, you’re looking to demonstrate to donors that you’re a very well-run and governed organization.”
Scrutiny abounds Charity Navigator gets the bulk of the information for its ratings from nonprofits’ publicly available 990 tax forms, which organizations file each year with the Internal Revenue Service. The form, which in the 1990s was roughly two pages long, has evolved into a mammoth document that Chris Anderson, leader of the not-for-profit practice at Maloney + Novotny in Cleveland, called “your most important public relations document.” “You could send out a report to everyone in the community — even the media — but that’s still a defined population,” said Mr. Anderson, who also is a shareholder at the accounting and business advisory firm. “With Charity Navigator, all of that information is out there for anyone in the world to look at.” Todd Welki, whom the natural history museum cites as the architect of its Charity Navigator upgrade, said nonprofits tend to approach their 990s differently than they had in the past. ”You have the ability to talk about your programs, talk about your services and people tend to flush them out a lot more,” said Ms. Welki, the museum’s chief financial and operating officer. Charity Navigator bases much of its evaluation on certain financial ratios, such as the percentage of an organization’s budget that goes toward raising money. For some organizations, that percentage tends to balloon at the peak of major fundraising campaigns, given the rapid infusion of revenue, said Liz Fowler, executive director of the Cleveland Zoological Society, the fundraising arm for the Cleveland Metroparks Zoo. For instance, the Zoological Society’s Charity Navigator score last
summer dropped to two stars from three. Ms. Fowler attributes the decline to the culmination of the organization’s $12.8 million fundraising campaign for the zoo’s new elephant exhibit, African Elephant Crossing. “I pay attention to it (Charity Navigator) because it is an outside evaluation, but we’re not going to change how we do business because we are actually hitting our marks,” Ms. Fowler said. “The stars only tell part of the story.”
Take a deeper look Mr. Kitson of United Way said Charity Navigator can be a useful tool toward which to steer potential donors, particularly those who might be concerned about a charity’s administrative expenses — something for which United Way chapters nationwide often are criticized. The website notes that 10.4% of United Way of Greater Cleveland’s budget goes toward administrative expenses. The website gave United Way a score of 7.5 out of 10 for its administrative expense breakdown. In 2011, Charity Navigator started grading nonprofits on several transparency and accountability measures, which many nonprofits suggest have been helpful in pushing organizations to provide more information to the community and to implement new policies. Charity Navigator, for example, now rates organizations based on whether they have conflict-of-interest and whistleblower policies as well as whether they provide a link to their audited financial statements and 990 forms on their website. Still, nonprofits say potential donors should go well beyond the Charity Navigator score when scoping out an organization. Chris West, director of resource development for the Boys & Girls Clubs of Cleveland, which boasts a four-star rating, said he doesn’t expect someone to cut a $10,000 check based on a simple score on a website. “We expect our donors to want to get to know us a lot better than that,” Mr. West said. ■
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Head of ECM BioFilms says FTC has ‘sullied our name’ Company denies that it made unsubstantiated claims about biodegradability of its products By JEREMY CARROLL Plastics News
Saying science is on his side and the Federal Trade Commission is “out of the loop,” the CEO of ECM BioFilms Inc. has pushed back against allegations the company misrepresented the biodegradability of its products. The 16-year-old company believes it properly has advertised its biodegradable additives, ECM MasterBatch Pellets, said president and CEO Robert Sinclair in an interview at the company’s headquarters in Painesville. In a 16-page complaint, the FTC alleges ECM BioFilms has made unsubstantiated claims about biodegradability. According to the FTC, the product “will not completely break down and decompose into elements found in nature within a reasonably short period of time after customary disposal.” Before an update last year to the FTC’s “Green Guides,” ECM BioFilms used marketing materials to say the product would break down in landfills in a time period between nine months and five years. In October 2012, when the Green Guides were updated, the company changed its language, putting an asterisk on its marketing materials when using the word “biodegradable,” noting that it will take longer than a year for the material to biodegrade in landfills. “We thought we were the poster boys of following the Green Guides,” Mr. Sinclair said. The pellets ECM BioFilms manufactures in Illinois are used in various products, including golf tees, bags, highlighters and water bottles. Normal plastic does not biodegrade because typical bacteria and algae are not able to break down the material. “Their acids and enzymes can’t take these mega molecules and break them down far enough. So they need some help, and that’s where our stuff comes in,” Mr. Sinclair said. “Instead of the bacteria cell moving on, he hangs around for a little bit. And some more bacteria joins in, and all of a sudden they start making a biofilm.” That biofilm eventually will break down the plastic, he said. The materials break down in aerobic and anaerobic settings, Mr. Sinclair said, making landfills an acceptable destination for the plastics. During the biodegradation, the material gives off gas that is captured at many landfills for various uses, including making new resins or fuel. Mr. Sinclair said the company went through ASTM 5511 testing that proves the product breaks down, but the FTC said those tests do not properly replicate landfill conditions. “The test results they provided to us, we believe, don’t substantiate the claims they are making,” said Katherine Johnson of the FTC’s Bureau of Consumer Protection in a telephone interview. “The commission does not believe ASTM 5511 simulates condi-
JEREMY CARROLL
A highlighter by ECM BioFilms that uses biodegradable additives. tions found in landfills,” Ms. Johnson said. “An ASTM 5511 test would not be adequate substantiation that a product would biodegrade in a landfill, at least if they relied on that protocol alone.”
Test prep Mr. Sinclair said the company had asked what tests the FTC would recommend, but was not given any options. “We’ll test to whatever,” he said. Ms. Johnson said the FTC would look at any tests the company would conduct, but does not recommend particular tests. “There are tests out there that could establish that plastic will biodegrade or these kinds of treated plastics will biodegrade in landfills,” she said. Mr. Sinclair said objections were raised over how much moisture was used in the conducted tests. “The moisture only affects the rate. It’s not affecting the extent of biodegradation,” he said. “If something is biodegradable, and it’s in conditions where other things are biodegrading, it’s going to biodegrade fully. It’s just a matter of time.” And that “matter of time” might be key to the whole issue. FTC said the product will not break down in a “reasonably short period of time.” ECM BioFilms thinks its product falls into that time frame, because under various conditions, it might take grass more than a year to biodegrade. According to the new Green Guides, a plastic product can be labeled biodegradable if it can fully break down within one year of disposal. That restriction is unreasonable, Mr. Sinclair said. “They talk about a reasonable time being a year or less — it’s really insanity,” he said. “The FTC, they’re out of the loop. Purposely, they’ve been put out of the loop by interested parties. … They don’t get it. What they are doing is, they are basing things on information from the late ’80s and early ’90s. They haven’t changed with the times. This technology is all different now. “The truth is, the reason we are going to fight this out is, science is on our side,” Mr. Sinclair said. Once his company knew the FTC was going to make its complaint, Mr. Sinclair said he spoke to each of the company’s current customers. “I told them we were going to fight it, because we believe in what we’re doing,” he said. “I think, and time will tell, but I believe every single one of them will stay by us.”
‘All the bargaining chips’ About two-thirds of the company’s business is in the United States, said chief financial officer Kenneth Sullivan. “Before they start buying our product, they test,” Mr. Sullivan said about ECM BioFilms’ customers. “They are not unsophisticated companies.” ECM BioFilms is challenging the commission’s finding and a hearing is set for June 18, 2014, before an administrative law judge. That ruling could be appealed back to the FTC. That group’s ruling could then be appealed to a federal appeals court. “Of course we have to expense a huge amount of money. And they know that,” Mr. Sinclair said. “And they’ve sullied our name. They have all the bargaining chips as far as that goes.” ■ Jeremy Carroll is a staff reporter with Plastics News, a sister publication of Crain’s Cleveland Business.
JEREMY CARROLL
ECM BioFilms Inc. chief financial officer Kenneth Sullivan, left, and president and CEO Robert Sinclair pose in front of a variety of products that contain their firm’s biodegradable additives.
SOUNDING OFF ON THE FTC ECM BioFilms Inc. CEO Robert Sinclair didn’t mince words when discussing the Federal Trade Commission’s complaint that the Painesville company has made unsubstantiated claims about biodegradability:
“Of course we have to expense a huge amount of money. And they know that. And they’ve sullied our name. They have all the bargaining chips as far as that goes.” “They talk about a reasonable time being a year or less — it’s really insanity. The FTC, they’re out of the loop.”
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oyster perpetual and submariner are trademarks.
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Progress: Tri-C president says Corporate College has ‘arrived’ continued from PAGE 1
Tri-C’s new president, Alex Johnson, told Crain’s that Corporate College “continues to be a work in progress,” although it appears to be headed in the right direction. According to financial data provided by Tri-C, Corporate College finished its 2012 and 2013 fiscal years with profits — $329,509 and $461,308, respectively — and is on track to do the same this fiscal year, which began July 1. “It was a novel idea, and I think its time has finally arrived,” said Dr. Johnson, who started in his role last summer. Tri-C has taken an ax to Corporate College’s budget, cutting its expenses substantially since fiscal 2009, when they hovered at $4.9 million. By fiscal 2013, expenses had shrunk to $2.9 million, mostly due to not filling open positions, according to college officials. Over the same period, revenue has remained relatively flat, though Tri-C leaders say the pipeline of clients it built last year is starting to reflect positively on Corporate College’s bottom line. The architect of Corporate College’s turnabout is its leader of one year, Robert Peterson, former pres-
ident of the I-X Center and a longtime associate of local business magnate Ray Park. By the count of former Tri-C president Jerry Sue Thornton, Mr. Peterson is Corporate College’s fifth leader during its relatively short lifespan, but the first who didn’t hail from academia. “From my perspective, selecting a business person was probably a wise decision,” Mr. Peterson said. “We’re communicating with the business community. We need to be close to them and understand what their training needs are to be responsive to their needs. It’s easier for a business person to do that.”
What’s in a name? When Mr. Peterson arrived, TriC’s nameplate was nowhere to be found on Corporate College’s business cards. Corporate College wasn’t linked on Tri-C’s home page. Indeed, Mr. Peterson said CEOs around town — many of whom had been inside Corporate College facilities for events or meetings over the years — had no idea the enterprise was connected with Tri-C. Those were problems, according to Mr. Peterson, who suspects the superficial division of Corporate College and the rest of Tri-C was
done in order not to confuse their audiences. Simple tweaks such as merging Tri-C and the Corporate College’s branding already have proven fruitful, as Mr. Peterson said inquiries from local companies are on the upswing. “Tri-C is ingrained in the fabric of Northeast Ohio in a very positive way,” Mr. Peterson said. “It’s more of an asset to us than a detriment to say we’re part of Cuyahoga Community College.” Also, Corporate Collegeis putting a particular emphasis on using data to drive new business. Corporate College is using data gleaned from surveys, interviews and focus groups to formulate training programs for area business — an effort that has resulted in long-term arrangements with local firms, such as American Greetings, rather than one-off training programs. While Mr. Peterson sees Corporate College as able to serve businesses of all sizes, he thinks the middle market is particularly underserved. The Greater Cleveland Partnership, the regional chamber of commerce, agrees, and the two organizations have agreed to conduct jointly a survey to better understand the needs of middle-mar-
Ohio inventors received nearly 3,400 patents in 2012.
