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Governments more willing to share IT services

GOING

WITH CHOSEN CEO GONE, METROHEALTH SCRAMBLES

MARK MORAN Started as interim CEO in 2008; became permanent CEO in 2009

WAS COMING; NOW GONE

Summit, Lorain counties consider deals consultant calls ‘repeatable’

JOHN BRENNAN Hired on Nov. 14; withdrew on Nov. 29

By CHUCK SODER csoder@crain.com

Personnel uncertainty persists By TIMOTHY MAGAW tmagaw@crain.com

Dr. John Brennan’s bombshell decision to renege on his commitment to take over as president and CEO of MetroHealth and instead stick with his current employer in New Jersey has left the health system subsidized by Cuyahoga County in a bind. MetroHealth has been peppered by executive turnover in recent years, particularly in the chief financial officer role — with two of the leading credit rating agen-

System needs clarity at top to beat challenges it faces in short, long term cies taking a dim view of the revolving CFO door and the search for a new CEO in their lukewarm assessments of MetroHealth’s finances within the last year. And without a clear successor in sight for CEO Mark Moran, who announced

roughly a year ago he would step down from the post when a new boss was named, uncertainty continues to swirl around the executive ranks of the hard-pressed health system as it looks to chart a sustainable course for the future. The problem has intensified because of Mr. Moran’s notice to MetroHealth’s board last Monday, Dec. 3, that he will step down come Jan. 1, forcing the board to scramble for an interim leader until a permanent CEO is secured.

Nine governments in Summit County are working to create one giant computer network that connects them all. Doing so could help them share services and cuts costs. For instance, they all could use one digital phone system or share dispatch centers. They could share software, hardware and maybe even some employees. Another group of governments in Lorain County is talking about doing something similar. And municipalities in other parts of the region could do it, too, according to Dan Quigg, CEO of Tecquiti LLC, an information technology consulting company in Hudson that is helping coordinate both efforts. “Is it repeatable? Absolutely,” Mr. Quigg said. Members of the Summit County coalition are working with Tecquiti to hunt for fiber-optic cable that already is installed through the county, whether it’s owned by the governments themselves, nonprofits or private companies. Then they’ll suggest different ways coalition members could connect to each other and recommend ways they could govern the use of the network. That work is financed by a $100,000 grant from Ohio’s Local Government Innovation Fund and $279,000 in cash contributions from coalition members. See SHARE Page 11

INSIDE Golf industry strained More course owners and operators appear willing to shed properties. PAGE 3 PLUS: Four lenders line up for American Greetings’ go-private offer. PAGE 6

See METRO Page 12

Finalists for Kent State architecture building must get specific Officials in renowned program acknowledge pressure to reflect reputation By TIMOTHY MAGAW tmagaw@crain.com

Kent State University’s renowned College of Architecture and Environmental Design needs a new home, and the university is taking an unusual approach in creating one with its decision to construct a roughly $40 million building on the

outskirts of downtown Kent rather than in the heart of campus. Knowing full well the pressure it’s under from the architecture and design community to construct a building that reflects the hallmark program, Kent State also is taking an atypical tack in how it will select the firm to design the structure. Rather than the traditional route of

selecting a firm based on a vague proposal and an interview, the university is injecting a competitive edge to the process by asking four architectural teams to hash out designs for the building. “There was hope this building would really capture our imagination,” said Michael Bruder, director of design and construction at Kent

State’s Office of the University Architect. “We wanted our vision to match (the architects’) vision really early on.” The four finalists vying for the high-profile job are Bialosky & Partners Architects, which has offices in New York and Cleveland, in association with Architecture Research Office of New York; Richard L. Bowen & Associates Inc. of Cleveland, in association with Weiss/ Manfredi in New York; The Collab-

orative Inc. in Toledo, in association with the Miller Hull Partnership of Seattle; and Westlake Reed Leskosky, which has offices in Cleveland and four other cities. Each team will receive a $25,000 stipend for its work, so Kent State will have spent $100,000 before selecting a designer for the project. Mr. Bruder contends the cost is worthwhile given the pressure of designing a landmark building and See KENT Page 6

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INSIGHT

Golf courses fade away in rough conditions Competition, declining revenue per round could cause more to close By JOEL HAMMOND jmhammond@crain.com

Golf industry observers long have worried about Northeast Ohio being oversaturated with courses, and feared the day when too much competition and the expensive upkeep of properties would catch up with owners and operators. That day could be upon us. Courses slowly continue to drop off the map locally and nationwide,

and Jimmy Hanlin, director of golf at Little Mountain Country Club in Concord and StoneWater in Highland Heights, said it’s a reflection of a new day for the golf industry. “The business is changing, especially on the public side,” Mr. Hanlin said. “It’s like buying a hotel room now. People shop it, and the dollar per round is significantly less. But the bank payment didn’t go down, and taxes didn’t go down. You can only shave expenses so far.”

The competition is spurred by too many options, according to a report by Columbus-based U.S. Realty Consultants Inc. The firm analyzes what it calls the location quotient for a market’s ability to support the number of golf holes in that market. In Northeast Ohio, U.S. Realty reports, the location quotient is 0.86; anything under 1 means the population is too small to support a market’s courses. Further, that report suggests

reaching equilibrium — or the point at which Northeast Ohio’s location quotient would equal 1 — would require the market to eliminate 290 holes, or 17 courses. “The bottom line is that most markets in Ohio are overbuilt, and that’s reflected in many markets nationally,” said Sam Powers, U.S. Realty’s founder and a golf course appraiser. The region already is seeing some of that contraction. Upscale Blue Heron Golf Club closed in November 2011 as developer Gary Hoffman sought a buyer; the club and its

River Styx Grille are closed “indefinitely until a sale,” a phone message at the club says. Meanwhile, high-profile Acacia Country Club in Lyndhurst will become a public park run by the Cleveland Metroparks after a Virginia conservation nonprofit bought the course this fall for $14.75 million from shareholders and subsequently donated it to the Metroparks. Likewise, the city of Aurora plans to buy Aurora Country Club for $4.76 million, using funds from the Northeast Ohio Regional See GOLF Page 11

ArcelorMittal targeting the classroom to solve expected worker crisis Steelmaker, community colleges pair on program By JAY MILLER jmiller@crain.com

Like the rest of the steel industry, and the rest of the manufacturing sector in general, steelmaker ArcelorMittal is facing a worldwide labor crisis. The average age of its mill workers has risen above 57, and the company has asked itself where it will find skilled workers as the baby boomer generation retires. Part of the answer is its “Steelworkers for the Future” program, which enrolled its first class of about 20 students this fall at Cuyahoga Community College and has four more students at Lakeland Community College in Kirtland.

Firefighters Community Credit Union’s eventual new look on Cleveland’s near East Side. RENDERINGS PROVIDED

The program, which began in 2008 with Ivy Tech Community College in Indiana and Prairie State College in Illinois, is designed to produce qualified candidates for jobs as mechanical and electrical maintenance technicians for the company’s steel mills. Graduates who are hired by the steel company can expect to earn as much as $75,000 a year with full benefits. Attracting young people to jobs in manufacturing has become increasingly difficult as many students with high school backgrounds in science and technology are drawn by the more glamorous health care See WORKER Page 18

THE WEEK IN QUOTES

A DATE WITH NEW DIGS Unique among credit unions, Firefighters embarks on pricey plan to enliven interior of busiest branch By MICHELLE PARK mpark@crain.com

n a move that’s more the exception than the rule in Ohio’s credit union landscape, Firefighters Community Credit Union in Cleveland is embarking on multimillion-dollar renovations. At an estimated cost of $2.1 million, the institution’s busiest branch at 2300 St. Clair Ave. will be gutted early next year to freshen up its “dated” interior — the first phase of a physical rebranding that president and CEO Ben Laurendeau plans to replicate in at least one other branch in the city. But before demolition can begin, Firefighters Community first will move 15 executives and administrative personnel in early January out of the St. Clair branch and into leased space in the former home of United Food and Commercial Workers (UFCW) Local 880 Credit Union, which Fire-

fighters Community acquired, effective Nov. 5. The 12-month lease, which will cost the institution nearly $10,000 a month, will buy Firefighters Community time to search for a building to renovate, or a place to build a new, separate headquarters, Mr. Laurendeau said. Construction on the busiest Firefighters Community branch is slated to begin by Feb. 15, Mr. Laurendeau said. Because construction will occur while the branch remains open, it likely will take nearly a year to complete. The goal is to host a grand reopening by late 2013. The project is a response to membership and asset growth, Mr. Laurendeau said. Firefighters Community’s staff numbered 56 as of Dec. 5, up three from Dec. 31, 2011, but up 19 from 37 as of Dec. 31, 2005. And assets have nearly doubled, to $194.9 million as See FIREFIGHTERS Page 18

“When you have interim leadership, it sort of has the potential of negatively impacting the culture of an organization, and people are not always sure which direction they’re going.” — Tom Campanella, director, Baldwin Wallace University’s health care MBA program. Page One

“It’s filling a gap in the marketplace and it’s doing it in a way … to ensure that these borrowers succeed.” — Gil Goldberg, director, Small Business Administration’s Cleveland district. Page 8

“There’s already connectivity that’s all over the place. … But they don’t know what’s outside their borders.” — Dan Quigg, CEO of Tecquiti LLC, an IT consulting firm in Hudson that is helping nine governments in Summit County create a large computer network. Page One

CLARIFICATION Cleveland Corporate Services Inc.’s assets total about $11 million, not a considerably smaller figure that the company’s Chapter 11 bankruptcy petition initially reflected and that was included in a Dec. 3 Reporters’ Notebook item. According to the company’s attorney, Cleveland Corporate Services — as often occurs — made a skeleton filing that listed its debts for the court, but not its assets, so the smallest asset box was checked automatically. The company’s accurate assets will be listed with the court in coming weeks, the attorney said.

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PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

They got it

t would be a mistake to think Cuyahoga County voters last month trashed the Cleveland-Cuyahoga County Port Authority’s proposed tax levy because they either didn’t understand how the money would be spent or the levy’s backers did a poor job of explaining its benefits. Voters got it — and they sent a message to the Port Authority and community leaders that they weren’t on board with their plans. Though we believe the port is headed in the right direction under current CEO Will Friedman, we also can see reasons why the Port Authority’s attempt to push through a 400% increase in its operating levy failed by a lopsided 57%-to-43% margin. A general anti-tax sentiment is among them. Even the parents of school-age children don’t support school levies in their communities. How much easier is it to vote against a levy for port operations and waterfront improvements when you don’t feel a direct impact from them? And for all the talk about the benefits of regionalism, it’s tough to convince suburban voters to pay for infrastructure investments in the urban core. Winning that support becomes even harder when people aren’t convinced of the value of an investment, such as the proposed $25 million pedestrian bridge from Cleveland’s new convention center to the attractions on the city’s lakefront. The bridge would have sopped up nearly 30% of the $90 million the port levy would have raised over five years. However, the levy’s rejection by such a wide margin went beyond where the money would go. We also suspect it partly reflects a response among voters to inconsistencies in the Port Authority’s actions over the last five years. Its board hired a CEO, Adam Wasserman, whose ambition was to spend a half-billion dollars to create a megaport off Cleveland’s shoreline. The port board endorsed that vision, only to do a 180-degree turn, with Mr. Wasserman sailing off into the sunset and the megaport project disappearing with him. For years, the port said it needed to spend tons of money to build a new containment bed in Lake Erie to dump the sediment dredged from the Cuyahoga River to keep it navigable. But now it appears the big expenditure will be avoided thanks to the port’s planned adoption of a method of drying and mounding the dredged material. The shame of these past faux pas is that the Port Authority under Mr. Friedman has changed course for the better. He is moving the Port of Cleveland closer to self-sustaining operations. He also wants the port to be the steward of Cleveland’s shipping channel infrastructure so that the Cuyahoga remains navigable for vessels that supply steelmaker ArcelorMittal and other employers along the river. The port must go back before voters next year, because its current operating levy will expire by 2014. To help assure the levy’s passage, civic leaders can’t make the Port Authority the vehicle for raising the money for the long-sought pedestrian bridge. And both Cleveland Mayor Frank Jackson and Cuyahoga County Executive Ed FitzGerald need to be champions of the port’s cause. It deserves their visible support.

