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Opportunity knocks in apartment sales market Loan access, low vacancy contribute to uptick By STAN BULLARD sbullard@crain.com
The volume of apartment sales in Northeast Ohio is up and is likely to continue gaining momentum through the rest of the year amid a low-vacancy market for residential rental properties. Big sales already have occurred this year, and more are on the way if large properties quietly being marketed — including the Statler Arms and Bingham Apartments in downtown Cleveland — are bought by the end of December. Through the end of August, with the crucial fourth-quarter commercial real estate selling season still
INSIDE: Apartment owners ring up multimillion-dollar deals in 2011. Page 5 ahead, 11 Northeast Ohio apartment complexes had been sold for at least $1 million; they had a total price tag of $33 million. For all of 2011, 11 such properties changed hands for a total of $46 million, according to the website www. TerryCoyne.com. The site, operated by Terry Coyne, executive vice president of Grubb & Ellis Co.’s Cleveland office, does not track the region’s huge market for multifamily properties with under 30 suites that sell for less than $1 million. See SALES Page 5
STEVE BENNETT
A ROAD MAP TO REBIRTH Ohio City’s commercial investments extend beyond venerable West Side Market, breweries By STAN BULLARD sbullard@crain.com
B
lock by block, the resurgence of the commercial area surrounding West 25th Street in Cleveland’s Ohio City neighborhood is spreading beyond the shadow of the West Side Market and the domains of breweries and restaurants in its Market Square District. Construction workers recently began renovating a line of storefronts at West 25th and Jay Avenue that for 40 years were bricked in for security reasons. New owners are taking positions in properties ranging from the former Ohio City fire station — a landmark dating from the 1840s — to the dilapidated, long-mothballed Jay Hotel. And plans for a loft conversion — the first in a decade on West 25th — also are in the works.
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See REBIRTH Page 13
GO BEHIND THE NEWS Each Monday, Crain’s reporters offer a deeper analysis into the top stories that appear in that week’s newspaper. Visit www. CrainsCleveland.com/section/audio.
KeyCorp CEO directs focus on business lending, balance sheet Beth Mooney charts institution’s growth strategy By MICHELLE PARK mpark@crain.com
Beth Mooney believed KeyCorp’s stock was undervalued when she took the helm of Cleveland’s largest bank four months ago. The closing price on May 2 was $8.53. The closing price last Thursday, Sept. 8 — $6.42 — was down almost 25% from when she became chairman and CEO.
Suffice it to say, there are many economic headwinds to grapple with, Ms. Mooney acknowledged. Today, growth is a game of inches, not yards, but Key, armed with a strategy Ms. Mooney devised prior to being named CEO, will grow, she anticipates. “I think Key is at a favorable inflection point,” she Mooney said in an interview last See MOONEY Page 21
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SMALL BUSINESS Mapleside’s new owners work to turn farm into agritourism destination ■ Page 17 PLUS: RESALE BUSINESS ■ GRAND OPENINGS ■ & MORE
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 37
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Health care directory Our annual listing of health care providers — which covers 15 categories and nine counties — appears in next week's Crain's. This comprehensive guide is a resource for business leads, contacts and more.
Americans love their cars, but gas prices approaching $4 a gallon are curbing their enthusiasm for driving. The Federal Highway Administration reports that travel on all U.S. roads and streets fell by 1.4% — that’s 3.8 billion vehicle miles — in June 2011 from June 2010. (We still drove a total of 259 billion miles that month.) For the year through June, travel was down 1.1%, or 15.5 billion miles, to 1.45 trillion vehicle miles. Here’s a look at road travel by region for June:
Region
List: Industrial Parks ...22 Milestones...................27 Reporters’ Notebook....27 Tax Liens.....................12 The Week ....................27
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Change from June 2010
60.4 billion
-1.3%
West
56.9
-1.0
South Atlantic
55.0
-1.8
South Gulf
48.7
-2.0
Northeast
38.2
-1.2
SOURCE: FEDERAL HIGHWAY ADMINISTRATION; WWW.FHWA.DOT.GOV
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Cleveland off radar for expo center operator Euclid venue succumbs to lack of shows as envisioned level of events fails to materialize By JAY MILLER jmiller@crain.com
MARC GOLUB
Kevin Suttman last week reached a long-awaited goal: shipping Seven Brothers Distilling Co.’s artisan vodka to stores across Northeast Ohio and about 20 in the Columbus area.
WORKING ON THEIR CRAFT Area distillers see fresh water, crops as avenues to gain share of $40 billion spent nationwide on spirits each year By KATHY AMES CARR kcarr@crain.com
WHAT IS A CRAFT DISTILLER?
W
ithin the confines of an old red barn in Leroy Township that’s the size of a 19th-century schoolhouse, Kevin Suttman has been toiling with a low-temperature distilling process that uses local spring water and stone-ground winter wheat and corn to distill a premium brand of smooth vodka. The technique preserves the sweet aroma of the winter wheat and eliminates any harsh flavors that traditional, high-temperature distilling processes produce, according to Mr. Suttman. Just last week, Mr. Suttman See CRAFT Page 25
Much like craft brewers and regional vintners, craft distillers focus on making quality products that are representative of the heritage of the communities from which they hail. Craft distillers produce alcoholic beverage spirits by distillation, or by infusion through distillation or re-distillation. Maximum production for a “craft” or “artisan” distiller should not exceed 250,000 proof gallons per year, according to the American Distilling Institute.
A LITTLE HELP, PLEASE? Area craft distillers see big potential for their spirits, but they’re aiming to get some relief from lawmakers. Currently, Ohio law allows only three A-3a permits — through which distillers can sell their products on site. That means Cuyahoga, Franklin and Hamilton counties each have only one A-3a permit available. Two state representatives have sponsored a bill that already has passed the House of Representatives and would ease the limits placed on the number of A-3a permits issued.
The long-running Cleveland Home & Garden Show and its companion Cleveland Sport, Travel & Outdoor Show, fixtures in the spring and fall, are no more. Gone, too, is the venue that hosted them, the Great Lakes Expo Center in Euclid. It closed May 31. Chris Fassnacht, operator of the expo center and president of Expositions Inc., the firm that mounted the two shows, said last week he has suspended operations in the Cleveland area. He said the sour economy and aggressive marketing by the I-X Center were responsible for the demise of his operation. “I would basically say it was just a
lack of shows” that led to the closing of the expo center, Mr. Fassnacht told Crain’s from the Lakewood office of Expositions Inc., a 73-yearold firm. He said his firm continues to promote shows in Pittsburgh but will hold off on any Cleveland shows “until the dust settles” and the new Cleveland convention center opens downtown in 2013. The expo center is a former Kmart store that Mr. Fassnacht leased and converted into exhibition space. It opened in January 2010 with the home and garden show. That show and the sport and outdoor show previously had been held at the I-X Center. Before then, the shows, under different names, operated at the Cleveland Convention See EXPO Page 21
THE WEEK IN QUOTES “We used to only get inquiries (about vacant retail space) from pawn shops, furniture stores and used appliance shops.”
“A lot of small towns can look at that and say, ‘We’re a small town. Why couldn’t we have that, too?’” — Cathy Belk, chief relationship officer, JumpStart Inc. Page 9
— Tom Gillespie, owner TEG Properties LLC, which owns buildings on West 25th Street in Cleveland. Page One
“People are seeking authentic experiences. People not only want that fresh-baked apple pie, but they want to see where the apples came from. It’s about the local connections.”
“The economic condition of things right now has definitely changed people’s focus on what they have to have and what’s important.” — Laura Goss, owner of ReRun Consignment Boutique, Avon. Page 17
— Amir Eylon, tourism director for the Ohio Tourism Division. Page 17
INSIGHT
As sustainability summit nears, signs of progress take shape By CHUCK SODER csoder@crain.com
Andrew Watterson is in charge of the annual Sustainable Cleveland 2019 summit, but he’s not really in control of it. He’s OK with that: The summit — which is scheduled to take place Sept. 22 and 23 at Public Auditorium in downtown Cleveland — is
meant to help people come up with their own ways to build a culture of sustainability in Northeast Ohio. “Our job is tilling the soil to create conditions for these things to prosper,” said Mr. Watterson, Watterson who is chief of sustainability for the city of Cleveland.
Some of the seeds planted in that soil since the first summit two years ago have started to germinate. For instance, a group focused on green buildings is working with the city of Cleveland to make 100 homes more energy efficient as a pilot for a bigger project. Another group focused on clean
water formed a nonprofit that has created a campaign to drink tap water and is making a documentary about its effort to bring fresh water to a school in Africa. A group interested in local food created a nonprofit, too, and it spurred the creation of a company that could help urban farmers. And the sustainable transportation group convinced the state to make the Lorain-
Carnegie Bridge more accessible to bicyclists and pedestrians. Many other initiatives are in the works, too. However, the green building group’s project appears to be among the most ambitious so far. The working group, one of 17 formed after the first summit in August 2009, is in the process of creating a nonprofit called the See SIGNS Page 21
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Expertise in bank compliance boosts Cleveland company By MICHELLE PARK mpark@crain.com
Righting an early mistake has resulted in unprecedented growth for a small Cleveland company, AML RightSource. AML, which provides anti-money laundering (hence the “AML”) monitoring to banks, so far in 2011 has added the most new clients it ever has gained in a single year, and it expects the growth to continue.
The company sells its service to banks that must comply with the Bank Secrecy Act. It has added five clients this year, bringing its total to 15, a 50% increase. Revenue through August is up 47% from a year ago, said president and CEO Tom Pratt. He did not disclose specific figures. Mr. Pratt said there’s a good chance AML will sign four more banks yet this year. The goal is to close 2011 with at least 18 clients on the books and to reach 36 clients in 2012.
He attributes the 6-year-old company’s growth this year to a new focus on marketing. “One of the mistakes that we probably made early on was not really focusing on the sales and marketing side,” Mr. Pratt said. “We’re accounting, finance and operational guys.” Now, Mr. Pratt said, the company is establishing name and brand recognition, evidenced in six words they’ve heard more often from people: “ ‘Oh yeah, we’ve heard of you.’” Malaga Bank, a Palos Verdes Estates, Calif., bank with $824 million in assets, is one of AML’s newest customers. Connie Begovich, assistant vice president of deposit compliance and Bank Secrecy Act officer at Malaga, learned of AML through a bankers’ compliance conference a few years ago and signed on in January because regulatory compliance is taking up more time, she said. “You don’t have enough hours in a day to do all that’s being asked of you,” she said. The Bank Secrecy Act, passed in 1970 and designed to root out drug and organized crime money, tasks institutions with monitoring transactions for suspicious activity. At a four-branch bank like Malaga, there isn’t space for additional personnel, Ms. Begovich said. Plus, finding people who know how to identify suspicious activity is a struggle. So the bank hired AML to take day-to-day monitoring off Ms. Begovich’s plate. “I think for ... what they provide and some of the tradeoffs of having an employee here, I’d say that they are reasonable,” she said of the cost. The new marketing strategy that Mr. Pratt says has boosted business launched in January and has included advertising and direct email campaigns to compliance officers and high-level executives. AML also began conducting free webinars every other week, Mr. Pratt said, covering topics such as how compliance professionals can prepare for and pass their Bank Secrecy Act exams. Attendance to AML’s webinars frequently has exceeded 100, he said. AML’s clients all are community banks such as Malaga. None are in Northeast Ohio. Their asset sizes range from $260 million to more than $5 billion, Mr. Pratt said. A bank that hires AML does not eliminate its need for an internal compliance officer, but it does enable an institution to avoid hiring more personnel, he added. Hiring at AML itself, though, has been a must. The company this year has grown to eight employees from five, and Mr. Pratt hopes to hire two more by year-end. This time of year, when institutions are coming into budget cycles for the coming year, is a time when bank executives are focused on return on investment, so AML will market heavily the cost savings it can provide. “The industry norm is that I as a bank will go out and buy software, will hire people, will deal with turnover of those people,” Mr. Pratt said. “I will do it all myself. We’re in the process of disrupting the industry norm.” ■
Volume 32, Number 37 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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Sales: NE Ohio benefits from stability continued from PAGE 1
Dollar volume is suppressed somewhat this year because banks are flooding the market with distressed properties at discounts. The stepped-up deal activity shows the market for apartments is starting to reawaken, although at nothing like the pace prior to 2008, when the recession hit. Chris Smythe, CEO of Smythe Property Advisors LLC in Cleveland, said the market for apartments “is picking up, but it does not have the strong, fleet legs like it did at the height of the boom.” Buyers are looking for bargains at both ends of the spectrum: Large, institutional owners want prime properties with more than 200 units, and smaller, mom-and-pop investors who can afford to pay cash or mostly cash are looking for small apartment properties. Renewed appetite for multifamily investments is out there, but experienced buyers are as careful about what they consume as a middle-aged man after a heart attack. “There is no feeding frenzy like what developed prior to 2008,” said Vicki Maeder, a vice president in investment sales at the Cleveland office of CB Richard Ellis. “Formerly, people were intent about outbidding other people just to control the real estate.”