CRAIN’S
PATENT POWER GUIDE
ket companies. The burgeoning relationship will help Corporate College get face time with potential clients and GCP better involve the middle market in setting its economic development agenda. “This is really the first deep programmatic connection between us and the college,” GCP president and CEO Joe Roman said. “This is the first step in what I think will be a pretty long-term relationship. This middle-market area in Greater Cleveland is a sleeping giant.”
Training days When the Corporate College idea was unveiled in 2002, a cornerstone of the concept was that it would involve campuses on both sides of Cuyahoga County. The college ultimately constructed a hulking, 107,000-square-foot building in Warrensville Heights for $27 million and acquired a 104,000-square-foot building in Westlake for $10 million. Mr. Peterson said the Westlake campus hasn’t quite taken off as envisioned, at least to the extent of its counterpart in Warrensville Heights. While the Westlake campus houses a few Corporate College employees, it also serves as overflow space for Tri-C’s Westshore Campus, which has seen an explosive growth in enrollment over the last few years. Tri-C plans to expand its Westshore site, which could free up space at the western Corporate College outpost. However, college officials aren’t ready to call it quits on the building or the two-campus model. “You can look at it from one side of the coin and say we probably don’t need the building,” Mr. Peterson said. “On the other hand, we might lose an opportunity to serve
some of our West Side clients. I’d like to spend more time trying to develop it more fully before I make the decision it doesn’t make economic sense.” The Eastern campus, perched along Richmond Road near Interstate 271, serves as Corporate College’s hub. When the recession hit and training opportunities dried up, Mr. Peterson said the college relied more heavily on generating revenue by renting out meeting space. The rental business is still an important component of the Corporate College’s business model, but Mr. Peterson stresses that corporate training is still its primary focus. “Training is the only reason we exist,” he said. “We’re not in the business to rent rooms out and make rental revenue. “We’re cross-selling and focusing on making sure people understand we’re not just a rental facility but also a trainer,” he added. “That hadn’t been done effectively before.” Going forward, Mr. Peterson said Corporate College’s biggest challenge is the economy. As long as the economy continues to rebound, Corporate College will continue to drum up business. “I want the economy to continue to get stronger every day,” Mr. Peterson said. “That’s what I’m rooting for.” All involved admit Corporate College’s launch hasn’t been an easy haul. Still, Dr. Thornton, who dreamed up the idea during her stint leading a community college in Minnesota, told Crain’s that despite its losses, Corporate College “was really the right concept.” “It’s entrepreneurial and creative, and that’s what we are known for in this community,” Dr. Thornton said. ■
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GOING PLACES
TAX LIENS
JOB CHANGES EDUCATION LAKE ERIE COLLEGE: Dario Muzina to vice president, institutional advancement.
ENGINEERING
Muzina
Roloff
Mallo
Trivisonno
R.E. WARNER & ASSOCIATES INC.: Tom Adams to senior transportation engineer; Alex Dumesh to senior mechanical engineer; Tanya Koba-Hall to mechanical designer; Corey Holz to electrical engineer; Adam McClain to structural engineer.
FINANCE
Bloor
Murvine
Tomi
Agrawal
Coleman
Lambillotte
MCMANUS, DOSEN & CO.: Nicholas J. Weeks to member, accounting and auditing group.
HEALTH CARE VISITING NURSE ASSOCIATION OF OHIO: Katy Bloor to director, business development; Sherry Murvine to director, hospice; Laurel Tomi to director, home assist.
LEGAL BONEZZI SWITZER POLITO & HUPP LPA: G. Brenda Coey to shareholder. CALFEE, HALTER & GRISWOLD LLP: Ritesh Agrawal, Tera Coleman, Veronica Lambillotte, Kirsty McNamara and Mallika Reddy to associates.
MANUFACTURING AKRO-MILLS: Mike Weisburn to tooling engineer. MOLDING DYNAMICS INC.: Bryan Pappas to sales manager. SHILOH INDUSTRIES INC.: David Jaeger to vice president, sales and business development.
Jaeger
Smith
SERVICE PREDICTIVE SERVICE: Trent Surles to director, PdM operations.
McNamara
Weisburn
IDEASTREAM: Larry Pollock (Lucky Stars Partners LLC) to chair; Robert C. Smith to immediate past chair; Kevin McMullen to vice chair; Daniel P. Fahey Walsh Jr. to treasurer; William R. Stewart to secretary; Jerrold F. Wareham to president, CEO; Kathryn P. Jensen to COO; John Phillips to CFO.
TENABLE PROTECTIVE SERVICES: Ronald L. Smith to director, Tenable Training Institute.
STAFFING DIRECT RECRUITERS INC.: Kasey Fahey to project manager, health care IT practice.
TELECOMMUNICATIONS VERIZON WIRELESS: Christopher Chadwick to assistant retail manager, Niles.
BOARDS ACHIEVEMENT CENTERS FOR CHILDREN: Mozelle Jackson (Cavaliers Holdings LLC) to chair; Julie Boland to vice chair.
AWARDS LEA GLOBAL: Gary Shamis (SS&G) received the 2013 Legends Award. MENTAL HEALTH & RECOVERY BOARD OF PORTAGE COUNTY: Will Schritchfield (Kent State University) received the 2013 Crisis Intervention Team Officer of the Year Award.
RETIREMENT CLIFFS NATURAL RESOURCES INC.: Donald J. Gallagher (executive vice president and president, global commercial) effective Dec. 31 after 32 years.
Send information for Going Places to dhillyer@crain.com.
TIMKEN CO.: Louise Dalton to general manager, global distribution.
MARKETING HILEMAN GROUP: Kevin Schroeder to front-end developer.
NONPROFIT LORAIN COUNTY CHAMBER OF COMMERCE: Anthony Gallo to president.
STAY CURRENT WITH CRAIN’S ! ■ Register for daily email alerts at: CrainsCleveland.com/register ■ Crain’s on Twitter: @CrainsCleveland ■ Crain’s on Facebook: Facebook.com/CrainsCleveland ■ Crain’s on LinkedIn: linkedin.com/company/ crain’s-cleveland-business
Cadd Department Inc. 3789 Bushnell Road, University Heights ID: 32-0207160 Date filed: Nov. 5, 2013 Type: Employer’s withholding Amount: $342,187 Duct Fabricators Inc. 883 Addison Road, Cleveland ID: 34-0901203 Date filed: Nov. 5, 2013 Type: Employer’s withholding Amount: $231,797
FINANCIAL SERVICE
DELTA DENTAL: Scott Krebs to account executive.
The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.
LIENS FILED
FIRST PLACE BANK: Matthew Tuohey and Judy Ulrich to senior vice presidents, commercial banking; Dawn Enovitch and George Moy to vice presidents, commercial banking.
AXA ADVISORS: Rick Roloff to financial professional; Joseph Mallo to financial consultant; Carmen Trivisonno to vice president.
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
S
D L O
Colliers International is pleased to have facilitated the sale of the 49,998 square foot ThyssenKrupp Materials NA facility in Cuyahoga Heights. Abram Schwarz Ň abram.schwarz@colliers.com Bill Stevens Ň bill.stevens@colliers.com 216.239.5060 Ň www.colliers.com/ohio
MM EMS LLC 1279 W. 73 St., Cleveland ID: 26-2856984 Date filed: Nov. 5, 2013 Type: Employer’s withholding, corporate income Amount: $90,450
Packaging Machinery Services Inc. 20001 Euclid Ave., Euclid ID: 34-1187804 Date filed: Nov. 5, 2013 Type: Employer’s withholding, corporate income Amount: $19,869 VIP Auto Beauty Centre Inc. 4959 Commerce Parkway, Warrensville Heights ID: 34-1280047 Date filed: Nov. 5, 2013 Type: Employer’s withholding, unemployment Amount: $17,604 Academy of Learning Enrichment Center 25988 Highland Road, Richmond Heights ID: 26-4566770 Date filed: Nov. 5, 2013 Type: Employer’s withholding, unemployment Amount: $17,168 Guarantee Product Specialities Inc. 9401 Carr Ave., Cleveland ID: 45-0673710 Date filed: Nov. 5, 2013 Type: Employer’s withholding Amount: $16,114
City View Mechanical Inc. 6111 Carey Drive Suite 2, Valley View ID: 20-0205114 Date filed: Nov. 5, 2013 Type: Employer’s withholding Amount: $61,251
B A J Auto Inc. 23300 Lakeland Blvd., Euclid ID: 34-1798181 Date filed: Nov. 5, 2013 Type: Employer’s withholding, unemployment Amount: $12,228
New Hope Specialized Services LLC 13951 Progress Parkway, Suite A, North Royalton ID: 80-0690155 Date filed: Nov. 5, 2013 Type: Employer’s withholding Amount: $50,876
Hogg Heating & Cooling Inc. 7650 State Road, Cleveland ID: 34-1816168 Date filed: Nov. 5, 2013 Type: Employer’s withholding, unemployment Amount: $11,872
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PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) ASSOCIATE PUBLISHER/EDITORIAL:
John Campanelli (jcampanelli@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Get going
A
year ago, we praised Ohio voters for soundly rejecting a flawed proposal to change the redistricting process in Ohio. We also urged the General Assembly to take advantage of the reprieve it had been given to bring fairness to the method of drawing up boundaries for congressional and state legislative districts. Well, it’s 12 months later, and we’re still waiting. News reports out of Columbus indicate the Ohio Constitutional Modernization Commission has made progress in coming up with redistricting reform recommendations for the Legislature to consider. We suppose we should be thankful for any positive signals coming from commission members. However, we’ve seen elected officials in Columbus raise and then drop the redistricting issue too many times to be encouraged by mere talk of change. It was the repeated failure of lawmakers to create fair redistricting maps that led to last year’s push for Issue 2. It was a proposed constitutional amendment that would have taken the redistricting process away from various state officeholders and legislative leaders and given it to an appointed, 12member citizens committee. The issue’s opponents, which included the Ohio State Bar Association, convinced voters that a committee selection process involving members of the judiciary wasn’t a good idea, and the measure was defeated by a margin of 26 percentage points. However, the sound thumping Issue 2 received at the ballot box doesn’t mean the public doesn’t favor redistricting reform. It also doesn’t make reform any less essential if election outcomes aren’t to be predetermined by the party in power as it draws legislative and congressional districts that stack the deck for their candidates. Ohio Secretary of State Jon Husted, who has championed redistricting reform since his days in the Ohio Senate, made that very point in testimony Nov. 14 before the modernization commission. Mr. Husted said that in last year’s general election, the average margin of victory of candidates for the U.S. House was 32 percentage points. He also noted that in a state where the incumbent, Democrat Barack Obama, won the presidential vote, Republicans retained a congressional majority by a 12-4 margin, and continued to dominate the Ohio House and Senate. “By and large, the general election no longer matters,” Mr. Husted said. Rather, he said, Ohio’s current system of mapping districts “has ensured that the big prize in most legislative and congressional elections is the primary election, where small groups of voters are deciding who the congressional or legislative representative is going to be rather than the majority of the population that representative is supposed to serve.” Redistricting as we know it also has produced the polarized politics of today as legislators at the state and national levels lack any incentive to compromise because they know re-election in their partisan districts is a lock. Another redistricting abomination awaits in 2020 if reform is left to drag on. Commission members must work diligently to arrive soon at recommendations that would stop the gaming of the redistricting process.