FROM THE PUBLISHER

Warming up to a sustainable model

ustainability is one of those things. But, again, this is not just an admirable When I say, “one of those part of Fairmount’s mission; it’s an things,” I mean that when many important part of the company’s profbusiness owners or executives are itability. “We spent $5 million last year asked about it, they have a vague underon our SD efforts,” he said, “and that’s a standing that it’s an important issue, but lot of money. So we started measuring haven’t — perhaps — gotten their heads our outcomes, and learned that it far enough above the post-2008 economic brought back $11 million to us.” water to make it a serious part of And that’s a good ROI, by their business model. anyone’s measuring. BRIAN Not so with Chuck Fowler TUCKER Fairmount’s goal — driven and the company he leads, Fairby its “three R’s of Reclaim, mount Minerals. Not by a long Reuse and Restore” — is to shot. This man is a disciple. ensure that by 2015 all of its And for Chuck, who spoke facilities will generate zero last week to open our “Ideas at waste. He said five facilities will Dawn” breakfast program, this reach that objective this year, is every bit as much about the and that the company has dollars-and-cents performance planted 69,000 trees “which of his company as it is about sequestered an equivalent of all saving our planet for future generations. the CO2 produced by our plants.” Fairmount, a global miner and seller And of course, Fairmount insists on of industrial sands, has 13 sustainability the same sort of zeal from its suppliers, teams, all of which have defined goals, each of which must meet a sustainability and “50% of our bonuses are tied to SD score as well. Their biggest complaint, he (sustainable development) initiatives, says, is the paperwork involved as part of including mine,” he told the audience at the measuring, but I’m sure the suppliers Executive Caterers at Landerhaven. are OK with keeping a good customer

while bettering the environment as well. Another panelist, Jeff Baldassari, ran a much smaller company when he was CEO of Taylor Cos., a 200-year-old office equipment manufacturer here that was sold and moved a few months ago. But he was as much of a zealot as Chuck, insisting that the company buy as much of its supplies from local sources as possible, and making sustainability a key part of its business practices. Jeff told the audience of a waste diversion initiative that saved $120,000 to $140,000 per year. “It was paid off in 13 months, and was all gravy after that,” Jeff said. That’s a home run. I recall the Arab oil embargo and America’s first drive to gain “energy independence.” We know now, of course, that such a concept isn’t fully practical given the global nature of business. But if we combined smart, moneysaving initiatives such as Fairmount’s with the abundant new finds of low-cost natural gas, who knows how quickly American businesses could have a real impact on the globe’s climate and their bottom lines at the same time? ■

LETTERS

Bracing for the Non-Affordable Care Act ■ Now that the warm and fuzzy aspects of the Affordable Care Act have been in place (dependents covered until age 26, no pre-existing condition on children, women’s preventative care covered 100%, etc.), it’s time to raise the second curtain to see the cost realities of what could turn it into the more aptly named “President Obama’s Non-Affordable and I Don’t Care Act.” No sooner had the election ended (coincidence?) than the Patient-centered Outcomes Research Institute (PCORI) research fee was implemented. This fee will fund “research that evaluates and compares health outcomes, clinical effectiveness, risk and benefits of medical treatments and services.” Sounds great. No chance for waste there and it’s “only” $1 per member per year, increasing to $2

next year. Then, the fee adjusts “based on the percentage increase in the projected per capita amount of national health expenditures.” Huh? Of course, 2014 is the big year as the Transitional Reinsurance Fee and Insurer Fee come into play. The Transitional Reinsurance Fee is collected from health insurance issuers and is distributed back to insurers in the “non-grandfathered individual markets that disproportionately attract individuals at risk for high medical costs.” In that category would be individuals who have voluntarily not been paying into the system but now need care, sort of like buying house insurance after the fire has started. The impact of this fee figures to be about $6 per member per month and total $12 billion in 2014.

The Insurer Fee is basically a premium tax on health insurance providers to fund premium tax subsidies for individuals and families with household incomes between 100% and 400% of the federal poverty level who purchase health insurance through the soon-to-be-created Health Benefit Exchange. The impact of this fee, based on the government rule and industry analysis, is about 2.3% of premium the first year for a total of $8 billion in 2014, increasing each year to $14.3 billion in 2018. To a government that is not alarmed by a debt of $16 trillion, one or two dollars here, six dollars there, 2.3% over here, are not a big deal. But to those paying into our health care system i.e., mainly the middle class on whom these See LETTERS Page 7

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I don’t think that it’s necessarily a loss for a newspaper not to publish on a daily basis. I think we’re moving in a direction where people are getting news online. There’ll be an initial loss to the city’s pride, however.

I think a newspaper is important to the city. Things happen on a daily basis. It keeps you up to date everyday. There’s an article from The Plain Dealer that I want to read I haven’t found on my phone yet.

News is important. People need to know what is going on and what people in power are doing. … As far as newspapers are concerned, it has a sense of familiarity for people’s daily routine.

Not all of us want to go to television or the Internet to find an avenue to find out about the world. … I’ve seen the number of (daily) newspapers here go from three to two to one. … It’s a ... loss from a cultural standpoint.

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Weisses line up banks for AG offer Go-private effort backed by lenders’ $742 million By MICHELLE PARK mpark@crain.com

While a special committee of the board has yet to decide whether it will accept the offer by the Weiss family and related interests to take American Greetings Corp. private, four lenders apparently are behind the deal. It is expected that Bank of America and Macquarie Capital (USA) Inc., plus KeyBank and PNC Bank, would commit to lending a total principal amount of $742 million to an entity to be controlled by the Weiss family, according to a letter sent last Wednesday, Dec. 5, to the special committee from American Greetings CEO Zev Weiss and president and chief operating officer Jeffrey Weiss. “We are pleased to inform you that we have negotiated terms of a commitment letter with potential financing sources in respect of the proposed transaction,” they wrote.

The Weisses also repeated in the letter their offer previous offer to acquire American Greetings at $17.18 a share. That per-share price values the equity of the company, which had 31.6 million common shares outstanding as of Oct. 1, at roughly $543 million. Demonstrating to a committee of independent directors that you’re able to finance the acquisition you’re proposing is a usual and customary, but important, step in a going-private process, said Christopher Hubbert, a partner with law firm Kohrman Jackson & Krantz PLL in Cleveland who has been involved in several going-private transactions in his career. “One of the key issues that the committee is going to consider is the ability of the purchasers to actually make good on their offer,” Mr. Hubbert said. “The Weisses have shown this is a real offer and that the company should take them seriously.”

But, if the company’s equity would be valued at $543 million, why would the buyers want a commitment of $742 million? The higher amount could signal that the Weiss family might anticipate needing to come up with more money to close the deal, said Michael Wager, a corporate finance and capital markets attorney with law firm Taft Stettinius & Hollister LLP in Cleveland. “They may be doing it in anticipation of paying more than the initial offer, or the capital may be being borrowed for the purposes of additional investment in the company after the closing of the going-private transaction,” Mr. Wager said. The purchase price could increase if the special committee concludes the proposed price is low or if a third party bids higher to buy American Greetings, Mr. Hubbert noted. An American Greetings spokeswoman declined to comment on the commitment letter last Friday, Dec. 7. American Greetings’ shares closed at $16.56 on Dec. 6. ■

Kent: University sees project as ‘icon’ continued from PAGE 1

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because the designs, studies and other information garnered from the firms during the competition are “worth well more than that.” The teams will present their design concepts and cost estimates to university officials next month, followed by a short presentation open to the public. A final decision is expected by February, and the college hopes to occupy the building by 2015. “There are pressures to make the school the best that we can,” said Douglas Steidl, dean of the university’s College of Architecture and Environmental Design. “The facility should demonstrate what we deal in and reflect who we are.” Kent State’s architecture program has a reputation as being among the most rigorous programs in Kent State’s portfolio, and a large piece of the learning comes from peer-topeer interaction. The architecture program now is housed in three separate buildings across campus, and Mr. Steidl said consolidating the program into one building would strengthen those collaborations. The new building also would allow the college to grow in terms of its enrollment, Mr. Steidl said, as its current digs offer little room for expansion. About 850 students are enrolled in the college at present, and he anticipates growing enrollment by a few hundred students in the five years following the building’s completion. “This is a significant building in the life of Kent State,” Mr. Steidl said.

Icon in the works The new building is a large piece of the university’s massive $150 million construction initiative, which is made possible, in part, by a $170 million bond issue from early this year. The bond will be financed by a new course overload fee — a $440 per-credit-hour charge for each credit a student is enrolled beyond 17 credit hours in a semester. Other construction projects in the pipeline include a $22 million building for Kent State’s arts programs and $72 million of upgrades

to buildings housing the school’s science programs. Still, Kent State officials contend the architecture building is among the most exciting of the projects, as it also will serve as a new front door to the university for those arriving from the north. “This is going to be a new icon,” Mr. Bruder said. “As soon as you come toward campus, this will be one of the first buildings you see.” The building is to be built along an under-construction walkway — or, as it’s been dubbed, an esplanade — that will extend about a quarter mile northwest from campus toward downtown Kent. The esplanade itself has been mulled for much of the last two decades by city and university officials, ever since a bypass road was built that extended state Route 59 and severed the flow of pedestrian traffic from campus to downtown. “We think the esplanade is a tremendous additional connector and bridges the gap and breaks up that quarter-mile stretch,” said Daniel Smith, the city’s economic development director. “It will make it easy for students, faculty and staff members of the university to take advantage of the amenities we’ve invested in downtown.” The new architecture building is only a drop in the bucket in terms of the total dollars being pumped into real estate in the city of Kent. Private developer Ron Burbick has put millions of his own dollars into building retail space and is credited by many as igniting the wave of redevelopment. Among other projects, Fairmount Properties of Cleveland is leading the development of a $27 million mixed-use complex. However, city and university officials suggest the presence of a prominent academic building within a stone’s throw of downtown represents the renewed relationship between the city and the university — a relationship that, at times, had been contentious. “(Kent State president) Lester Lefton and the city have been very public in their desire to reconnect,” Kent city manager David Ruller said. “This is the physical expression of that.” ■