The virtues of stability Two factors — improved fundamentals and broader availability of loans for apartments, albeit with
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stricter financial requirements — account for the apartment sales uptick. Michael Shemo, president of Wolf Real Estate Group in Beachwood, said occupancies are high in the region, and rents are up. “Northeast Ohio is seen as a stable market, because we don’t have the thousands of apartment units coming out of the ground that you see in other markets such as the Carolinas,” Mr. Shemo said. The market is so attractive that Wolf is preparing to offer about 500 units for sale, he said, though he would not identify the properties. The Northeast Ohio Apartment Association trade group estimates vacancy is just 3.2% in the region, a very low number by historical standards. Meanwhile, “money is cheap,” says Joe Bobeck Jr., development manager at Great Lakes Financial Group of Cleveland. Governmentbacked apartment loans can be had for 4.5% to 5.5%, while interest rates for other commercial properties start at 5.5% and go up from there. Moreover, government-backed loans do not require personal guarantees and often are assumable, though down payment requirements remain high. Still, getting the money remains an issue in some cases, even for well-heeled groups. For instance, Finch Group, a Boca Raton, Fla.-based apartment owner and developer, is assembling city, state and federal funds for a $12 million renovation of Hawk’s Landing Apartments, 14601 Puritas Ave. in Cleveland, as it works to
OPENING NEW DOORS Apartment owners ring up multimillion-dollar deals in 2011: ■ Emerick Manor, 4671 Country Lane, Warrensville Heights, is a 133-unit complex acquired by a Brooklyn, N.Y., investor group for $3.3 million.* ■ Stone Ridge, 1000 Stone Ridge, Berea, is a 144-unit complex acquired by a Pittsburgh investor group for $13.3 million.* ■ Dorchester Village, 137 Chestnut Lane, Richmond Heights, is a 473-unit complex acquired by a New York City-based apartment concern for $5.4 million.* ■ Lakeland Plaza, 25551 Lakeland Blvd., is a 120-unit complex acquired by K&D Group of Willoughby for $1.2 million.** SOURCES: *ALEC PACELLA, NAI DAUS, AND REAL CAPITAL ANALYTICS. **CUYAHOGA COUNTY LAND RECORDS.
close a deal with a court-appointed receiver to buy the property, said Mark Dodds, Finch’s Cleveland-based staff architect. Mr. Dodds declined to say how much Finch would pay for the property, though he noted it will not acquire the complex without funds to redo it. “It’s a wreck,” Mr. Dodds said of the 144-suite complex that dates from the 1960s. “The only things we’re saving are the brick veneer outside and the masonry inside the buildings.” The acquisition will give Finch its fifth
5
property, and nearly 1,000 units, in Northeast Ohio, Mr. Dodds said.
healthy enough today that “we’re seeing multiple bids again,” he said.
More lookers
Downtown deals afoot?
Dan Siegel, the Beachwood-based owner of about 5,000 rental units, recently added to his holdings with the purchase for $600,000 of the 60-unit Kingsway Apartments, 2326 W. 14th St. in Cleveland’s Tremont area. “The property has a lot of potential,” Mr. Siegel said. “There are few large apartment properties in Tremont; it’s mostly single-family properties. It’s a nice infill location where people want to live, especially since all the restaurants went in. It’s a great location for people who work downtown and want to live nearby.” Mr. Siegel said he knows “a lot of people” also looked at the Kingsway because the 19th-century structure has “good bones.” He plans to renovate the building, now just 75% occupied, to boost occupancy, and to hike rents by about $100 a month to between $550 and $650. The revival in the popularity of apartments as investments has its downside, according to Mr. Siegel, who said he knows he will pay more for apartments now than he did a year ago. He said he has seen some properties trade for more than he would have paid for them. Dan Burkons, a Marcus & Millichap vice president who handles apartment properties, said among properties of less than 200 units, local “mom-and-pop” buyers are able to buy properties again after being outbid by investors from the coasts earlier this decade. Mr. Burkons said the market has improved every year since it died in 2009. It’s
Meanwhile, bigger deals are looming. A sale of Statler Arms, 1127 Euclid Ave., may be in the cards, as it is an asset in the Lehman Brothers Holding Corp. Chapter 7 bankruptcy action that is nearing completion in the Southern District of New York. If Statler Arms does not stay in a portfolio of more than 10,000 apartment units that court minions are marketing, a local buyer may do a follow-on deal, insiders say. A Lehman affiliate, Pami Statler LLC, in 2006 bought Statler Arms after a developer defaulted on a $33 million loan backed by the U.S. Department of Housing and Urban Development; the loan was used to convert the one-time hotel and office building to apartments. Also, industry insiders say multiple owners of large local portfolios have looked at the 340-suite Bingham Apartments, 1278 W. Ninth St. in the city’s Warehouse District. RRE VIP LLC, an affiliate of Philadelphia-based Resource Real Estate Inc., last year bought the defaulted $45 million HUD loan that was used to convert the former warehouse to apartments. It later foreclosed to gain title to the trendy loft complex. If either or both big properties trade, their sale prices are likely to be in the tens of millions of dollars. Downtown Cleveland properties, in particular, are benefiting from the addition of the Medical Mart and Convention Center, the Horseshoe Casino Cleveland and Flats East Bank office-hotel project. ■
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SEPTEMBER 12 - 18, 2011
Cleveland Hts. tests economic strategy with security outfit By JAY MILLER jmiller@crain.com
Cleveland Heights wants to be known as a safe city. Now it’s trying to use its new economic development department to help make that case — and to bring jobs to the eastern suburb, too. A centerpiece of the city’s efforts involves inking an agreement with FST21 Ltd., an Israeli security technology company that would make Cleveland Heights its regional base of operations. FST21 is preparing to roll out its new, highly regarded SafeRise system, a biometric security product that it is bringing to the United States. The business needs a conditional occupancy permit from the city to open for business and is negotiating a lease with the city for space in the former Coventry School. “We would like to be considered the homeland security mecca of the Midwest,� Mayor Ed Kelley said. “We believe that this type of security is the wave of the future, and we are going full throttle ahead trying to attract and locate these businesses here in Cleveland Heights.� The city is tagging the program, “Smart City, Safe City.� The strategy evolved as Cleveland Heights was outfitting Coventry School for commercial use. It’s leasing out office space in the 1970s-era school building and hopes to attract other tenants with a business development center there that will nurture small businesses. The business center will be operated by Cleveland State University with some state and federal small
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“This is a new wave of economic development. We’re ahead of the curve.� – Ed Kelley, mayor, City of Cleveland Heights business money. Beachwood had hosted the center, but it lost its home when that city decided to close its business incubator late last year. It might seem odd that a small city such as Cleveland Heights — population 46,121 — in a large metropolitan area would be looking to create an economic development strategy on its own. But the city is undaunted. “This is a new wave of economic development,� the mayor said. “We’re ahead of the curve.�
Testing a concept The city was looking for a security system for the school building late last year and found FST21 through Howard Gudell, a partner in SGI Global Business Advisors LLC, an international business consulting firm. Mr. Gudell also was a founder of the Ohio-Israel Chamber of Commerce, which has been successful at attracting Israeli companies to Northeast Ohio. As the city talked about installing the FST21 system, the concept of using Cleveland Heights as a base of operations for FST21 in the region, and using city buildings for system demonstrations and beta testing, began to take shape. “We thought there was an opportunity to expand the concept to drive an economic development program around it,� said Howard Thompson, who was hired by Cleveland Heights last December as its first economic development director. Mayor Kelley said the city has a number of older office buildings of various sizes and from various eras that he believes can be attractive to young businesses looking for lowcost space. “This can be a huge opportunity to implement a part of my dream to
build a safe and secure smart city,� said Aharon Zeevi Farkash, FST21’s chairman and CEO, during a visit to Coventry School last month. “One of the major vectors that will face our life in the 21st century is the development of mega-cities� and the security needs that come with them. Mr. Farkash is a retired Israeli major general who at one time was head of military intelligence.
An opportunity recognized In addition to using security firms to bolster its tax base, Cleveland Heights wants to be the place where these new technologies are tested. So it will install a SafeRise system at city buildings and hopes to spread their use to schools and even apartment buildings in the community. Mr. Gudell, a consultant to Cleveland Heights, said the business attraction effort initially will focus on Israeli companies. “We want to attract advanced homeland security companies and technologies from around the world,â€? he said in an email. “Israel will be the initial country we would concentrate on because of its leadership position in homeland security technologies and our (SGI Global’s) relationship with Israeli companies and government officials.â€? FST21’s SafeRise security product is a biometric identification system installed at entryways. It uses a combination of face and voice recognition to scan and identify the person seeking entry. If the individual is known to the system — say, a resident of a building or employee of a company — the system can grant access immediately. If the individual isn’t known, the system uses voice prompts to ask questions and call a resident or a reception desk to authorize entry. It even can analyze emotional patterns in voices to determine if a person known to the system is under duress. SafeRise was named product of the year at the 2011 Security Industry Association New Product Showcase and won a similar award at the 2011 Electronic Security Expo. â–
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SEPTEMBER 12 - 18, 2011
Akron marathon participation keeps pace Physician fees key contributor in higher spending
Event continues to set healthy gains; companies also step up sponsorships
By JESSICA ZIGMOND Modern Healthcare
By JOEL HAMMOND jmhammond@crain.com
An economic impact study conducted by the University of Akron’s economics department last winter showed the Akron Marathon contributed more than $4 million to the area’s economy. Expect that figure to grow significantly after this year’s event, set for Saturday, Sept. 24. If participation hits the cap race officials have set, the number of runners would increase nearly 29%, to 14,250, over last year’s total of 11,051. In 2009, 10,566 runners participated, up from 9,100 in 2008. Look for the event to reach its goals, as procrastinators send in registrations at a rate of “hundreds a day,” said Katie Greenwald of Hitchcock Fleming & Associates, which handles public relations for the race. The event features four races: a full marathon (capped at 2,000 runners), a half marathon (4,250), a marathon relay (6,000) and a 1-mile kids’ fun run (2,000). The Akron marathon relay — in which five runners compete in varying distances, from an uphill 2.8-mile segment to a race-closing 7.9-mile stretch — is the fourth-largest relay event in the country, according to Running USA, a 12year-old nonprofit running advocacy and research group based in Los Angeles. Running USA data also show the growth in Akron mirrors a nationwide trend. According to the group, marathon participation in the
PHOTO PROVIDED
Participation continues to rise at the Road Runner Akron Marathon. United States rose 8.6% in 2010 from 2009, to 507,000. The largest, in New York City, drew 44,977 participants. Half marathons experienced even greater growth — to 1.4 million finishers in 2010 from 1.1 million in 2009, a jump of 24%. The largest half marathon, in Indianapolis, drew 31,046 runners. Ms. Greenwald said the 60% growth in female participation also is mirrored in the Akron field.
Sponsors, too Runners aren’t the only ones returning or flocking to the race; sponsorships, too, are increasing. Ms. Greenwald said sponsorships overall are up 6% this year compared with last year. They include Time Warner Cable, the event’s
title sponsor, and Acme Fresh Markets and Novo Nordisk, which sponsor the half marathon and relay, respectively. Time Warner Cable renewed its sponsorship this winter, and will stay in the fold for at least the next four years. And it wasn’t a difficult decision, according to director of public affairs Tish Biggs, who cited the name of the company’s high-speed Internet service — Road Runner — being a perfect fit. (Marathon officials dropped the Road Runner name this year.) “We were there from the beginning, and we’ve always felt the race offers a great opportunity to the community to come together,” Ms. Biggs said of the event that started in 2003 with 3,473 participants. “It’s a very healthy activity. We saw it as a wonderful opportunity for our brand.” ■
New research finds that fees paid to physicians in the U.S. are higher than in other countries and are the main cause of higher overall spending in America on physicians’ services. The study — which appears in the September issue of the journal Health Affairs — reported that 2008 per capita spending on physician services in the United States was $1,599, while per-person spending for these services across all other Organisation for Economic Co-operation and Development countries averaged about 81% less than that, or about $310 per person. The study also showed that public and private payers paid somewhat higher fees to primary care physicians and much higher fees to orthopedic physicians for hip replacements than their public and private counterparts in other countries. And both U.S. primary-care and orthopedic physicians also earned higher incomes — $186,582 for the former and $442,450 for the latter — than those physicians in other countries. “For decades, concern has been raised that greater financial incentives may be needed so that enough American doctors will choose to become primary-care physicians,” wrote the study’s co-authors, Miriam Laugesen, an assistant professor of health policy and management at Columbia University, and Sherry Glied, assistant secretary of planning and evaluation at the U.S. Department of Health and Human Services. ■
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Community-focused funds capitalize on JumpStart model By CHUCK SODER csoder@crain.com
John Dearborn believes small cities can be good places to grow small companies into big ones. Over the past nine months, four Northeast Ohio cities — Barberton, Canton, Wooster and Mansfield — have worked with JumpStart Inc. to start or expand seed loan funds for startup companies that appear to have high growth potential. A few more cities in the area likely will join them over the next year or two, said Mr. Dearborn, president of JumpStart, a Cleveland-based nonprofit that assists and invests in startups. The seed loan funds are meant to help the cities grow their own companies and, in some cases, attract startups from other areas. None of the cities that have started funds is particularly large — Canton has about 73,000 residents, Mansfield has about 48,000 and both Barberton and Wooster have fewer than 27,000, according to 2010 figures from the U.S. Census Bureau. Startup companies, however, don’t need to be based in big cities, Mr. Dearborn said. He described how, in the late 1980s, he helped start a company in a town of 2,000 people in New Hampshire. The company, Astral Development, created one of the first image-editing programs for the PC. “Ideas can come from anywhere,” he said. Barberton Community Development Corp. in August said it would launch a $500,000 fund that would provide loans of up to $50,000 to companies that appear able to raise additional venture capital. The only catch is the company has to be based in Barberton or move to the city. Canton started a similar fund in July. Wooster started one last November. Mansfield’s fund is somewhat different. The Braintree Business Development Center in Mansfield over the past year has loaned almost $100,000 to four Richland County companies through the Appleseed Microfinance fund, said Bob Leach, Braintree’s director of operations. Braintree and JumpStart announced last week that the fund would begin loaning money to companies throughout Northeast Ohio, but it largely will target companies in rural areas because most of the money it has raised so far came from a U.S. Department of Agriculture grant.