FROM THE PUBLISHER
Another of Cleveland’s hidden gems the street at the former department store Life comes at you in the strangest building with its twin cupolas, I imagways. There I was last week, doing my fiined the neighborhood as it must have nal speaking gig as publisher of Crain’s been in Cleveland’s go-go Cleveland Business, and I found 1950s. And I thought, knowing myself in a treasure of a buildBRIAN a bit about the “pop-up” retail ing that all Clevelanders should TUCKER programs that have been going visit: the Slovenian National on, that this area could very Home. well become Cleveland’s next I was asked to emcee The Tremont or Detroit-Shoreway. First Tee of Cleveland’s annual St. Martin de Porres, the exThanksgiving breakfast, and for citing charter school, is there. the second year in a row, the The buildings are in solid event was held in a wonderfully shape. It’s on a major thorrestored theater in this building oughfare, a short ride to the at St. Clair Avenue and East 62nd central business district. If I’m a visionStreet. ary developer, I’m thinking there’s opThe First Tee is a terrific nonprofit group that uses the game of golf to teach portunity to be found there. basic life skills — such as integrity, per***** severance and sportsmanship — to AND NOW, for some random observations: young people. And there the kids were, dressed in their finest, welcoming all the ■ Any Clevelander who complains about Frank Jackson should thank their attendants as they entered the hall. It was a wonderful morning, made even lucky stars they don’t live in Toronto. I better by the beauty of the theater. don’t know which big, burly Ontario politician is less appealing, the crackAs I walked outside and gazed down
smoking mayor, or the numbskull brother who may be his only loyalist member on the city council. ■ Across the world, another self-aggrandizing politician — Afghan President Hamid Karzai — had the temerity to insist that the U.S. president should apologize to the Afghans for mistakes by the American military in his country. You know, the military that kept him safe and in power. What a joke. ■ And here, some members of Cleveland City Council are trying to score points by criticizing the recent deal the mayor struck that would provide some city funds to the renovation of FirstEnergy Stadium. That’s right, just when it looked like we have a Browns management team and coaching staff with promise, let’s squabble over a $2 million annual stipend to help pay for needed improvements to the lakefront stadium. Sheesh. Coming next week: my post-Thanksgiving, Thanksgiving column. See you then. ■
TALK ON THE WEB
POLL POSITIONS
Re: Pursuit of pedestrian bridge ■This is essential as the lakefront is so hard to reach in Cleveland. Having access for pedestrians and conventioneers will make meeting in Cleveland that much more attractive. Chicago, which is arguably the convention capital of the world, is attractive for convention planners and other visitors due to the lakefront access, Navy Pier, etc. Cleveland can have this, too. — Leland Lewis
Re: President Obama at ArcelorMittal ■ I wonder if the president knew that this plant employed 14,000 in 1987 compared with about 3,000 today.
Reader responses to stories and blogs that appeared on: www.crainscleveland.com
How should the proposed $120 million in upgrades for FirstEnergy Stadium be paid for? The Browns should pick up the entire tab.
“Having access for pedestrians and conventioneers will make meeting in Cleveland that much more attractive.”
It should be a 50-50 split with the city.
– A CrainsCleveland.com commenter, on the city’s pursuit of a pedestrian bridge
The stadium doesn’t need upgrades.
58.2%
15.4%
26.4% Such is the effect of President Obama’s refusal to hold China to task for undervaluing its currency — not to mention Lockheed’s announcement the same day that they are shutting down their Akron facility, eliminating 500 more jobs. — Robert Fritz
Vote in the poll each week at: CrainsCleveland.com
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
LETTERS
Tribe should ditch ‘Little Red Sambo’
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hank you, Crain’s, for saying it’s time to scrap Cleveland’s tired, old baseball name and logo and create a fun way of replacing them. I like what’s suggested in your Nov. 4 editorial and cartoon: invite the public to be creative, especially the younger generation of current and future fans. The owners should expect resistance and accusations of “political correctness,” but I hope they won’t fear them. We all know the antichange arguments by heart, and just a little research reveals convincing answers: The name and logo are not and never were meant to be an honor. It doesn’t matter how few protests or demonstrators there are or how many individual American Indians say they don’t find the name and mascot offensive. Ask the American Indian Move-
ment, the National Congress of American Indians, the Lake Erie Native American Council, and the Committee of 500 Years what they think. Change will bring howls from white fans who wear “Wahoo” and think it’s harmless. Lovers of “Little Red Sambo” may take their business elsewhere. But judging from the number of empty seats at Progressive Field during the winning 2013 season, it’s time to refresh the brand. It is always the right time to do the right thing. Surely there is a way to do good business at the same time. Be not afraid, baseball executives — and make change fun! Hans Holznagel Cleveland
Promises, promises “We will keep this promise to the
American people: If you like your doctor, you will keep your doctor, period. If you like your health care plan, you will be able to keep your health care plan, period. No one will take it away.” We will “lower your premiums by up to $2,500 for a typical family per year.” Without a single vote to spare, Barack Obama deliberately lied to the American people in order to turn reckless legislation into a very destructive law. Brian Tucker’s Nov. 11 commentary, “D.C.’s sad merry-go-round ride continues,” feeds his addiction to bash the Tea Party that he has such contempt for, though he never once mentions the beyondshameful behavior of the president. Your readers deserve better. Jeff Longo North Royalton
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LAST CHANCE TO GET YOUR Hospitals team up for data sharing AD IN THE CORNER OFFICE By TIMOTHY MAGAW tmagaw@crain.com
Case Western Reserve University, the Cleveland Clinic and University Hospitals have launched a venture designed to allow scientists and physicians from the three health care powerhouses to share clinical data that could be used to improve patient care. The newly formed Institute of Computational Biology will be charged with developing a technological infrastructure that allows scientists and physicians from the three institutions to examine existing clinical data to improve treatment and enhance the health of the community. Jonathan L. Haines, a renowned geneticist who most recently worked at Vanderbilt University, will lead the effort. In addition to becoming the institute’s director, he also has been tapped as chair of the CWRU medical school’s department of epidemiology and biostatistics and the Mary W. Sheldon professor of genomic sciences.
“He is an innovative researcher and a multitasking genius who fits right in with the spirit of collaboration we embrace here,” said Haines Dr. Pamela B. Davis, dean of the medical school and vice president of academic affairs, in a news release. “His body of work is astonishing, and his results are groundbreaking. And we believe his vision will lead us to new heights in the biomedical community.” While at Vanderbilt, Dr. Haines founded the Center for Human Genetics Research as well as a doctoral program in human genetics. He also helped build a biological repository linked to Vanderbilt’s medical records database. In addition, he led teams that made advances in identifying the genes involved in Alzheimer’s, macular degeneration, multiple sclerosis and autism — areas in which he holds five patents for his work.
Dr. Haines earned his doctorate in genetics from the University of Minnesota and did postdoctoral training at the Indiana University School of Medicine. In 1987, he started his professional career as an instructor at Harvard Medical School and remained there as an associate professor until he left for Vanderbilt in 1997. “There’s a tremendous amount of expertise and a strongly collaborative atmosphere here,” Dr. Haines said about Cleveland in the release. “I look forward to working with all of our partners.” ■
Crain’s Book of Lists ISSUE DATE: December 23/30 | AD CLOSE: December 5 Book your ad today! Contact Michelle Sustar at 216-522-1383 or msustar@crain.com
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NFL: Taxpayers usually foot most of bill for stadium renovations “All the things specified in the lease — the scoreboard, painting, carpeting, electric, plumbing, concession stands — this project will fully replace all of those. We’re kind of starting with a new life expectancy that could carry us through the end of the lease.”
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The agreement between the Browns and Mayor Jackson would put the city on the hook for $2 million a year for the next 15 years. In the Browns’ way of thinking, the team is paying all but $22 million of the ninefigure renovation package when the city’s share of the cost is adjusted to reflect the effect of inflation over time on the value of a dollar. Some taxpayers disagree. They don’t see a proposed deal that would result in the city taking $30 million from its general fund over 15 years, plus spending $12 million beginning in 2016 on infrastructure repairs from its $24 million sin tax fund, as a sweetheart agreement. But a look at the way other recent NFL stadium renovations have been financed seems to back up Mr. Banner’s assessment.
NFL rarely loses Judith Grant Long, a Harvard University professor of urban planning, told The Atlantic for a story published in September that, according to her research, 70% of the cost of capital repairs to NFL stadiums has been financed by taxpayers throughout the years. The Atlantic’s Gregg Easterbrook
– Joe Banner, CEO, Cleveland Browns, on FirstEnergy Stadium
RENDERING PROVIDED
The Cleveland Browns’ proposed $120 million renovations to FirstEnergy Stadium are highlighted by the addition of huge scoreboards in each end zone. The team hopes to have the scoreboards ready for the 2014 season. wrote that the league “is about two things: producing high-quality sports entertainment, which it does very well, and exploiting taxpayers, which it also does very well.” As the most powerful sports league on the planet, the NFL often has cities in the palm of its hand
when negotiating stadium construction or renovation projects. At least 10 NFL teams, including the Browns, have announced plans since 2012 for major stadium renovations — a figure that doesn’t include new stadiums that communities are building for the Atlanta
Falcons, Minnesota Vikings and San Francisco 49ers. The most expensive of the planned renovations are in Buffalo ($130 million), Philadelphia ($125 million), Cleveland and Jacksonville ($63 million). Only renovations to Lincoln Financial Field — home of the Philadelphia Eagles, a team with which Mr. Banner spent his entire career as an NFL executive before he was brought in as the right-hand man of Browns owner Jimmy Haslam in October 2012 — will be financed entirely with private money. The Buffalo Bills will contribute $35 million for improvements to Ralph Wilson Stadium. The state and Erie County, N.Y., will pay the remaining $95 million. Jacksonville Jaguars owner Shahid Khan has pledged $20 million for scoreboards at EverBank Field that the team says will be the largest in the world. The city of Jacksonville will pay $43 million, mostly from a 2% hotel tax.