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LETTERS continued from PAGE 4

fees and taxes will be passed â&#x20AC;&#x201D; it will be a big deal, especially coming from an administration that said â&#x20AC;&#x153;no new taxes on the middle class.â&#x20AC;? Oh thatâ&#x20AC;&#x2122;s right, they used the word â&#x20AC;&#x153;penaltiesâ&#x20AC;? throughout the Affordable Care Act, until it was to their benefit to call them taxes for the purpose of the Supreme Court argument. A knowledgeable colleague of mine in the health insurance industry said when the Affordable Care Act first came out, the people who put this 2,700-page monstrosity together were very â&#x20AC;&#x153;smartâ&#x20AC;? in setting it up to reach the goal of universal, single-payer health care. I must have missed it while I was busy earning a living and helping my clients, but when did â&#x20AC;&#x153;deceptiveâ&#x20AC;? become a synonym for smart? Jim Schade Principal/benefits adviser The Alpha Group Independence

Stop sequestration â&#x2013; The salaries of 18,000 Ohioans, safety of air travelers and independence of the nationâ&#x20AC;&#x2122;s space agency rest on decisive action by congressional members. We cannot allow proposed budget cuts to take effect. It is ironic that as the call goes out from our nationâ&#x20AC;&#x2122;s leaders for greater efforts in support of manufacturing and the myriad of job opportunities manufacturing provides, we are faced with these potentially devastating cuts. More than one year after President Barack Obama signed the Budget Control Act of 2011, defense contractors, both large and small, are anxiously awaiting action by Congress that could prevent the sequestration reductions in the federal statue from taking effect. The inability of the Congressional Joint Select Committee on Deficit Reduction, or so-called â&#x20AC;&#x153;super committeeâ&#x20AC;? of lawmakers, to craft a deficit-cutting plan will now force the stripping of more than $500 billion from aerospace and defense programs. Those cuts will affect our national security, critical military modernization programs, NASA and the Federal Aviation Administration with the unacceptable cost of nearly one million jobs. Ohio has a long and distinguished history in aerospace and defense programs. Currently, more than 117,000 jobs exist in the state to support defense programs. An economic impact study conducted by George Mason University shows sequestration could cost Ohio more than 18,000 private-sector jobs, $1.09 billion in lost earnings and the eventual decrease of more than $1.6 billion in gross state product. In addition, the threat exists for another 7,600 jobs being lost by Department of Defense active military and civilian employees. If these cuts are allowed to take effect, diversified defense contractors, such as Voss Industries in Cleveland, may be able to weather the financial effects of this federally enacted storm. However, the effects on tens of thousands of American households will be severe. Beyond the potential damage to defense programs, the development and deployment of the much-needed Next Generation Air Transportation System is at risk. The NextGen plan would replace 1950s-era radars with satellite-based air traffic controls. The development of a new launch vehicle for American astronauts is

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also in danger of being eliminated, which could force the United States to pay Russia upwards of $60 million per ride to deliver astronauts to the International Space Station. In a fragile domestic and global economy where the recovery from the last downturn has slowed dramatically, the effects of a $500 billion cut in aerospace and defense will slam on the brakes. Currently, the Department of Defense is spending 20% of the total federal budget. The sequestration, however, would require the Department of Defense to absorb 50%, or $500 billion, of the proposed total sequestration of $1 trillion. This unprecedented cut in the Pentagonâ&#x20AC;&#x2122;s budget requires American troops to shoulder 50% of the deficit reduction while only accounting for less than 20% of federal spending. If allowed to reach fruition, sequestration cuts will provide our nation with its smallest military since before World War II. With the ongoing war in Afghanistan, ever-looming regional threats in the Middle East and growing concerns surrounding Iran and North Korea, now is not the time and this is not the way to responsibly address deficit reduction. We cannot hope to fix our budget by driving the economy off the proverbial cliff. Congress needs to find a pragmatic course of action to replace the current ill-conceived sequestration. With the elimination of these reductions from the Budget Control Act of 2011, we will be assured that the United States will have a strong defense and a greater chance at a stronger economy.

Since the mainstream media consistently choose to withhold important and relevant news regarding our country and its leadership in favor of partisan allegiance, I am glad for Fox News, where I can learn about under-reported and untold news not shared on other network channels. Consider the words of Brit Hume regarding Benghazi on the Oct. 28, 2012, edition of â&#x20AC;&#x153;Fox News Sundayâ&#x20AC;?: â&#x20AC;&#x153;The mainstream organs of the media â&#x20AC;&#x201D; that would be after this like a pack of hounds, if this were a Republican president â&#x20AC;&#x201D; have been remarkably reticent. ... A lot of the media, who are a combined potent force, have not done their job.â&#x20AC;? I would not be aware of the terrorist attack at Benghazi and the misrepresentations from the top if not for coverage from Fox News. â&#x20AC;&#x153;(The Republicans) lost because they appear to be on the wrong side of history,â&#x20AC;? Mr. Hollister said. Perhaps Mark Twain got it right when he said, â&#x20AC;&#x153;Whenever you find yourself on the side of the majority, it is time to pause and reflect.â&#x20AC;? History tells us that our nationâ&#x20AC;&#x2122;s founders were not in the majority, either. Laurie Weigelt Frontier Packaging Inc. Grafton

Bill hurts auto recyclers â&#x2013; For years I have owned and operated an Ohio recycling company called Affordable Auto Parts and Salvage. I show up every day to my job proud of the work that I do. I pay my taxes, I adhere to all the laws and regulations governing my industry and Iâ&#x20AC;&#x2122;m thankful that I have an environmentally friendly job that enables me to provide for my family. Senate Bill 273 is going to hurt people like me and could even cost me, my colleagues and other recyclers across the state our jobs. A recent amendment to the bill that was passed in the Ohio House Insurance Committee will make this bill even more harmful than it was originally. (â&#x20AC;&#x153;Automotive recyclers fear effect of new bill,â&#x20AC;? Oct. 29.) If out-of-state buyers are allowed to purchase vehicles from salvage auctions, then the current level playing field will be destroyed and make it harder for Ohioâ&#x20AC;&#x2122;s recyclers to compete. I am extremely concerned that our lawmakers would even consider changing the law in a way that rips out essential consumer protections. Does it sound like a good idea to give a green light to anyone who wants to buy a salvage car and harvest parts even if they donâ&#x20AC;&#x2122;t possess the proper tools, training or know-how to do it safely and in a way that pro-

tects the environment? Why should our legislators want to pass a bill that makes it easier for unqualified and even criminal buyers to acquire these dangerous vehicles while making it harder for law enforcement and other regulatory agencies to keep track of their purchases? It makes no sense. If SB 273 passes, then it wonâ&#x20AC;&#x2122;t just be recyclers like me who lose â&#x20AC;&#x201D; it will be everyone who lives in Ohio and travels our roadways. Bradley Alexander Owner Affordable Auto Parts and Salvage Painesville

All hail Shale â&#x2013; I saw Brian Tuckerâ&#x20AC;&#x2122;s commentary announcing Crainâ&#x20AC;&#x2122;s new quarterly magazine supplement Shale and I feel this is just what the doctor ordered. I think this will be huge, and it is great that Crainâ&#x20AC;&#x2122;s can be â&#x20AC;&#x153;first inâ&#x20AC;? in reporting about this great natural resource. (The business community) need a reference to pull together all the information that is floating around out there regarding the Marcellus and Utica energy boom. Thank you for doing this. Dino Sciulli Executive vice president Dorman Sciulli Advisors Medina

Daniel W. Sedor Sr. President and CEO Voss Industries

Value all media sources â&#x2013; I was surprised to see the big headline, â&#x20AC;&#x153;Post-election, a pox on self-delusional Fox News,â&#x20AC;? that ran above the political statement made by reader David B. Hollister in Crainâ&#x20AC;&#x2122;s Nov. 26 letters to the editor. After reading Mr. Hollisterâ&#x20AC;&#x2122;s suggestion to â&#x20AC;&#x153;turn (Fox News) offâ&#x20AC;? â&#x20AC;Ś because it has â&#x20AC;&#x153;outlived its usefulnessâ&#x20AC;? and because its election poll reporting was â&#x20AC;&#x153;downright dumb or willfully blind,â&#x20AC;? I think these kinds of statements reflect a name-calling and bullying mentality rather than utilizing a thoughtful and reasoned response. According to the American Heritage Dictionary, a poll is a â&#x20AC;&#x153;survey of the public or of a sample of public opinion to acquire information.â&#x20AC;? To suggest â&#x20AC;&#x153;turning it offâ&#x20AC;? because the polls and â&#x20AC;&#x153;tea leavesâ&#x20AC;? on Fox News were misread is like saying we should abolish the weatherman because he reported the weather incorrectly. There is a margin of error in all things human. Further, Mr. Hollister states in one breath, â&#x20AC;&#x153;turn it offâ&#x20AC;? and a few breaths later he states, â&#x20AC;&#x153;I revel in the give and take of ideas.â&#x20AC;? Huh? These statements are contradictory. Further, I find it ironic that Mr. Hollister criticizes the Republican Party for â&#x20AC;&#x153;talking points wrapped in angry blatherâ&#x20AC;? when his opinion piece smacks of the very same angry blather. I think we need media that present all the facts and at the same time values free speech and isnâ&#x20AC;&#x2122;t afraid to share the truth, come what may.

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Eaton widens supercharger market

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By DUSTIN WALSH Crain’s Detroit Business

Fuel efficiency remains on the forefront of technology innovation in the automotive industry. Every engineer in the industry is trying to push vehicles farther on less fuel — whether through weight reduction, alternative propulsion or other methods. Cleveland-based Eaton Corp., which operates an innovation center in Southfield, Mich., and proving grounds in Marshall, Mich., is taking its high-octane sports car superchargers to the mass-produced car market. Eaton expects to double supercharger sales by 2016. The maker of engine valves, gears, powertrain controls and superchargers reported net income of $1.4 billion last year on revenue of $16 billion. Grant Terry, manager of business development for Eaton’s superchargers unit, said automakers are making smaller engines to improve fuel efficiency, but customers still want horsepower.

“We’ve always developed products to meet high horsepower specs,” Mr. Terry said. “Now we’re improving the performance of those superchargers at low speeds ... to meet better fuel economy performance.” In the United States, Eaton currently supplies its superchargers to Audi’s high-end offerings, including the A6, A7, S4, S5, Q5 and Q7 models, as well as Porsche’s Cayenne Hybrid and Panamera Hybrid. But it plans to enter the more economical car market, as it’s done with the Nissan Micra in Europe and Nissan Note in Japan. The fuel economy-focused North American market is dominated by turbochargers from companies such as Honeywell and BorgWarner. Honeywell said earlier this year it expects turbocharged vehicles in North America to grow to 3.2 million vehicles, up from 2.2 million in 2011. Superchargers work the same way as turbochargers by increasing power to the engine through an airfuel mixture. But turbochargers are driven by exhaust and superchargers are driven by a belt connected to

the engine. Superchargers improve fuel economy by 10% to 15%, Mr. Terry said. Eaton’s superchargers also perform better from a cold start and release fewer emissions, he said. But Mr. Terry said he believes as fuel economy regulations continue to spur the use of turbos, superchargers and turbochargers will be paired to offer the best fuel efficiency possible. “What you’re going to see in order to meet the aggressive standards (54.5 mpg by 2025) is compounding of superchargers and turbochargers,” he said. “We can use a supercharger for response at low speeds and the turbo for operating at efficient zones at higher speeds, instead of compromising a turbo for response.” Eaton will launch its first fourcylinder supercharged product at the North American International Auto Show in January. The 2014 model will go on sale in late 2013. ■ Dustin Walsh is a reporter with Crain’s Detroit Business, a sister publication of Crain’s Cleveland Business.

