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Commercial mortgage loan defaults vexing
COURSES KEEP BUSINESS ROLLING
As delinquencies rise, brokers predict lenders will take more action against property owners By STAN BULLARD sbullard@crain.com
Incentives allow many area golf courses to maintain or increase rounds played, despite recession By JOEL HAMMOND jmhammond@crain.com
T
he PGA of America late last month released some mildly surprising data: Rounds of golf played through October in Ohio were up 1.2% compared with the first 10 months of 2008, while nationwide, rounds played were down 1.5%. A misprint, right, given the economy and the wacky weather of the year? Conversations with officials at area courses and clubs mostly affirm the PGA’s news, though the scene isn’t all rosy. Rounds are up or flat — for which many courses are thankful, given their expectations in January — but dollars per round are down, thanks to often-steep discounting resulting from the market’s saturation. “We had to go out and fight for it with different promotions,” said Jimmy Hanlin, director of golf at Little Mountain Country Club in Concord and StoneWater Golf Club in Highland Heights, where rounds were flat.
See MORTGAGES Page 4
New state franchise fee causes budget quagmire for hospitals By SHANNON MORTLAND smortland@crain.com
Local hospitals are in search of ways to reduce their budgets so they can absorb a new franchise fee imposed upon them by the state. Lawmakers created the new fee earlier this year as a way to help solve the state’s own budget quandary, but in doing so, they likely created a financial bind for some of Ohio’s largest employers. Under the new mandate, Ohio hospitals must pay the state a fee equal to a portion of their operating costs — an estimated $718 million in the current biennium — that enables the state
to receive an extra $1.86 billion in federal Medicaid dollars. Some of that money will come back to hospitals in the form of a 5% hike in Medicaid reimbursement levels, but Ohio hospitals still are expected to lose a combined $150 million to the franchise fee. Hospitals could receive an even higher Medicaid reimbursement, but a distribution plan in the works for six months still has not been ironed out, said Tiffany Himmelreich, spokeswoman for the Ohio Hospital Association, which is working with the state on that plan. In the meantime, the first of the See FEE Page 10
INSIDE Banking industry deserves credit The failure of AmTrust Bank was the latest blow to Northeast Ohio’s banking market, but analysts say top banks headquartered here and in the state help the region maintain its prominence in the industry. Read Arielle Kass’ story on Page 3.
See GOLF Page 9
46
Eight bargain hunters, some of them owners of small hotel chains and apartment landlords looking to diversify their portfolios, gathered Nov. 24 in Middleburg Heights as Chartwell Group readied a lenderordered auction of the 93-room Super 8 Hotel in Strongsville after the owner defaulted on a $1.8 million mortgage. “There were a lot of disappointed bidders,” recalls Gordon Greene, a partner at Cleveland-based Chartwell’s
auction unit, which does business nationally. That’s because a court-appointed receiver at the auction got a cell phone call 15 minutes before the bidding was to kick off, at $900,000, notifying him that the property owner that morning had filed for Chapter 11 bankruptcy reorganization. A bankruptcy-scuttled auction is a rarity, Mr. Greene said, though most properties wind up going back up for sale after Chapter 11, anyway. Mr. Greene foresees more lenderordered auctions for the next two
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SPECIAL SECTION
SMALL BUSINESS Northeast Ohio’s business incubators help generate regional economic growth ■ Page 13 PLUS: ON THE RISE ■ GRAND OPENINGS ■ & MORE
Entire contents © 2009 by Crain Communications Inc. Vol. 30, No. 46
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
NOWHERE TO GO BUT UP
COMING UP IN CRAIN’S
Everybody knows health care is expensive and getting pricier every year, but data from the Kaiser Family Foundation is pretty eye-popping nonetheless. The foundation reports that the average health insurance premium for family coverage cost $13,375 in 2009. At the average premium growth rates posted from 1999 to 2009, that family coverage would cost nearly $31,000 by 2019. Even at the more modest growth rate of 2004-2009, the coverage would top $24,000.
This year’s Book of Lists, which prints Dec. 28, features 46 lists and thousands of contacts from the region’s leading businesses and organizations for all of your company’s needs. Meanwhile, Crain’s on Jan. 4 will forecast 2010 from the perspective of the region’s various sectors, including technology, real estate and retail, among others.
Projected health insurance premiums for family coverage
REGULAR FEATURES Big Issue ........................8 Classified .....................18 Editorial .........................8 Going Places ................10
DECEMBER 14-20, 2009
List: Banks in Northeast Ohio .........17 Personal View.................9 Reporters’ Notebook ....19
Year
at 1999-2009 rates
at 2004-09 rates
2010
$14,539
$14,191
2011
$15,803
$15,057
2012
$17,178
$15,975
2013
$18,673
$16,949
2014
$20,297
$17,983
2015
$22,063
$19,080
2016
$23,983
$20,244
SOURCE: KAISER FAMILY FOUNDATION; HTTP://TINYURL.COM/YB49WAV
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Ohio’s financial star dims amid buyouts But region and state remain centers of banking despite outsider takeovers of AmTrust, Nat City By ARIELLE KASS akass@crain.com
In just over a year, Cleveland has lost two big banks headquartered in the city. But the demise of beleaguered National City Corp. and, just this month, AmTrust Bank doesn’t mean Ohio has fallen off the country’s financial map — only that its place
THE WEEK IN QUOTES
on that map isn’t quite as prominent. Seven of the nation’s top 100 banks when ranked by assets are still headquartered in Ohio, said Fred Cummings, a former bank analyst and president of Elizabeth Park Capital Management in Beachwood. Those banks account for nearly $296 billion in assets, making Ohio fifth in the country when
INSIDE: Fourteen suitors submitted bids for AmTrust Bank, according to the FDIC. Page 6 states are ranked by the assets of their headquartered banks. “It’s a significant banking center,” Mr. Cummings said. That’s not to say the failure of AmTrust, which was taken over by New York Community Bancorp after the troubled bank was closed Dec. 4 by regulators, and the acquisition of loss-plagued National City by Pittsburgh’s PNC Financial Services
Group Inc. late last year hasn’t dealt a blow the state’s financial prestige. Scott O’Donnell, retired state superintendent of financial institutions, said Ohio has lost out “pretty dramatically” over the years as Ameritrust, Central National Bank of Cleveland, Union Commerce Bank and Bank One disappeared via merger. Now AmTrust and National City have been added to their ranks. “The prominence of the state has diminished significantly,” he said. Mr. O’Donnell said KeyCorp now remains as the one major bank
INSIGHT
— John Gaydos, general manager, Fowler’s Mill Golf Course. Page One
Pilot project to merge functions such as HR may be pitched to others
“People will get hurt. If money is not made (at bargain sales), that means things are not getting better.”
“We are doing our best to analyze the cost structure. We are certainly looking at every item. We’re clearly making some tough decisions.” — Mike Szubski, senior vice president and chief financial officer, University Hospitals. Page One
“Incubators at their heart are about helping small businesses grow more quickly.” — Cathy Belk, chief marketing officer, JumpStart Inc. Page 13
“The more successful family businesses truly do look at their business as a business first.” — Dr. Ronald C. Reece, business coach, The National Center for Family Business. Page 15
See BANKS Page 6
UA, LCCC think they’ve found a way to share some services
“We made some concessions to make sure we maintained rounds, no doubt.”
— Gordon Greene, partner, Chartwell Group’s auction unit. Page One
headquartered in Northeast Ohio. Other top 100 banks in the area, though, include FirstMerit Corp. of Akron and Third Federal Savings and Loan of Cleveland. Other Ohio banks in the top 100 are Columbusbased Huntington Bancshares, Fifth Third Bancorp of Cincinnati, First Financial Bancorp of Cincinnati and Park National Corp. of Newark. But this region and the state do have a financial ace in the hole in the form of the Federal Reserve Bank of Cleveland. As long as a Fed
By CHUCK SODER csoder@crain.com
MARC GOLUB
Dr. Charis Eng, head of the Cleveland Clinic’s Genomic Medicine Institute, got her start in genetics at the University of Chicago at age 16, when she decided to study how to diagnose and treat different cancers.
COMFORTABLE IN GENES Clinic specialist pushes system’s doctors to better understand genetic testing, which could make diagnoses easier By SHANNON MORTLAND smortland@crain.com
D
r. Charis Eng believes the answers to many medical questions are right in front of our faces, waiting to be discovered. Is someone more susceptible to breast, thyroid or uterine cancer? The answer likely is encoded in a person’s genetic makeup, which is why Dr. Eng is urging doctors at the Cleveland Clinic to send their patients to the health system’s Genomic Medicine Institute for testing. “If you find alterations in the gene, you will have made your diagnosis,” said Dr. Eng, who is director
of the Genomic Medicine Institute and recently was named to the Advisory Committee on Genetics, Health and Society, which answers to the secretary of the U.S. Department of Health and Human Services. Since her arrival at the Clinic four years ago, Dr. Eng has been reorganizing the staff at the Genomic Medicine Institute to handle more patients and has standardized their work to include certain steps — such as documenting a patient’s family medical history — that every geneticist at the Clinic must take. One year ago, the institute finally was ready to take on more patients, so Dr. Eng has been educating doctors See GENES Page 18
MORE TESTING, PLEASE The Cleveland Clinic’s Genomic Medicine Institute has seen steady increases in its patient volume. Its director, Dr. Charis Eng, wants to see more patients visit the institute for genetic testing — for a number of reasons: ■ Testing can determine toward which diseases a patient — about 10% of the population is susceptible
to genetic disease — is predisposed; ■ Family testing can determine whether any genetic abnormalities exist within a family; and ■ Once those two factors are weighed, health care spending is decreased, as doctors can eliminate any needless testing or treatment for diseases or conditions that aren’t present.