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An examination of the reported costs of renovations to stadiums in Orchard Park, N.Y.; Denver (Sports Authority Field at Mile High); Houston (Reliant Stadium); Nashville (LP Field); and Jacksonville shows a significant disparity in public and private costs. The five NFL teams recently have finished or are undertaking a combined $257.5 million in renovations (the work is complete in Tennessee and Houston). The clubs are paying an aggregate 27% of the cost — a combined $70 million — and taxpayers in total are kicking in $187.5 million. Depending on how you do the math, the Browns are paying 75% (counting the city’s contribution as $30 million) or 82% (using the $22 million inflation-adjusted value of the city’s 15 payments) of the $120 million for giant new scoreboards and other pricey renovations at FirstEnergy Stadium. “For us, it was really important that there was balance to the deal we struck and it made sense to everyone,” Browns president Alec Scheiner said last Wednesday, Nov. 20, of the negotiations with the city. “There were various obligations in the lease we had with the city,” Mr. Scheiner said. “One way to look at it was the city should be responsible for that lease. We didn’t take that approach. We took the ap-
proach that there were renovations that needed to be made, there is an exciting way to do it, and there is a way to structure it so it’s fair to all sides and can get done quickly.” Before he was hired by the Browns in late 2012, Mr. Scheiner spent eight years with the Dallas Cowboys. He was involved heavily in the planning of the $1.2 billion Cowboys Stadium, which opened in 2009 and cost the city of Arlington $325 million. (It’s now known as AT&T Stadium.) “We both had a degree of knowledge from our previous experiences,” Mr. Banner said of Mr. Scheiner and himself. “Really, though, we were focused on this particular lease and who owes what.”
Good deal for everyone? Mr. Banner and Mr. Scheiner said the reaction the team has heard since the financing plans were announced has been overwhelmingly positive. “Believe me, when people don’t like something, we hear about it,” Mr. Banner said. Mr. Scheiner thinks many fans were “relieved that the deal was what it was.” After the press conference last week at City Hall, two members of Cleveland City Council expressed concern about the tentative agreement. One, Jeff Johnson, told Crain’s he wouldn’t support the deal. Another, Brian Cummins, said, “The Browns and the NFL talk about enhancing the fan experience. I’m concerned about funding the neighborhood experience.” Mayor Jackson and the Browns tried to alleviate any worry about the agreement during discussions with City Council prior to meeting with the media. The mayor and the team believe by investing significant money in the stadium in the next three years, the structure will be in far better shape — and thus less costly in the future — when the lease nears its 2028 expiration. “All the things specified in the lease — the scoreboard, painting, carpeting, electric, plumbing, concession stands — this project will fully replace all of those,” Mr. Banner said in a phone interview Nov. 20. “We’re kind of starting with a new life expectancy that could carry us through the end of the lease.” Mr. Banner and Mr. Scheiner didn’t want to speculate how the agreement will be greeted when the team stands before City Council this week. However, they are firm in their belief about the fairness of the proposal. “We’re very confident that this is a good deal,” Mr. Scheiner said. “We hope people feel that way.” ■
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JONATHAN B. KAPLAN
NICOLE KOHARIK
President PearlWind LLC
Global sustainability marketing director Gojo Industries
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bout two years ago, Jonathan B. Kaplan, the president of PearlWind LLC, led a full lighting retrofit at Montefiore, the big, nonprofit nursing home in Beachwood. The results were immediate. “We saw a significant drop in energy usage once that retrofit was complete,” said Jack Schoenbeck, director of facilities operations at Montefiore, who earlier that year met Mr. Kaplan at a sustainability conference, picked up the conversation in the parking lot (where the PearlWind president had compact fluorescent lighting samples in his truck) and began a business relationship that’s extending to a new lighting project. Mr. Kaplan once again is looking to help Montefiore cut its energy cost, this time through the use of LED products. There are “well over” 1,000 fixtures at Montefiore, Mr. Schoenbeck said — and in six days over two weeks recently, Mr. Kaplan reviewed every one of them. “The guy is thorough,” Mr. Schoenbeck said. “He’s crawling all over the building. It’s driving everybody a little crazy, but he’s spot on.” Mr. Kaplan has had a longstanding interest in renewable energy and sustainable business practices, which manifested itself at a somewhat unusual location — Pearl Road Auto Wrecking and Salvage Inc., where Mr. Kaplan was a fourth-generation family member. At the salvage yard, he established a large after-market parts business, set up an overstock and discontinued new dealership parts business and began capturing and shipping off-site toxic substances such as elemental mercury in switches to prevent contamination. In 2009, he took yet another big step — installing a Vestas V20 wind turbine at Pearl Road Auto Wrecking, with the help of state and federal grants that picked up much of the $350,000 cost. That led to the formation of PearlWind, which designs, engineers and installs renewable power products such as wind and solar panels, as well as highly energy-efficient LED, fluorescent and induction lighting for commercial and residential customers. Mr. Kaplan estimates he has completed more than 350 energyefficiency projects since the company’s founding, for clients including Classic Auto Group, the Cleveland Browns, Federated Auto Parts and more. “I think it’s fun to go into places and find hidden corners of energy savings,” Mr. Kaplan said, noting areas of potential savings extend even to small devices, such as the control units on HVAC systems. In some cases, Mr. Kaplan said, PearlWind clients have been able to reduce lighting costs by up to 75%. The up-front investment can be significant, he said, “but the longer people have the lights on, the quicker the return.” He said banks have become much more willing to make loans for energy-efficiency projects, and government grant programs continue to help defray the expenses. “Who knows how many kilowatt hours (PearlWind) has saved,” he said. “It’s good for the earth, and it’s good for the companies.” — Scott Suttell
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cross the region, individuals and organizations are integrating sustainable practices and monitoring their social, economic and environmental impacts. This section takes a look at just some of those in Northeast Ohio who are focusing on sustainable principles in the way they do business. Those featured in this section will be participating in a breakfast event from 7 a.m. to 10 a.m. on Dec. 11 at the Cleveland State University Student Center, where John Bradburn, manager of waste
ANDREW BRICKMAN Managing member Abode
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ndrew Brickman wants to redevelop the urban core of Cleveland. The managing member of Abode, the Cleveland-based real estate development company that Mr. Brickman founded about four years ago, said suburban sprawl — and the corresponding dependence on vehicles — is one of the largest contributors to resource depletion. It requires more roadways, eats up farmland and duplicates businesses already found in the city. The communities Mr. Brickman helps create are centered on walkability, and bike share and carpooling programs are encouraged. The homes are intelligently designed rather than massively sized, with open floor plans for maximum flexibility. “We think that’s what people want today,” Mr. Brickman said. Abode also puts a premium on using the latest in eco-friendly materials and practices in its residential, retail and hospitality buildings. That might range from installing a green roof to landscaping with only indigenous plants to equipping residences with smart home technology that individuals can control via mobile application. Community gardening, recycling and composting also are encouraged among residents. Even some of the sites Abode has chosen to overhaul for its projects — an abandoned church in Cleveland Heights for the Brownstones of Derbyshire and a former industrial site in Cleveland for the 27 Coltman Luxury Townhomes — put the practices of reuse and revitalization into action. Mr. Brickman has been working on the different developments within Abode for more than 10 years, but Abode brings them all together under
reduction efforts, General Motors, also will discuss “Reimagining Waste.” Mr. Bradburn will examine the philosophy of looking at waste as a resource out of place and the business case supporting it. He also will discuss how attendees can help foster a culture of innovation and come up with better options for everyday byproducts. For information on the event and to purchase tickets, go to www.CrainsCleveland.com/WhoToWatch or contact Kim Hill, special events coordinator, at 216-771-5182 or kehill@crain.com.
INSIDE: A look at which attributes may be necessary to be a leader in the sustainability sector of tomorrow. Page 14 one parent company. The developments include the Clifton Pointe Luxury Ecohomes in Lakewood and the Eleven River Luxury Townhomes in Rocky River. And new projects are under way. Construction is set to begin in the spring on projects in Ohio City, Beachwood and Fairview Park, Mr. Brickman said. The company’s luxury townhomes and other residences set the bar high in terms of energy efficiency and eco-friendliness, Mr. Brickman said. “We want to serve as the model for other developers,” Mr. Brickman said. Justin Campbell, partner at Abode, said the company wants to change the perception of Cleveland. Abode wants to build housing that retains and attracts Cleveland’s brightest, creates a niche in the higher-end market and rebuilds the city and innerring suburbs, Mr. Campbell said. He called Mr. Brickman a hard worker who is passionate and confident. “He’s very well-intentioned,” Mr. Campbell said. Mr. Brickman’s interest in sustainable design can be attributed, in part, to his extensive travel experiences. Seeing the environmental degradation in highly populated countries made it hit home, he said. Before starting Abode, Mr. Brickman worked in the film industry and started a real estate brokerage transaction firm, DHC Associates, where he is still a managing partner. Mr. Brickman received his bachelor’s degree in finance and marketing from the University of Colorado. In his free time, he sponsors a youth soccer program for orphans in India. He also practices yoga and studies ayurvedic medicine, and he enjoys cooking. He has a rooftop garden on his home in Shaker Heights where he grows a lot of his own food. — Rachel Abbey McCafferty
hen Nicole Koharik joined Gojo Industries in 2006, she was looking for a company that was positioned to be proactive in terms of sustainability. And that’s exactly what she found. Initially hired as marketing manager, one of Ms. Koharik’s first tasks was to develop a strategy for entering the green products marketplace. At the time, Gojo’s senior leadership team also was focused on the same types of issues, considering ways to formalize the company’s long-standing tradition of sustainability. “It’s all about leveraging sustainability to change the way we work,” Ms. Koharik said. As a result of the convergence of those efforts, Ms. Koharik in 2007 was moved into the company’s first dedicated sustainability position, becoming global sustainability senior marketing manager and then as director. Based in Akron, Gojo is the inventor of Purell hand sanitizer, and it specializes in skin health and hygiene products. Its motto is “saving lives and making life better.” Ms. Koharik sees her role as being both internal and external, working with customers and stakeholders while imbedding sustainable values across the company’s culture, making it “top of mind for every employee. “ Some of the milestones under Ms. Koharik’s watch have included working with senior leadership to host a sustainability summit for employees and stakeholders; creating a sustainability policy; and expanding Gojo’s green products portfolio and its sustainability profile. Also under Ms. Koharik’s leadership, Gojo started the practice of publishing sustainability reports. Some of the key metrics detailed in the 2012 report, the most recent, show a 52% increase from 2010 in sales from sustainably certified products; a 13% decrease in solid waste during the same time period; and a 67% decrease in the weight of hazardous material treated or transported since 2010. Marcella Kanfer Rolnick, Gojo’s vice chair, describes Ms. Koharik as both a champion and partner in the sustainability efforts at her family’s company, which was started in the 1940s for the purpose of offering a safer way to clean the hands of those working in the rubber industry. “Nicole has been part of the transformation of our understanding,” she said, adding that Ms. Koharik has emphasized the social and economic implications of sustainability. “Nicole has really helped us think whole systems.” For her part, Ms. Koharik stresses that for other businesses looking to incorporate sustainability measures, it should not be looked upon as a standalone initiative. Rather, it’s a business imperative — a competitive advantage, she said. “It’s critical for businesses to understand that sustainability is not something you choose to do or choose not to do,” she said. — Amy Ann Stoessel
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INNERBELT BRIDGE PROJECT Myron Pakush, District 12 deputy director Ohio Department of Transportation
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he Ohio Department of Transportation is using the first phase of Cleveland’s Innerbelt Bridge project, the two new spans across the Cuyahoga River valley, as a pilot for the department’s Green 7 sustainability program. The Federal Highway Administration recently recognized the project for its successful effort in incorporating environmental sustainability into the bridges’ construction. Called the “Green 7,” ODOT sought to incorporate energy efficiency, green building practices, waste reduction and recycling efforts, green project administration, awareness of the community’s environment, the use of sustainable materials and con-
JOE PATERNITI Vice president, senior relationship manager KeyBank
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hen businesses need financing, Joe Paterniti isn’t interested only in what KeyBank product they could use. Mr. Paterniti often digs into how whatever they’re planning can be made more efficient and sustainable, and helps identify what other types of financing — be it grants, rebates or tax incentives — are available to get it done. As vice president and senior relationship manager for Clevelandbased KeyBank and vice chair for the Northeast Ohio chapter of the U.S. Green Building Council, Mr. Paterniti works to make connec-
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struction practices into the bridge’s design and construction. “We’re proud of our sustainability efforts and we plan to Pakush continue utilizing sustainable methods of construction through the reconstruction of the Innerbelt Corridor — and throughout ODOT,” said Myron Pakush, District 12 deputy director, in an email. “As an agency, now more than ever, we are aware of how our projects impact people and neighborhoods — not just getting from point A to point B,” Mr. Pakush said. Mr. Pakush, who has worked at ODOT since 1989, except for a nearly four-year stint as a transportation planning engineer consultant with CT Consultants of Mentor, said some of the cost reductions on the first bridge can be
attributed to engineers and contractors working smarter and greener. The bridge’s original cost estimate was pegged at $392 million, but after bidding, came in at $293 million. For example, the project’s prime contractor, Walsh Construction of Chicago, saved more than 95,000 gallons of diesel fuel. Mr. Pakush, said ODOT designed “the project in a way that reuses the excavated material on-site — rather than hauling materials to a separate facility and later trucking them back in. These items just make good business sense.” This was a pilot project, so ODOT moved carefully. But, said Tom Flask, a transportation engineer with the bridge’s designer, HNTB Corp. of Kansas City, “To ODOT’s credit, they were innovative in the first place by saying in the project requirements they were going to require sustainability at all. When you make a project sustainable, it’s going to raise your price tag.” — Jay Miller
WHAT THE SUSTAINABILITY COMMUNITY IS SAYING
tions for clients, and also is coaching other loan officers throughout KeyBank’s Alaska-to-Maine footprint on how they, too, can assist clients on such matters, said Lisa J. Oliver, Key’s regional sales executive for east Ohio. “From the beginning, he’s invested to continue to learn more about how these agencies, organizations, financiers (and) vendors come together to create a package,” Ms. Oliver said. “He will take what really is a specialty financing niche that he has gotten involved with, and he will expand it across Key’s footprint,” she said. “He’s helping to grow other experts … to do more of this.”