Strength in small numbers The groups that run the funds choose the startups that receive the loans, which tend to have low interest rates and friendly payback terms. However, JumpStart helps them find the companies, and in some cases it helps them figure out which ones deserve money. JumpStart did not seek out the cities and suggest that they start loan funds for startups, said Cathy Belk, chief relationship officer at JumpStart. Instead, during conversations that the nonprofit regularly holds with area leaders, officials from those cities inquired about how they might create and attract more startup companies. During those conversations, JumpStart often cited Cuyahoga County’s North Coast Opportunities Technology Fund as a model they could follow. That fund has made $1.6 million in loans to 18 startups that since have raised more than $6
million in follow-on capital. They employ 40 people, though some of the entrepreneurs did not include themselves in that figure. Though there naturally are going to be more startups to finance in Cuyahoga County due to its size, Wooster has shown that big opportunities exist in small cities, too, Ms. Belk said. She cited how ABSMaterials Inc. recently raised $11 million to help it commercialize a water purification technology developed at the Ohio Agricultural Research and Development Center in Wooster. “A lot of small towns can look at that and say, ‘We’re a small town. Why couldn’t we have that, too?’” she said.
Leveraging existing assets
entrepreneurs to Barberton, Mr. Genet said, noting that a lack of convenient highway access makes it hard for the city to attract larger companies. Mr. Dearborn said he doesn’t expect Northeast Ohio communities will use city-focused funds to steal startups from one another. Instead, the loans will push wouldbe entrepreneurs to pursue their ideas, he said, again citing his experience starting Astral Development. “The most important decision was to start,” he said. Mr. Dearborn said he knows of no other region with so many community-focused funds in such close proximity.
Among Barberton’s assets are the Babcock & Wilcox Power Generation Group and plants owned by aluminum maker Alcoa and specialty materials producer PPG Industries. From those companies could come spinoffs or former employees who want to start their own business, Mr. Dearborn said. Barberton Mayor Bob Genet also cited those companies as assets. “There is a lot of activity here in the city of Barberton,” Mr. Genet said. The Barberton Community Development Corp. wanted to start the fund partly because it wanted something it could use to attract
Neither does Jim Jaffe, president and CEO of the National Association of Seed and Venture Funds, which is based in Philadelphia. Mr. Jaffe said the guidance of JumpStart — an organization he respects — will be essential to these loan funds. Otherwise they may not be able to figure out which startups have the best chance of succeeding, he said. Mr. Jaffe agrees that it’s possible for small cities to attract and grow enough startups to make seed loan funds a worthwhile investment. He’s not yet ready, however, to say they’ll succeed. “Is it a good idea? I don’t know,” he said. ■
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PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Blah blah
A
stimulus plan by any other name is still the same. It all amounts to the government trying to engineer an economic recovery, and as we’ve seen over the last three years, government engineering can’t replace market forces in producing large quantities of jobs that last. Remember the immortal words “shovel-ready projects,” anyone? That’s the phrase President Barack Obama repeatedly used as he went about selling his original stimulus package shortly after he took office in January 2009. He cast a vision of hundreds of thousands of workers toiling away on infrastructure projects that were ready to roll. Well, the promised jolt didn’t happen. A report in the summer of 2009 by the Government Accounting Office would reveal that most of the stimulus outlays for state and local governments weren’t going toward roads, bridges, sewers and other public works projects. Rather, the GAO would report, most of the money was bolstering Medicaid programs and the budgets of state governments, including Ohio’s, so that hordes of the president’s supporters — unionized public employees — wouldn’t need to be laid off. When the stimulus money ran out, so did the means to pay for those jobs, leaving governors such as John Kasich with the inevitable (and unenviable) task of laying off workers who by all rights should have been out of work way back then. So, let’s scratch off our job-creation (notice how we didn’t use the word ‘stimulus’?) list any proposal that involves trusting the government to dole out a large pot of money for a specific purpose. Instead, let’s focus on eliminating government initiatives that inhibit private-sector hiring because of their feared cost to employers. Start with amending the president’s health care plan as constituted, or repealing it altogether and devising a proposal that won’t make employers afraid of adding to their payrolls. To help return to the job rolls people who already are out of work, let’s get behind legislation pushed by Ohio’s senior U.S. senator, Sherrod Brown, that would prohibit employers from refusing to consider unemployed Americans for open jobs. It’s unconscionable how some employers explicitly exclude the unemployed from consideration for job openings, including by telling employment agencies to screen out jobless applicants. And to give consumers and employers a greater sense of the long-term financial stability of the U.S. government, let’s quit proposing grandiose programs that only add to the federal deficit and instead concentrate on piecing together a plan for bringing down the deficit, and with it, the federal debt. The president and Congress both have managed to lose the faith of the American people. The latest public opinion poll released last Wednesday, Sept. 7, by the IBOPE Zogby International research firm found that the percentage of voters saying the nation is on the wrong track reached a new high of 75%. The message people are sending is that they don’t want a stimulus; they know the government is broken (and broke), and they want a fix. And the country will continue to slog along until they get it.
FROM THE PUBLISHER
Remembering our man Dirk Kruger
D
irk Kruger was indeed a man of stop. I only wish it could have been his word. longer — much longer. I first met Dirk when he After four very successful years with came to Cleveland for a lunch our sales team, Dirk tragically was killed to discuss future job prospects at Crain’s in a car crash on the Thursday before the Cleveland Business. At the time, he was a Labor Day weekend. According to news senior sales representative for a weekly reports, the driver of an oncoming vehibusiness newspaper in Pittsburgh. He cle crossed the center line on state Route was doing well, enjoying his 44 at mid-afternoon and ran job and had been a leading head-on into Dirk’s car. Dirk BRIAN member of their sales team for never made it out of Robinson TUCKER several years. Dirk’s wife, Tracy, Memorial Hospital (his obituwas from Pittsburgh, so family ary appeared last week in our was close. pages). Dirk, however, drew on his Throughout last week, as we adaptive strength from growing gathered at the wake and again up in a military family, and felt at his memorial service, I couldn’t there was something better help but recall Dirk’s words here in Cleveland. The consumwhen he first met with Crain’s mate family man, Dirk had besales director Mike Malley and friended a Cleveland-area family at me. junior baseball tournaments in which “I know about Crain and what a great his son was playing, and liked what he company it is,” he said. “I know about heard about our town. your paper and love the idea of moving Dirk and Tracy visited, and were to Cleveland and selling for you. intrigued. So Dirk went about mapping “And I promise you — you won’t be his plan for coming to Cleveland, and disappointed.” I’m so thankful that Crain’s was his first Well, Dirk lived up to that promise,
and much more. He worked tirelessly, always among our leading sales representatives, helping advertisers develop the perfect mix of print ads, digital impressions and event sponsorships to support their business-to-business branding efforts in Northeast Ohio. His clients loved him because he was there to help them. For Dirk, it was never about simply getting the next ad from a client, and then moving onto his next appointment. He knew we would only be successful if we were helpful, and that is exactly what he did for all his clients. We all miss him already, and that’s a void we’ll feel for a long time. But it will be especially hard during college basketball season, and especially during March Madness when his beloved Kansas Jayhawks always would be in the mix. So we tip our hat, remember his contagious grin and recall his usual greeting during the NCAA basketball tournament: “Rock, chalk, Jayhawks, baby.” I’m sure he’s in heaven, thinking about his pool sheet. We’ll always know who he picks to win it all. ■
THE BIG ISSUE Should the federal government be spending money to create jobs or cutting expenses to decrease the national debt?
JAY WESTBROOK
JOHN JENKINS
AL SAMMON
STACEY HULL
Cleveland (represents Ward 16 for Cleveland City Council)
Cleveland
Bay Village
Cleveland
They should be looking at ways to cut the national debt, and they should be spending money to create jobs. We’ve got an infrastructure problem in the United States, so we need to look at that.
I think they ought to be spending money to create jobs. Nine to 10% unemployment nationwide — it’s pretty clear we need some job focus.
I think they should be cutting costs right now. They seem to be spending a lot as it is.
Spending money to create jobs. I believe the proper role of government is to spend money on public works and on infrastructure.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com
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Tech execs target more IT grads Group continues work after grant runs out By CHUCK SODER csoder@crain.com
The plan to pump up Northeast Ohioâ&#x20AC;&#x2122;s pipeline of information technology graduates is starting to fall into place. A board that includes IT executives from some of the regionâ&#x20AC;&#x2122;s biggest companies has taken some early steps to increase the number and quality of IT students graduating from area colleges. For one, the Regional Information Technology Engagement Board has laid the foundation to start implementing a British job classification system that could give colleges and IT students a better sense of the skills and traits businesses want for various IT positions. The RITE Board also is working with colleges to create a culture where more IT students apply for internships and know where to look for them; has designed the first version of a scorecard colleges can use to evaluate their IT programs; and has produced events and marketing materials meant to convince younger students to pursue IT careers. Perhaps the most important achievement, however, is that the two-year-old RITE Board still is
passionately pursuing its goal, even though the $287,000 state grant that financed much of its work over the past year ran out in June, said Jim Shanahan, director of the Entrepreneurship Innovation Institute at Lorain County Community College. The school is one of five area colleges working with the board. â&#x20AC;&#x153;The most important thing is to keep this moving,â&#x20AC;? said Dr. Shanahan, who helped organize the RITE Board as part of a state initiative called the Ohio Skills Bank. The boardâ&#x20AC;&#x2122;s effort to implement Britainâ&#x20AC;&#x2122;s Skills Framework for the Information Age has a lot of potential, said co-chair Joe LaMantia, who also is president of supply chain software firm e-Ventus Corp. of Cleveland. The SFIA (pronounced â&#x20AC;&#x153;Sophiaâ&#x20AC;?) system was designed to define the skills and traits someone needs to fill a particular IT position. That way, a student interested in IT can figure out what a â&#x20AC;&#x153;business analystâ&#x20AC;? does, for instance. Then a college can better prepare the student for that job and more easily find him or her a relevant internship. The board â&#x20AC;&#x201D; which includes high-level IT executives from 16 organizations such as the Cleveland Clinic, Sherwin-Williams Co. and Goodyear Tire & Rubber Co. â&#x20AC;&#x201D; held focus groups to define the skills and traits needed to fill five common entry-level IT jobs at RITE Board companies. Then about 60 IT students
from the five partner schools â&#x20AC;&#x201D; LCCC, Cleveland State University, the University of Akron, Baldwin-Wallace College and Stark State College â&#x20AC;&#x201D; took tests to gauge how good of a match they were for their preferred jobs. The board plans to keep exploring ways to apply the SFIA system more broadly, Mr. LaMantia said. Board co-chair Bill Blausey, who also is chief information officer of manufacturer Eaton Corp., emphasized how the board is trying to get more companies and schools to post and hunt for internships on an existing website, NeoIntern.net. Schools are putting more emphasis on IT internships, too, Mr. Blausey said, noting how Baldwin-Wallace put someone in charge of IT internships because of the board. â&#x20AC;&#x153;You have a really big difference school to school on how much importance they place on these internships and co-ops,â&#x20AC;? he said. The RITE Board conducted surveys following the events it organized to drum up interest in IT, and it plans to conduct more analysis on what marketing methods work best, Mr. Blausey added. In the future, the board likely will get more grant money to add to the dues it collects from board members, Mr. LaMantia said. If it doesnâ&#x20AC;&#x2122;t, though, it will continue on, he said. â&#x20AC;&#x153;The people in the industry leading this are very committed to solving this problem,â&#x20AC;? he said. â&#x2013;
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Goodyearâ&#x20AC;&#x2122;s North American unit growing By MIKE McNULTY Rubber & Plastics News
Goodyear Tire & Rubber Co.â&#x20AC;&#x2122;s North American Tire business has shown solid improvement in the first six months of 2011, and Stephen R. McClellan, the unitâ&#x20AC;&#x2122;s new president, is looking for more of the same in the second half. Mr. McClellan, who was named to the top spot in mid-August, said the operation has great momentum going for it after delivering strong results in each of the first two quarters. â&#x20AC;&#x153;This is a great time for the (North American Tire) business,â&#x20AC;? he said, and it has â&#x20AC;&#x153;great products, talented people building them and selling them, and consumers who see their value.â&#x20AC;? Mr. McClellan took over the presidency of North American Tire following the recent departure of Curt Andersson, who left Goodyear to pursue â&#x20AC;&#x153;other professional interests,â&#x20AC;? according to the company. During Mr. Anderssonâ&#x20AC;&#x2122;s tenure, â&#x20AC;&#x153;we have continued our progress toward returning North American Tire to sustainable profitability,â&#x20AC;? said Richard J. Kramer, the Akron-based tiremakerâ&#x20AC;&#x2122;s chairman, president and CEO. Mr. Andersson had been with Goodyear since early 2010, when he was brought on board as president of North American Tire, replacing Mr. Kramer in that position. He previously worked at the Cooper Crouse-Hinds division of Cooper Industries in Syracuse, N.Y. The 45-year-old Mr. McClellan, who has served as president of the companyâ&#x20AC;&#x2122;s North American consumer business division since 2008, will continue his duties in that position until a successor is named. He is confident the North American
Tire unit will continue to grow. â&#x20AC;&#x153;Our strategy is sound, and weâ&#x20AC;&#x2122;re on the right path,â&#x20AC;? McClellan said. â&#x20AC;&#x153;Even though weâ&#x20AC;&#x2122;re facing challenging work and demanding goals, Iâ&#x20AC;&#x2122;m confident we will deliver because of the strength of our products, the improvement of our processes and the capabilitiesâ&#x20AC;? and dedication of the business unitâ&#x20AC;&#x2122;s employees. He maintained that North American Tire will be successful because it has one of the worldâ&#x20AC;&#x2122;s greatest tire brands, â&#x20AC;&#x153;outstanding products and a commitment to operational excellence.â&#x20AC;? Since joining Goodyear in 1988, Mr. McClellan has held a variety of management positions on the consumer side of the business, including finance, sales and distribution. In December 2001, he moved into Goodyearâ&#x20AC;&#x2122;s commercial business, initially as president of Wingfoot Commercial Tire Systems before becoming vice president, Commercial Tire Systems, in September 2003. â&#x20AC;&#x153;Steve brings strong leadership and a proven track record of delivering results,â&#x20AC;? according to Mr. Kramer. â&#x20AC;&#x153;Steveâ&#x20AC;&#x2122;s career of more than 20 years at Goodyear has included progressively larger leadership positions within North American Tire. His success in running the North American consumer and commercial tire businesses and his strong relationships with customers make him a natural successor to the role.â&#x20AC;? A strong believer in working as a team, Mr. McClellan cited two key areas that Mr. Kramer stresses: building capabilities while delivering results. â&#x20AC;&#x153;One person doesnâ&#x20AC;&#x2122;t do that,â&#x20AC;? he said. â&#x20AC;&#x153;We do it together.â&#x20AC;? â&#x2013;
(Mike McNulty is a senior reporter with Rubber & Plastics News, a sister publication of Crainâ&#x20AC;&#x2122;s Cleveland Business.)
