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12/11/2009
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$1.50/DECEMBER 14 - 20, 2009
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
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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.
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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