“This” can take numerous forms. “Sustainability within an organization is about more than just the real estate,” Mr. Paterniti said. “There are different pieces of equipment that they (companies) can use. Ultimately, the end game is to make the company more sustainable, support the environment and add cash back into the company.” If the financing for a project, such as the retrofitting of lights or the replacement of a heating, ventilation and air conditioning system, can be structured in a way that the loan payments are less than what a company will reap in energy savings, “immediately, on day one, they’re saving money … and they can take those additional dollars and invest in business strategy,” Mr. Paterniti said. “That’s where the sustainability part really becomes a competitive advantage for companies,” he added. Of course, those clients who’d rather pay down whatever debt they incur faster may opt to do so. Mr. Paterniti, 44, lives in Hudson with his wife and their two children. Their passion for sustainability is evident at home, too, where they recycle and use rain barrels to collect water for uses such as gardening and washing their vehicles. “It’s a very simple thing that you can do to support the environment,” Mr. Paterniti said. — Michelle Park Lazette
“Perseverance and passion. I am engaged in a huge effort to develop a new source of clean electricity for our region, our state and our nation — offshore wind power. This undertaking is a long-term proposition. Achieving sizeable scale in this infantile industry that is sufficient to realize significant impact on our current energy infrastructure is many years down the road. There have been times where it seemed like the grand vision was just out of reach or maybe even completely unattainable. There are also myriad bumps, potholes and massive craters in the road ahead that will certainly challenge our resolve. Many others striving to make progress in the sustainability sector face the same situation. It is during these trials that leaders must keep their eyes on the prize. They must keep forging ahead, doing the work in front of them, confident that their tenacity will pay off and confident that they are doing the right thing. Passion fuels perseverance. It is the passion that burns deep inside that drives leaders in those times of uncertainty, strife and fear. When things are going well it’s easy. Passion is needed to keep us going strong even in the face of what may appear at times to be insurmountable odds.”
What attributes are necessary to be a leader in the sustainability sector of tomorrow?
ROGER SAILLANT Executive director of the Fowler Center for Sustainable Value Weatherhead School of Management, Case Western Reserve University “The real leaders will see beyond the ideas associated with the conventional usage and practices of the term ‘sustainability.’ They will recognize that many companies today embrace ideas which are more about becoming ‘less unsustainable’ than really becoming sustainable in the sense of ‘flourishing.’ The term ‘flourishing’ inspires, excites, and engages people in ways that the term ‘sustainable’ never will. Tomorrow’s corporate leaders who inspire people with the clearly positive vision of a flourishing future will see their companies emerge as leaders because their employees will put their emotional and intellectual shoulders to the ‘corporate wheel’ and all stakeholders will be surprised and delighted by the outcomes. “The leading individual and corporate attributes will include active systems thinking practices, which means bringing the whole system into planning conversations involving customers, employees, and suppliers as well as community stakeholders. The idea of thriving will permeate all corporate processes.”
DAVID BEACH Director GreenCityBlueLake Institute at The Cleveland Museum of Natural History “A sustainability leader must be a systems thinker with a long time horizon — someone who can understand complex relationships between economic, environmental and social issues and who is dedicated to building institutions that will flourish for generations. And since our present society is very unsustainable in many ways, the sustainable leader must be a determined and courageous change agent. He or
ON THE WEB: Go to www.CrainsCleveland.com/ Challenges to find out what these four sustainability leaders see as the greatest challenges facing the sector in the future. she must be able to communicate the need for change and inspire others to act. This requires a strong faith that a more sustainable and healthier world is possible, even though it might be dramatically different from the world we know today. To be authentic in this role, he or she should set a good, personal example — living an ecological life that minimizes consumption, carbon emissions and waste.”
DAVE KARPINSKI Vice president of operations LEEDCo
MARGIE FLYNN Principal and co-owner BrownFlynn Ltd. “A leader in the sustainability sector of tomorrow will embrace innovation and actively engage their stakeholders, internally and externally, to create shared value for their organizations and society. They will be openminded and opportunistic, looking across their business’ value chain to identify and create positive sustainability impacts. They will be committed to transparency while continually measuring and reporting their progress and openly collaborating with stakeholders to achieve goals. Most importantly, they will continually invest in their employees, providing the necessary training, development and recognition for their roles in advancing sustainability within and outside the company.” ■
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JENITA MCGOWAN Chief of sustainability City of Cleveland s chief of the city of Cleveland’s office of sustainability Jenita McGowan helps Mayor Frank Jackson develop strategies that bolster the city’s economy by reducing its ecological footprint and by helping save money. A big part of that job is guiding Sustainable Cleveland 2019, a decade-long program launched in 2009 that was designed to bring together the city government, businesses and institutions to develop sustainable practices that boost the regional economy. So far, that program has produced two plans to improve city operations and the region’s environment, Ms. McGowan said. She said the Climate Action Plan is designed to improve building efficiency, reduce dependence on
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JERRY SCHILL Founder, president Schill Grounds Management
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chill Grounds Management hasn’t always been as green as the grass it
cuts. With all its trucks and mowers and fertilizer, the North Ridgeville firm for a long time was one of the many companies that helped make landscaping “one of the least green industries on the planet,” according to founder Jerry Schill. That started to change about six years ago. The South was going through a big drought when Mr. Schill heard one of his mentors — a landscaper in Atlanta — give a seminar about all the ways his company was trying to save water. That got Mr. Schill thinking that maybe his own business could help fight environmental problems instead of contributing to them. Since then, that attitude has seeped into nearly everything Schill Grounds Management does.