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Type: Employer’s withholding, unemployment Amount: $112,714
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LIENS FILED Light of Peace Society 12015 Cromwell Ave., Cleveland 44120 ID: NA Date filed: July 19, 2011 Type: Individual income tax return Amount: $500,987
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Empire Management Group LLC 27000 Springside Lane, Olmsted Falls ID: 33-1036273 Date filed: July 19, 2011 Type: Employer’s withholding, unemployment Amount: $150,294 Lobecks Hot Rod Parts Inc. 560 Golden Oak Parkway, Cleveland ID: 34-1454604 Date filed: July 8, 2011 Type: Employer’s withholding, unemployment Amount: $149,749 SJT Enterprises Inc. 28045 Ranney Parkway, Suite L, Westlake ID: 34-1638133 Date filed: July 21, 2011
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City View Mechanical Inc. 6111 Carey Drive, Suite 2, Valley View ID: 20-0205114 Date filed: July 26, 2011 Type: Employer’s withholding, unemployment, corporate income Amount: $100,833 Yelsky & Lonardo Co. LPA 75 Public Square, Suite 800, Cleveland ID: 34-1527486 Date filed: July 19, 2011 Type: Employer’s withholding, unemployment, partnership income Amount: $68,137 Northeast Ohio Electric LLC 5069 Cohen Drive, Bedford Heights ID: 34-1921661 Date filed: July 28, 2011 Type: Employer’s withholding Amount: $65,137 Anna Carrie Home Health Care and Services Inc. 15322 Waterloo Road, Cleveland ID: 30-0264062 Date filed: July 21, 2011 Type: Employer’s federal tax return Amount: $39,661 Green Thumb Florists Garden Center and Landscapers Inc. 11515 Lorain Ave., Cleveland ID: 34-1824632 Date filed: July 6, 2011 Type: Employer’s withholding, unemployment Amount: $26,027 Will Repair Inc. 2901 E. 65th St., Cleveland ID: 34-1577547 Date filed: July 28, 2011 Type: Employer’s withholding Amount: $25,073 Kyron Plating Corp. 1336 W. 114th St., Cleveland ID: 34-0960138 Date filed: July 26, 2011 Type: Employer’s withholding Amount: $21,517 The Ventures Inc. P.O. Box 771686, Lakewood ID: 20-5967810 Date filed: July 13, 2011 Type: Employer’s withholding, unemployment Amount: $19,211 Itek Systems Inc. 22700 Shore Center Drive, Suite 100, Euclid ID: 34-1874489 Date filed: July 13, 2011 Type: Employer’s withholding Amount: $16,272 Thompson Ground Development Inc. 12640 Euclid Ave., East Cleveland ID: 34-1533357 Date filed: July 14, 2011 Type: Employer’s withholding, unemployment, failure to file complete return Amount: $15,376
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X L Excavating Inc. 12291 Eagle Nest Drive, North Royalton ID: 34-1971682 Date filed: July 21, 2011 Type: Employer’s federal tax return Amount: $14,143
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Kidz Corner Inc. 3749 E. 142nd St., Cleveland ID: 26-0385951 Date filed: July 28, 2011 Type: Employer’s withholding, unemployment Amount: $13,622
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Task Force Interiors LLC 3574 W. 44th St., Cleveland ID: 65-1313251 Date filed: July 19, 2011 Type: Employer’s withholding Amount: $12,263
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CRAIN’S CLEVELAND BUSINESS
Rebirth: Potential extends beyond W. 25
th
continued from PAGE 1
“This is a neighborhood that has some real partisans moving in who are looking to put their roots down,” says videographer Graham Veysey, a Shaker Heights native who rented a Bridge Avenue loft in Ohio City when he came home from New York three years ago. Mr. Veysey said he decided, even then, that the renaissance of Ohio City “is for real and not just talk.” Mr. Veysey now has put his money where his mouth is. Through Ohio City Firehouse LLC, he recently shelled out almost $400,000 to buy Firehouse No. 4, 1455 W. 29th St., which had languished on the market for years. The six-person staff of Mr. Veysey’s North Water Partners video business is in the firehouse’s second floor rec room and he lives on the first floor. He also is renting out to other businesses parts of the structure that most recently were used as a photography studio, and he even has a bidding war for one office.
Keeping the faith Mr. Veysey is no loner in commercial investment in the neighborhood. At 1810 W. 25th St., at the southwest corner of West 25th and Jay, workers recently exhumed three storefronts that were bricked in and plan soon to begin removing bricks from sashes on the building’s north side for another nine windows. The space in the building that
dates from the early 20th century is the latest venture by TEG Properties LLC, which owns the nearby Heil and Gillespie buildings, 1848 W. 25th and 1836 W. 25th, respectively, at Bridge Avenue. Tom Gillespie, TEG’s owner, said he is adding the 8,000 square feet of retail space because he is impressed by resurgent retail interest in the street. He credits that interest to the nearby breweries and developer MRN Ltd.’s $20 million makeover of the United Office Building and other nearby structures as new-breed retail space, with tenants such as Penzeys Spices and Campbell’s Popcorn Shop. “We used to only get inquiries (about vacant retail space) from pawn shops, furniture stores and used appliance shops,” said Mr. Gillespie, whose TEG ventures are a sideline to his environmental consulting company, Getco Environmental, which has offices in his Gillespie Building. Mr. Gillespie restored the Heil and Gillespie buildings as contemporary retail, office and loft space a decade ago while retaining their classic post-Civil War era looks. He has weathered the coming and going of many tenants through the years. “I’ve never lost faith in the street,” Mr. Gillespie said. He declined to say how much he spent on getting the new storefronts ready — some of the former Woodworks furniture refinishing shop
“We see Lorain as another avenue for growth. There are a lot of buildings there.” – Eric Wobser, executive director, Ohio City Inc. still has classic tin ceilings above it — but he’s putting his own money into the venture. “There’s little lending for this type of investment property without tenants and a 40% down payment,” Mr. Gillespie said. His solution: using his own equity, hiring his own crews and working in the space on weekends with his 3-yearold son, Owen, as a helper.
Lofty goals Ironically, making a go of the restored sandstone and decorative, steel-columned storefronts pulled TEG Properties into an even bigger venture. To provide needed parking spaces for the new storefronts and his other properties, a partnership Mr. Gillespie heads last year acquired the mortgage on the former Jay Hotel property, 2515 Jay Ave., which stands immediately west of the building with his new storefronts. He subsequently secured ownership of the property at a sheriff’s sale and has repaired its parapets and windows to protect it from the elements. Thanks to its four-story height
and a façade with ornate carved sandstone features, the old hotel could serve as an anchor for the north end of the Market Square District, said Eric Wobser, executive director of the Ohio City Inc. nonprofit development group. Mr. Wobser sees the building as a site for additional apartment rentals and has heard talk of it as a boutique hotel. Mr. Wobser’s enthusiasm aside, Mr. Gillespie said he is not convinced the old hotel could be converted to apartments at a market rate. He acknowledged he has been approached by a developer he declined to identify about using it as a boutique hotel. “It definitely will not become condos,” Mr. Gillespie said of the last failed makeover plan for the hotel. Mr. Wobser has his own reason for advocating for more apartments: demand. He said vacancies are almost nonexistent among loft projects on the street. The situation is the Ohio City version of the familiar tale of resurgent rentals after the collapse of the for-sale housing market three years ago. However, another loft project is in the wings. West 25th St. Lofts LLC, which owns the former Exhibit Builders property at 1526 W. 25th St. and several adjoining properties, has secured Ohio Historic Preservation Tax Credits for a $7 million restoration of the former Baehr Brewery dating from the 1870s as
13
restored retail space and 67 market-rate apartment rentals. Rick Foran, a member of West 25th Street Lofts LLC, declined comment on the project. “We’re not discussing it until we get financing,” he said. Mr. Wobser said the loft project could help extend redevelopment of West 25th north toward Detroit Avenue, much the way that MRN’s United Office Building project stabilized the south end of the Market District.
Market-driven The time has come to look at projects spreading north in the Market District, Mr. Wobser said, “since we figured out Moda.” The solution for the long-shuttered Moda nightclub at 1867 W. 25th fell into place last month as Mitchell’s Ice Cream in Rocky River announced it has optioned the property for another of its shops and for a new headquarters to capitalize on the food and entertainment-related attractions of the West Side Market area. Even with all those projects, Mr. Wobser said Ohio City is looking at another way to build on demand associated with the West Side Market and nearby properties. With a $7,500 grant from the nonprofit assistance group Neighborhood Progress Inc. and $2,500 of its own, Ohio City Inc. has commissioned the Northeast Ohio Urban Design Center to prepare a conceptual design for how to redevelop Lorain Avenue west of West 25th Street. “We see Lorain as another avenue for growth,” Mr. Wobser said. “There are a lot of buildings there.” ■
The largest pediatric health care provider in NE Ohio. AKRONCHILDRENS.ORG
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Supporting the economy of Greater
Carbide Industries LLC Central Carbide LLC Manufacturer of calcium chloride and acetylene
Participation in a multi-bank credit facility January 2011
Raven Lining Systems, Inc. Manufacture and sales of high performance coatings for wastewater treatment and water infrastructure
L&M Auto Specialty LLC Complete Auto Care Provider
Building contractor and construction manager for the commercial, industrial and institutional markets
Term Loan Financing January 2011
Real Estate Financing January 2011
Working Capital Line of Credit January 2011
Stoddard NLA LLC
Branam Fastening Systems, Inc.
Manufacturer and distributor of collector Porsche car parts
OEM distributor of fasteners, hardware and stud welding products
Working Capital and Term Financing March 2011
Line of Credit and Equipment Financing March 2011
Vintage Development Group LLC Chagrin River Walk LLC
National Threaded Fasteners Ltd.
Real estate developers and property managers
Flange bolt importer and distributor
Real Estate Financing February 2011
Working Capital Financing March 2011
MPDS Memphis Ltd. Emerald Overlook
MPDS West Park Ltd. Canterbury Court
Panzica Construction Company
Playhouse Square Foundation
Consolidated Investment Corporation
Performing arts center Multi-Unit Apartment Community Managers
Real Estate Financing May 2011
Participation in multi-bank revolving credit and Allen Theatre renovation loan May 2011
Real estate investment, management and development company
SpringCo Metal Coatings, Inc. Versatile metal coating job shop with multiple coating and plating capabilities
Real Estate Financing May 2011
Working Capital, Equipment and Commercial Real Estate Financing May 2011
Pearne & Gordon LLP
Davco Fastener Co.
WXZ Residential Group / Hazel LLC
Intellectual property law ďŹ rm providing patent and trademark services
Industrial Fastener Distribution
Commercial Real Estate Developer
Working Capital and Real Estate Financing June 2011
Multi Family Construction Financing July 2011
Monclova One LLC Redwood Management specializes in the development and management of apartment communities
Multi Family Construction Financing June 2011
Working Capital Financing June 2011
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r Cleveland, one partnership at a time. Shale Construction Services LLC Duke Graphics, Inc.
KR Northwest LLC
Full service print, direct mail and fulfillment provider
Redwood Management specializes in the development and management of apartment communities
Working Capital, Equipment and Real Estate Financing January 2011
Multi Family Construction Financing January 2011
Choice Child Care and Preschool, Inc. Provider of quality childcare and educational programs
Construction Financing April 2011
GPD Development LLC
Ciro’s Property Management, Inc. Real Estate Owner and Manager
Commercial Owner-Occupied and Investment Real Estate Financing April 2011
D&S Custom Van, Inc.
Harbor Communications LLC
Equipment rental, inspection and engineering services related to storm water, erosion and sediment control
Business media company with magazines, websites and events for industries served
Equipment Financing February 2011
Line of Credit February 2011
Sheoga Hardwood Flooring & Paneling, Inc.