Growth Capital able to lend more freely SBA allows firm to expand beyond fixed assets By MICHELLE PARK mpark@crain.com

2012

For the first time in its 30-year history, Growth Capital Corp. in Cleveland is free to do more than fixedasset lending — a change that its executive director believes will enable it to meet the borrowing needs of

we’ve moved Rehmann Retirement Builders’ Independence office has moved to 6155 Rockside Road, Suite 100. The newer space and convenient location will help us continue to meet our commitment to deliver retirement plan services to clients in the Greater Cleveland area and beyond.

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more service businesses. Growth Capital, a nonprofit certified development company, is the first lender in the Cleveland district of the U.S. Small Business Administration to become an approved lender in a program that opens the SBA’s 7(a) loan program to community-based financial institutions. Approved lenders in the SBA’s Community Advantage Pilot Loan Program may lend up to $250,000 with the regular 7(a) government guarantee. As of Nov. 19, Growth Capital was one of two Community Advantage-approved lenders in Ohio and one of 55 in the country. The SBA’s approval means Growth Capital early next year can begin lending money to businesses that need cash for working capital, improvements to leased properties and business acquisitions, among other things, said John Kropf, executive director. Until now, Growth Capital has done fixed-asset loans under two programs — one through the SBA and one through the state — primarily for capital equipment and owneroccupied commercial real estate. Most of its lending is done in Northeast Ohio, though the organization may lend anywhere in the state, and about 30% of its borrowers are manufacturers. The change will bring new regulations and capital requirements for Growth Capital, but also the opportunity to diversify its loan portfolio, which currently totals roughly $90 million, Mr. Kropf said. “It is going to open up new avenues, new borrower types,” he said, noting the SBA wants Community Advantage lenders to assist startup companies and underserved communities. “We’ll be able to broaden the impact of our mission,” Mr. Kropf said. Founded in 1982 by a group of business leaders and funded by fees it earns through lending, Growth Capital aims to provide creative

financing to growing small businesses. To handle the new form of lending, Growth Capital will need to beef up its staff, offices and technology, Mr. Kropf said. It currently employs five, but plans to hire two in early January and may need to hire more people as the new loan portfolio grows, he said. Mr. Kropf said Growth Capital probably will double its space at Cleveland’s IMG Center, where it currently leases about 3,000 square feet. Growth Capital’s servers and website will be upgraded, too, including new software to manage the loan processing and payment collection. To date, Growth Capital is the first and only lender to apply for Community Advantage in the SBA’s Cleveland district, which encompasses all 28 northern counties in Ohio, said Gil Goldberg, district director. The program requires lenders to provide both loans and technical assistance to borrowers, Mr. Goldberg noted. “It’s filling a gap in the marketplace and it’s doing it in a way … to ensure that these borrowers succeed,” Mr. Goldberg said. Growth Capital’s designation as a Community Advantage lender will expire March 15, 2017. Organization officials hope to do about 60 loans and build an $8 million loan portfolio in the first three years, Mr. Kropf said. “It’s exciting because there are a lot of small businesses out there that are sort of getting locked out,” Mr. Kropf said, noting many business owners today cannot draw down equity from real estate and are turning to higher-cost alternatives such as credit cards. “We can help those businesses with the Community Advantage program.” The SBA will guarantee 85% of loans up to $150,000 made under Community Advantage and 75% of loans greater than $150,000, Mr. Goldberg noted. Growth Capital will sell the guaranteed portions of the loans on the secondary market, which will help reduce its need for capital, Mr. Kropf said. ■

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CRAIN’S CLEVELAND BUSINESS

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

LIENS FILED Pasha Motors Inc. All Tune and Lube 19606 Rockside Road, Bedford ID: 34-1848105 Date filed: Oct. 9, 2012 Type: Employer’s withholding Amount: $53,500 James B. Solon, D.D.S. 4212 state Route 306, Willoughby ID: 34-1743463 Date filed: Oct. 19, 2012 Type: Employer’s withholding Amount: $53,186

Amount: $41,680 U Brothers Rents Ltd. U Brothers Rents LLC 16750 Hilltop Park Place, Chagrin Falls ID: 61-1420563 Date filed: Oct. 19, 2012 Type: Employer’s withholding, unemployment, failure to file complete return Amount: $36,308 Records Central Inc. 4700 Lakeside Ave., Cleveland ID: 34-1035430 Date filed: Oct. 3, 2012 Type: Employer’s withholding, unemployment Amount: $26,538 Tim Tabar & Associates Inc. Tim Tabar Insurance Agency 20325 Center Ridge Road, Rocky River ID: 34-1889428 Date filed: Oct. 19, 2012 Type: Employer’s withholding Amount: $23,056

Records Central Inc. 4700 Lakeside Ave., Cleveland ID: 34-1035430 Date filed: Oct. 23, 2012 Type: Employer’s withholding Amount: $46,567

Great Lakes Etching & Finishing Co. 7010 Krick Road, Bedford ID: 34-1136809 Date filed: Oct. 3, 2012 Type: Employer’s withholding Amount: $21,114

Peter G. Gordon, D.D.S., Inc. Beachwood Dental Group 23300 Chagrin Blvd., Suite G10, Beachwood ID: 34-1134403 Date filed: Oct. 3, 2012 Type: Employer’s withholding

William E. Crowe, M.D., Inc. 6681 Ridge Road, Suite 204, Parma ID: 30-0019966 Date filed: Oct. 19, 2012 Type: Employer’s withholding Amount: $17,429

OYSTER PERPETUAL EXPLORER II

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PROFESSIONAL SERVICE INDUSTRIES INC.: Paul Bowyer to principal consultant.

FINANCE LORAIN NATIONAL BANK: Chad Spencer to mortgage loan officer.

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MARCUS & MILLICHAP CAPITAL CORP.: Andrew Burgess to associate director. SCHLABIG & ASSOCIATES LTD.: Richard Simon to manager, assurance services; Katherine King to staff accountant; Melanie Miller to administrative assistant. SS&G: Olivia Cunningham to manager, assurance department. STOUT RISIUS ROSS: Stephen L. Buffo to managing director, Dispute Advisory & Forensic Services Group.

HEALTH CARE VILLAGE AT MARYMOUNT: Jamie Killian-Centa to director of nursing; Jenell J. Westhoven to assistant director of nursing and director of quality management.

WESTFIELD INSURANCE: Marianne Parkinson to group customer and marketing leader.

Spencer

Burgess

Killian-Centa

LEGAL JACKSON LEWIS LLP: Daniel Messeloff to associate. ROLF GOFFMAN MARTIN LANG: Andrea Lee and Philomena O’Hare to associates.

Westhoven Golovan

Messeloff

Lee

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SQUIRE SANDERS: Steven M. Auvil to head, Intellectual Property and Technology Group litigation practice. TAROLLI, SUNDHEIM, COVELL & TUMMINO LLP: Raymond N. Russell to partner. THRASHER, DINSMORE & DOLAN LPA: Matthew H. Matheney to partner; Laura M. Wellen and Daniel T. Cronin to associates. TUCKER ELLIS: Peter Igel to partner; Sarah Bunce and Jennifer Steinmetz to counsel. ULMER & BERNE: Andrew Fontanarosa, Benjamin C. Galea and Erin H. McBride to associates.

MANUFACTURING EATON CORP.: Pavan Pattada to senior vice president, Corporate Supply Chain Management. LASZERAY TECHNOLOGY INC.: Jason Tichy to senior design engineer; Nick Machoukas to production manager; Scott Klem to molding process manager. MAR-BAL INC.: Maria Gaeta to corporate director, human resources.

MARKETING AESPIRE: Vance Williams to graphic designer. FATHOM: Jeff L. Herrmann to chief revenue officer.

NONPROFIT KIDNEY FOUNDATION OF OHIO: Sara E. Nunney to assistant development director.

REAL ESTATE CBRE INC.: Michael Davies to project manager. CUTLER REAL ESTATE: Jason T. Beck and Shaunte Jackson to sales associates.

STAFFING ALLIANCE SOLUTIONS GROUP: Victor Ing to president, Mahoning Valley; Mark D’Agostino to president, Akron.

TECHNOLOGY BRITESKIES: Jakeb Brasee to WebSphere commerce developer. EVOLVE CREATIVE GROUP: Mike D’Agruma to front-end web developer. ONOSYS: Maurice Bachelor to senior software development engineer; Josh Scott to menu engineer. VECMAR COMPUTER SOLUTIONS: Stefanie Valentic to marketing coordinator.

BOARDS KIDNEY FOUNDATION OF OHIO: Deborah Damas (Genentech) to president. WVIZ/PBS AND 90.3 WCPN IDEASTREAM: Larry Pollock (Lucky Stars Partners LLC) to chair; Robert C. Smith to immediate past chair; Kevin M. McMullen to treasurer; William R. Stewart to secretary; Jerrold F. Wareham to president, CEO; Kathryn P. Jensen to chief operating officer.

AWARD LAKE COMMUNICATORS: Phil Stella (Effective Training & Communication Inc.) received Gold Apex Awards for Writing.

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

COMING UP: WHO TO WATCH IN LAW Crain’s seeks legal sector leaders of the future “Who to Watch” section continues four-part 2012 series

Crain’s Cleveland Business in 2013 is continuing its series of “Who to Watch” sections. The first section, scheduled for publication Jan. 21, 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 Wednesday, Dec. 19. 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: Nonprofits,” April 22; “Who to Watch: Law,” July 15; and “Who to Watch: Finance,” Nov. 25.

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Golf: Owners Share: Once on IT network, ‘sky’s the limit’ more willing to walk away continued from PAGE 1

continued from PAGE 3

Sewer District; the course will be turned into a conservation area. Previously, well-known industrialist and philanthropist Monte Ahuja bought at a significant discount the nonperforming $5.7 million note on Barrington Golf Club in Aurora, which had run aground after club members purchased the club from the estate of Bert Wolstein in 2006. Crain’s also reported in October on the plight of Tanglewood Golf Course in Bainbridge, which Marc Strauss bought at auction for a surprisingly low $950,000; it later was taken over by Mr. Strauss’ backers when they alleged he failed to make loan payments.