Two area colleges think they’ve finally figured out a way to get Ohio’s higher education institutions to start sharing administrative services. The University of Akron and Lorain County Community College next month will begin a pilot project that the two schools hope will lay the foundation to create a standalone administrative services center that could provide back-office functions to more schools and possibly other organizations as well. It’s an ambitious goal that other colleges, including Akron, have fallen short of in the past. This time, however, officials at the two schools believe they’ve worked out most of the issues that could threaten the effort, said Jim Sage, chief information officer at Akron. The pilot is supposed to serve as proof. Next month, LCCC will start using Akron’s administrative software system, and over the course of 2010 the two schools plan to combine at least three other administrative services, which could include human resources, payroll, billing, purchasing and various student services. Should the pilot go as planned, the two schools would have a tool to help them convince other Ohio colleges to join the effort to open a standalone services center at a neutral location in 2011 or 2012, said Mr. Sage, who is helping drive the effort. “We know that we’re going to have to prove to colleges and universities that this will work and be better than what they’ve got,” he said. Such a center would give small schools access to services they couldn’t afford on their own while providing economies of scale that could help all participants redirect administrative dollars to education, said Mr. Sage, who previously led an effort to combine the administrative services of three divisions of computer distributor Pioneer-Standard Electronics, which is now Agilysys Inc. Saving money is especially important for colleges today. The state cut See SHARE Page 5
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years, an observation supported by new statistics showing that more of the region’s commercial property owners are falling behind on loans or can’t find replacement financing for maturing loans. Foresight Analytics, an economics consultancy in Oakland, Calif., estimates commercial mortgage delinquencies in the Cleveland-ElyriaMentor metropolitan statistical area climbed to 6.7% as of Sept. 30 from 5.5% at the end of June. The MSA’s delinquency rate ranks sixth-highest in the nation, where the average default rate was 4.6% at the end of the third quarter, an increase from 4% in the second quarter.
In the Akron MSA, consisting of Summit and Portage counties, the commercial mortgage delinquency rate hit 5.2% in the third quarter from 4% in the second quarter. Foresight Analytics tags the Akron MSA with the 27th-highest delinquency rate in the nation.
Ready for a workout Based on Federal Deposit Insurance Corp. reports of calls to lenders, the Foresight data shed light on the behind-the-scenes fight over real estate loans that’s going on between lenders and the owners of commercial real estate and businesses that borrow from those lenders. Relatively few commercial and
MY BANKER
industrial foreclosure cases so far have hit the courts as full-blown foreclosure actions, such as the $80 million default on the City View Shopping Center in Garfield Heights by a New York-based grocer that is pending in U.S. District Court in Cleveland. Another big foreclosure is Bank of America’s pending foreclosure on the Cleveland Arcade to satisfy a $15 million first mortgage used to remake the historic retail center into a Hyatt Regency Hotel. Regional real estate brokerages, which more than a year ago began positioning themselves for handling court receiverships and property management services for properties that owners gave back to lenders, have gained little such work so far. However, David Browning, managing director of the Cleveland office of CB Richard Ellis, said such work is “starting to filter through,” and he expects more next year. “Can I give you concrete examples of it worsening? No,” Mr. Browning said. However, he described his firm as “the proud” manager of a half-dozen commercial properties in the region undergoing foreclosure, and he hopes to land some of “another half-dozen that are definitely broken.” Warren Morris, CEO of the Ostendorf-Morris Colliers brokerage, also expects to see more cases of lender action against commercial property owners. He said as collateralized mortgage-backed securities loans of the past decade mature, more cases will result if property owners continue to struggle to find replacement financing.
I’M WORKING G LATER TH THAN THA USUAL THESE DAYS, but so is
Tough choices
my Citizens Banker. She’s in her office crunching numbers.
One of the nation’s realty titans, Forest City Enterprises Inc. in Cleveland, talks about negotiations with lenders over debts in such a way that it sounds like a game of who blinks first. The multibillion-dollar property owner says it’s willing to give back properties when it cannot get suitable terms. CEO Charles Ratner, in a Dec. 10 conference call with securities analysts, said Forest City works with lenders to adjust mortgages for underperforming properties. He said conducting such talks are a benefit of Forest City’s 50year history developing and managing properties from Cleveland to other parts of the country. Like Mr. Ratner, Mr. Greene of Chartwell counts himself a veteran of other real estate downturns, ticking off four serious ones before this one. He sees the current situation worsening because borrowers can stand losses for only so long, even when aided by today’s low interest rates. If more loans become available, Mr. Greene said the property market may not worsen but will bump along on the bottom through 2011. The 60-plus Mr. Greene is philosophical about the state of the market, noting, “It’s not always going to go up, and it’s not always going to go down.” ■
My numbers. And tomorrow she’ll call, to tell me another way I can save or make more money. And when I say “thanks,” she’ll say, “No thanks necessary. Just doing my job.” If you want a banker that works hard for your business visit a Citizens Bank branch near you today, call (800) 946-2264 or visit us online at CITIZENSBANKING.COM/BUSINESS
Volume 30, Number 46 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 fifth week of June and first week of July, the fourth week of August and fifth week of August, the third week of November and fourth week of November, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2009 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. (888)909-9111. REPRINT INFORMATION: 800-290-5460 Ext. 136
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$170 million from its higher education budget when it passed its twoyear budget last July, putting more strain on school budgets that were already constrained by forced tuition freezes and past cuts.
Thumbs up from regents Among the effort’s supporters is the Ohio Board of Regents. The regents last month awarded the pilot project $320,000 of a $950,000 grant the state received from the Lumina Foundation for Education. There are a handful of other projects in Ohio that promote collaboration among the state’s colleges, but none appear to be as ambitious at the service center project, said Michael Chaney, chief communications officer for the Ohio Board of Regents. Ambition is good, Mr. Chaney said, because savings can result via such collaboration. “The more they’re able to collaborate on things and save money, the more they’re going to be able to put toward students,” he said. Akron and LCCC have worked to remove some of the barriers to participation: The plan to put the center on neutral turf should ease worries from institutions reluctant to relinquish operations to a competitor, and all participating schools would have representation on the governing board that would run the center. Disagreements over control helped derail a 2001 effort between Akron and a few other Ohio school
ALL TOGETHER NOW After many attempts by many schools, the University of Akron and Lorain County Community College think they’ve developed a way to share administrative services: How it works: In the UA/LCCC pilot program, the latter will use Akron’s administrative software system, and in 2010 the duo will combine three other student services, such as HR, payroll and billing. The hope: UA and LCCC envision a standalone services center that could draw other schools and even some organizations. Small schools would benefit from affordable services, while all participants could use more money toward education. Quotable: “The opportunities to do other things are almost unlimited.” — Jim Sage, chief information officer, University of Akron that were considering sharing information technology services, Mr. Sage said. “People didn’t want to lose their power base,” he said.
Parochial concerns The pilot project aims to prove the method is practical, but challenges will remain even if it succeeds. For example, Mr. Sage worries some colleges might not participate because of concerns that sending
administrative functions to a separate services center would leave some of their employees without work. Participating schools could avoid or minimize staff cuts by ordering an increasing number of administrative services from the center’s “menu” over time, Mr. Sage said. That way, many staff members could leave through attrition or retirement. Plus, colleges also could move remaining administrative employees to other departments, and some could take transfer options to work at the center, he said. “The opportunities to do other things are almost unlimited,” Mr. Sage said. In situations where combining services would make staff cuts necessary, some colleges may be willing to make the cuts because of the need to save money, said David Cummins, vice president of administrative services at LCCC. The community college doesn’t expect to be among them. It plans to reassign any employees who are freed up because a growing number of students already is taxing LCCC’s current staff, Mr. Cummins said. The school expects to gain resources and expertise by combining services with Akron, which is a much bigger institution. It expects to see little in the way of savings, however, unless more schools pool together to form the service center. “There will be some economies of scale as this office grows,” he said. ■
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branch remains in the city, Cleveland will retain a certain importance as a banking center, Mr. O’Donnell said. Charlie Crowley, managing director of investment banking in Cleveland for Stifel Nicolaus & Co., said Northeast Ohio still has a “very vibrant banking community,” even as he acknowledged that the loss of bank headquarters is “certainly” a negative for the region. He noted, though, that other former banking centers such as Chicago and Boston have experienced worse losses than this region has.
The silver lining And the takeover of National City and AmTrust, which both were in
greatly weakened states in their final days, by far stronger institutions should have its upside, according to Mr. Crowley. New banks will have the chance to emerge as stronger contenders for customers’ business, and a purchasing bank could even choose to add jobs to the region. That was the case in Columbus, when Chase bought Bank One in 2004, said Mike Van Buskirk, president and CEO of the Ohio Bankers League. The company’s mutual fund operations, trust operations and other functions stayed in or were moved to the state, meaning some senior-level Chase employees were transferred to Ohio. “A merger, any time it happens, there are winners and losers,” Mr.