fossil fuels and provide more efficient travel options, including public transit. Though chiefly designed for the city of Cleveland and its residents, Ms. McGowan believes its programs can be applied regionally. “We think this is the starting place that other communities can look at and use to guide their greenhouse gas emissions as well,” she said. “There are certain things that are regional (in the plan).” The sustainability program also has developed a Municipal Action Plan that focuses on finding ways for city government to reduce its energy costs, its motor vehicle fuel costs and to reduce waste generation. “We try to lead by example,” Ms. McGowan said. “We don’t want to put something out there for the community to do that we’re not willing to do in our own internal operations.” Joining the city’s sustainability office was a career change for Ms. McGowan, who was a dance major at Kent State University and a member of a dance company earlier in her career. But the career change didn’t require her to
change her lifestyle. “I have been involved in sustainability in my personal life for a very long time even though in my career I was doing something completely different,” she said. “But I have been involved in the local food sector and have been interested in waste reduction, recycling and community engagement for a while before I worked at the city.” She joined the city’s sustainability office in 2010 as sustainability manager, working under the city’s first sustainability chief, Andrew Watterson. She became chief when Mr. Watterson left the job in 2012. “Jenita is terrific,” Mr. Watterson said recently. “She’s very passionate in her sustainable life. I was happy to be her boss and happy to see her take over my role.” He also credits Mayor Jackson for embracing and pushing forward the city’s sustainability efforts. “The mayor sees it as moving the city away from an economy that exploits people and resources to one that is supporting people and supporting regenerating resources,” he said. — Jay Miller
For instance, the company focuses its sales efforts in tight geographic areas so employees don’t have to haul equipment long distances. That equipment is greener, too: This spring, Schill Grounds Management converted more than 30 of its 80-plus mowers to propane, which burns cleaner than gasoline; the rest of the fleet should be running on propane by 2015. The company also is in the process of replacing several of its three-quarter-ton trucks with half-ton models that get better mileage. It also owns a handful of Toyota Priuses, because its sales team doesn’t need trucks. On the job site, the company prefers to plant perennials and hardy species that need less care. It turns yard waste that can’t be recycled on site into topsoil, compost or mulch. Being green, however, isn’t enough to be sustainable, Mr. Schill said. He recited the “people, planet, profits” mantra often espoused by sustainability professionals. To be sustainable, a business still has to please its clients and make money, he said. Thus, though the company’s fertilizer is 70% organic, it still contains
synthetic herbicides and pesticides, which he says still are necessary to protect a client’s lawn. “Sustainability has to include all three legs, all three components,” he said. Mr. Schill is “a thought leader in sustainability,” according to Judith Guido, a sustainability consultant who works with a vendor that Schill Grounds Management uses. The company doesn’t just do a few things that are environmentally friendly: Sustainability is part of its culture, according to Ms. Guido, president and CEO of Guido & Associates in Moorpark, Calif. “He’s really woven it into his overall strategy,” she said. — Chuck Soder
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CRAIN’S CLEVELAND BUSINESS 15
HAWKEN SCHOOL DESIGN TEAM Jonathan Kurtz, lead designer Westlake Reed Leskosky
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hen it comes to designing sustainable buildings, it takes more than a single person to get the job done. Such an undertaking requires the collaboration of several talented individuals from an array of disciplines. At Westlake Reed Leskosky in Cleveland, that’s just what happened with the team designing the transformative overhaul to Hawken School’s high school campus in Gates Mills. “Sustainability works on all levels,” said Jonathan Kurtz, the project’s lead designer and a principal at the firm. “It’s too much for one person to make good decisions in all those departments. You have to develop a culture where everyone is thinking opportunistically about everyone else’s discipline.” While the project still is being designed, what’s transpired thus far is a roughly $24 million expansion effort that has the potential to transform the quaint Hawken campus into an environment rooted in sustainable values that reflects the private school’s forwardfocused approach to education. The project will coincide with Hawken’s 100th anniversary in 2015. “This is a beautiful, pastoral and almost rural campus with some nice traditional buildings on it, but we’re a forward-focused school,” said D. Scott Looney, Hawken’s head of school. “We wanted a building that looks forward into the 21st century.” Westlake Reed’s team made a conscious decision to work outside the boundaries of a green building rating system, such as LEED (Lead-
ership in Energy and Environmental Design). Such a system can restrict design decisions, Mr. Kurtz said. What the team has developed Kurtz is a plan for a building strewn with natural light that feeds off the pastoral landscape on which the school is situated. “The site probably had the greatest impact on how we organized their program,” Mr. Kurtz said. “There is ample natural light in the spaces, and the students will be able to move through the building and find different spaces that feel less like an institutional building.” Hawken’s current high school building is about 84,000 square feet. Plans call to tear down about 30,000 square feet of the space and add a 50,000-square-foot addition, bringing the total building size to about 105,000 square feet.The project — the scope of which depends on the success of Hawken’s fundraising efforts — could be finished, at the earliest, by fall of 2016. Hawken selected Westlake Reed through a national competition, and so far the firm hasn’t disappointed. “They’ve been great since day one,” Mr. Looney said. “They strike the right balance between being good listeners to the client but standing up for their design principles.” Once completed, the project is expected to inspire Hawken’s students to be stewards of sustainability and lead green initiatives of the future, according to those involved with the project. — Timothy Magaw
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WHO TO WATCH IN SUSTAINABILITY
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JILL ZIEGLER Program manager, sustainable initiatives Forest City Enterprises
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ou meet the nicest people in garbage bins. Just ask Beau Daane, because that’s where he met Jill Ziegler, who he agrees is definitely a person to watch in the sustainability field here in Northeast Ohio. “Yes, we were on a Dumpster dive,� chuckled Mr. Daane, director of the Fowler Center for Sustainable Value at the Weatherhead School of Management at Case Western Reserve University. That dive was part of a trash audit, of sorts, Mr. Daane explains, because Ms. Ziegler wanted to find out what was being thrown away at the headquarters of her employer, Forest City Enterprises. Ms. Ziegler wanted to know what could have been sold as recyclable materials, and to see how much trash her company could avoid having hauled away to landfills at its own expense. The results Ms. Ziegler got digging through the trash helped her to convince Forest City to set up
“I became very upset when they (developers) built homes and cut down trees, so it’s kind of ironic I work for a developer now.� – Jill Ziegler recycling programs at all its major facilities. From there, Ms. Ziegler expanded the program, Mr. Daane said, so that now the company even salvages leftover food and other organic garbage, some of which is used to create energy via anaerobic processes that turn it into methane. “With Jill, Forest City has taken this to a new level,� Mr. Daane says. Working on environmental and sustainability issues is really all Ms. Ziegler has ever wanted to do. “It was always a personal passion and dear to my heart,� she said, recalling how the Exxon Valdez oil spill inspired her interest in environmental protection as a child. She received a bachelor’s degree in sociology in 1998 from Miami University, followed by a master’s degree in public administration, environmental science and public policy in 2000 from George Mason University in northern Virginia. She spent six years working as a
consultant on environmental issues for a firm in Washington, D.C., but then landed at Forest City. And yes, she says, she sees how that might look like a surprising move for some people. “I became very upset when they (developers) built homes and cut down trees, so it’s kind of ironic I work for a developer now,� she says. But, she adds, she realized before taking the job that, by working for a developer herself, she probably could do the most good. Today, she works to help Forest City save energy, reduce its water usage and cut down on the trash it throws away in markets across the country. The opportunities always are different, she said. For example, in Northeast Ohio a chief concern might be conserving heat in the winter, while in the south it might be reducing air conditioning costs. In places such as New Mexico and Colorado a priority is to conserve water. Getting buy-in from her company has not been the uphill struggle some might expect. Ms. Ziegler said she fits right in with the company culture and often faces little or no opposition to her ideas. “Luckily, I landed at a company that really cares about this stuff,� she said. — Dan Shingler
Wednesday, December 4
o BN t Registration / Breakfast / Networking o BN t Keynote Speaker & Panel Discussion Student Center Ballroom, Cleveland State University
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Brian Tucker Publisher & Editorial Director Crain’s Cleveland Business
Ann Womer Benjamin Executive Director NOCHE
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JAMES ‘DEEJ’ LINCOLN Founder Reclaimed Cleveland
J
ames “Deej� Lincoln is a former television producer who also spent seven years at Nook Industries, a Cleveland-based manufacturer of precision linear motion and power transmission systems and components. In 2010, however, he was searching for a business to call his own and “came across� Interior Products Company. “Something about it resonated with me,� Mr. Lincoln said. Mr. Lincoln said he “didn’t have a background in cabinet furniture or anything,� but he did have an idea for the company that made a name for itself in the 1980s by making custom cases for libraries. Shortly after he purchased the now-40-year-old business, Mr. Lincoln saw the potential for using reclaimed wood as a way of driving business. On July 1, 2012, a spinoff company — Reclaimed Cleveland — was born. The company repurposes materials that would otherwise be slated for demolition and turns them into custom products such as tables, benches, desks and flower pots. “When I walked into Interior Products (for the first time), there was something about walking into a company and seeing things being made,� Mr. Lincoln said. “It made so much sense to try and incorporate materials that were oth-
NOVEMBER 25 - DECEMBER 1, 2013
erwise going to be thrown away. “In Cleveland, we have a surplus of (foreclosed) houses and structures,� he continued. “Why not do something with it? It made too much sense.� The result has been a subsidiary that has done projects in Chicago, Cincinnati and Pittsburgh. Mr. Lincoln said 30 restaurants are Reclaimed Cleveland clients, including First Watch, which hired the business to supply its 200 locations with table tops, waiting room benches and tables, and reception and cashiers desks. “In the eight years I’ve known Deej, I’d say the best attributes to describe him are hard-working, down to earth, and he’s very passionate about what he does,� said Andrew Coleman, senior vice president at Jones Lang LaSalle and a friend with whom Mr. Lincoln consulted when he was looking to buy a business. “With some companies, especially startups, it’s difficult to get an understanding of what they do and not get overwhelmed.� Mr. Lincoln said interest in Reclaimed Cleveland, which has expanded well outside Northeast Ohio, has motivated him to launch another startup, Rust Belt Reclamation, in January. Reclaimed Cleveland will focus on custom work, and the new venture will consist of standard catalog products. Mr. Lincoln said the companies’ extended reach wouldn’t be possible without design director David Meyers and product manager Aaron Gogolin. His support team at home includes his wife, Nicole, and two children — Finn, 10, and Madeleine, 9. — Kevin Kleps
KEEP TELLING US WHO TO WATCH Crain’s Cleveland Business in 2014 is continuing its series of “Who to Watch� sections. The first section of the new year, scheduled for publication Jan. 20, will highlight up-and-comers in health care. If you think you know who will be among those leading the Northeast Ohio health care scene of the future, drop an email to sections editor Amy Ann Stoessel, astoessel@crain.com, or call 216-771-5155. Please send in your
suggestions no later than noon on Monday, Dec. 16. There are no hard and fast requirements for this section, other than the candidate needs to exhibit the kind of potential that makes him or her someone to watch in the field of health care. Mark your calendars for future sections: “Who to Watch: Finance,� April 28; “Who to Watch: Law,� June 23; and “Who to Watch: Education,� Nov. 24.
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Booming: Some are skeptical about long-term success of projects along major travel corridors so we’re not reliant on one particular piece of business, i.e., oil and gas,” he said. “Obviously, there’s got to be a supply-and-demand balance.”
continued from PAGE 3
And, from where Amy Rutledge sits in Carroll County — home to Atwood Lake but no four-lane highways — the development is needed. “We have a lot of people who are working in Carrollton who are staying in hotels in Canton and (the) New Philadephia area because there’s not enough places for them to stay here in Carrollton,” said Ms. Rutledge, director of the Carroll County Convention & Visitors Bureau and the Carroll County Chamber of Commerce. Not only are two hotels under construction in Carrollton, but the Days Inn that opened in 2000 has been remodeled and expanded in the past couple years by more than a third to 59 rooms from 43, Ms. Rutledge said. A similar story is unfolding in Columbiana County’s Salem. “It’s crazy. For multiple years here, we haven’t had a hotel,” said Lawrence Kosiba, executive director for the nonprofit Sustainable Opportunity Development (SOD) Center, which works to create economic development for Salem and the surrounding areas. “We’ve gone from literally no hotel to now having upwards of six,” Mr. Kosiba said. Well, sort of. Land has been purchased by a development group out of Pittsburgh for a hotel along state Route 14, and another group out of California has a purchase agreement in place for a 40-plusacre site for a hotel where a mudroom and lockers are planned specifically for oil and gas workers, Mr. Kosiba said. There’s also the Timberlanes, a hotel that had closed and now is under remodeling. The SOD Center, as it’s called, also has received a few other inquiries regarding hotels, Mr. Kosiba reports.
Just a matter of time Tom Hartnett, who chairs the real estate practice of Cantonbased law firm Day Ketterer Ltd., says the increase in hotels in the last 12 to 16 months is part of a pro-
Just the beginning
SUBMITTED PHOTO
In the past two months, Corporex has broken ground on two hotel projects, including this future home of the Candlewood Suites in Carrollton in Carroll County. gression in Ohio’s shale country. “Certainly, it’s more than it’s been in the last decade,” Mr. Hartnett said of the hotel development. “What we saw a couple years ago (was) the initial run on warehouse space. All these companies coming to town, the first thing they needed to do was plant their equipment somewhere.” Then, Mr. Hartnett said, there was a run on the rental market. Now, with the availability of that housing stock squeezed, there’s a need for hotels. “(There’s) probably more hotel development … in the last year than the last five years combined,” Mr. Hartnett said. “I think they (developers) are excited with the oil and gas play. I think they see this as a long-term economic benefit to Northeast Ohio. They’re saying, hey, when you have billions of dollars of money being pumped into this economy, they want to be a part of it. They think there’s money to be made at the end of the day.” Developers also followed oil and gas development in other states, among them, Pennsylvania and North Dakota, sources say. While Day Ketterer’s Mr. Hartnett acknowledges “there’s a saturation point with hotels,” he expects residential real estate
development to follow. “I don’t think it’s a situation where, boy, I think they’re overdeveloping this region, it’s going to cause blight in other areas,” he said. “We see this as a start of a bigger impact for Northeast Ohio.”