In addition to the government members — Summit County, Fairlawn, Hudson, Stow, Tallmadge, Twinsburg, Mogadore, Bath Township and Copley Township — the coalition includes the University of Akron and Akron General Health System. The group also is working with the Sourcing Office, a nonprofit that helps governments, nonprofits and companies create and manage group purchasing programs. The coalition members are expected to vote on whether to go forward with the plan next August. If they vote yes and successfully connect their government buildings with fiber, which allows for faster data transfer than coaxial cable or

telephone lines, they’ll be able to share various digital resources. First, there’s the fiber-optic cable itself. Finding all the existing fiber will help governments find the cheapest way to boost data transfer speeds, Mr. Quigg said. Municipalities often don’t think to tap into fiber networks that serve the libraries and school systems in the suburb next door. Helping governments find nearby connection points will bring down the cost of high-speed Internet access, he said. So will adding more users to existing fiber lines. “There’s already connectivity that’s all over the place. … But they don’t know what’s outside their borders,” Mr. Quigg said.

With faster data speeds, coalition members could share computer servers housed on the network. They’d also be able to share software that resides on those servers. For example, two cities that use the same payroll processing software program might agree to share a backup copy of that program housed at a data center. Or, they might take the next step and share the copy of the program that they use every day. They could buy the licenses in bulk, too. Governments also could share emergency dispatch centers — and the operating costs. Tallmadge already uses a dispatch center based in Stow, which made it possible for Tallmadge to upgrade its dispatch technology,

said Tallmadge Mayor Dave Kline, one of the early proponents of the coalition’s project. There’s more savings to be had, Mayor Kline said, noting that members connected by fiber could share digital phone systems, software and perhaps even some employees to manage the technology. “The sky’s the limit,” he said. That’s John Hunter’s attitude. The mayor of Sheffield Village said Lorain County and all 17 of its cities are considering a similar plan that would involve tapping into fiber installed by Lorain County Community College. Connecting the Lorain County coalition — which is talking to Tecquiti but hasn’t decided to pursue the project — would make disaster recovery easier because one city could access backup copies of its data and computer programs housed in another city, Mayor Hunter said. ■

Rounds up, fees down Rounds played in Ohio were down 2.6% in October from October 2011, according to the PGA’s monthly PerformanceTrak report, which is issued in conjunction with the National Golf Course Owners Association. But the state and area owners and operators have rebounded from a poor 2011, in which courses got off to an awful start due to early season rains and never recovered. For the first 10 months of 2012, rounds are up more than 10% from the like period in 2011. Mr. Hanlin said rounds at his courses, which include Cumberland Trail in the Columbus area, are up 20% over an average year and 40% over 2011. But at public courses, where greens fees already are at rock-bottom prices because of the intense competition, keeping golfers coming comes at a cost. A drop in per-round revenue, coupled with more wear and tear on a course, adds up, but it’s hard to avoid. U.S. Realty’s Mr. Powers says his firm anecdotally hears of customers being very sensitive to price hikes. Add it all up and owners and operators more often are willing to walk away at a loss from a property to get out from under mounting debt service, as in the case of Barrington. Mr. Powers said courses that have changed hands over the last three to four years are selling at a discount of 50% to 65% of what it cost to build those courses new. Many of the developments, built in conjunction with residential developments, have suffered a double whammy as the housing market plunged. “Those courses that are changing hands are selling under duress,” Mr. Powers said. “Those who are taking them over have less of an investment and are better equipped to handle debt service, if there is any.” The willingness of owners to walk away from properties is a growing trend locally, said John Kostelnik, a partner in the Cleveland office of Frantz Ward. The law firm often represents the lead secured creditor in golf transactions, and while Mr. Kostelnik cautioned the firm isn’t seeing a big influx of these cases, the motivation often is to shed a nonperforming asset. “Obviously in a down economy, (recreation) things become the first thing to go,” Mr. Kostelnik said. “That affects the viability of these courses and clubs, and we’ve found they’re more willing to unload their properties.” ■

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Metro: Turnover causes some concern continued from PAGE 1

“Before we got to a place we were tempted to ask Mark to stick around, he let us know it’s time to get on with the rest of his life,” said MetroHealth board chairman Ronald Fountain. “Mark’s done more than anybody could have asked, and at this point, we spend the days now working through and vetting our options.” While Dr. Fountain and other MetroHealth officials are confident they’ll weather the storm left in Dr. Brennan’s wake, health care observers say the protracted search for MetroHealth’s next CEO won’t come without its battle scars or, at the very least, a few bruises. And with hundreds of millions of dollars of construction in the pipeline, MetroHealth needs a clear leader in place if it’s to execute the vision conceptualized under Mr. Moran’s watch, these observers say. “They need to have people in place focusing both on today and tomorrow,” said Tom Campanella, who directs Baldwin Wallace University’s health care MBA program. “When you have interim leadership, it sort of has the potential of negatively impacting the culture of an organization, and people are not always

sure which direction they’re going.”

Who’s in charge? MetroHealth officials contend Dr. Brennan’s startling Nov. 29 announcement that he’d remain president and CEO of Newark Beth Israel Medical Center and the Children’s Hospital of New Jersey won’t necessarily put MetroHealth behind schedule regarding its ambitious plan to build a handful of outpatient health centers and to pump up to $650 million into upgrading its aging main campus on West 25th Street in Cleveland by 2017. Moreover, the lack of a clear leader won’t impact MetroHealth’s plans to implement its Medicaid waiver program. It’s a complex legal tactic awaiting federal and state approval that has the potential to extend health insurance to as many as 30,000 people in Cuyahoga County who otherwise couldn’t pay for their care ahead of the full implementation of health care reform. “The new CEO will have to run like hell to get on that train,” Dr. Fountain said. “We are not stopping and sitting on the sideline waiting for a CEO to show up … We are going to locate, recruit and attract a CEO that aligns, in general, with

those objectives.” Still, Bill Ryan, president of the Center for Health Affairs, an advocacy group representing local hospitals, indicated the uncertainty surrounding MetroHealth’s administration could cause ratings agencies to raise their eyebrows when evaluating the large amount of new debt required to finance MetroHealth’s expansive construction initiative. The problem, he said, is that the agencies would be asked to issue ratings “without knowing who the heck is running the place.” Baldwin Wallace’s Mr. Campanella noted that “if you put yourself in a position of an evaluator that effectively puts a stamp of approval on an organization’s ability to pay for debt and make wise decisions, the first thing they’re going to do is look at the people in charge.” “It doesn’t help — and I’m not going to say they’ll do any downgrading — your case if you have a tenuous situation in the upper ranks of an organization,” he added.

Negative vibe Fitch Ratings affirmed MetroHealth’s A-minus long-term debt rating in June, but also revised its outlook for the rating to negative

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DECEMBER 10 - 16, 2012

from stable. Fitch cited the deterioration in MetroHealth’s operating performance and noted that the health system is poised to meet its 2012 budget targets mainly due to the layoffs it implemented late last year. At the time of Fitch’s initial rating in 2010, MetroHealth’s management team was lauded for its strategic efforts to transform the organization, though the agency last summer said the turnover in management could be cause for concern. Dr. Fountain brushed off those assertions, saying a permanent CEO would be in place well before the health system goes to the market to take on any new debt because MetroHealth still is planning how it wants to overhaul its aging facilities. While Dr. Fountain wouldn’t put a firm timetable on the renewed search to find a permanent successor for Mr. Moran, he said the process likely would take a few months — “less time than last time because we’ve already been through it once,” he added.

NO NAMES NAMED The board chairman of MetroHealth said the health system has options when it comes to filling temporarily the void that will be left in the CEO post when Mark Moran leaves the top job come Jan. 1. Without naming names, chairman Ronald Fountain said prospective candidates exist to do the job on an interim basis. The person who does so, he said, could be an individual already employed with the organization or an outsider. “There will in fact be a point person,” he said. “There will be a go-to person inside the organization.” Mr. Moran, for example, first came to MetroHealth on an interim basis in 2008 after serving as a partner at the consulting firm Booz Allen Hamilton. The ‘interim’ tag was dropped in March 2009. Dr. Fountain said the board also is toying with the idea of forming a committee of the board to serve as CEO upon Mr. Moran’s departure. MetroHealth’s board isn’t expected to meet until Dec. 19, though Dr. Fountain said he could call a special meeting of the board to name an interim leader before then. — Timothy Magaw

Inevitable comparison MetroHealth launched the search for Mr. Moran’s replacement last January, and search committee members said Dr. Brennan was the clear choice for several months prior to rolling him out as the system’s next leader. The 14-member search committee that sized up 40 candidates put forth by a search firm, Witt Kiefer, whittled the list to eight — each of whom was interviewed this fall. When Tom McDonald, the committee’s chairman and a MetroHealth trustee, asked the search committee to rank those interviewed, Dr. Brennan came in first on all 14 ballots in the straw poll. Dr. Fountain said the board still was sizing up how to proceed with the search, and the group met behind closed doors last week to discuss the matter. He said it would be natural for the search committee to compare candidates for the post to Dr. Brennan, who had a lengthy list of credentials that appeared to be a good fit for MetroHealth. Included on that list were his expertise in emergency medicine and his having turned around a financially strapped hospital. “There are people who would probably do that because we are all human,” Dr. Fountain said of drawing comparisons to Dr. Brennan. “We will compare any candidate with what we saw and what we believed we knew about him.” The comparison game can be

somewhat of a disadvantage because it short-circuits evaluating candidates on their own merits, according to Greg Reynolds, the director of client development of Dise & Co, a Cleveland-based executive search firm. “One of the dynamics of having your selected candidate pull the trigger not to come is that person becomes the barometer for everyone else you look at,” he said. “In the search world, that’s one of the thing we hate the most.”