Van Buskirk said. “Once the dust settled, there was a steady increase in jobs in Ohio from Chase.” Kevin Jacques, the Boynton D. Murch chair in finance at BaldwinWallace College and a former economist for the U.S. Treasury Department and the Office of the Comptroller of the Currency, said some evidence exists that major bank mergers often don’t lead to the reduction of employees that outsiders expect. And Mr. Crowley said even those bank employees who have lost their jobs will see other opportunities in the region as the remaining banks look to upgrade their talent, though some will likely need to embark on new careers. In the days before interstate banking was permitted, Mr. Van Buskirk said, Ohio banks dominated the contiguous states, excluding Pennsylvania. But Dr. Jacques indicated that Ohio never attained the same level of prestige once banking across state lines was opened up and various megainstitutions came into being. The same can’t be said of North Carolina, which houses Bank of America Corp. and was the home of Wachovia Corp.; New York, where JPMorgan Chase & Co. and Citigroup are based; or California, which is home to Wells Fargo & Co. Each of those banks has more than $1 trillion in assets. “Key and National City never quite rose to that level,” Dr. Jacques said. ■
AmTrust had many bidders
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There were a number of institutions that were interested in picking up the pieces of AmTrust Bank, which on Dec. 5 was closed by regulators. Of the 104 potential bidders contacted by the Federal Deposit Insurance Corp., 14 submitted bids for the Cleveland bank, FDIC spokesman David Barr said. He said it was a “pretty active” response rate for the number of potential bids. Mr. Barr could not give any information about the bidders, including where they are based. The winning bid was from New York Community Bank, of which AmTrust is now a part. For smaller banks, Mr. Barr said, the FDIC often contacts between 500 and 600 potential bidders. He said the pool this time was smaller because of AmTrust’s size. “There are just so many buyers for an $11 billion institution,” he said. “You don’t want a guppy swallowing a trout.” Joseph Ficalora, chairman, president and CEO of New York Community Bank and its parent company, said the bank had bid on “every major regulatory deal,” in whole or in part, from Washington Mutual through AmTrust. This was the first the bank received. Mr. Ficalora said New York Community Bank will continue looking for failed banks to take over, both in the areas where it already operates — including Cleveland — and in new areas where it could come in with significant market share. Mr. Ficalora said the bank had been eyeing AmTrust for more than a year. — Arielle Kass
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#9>9CDBI ?6 D85 )9CD5BC ?6 81B9DI ?6 )D E7ECD9>5 s ZPZ[LYZVMJOHYP[`OLHS[O VYN CANTON, OHIO Mercy Medical Center**, Mercy Professional Care Corporation*, Sisters of Charity Foundation of Canton, Early Childhood Resource Center CLEVELAND, OHIO St. John West Shore Hospital**, St. Vincent Charity Hospital**, Sisters of Charity Foundation of Cleveland , Westshore Primary Care*, Cuyahoga Physician Network*, Light of Hearts Villa*, Joseph’s Home, Regina Health Center, Catholic Community Connection* SOUTH CAROLINA Providence Hospital, Providence Hospital Northeast, Providence Heart Institute, Augustine Health Group Llc, Sisters of Charity Foundation of South Carolina, Healthy Learners, The South Carolina Center for Fathers and Families *Jointly Owned **Jointly owned with University Hospitals
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
DECEMBER 14-20, 2009
PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Hot spot
C
ontrary to preservationists and some students of Cleveland history, Mall C in the city’s downtown is not holy ground. However, it is a valuable piece of property, and if anything ever is built there, it must be a project of enough economic significance and architectural importance to merit this prime, open public space on the bluffs overlooking Lake Erie. We’re not convinced the proposed medical merchandise mart rises to that level of worthiness. A month has passed since MMPI Inc., the Chicagobased developer picked by the Cuyahoga County commissioners to create the medical mart and a new convention center, announced that it now wants to construct on Mall C the building that would house the med mart. The mart originally was destined for property on St. Clair Avenue east of Ontario Street. However, stalled negotiations with property owners there and the high cost MMPI said would be involved with incorporating an aging Public Auditorium into the project led the developer to gravitate to the Mall site. Much of the talk since then has been about whether MMPI and the county used a classic bait-and-switch tactic on the city of Cleveland, which owns both Public Auditorium and the Mall property. It’s hard to fathom why an experienced developer such as MMPI didn’t do sufficient due diligence on Public Auditorium before striking a deal last spring for it and the current convention center. But rather than get caught up in that soap opera, we’d like to focus on the bigger issue of whether the med mart is deserving of the Mall space. Make no mistake. Mall C is a true asset, and the city deserves top dollar for a property that enjoys great lake views. But the decision of whether to turn over control of that asset to another party must involve more than the dollars and cents of any deal. City officials also must consider whether the buyer will use the land to create something that will bring people and energy to downtown streets and hundreds if not thousands of jobs to the city, all while yielding a structure that will do justice to a space that has waited a century for the right project to come along. Architect Daniel Burnham, who conceived Cleveland’s Mall plan shortly after the turn of the 20th century, envisioned a grand train station for Mall C. The station was built instead at Terminal Tower, now part of Tower City, and Mall C has remained vacant since. But that doesn’t mean the land should stay forever unoccupied — especially if a project would be true to Burnham’s vision of using the space to bring abundant life to downtown. We’re not sure a medical mart fits that criterion, or would make the type of architectural statement we’d hope to see from a building on Mall C. If city leaders also aren’t sure, they shouldn’t succumb to pressure to locate the med mart at that site. We realize this stance may necessitate a re-examination by local leaders of what the appropriate site should be for the convention center and med mart. But, given the drastic changes proposed by MMPI, a gathering of civic minds may well be in order to make sure this project is done to its best effect.
FROM THE PUBLISHER
Especially now, don’t forget charities
A
So here we ride it out, hoping that the s we go about the hustle and economic malaise doesn’t take many bustle of wrapping up (and more businesses or jobs with it. In the forgetting) 2009, most of us meantime, our people — even some with in Northeast Ohio understand jobs — are hurting. They worry about their that the economic recovery that seems futures, about whether their companies to be stirring in some areas of the country or industries can hang on to late 2010 (or and sectors of the broader, national later), and how they’re going to pay for economy will take its own sweet time college for their kids. getting here. At a once-wondrous time of We all have heard the refrain BRIAN the year, parents weigh the cost and experienced the ways in TUCKER of celebrations and gifts against which Northeast Ohio and the the price of food and rent paynational economy interact. ments. It is at a time like this Simply put, we rarely ride the when the various charities and highs of the economic cycle nor social service agencies supported do we sink to the same lows. by our United Way organizaThis time is no exception, tion need us the most. which has been illustrated by The needs can be measured how well our home values have in startling statistics, such as held up in comparison to some the 2-1-1 “First Call for Help” inquiries of the horror stories emanating from fielded by Cleveland’s United Way once-hot real estate spots. Services organization. Calling 2-1-1 is Many Northeast Ohioans, for example, the first step that a person takes when have winter homes or have retired in and trying to seek emergency aid or counsel. around Naples, Fla. Talk to them about In 2006, United Way Services fielded their home values if they bought, say, 84,916 calls and the campaign brought in three or four years ago when “everyone” $43.8 million. The next year, 2-1-1 calls was making money on their brilliant deals.
exploded to a total of 135,485 and the campaign raised slightly more than $43 million. Last year, the calls for help rose to 165,925 and $40.5 million was raised. Those are alarming statistics for sure, but it’s even more troubling this year. In the same time frame, United Way Services has fielded 180,647 2-1-1 calls, and the campaign projects to fall short of its $40 million goal if something doesn’t change in the next four months. This is a terrible time to ask your companies and employees to do anything extra, but the need is extraordinary, and the chances are good that someone in your company could need these services, either for themselves or a friend or a family member. It’s a cruel irony that the economic crisis causes so many problems while it’s also tearing away at our community’s efforts to raise the money to help those in need. Even the most modest gift could make a great difference in the 202 programs offered throughout Greater Cleveland. And you can do it securely, and quickly, online at www.uws.org/give. You can make a difference for all of us. ■
THE BIG ISSUE Is your company having a holiday party this year, and do you think it should?
MICHELE NORTON
JEFFERY SCHIFFMAN
BERNIE GOODMAN
JOAN LOGAN
Cleveland
Shaker Heights
Pepper Pike
Cleveland
We are having an office party this year, and it’s just going to be at my boss’s house. … You don’t have to spend a lot of money, but it’s a good idea as an employer to let employees know you appreciate them.
No. I work for the government, so times are tight. You don’t want to spend taxpayer money on that sort of thing.
They’re having it on a very reduced basis, just a modest basis. I think it’s appropriate.
We are having a lunch, and absolutely we should. It’s just a lot of fun. People work hard over the year and they deserve a little pat on the back.
➤➤ Watch other people weigh in by visiting the multimedia section at www.CrainsCleveland.com.
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DECEMBER 14-20, 2009
PERSONAL VIEW
Feeling cheated as a Tiger customer By DAN SHINGLER dshingler@crain.com
I
’ve been hearing a lot lately about how Tiger Woods does not owe an explanation to anyone outside of his family with regards to his recently disclosed “transgressions” and desperate need for a driver not made by Nike. Really? What about his customers? If you paid for a product, then found out that product was not what it was promised to be, wouldn’t you be owed an explanation, if not a refund? Well, when it comes to Tiger Woods, that’s a lot of customers — anyone who’s bought a Buick, a bottle of Gatorade, a Gillette razor, Accenture financial services or a host of other products is a customer of Tiger. I hear you — you didn’t buy that last Gatorade or even that Nike golf ball because of Tiger Woods. Didn’t you? In reality, how do you know? How can any of us be sure to what degree our buying decisions, if only subconsciously, are swayed by
Mr. Shingler covers manufacturing for Crain’s Cleveland Business. celebrity endorsements? I’m guessing the gurus on Madison Avenue who deem it a good investment to spend billions of dollars on those endorsements must think there is some link between the endorser and the purchase. But, I suppose they could just really want to help out folks like Tiger. Even if Tiger’s persona does not play into a consumer’s buying decision, that doesn’t mean that consumer is not Tiger’s customers. I mean, if Nike pays Tiger $100 million to endorse its clubs and balls, doesn’t that drive up the cost of those items? Doesn’t some tiny portion, at least, of each dollar spent on Tiger’s Gatorade go toward paying the fat cat himself? Of course it does. Those companies decided to pay Tiger for the endorsement and pass on the cost to their consumers, making many of us direct customers of golf’s greatest player. I bet if you bought a hundred or so Gatorades, a
set of Nike clubs and few dozen balls, you’d be paying an easy $100 to Tiger along the way. Not to mention that if you go to a golf tournament where Tiger is paid millions in appearance fees just to show up, you can bet the price of your ticket included a little something for the man now in the rough. So, yes, Tiger does owe all of us an explanation, and probably an apology. He portrayed himself as squeaky clean and then used that image to build up a fortune of reportedly more than $1 billion — and in doing so, he drove up the cost of products and knew that his fortune was ultimately being provided by Joe the consumer. But I’m willing to be flexible. I will happily allow Mr. Woods to not answer any further questions if he gives the money back and I get a refund for all those Gatorades. I might let Accenture off the hook, though. In its ads, Accenture only claims that Tiger is “the ultimate symbol of high performance.” It said nothing about high fidelity. ■
Golf: Saturation in area hurts many courses continued from PAGE 1
“We had to be a little more creative,” Mr. Hanlin said. “For the consumer, it was great. For the operator? It wasn’t as good.” Mr. Hanlin said Little Mountain sold more discount packages of 25 or 50 rounds. It also capitalized on social media sites Twitter and Facebook and the club’s e-mail list, through which it often advertises limited-time discounts — say, a Saturday afternoon rate reduction. But those discounts and increased off-peak play — typically evenings and weekend afternoons when rates are lower — contributed to the dollar-per-round slide at many area courses. At Hickory Nut Golf Club in Columbia Station, chief of business operations Julia Osborne said she analyzed last season’s books in an attempt to lure golfers to the course during slow times, no matter the discount necessary. “There were slow spots that we thought we could fill, so we developed specials to attract those people to come at off-peak times,” said Ms. Osborne, who hasn’t crunched the 2009 numbers yet but said Hickory Nut “had a good year.” “We’ve seen more people come in at 6 a.m., or some looking to get in nine in an hour after work” before the sun sets, she said. “You have to get those people on.” At Fowler’s Mill Golf Course in Chesterland, which was bought last Monday, Dec. 7, by a group of local investors, filling soft spots meant drastically cutting rates Monday through Thursday. “We made some concessions to make sure we maintained rounds, no doubt,” said general manager John Gaydos, noting that rounds at the course, at around 38,000, were about flat with the course’s 2008 numbers.