Presrite Corporation
Manufacturer of solid, high quality hardwood flooring and paneling
High-tech metal forging for a variety of industrial applications
Working Capital Financing April 2011
Participation in a multi-bank credit facility May 2011
Continental Enterprises Ltd.
Moving Solutions, Inc.
M.C. Mobility Systems, Inc.
Customized moving services for local and long distance
Commercial Real Estate Developer
Full service collision and restyling center and mobility products dealer
Luxury Apartment Community
Real Estate Financing June 2011
Working Capital Financing June 2011
Real Estate Refinancing June 2011
Real Estate, Equipment and Working Capital Financing June 2011
Hodell-Natco Industries, Inc.
Sea-Land Chemical Co.
Commercial Real Estate Developer
Nationwide, solution-focused wholesale distributor of fasteners and chain
100% employee owned specialty chemical distribution company
Finance of Commercial Out Lots July 2011
ABL Financing August 2011
ABL Financing August, 2011
Hemingway at Boston Heights LLC Construction and mini-perm financing of a 25,000 sf office building July 2011
State Road Associates
Member FDIC
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Malie to associate.
communications; Thea Wilson to director, Department of Early Childhood Education.
Blaha, Andy Damberger, Joe DeLiberato, Nick Hunter, Megan Kessler, Dave Koval, Mike Murphy, Brian Murray, Nicole Oakes, Scott Schmit and Brad Schoenfelt to senior associates.
UNIVERSITY OF AKRON: Nita Sahai and Bryan Vogt to faculty, College of Polymer Science and Polymer Engineering.
SS&G: Anna Friedman and Sharon Uecker to senior associates; Ann Butekoff to manager; Sarah Edwards to administrative assistant.
GOLDSTEIN GROUP COMMUNICATIONS: J. Paige Boyer to account manager.
GOING PLACES JOB CHANGES ARCHITECTURE VOCON: Jeff Gibbon and Kerre Ovens to project managers; Greg Roda to intern architect, designer and project manager; Nick Faehnle to project designer; Lindsey Ray to interior designer.
CONSTRUCTION GILBANE BUILDING CO.: Scott Orr to project executive; Aaron Claxton and Cameron Hill to project engineers; John Coughlin and Lenny Jatsek to senior office engineers; Todd Gerber to project manager; William Helmet to senior project engineer. RUHLIN CO.: Suzy Martin to marketing coordinator; Alan Ely to site safety specialist; Bill White to quality control specialist; Marquessa Callaghan to safety/HR administrative assistant.
EDUCATION CUYAHOGA COMMUNITY COLLEGE: Belinda Miles to executive vice president, Academic and Student Affairs. MUSIC SETTLEMENT: Lisa M. Smith to director, marketing and
SEPTEMBER 12 - 18, 2011
FINANCIAL SERVICE APPLE GROWTH PARTNERS: Wayne Chamberlain to business valuation senior associate; Lindsay Cooper, Sean Cwynar and Paul Martin to senior associates; Kathryn Lee to human resources manager; Tom McClary and Angelique Rogers to managers; Krista Clarke to associate.
ZINNER & CO. LLP: Joe Ramey to senior manager, accounting and tax services; Brett Neate to tax manager; Ted Austin to IT administrator.
HEALTH CARE SUMMA HEALTH SYSTEM: Cynthia Struk to president, Home Care, Hospice and Palliative Care Services.
ULMER & BERNE LLP: Mark Floyd to partner and co-chair, Employment & Labor Practice Group.
MARKETING
LIGGETT STASHOWER: Kelly Molnar to controller; Celeste Conklin and Pete Grasso to account supervisors; Laura Kuenzel to assistant media planner; Kurt Eyman to account coordinator.
INSURANCE
COHEN & CO.: Neal Sheehan to senior staff accountant; Bill Boyer, Andreana Shengelya, Brendan Walsh, Marissa Beck, Emily Kwong and Carmella Ballone to staff accountants; Todd Pence and Ben Schillig to staff accountants, Cohen Fund Audit Services; Shelyn Hunley and Jenera Scott to Cohen Healthcare Consulting; Derek Austin to software developer.
OSWALD COS.: Michelle Gaertner to director of business development.
NONPROFIT
GRANT THORNTON LLP: Joe
TUCKER ELLIS & WEST: Paul J.
WILLCARE: John Ventresco to community relations specialist.
LEGAL DWORKEN & BERNSTEIN CO. LPA: Jim Timmerberg, Shelley Fleming and Joshua Strickland to associates. ROBERT J. FEDOR, ESQ., LLC: Kevin L. Preslan to associate.
AMERICAN HEART ASSOCIATION: Donna Ferrante to Cleveland Metro vice president; Megan French to director, go Red for Women. EUCLID AVENUE CONGREGATIONAL CHURCH: James J. Rutledge Jr. to finance manager. FAIRMOUNT CENTER FOR THE ARTS: Jessica Leary Allen to executive director.
SERVICE
nsights
RADCOM INC.: Tina White to account representative.
FROM A BUSINESS OWNER
“Cox is responsive to our needs because they’re local. And in business, location really is everything.”
Vogt
Feda
Struk
Malie
Boyer
Moore
J. Kallmeyer A. Kallmeyer
KNOTICE: Jeff Carey to director of analysis and strategy; Brent Williams to director, professional services.
SKODA MINOTTI MARKETING SERVICES: John C. Moore to managing director, strategic marketing programs; John Kallmeyer to director of visual marketing; Alyson Kallmeyer to marketing project manager.
BEACON FINANCIAL PARTNERS: Matthew Feda to planning advice and technology specialist.
Sahai
BOARDS AMERICAN HEART ASSOCIATION:
Jeffrey M. Embleton (Mansour, Gavin, Gerlack & Manos Co. LPA) to chairman; Brian P. Griffin to president.
AWARDS SOCIETY OF RESEARCH ADMINISTRATORS: Kathryn Watkins-Wendell (University of Akron) received a Distinguished Faculty Award.
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CRAIN’S CLEVELAND BUSINESS
SEPTEMBER 12 - 18, 2011
17
SMALL BUSINESS
INSIDE
19 ADVISER: CAREFULLY WEIGH PRODUCT IDENTITY.
Shoppers rethinking resale, see value option Consumers’ desire for deals rises; stigma fades By MICHELLE PARK mpark@crain.com
J
MARC GOLUB PHOTOS
ABOVE: Brunswick residents Greg and Kelly Clement reopened Mapleside Farms in June after acquiring the property in late 2010 from the Eyssen family. Their goal is to expand the farm’s drawing power beyond its most traditional events. BELOW: The Melrose Grille underwent $1 million in improvements before reopening.
A NEW BEGINNING Mapleside Farms’ new owners work to expand the Brunswick staple into an agritourism destination with more entertainment options By KATHY AMES CARR kcarr@crain.com
F
or generations, Mapleside Farms in Brunswick has been a mecca for sunset enthusiasts, apple lovers and restaurant patrons with a taste for predictable comfort food. Each summer, visitors flock to the bucolic Pearl Road institution for its spectacular views of the sunset, and each fall, the Johnny Appleseed Festival lures throngs of tourists, all jockeying to partake in the tradition of bagging their own apples and indulging in homemade cider. But last winter, financial difficulties associated with the business threatened to forever
ON THE WEB: For a video interview with the Clements and a deeper look at Mapleside Farms, visit www.CrainsCleveland.com/Mapleside.
spoil these rituals. The 100acre farm, which had been in the Eyssen family since 1927, was slated to be sold at a Medina County sheriff’s sale, appraised at $2.8 million. That’s when Brunswick residents Greg and Kelly
Clement spotted an opportunity ripe for the picking. The couple acquired the mortgage on the property from Fifth Third Bank for less than the $4 million that the Eyssen family owed, according to Mr. Clement, although
he declined to specify the purchase price. “People love Mapleside. We wanted to preserve it and make it a year-round destination,” Mr. Clement said. Since taking over the operation in late 2010 and reopening in June, the Clements have been busy doing just that, recasting Mapleside as an agritourism — or farm-based recreation — destination. The hope is to protect the farm’s heritage while expanding upon its potential to attract more people beyond the location’s more traditional draws, such as the restaurant, bakery and Johnny Appleseed Festival. See FARMS Page 20
udy Schordock puts it this way: “It’s like resale shopping’s been discovered.” If it’s been discovered, it seems the lure has stuck: Though the recession is officially over, Northeast Ohio resale store owners continue to watch their sales climb. At The Red Geranium in North Royalton, where consignment items include jewelry, collectibles and vintage clothing, sales were up 11% this June over June 2010 and were up 14% in calendar year 2010 over 2009, said Ms. Schordock, the owner. The shop has been open for 17 years. “People who would have never stepped foot into a resale shop are doing it,” she said. “Everyone is looking for a bargain.” Gerri’s Closet, an upscale consignment boutique in Green that’s been in business for 14 years, has been racking up new shoppers and consigners, too. Owner Gerri Talevich estimates sales were up 15% to 20% in the first half of 2011 over the year-ago period. More broadly, the most recent operating survey by NARTS: The Association of Resale Professionals echoes these examples of local growth: Sales were up 12.7% in 2009 over 2008, 9.8% in 2008 over 2007 and 6.9% in 2007 over 2006. Adele R. Meyer, executive director of NARTS, which is headquartered in the Detroit suburb of Saint Clair Shores, isn’t surprised that the growth persists. “Even when the economy recovers, the industry keeps the new customers it attracted during an economic downturn as they continue to love the values they get shopping resale,” she said.
What’s old is new Having been in business for nearly two decades, Ms. Schordock believes current sales growth is driven largely by the economy: People want to sell, not give away, what they own and want to score deals on what they buy. Laura Goss, owner of ReRun Consignment Boutique in Avon, agreed. She estimates her store’s June sales were up more than 40% from last June and her July sales up 12% over last July. Sales have been up every year since she opened in 2008, she said, and she doesn’t See RESALE Page 18
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IRS more closely watches boss’s salary
I
t may feel liberating to some business owners that they have the authority to decide for themselves how big of a paycheck to draw, but it can be easy to forget that the Internal Revenue Service is scrutinizing those decisions. To be more specific, it’s the salary drawn by shareholders in S corporations that is of greatest interest to the IRS — and they’re looking at it more skeptically than ever these days. Examiners are concerned about owners whose paychecks seem a little thin. It makes the IRS wonder if those owners are abusing one of the key characteristics that distinguishes the S corporation from other legal structures under which a business might operate. The S corporation is the structure of choice for many small businesses in large part because of how it allows income to pass through the entity, free of income and employment tax, so it is reported as income to shareholders. That’s different from other corporate structures. In an S corporation, shareholders also can take dividend distributions from the entity that are not subject to the usual taxes, such as income tax, Social Security tax and Medicare tax because the S structure subjects the profits to tax only once, whether or not it is distributed to the owners. That has led some owners in S corporations to look at how much they pay themselves via a regular paycheck and how much they take in the form of distribution dividends. Consider the tax impact for the business if an owner takes a dividend check instead of a payroll check.
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TAX TIPS In a simple illustration, assume a company earns $100,000 in income in a single year, and the president of the company is the only employee. He takes compensation of $100,000 over the course of that year. The company taxable income is reduced to zero, but it must pay a 7.6% payroll tax on that amount and must withhold payroll tax from the salary. All together, the tax bill will be a little more than $13,000. If that same owner takes a $100,000 dividend distribution instead of a paycheck, then the company and the owner avoid the $13,000 in employment taxes. The owner still will report the same total income of $100,000 on his personal income tax return, but the overall tax impact will inevitably be reduced. It’s an extreme example, and any owner who takes payment from the company in this fashion would invite the wrath of the IRS. Active, hands-on business owners must take a reasonable measure of their compensation as employment income. But how much is reasonable? The IRS has provided scant direct guidance on that point, but case law is starting to provide more guidelines for owners to follow.
First, the IRS will look at whether the owner is a significant employee who actively works for the company, or an absentee shareholder. Compensation is paid to people who work while dividends are paid based on an investment or an ownership interest, so an active employee logically should draw a paycheck commensurate with his or her contribution to the business. The IRS also might look at the nature of the business. In a serviceoriented company, value is generated almost entirely by the work of its employees. In a more product-driven business, more of the value is driven by capital and assets, so a lower salary might be more justified. Examiners will look at how the owner’s compensation compares with similar professionals in other companies, and with other employees inside the same company. It also will look at historical salary and revenue data looking for logical trends in increases or decreases. Finally, the IRS might even do some ratio analysis, studying the owner’s pay as a percentage of sales or profits, or the relationship between compensation and dividend payments. While business owners might enjoy the flexibility that comes with writing their own paychecks, they need to be mindful of the various tax implications to avoid inviting unwelcome scrutiny. ■ Mr. DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.
Resale: Even wealthy shoppers give it a try continued from PAGE 17
ire additional staff
SEPTEMBER 12 - 18, 2011
expect that to change. “The economic condition of things right now has definitely changed people’s focus on what they have to have and what’s important,” she said. “I really don’t think, even if the economy turns around, that a majority of people are going to go back to their old ways.” People who’ve discovered, for example, that they can sell their clothing through a consignment shop like ReRun aren’t going to revert to donating it to Goodwill just because the economy improves, she said. Ms. Schordock believes the growth in sales and of resale shops — which is evident in the number that have popped up locally — also is driven by the increased number of television shows that promote resale shopping, and the continued push for recycling. The stigma of resale shopping appears to have faded, too, store owners say, but that began to occur long before the recession struck. In fact, one of the best forms of advertising for resale stores today is word of mouth, Ms. Meyer of NARTS noted. “Years ago, it wasn’t that way because people didn’t want to brag that they bought something at a resale shop,” she said. “Nowadays, people are proud to save
money, people are proud of their bargains and people are very, very tuned into recycling and the environment.” The recession, meanwhile, drew in a demographic that didn’t previously shop resale, Ms. Goss said. “(Shopper) income levels are much higher than they once were,” she said. “With that come higher expectations of customer service. Resale stores have become so boutique-like.” Consider, for example, that ReRun Consignment carries some expensive labels, including Coach and Louis Vuitton, and offers coupons and promotions to compete with the retail world.