Mum’s the word MetroHealth has been tightlipped about identifying other candidates for the CEO post and wouldn’t say whether they’d ask their second choice — if there was one at all — to consider an offer. Mr. Reynolds said he typically advises clients to go back to the drawing board and recruit a new slate of candidates. After its involvement in a national search for about a year, Dr. Fountain said, MetroHealth’s profile is as high as it’s ever been. “We’re not going after somebody on the rebound,” he said. “We’re going to find what we want.” ■

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INSIDE

14 ADVISER: YOUR PHONE IS SMART, BUT IS IT SECURE?

SMALL BUSINESS

MCKINLEY WILEY

Kim Baxter and George Catavolos own Flux Metal Arts LLC, a Mentor company that provides workshops and studio space for people who want to learn how to work with metal and make jewelry. They are among a number of artists who teach their craft as a way to supplement their income and build exposure for their work. By KIMBERLY BONVISSUTO clbfreelancer@crain.com

THE STUDIO BECOMES THE CLASSROOM Local artists teach their craft to bring in extra cash, broaden their customer base, find inspiration

fter earning a degree in metals from the Cleveland Institute of Art, Kim Baxter worked the circuit of art shows and galleries to sell her work. There she encountered customers interested in learning how to make their own jewelry, but unsure of where to go to learn those skills. At the same time, as a part-time instructor at Lakeland Community College, she found the jewelry program was so popular that it was difficult for some to get into a class, while others could not commit 16 weeks to a session. She also was part of a Grand River co-op of jewelers and metalsmiths, including George Catavolos, sharing a studio and confronting similar issues with limited workspace and education options. “George and I looked at each other and said we have something here,” Mrs. Baxter said. Out of those experiences, Flux Metal Arts LLC was born. See ART Page 16

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14 CRAIN’S CLEVELAND BUSINESS

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DECEMBER 10 -16, 2012

SMALL BUSINESS

Hackers target handheld devices, too

ou’ve gone mobile and come to rely on your tablet and smart phone for business as well as fun. You already have a list of applications you can’t function without. Guess who else is as excited about your new fascination with mobile technology? Cyber criminals. The good news is that they are just beginning to exploit vulnerabilities in these devices. The bad news is that experts predict an explosion in the number and scope of mobile security breaches. What do these attacks look like? One example is called “smishing,” or phishing via SMS or text message. You may have received a text message on your smart phone that includes a link to a web page. It could look legitimate, like a message from your bank, or a little suspicious. Maybe it says you’ve won a prize. Perhaps it’s a link to a picture. Often the messages are personalized and contain your name or other identifying information. Regardless, once you click on the link, you’ve given the hackers a way to download malicious code onto your phone and retrieve everything on it, from email accounts to your location via GPS. Hackers also attack through apps. You download what you think is a cool game or a useful tool, but once it’s installed your device is infected. The Android platform is a little

JAYMELLON

ADVISER more vulnerable than Apple for this type of attack because the Apple iTunes Store is more controlled. However, that doesn’t mean that an iPad or iPhone can’t become infected. It’s merely that the Google Play Store is more open and allows users to bypass it and download apps from other market stores or even private web pages. While this is great for developers and brings innovative apps to the end user, it also makes it easier for hackers to exploit it. What can you do about it? The best way you can protect yourself is to use safe browsing habits. As with a traditional computer, it pays to be cautious. Don’t click on links unless you are expecting specific information from a known source. Remember, hackers are savvy enough to make the text look like it came from someone you know. Only download apps from legitimate app stores. Avoid downloading them from private web pages unless

you know the company and feel confident that it doesn’t have a hidden agenda for offering the app. Look at the number of downloads the app has generated and its overall user rating. Apps with hundreds of thousands or millions of downloads with high ratings have been thoroughly tested by users and usually are safer than less popular apps. There are antivirus software programs for mobile devices. A good place to start researching is the website of the antivirus provider you are using for your desktop or laptop. Many have a mobile version. Keep in mind the downside to this software is that it will use resources on your tablet or smart phone. It will scan data in the background, which may cause your device to run slower and shorten battery life. However, the tradeoff may be worth it to you. Finally, don’t be surprised if someday soon your IT guy announces that mobile devices connecting to the company network are going to be centrally managed. Mobile Device Management is the next trend in the industry. MDM software monitors, secures and controls applications on smart phones and tablets across a network and is becoming a necessary tool for businesses to protect their users and data. ■ Jay Mellon is a partner for AtNetPlus Inc., an IT services firm in Stow.

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CRAIN’S CLEVELAND BUSINESS 15

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SMALL BUSINESS

Shareholders should be ready to justify salaries to IRS

s the end of the year approaches, many businesses are reviewing and adjusting the compensation of their employees and executives. For closely held companies, shareholders often have exclusive or substantial input in the amount of salary they are paid as employees of the company. In these cases, the amount of compensation needs to be analyzed as to whether it will be respected from a tax standpoint. Depending on whether the business is operating as a C corporation or an S corporation, the IRS might determine that an employee who is a shareholder is being paid too much or too little. Clients are sometimes surprised that the IRS has the ability to adjust the amount of an employee’s salary, but it does. Relying on the rule that in order to be deductible an expense must be “ordinary and necessary,” the IRS can successfully recharacterize payments to shareholders. In a C corporation, where the employee and the shareholder are the same person or family members, the IRS might assert that the compensation being paid is in excess of that which is necessary to compensate the employee. The IRS view in these cases is that the compensation is at least in part a method of taking earnings out of the corporation without paying two levels of tax, as would be the case if a nondeductible dividend were paid to the shareholder instead. This has not been as significant an issue in the past few years because shareholder/employees could take profits out of a corporation at relatively favorable dividend rates. With dividend rates scheduled to increase next year, there is more at stake for companies paying significant salaries to shareholders. Characterizing some of these payments as nondeductible dividends is more likely to generate significant revenues for the U.S. Treasury. There are many different tests that courts have adopted over the years that can indicate whether a particular salary level is deductible. For instance, the permitted salary of an executive who performs multiple roles in the company may not be limited to the amount of compensation that would be reasonable for the position that the shareholder actually has. As an example, if the president of the company also is instrumental in securing significant new sales, the amount of compensation that is reasonable is not necessarily limited to that which would normally be attributable to a president of a similar business. Comparability studies also are available that can guide the company in making this determination. Business owners also need to be aware that the IRS can assert that a business pays a shareholder/ employee too little. In an S corporation, the salary paid to any employee (including employees who are shareholders) is subject to withholding and employment taxes. The allocation and distribution of an S corporation’s profits to its shareholders are, however, not subject to these taxes. There can be an incentive, there-

fore, to minimize the amount of salary paid to the shareholders and increase the distributable profits. As an example, a management consultant earning $200,000 per year might decide to incorporate his consulting business as an S corporation to limit his personal liability. If the consultant causes his new company to pay him his old salary of $200,000, he will have earned $200,000 in wage income and the S corporation will have no taxable income. The consultant may be tempted, however, to pay himself a minimal salary and cause the remaining

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TAX TIPS income to be reported as profits from the S corporation. This would save the consultant a substantial amount of money because none of

the S corporation profit is subject to employment taxes. The IRS has been successful in establishing in many of these cases that the salary being paid is too low, asserting that if the consultant is personally doing all the work, it is hard to justify paying him only a small amount of the total income of the business as a salary while distributing the remaining income as profits. The position of the IRS on whether a shareholder/employee’s salary is too high or too low will, in almost all cases, depend on the type of entity. The motivation of the

taxpayer in a C corporation is to maximize the deductible salary, whereas S corporation shareholder/ employees want to decrease employment taxes. Shareholders who set their own salaries, or who have significant influence over that determination, should be prepared to justify those payments. The rationales for compensation decisions should be carefully and fully documented at the time those decisions are made. ■ Mr. Grassi is president of McDonald Hopkins LLC.

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Mrs. Baxter and Mr. Catavolos are co-owners of the Mentor business, which offers studio and classroom space, and a retail storefront where artists can sell their work. The transition from creating art to teaching workshops is becoming a lucrative option for many artists to boost their artistic bottom lines. Along with providing extra income, workshops also provide a creative release for the artists and expose their work to a broader customer base. Conversely, unlike a structured long-term program, workshops offer the student flexibility without the commitment. “With the small gallery in front, they can look at pieces and handle pieces,” Mrs. Baxter said. “If they look at something and realize it would take a long time to gain this skill, they really appreciate a piece and may want to buy it.” Paula Atwell, owner of Lake Erie Artists Gallery in Shaker Square, is a jewelry maker and painter who offers classes ranging from jewelry making to photography to painting and textiles. She said many of her customers come in without much education about how pieces are made. “By taking a class, not only does someone feel good about creating something on their own, they also learn what it takes to make something,” Ms. Atwell said. “They are pretty amazed by the work that goes into making something.”

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Mr. Catavolos originally discovered his love of metalsmithing at another local outlet, TAP Studios, an art jewelry workshop in Cleveland. He later joined the Grand River artists’ co-op, where he met Mrs. Baxter; they then decided they needed something more structured to expand their reach. “It’s all about the almighty dollar,” Mr. Catavolos said. “A true artist will say I’m in it for the

passion — but you have to eat, you have to survive. You try to build it like we have around what your love is and in a way you’re going to generate a revenue stream. You try to find that happy medium — I think we found that.” Todd Pownell and Debra Rosen, partners in TAP Studios, were working in an established jewelry storefront when they started talking about finding a live/work loft in an urban area to spread their wings and devote more time to their own jewelry designs. To supplement their endeavor, they started classes on the side, as well as a gallery to show up-andcoming college graduates’ work. “The idea was to be able to do our craft in a way that was supplemented by some income from teaching,” Mr. Pownell said. “A lot of jewelers are in their basement. We wanted to get them out of their studios. It’s happening with ceramics people and glass blowers. Metalsmiths, especially small and jewelry artists, are separated in their own little studios. We wanted to be more open and bring the craft into the open.” Mr. Pownell, likening the sentiment to the local food movement, said there’s a small resurgence of people who are more aware of where things come from and how they are made. “It’s hard to get the mainstream public to think of a light bulb, a chair or a piece of jewelry as something to be bought locally, but it’s small and growing,” he said.

Multiple payoffs Peter Debelak and Jim McNaughton took their love of woodworking and turned it into Soulcraft Woodshop, a community woodshop in Cleveland offering monthly membership access to equipment and a line of classes spanning from beginner to expert. Mr. Debelak, who describes himself as a recovering lawyer, was

a woodworking hobbyist for 15 years who began making money on his craft five years ago and turned it into a full-time business in the last two years. “I wanted to step away and get to what I love doing — working with wood,” he said. “I come from a family of educators. I loved the idea of people coming in to work with their hands, whether it becomes a profession or something to complement their lives.” He and Mr. McNaughton opened Soulcraft in the historic Hildebrandt Building near Ohio City in July and bought equipment from auctions and schools closing down woodshop programs. Anywhere from 15 to 30 people use the space to create their own furniture or take classes. An exhibition space also is being planned for student work and local artists. “It’s letting people get the opportunity to get in there, come in with an idea, give them the know-how, the resources and the fruition,” he said. Kate Snow, meanwhile, didn’t set out to teach her craft — printmaking — but said she’s grown as an artist through collaborations with other artists and influences from her students’ creative perspectives. Ms. Snow prints much of her work at Zygote Press in Cleveland, a collective providing studio space, equipment, technical assistance, a gallery, archives and classes in printmaking. She also teaches at Art House Inc., a nonprofit arts center in Old Brooklyn offering studio and gallery space, and leads a variety of art classes and an artsin-education program that pairs artists with schools. “Sometimes when you’re working in a specific field, you get locked into a way of doing things,” Ms. Snow said. “People who have never done this before come with a fresh eye. It’s kind of neat to watch and absorb and be around that.” ■

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

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BANKS IN NORTHEAST OHIO RANKED BY DEPOSITS(1)

Name Address Rank Phone/Website

Northeast Ohio deposits (millions) 6-30-2012

6-30-2011

% change

Offices in NE Ohio

Employees (companywide) 6-30-2012

Holding company

Top local executive

KeyBank NA 127 Public Square, Cleveland 44114 (216) 689-3000/www.keybank.com

$12,254.8

$13,396.2

-8.5%

128

15,777

KeyCorp Cleveland

Beth E. Mooney chairman, CEO, KeyCorp

PNC Bank 1900 E. Ninth St., Cleveland 44114 (216) 222-2000/www.pnc.com

$9,207.8

$9,184.6

0.3%

158

53,863

PNC Financial Services Group Inc. Pittsburgh

Paul Clark regional president

Huntington National Bank 200 Public Square, Cleveland 44114 (800) 480-2265/www.huntington.com