Locals are wary There are skeptics, though, who question the need for and the sustainability of all the building, Carroll County’s Ms. Rutledge said. “The local folks don’t see this being a long-term piece,” she said. “They think (it’s a boom) and then everything will be gone, and they’ll think, ‘Why did they do this?’” “It seems like it’s a lot quickly,” she conceded. “But I really think these companies have done their homework.” Corporex Capital, a real estate development company in Covington, Ky., with plans to build five hotels representing $80 million of investment in Stark, Carroll and Belmont counties, is drawn primarily by the “energy component,” but also because those places have infrastructure, such as airports, highways and rail lines, said Nick Heekin, vice president of Corporex Capital. Plus, the region has “multiple demand generators,” Mr. Heekin said,
unlike some regions of the Bakken shale play in North Dakota. There, he said, Corporex didn’t find major company headquarters, travel corridors for capturing leisure business or “anything beyond just the oil and gas, mainly because you don’t have any infrastructure up there.” “We pay attention to what’s going on in these markets, study market trends historically and look at the existing hotel stock to determine if and when new supply is actually warranted,” Mr. Heekin said. Much of the existing hotel stock in the Ohio counties in which Corporex is investing is “very dated,” according to Mr. Heekin, and hotel rates and occupancy are increasing more there than in other parts of the country. In the past two months, Corporex has broken ground on two hotel projects, one in Canton off Interstate 77 and the Candlewood Suites in Carrollton in Carroll County. It has submitted plans for a hotel off Interstate 77 at Shuffel Road, has drawn preliminary plans for another in St. Clairsville in Belmont County, and is planning a second hotel at Interstate 77 and Faircrest Avenue, Mr. Heekin said. “Our strategy is to focus on recognizable brands (and) also locating
A number of eastern Ohio municipal officials expect hotels to be a gateway for more investment in their communities. Mr. Kosiba said more hotels means more rooms and conference space, which are selling points for Salem to companies that might relocate. They also increase a community’s tax base. “This will be the impetus that will allow us to do attraction of other companies and other retail and commercial development,” he said. “I expect that to be the springboard for an awful lot of development.” To the near southwest, Ms. Rutledge is optimistic, too. “Hopefully, we’ll start seeing more restaurants, more retail, other things coming in to support the added people,” she said. The Carroll County visitors bureau, which is financed by the bed tax generated from hotel occupancy, already is reaping the rewards of the area’s hotel expansion. Even before the two hotels under construction come online, its budget had doubled, increasing by $50,000 between November 2012 and November 2013, thanks to the reopening last year of Atwood Lake Resort & Golf Club in Sherrodsville and the expansion of the local Days Inn, Ms. Rutledge said. That larger budget means more money for advertising Carroll County’s lakes, “quaint downtowns” and local businesses to tourists, which should help to fill those hotel rooms, Ms. Rutledge said. Still, though, Ms. Rutledge said, there are locals who remain unconvinced. “When you live in a community that’s been pretty depressed for a long time, it takes a while for people to realize that positive things are happening,” she said. ■
Levies: Roman uses Hamilton County process as a possibility continued from PAGE 1
“We need to find a way to make these (campaigns) more efficient, because they cost a lot of money to run,” he said. Mr. Roman is worried about the extent to which the business community will be able to support financially the tax issues he expects to see on ballots in the next 18 months. His immediate concerns are sin taxes that support Cleveland’s major league sports facilities and the community’s arts organizations, and a levy for Cuyahoga Community College. The campaign for the sin tax for the ballpark, arena and stadium, in particular, might be expensive if alcoholic beverage and tobacco interests mount a campaign against it.
Too many hands out Civic leaders would prefer not to see a repeat of the recent election, which was a nail-biter for dozens of levy campaign chairmen and agency heads in Cuyahoga County as more than 80 money issues appeared on the Nov. 5 ballot. Voters ended up approving all three countywide issues on the bal-
lot — for the Cleveland Metroparks, the Cleveland-Cuyahoga County Port Authority and the county’s health and human services levy — despite pre-election concerns about the port and human services levies. But amid this crowded field, where voters in some cities were asked to approve four and even five tax levies, many issues also failed. Notable among them were Westlake’s request for a continuing school district levy and Strongsville’s defeat of a city income tax increase. GCP’s campaign spending plans were upset this year when, late in the summer, Cuyahoga County unexpectedly decided to put its health and human services levy on the November ballot. The business community, through GCP, already had divvied up its campaign war chest for this election cycle among levies supporting the Metroparks, the Port Authority and the Cleveland Public Library. So, the campaign money directed to health and human services — traditionally well-supported by the business community —
was modest. Mr. Roman said he believes a well-publicized election-issue calendar would force county agencies to figure out how best to introduce and schedule new levies. It also would help cities and schools districts calculate the best time to go to the ballot, he said. “When we have three or four (county issues) converge (on a ballot) all at one time, I think that puts pressure on municipalities and school districts,” Mr. Roman said. With a calendar, he said, “you can do a better job of budgeting what (levies) you can invest in.”
How it’s done downstate Mr. Roman held up a process Hamilton County uses that he wants to investigate. He’s also soliciting advice from metropolitan chambers of commerce across the country. But the Hamilton County process may not work in Cuyahoga County. Since the 1990s, the Cincinnati area has had the Hamilton County Tax Levy Review Committee. Before a levy from any of eight county
agencies can reach the ballot, it must submit to a review by the committee, which is composed of public officials and business and civic leaders, said Lisa Webb, a Hamilton County budget official. The committee reports its finding to the county commissioners. The review committee has broad authority, well beyond simply keeping a calendar. It hires a consultant who reviews the operations of each agency that is seeking a place on the ballot and it can recommend to the commissioners whether the request is appropriate based on an agency’s finances.For example, the committee can recommend that a tax issue’s millage rate be reduced, if the committee believes the requested rate isn’t justified. It also can recommend the merger or consolidation of levies and even the merging of administrative functions among levies. One stumbling block for its implementation here is that some agencies with taxing authority in Cuyahoga County, including the Metroparks, the Port Authority and Tri-C, are independent of the coun-
ty executive and County Council. In Hamilton County, similar agencies, including the Cincinnati Zoo and Botanical Gardens and the Cincinnati Museum Center, must win approval of the commissioners before they can go to the ballot. Bill Burges, president of Burges & Burges Strategists, a campaign consulting firm, understands Mr. Roman’s quandary. He wonders, though, if it’s possible, or even realistic, to try to put so many players in a batting order, particularly because many levies already are locked into three- or five-year renewal cycles. The Burges firm ran about a dozen campaigns this fall, including the successful campaign for the Cleveland Metroparks, and Mr. Burges believes agencies already are aware of the need to avoid competition on the ballot. “I don’t disagree with an effort to rationalize (campaign cycles), but in many ways it’s self-regulating already,” he said. “People work very hard to avoid their colleagues (on the same ballot) and in most instances they understand they’re all serving the same (constituency).” ■
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Pursuit of pedestrian bridge to lakefront resumes By JAY MILLER jmiller@crain.com
A long-discussed pedestrian bridge that would link the new convention center in downtown Cleveland with the lakefront is being pursued once again following the project’s failure to win a federal transportation grant in September. The bridge is a key piece in the $350 million downtown development plan announced last June by Mayor Frank Jackson and Cuya-
ON THE WEB Story from: www.crainscleveland.com hoga County Executive Ed FitzGerald. Although they still are struggling to put together a financing package for the project, the pair has submitted to their respective legislative councils a cooperative agreement for the planned convention center hotel that includes a financial commitment from each
government for the bridge. The hotel would be built adjacent to the convention center and Global Center for Health Innovation on the site of the recently vacated county administration building. Plans for the bridge were dashed when the city learned in September that it had not won a $17 million federal Transportation Investment Generating Economic Recovery, or TIGER, grant to cover a portion of the estimated $47 million cost. The
bridge would span the Shoreway and the railroad tracks between the north edge of the Mall above the convention center and the Great Lakes Science Center and the Rock and Roll Hall of Fame on the lakefront; it would include a parking garage midway across the span. The city and county each pledged $10 million for the project. The city would have bonded its portion, but Mayor Jackson told Crain’s last week, “Since we lost the TIGER grant, we held off on bor-
rowing this money.” County consultant Jeffrey Appelbaum, who has been overseeing the convention center and the hotel projects, told County Council on Tuesday, Nov. 19, that the county would fund its $10 million share as part a cooperative agreement with the city and the Cleveland-Cuyahoga County Port Authority to build and finance the convention center hotel. The Port Authority will be the owner of record of the new hotel. ■
REAL ESTATE CLASSIFIED Phone: (216) 522-1383 Fax: (216) 694-4264 Contact: Denise Donaldson E-mail: DDonaldson@crain.com AUCTIONS
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1505 Kansas Avenue, Lorain, OH
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OFFERED ABSOLUTE, REGARDLESS OF PRICE! Suggested Opening Bid: $10,000
4 All-brick, 3-story buildings, 80% occupied w/$80,896 NOI. Near 2,000 SF Completely renovated, 13 private University Circle & Case Western offices, conference room, 4.5 baths and University. Value-added opportunity! newly paved parking lot. Excellent for On-Site Inspections: Tues., Nov. 19th & Medical/General Office or Retail. 26th & Dec. 3rd / 2:00 pm to 4:00 pm
2 50,341 SF Industrial/5.3 Acres
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2,300 SF All-Brick Office Condominium built in 2000. Great end-cap unit to 3-unit building. Small warehouse w/ garage door. Drive up to front door. Ample parking. Minutes from Chagrin On-Site Inspections: Thursdays, Nov. 21st & Falls Village, SR 422 & SR 306. Great industrial/warehouse facility with 2,600 SF office. High ceilings, clear span, heavy floor loads, 5 loading docks, 3 overhead doors and 80 car pkg
Dec. 5th, Tues., Nov. 26th, 10:00am-12:00 Noon On-Site Inspections: Tuesdays, Nov. 26th & 3 18,000 SF Fmr. Warehouse/Ind. Bldg. Dec. 3rd from 1:00 pm to 3:00 pm LAND
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Contact Receiver Jim Myers 216-314-6159
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4414 Yorkshire Road, Parma, OH 2 bedroom, 1 bath all-brick bungalow With large attic for bonus room and full Suggested Opening Bid: $27,500 basement with fireplace & bar Detached 6,500 SF fmr. bank branch on 3.22 garage and landscaped backyard. beautiful acres. Opportunity for expansion. Open Houses: Saturdays, Nov. 23rd, Excellent commercial location near I-271. 30th & Dec. 7th 1:00pm-3:00pm Full basement with tunnel to drive thru OFFERED ABSOLUTE, windows. Variety of possible uses. 9447 Olde Eight Rd., Northfield, OH
OFFERED ABSOLUTE, REGARDLESS OF PRICE!