Taking it mainstream Though a seeming majority of resale shops are enjoying growth, there have been casualties. For example, Patricia Lucas shuttered her Lakewood store, Haute Stuff, in June, a little more than a year after she opened because sales had fallen for months and were so depressed she wasn’t breaking even. In retrospect, she believes her choice to open near several established resale shops was unwise. However, many of NARTS’ approximately 1,200 member stores are expanding, remodeling and adding new locations, Ms. Meyer said.
The Big Red Wagon is a Columbus venture that collects consigned items and hosts biannual sales of maternity, teenager and baby items. The company, which opened in 2008, began selling franchises about a year ago and already is on its fifth, said Susan Nimon, coowner. All are in Northeast Ohio. Ms. Goss of ReRun also hopes to grow, perhaps with a second location, though she doesn’t have a timeframe for when. Many expect the upward trend in resale to continue. “I do not see this industry going backward in any way because it has such a good foothold,” Ms. Meyer said. “It’s already increased so much. It’s become so much more mainstream.” Though her shop has enjoyed increased sales overall this year, Ms. Schordock of The Red Geranium noted this summer’s been slow. Sales in August ended “a little below” last August — disappointing since the prior months were better than last year. She blames the heat, for one, and the cost of gas. But she and other store owners remain optimistic. With school in session and the holidays approaching, she expects this fourth quarter to exceed fourth quarter 2010. “It’s going to keep going as more and more people realize that it’s OK to do this — it’s OK to walk into a resale shop,” Ms. Schordock said. ■
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SMALL BUSINESS
Developing a brand-new brand might not be necessary Companies must consider the benefits, potential pitfalls involved when launching new identity
C
ompanies are innovating more than ever. However, introducing a new product doesn’t necessarily mean you need to create a new name, new logo, new website and new brochures. In many instances, it’s better for the company and its customers if an existing product name is used versus generating a new one. In some circumstances, a new name does make sense, and following a structured process will surprisingly be faster and result in a better name. Here’s an approach to help you navigate through this issue. ■ Is your innovation a new product or is it a new brand? Is it added functionality, an enhanced version of an existing product, or an entirely different offering? Are the customers new and different? If the product and target market are at all similar to your current set, then you likely can avoid developing a new brand name. ■ A new brand is expensive. Sure, it’s exciting to develop a new brand. But that excitement is dwarfed by the cost and complexity associated with creating one. A specialized ad agency should be retained to help with a logo, look and style (called brand identity). Then, the brand identity needs to be applied to business cards, email templates, website, print ads and whatever else is part of the brand launch and ongoing marketing program. However, the most significant costs are those associated with building awareness of the new brand. How are people going to learn about it? Online ads? TV? Radio? Newspaper or magazine? ■ A structured process trumps brainstorming. OK, so your new product is really different and is for a different audience. And, you have the budget to support creating and promoting the new brand. Avoid the temptation to have your staff brainstorm around the conference room table. Instead, agree on criteria that create boundaries and limits, such as easy to say, not sounding like a competitor and being original. Then, list the emotional and rational benefits of the new product and their synonyms. Playing with combinations of those words, words in other languages and invented words that convey those benefits will help you create a list of names. As you winnow the list, refer to the benefits and criteria to stay focused on your original guidelines. ■ Test your finalists. Put your short list through a filter. What do you want customers to think of when they hear the name? How does the name relate to your company’s other products? Is it memorable? When you search the name online, are other companies using ones that are similar? Is it easy to say, read and spell? Is it fresh and original? Does it evoke the emotions that you want customers to connect to your brand? ■ A new brand needs a domain
name and trademark. Easy to obtain 10 years ago, today it’s challenging to select a name with an available domain name. Unfortunately, it’s an important part of the brand creation process. Check GoDaddy.com or Register .com to see if the domain name is available. In addition to the domain name, the brand needs to be trademarked.
LAURASHERIDAN
ADVISER It’s key to protecting the goodwill and value of your brand. You can conduct a free, cursory check on www.trademarkia.com or
the government’s site, www.uspot .gov/trademarks/index.usp, to determine if the trademark is available. This basic research does not replace the need to have your attorney complete a thorough investigation of the trademark. ■ Just say ‘no,’ if you can. For those innovations that complement your existing product line, save money and time by developing a product name only. Consider how the names of the current products relate to one another, and generate another one in the same “family.” There’s no need to develop a
new logo, brand identity system or website. Leverage what your customers know and love about your existing products to announce your newest offering. If the answer is a new brand, follow the structured process outlined above. Resist the temptation to shortcut the effort by using a random name without a solid foundation. ■ Ms. Sheridan is president of Viva La Brand, the Clevelandbased marketing strategy and ad agency search firm.
A LOAN WITH
A CITIZENS BANK LOAN LETS YOU FOCUS ON THE FUTURE ... because the businesses that will succeed tomorrow are the ones that make the right choices today. They are led by individuals who see opportunity for growth and expansion, and take action with complete confidence. A loan from Citizens Bank will keep you moving forward and never wondering, “What could have been?” Get the loan you deserve now. To make an appointment with a Citizens Banker, call 800-946-2264 or visit CITIZENSBANKING.COM/BUSINESS.
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Farms: New owners seize recent gains made in agritourism continued from PAGE 17
According to the 2007 U.S. Census of Agriculture, the most recent figures available, 23,350 farms throughout the nation indicated they offered agritourism and recreation opportunities, generating $566 million. During that same year, 418 Ohio farms collected nearly $5 million in agritourismrelated income. “There’s only so much leverage we can have between the apple house, bakery and restaurant,” said Mr. Clement, noting that earlier this year the eatery underwent a $1 million facelift. It reopened as The Melrose Grille, with a menu that highlights many farm-to-table menu items and locally grown ingredients. The Clements also built a stage behind the restaurant, overlooking the orchard, and each Friday this summer featured a different concert as a way to entertain families and ensure a steady flow of traffic to the farm. “We want to pull people into the farm and get them in the orchards, the fields and the pumpkin
patch,” Mr. Clement said. “There’s only so much revenue the traditional business can produce, but turning the business into an adventure farm” and creating themed events provides a growth avenue, too. This fall, the new owners are creating what Mr. Clement calls Ohio’s largest corn maze to encourage children and their adult counterparts to navigate through 32 acres. They also are building a 250-foot slide into the orchard and are constructing a giant tree house nestled in the woods. “I think the largest ones now are 10,000 square feet in Minnesota and England,” Mr. Clement said of the tree house. “Ours will be bigger than that.” The Clements say the orchard’s 4,000 apple trees additionally could provide an idyllic setting for a festival of lights or perhaps a Polar Express-type concept during winter. Amir Eylon, tourism director for the Ohio Tourism Division, said agritourism is not a new phenomenon, but it has been gaining traction over the last 12 to 15 years.
“People are seeking authentic experiences. ... It’s about the local connections.” – Amir Eylon tourism director, Ohio Tourism Division “As independent farmers have dealt with the challenges of running their farms, agritourism has helped generate year-round revenue,” he said. Mr. Eylon said the number of agritourism events, such as pick your own apples, farmers markets and corn maze adventures, has been increasing among Ohio farms. He cites the growing event calendar list on the state’s website DiscoverOhio.com as evidence of this resurgence in agritourism. “People are seeking authentic experiences,” he said. “People not only want that fresh-baked apple pie, but they want to see where the apples came from. It’s about the local connections.”
Hoping they bite Farm manager Bill Eyssen said he and his family, which still help operate the business, are “very satisfied” with the outcome so far and the direction Mapleside is headed. “We were probably frontrunners of agritourism 20 years ago, but Greg’s insight is to expand that even more and make Mapleside bigger and better,” Mr. Eyssen said. Mr. Clement said both June and July sales were about 90% over the like periods one year earlier. He’s also projecting sales in the new operation’s first full year of business in 2012 will be about $5 million. The Clements are not new to the entrepreneurial world. They also are co-founders of Parma Heights-based Realeflow, which specializes in business management, marketing tools and software for entrepreneurs and investors in the real estate industry. That company, started in 2007, made Inc. magazine’s 2011 list of the 500 fastest-growing companies
in the United States, with sales over a three-year period growing 823%, to $6 million in 2010 from $646,000 in 2007. The pair this summer also began another venture, Agritourism Coach, which consults farmers on ways to grow new revenue streams. They are using Mapleside as a blueprint. The Clements are generating the buzz about both Mapleside and Agritourism Coach through the latter’s Facebook page, which currently has more than 2,500 friends who have the opportunity to view videos, read blogs, podcasts and other posts about the business. The Clements, meanwhile, plan to conduct this winter a three- to four-day “boot camp” on agritourism, which likely will take place in Orlando or Las Vegas. “There are about 2 million farmers in the U.S., and we estimate 1.5 million of those will need help,” Mr. Clement said. “The average farmer only makes $12,000 a year. “We’re completely stoked about the future of this place and the future of other farms,” he said. ■
GRANDOPENINGS
JB Dunn, Jack Madda and Joe Paster, the men behind new clothing store J3 Clothing Company. PHOTO PROVIDED
J3 CLOTHING COMPANY Moreland Towne Centre 34105 Chagrin Blvd. Moreland Hills 44022 www.j3clothingcompany.com With a collective 65 years of experience, Jack Madda, JB Dunn and Joe Paster bring to Northeast Ohio a new men’s store that offers personal service, unique style and inventive technology. J3 Clothing Company aims to be more than a place to shop; as such, it also features a lounge area where clients and customers may relax or watch a game. Phone 216-285-0555 Fax 216-285-0550 jack@j3clothingcompany.com jb@j3clothingcompany.com joe@j3clothingcompany.com
THE BEHAVIOR CLINIC 9680 Columbia Road Olmsted Falls 44138 www.thebehaviorclinic.com Owner Dr. Elizabeth Feltes is focused solely on pet behavior issues, practicing the most positive, least intrusive and most effective means possible. Dr. Feltes conducts public seminars throughout the state, offers continuing education for veterinarians and technicians and consults on behavioral problem in companion pets. The Behavior Clinic also offers specialty classes, training evaluations, toys, muzzles and a library pertaining to dog and cat behavior. Hours are 8:30
a.m. to 6 p.m. Monday, Wednesday, Thursday and Friday; and 9 a.m. to 1 p.m. Saturday. Phone 440-334-8534 Fax 440-235-8534 info@thebehaviorclinic.com
KEVIN BUSTA INDUSTRIAL FURNISHINGS 2673 W. 14th St. Cleveland 44113 www.kevinbusta.com Cleveland-based industrial-style artist Kevin Busta has opened a store in Tremont. Mr. Busta, who has received national recognition for his industrialstyle furnishings and artwork since he began his operation in November 2008, earlier this year partnered with one of his collectors, Michael Carreras. The two since then have been focused on expanding Mr. Busta’s efforts beyond being a made-to-order venture. Store hours are 11 a.m. to 6 p.m. Tuesday through Saturday; noon to 5 p.m. Sunday; and closed Monday. 216-206-6022 info@kevinbusta.com To submit a new business, send the following by email to Amy Ann Stoessel at astoessel@crain.com: business name; address; city and ZIP; website; brief description of business; business phone number; business fax number; business email address; and date that business opened.
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Mooney: Melding of corporate, Signs: Big firms brainstorm community banks a priority continued from PAGE 3
continued from PAGE 1
week with Crain’s. “I think we are well positioned for the current environment.” For one, she said, Key has enjoyed five consecutive quarters of profitability. Plus, its problem assets continue to decline, as seen in a 50% drop in its nonperforming loans to $842 million as of June 30 from $1.7 billion the year before. The goal as Key moves into next year is to stabilize its balance sheet and begin growing, Ms. Mooney said. She anticipates that growth will come not through consumers — who continue to deleverage themselves — but through small business, middle-market and corporate lending. The anticipation that business lending will be a main source of growth fuels Key’s focus on aligning the efforts of its two banks to net more business customers, Ms. Mooney said. The plan, which the company began implementing in 2009, is to intersect the community bank, which is Key’s bank branch presence, with its corporate bank, which provides business customers with Wall Street capabilities, such as investment banking services. The intersection of the two was a strategy Ms. Mooney drove herself, and one she believes helped land her the CEO seat. Community bankers in Key’s local markets know their communities better than anyone, and Key aims to marry their connections with the expertise and products of the corporate bank.
Here’s the plan The corporate and community bank leadership has written and prioritized a list of thousands of companies in Key’s markets to call upon, Ms. Mooney said. That programmatic approach differs from the haphazard way in which the banks used to connect. “You are creating opportunities for both sides of the bank that you wouldn’t have had before if they weren’t calling together and showing up as one team,” she said. Key also continues to invest for growth through its branches, which
it believes consumer and small business customers want. In Northeast Ohio alone, the bank has added 14 branches in the past four years. Five more are slated by the end of 2011. The bank also is investing in branches in Seattle, Portland, Ore., and Colorado, Ms. Mooney said. Key plans to maintain its current branch network, which spans 14 states from Alaska to Maine, Ms. Mooney said. The bank, she noted, may deploy capital to make fill-in acquisitions in those markets. Key in recent years has divested certain businesses, including marine and recreational vehicle lending and student lending, as it worked to redefine its business mix. The company’s portfolio of markets and businesses, Ms. Mooney said, is what it believes to be the right one for profitability. “I feel like that hard work is behind us,” Ms. Mooney said.