$8,657.2

$8,422.1

2.8%

182

10,368

Huntington Bancshares Inc. Columbus

Daniel P. Walsh Jr. president, Greater Cleveland region

FirstMerit Bank NA 106 S. Main St., Akron 44308 (888) 384-6388/www.firstmerit.com

$8,062.8

$7,560.5

6.6%

128

2,789

FirstMerit Corp. Akron

Paul G. Greig chairman, CEO

JPMorgan Chase & Co. 1300 E. Ninth St., Cleveland 44114 (877) 302-4273 /www.chase.com

$5,798.6

$5,326.6

8.9%

205,849

JPMorgan Chase & Co. New York

James R. Geuther, regional president and head, commercial banking business, NE Ohio

Charter One 1215 Superior Ave., Cleveland 44114 (216) 566-5300/www.charterone.com

$5,749.6

$6,124.0

-6.1%

103

15,336

Royal Bank of Scotland Group PLC Edinburgh, Scotland

Kenneth E. Marblestone president, Ohio region

Fifth Third Bank 600 Superior Ave. E, Cleveland 44114 (216) 274-5300/www.53.com

$4,392.9

$4,216.5

4.2%

20,888

Fifth Third Bancorp Cincinnati

Jerry Kelsheimer president, CEO, Fifth Third Bank, Northeastern Ohio

U.S. Bank NA 1350 Euclid Ave., Cleveland 44115 (216) 623-9300/www.usbank.com

$2,453.3

$2,299.7

6.7%

61,208

U.S. Bancorp Minneapolis

Alan Zang president, Northeast Ohio market

Lorain National Bank 457 Broadway Ave., Lorain 44052 (440) 244-6000/www.4lnb.com

$1,025.0

$983.6

4.2%

263

LNB Bancorp Inc. Lorain

Daniel E. Klimas president, CEO

The Farmers National Bank of Canfield 20 S. Broad St., Canfield 44406 (330) 533-3341/www.fnbcanfield.com

$752.1

$652.8

15.2%

293

Farmers National Banc Corp. Canfield

John S. Gulas president, CEO

Citizens Banking Co. 100 E. Water St., Sandusky 44870 (419) 625-4121/www.citizensbankco.com

$540.4

$521.7

3.6%

305

First Citizens Banc Corp. Sandusky

James O. Miller president, CEO

Middlefield Banking Co. 15985 E. High St., Middlefield 44062 (440) 632-1666/www.middlefieldbank.com

$511.9

$515.3

-0.6%

Middlefield Banc Corp. Middlefield

Thomas G. Caldwell president, CEO

Cortland Savings and Banking Co. 194 W. Main St., Cortland 44410 (330) 637-8040/www.cortland-banks.com

$414.6

$391.4

5.9%

158

Cortland Bancorp Cortland

James M. Gasior president, CEO

First National Bank 112 W. Market St., Orrville 44667 (330) 682-1010/www.fnborrville.com

$371.0

$337.4

10.0%

118

National Bancshares Corp. Orrville

Mark R. Whitmer president, CEO

First National Bank of Pennsylvania 166 Main St., Greenville, Pa. 16125 (800) 494-2265/www.fnb-online.com

$344.1

$302.4

13.8%

2,550

F.N.B. Corp. Hermitage, Pa.

Vincent J. Delie Jr. CEO

Citizens Bank One Citizens Banking Center, Flint, Mich. 48502 (800) 676-6276/www.citizensbanking.com

$306.5

$348.5

-12.1%

1,996

Citizens Republic Bancorp Inc. Flint, Mich.

Jamie Lynch community president; president, commercial banking

Andover Bank 19 Public Square, Andover 44003 (440) 293-7605/www.andoverbankohio.com

$277.5

$271.8

2.1%

Andover Bancorp Inc. Andover

Martin R. Cole president, CEO

Portage Community Bank 1311 E. Main St., Ravenna 44266 (330) 296-8090/www.pcbbank.com

$231.8

$223.2

3.9%

Portage Bancshares Inc. Ravenna

Richard J. Coe CEO

Farmers Savings Bank 111 W. Main St., Spencer 44275 (330) 648-2441/www.fsb-spencer.com

$219.2

$205.2

6.8%

Thomas W. Lee president, CEO

Liberty Bank NA 2351 Edison Blvd., Twinsburg 44087 (330) 425-3033/www.libertybankna.com

$184.2

$193.0

-4.6%

William A. Valerian chairman, president, CEO

Independence Bank 4401 Rockside Road, Independence 44131 (216) 447-1444

$155.6

$143.7

8.3%

Independence Banccorp Independence

Christopher Mack president

Consumers National Bank 614 E. Lincoln Way, Minerva 44657 (330) 868-7701/www.consumersbank.com

$153.3

$132.9

15.3%

118

Consumers Bancorp Inc. Minerva

Ralph J. Lober II president, CEO

Buckeye Community Bank 105 Sheffield Center, Lorain 44055 (440) 233-8800/www.buckeyebank.com

$132.9

$126.1

5.4%

Buckeye Bancshares Inc. Lorain

Bruce E. Stevens president, CEO

Sutton Bank 3 S. Main St., Attica 44807 (419) 426-3641/www.suttonbank.com

$125.1

$120.0

4.2%

Sutton Bancshares Inc. Attica, Ohio

Eric A. Gillett vice chairman, CEO

Commercial & Savings Bank 91 N. Clay St., Millersburg 44654 (330) 674-9015/www.csb1.com

$112.1

$34.7

223.3%

167

CSB Bancorp Inc. Millersburg

Eddie Steiner president, CEO

Premier Bank and Trust 6141 Whipple Ave. NW, North Canton 44720 (330) 478-1000/www.mypremierbankandtrust.com

$111.3

$154.0

-27.7%

Excel Bancorp LLC Saint Clairsville

Rick L. Hull president, CEO

Lake National Bank 7402 Center St., Mentor 44060 (440) 205-8100/www.lakenationalbank.com

$109.2

$106.3

2.7%

Andrew L. Meinhold president, CEO

Ohio Commerce Bank 24400 Chagrin Blvd., Beachwood 44122 (216) 910-0550/www.ohiocommercebank.com

$105.9

$82.5

28.4%

Dell R. Duncan president, CEO

Croghan Colonial Bank 323 Croghan St., Fremont 43420 (419) 332-7301/www.croghan.com

$102.7

$99.3

3.5%

168

Croghan Bancshares Inc. Fremont, Ohio

Rick M. Robertson president, CEO

Apple Creek Banking Co. 21 E. Main St., Apple Creek 44606 (330) 698-5003/www.applecreekbank.com

$91.7

$78.7

16.5%

Apple Creek Banc Corp. Apple Creek

Carol Meek president, CEO

Source: Federal Deposit Insurance Corp., www.fdic.gov, Summary of Deposits reports. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Banks with deposits in Ashland, Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Stark, Summit, Trumbull and Wayne counties are included in this list. Only deposits from those counties are used for the NE Ohio deposit numbers.

RESEARCHED BY Deborah W. Hillyer

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

DECEMBER 10 - 16, 2012

Firefighters: Big credit unions grow Worker: Others try similar programs continued from PAGE 3

of Nov. 30 of this year from $107.8 million as of Dec. 31, 2005. “We’ve outgrown this building,” Mr. Laurendeau said of the St. Clair building that is used for both administrative and branch functions. “I need to add staff, and I don’t have anywhere to put them. “I think that it’s going to greatly improve the member experience at our busiest office and allow us to grow the administrative structure of the credit union,” he added.

Out of the ordinary Improving the member experience at the St. Clair branch is particularly important, given that 50% of Firefighters Community’s inbranch transactions occur there, Mr. Laurendeau noted. The St. Clair branch will be outfitted with drive-through lanes and an ATM, both of which it does not have now, he said. The rebranded look of the St. Clair branch will be replicated at the Firefighters Community branch at 20333 Emerald Parkway near Cleveland Hopkins International Airport, though not likely for a couple years and not through such extensive renovations. That’s because the airport branch was built in 2004, Mr. Laurendeau said. No updates are planned as of yet to Firefighters Community’s two other branches in Broadview Heights and Willoughby, as the credit union doesn’t own the buildings. Once the first two branches are renovated and the separate headquarters open, Firefighters Community executives will need to decide if they want to own branches in those communities, Mr. Laurendeau said.

With the average asset size of Ohio credit unions hovering at $63.6 million, this magnitude of renovations is not common in the state, according to Patrick Harris, spokesman for the Ohio Credit Union League. (The average credit union in the United States has $143.6 million in assets.) “What’s happening at Firefighters Community … is definitely not a trend within the industry in Ohio,” Mr. Harris said. “There’s a handful of credit unions in the state that have seen tremendous growth and are turning that tremendous growth into an expansion of some sort. But that number is very small. “The (credit unions) that are seeing the greatest amount of growth are ones that are larger,” he added. “A lot of that has to do with their (community) charters,” which allow them to serve large regional areas as opposed to specialized groups, he noted.

Meanwhile, in Lake County … Indeed, Firefighters Community holds a community charter, as does Cardinal Community Credit Union, another institution with a sizable renovation in the works. Driven by what president and CEO Christine Blake calls “substantial” growth in recent years, the Mentor-based institution has blueprints in hand for a 3,000-square-foot addition to its existing 12,000-square-foot corporate office at 8500 Westport Drive. The credit union expects to put the project, which could cost more than $300,000, out for bid in 2013 and have it completed by 2014, Ms. Blake said. The availability of more corporate space would mean the institution’s operations people could be united in one place. ■

continued from PAGE 3

or high-tech fields. This program, which ArcelorMittal pitches to high school guidance counselors and others with influence over graduating high school students, is an attempt to win over at a least few of those graduates. “The main issue we have, which is common to all (community college manufacturing technology programs), is that a lot of students don’t want to work in dirty, hot environments,” said Ken White, chairman of the electrical engineering technology department at Lakeland. “But we do have a few students, who once they see it, they love it,” Mr. White said.

Welcome to the mill Mark Langbehn, manager of hourly training for ArcelorMittal USA, told Crain’s the company expects to hire 250 people a year to fill these maintenance positions. He said about one-third of a mill’s work force is maintenance workers. “Our biggest need that we have today is these craft positions,” Mr. Langbehn said. “That’s why we’ve reached out to community colleges across the country to help train the next generation of steelworkers.” ArcelorMittalUSA, which is a subsidiary of ArcelorMittal of Luxembourg, employs more than 13,000 steelworkers at 12 mills in the United States. It employs 1,300 at its Cleveland integrated flat-steel mill and 128 at its coke oven in Warren. The Steelworkers for the Future program currently partners with 11 community colleges in close proximity to company operations. ArcelorMittal also is working to expand training opportunities to upgrade the skills of its existing work force.

The company neither pays directly for the program nor guarantees graduates a job. However, outside of the four semesters of classroom work — leading to an associate of arts degree in applied science — the company provides two eight-week internships, paying $20 an hour. “So, in essence, we are paying for their college through the internship program,” Mr. Langbehn said. So far, the company has hired 78% of the graduates of the first program that feeds two mills in northern Indiana.