Here’s your reward Rewards programs also are becoming more popular. For instance, Cleveland Metroparks offers $20 in greens fees for every
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
“Absolutely, there are too many courses. Is there any growth, or are we just taking rounds from other places? ... For operators’ sake, there has to be shrinkage.” – Herb Page, director of golf, Windmill Lakes Golf Club $100 in greens fees a golfer spends at its seven courses. That promotion has been more popular this year, said Mike Raby, the golf pro and clubhouse manager at Big Met, Little Met and Mastick Woods. The loyalty program was part of the courses’ round increase of 2.25% — or 7,800 rounds. Jane Christyson, the Metroparks’ director of marketing and golf clubhouse services, said it is “very important to reward loyal customers, and the loyalty program is an important part of influencing their decision to bring their foursome to our courses.” Sweetbriar Golf Course, in Avon Lake, sold about 50 more rewards cards this year than in 2008. In addition to pro shop discounts, card holders get 20% off weekday rounds, 20% on weekend rounds after 1 p.m. and 10% before 1 p.m. Sweetbriar’s rounds played were up, but the increase was due to more rewards rounds played, which cut revenue about 1%. Still, that decline was against Sweetbriar’s best year, in which the course introduced its new, 18-hole Legacy course. “It keeps people coming back,” said director of golf Brian Butchko, who noted that Sweetbriar’s rounds played figure was up but revenue would be down about 1%. “It makes them want to come here when they’re choosing where to play,” Mr. Butchko said.
Too much? The National Golf Foundation, in its 2009 “Golf Facilities in the U.S.” study, reported that the ClevelandMentor-Elyria Metropolitan Statistical Area had 1,002 residents for each of the 2,133 holes in the MSA, a saturation many course officials cited as the overarching problem. Among 363 MSAs nationwide,
though, the foundation reports an average of 1,318 residents per hole. Charlie Wood, director of golf at the Mayfield Sand Ridge Club, which has courses in Chardon and South Euclid, was surprised by the PGA report. He said the club’s membership is down 7%, and as a result rounds played are down about 4%. The declines are a result of the region’s economy, Mr. Wood said. “Private clubs are doing everything they can to drive membership, but there’s no one moving in,” Mr. Wood said. “The group of people you’re competing for is getting smaller and smaller.” Dave Snacki, director of golf at the private Red Tail in Avon, said his membership rose slightly and rounds are up about 16%, likely driven by a discounted guest rate and members who want to get more out of their membership fees. He said the price wars of the region’s public courses place them at a disadvantage because of the aforementioned steep discounting. “They’re selling rounds for $20; how can they justify going back up?” Mr. Snacki said. “They’re getting twice as many rounds, and the course is twice as beat up. How does that make sense, business wise?” For Herb Page, director of golf at Windmill Lakes Golf Club in Ravenna, it’s simply a matter of too much. Windmill Lakes, like many others, saw rounds go up but dollar values remain flat. “Absolutely, there are too many golf courses,” said Mr. Page, also head golf coach at Kent State University. “Is there any growth, or are we just taking rounds from other places? Deflation is here, yet the operating expenses of the courses haven’t deflated. For operators’ sake, there has to be shrinkage.” ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Fee: More cost cuts now necessary
GOING PLACES JOB CHANGES
Jennifer Himmelein and Megan Miller to associates.
FINANCE
GALLAGHER SHARP: Steven D. Strang to associate.
KEY BANK: Ryan A. Kozak to senior vice president, national sales manager, interest rate and energy derivatives.
FINANCIAL SERVICE REA & ASSOCIATES INC.: Laurie Braun to manager.
HOSPITALITY INTERCONTINENTAL HOTELS CLEVELAND: Julia Krstevski to catering sales manager.
LEGAL CAVITCH, FAMILO & DURKIN:
DECEMBER 14-20, 2009
HAHN LOESER & PARKS LLP: Jon Paul Anthony, Michael C. Campbell, Alfred Y. Chu, MacCallister A. West and Emily W. Ladky to associates.
continued from PAGE 1
Kozak
Krstevski
Himmelein
THE GATHERING PLACE: Elizabeth Roth to program staff member.
Miller
Strang
Schumacker
OHIO CITY NEAR WEST DEVELOPMENT CORP.: Eric Wobser to
executive director.
REMINGER CO. LPA: Marilene DiSilvio, John O’Neil and Richard J. Rymond to executive committee.
NONPROFIT
THE PRESIDENTS’ COUNCIL: Duane Thornton to president.
REAL ESTATE DEVELOPERS DIVERSIFIED REALTY CORP.: Kurt Palmer to director of specialty leasing. TRANSACTION REALTY: Luke Lyle to sales associate.
SERVICE ALL SWEEP INC.: Helen Carcioppolo-Crawford to vice president. ANGSTROM GRAPHICS: Rhonda Perry to senior vice president, new business development. PATINA SOLUTIONS: Kelly Schumacker to director of client solutions. VISUAL EVIDENCE/E-DISCOVERY LLC: Kathianne Lamb, Sara Madden Dwyer and Scott Wood to project manager.
TECHNOLOGY CARDINALCOMMERCE CORP.: Charles R. Vojtas to vice president, design and development.
Send information for Going Places to dhillyer@crain.com.
Be Distinct.
recession, which forced them to begin tightening the purse strings over the last 18 months. That belt tightening worked out well for Southwest General Medical Center, which will owe $6.1 million to the state over the biennium. The Middleburg Heights hospital expected patient volumes to drop and charity care to increase due to job and insurance losses, but that didn’t happen, so Southwest was prepared to absorb the first year of the franchise fee, said MaryAnn Freas, chief financial officer at Southwest. All Southwest managers decreased their budgets by 6%, largely by eliminating pay raises and cutting discretionary spending such as communications, travel and professional development, Ms. Freas said. But those same measures can’t be used to absorb the second year of franchise fee payments, so Southwest is considering not filling open positions. Administrators also are making sure patient care remains streamlined to control costs, she said.
six franchise fee payments owed during the current biennium was due Nov. 30, and hospitals say the payments will leave a mark. “This takes a healthy bite out of our cash flow,” said Chuck Alderson, chief financial officer of Summa Health System’s Barberton and Wadsworth-Rittman hospitals. He also is on the Finance Committee of the Ohio Hospital Association. Summa will pay $25.7 million to the state over the biennium, money that could have been used to improve buildings, buy equipment, boost programs and hire people, Mr. Alderson said. However, all spending will be heavily scrutinized and some planned projects might be put on hold or canceled, he said. Summa’s Robinson Memorial Hospital in recent weeks laid off 100 people and Wadsworth-Rittman laid off 51, he said. “The routine things we have to do to keep the doors open, some of those things we may have to look at,” Mr. Alderson said. “There are a lot of contingency plans we’re working on.”
An emphasis on efficiency Community Health Partners in Lorain is taking a similar approach to afford the $5.7 million in franchise fees it will need to pay. The health system is trying to better coordinate patient care to reduce costs, said Samantha Platzke, chief financial officer for Community Health Partners. For example, the health system wants to decrease the amount of time a patient spends in the hospital by creating an itinerary for the patient’s care for medical personnel to follow. Patients often spend a lot of time waiting for tests to be taken or for someone to attend to them because medical personnel get behind. “We’re asking questions like, ‘How can we manage the care of the patient in the hospital setting in a more efficient manner? How can we take out the waiting time?’” Ms. Platzke said. Community Health Partners also hopes to forge partnerships with other local health care providers to halt duplication in patient care. Ms Platzke said. The hospital recently partnered with Tri-City Family Medicine, a 16-physician practice in Lorain. Under the deal, the doctors are now employees of the health system but they’ll retain the assets of their practice, which will be overseen by a joint council. ■
This will hurt University Hospitals is facing similar problems as it tries to determine how to afford the $32 million it will owe in franchise fees over the biennium. “We are doing our best to analyze the cost structure. We are certainly looking at every item,” said Mike Szubski, senior vice president and chief financial officer at UH. “We’re clearly making some tough decisions.” UH already reduced its budget by $6 million this year to absorb the $6 million payment on Nov. 30, Mr. Szubski said. Some open positions and the use of outside consulting firms were eliminated, and discretionary spending in areas such as travel also took a hit, he said. UH would not disclose its budget. Supplies and salaries are the biggest expenses on the books at Lake Health, so the hospital system is poring over every line item to see where money can be saved, said Bob Tracz, chief financial officer at Lake Health. No layoffs have occurred, but Mr. Tracz said the hospital system might consider not filling open positions and delaying projects. Hospitals already have seen a decrease in surgeries and an increase in uninsured patients due to the
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CRAIN’S CLEVELAND BUSINESS
DECEMBER 14-20, 2009
I N S I D E 15 INTERVIEW: NAT’L CENTER FOR FAMILY BUSINESS, DENISE WARRUM
SMALL BUSINESS
BEACHWOODBUSINESS DEVELOPMENTCENTER
MAGNET
FREEDOM MEDITECH
SURE TO GROW
F
W
ith the help of the Beachwood Business Development Center, 6062 Holdings LLC almost was sure to grow. The Beachwood startup, which develops and sells a plant growth medium called Sure to Grow, should vastly increase its office space next August, when the entire development center is scheduled to move into 60,000 square feet within a city-owned building. The center is making more than 5,000 square feet available to Sure to Grow for use as a research-anddevelopment lab, where it will test new versions of its polymer-based plant growth products and teach schoolchildren about hydroponics. For more, go to www.Crains Cleveland.com/suretogrow.