On-Site Inspections: Mondays, Nov. 25th, REGARDLESS OF PRICE! Suggested Opening Bid: $5,000 Dec. 2nd & 9th from 2:00 pm to 3:30 pm
For Terms of Sale & Brochure, Please Call: 216-360-0009 ChartwellAuctions.com
Hanna Chartwell / Chartwell Auctions, LLC Michael Berland, Gordon Greene, Mac Biggar & Anna Maria Hamm, OH Auctioneers
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BUSINESS FOR SALE Service Business in Stark County Highly-automated. Profit $275.000. Ask $850K.
Nutritional Supplements High-end retail stores. Sales $525,000. Profit for owner-mgr., $140,000. Ask $279.9K. Seller financing available. Don Dreisig, Owner
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NOVEMBER 25 - DECEMBER 1, 2013
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
19
THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
NOVEMBER 18 – 24
So, turns out he was right after all
The big story: The Cleveland Browns’ $120
■ Cleveland attorney Joshua Cohen finally has gotten a measure of vindication. That’s because the National Journal on Nov. 20 gave him and his client, the city of Cleveland, a little credit for the $13 billion settlement the federal government won last week from the country’s largest bank, JP Morgan Chase, over the sale of shaky mortgage-backed securities during the U.S. housing crisis. Mr. Cohen’s Warehouse District firm, Cohen Rosenthal & Kramer LLP, was hired by Cleveland Mayor Frank Jackson in 2008 to sue JPMorgan Chase and 21 other financial institutions, contending they were public nuisances for the way they made loans to unqualified buyers. The case died in the U.S. Sixth Circuit Court of Appeals in 2010. But last Friday, Nov. 22, Mr. Cohen showed the National Journal article to this reporter, whose office is one floor below Mr. Cohen’s. He highlighted the last paragraph of the article, which in part read that the statement of facts in the settlement agreement between the federal government and JPMorgan Chase “appears to be a confession that there was a great deal of merit to lawsuits like the one filed by the city of Cleveland.” — Jay Miller
million proposal to upgrade FirstEnergy Stadium moved a step closer to being a fancy reality. Mayor Frank Jackson and the Browns announced an agreement under which the NFL team would invest $120 million up front for the upgrades, with the city paying $2 million a year for the next 15 years toward those improvements Jackson from its operating fund. The agreement, which needs the approval of Cleveland City Council, represents a present-day value of $22 million in expenses for the city, because Cleveland would make annual payments until the late 2020s. See story, Page 3.
A new crew: The new operator of the Cleveland Convention Center and Global Center for Health Innovation already is making changes at the complex. SMG of Philadelphia has installed Mark Leahy as general manager. It told four employees hired by MMPI Inc., the former operator, that they would not be retained by SMG. The four are James Bennett, who was an MMPI senior vice president in charge of the Cleveland operation; Dick Anter, director of finance and administration; Brian Milner, director of operations; and Ron Willner, director of event services. Spring in their step: Regular ocean-going freight service between Cleveland and Europe will begin next spring. The board of the Cleveland-Cuyahoga County Port Authority agreed to underwrite monthly cargo sailings by the Amsterdam-based Spliethoff Group between Cleveland and Antwerp, Belgium. This will be the first direct cargo service between a Great Lakes port and Europe. At present, cargo originating from or ending up in the Midwest travels via train or truck to or from East Coast ports, which handle overseas shipping.
■ A private equity firm in Chagrin Falls has raised in a mere five months a fourth fund
that is more than double the size of the last one it raised — evidence, its president says, that others believe in its thesis. Peppertree Capital Management Inc., founded in 2004, is a niche private equity firm that provides capital to companies that build communication infrastructure, such as towers and fiber. The firm’s newest and largest fund, Peppertree Capital Fund IV LP, closed last month. The $132 million fund was raised from new and existing investors and eclipses by far the last $54 million fund Peppertree raised, president Howard Mandel said. “Our success is due to the confidence that investors have in our thesis: that the demand for wireless infrastructure will outstrip supply for the foreseeable future,” Mr. Mandel said. “More and more people are using phones now for reasons that we couldn’t have dreamed of a few years ago,” Mr. Mandel said. “There’s just more opportunity in what we do. The wireless networks are beyond their capacity, so we have to keep building more networks so you can download movies from wherever you are.” Though many people might assume that carriers such as AT&T and Verizon own their fiber and towers, more often, third parties own them, Mr. Mandel
MILESTONE
BEST OF THE BLOGS
Peppertree dials up more investor dough
Excerpts from recent blog entries on CrainsCleveland.com.
Cleveland gets a good rap
Pre-holiday gift: Cleveland State University snagged a $10 million gift — equal to the largest in the school’s history — to support the growing engineering program at the university. Donald Washkewicz, president and CEO of Parker Hannifin Corp., and his wife, Pamela, committed $5 million, and the Parker Hannifin Foundation kicked in an additional $5 million. In recognition of the gift, Cleveland State will rename its engineering program the Washkewicz College of Engineering. The gift will allow for significant infrastructure improvements to the 1920s-era building that houses the school’s engineering program.
Risk assessment: Cliffs Natural Resources Inc. will suspend “indefinitely” the Ontario chromite project of its affiliate, Cliffs Chromite Ontario Inc., by the end of 2013. Last June, the producer of iron ore and metallurgical coal temporarily halted environmental assessment activities for the project, citing delays related to the assessment process, land surface rights and negotiations with the province. Cliffs said last week it will not put more resources into the project considering the “uncertain timeline and risks associated with the development of necessary infrastructure to bring this project online.”
Ready to run?: Cuyahoga County Executive Ed FitzGerald, the Democratic candidate for governor next year, announced that state Sen. Eric Kearney of Cincinnati will join him in his challenge to unseat Gov. John Kasich. The run for lieutenant governor will dovetail with the end of Sen. Kearney’s time in the Senate because of term limits. Sen. Kearney, who is black, brings geographic and racial balance to the Democratic ticket. He currently is the Senate minority leader.
COMPANY: Cleveland Plant & Flower Co., Parma OCCASION: Its 100th anniversary Walter Priest started Cleveland Plant & Flower Co. in a storefront in Cleveland in 1913. Charles Macuga Sr. joined him, and together they sold flowers to retail florists on a commission basis for local growers. Since then, four generations of Priest and Macuga family members have grown the distributor of wholesale floral products to 146 employees, 11 branch operations in five states — Ohio, Michigan, New York, North Carolina and Pennsylvania — and a brokerage office in Pereira, Colombia. Cleveland Plant & Flower Co. was located for 75 years of its 100 years at East Ninth Street and Carnegie Avenue in downtown Cleveland, but it has been headquartered at 12920 Corporate Drive in Parma since 2003. The company imports fresh flowers, foliages and plants daily from all over the world and distributes them to customers nationwide. It also carries floral supplies and holiday and novelty items. Cleveland Plant & Flower can be found on the web at www.cpfco.com, as well as on Facebook and Twitter. Send information about significant corporate anniversaries to managing editor Scott Suttell at ssuttell@crain.com.
■ Having a bit of a down day? A rap video from Parma native Donny Newman should turn things around for you. Mr. Newman recently released a video that explains everything great about the city of Cleveland. What sets it apart? It’s in Chinese. (Don’t worry — there are English subtitles. You can view it at tinyurl.com/mb76fjk.) TheAtlanticCities.com noted that a “record number of Chinese students are pouring into the United States,” and Mr. Newman hopes his video — filled with great images by the lake, the river, the Rock Hall, the West Side Market and other fun places — “might convince some of them to pay Cleveland a visit.” The 2003 Benedictine grad is something of a TV star in China, where he worked at a TV station and appeared on an “American Idol”style reality show.
Off of the bubble ■ The country doesn’t need to worry about a housing bubble — and that’s especially true for Cleveland. In an analysis on Forbes.com, real estate data firm Trulia.com looked at whether home prices are overvalued or undervalued relative to their fundamental value by comparing prices today with historical prices, incomes, and rents. (Basically, the more prices are overvalued relative to fundamentals, “the closer we are to a housing bubble — and the bigger the risk of a future price crash,” Trulia said.) The verdict: “We estimate that home prices nationally are 4% undervalued in the
noted. Peppertree’s newest fund will provide capital to companies with which it already has worked, and to entities new to it, he said. — Michelle Park Lazette
Changing with the times in printing ■ A new product from Digital Color International LLC in Akron is helping the printing company remake itself yet again, this time as a technology provider. Digital Color started marketing its technology platform, DCI Direct, to customers about two months ago and began promoting it publicly late last month. More than two dozen organizations already have signed three-year agreements to use the platform, said chief operating officer Jeff Weiss. The technology helps customers automate a variety of tasks, from inventory management to internal and external communication. Digital Color hosts the platform for its customers, but it is branded for each individual customer and built out to their specifications. Last summer, Digital Color talked to Crain’s about its plans to diversify the products it offers. At that time, the focus of the subsidiary of Che International Group LLC was on packaging and displays. Mr. Weiss took the position of chief operating officer in June. He has a history of transforming traditional printing companies into technology providers, and it’s part of why he was brought in, he said. “Traditional printing companies are going by the wayside,” he said. — Rachel Abbey McCafferty
fourth quarter of 2013 (2013 Q4), which means we’re nowhere near another housing bubble,” according to Trulia. “To put this in perspective, prices were as much as 39% overvalued in 2006 Q1, at the height of last decade’s bubble, then dropped to being 15% undervalued in 2011 Q4,” the firm noted. The analysis includes a list of the 10 U.S. metro areas where home prices are most undervalued. No. 1 is Cleveland, where Trulia estimates home prices are 20% below the level traditional fundamentals would expect. No. 2 is Akron, at 19%.
Get to know him ■ You will not need to wait until the 2016 presidential campaign to see New Jersey Gov. Chris Christie on the stump in Ohio. The Wall Street Journal reported that Gov. Christie, who last week became chairman of the Republican Governors Association, plans to stump most frequently next year in Ohio, Arkansas, Florida, Michigan, Pennsylvania, South Carolina and Texas on behalf of GOP gubernatorial candidates. He’s focusing on the toughest races in the biggest states. Given Gov. Christie’s rising profile, his assistance could be a powerful asset Kasich for Gov. John Kasich in his race against Cuyahoga County Executive Ed FitzGerald. There are 36 governors’ races in all next year. “My job is to be supportive of those 36 races, to make the strategic choices about where we should invest the most money to yield the greatest success,” Mr. Christie told The Journal. “If we have the chance to tell our story we can do it quite well.”
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