Time to ‘hunker down’ For Fred Cummings, whose Beachwood hedge fund, Elizabeth Park Capital Management, is an investor in KeyCorp, the focus is on Key’s profitability. He characterizes the bank’s profitability as below average, though he acknowledged it has improved. The company reported $234 million in net income attributable to common shareholders in the second quarter, compared to a profit of $29 million in the like period a year ago. Mr. Cummings questions how the bank will grow its net interest income, which has declined, as it shrinks its balance sheet and as loan growth remains sluggish. Mr. Cummings also observed that the company’s expenses are higher than its peers. “That’s a bad combination, when you have a lower margin and you aren’t as efficient as your peers,” he said. Ms. Mooney said she believes Key has outperformed analysts’ expectations in recent quarters. Its credit profile has improved rapidly, she said, and it repaid earlier this year the $2.5 billion in Troubled
“We believe we are undervalued. At this current price, we believe that even more so.” – Beth Mooney, chairwoman and CEO, KeyCorp Asset Relief Program (TARP) funds it received from the U.S. Treasury. Key remains disciplined about its expenses, Ms. Mooney said. “I like our capabilities, and I think we’ve just got to hunker down and grow,” she said. Though he believes Key could be performing better, Mr. Cummings acknowledged that Key’s credit quality has improved, as have its capital ratios. “One could say that they have excess capital,” he said.
Itching to buy its shares That capital is a “checkbook” that can be deployed opportunistically for growth, Ms. Mooney said. While its primary goal this year was to repay TARP, Key likely will ask for the green light to repurchase stock next year, Ms. Mooney said. Banks must have regulatory approval to buy back stock. “We believe we are undervalued,” she said. “At this current price, we believe that even more so.” When her first year as CEO concludes, Ms. Mooney wants Key to have had continued profitability and wants its stock to have performed well relative to its peer group. “With a little help from this economy, I look forward to telling the story that we have stayed the course on our strategy and that we can point to how we’re winning with our clients, that we are indeed building relationships,” Ms. Mooney said. It’s only fair to give a new bank CEO a year before assessing what’s been accomplished, particularly one leading a bank the size of Key, Mr. Cummings said. “These are big companies,” he said. “They don’t turn over night, so you’ve got to give her some time.” ■
Expo: Larger competitor proved too much continued from PAGE 3
Center and, earlier, at Public Auditorium in downtown Cleveland. The sport and outdoor show, formerly the Sportsman’s Show, began its run in 1927. What was the Greater Cleveland Home & Flower Show began in 1942.
Unrealized vision Mr. Fassnacht envisioned the Euclid expo center as the home for the two shows promoted by his Expositions Inc. and for a variety of consumer shows operated by other show producers, who bring events such as bridal fairs, baby fairs and custom car shows to exhibition halls nationwide. For instance, International Gem & Jewelry Show Inc. puts on shows in 90 cities annually. It opened shop at the Great Lakes Expo Center for
three days in May. At the time he moved his shows out of the I-X Center, Mr. Fassnacht was optimistic. “By 2011, we anticipate hosting at least 125 events a year,” Mr. Fassnacht said in a news release in September 2009, when he announced the planned move to Euclid. It appeared to get off to a good start. In March 2010, he told Crain’s that the 10-day home and garden show held that January drew 62,500 people, more than 13% above his projected attendance. However, the cornucopia of events at the expo center did not materialize. “We anticipated getting a lot of the small, 50,000-square-foot shows — woodworking shows, trains shows, gem and jewelry shows, things like that,” Mr. Fassnacht said. “But a lot
of people want to wait and see how a facility does” before bringing in a show. “The bottom line is if you have a full fourth quarter and first quarter (late fall to early spring), you can make it, but if you don’t, chances (of succeeding) are unlikely,” Mr. Fassnacht said. He said the expo center had about 16 shows in the five months it was open in 2011.
Competition from the west The Great Lakes Expo Center also was hurt by competition with the I-X Center, which brought in a show promoter, Marketplace Events of Solon, to run home and garden and outdoor shows at the mammoth exhibit hall in Brook Park. Tom Baugh, CEO of Marketplace Events, said the I-X Center is among
Northeast Ohio Regional Energy Alliance. The alliance’s goal will be to convince area residents to make their homes more energy efficient — by adding insulation, replacing old furnaces, and so on — while also designing a process that makes it easier to do so. Before the end of the year, the Cleveland Housing Network, which already helps the city’s low-income residents make their homes more energy efficient, plans to begin conducting subsidized energy audits on 100 homes owned by residents of various income levels. Then those residents will receive help figuring out which upgrades they should implement and how to apply for rebates. That assistance is important, said Paul Ettorre, co-chair of the green building committee. Many residents who get audits today don’t go forward with improvements, he said. Early next year, the alliance aims to conduct 100 more audits, this time without a subsidy, in one of Cleveland’s inner-ring suburbs. That pilot also would test the alliance’s ability to market the audits and drum up interest in energy efficiency, which is the main focus of this year’s summit.
this thing can get to scale,” he said. Other initiatives include Drink Local, Drink Tap, a nonprofit created by the clean water working group. The nonprofit is campaigning to get people to replace bottled water with tap, has organized beach cleanups at Edgewater Park and is raising money to bring clean drinking water to a school in Uganda. Drink Local, Drink Tap last week announced it had raised $10,000 from the George Gund Foundation, which will go toward the $50,000 it needs to drill a well near the African school and create a documentary about the effort, said Erin Huber, director of the nonprofit. “Everything has moved very, very quickly,” she said.
Jumping through hoops
One of the alliance’s long-term goals is to make it easier to finance energyefficiency improvements, said Mr. Ettorre, Great Lakes regional manager for Key Bank Community Development Lending, which provides financing for economic development and community revitalization in markets served by the Cleveland bank. For one, the alliance is thinking about tapping into a revolving loan fund that the state of Pennsylvania created to finance energy-efficiency improvements, he said. A similar organization called the Cincinnati Energy Alliance has made a “soft commitment” to do the same thing, he added. The final goal would be to create a system where homeowners borrowing money to make energyefficiency upgrades could pay off their entire monthly bill with the amount they saved on energy costs that month, Mr. Ettorre said. “If you can get to that magic balance,
The local food group not only created Growhio, a nonprofit formed to generate demand for local food, but three men who met through the group also founded Tunnel Vision Hoops LLC. The company, which works out of the LaunchHouse business incubator in Shaker Heights, creates portable greenhouses that farmers can use to grow food in temperatures that otherwise would be too cold. The company has built about 15 “hoop houses” since June 2010, when Todd Alexander, Michael Walton and Carlton Jackson founded the business. Tunnel Vision Hoops never would have started, however, if the three men had not met at the first Sustainable Cleveland 2019 summit. The event has proven to be a great forum for people interested in sustainability to meet and come up with ideas, said Mr. Alexander, who also helped start Growhio. “In my mind the summit has done what it set out to do so far,” he said. In addition to projects led by working groups, a few dozen of the biggest companies in Northeast Ohio since the first summit have been gathering for all-day meetings twice a year to talk about their sustainability initiatives. The meetings give them an opportunity to share best practices, said Mr. Watterson, Cleveland’s chief of sustainability. They’re even helping develop metrics the city could use to track the sustainability of the region’s corporate community as a whole, Mr. Watterson said. ■
the most attractive venues in which his company operates. “It was a difficult headwind (Mr. Fassnacht) was trying to make an adjustment in,” he said. “It would be extremely difficult for anyone in Cleveland outside of the I-X Center to have a property that could grow and be strong. The I-X’s presence in this market is huge.” Marketplace Events created the Great Big Home & Garden Expo for the I-X Center and stages 20 other home and garden shows around the country annually. The competition for consumers and exhibitors only was likely to intensify for the expo center, as the I-X Center announced in July that it planed to make a $25 million to $30 million investment over the next several years to spruce up the former tank plant, now in its 25th year as a convention center, and to create new shows. “It’s a very interesting industry right now,” said Les Gray, vice
president of Southeast Productions Inc. of Greensboro, S.C., and president of the National Association of Consumer Shows, a Portland, Ore., trade group for show producers. “The trickle-down effect of several independent show promoters either pulling back the footprint of the shows they manage or pulling out completely due to the lack of participation of exhibitors has had a huge effect on venues,” he said. Mr. Gray said the show business is hurt whenever consumer products companies trim marketing budgets and either cut back on the number of shows they participate in or on the size of the booths they lease. Mr. Fassnacht will maintain Exposition Inc.’s office in Cleveland, though it will be producing shows elsewhere. The company has operated shows in Pittsburgh for 27 years. “Expositions Inc. is still a viable company,” he said. “I ran the expo center, but they were two separate companies.” ■
Inspiration in Pa.
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LARGEST INDUSTRIAL PARKS RANKED BY TOTAL ACRES(1)
Industrial Park Address Rank Web site
Total acres
Number of acres occupied
Number of businesses in park
1,693
1,237
77
U.S. Route 42, Avery Dennison, Momentive Performance Materials, Route 82, Eberhard Manufacturing, C.Trac, Clark-Reliance Corp. state I-71, I-80
City of Strongsville (440) 580-3118
Medina Blanking, Ohio Welded Blank, Three D Metals, Fuserashi, MTD Products, Shiloh Industries
I-71
MTD Products
Businesses located in park
Property manager Phone number
Freeway access
1
Strongsville Business and Technology Park Foltz Parkway, Strongsville 44149 www.strongsville.org/content/strongsville_business_park.asp
2
Liverpool Industrial Park Innovation Drive, Valley City 44280
900
400
8
3
Twinsburg Industrial Park Highland Road/Enterprise Drive/Case Parkway/Pinnacle Parkway/ Edison Blvd., Twinsburg 44087
571
530
120
Verizon, United Stationers, Pepsi America, Weatherchem, Rockwell Automation, Experient Inc.
I-271, I-480
NA
4
Akcan Industrial Park Mt. Pleasant Road and Mayfair Road, Green 44720 www.dehoffdevelopment.com
400
250
41
Diebold Corp., Belden & Blake, Cintas, Lexington Technologies, The Ohio Lottery, Inventors Hall of Fame, Best Supply, Aramark, Massillon Plaque
I-77
DeHoff Development Co. Daniel J. DeHoff (330) 499-8153
4
Interstate Commerce Center Mondial Parkway, Streetsboro 44241 www.geisco.net
400
144
20
Best Buy, Playtex, Chrysler, Hammer Co., Pods, Millard, Aurora Plastics, Schwan's, Classic Honda, Classic Nissan, Classic GMC, Flexalloy
I-80, I-480
Geis Property Management Joe Perrow (330) 528-3500
6
NEOCOM I Navarre Road, Massillon 44646 www.massillondevelopment.com
380
70
7
Ziegler Tire, Case Farms, Kraft Power, E-Tank, Kendal U.S 30, I-77 Welding, PolyOne, Shearer's Foods
Miller Land Inc./Massillon Development Foundation (330) 833-3146
7
CAK International Business Park Massillon Road (SR 241) and International Parkway, Green 44720
359
120
7
ASC Industries, Sam's Club/ASW, Akron Logistics, Diebold Inc., General Electric, SilMix of Ohio/Wacker Chemical Corp., J & K Subway/Prout
City of Green Planning Department (330) 896-6614
8
Progress Drive Business Park Pearl Road and Westwood Drive, Strongsville 44149 www.strongsville.org/content/progress_drive.asp
325
312
48
Route 42, DeMag Plastics Group, PPG Industries, Atlantic Tool & U.S. state Route 82, Die, Archway Marketing, Empco I-71, I-80
City of Strongsville (440) 580-3118
9
Emerald Valley Business Park Cochran Road and Pettibone Road, Glenwillow 44139
285
115
9
Home Depot, Stride Tool, Best Buy, Kauffman Tire, Ris Paper, Owens & Minor, Saeco USA
First Industrial Realty Trust Inc. Kelli Nicoloff (513) 860-0480
10
Midway Industrial Park Dutton Drive and Midway Drive, Twinsburg 44087
269
230
32
K & M International, Production Tool, Glass Equipment Development, CEIA USA, WebMD, Polystar, Decco I-480, I-271 Alloys, Towner Filtration
NA
11
Dow Circle Research Park Sprague Road, Strongsville 44136 www.strongsville.org/content/dow_circle.asp
258
249
33
U.S. Route 42, Akzo Nobel, Cintas, PNC Bank Technology Center, Route 82, Enterprise Holdings, Acuative, Honeywell International state I-71, I-80
City of Strongsville (440) 580-3118
12
Ascot Industrial Park State Road, Akron 44223 www.ci.akron.oh.us/ed/development/indparks/ascot_park.htm
220
167
20
Pneumatic Scale, Coltene/Whaledent, SpunFab Adhesive Fabrics, Coretec, Linden Industries, Main Street Gourmet, Spectrum Plastics, Becker Pumps
State Route 8, I-76, I-77
City of Akron Rita Weinberg, Brent Hendren (330) 375-2133
13
Diamond Business Center Pettibone Road, Glenwillow 44142 www.geisco.net
200
53
3
Superior Beverage, Mat Holdings, Winston Products
I-480, state Route 422
Geis Property Management Joe Perrow (330) 528-3500
13
Frost Road Commerce Center Philipp Parkway and Frost Road, Streetsboro 44241 www.geisco.net
200
175
22
L'Oreal, Venture Lighting, Wine Trends, Andrews Moving, A. Duie Pyle, Seegott, Soft-Lite Windows
I-80, I-480
Geis Property Management Joe Perrow (330) 528-3500
15
Riverbend Commerce Park Colorado Ave., Lorain 44052 www.cityoflorain.org/community/economic_development.shtml
199
20
3
Camaco Lorain Manufacturing, U.S. Post Office Distribution Center, Horizon Daycare Center
Real Estate State Routes 57, Cresco V. Barna, George J. Pofok 611 and 254, I-90 Joseph (216) 520-1200
16
French Creek Business Park East River Road, Sheffield Village 44054 www.barnacaplan.com/ourproperties/detail.asp?id=137
187
12
1
ZF Trading Co.