13
PHOTOS PROVIDED
Sure to Grow co-founders, and brothers, Cary (left) and Eric Senders work in the startup’s “grow room.”
AKRONGLOBALBUSINESSACCELERATOR
REXORCE THERMIONICS INC.
I Rexorce Thermionics Inc. cofounder Michael Gurin (left) and CEO Philip Brennan have plans for a pilot unit to be installed in January for a large utility.
f startup companies were children, rexorce Thermionics Inc. would be a college student: still partially subsidized, but getting ready to go it alone. The company, which is developing a system for turning industrial waste heat into electricity, technically still is a resident of the Akron Global Business Accelerator, but has its own space at 405 S. High St., just a few blocks from the 200,000-square-foot former tire manufacturing plant that serves as the incubator’s main building. The 18-person company expects to grow out of its 18,000-square-foot headquarters by January 2011, said CEO Phil Brennan.
reedom Meditech has just two employees, but they aren’t alone in their effort to fix what CEO Craig Misrach describes as an “enormous global problem.” The company, which is developing ways to diagnose and monitor diabetes without drawing blood, has received an outpouring of support from members of Ohio’s business and research communities, including the Misrach Manufacturing Advocacy and Growth Network, which is one of Ohio’s Edison Technology Centers. The presence of Magnet was a factor in helping Freedom Meditech, which already had an office in San Diego, open a Northeast Ohio location, Mr. Misrach said. Beyond access to affordable space in its incubator at 1768 E. 25th St. in Cleveland, Magnet provides access to lasers and equipment Freedom Meditech uses to test its prototypes, which scan the eye to measure glucose levels in the bloodstream. For more on this incubator startup, go to www.Crains Cleveland.com/meditech.
For more on this incubator startup, go to www.CrainsCleveland.com/rexorce.
Diabetes monitoring device
JUST GETTING STARTED Northeast Ohio’s business incubators help fledgling firms grow new ideas, products By JAY MILLER jmiller@crain.com
W
hen VasoLux MicroSystems LLC moved into the Great Lakes Innovation and Development Enterprise on the campus of Lorain County Community College in Elyria it was little more than an idea — an idea that needed time to grow, time to incubate. Now, nearly five years later, its fiber-optic, minimally invasive probe, which measures the extent of damage in joints’ cartilage, is ready for U.S. Food and Drug Administration trials.
While the scientists who developed and are refining the technology get the lion’s share of the credit for the company’s growth so far, general manager Elliot Reed believes the company’s presence at GLIDE, a business incubator, helped it mature and succeed. “I think the most important thing for us (about being in an incubator) is to have the ability to have business experts on hand to provide instant consulting,” Mr. Reed said. “If we have issues related to complex corporate structuring or deal making, we can go in and just talk with them.” GLIDE is one of about 10 similar incubator-type organizations
operating in Northeast Ohio that aim to assist entrepreneurs who have ideas for businesses. It was created and continues to be supported by the Lorain County commissioners, Lorain County Community College and the Ohio Department of Development and its Thomas Edison Program, a state effort to transfer technology from the lab to finished product. The Northeast Ohio Incubator Collaborative estimates that the businesses associated with that organization’s five northern Ohio affiliates helped create 784 jobs and a payroll of $39 million from 2006 and 2008. Sales revenue of See INCUBATORS Page 16
NORTHEAST OHIO INCUBATORS ■ Akron Global Business Accelerator: Helps new companies commercialize advanced materials, electronics and instrumentation and information technologies. www.ci.akron.oh.us/aii ■ Beachwood Business Development Center: Specializes in international businesses looking to establish a U.S. presence. It also accommodates local startups. www.beachwood.org /businessdevelopmentcenter.htm ■ BioEnterprise: Focuses on health care companies and firms that commercialize bioscience technologies. www.bioenterprise.com ■ Civic Innovation Lab: Funds up to $30,000 for ideas that can have an impact on the Greater Cleveland economy. www.civicinnovationlab.org ■ Great Lakes Innovation and Development Enterprise: GLIDE assists entrepreneurs in growing their
business at all stages. www.glideit.org ■ JumpStart TechLift Advisors: A virtual incubator that targets what it calls “high-potential technology entrepreneurs.” www.jumpstartinc.org/Techlift Advisors/ ■ Magnet: The Manufacturing Advocacy and Growth Network supports manufacturers of all stripes. www.magnetwork.org ■ Mentor/CADventure: Scheduled to open in January, this incubator will focus on helping companies with product development. ■ Sherwin-Williams CRADLE: The Creative Research and Development Laboratory Environment Technology Incubator Laboratories offers chemistry laboratory, office and meeting space in Valley View. www.swcradle.com
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SMALL BUSINESS
Worker classification draws more IRS scrutiny
W
orker classification has been a battleground between the IRS and business owners for more than 40 years. Several significant announcements in the last several months have made it clear that this issue is once again at the top of the IRS priority list. Workers performing services for a business can be classified as either employees or independent contractors. Determining the appropriate classification for a particular worker sometimes can be difficult. In the 1980s, the IRS set forth a
list of 20 factors to consider when determining whether a person providing services is an employee or independent contractor. The degree of importance of each factor varies depending on the occupation and factual context in which the services are performed. Generally, the more control the business has over the individual, the more likely it is that the individual will be considered an employee. The IRS refined the 20-factor test in an advisory memorandum that it published in 2001. That memorandum essentially consolidated the factors
CARLGRASSI
TAX TIPS into three categories: behavioral control, financial control and relationship of the parties. ■ The behavioral element exam-
ines the degree of control the business has over the worker. If the worker controls the method by which a project gets done, the relationship looks more like that of an independent contractor. ■ The financial element examines whether the worker has the ability to make additional profit if the worker can control expenses and other efficiencies. ■ Finally, the relationship element examines factors such as the duration of the relationship and whether the worker provides services for multiple recipients.
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Due to the inherent confusion in the rules discussed above, a series of “safe harbor” rules allow a business to treat a worker as an independent contractor if certain criteria are met. These rules allow a business that categorizes a class of workers as independent contractors in good faith to avoid a reclassification by the IRS, a situation that can be devastating to a business where the number of employees in that class is significant. The requirements of safe harbor provisions are based on having a “reasonable basis” for such treatment. A reasonable basis for this purpose can be established by existing case law or rulings that analyze the tax status of similarly situated workers. If the business has a reasonable basis for such treatment and has consistently treated all workers in the same class in the same manner, this can establish a presumption that the treatment is correct and therefore not subject to challenge by the IRS. This summer, the Government Accountability Office issued a report concluding that worker misclassification is contributing to the tax gap and made 19 recommendations for how this situation can be remedied. These recommendations included defining misclassification as a violation under the Fair Labor Standards Act and requiring businesses to file Form SS-8 for all new independent contractors. While these only are suggestions, any one of these recommendations would be a significant, detrimental change for businesses using independent contractors. In February, the treasury inspector general for tax administration published a report concluding that worker misclassification contributes significantly to budgetary shortfalls and imposes numerous other costs on the economy. The report recommended that the IRS develop and implement an agency-wide employment tax program, in part, to improve compliance and reduce the tax gap. In response, the IRS noted that several projects were under way to develop programs aimed at increasing compliance with the rules concerning the classification of workers. Finally, legislation was introduced in September aimed at “reversing the trend of the misclassification of employees as independent contractors.” This legislation would modify the standards for the safe harbor treatment discussed above, making it more difficult for businesses to meet the safe harbor requirements. Specifically, the reasonable basis test only would be met if the employer had a written determination from the IRS as to the classification of the worker in question (or a worker holding a substantially similar position) or the IRS had reviewed the status on audit and not proposed any changes. This legislation also would increase the penalties for failure to file certain information returns related to employees. Between the government reports, the IRS’ stated intention to increase audit activity in this area and the proposed legislation, it is clear that employee classification is an area that will see increased activity. For business owners, problems in this area can be avoided by objectively reviewing the classification of workers and making a determination of status based on the existing criteria. ■ Mr. Grassi is a member and president of McDonald Hopkins LLC.
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CRAIN’S CLEVELAND BUSINESS 15
WWW.CRAINSCLEVELAND.COM
SMALL BUSINESS
MENTAL_FLOSS
more. Russell residents Toby and Melanie Maloney will manage the store.
Artisan Landscape & Designs, founded by Dominic Vullo, provides a wide range of outdoor aesthetic services, including maintenance, installations and snow plowing.