How’s $60,000 sound? John Gajewski, a vice president in the work force and economic development division at Cuyahoga Community College, said Honda of America Mfg. Inc. in Marysville is looking for candidates for similar positions. Mr. Gajewski said the Tri-C program starts with basic English and math skills as well as an introduction to engineering technology. Before the end of the first year, students choose to focus on either the electrical or the mechanical maintenance specialties. They then take courses such as schematic reading and programmable logic controls if they choose the electrical option, or welding and fluid power if they choose the mechanical option. ArcelorMittal has chosen the curriculum, Mr. Gajewski said. However, the coursework is similar to a program in integrated systems engineering technology, so students end up with skills they can take to other industries. “It’s a very focused and deliberate program with a high payoff,” Mr. Gajewski said. “Two years later, they can move into jobs paying $60,000 a year or more with overtime.” ■

Volume 33, Number 48 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the third week of May and fourth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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20121210-NEWS--19-NAT-CCI-CL_--

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DECEMBER 10 - 16, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

THEINSIDER

THEWEEK DECEMBER 3 - 9 The big story:

The Rock and Roll Hall of Fame and Museum named Greg Harris its next president and CEO. Mr. Harris, the Rock Hall’s current vice president of development and government relations, will replace Terry Stewart, a former Marvel Entertainment Group executive who has served in the role since 1999. Mr. Stewart last May announced his intention to step down from the post by the end of 2013. Mr. Harris, Harris who begins his new role Jan. 1, said he was poised to build on the momentum generated during Mr. Stewart’s tenure.

A change of plans: The federal government threw a monkey wrench into plans by TransDigm Group Inc. to acquire for $236 million the pump and engine control systems business of Goodrich Corp., a subsidiary of United Technologies Corp. The two companies mutually agreed to terminate the previously announced asset purchase agreement, dated Oct. 25, following notice by the U.S. Department of Justice that it objected to the transaction. Under a consent agreement between United Technologies and the Justice Department, federal approval of the transaction was required and was in the department’s sole discretion.

Bad news: Plain Dealer editorial staffers heard from their union representatives that the newspaper’s managers plan to begin laying off reporters and editors in May in an action that would result in the newsroom staff shrinking by about one-third. In an email from Local 1 of The Newspaper Guild, the staff was told management intends to reduce the editorial staff’s size to 110 from an estimated 168. The reduction would be accomplished through layoffs and job offers from Cleveland.com.

Brushing up: Cequent Consumer Products, a Solon-based maker of automotive aftermarket products and household cleaning tools, bought the assets of Harper Brush Works Inc. in Fairfield, Iowa. Cequent, a division of Trimas Corp. of Bloomfield Hills, Mich., did not say what it paid for Harper, a maker of cleaning tools founded in 1900. However, according to documents filed in U.S. Bankruptcy Court, Cequent paid $3.45 million, plus assumed obligations of up to $100,000. Harper filed for Chapter 11 protection from creditors at the end of May.

Yes Sire: Hyland Software in Westlake bought privately held Sire Technologies, a provider of document management, agenda and minutes automation software designed for the government market. Hyland did not disclose what it paid for Sire, which is based in West Valley City, Utah. President and CEO A.J. Hyland said the company sees the acquisition of Sire “as a perfect fit as we continue to expand our market share in the government space.” He said Hyland has about 1,500 public-sector customers. This and that: UMH Properties Inc. bought Twin Oaks, a 141-site, 21-acre manufactured home community in Olmsted Township, for $4.35 million. UMH is a publicly owned real estate investment trust based in Freehold Township, N.J. … National Interstate Corp. of Richfield said Tony Mercurio will become executive vice president and chief operating officer, effective Jan. 1. Mr. Mercurio currently is CEO of Vanliner Insurance Co., one of National Interstate’s insurance subsidiaries. … Lakewood City Schools will get a $320,000 cash infusion in a new partnership with First Federal Lakewood through which the bank will receive naming rights to the 7,500-seat Lakewood Stadium for 10 years. The venue will be called First Federal Lakewood Stadium.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Out with the old, in with the new

resigned. — Michelle Park

NE Ohio becomes startup magnet

■ Four of 10 director seats at Central Federal Corp., the parent company of CFBank in Fairlawn, are vacant after four members resigned their seats last month to allow for a complete “changing of the guard,” according to Tim O’Dell, the company’s new CEO. Gerry W. Grace, Jeffrey W. Aldrich, Jerry F. Whitmer and William R. Downing all resigned from the board in November, a filing with the U.S. Securities and Exchange Commission reveals. No reason is provided in the document, but Mr. O’Dell said the resignations reflect the directors’ decision to “graciously step aside” for the bank’s new leadership, and Mr. Whitmer confirmed that statement in an email. “I felt that it was time to turn over the administration of the bank to the new management team,” said Mr. Whitmer, who had served since 2003. “I cannot speak for the other directors who resigned, but I think they felt the same way. We were all members of the board who chose the new management team, and I wish them great success.” After successfully raising $22.5 million in new capital in late August, Central Federal got a new CEO in Mr. O’Dell, a new president in Thad Perry and a new chairman in Bob Hoeweler, plus two other new board members, James H. Frauenberg II and Donal H. Malenick. “We clearly appreciate their service to the bank,” Mr. O’Dell said of the directors who

■ Business accelerators can attract entrepreneurs to Northeast Ohio: During 2012, six of them moved to the region to join either Bizdom Cleveland or the LaunchHouse Accelerator in Shaker Heights. Both accelerators provide startups with up to $25,000 in seed money, intense mentoring and office space in exchange for equity. Entrepreneurs apparently think it’s a good enough deal to move: ■ Christopher Armenio moved to Northeast Ohio from Pittsburgh to help Art Geigel start iOTOS, a LaunchHouse startup that has developed technology that lets people use smart phones to control garage doors, beer taps and other devices. Mr. Geigel lived here, but the two men had talked about starting the company in California or some other distant locale before learning about the LaunchHouse Accelerator. ■ LaunchHouse attracted Florida resident David Greenberg, who founded Sliced Apples, a blogging platform for businesses. Bizdom has attracted entrepreneurs, too: ■ Jennifer Jeng and Donna Lee moved from California to start Mascot Secret, which is developing software that would let people pay to upgrade their seats during live events. ■ Alicia Blas moved from Los Angeles to help start outdoor accessories maker Firmly Planted. ■ Xin Chen moved from New Jersey to

MILESTONE

BEST OF THE BLOGS

THE COMPANY: Direct Connect Computer Systems, Richmond Heights THE OCCASION: Its 20th anniversary

Excerpts from recent blog entries on CrainsCleveland.com.

Owner Jim Conley (pictured) started the business in 1992 with a simple philosophy: “Never let little issues get in the way of being my customer’s long-term technology partner.” It has served Direct Connect well, Mr. Conley says. “With advances in technology, we have been able to provide even more support options for our customers,” he says. “For example, the Internet enables us to provide immediate remote tech support that otherwise would have left our customers waiting for an on-site service call. The Internet has also allowed us to expand our service offerings into a ‘managed’ model, which basically means that we manage your technology so you can manage your business.” The company serves as an IT adviser to small business customers, offering on-site services as well as remote help-desk support. Mr. Conley says its managed services, including preventive maintenance and data backup, reduce customers’ downtime, improve performance and increase productivity. For information, visit ClevelandComputers .com. Send information about significant corporate anniversaries to managing editor Scott Suttell at ssuttell@crain.com.

The waiting is the hardest part ■ Foreclosures in Ohio take an average of 571 days to complete, making it the ninth-slowest state in the country, according to Market Watch.com, based on data from RealtyTrac. The slowest state, at 1,072 days, is New York. Also slower than Ohio are Connecticut (661 days), Florida (858) Hawaii (662), Illinois (673), Indiana (603), New Jersey (931) and Pennsylvania (580). Business-friendly Texas will get you through the foreclosure process faster than any other state. It takes only 97 days, on average, to complete a foreclosure there.

WSJ throws praise at a Little Italy glass house ■ If you love looking at fancy houses — and who doesn’t? — by all means check out a Nov. 30 Wall Street Journal story about urban glass houses, which includes a very cool home in Cleveland. “A growing number of city dwellers are building glass houses — just a stone’s throw from the street,” The Journal said. “Such homes allow in lots of light, but also curious looks from passersby; beware neighbors brandishing telescopes.” This is how The Journal described the Cleveland house: “In the heart of the historic Little Italy neighborhood in Cleveland, Stephen J. Buc-

launch web search firm Queryly.com. — Chuck Soder

He’s no Seinfeld, but he did get laughs ■ David LaRue, CEO of Forest City Enterprises Inc., kept the crowd chuckling at last Thursday’s “Annual Commercial Real Estate Deal Maker Forum” in Cleveland as he introduced keynote speaker Alex Arena, a senior vice president who leads the real estate developer’s San Francisco office. Picking up on opening remarks that the forum tries to bring in outside perspectives to Northeast Ohio real estate types, Mr. LaRue, a Forest City veteran, said, “I’m from out of town. I’m from Steubenville.” Noting that Ms. Arena teaches seminars on the so-called “triple bottom line” of business doing good deeds as it pursues profits, Mr. LaRue noted that Forest City’s chief financial officer, Robert O’Brien, says, “We have one bottom line, and I have to put up with that one.” Mr. LaRue said when Ms. Arena was selling the company’s investment committee on recent projects in San Francisco’s resurgent SoMA District, she went through a sophisticated analysis of how technology and social networking are transforming the flow of ideas, innovation and talent before she got to the real estate issues. “We were glad when she got to place. That’s something we understand as real estate developers,” Mr. LaRue said. “She allowed us as real estate developers to create a special place” where fast-growing tech companies want to locate. — Stan Bullard

chieri of Bucchieri Architects designed himself a townhouse in a neighborhood of streets lined with two- and three-story single-family residences on deep, narrow city lots. This is a new house built on a lot that used to have two houses. “Maintaining privacy was the architect’s priority in the design, which he did by including an enclosed courtyard between a front and a back part of the house. The front and back have large windows. The architect also sought to offset what he calls the ‘visual noise of the surroundings’ by making the exterior monolithic. The house is four stories, 3,800 square feet, and has three bedrooms and a roof terrace.”

And speaking of a famous Cleveland house … ■ USA Today is favorably impressed with Cleveland’s holiday spirit. A story on “10 great places to put a spin on the Christmas spirit,” suggests holiday travelers stop at the Christmas Story House in Cleveland. “Ralphie’s home is perfectly preserved in this homage to the 1983 holiday film that’s now a cult classic,” the newspaper noted. The newspaper also recommended seven cookbooks as holiday gifts, and one of them was “Michael Symon’s Carnivore: 120 Recipes for Meat Lovers,” co-authored by the celebrity chef and well-known local food writer Douglas Trattner. Why is it great for giving? “Not everyone’s a vegan,” USA Today said. “Chances are, plenty of people on your gift list crave the sizzling, sometimes bloody delight of a wellcooked and seasoned hunk of meat.”

20121210-NEWS--20-NAT-CCI-CL_--

12/7/2012

4:29 PM

Page 1

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