8051 Mayfield Road Chesterland 44026 www.mentalfloss.com
440-729-7774 customer-service@mentalfloss.com
Phone 216-299-5069 Fax 440-236-3412
GRANDOPENINGS
Mental_floss has opened its first retail store. Products offered at the retail outlet include the company’s T-shirt line, its flagship print magazine, the series of mental_floss books, games, puzzles and
ARTISAN LANDSCAPE & DESIGNS 23670 Red Fern Road Columbia Station 44028 www.artisanlandscapedesigns.com
artisanlandscapeanddesigns @gmail.com
REVIVE 24349 Cedar Road
Lyndhurst 44124 www.revivestore.com Revive, an independent boutique offering fair trade products for men, women, children and the home has opened at Legacy Village. The store specializes in eco-friendly, handcrafted goods and is owned by Lisa Dunn. The Legacy Village store is the second Northeast Ohio Revive location. The original store is on Lee Road in Cleveland Heights. 216-382-4836
PHOTO PROVIDED
Denise and the late Roger Warrum
THEINTERVIEW DENISE WARRUM National Center for Family Business By AMY ANN STOESSEL astoessel@crain.com
F
or Denise Warrum, the past several months have been the ultimate lesson in running a small business and succession planning. Mrs. Warrum is the widow of Roger Warrum, the founder of the Hudson-based National Center for Family Business, a family business center that provides consulting services and organizes classes, seminars and family business retreats. “One of the best things for families (Roger) did was to help them pass on businesses to the next generation,” Mrs. Warrum said. Mr. Warrum died April 6 at the age of 63 — about 2½ years after being diagnosed with lung cancer. Since then, his wife has taken over the center that Mr. Warrum started more than a decade ago. “Most important in my mind right now are the clients. … I want to make sure they’re OK,” she said. Mrs. Warrum has been facilitating meetings with family owned businesses and introducing clients to Dr. Ronald C. Reece, a South Carolinabased business coach helping with Mr. Warrum’s consulting work. Dr. Reece, a psychologist by training, first met the Warrums about 10 years ago and has helped the center put on a number of seminars, including one this past October. He said one of the biggest challenges family businesses have is communication. “The more successful family businesses truly do look at their business as a business first,” Dr. Reece said. Mrs. Warrum sees much of her mission as carrying on her husband’s work. “He worked with his clients all the way to the last two weeks,” she said. “It was always about his clients.” Looking ahead, one of Mrs. Warrum’s biggest challenges is finishing her husband’s third book, “The Changing of the Guard,” which ironically is about succession planning. “I’m trying to bring up his essence, which was handling some very difficult issues with a sense of humor,” she said. Mrs. Warrum also is gathering articles for the center’s Family Business Journal, pursuing potential expansion opportunities and planning seminars and programs — and she’s doing it all with her husband in mind. “You can’t minimize your loss. It feels like he’s sitting on my shoulder,” she said. “I’m doing my best.” ■
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16 CRAIN’S CLEVELAND BUSINESS
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DECEMBER 14-20, 2009
SMALL BUSINESS
Incubators: Facilities offer support continued from PAGE 13
the incubators’ companies totaled $304 million. NEOinc, as it’s called, is made up of the Akron Global Business Accelerator, Lorain County’s GLIDE, Magnet, the Braintree incubator in
Mansfield and the Youngstown Business Incubator. While the region’s incubators have slightly different operating styles and may focus on different kinds of businesses, the goals are the same. “Incubators at their heart are
about helping small businesses grow more quickly,” said Cathy Belk, chief marketing officer of JumpStart Inc., a venture development nonprofit in Cleveland that operates Jumpstart TechLift Advisors, another Northeast Ohio incubator.
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Figures from the National Business Incubation Association, based on the Ohio University campus in Athens, suggest the concept has widespread support. The NBIA estimates there are 1,100 in the United States and each typically has an average of 25 companies at any time. GLIDE and JumpStart are two of five incubators in Northeast Ohio that get state funding from the Thomas Edison Program to develop high-tech businesses. The other three are the Akron Global Business Accelerator; BioEnterprise, which focuses on health and medical businesses; and Magnet, which assists manufacturing startups. These and the other incubators in the region all are some sort of publicprivate partnership, funded by a mix of public, private, university and foundation funding. Most specialize in a particular industry or geographic area. Northeast Ohio has incubators that specialize in software, medical products and manufacturing. The service most associated with an incubator is its building space,
leased at low cost or even no cost. JumpStart, however, considers its TechLift a virtual incubator since it doesn’t offer office space. But it, like the incubators with a physical presence, offers an array of business services and counseling. The GLIDE incubator doesn’t limit itself to any particular industry. Rather, what its 41 clients and tenants have in common is access to the college’s business development specialists and space, whether it’s on the Lorain County Community College campus at GLIDE’S 45,000square-foot Entrepreneurship Innovation Center or in the Great Lakes Technology Park, adjacent to LCCC. The first step at an incubator is gaining admission. GLIDE has a road map, what it calls an “innovation continuum,” to assess where an entrepreneur is in the business development process and to explain the road ahead. If the incubator staff believes the business idea and its proponent have what it takes to become a successful business, they will offer admission. Companies that are part of an incubator can pick and choose from a laundry list of services: furnished office and lab space; accounting, receptionist and janitorial services; high-speed Internet access; and even the kitchen sink, usually accompanied by tables and chairs, a coffee machine and a microwave oven. Perhaps more important, most incubators have skilled staff, consultants or volunteers, often linked to a university and its students, who offer
managerial advice on a wide range of subjects.
Not going out of style The enthusiastic anecdotal evidence — most entrepreneurs who graduate out of incubators speak fondly of their time there — and the incubators’ ability to show that they create jobs and revenue have caused the incubator movement to grow in recent years. But it’s not at all clear how well they stimulate job creation. Scott Shane, the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University, threw some cold water on the movement last year with a white paper that reviewed the international research on incubators. He concluded that the money spent on incubators might be better spent elsewhere. “It’s not that there is anything wrong with incubators,” he told Crain’s Cleveland Business earlier this month. “It’s just that there is no evidence they do anything good.” But that isn’t stopping the spread of the incubator movement. A new one is slated to open in Mentor in January. The city of Mentor, the Mentor Economic Assistance Corp. and CADventure Inc., a reseller of product development software, are teaming to create an incubator in an 11,000square-foot building that CADventure purchased and moved in to. “We can help startups with new and better ways of doing things,” said CADventure president Ken Zebracki. ■
Helping small businesses dream big. Huntington is proud to announce we have been ranked the seventh largest Small Business Administration Lender in the nation. We’re also the #1 SBA lender in Ohio, Indiana, Michigan and West Virginia. While being recognized for our achievements is always an honor, our real pride lies in knowing we are helping our community by helping its small businesses prosper and grow. Call 1-800-976-1345, visit huntington.com/sba or stop by to talk to one of our lenders.
Small Business Administration ranking is based on the 2009 Coleman Report 500 for Top 50 7(a) Lenders by Number of Loans and Loan Volume in Ohio and West Virginia and Number of Loans in Indiana and Michigan, for fiscal year end on September 30, 2009. The Huntington National Bank is an Equal Housing Lender and Member FDIC. ®, Huntington® and A bank invested in people.® are federally registered service marks of Huntington Bancshares Incorporated. ©2009 Huntington Bancshares Incorporated.
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WWW.CRAINSCLEVELAND.COM
17
BANKS IN NORTHEAST OHIO RANKED BY DEPOSITS(1)
Name Address Rank Phone/Web site
Northeast Ohio deposits (millions) 6-30-2009
6-30-2008
% change
Offices
Employees (companywide) 6-30-2009
Holding company
Top local executive
1
PNC Bank 1900 E. Ninth St., Cleveland 44114 (216) 222-2000/www.nationalcity.com
$23,798.4
$23,788.3
0.0%
165
28,315
PNC Financial Services Group Inc. Pittsburgh
2
KeyBank NA 127 Public Square, Cleveland 44114 (216) 689-3000/www.keybank.com
$14,896.6
$13,331.1
11.7%
118
16,664
KeyCorp Cleveland
3
Huntington National Bank 917 Euclid Ave., Cleveland 44115 (800) 480-2265/www.huntington.com
$7,675.1
$7,583.0
1.2%
134
9,264
Huntington Bancshares Inc. Columbus
4
FirstMerit Bank NA 106 S. Main St., Akron 44308 (888) 384-6388/www.firstmerit.com
$6,757.2
$6,517.9
3.7%
125
2,540
FirstMerit Corp. Akron
5
Charter One Bank NA 1215 Superior Ave., Cleveland 44114 (216) 566-5300/www.charteronebank.com
$6,561.1
$5,554.8
18.1%
112
16,264
The Royal Bank of Scotland Group PLC Edinburgh, Scotland
6
JPMorgan Chase & Co. 1300 E. Ninth St., Cleveland 44114 (877) 226-5663/www.chase.com
$4,653.5
$4,642.4
0.2%
97
166,594
JPMorgan Chase & Co. New York
James M. Malz president, Northeast Ohio market
7
Fifth Third Bank 600 Superior Ave. E, Cleveland 44114 (216) 274-5300/www.53.com
$4,360.4
$3,730.5
16.9%
86
13,154
Fifth Third Bancorp Cincinnati
Todd F. Clossin regional president and CEO, Fifth Third Bank, Northeastern Ohio
8
US Bank NA 1350 Euclid Ave., Cleveland 44115 (216) 623-9300/www.usbank.com
$1,970.9
$1,885.9
4.5%
111
52,547
U.S. Bancorp Minneapolis
9
Lorain National Bank 457 Broadway Ave., Lorain 44052 (440) 244-6000/www.4lnb.com
$1,040.8
$861.8
20.8%
21
280
LNB Bancorp Inc. Lorain
Daniel E. Klimas president, CEO
Paul Clark regional president Henry L. Meyer III chairman, CEO, KeyCorp Jerry Kelsheimer president, Cleveland region Paul G. Greig chairman, CEO Kenneth E. Marblestone president, Ohio region
Kurt C. Treu president, U.S. Bank, Cleveland
10
The Farmers National Bank of Canfield 20 S. Broad St., Canfield 44406 (330) 533-3341/www.fnbcanfield.com
$593.1
$534.4
11.0%
13
261
Farmers National Banc Corp. Canfield
Frank L. Paden president, CEO
11
Citizens Banking Co. 100 E. Water St., Sandusky 44870 (419) 625-4121/www.citizensbankco.com
$508.9
$423.5
20.2%
12
287
First Citizens Banc Corp. Sandusky
James O. Miller president, CEO
12
Cortland Savings and Banking Co. 194 W. Main St., Cortland 44410 (330) 637-8040/www.cortland-banks.com
$387.1
$364.3
6.3%
14
160
Cortland Bancorp Cortland
13
Citizens Bank One Citizens Banking Center, Flint 48502 (800) 676-6276/www.citizensbanking.com
$371.9
$338.6
9.8%
14
2,014
14
Middlefield Banking Co. 15985 E. High St., Middlefield 44062 (440) 632-1666/www.middlefieldbank.com
$361.0
$336.0
7.4%
8
89
Middlefield Banc Corp. Middlefield
15
First National Bank 112 W. Market St., Orrville 44667 (330) 682-1010/www.fnborrville.com
$283.6
$252.7
12.2%
13
106
National Bancshares Corp. Orrville
16
First National Bank of Pennsylvania 166 Main St., Greenville 16125 (800) 494-2265/www.fnb-online.com
$259.5
$249.1
4.2%
11
2,064
F.N.B. Corp. Hermitage, Pa.
17
Andover Bank 19 Public Square, Andover 44003 (440) 293-7605/www.andoverbankohio.com
$232.5
$244.9
-5.1%
8
92
Andover Bancorp Inc. Andover
Martin R. Cole president, CEO
18
Portage Community Bank 1311 E. Main St., Ravenna 44266 (330) 296-8090/www.pcbbank.com
$182.4
$164.3
11.0%
2
50
Portage Bancshares Inc. Ravenna
Richard J. Coe CEO
19
Western Reserve Bank 4015 Medina Road, Medina 44258 (330) 764-3131/www.westernreservebank.com
$173.3
$145.3
19.3%
4
39
20
Farmers Savings Bank 111 W. Main St., Spencer 44275 (330) 648-2441
$169.0
$159.4
6.0%
2
29
NA
21
Ohio Legacy Bank NA 305 W. Liberty St., Wooster 44691 (330) 263-1955/www.ohiolegacybank.com
$157.4
$149.2
5.5%
4
62
Ohio Legacy Corp. Wooster
22
Liberty Bank NA 2351 Edison Blvd., Twinsburg 44087 (330) 425-3033/www.libertybankna.com
$142.8
$135.6
5.3%
3
49
NA
23
Independence Bank 4401 Rockside Road, Independence 44131 (216) 447-1444
$134.2
$144.8
-7.3%
1
23
Independence Banccorp Independence
Christopher Mack president
24
Buckeye Community Bank 105 Sheffield Center, Lorain 44055 (440) 233-8800/www.buckeyebank.com
$128.9
$131.2
-1.8%
1
25
Buckeye Bancshares Inc. Lorain
Bruce E. Stevens president, CEO
25
Consumers National Bank 614 E. Lincoln Way, Minerva 44657 (330) 868-7701/www.consumersbank.com
$113.3
$106.2
6.7%
5
93
Consumers Bancorp Inc. Minerva
Ralph J. Lober II president, CEO
26
Sutton Bank 3 S. Main St., Attica 44807 (419) 426-3641/www.suttonbank.com
$105.4
$105.9
-0.5%
6
105
Sutton Bancshares Inc. Attica, Ohio
27
Lake National Bank 7402 Center St., Mentor 44060 (440) 205-8100/www.lakenationalbank.com
$81.2
$65.1
24.8%
1
17
NA
28
Croghan Colonial Bank 323 Croghan St., Fremont 43420 (419) 332-7301/www.croghan.com
$78.3
$81.8
-4.2%
3
150
Croghan Bancshares Inc. Fremont, Ohio
Steven C. Futrell president, CEO
29
Apple Creek Banking Co. 21 E. Main St., Apple Creek 44606 (330) 698-5003/www.applecreekbank.com
$73.9
$73.4
0.8%
6
41
Apple Creek Banc Corp. Apple Creek
Kurt Kline CEO
Lawrence A. Fantauzzi president, CEO
Citizens Republic Bancorp Inc. NA Flint, Mich. Thomas G. Caldwell president, CEO David C. Vernon president, CEO Stephen J. Gurgovits president, CEO
Western Reserve Bancorp Inc. Edward J. McKeon Medina 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.
Thomas Lee president Mike Kramer president, CEO William A. Valerian chairman, president, CEO
Eric A. Gillett vice chairman, CEO Richard T. Flenner Jr. president, CEO
RESEARCHED BY Deborah W. Hillyer
20091214-NEWS--18-NAT-CCI-CL_--
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Genes: Combining testing, clinical application taking hold continued from PAGE 3
Dr. Eng said those numbers still are not enough. About 10% of the population is genetically susceptible to diseases, she said. People seem to be more aware of genetic testing, but Dr. Eng said she would like to see more families tested genetically so that doctors can map out what genetic abnormalities exist within the family to provide a more complete health care picture. Marrying genetic testing and clinical analysis is just beginning to take hold in the United States, said Dr. Edward McCabe, president of the American Society of Human Genetics in Bethesda, Md., and physician-inchief at Mattel Children’s Hospital
throughout the system on when genetic testing might be warranted and under what circumstances it will be covered by insurers. If used appropriately, Dr. Eng said, genetic testing could reduce health care spending by cutting down on the number of tests ordered by doctors who are trying to diagnose a patient. Genetic testing shows what diseases a person is predisposed toward, so much of the guesswork is eliminated when they begin showing symptoms of an illness, she said. Though the Genomic Medicine Institute has increased the number of patients it sees each year and will see about 3,000 patients in 2009,
Contact: Phone: Fax: E-mail:
UCLA in Los Angeles. Many companies do genetic testing, but they often don’t translate the results and help patients understand their implications, so Dr. Eng is on the forefront of that movement, Dr. McCabe said. His hospital has a similar project that involves genetic testing of children, he said. “Essential programs like Charis’ and ours are taking off because, if we’re going to prepare for the time when we can sequence the genome for under $1,000, we need to know how to use these tests,” he said.
A nose for science Dr. Eng grew up in Singapore admiring her uncle, who was the
chairman of medicine in Singapore and the physician for the prime minister. She said she knew by the time she was 4 years old that she wanted to follow in his footsteps. In fourth grade, she realized she wanted to be a physician-scientist after studying people such as Louis Pasteur, the French chemist who discovered diseases could be avoided through vaccination and that micro-organisms could be killed by heating a liquid to about 130 degrees Fahrenheit, a practice now called pasteurization. Dr. Eng finished high school early and was admitted to the University of Chicago at 16, which is when she planned her education
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NEW TO MARKET - 18th and Superior up to 90,000 sf of Downtown Class A Office available with furniture, amenities and parking - Tom West, SIOR INVESTMENT SALE OPPORTUNITY - 22,500 sf property under lease - located directly across from new Federal Building in downtown Canton - Patrick Reardon, SIOR WESTLAKE OFFICE BUILDING FOR SALE - investor/user opportunity - attractive medical/general office - 9,436 sf - convenient to I-90 - John Glasstetter, SIOR GREAT ALTERNATIVE TO LEASING! - 4,600 sf fully redesigned office building at corner of Lorain Rd./214th St. - Fairview - indoor parking - 445k - rpietro@crescorealestate.com - Rico Pietro, SIOR
CRANE BUILDING Perry, Ohio For Lease. 40,000 sq. ft. including Offices. 4 Overhead cranes, 7 ½ to 35 ton.
440-259-5200, ext. 3270
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around becoming a doctor who would study how to use genetics to treat various types of cancer. Her work has led her to examine the elephant man’s DNA and, as a wine connoisseur, Dr. Eng would like to figure out how to use wine in medical treatments. With more than 100 varieties of grapes, the genome of the grape is diverse, but it has been shown to have positive health effects, she said. “We would like to seek funding to examine whether profiling wine grape varietals and profiling us can somehow lead to personalized matching of a particular wine to a particular person to enhance disease prevention,” Dr. Eng said. ■
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Crain’s Executive Recruiter Chief Executive Officer A large physician group is seeking a CEO familiar with many facets of the healthcare industry. The CEO’s primary responsibility will be to set strategy and vision for the organization; build company culture; promote quality services; oversee operations, human resources, billing etc; and maintain appropriate budgets and capital allocations. Interested candidates should submit a resume, three professional references, and cover letter including salary expectations to Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113 Attn: Box 127.
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DECEMBER 14-20, 2009
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
19
THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
DECEMBER 7 – 13
Are you the proactive type? The Browns have a job for you
The big story: Cliffs Natural Resources Inc. is trying to land a knockout blow in the bidding war for Montreal-based Freewest Resources Canada Inc. The Cleveland-based producer of iron ore and coal once again amended its definitive takeover agreement with Freewest and has raised the price it would pay for Freewest stock to $1 a share Canadian in Cliffs stock for each Freewest share outstanding. The latest Cliffs offer tops an increased bid for Freewest from Noront Resources Ltd. of Toronto. And, to assure Freewest’s shareholders of its desire for their company, Cliffs will make a cash tender offer of $1 a share Canadian for all of Freewest’s stock should Noront become the owner of more than 12.5% of Freewest’s shares.
■ Here’s some good news, Browns fans: The team apparently has heard your complaints and is attempting to do something about it — at least in the customer service department. The team is advertising for a “ticket services representative” — the job listing can be viewed at http://tinyurl.com/yegc9dy — who is “responsible for developing and maintaining strong relationships with Cleveland Browns Season Ticket Holders by ■ With freshly polished wood paneling and providing proactive and superior customer chandeliers dating from 1912 gleaming over service in order to build new carpeting, the lights customer loyalty and are back on at another satisfaction with the goal part of downtown Cleveof maximizing client land’s storied past — the retention and revenue former Swingos and Marie opportunities.” Shriver’s restaurants at the A source said the team Statler Arms Apartments, began advertising the 1147 Euclid Ave. position prior to the Morton’s The SteakBrowns’ Dec. 6 loss to house is beginning to San Diego at Cleveland offer catering for corpoBrowns Stadium. The Morton’s The Steakhouse is offering rate or social events there advertisement comes catering at the former Swingos and to supplement operations about three weeks Marie Shriver’s restaurants. of its Tower City Center after a Crain’s Cleveland location. Kristen Adams, Business story highlighted many season Morton’s Cleveland sales and marketing manticket holders’ frustration, not only with the ager, said the Chicago-based restaurant chain on-field product but also with what they sees the space as an opportunity to compete perceived as inattention to their needs and a for larger downtown events. Statler can feeling of being exploited. accommodate 250 for receptions and 180 for “I could always justify laying the money sit-down events, compared to a maximum (for season tickets) out somehow,” sevenof 150 at Morton’s Tower City location. year season ticket holder Brian McPeek told Moreover, Ms. Adams said, the Statler’s Crain’s for that story. “I don’t consider myself high ceilings and arched leaded-glass windows
In with the old?: The CEO of the new owner of AmTrust Bank said he is “seriously thinking about” renaming the institution Ohio Savings Bank in this area. Joseph Ficalora, president, chairman and CEO of New York Community Bancorp, said he understands that after 118 years, Ohio Savings is a “well-regarded name.” The bank changed its name to AmTrust in April 2007 to make its area operations uniform with its branches in Arizona and Florida.
Baby steps: While noting challenges aplenty face real estate companies, Charles Ratner, president and CEO of Forest City Enterprises Inc., said in a conference call with analysts that “the most difficult stretch may be behind us” in adapting to the recession and real estate credit crunch. Mr. Ratner said at this time a year ago, he would not have “ventured to guess” the company could achieve some of the financial measures it reached this year, as it raised $330 million in new equity and won a new bank line of credit. At that time, he recalled, it seemed like “the market was falling away.” Looking at today, he said, “We have come a long way.”
MILESTONE
TB or not TB: Case Western Reserve University received a $19.7 million federal contract to become an international clinical trials site for the Tuberculosis Trials Consortium. Under the 10-year contract with the U.S. Centers for Disease Control and Prevention, CWRU will oversee clinical trial sites in Uganda and the Philippines. Dr. John Johnson, a professor of international health at CWRU, will lead research into new drugs to treat tuberculosis patients.
This and that: Business development organization JumpStart Inc. made a $250,000 investment in Electron Database Co. of Richfield, which is developing database software. The company will use that money to continue developing its patented software and to establish strategic partnerships. … Of the 89 organizations responding to a survey by human resources group ERC in Mayfield Village, 73% still are planning to have holiday parties this year, down from 92% last year.
Crain’s next regular print issue will be Jan. 4, following the Dec. 28 Book of Lists. Visit www.CrainsCleveland.com throughout December for business news as it happens.
give the restaurant a “different ambiance” for breakfast, lunch or dinner events. Owners of the Statler recently refurbished the space, which tenants of the apartment building also can book for their events. — Stan Bullard
Morton’s stakes claim to former Swingos space
■ Liggett Stashower has given something for its clients to open each day during the holiday season. In lieu of sending out printed holiday cards to clients, the Cleveland branding firm began on Nov. 30 sending out a daily holiday e-card, called “The 20 Workdays of Wonderful Gifts,” to provide clients with virtual gifts that include anything from holiday cookie recipes to a video on employees’ suggested holiday season workouts. Although Liggett had sent out e-cards in the past, this is the first year they were delivered through a social media campaign, said Mark Nylander, CEO. “There are a number of ways we are sharing the e-cards with clients, including on our web site, e-mail and social networks” such as Facebook and Twitter, he said. Liggett in the past had sent out traditional, tangible gifts to clients, but the e-card is a more modern, sustainable substitute, said Leslie Resnik, brand director. The firm also is making donations in the name of its clients to Coats for Kids, The Cleveland Foodbank and Greater Cleveland Habitat for Humanity. The cards will be produced daily, during weekdays, until Dec. 25. — Kathy Ames Carr
He went the extra mile to shed the Beltway’s ways
Cushman
Kirsch
COMPANY: Ferro Corp., Cleveland THE OCCASION: Its 90th anniversary Investors today know Ferro as a performance materials company with more than $2 billion in sales last year and 5,400 employees in 23 countries. What they might not know is that it was started in 1919 by Harry D. Cushman as the Ferro Enameling Co. with an investment of … $1,000. (No, we’re not missing any zeros.) At the company’s founding, workers in the Ferro plant on East 56th Street made frit, a complex glass that’s the core ingredient of enamel. Ferro has gone well beyond frit over nearly a century, and its materials now are used in end products including automobiles, pharmaceuticals and solar cells. Fun fact: In 1923, Ferro began publishing The Enamelist, the first trade journal in the porcelain enameling industry. Fun fact No. 2: Ferro in 1938 created the world’s largest porcelain enamel-on-steel mural for the World’s Fair in New York. The current CEO is James F. Kirsch. For information, visit www.ferro.com. Send information about corporate anniversaries to managing editor Scott Suttell at ssuttell@crain.com.
Merry e-greetings to you and yours
BEST OF THE BLOGS Excerpts from blog entries on CrainsCleveland.com.
Team player:
As part of the effort to bring greater stability to what has been a chaotic front office, the Cleveland Browns named Frederick R. Nance, regional managing partner for Squire, Sanders & Dempsey L.L.P., as general counsel. The addition of Mr. Nance “strengthens our ability to manage any number of matters,” said Browns owner Randy Lerner. Mr. Nance will remain as a partner at Squire Sanders, where he has practiced for more than 30 years and spearheads the firm’s sports and entertainment practice.
a stupid person, yet the Browns are going out of their way to make me feel like one.” Browns spokesman Bill Bonsiewicz said in an e-mail that the new position was not in response to the opinions expressed in the story, but “is part of a variety of things we have been discussing and planned for the 2010 offseason.” — Joel Hammond
concepts and safer and more secure means of making money, from fixed-rate annuities to dividend-paying stocks (utilities, anyone?) to, yes, even bank deposits.” Mr. Nakhooda, though, sensibly said that even playing it safe isn’t always safe, given threats to investments such as a weakening dollar and the potential for runaway inflation. He added that while investors might think there is more safety in foreign opportunities, that isn’t necessarily the case if they are buying those overseas investments with American dollars — as the investments go up, the currency could go down. “Every money manager has to ask additional questions we never thought to ask before,” Mr. Nakhooda told The Journal.
■ Remember Neel Kashkari, the Northeast Ohio native (he went to high school at Western Reserve Academy in Cleveland) who wound up being Henry Paulson’s point man for last year’s $700 billion bank bailout? His life has changed quite a bit, according to a riveting Dec. 7 feature in The Washington Post. Mr. Kashkari and his wife moved to a cabin in northern California and are putting their D.C. life behind them. He said he came up with a “Washington detox” program that includes building a shed, chopping wood and losing 20 pounds. (He still can’t kick a Blackberry habit, though; those things must be really pow■ File a Dec. 6 New York Times erful.) travel section story in the Of his life as Grizzly Adams, “small world” department. The Mr. Kashkari told The Post, “I piece on Singapore highlighted had to do something with my the hopping Kampong Glam hands. It’s a big amorphous retail district. One trendy shop, unknown — what’s going to PHOTO COURTESY OF THE called Know It Nothing, “feahappen to our economy. And CLEVELAND CAVALIERS tures nerd-chic button-down the shed is solid, measurable. I Michael Symon is one of shirts,” imported all the way can see it, I can touch it. It’s many top chefs scaling from the Cleveland-based going to be around for the next back. independent label Wrath Arcane. 30 years. It’s the opposite of amorphous.” ■ Celebrity chef Michael Symon is a leader of one of 10 menu trends for 2010, according to Restaurant & Institutions magazine: Bigname chefs taking it down a notch. “The drive toward downscale dining continues: Wit■ Boring is good in the world of wealth ness Big Star, Chicago chef Paul Kahan’s management these days. just-opened dive bar/taco shack; Il Cane In a Dec. 3 piece that quoted Azim Rosso, the San Francisco sandwich shop Nakhooda, chief investment officer with from Coi Chef-owner Daniel Patterson; and Cedar Brook Financial Group in Cleveland, Bar Symon, Michael Symon’s gastropubThe Wall Street Journal said financial pros style spot (in Avon Lake),” according to the “find themselves promoting back-to-basic trade publication.
A little bit of this, a little bit of that
Investors embrace safe options, if such a thing exists
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DECEMBER 14-20, 2009
Ganley Nissan reaches new Heights Dealership moves to Mayfield from Shaker By STAN BULLARD sbullard@crain.com
Ganley Nissan, part of the Lakewood-based Ganley Auto Group, has moved to 6060 Mayfield Road in Mayfield Heights from its longtime dealership on Chagrin Boulevard in Shaker Heights. Cuyahoga County land records show 6060 Mayfield Road Ltd. acquired the Mayfield Heights property on Nov. 23 for $2.2 million from Dorsan Realty Corp. The dealership,
with a building of unknown size, sits on nearly an acre on the busy Mayfield Road retail corridor. The Mayfield Heights location previously was Spitzer Dodge Motor Center East. It was one of the locations left without a franchise in Chrysler Corp.’s elimination of franchises as part of its Chapter 11 bankruptcy reorganization earlier this year. Patrick Campbell, Shaker Heights economic development director, said the city considers the former Ganley Nissan location at 16005 Chagrin Blvd. as a potential site for redevelopment. The property is zoned commercial, which allows multiple uses beyond remaining a car dealership.
It becomes the third auto dealership emptied in the suburb in the last dozen years as automakers push dealers to move to locations with greater freeway visibility or accessibility than older locations enjoy. “The city’s favored outcome on all property that’s available is for lots of employment and payroll,” Mr. Campbell said. “We live off of payroll taxes.” ■
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BMW 2009 328i xDrive
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* Monthly lease payments of $369 for 36 months. $4,269 due at signing includes first month’s payment, $3,500 down payment and $400 security deposit. Includes factory lease incentive. Lease cash is applied to lease contract in the form of capitalized cost reduction and is disclosed as such on the lease contract. Excludes tax, title, license, and registration fees. Lease financing subject to credit approval. Dealer contribution may affect terms. Mileage charges of $.15 per mile for miles driven in excess of 10,000 miles per year. Expires 12-31-09. See participating BMW centers for details and vehicle availability. ** Ultimate Service covers all factory recommended maintenance on all MY 2006 vehicles and newer vehicles, as determined by the Service Level Indicator, for 4 years or 50,000 miles, whichever comes first. Exclusions from coverage: gasoline, gasoline additives, windshield washer additives, tires, wheels, wheel alignment, tire balancing and rotation. All work must be performed by an authorized BMW center. See the Service and Warranty information booklet for more details and specific terms, conditions and limitations. ©2009 BMW of North America, LLC. The BMW name, model names and logo are registered trademarks.
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