I-80, I-90, state Routes 301 and 254
Comprehensive Development Solutions, Cresco Real Estate, Dillin Corp.; George J. Pofok
17
Geauga Industrial Park Industrial Parkway, Middlefield 44062
180
90
12
KraftMaid Cabinetry Inc., Mercury Plastics, Polychem Dispersions, Johnsonite, Sajar Plastics, Normandy Products, Penske
I-90, state Route 422
The Federal Improvement Co. David Ford
17
Sidley Industrial Park I-90 & state Route 45, Austinburg 44010 www.ashtabulagrowth.com/industrialpark.asp
180
30
1
Save A Lot
Interstate 90
Lu Dunlap (440) 352-9343
17
York Alpha Park York Alpha Drive, North Royalton 44133 www.northroyalton.org
180
120
108
Laszeray, Induction Tooling, Royal Wire, H & D Steel Services, May Industries, Valley Tool and Die
I-71, I-77, state Route 82
City of North Royalton Thomas John Jordan (440) 237-5484
20
Sweet Valley Business Park 9880 Sweet Valley Drive, Valley View 44125
160
132
75
XPedex, Dawn Enterprises, IBEW, ImaginIt, Pakrite, Sherwin-Williams
I-480, I-77
Cresco Simon Caplan (216) 525-1472
21
Heritage Business Park 23555 Euclid Ave., Euclid 44117
157
41
9
Eaton, Keene Building Products, TECT, Cuyahoga Community College, COAD, North American Plastics, Pollak Foods, Babcock & Wilcox, JW Belt
I-90
Ohio Realty Advisors (330) 659-4060
22
Brunswick North Industrial Park 945 Industrial Parkway North, Brunswick 44212
150
120
75
Fogg multi-tenant, Inflatable Images, Destiny Manufacturing, All Construction Services, Philpott Rubber, W. W. Williams
I-71
All Construction Services David James LeHotan
22
Cleveland Business Park 17909-18601 Cleveland Parkway, Cleveland 44135 www.chelmproperties.com
150
82
8
NA
I-480, I-71
Chelm Properties Inc. (440) 349-4300
22
Midway Industrial Park Schaden Rd,/Keep Ct./Freedom Ct./Liberty Ct., Elyria 44035
150
123
26
Sunbelt, AIT, CHP Cancer Center, Symrise, APR, Cleveland Plastic, Carpenter Steel, Marathon Steel
I-90, state Route 57
Logos Realty Co. (440) 324-3550
22
Quantum Centre Greenwich Road, Wadsworth 44281 www.naicummins.com
150
150
13
Parker Hannifin Corp., E. C. Morris Corp., Ebner Furnaces Inc., Soprema Inc., Accel Group Inc.
I-76
NAI Cummins Real Estate (330) 535-2661
22
Quarry Lakes Business Park Quarry Lakes Drive, Sandusky 45840
150
42
6
Encore Industries Inc., Northern Ohio Educational Computer Associates, SCC Resources Inc., North Coast Cancer Care, Praxair Inc.
State Routes 2 and 101
Cresco Real Estate George J. Pofok, Joseph V. Barna (216) 525-1469
27
Columbia Road Industrial Subdivision Columbia Road, Richfield Township 44286
147
31
4
Marathon Oil, FedEx, Bath Development Corp., 3230 Columbia Road LLC
I-77, I-271, I-80
NA
28
Taylor Woods Industrial Park Taylor Parkway, North Ridgeville 44039
143
80
13
Invacare, Norlake, Wolff Brothers, Tool & Die State Route 57 Systems, Poppeeâ&#x20AC;&#x2122;s Popcorn, Cuyahoga Vending, Frito from I-480, State Lay, Rhenium Alloys Route 10
Logos Realty Co. Bob Graham 440-324-3550
29
Mills Business Park Faircrest & Sherman Church, Canton 44721 www.dehoffdevelopment.com
141
20
2
Medline Industries Inc., Old Dominion Freight Line
I-77
DeHoff Development Co. Daniel James DeHoff (330) 499-8153
30
Akron Canton Corporate Park 1525 Corporate Woods Parkway, Green 44685 www.camincorp.com
140
100
76
Hankook Tire, Goodrich De-Icing, Paychex, Prudential Financial, Bonnot, InfoCision Management
I-77, state Route 241
CAM Inc. Mike J. Mockbee (330) 896-3253
30
Stonegate Corporate Park Highlander Parkway, Richfield Village 44286 www.camincorp.com
140
65
14
Bureau of Criminal Identification, Cisco Systems Inc., Corporate Express, OEConnection
I-71, I-271
CAM Inc. Mike J. Mockbee (330) 896-3253
I-77, state Route 241
I-271, I-480
Source: Information is supplied by the companies unless footnoted. 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) Information as of July 31, 2011.
RESEARCHED BY Deborah W. Hillyer
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Bedford company’s intriguing foam draws attention By DAN SHINGLER dshingler@crain.com
A small company in Bedford has a product that amazes most observers, but it’s still looking for its primary market and application. The product, Aeroclay, is a sort of foam made by a 2010 startup of the same name and run by entrepreneur Lauren Wolfe. Made from clay, water, some proprietary additives and a freezedrying process, Aeroclay can be made hard or soft, stiff or flexible. It can be engineered to soak up water like a sponge, or to be hydrophobic and absorb no water at all. The question is, what to do with it?
“It took us a good year to analyze the technology and figure out where to start,” said Ms. Wolfe, who now has a few markets targeted for her magic foam. The attribute that has gained the most attention so far is Aeroclay’s ability to soak up oil while not soaking up water — something that has brought both the Discovery Channel and National Geographic out to Bedford to check it out, Ms. Wolfe said. In a real-time, five-minute video the company prepared, an aquarium is filled with water and black oil is poured on top. Then, some crumbled Aeroclay is thrown on top of the oil. By the end of the video, all the oil has been soaked up, leaving
only clean water behind when Aeroclay is fished out. “And you can just wring it out and use it all over again to do the same thing,” Ms. Wolfe said. That characteristic could be a godsend to companies dealing with oil spills, and Aeroclay hopes to license it to one or more big oil companies for that purpose. In the meantime, it’s pursuing other options. Aeroclay also makes good packaging material and does not contain the carcinogens found in other foams, Ms. Wolfe said, which has garnered interest from some big shipping companies that could be customers. The drawback, if there is one, is
that Aeroclay requires freeze-drying, which often is thought of as a difficult and expensive process. But at least one international company that makes freeze-drying equipment, New Zealand-based Cuddon Ltd., is familiar with Aeroclay and doesn’t think scaling up the freezedrying process is a problem. Cuddon CEO Andy Rowe said not only can modern freeze-drying technologies handle the volumes Aeroclay might need, but he’s also convinced his company or one like it will be called upon to help produce it. “I think the likelihood of someone taking on some of the potential commercial products from Aeroclay is very good, especially with
the sustainable nature of the product’s base ingredients. It is really a question of which product and when as opposed to any question on if it will go to commercialization,” Mr. Rowe told Crain’s in an email exchange. But the first commercial sale of Aeroclay might be for something far less glamorous than cleaning up oil spills. It turns out Aeroclay also makes darn good cat litter, according to Ms. Wolfe. If that’s its first use, that’s fine by Ms. Wolfe, because she’s confident Aeroclay will find substantial uses. “Companies are finding us,” she said, “and so far, we’ve done no marketing.” ■
Industrial parks list stays steady There’s one not-very-exciting word — “stable” — that defines Northeast Ohio’s market for industrial parks. But in this fragile economy, stable really isn’t so bad. The top seven entries on Crain’s new list of Northeast Ohio’s Largest Industrial Parks, ranked by total acres, are exactly the same as they were in the 2010 list: the same seven properties, same total acreage, same number of acres occupied and same number of businesses in the parks. They’re also in precisely the same order. Nos. 8 and 10 on this year’s list — Progress Drive Business Park in Strongsville and Midway Industrial Park in Twinsburg — ranked No. 9 and 10 in 2010, also with the same vital statistics. That means the only change in the top 10 is this year’s addition of Emerald Valley Business Park in Glenwillow. The 285-acre park has nine businesses in the 115 acres that are occupied. The similarities in 2011 and 2010 extend beyond just the top of the list. Of the 58 industrial parks on the 2011 extended list, 49 appeared on the 2010 list with the same figures for total acres, occupied acres and number of businesses. There are eight parks new to the extended list this year. If you’re doing the math — and at this point, how could you not be doing the math? — you know that means there was one industrial park on this year’s list that was on the 2010 list and has some different numbers to report. That property is the 157-acre Heritage Business Park in Euclid, which now has nine businesses, up from six in 2010. Here are other highlights from the list: ■ Four properties report they are fully occupied: the 150-acre Quantum Centre in Wadsworth, the 102-acre Valley Business Park in Westlake, the 98-acre Park 82 in Strongsville and the 68-acre Points East Industrial Park in Twinsburg. ■ The industrial park capital of Northeast Ohio is … Green. The Summit County community has five properties on the extended list. It beat out strong challenges from Cleveland and Strongsville, with four each. — Scott Suttell
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Retirement plans show little movement despite recent volatility By DARLA MERCADO Investment News
Advisers: Experience with fluctuations plays role
Even though the stock market’s roller coaster ride has taken some screaming drops in recent weeks, retirement plan participants appear to have chosen to keep their hands and feet inside the cars, according to major plan administrators and record keepers. At J.P. Morgan Retirement Plan Services, which administers $121 billion in retirement assets, plan participants on Aug. 8 and 9 transferred just $833 million, which is less than 0.7% of the asset base. Principal Financial Group said 6,406 of the 2.4 million participants in plans that it administers made transfers on Aug. 8, more than three times the 2,000 participants who make a transaction on a typical day. Still, just 0.25% of plan participants took action on the day the Dow Jones Industrial Average lost 5.5%. Wells Fargo Institutional Retirement and Trust reported about $1 billion flowed into stable-value funds between Aug. 1 and Aug. 15, less than 1% of the $164 billion in plan assets, exclusive of defined benefit plans, which Wells Fargo administers. “Most vendors haven’t seen huge
numbers of transactions moving assets out of equities into other investments,” said Robyn Credico, head of the defined contribution practice at Towers Watson & Co. “In fact, they haven’t seen much activity at all.” At Great-West Retirement Services, a subsidiary of Great-West Life & Annuity Insurance Co. that oversees $150 billion in plan assets, $166 million moved from equities to fixedincome and stable-value investments during the first two weeks of August, with $74 million moving Aug. 8 alone. From Aug. 10 to Aug. 12, however, $13 million flowed back into equities, according to company president Charles Nelson.
Many stay put … Financial advisers who work with small to midsize plans report a similar lack of activity. “I received six calls; three people decided to be conservative,” said Michael Preisz, president of Preisz Associates Inc. and a member of the Institutional Retirement Income Council. The firm manages about $300
million and oversees 100 group retirement plans, each with less than $5 million in assets. The three participants who sought safety were over age 55 and wanted to shift more money to debt. Financial advisers and executives at retirement plan providers said employees, while tending toward caution, do not appear to be panicked. During the wild swings a few weeks ago, participants largely sought information. On Aug. 8, call volume at retirement plan service centers reached levels set in late 2008, but “the emotion wasn’t anywhere near what it was in 2008,” said Barrie Christman, vice president of retirement and investor services at Principal Financial. “If there’s anything as a silver lining, I think that (2008) has taught people that these kinds of fluctuations can happen,” Ms. Christman said. Gary Allen, a financial adviser with Prudent Investor Advisors, agreed. He noted that in 2008 and 2009, clients realized that a systemic downturn was taking place and nobody would be safe.
“In 2008 and 2009, we thought it would be a death march and we were ready to hand out the flak jackets and helmets,” Mr. Allen said. “The situation now is normal — it’s volatile, but that’s all the more reason to concentrate on what you can control.” Another possible contributor to the lack of activity is plan participants’ traditional inertia and the fact that more of them now invest in target date funds, a popular default investment, which could make them less likely to make changes. “The people who go into these target date funds are people who either made an active election or were defaulted; they tend to be passive in behavior,” Ms. Credico of Towers Watson said.
… but cash is king for some However, not all plan advisers are riding out the volatility. Those working with separately managed accounts and using a tactical investment approach have moved to cash. Braver Wealth Management, which manages $575 million and works with plans under $20 million in size, uses quantitative modeling to rotate clients into and out of equities. Braver’s model detected volatility
in late July and moved assets fully into cash by Aug. 4, missing the massive decline that took place days later. “We still reside in cash,” said David D’Amico, president of the firm. “You had a few decent days, but that’s not enough for the model to say that it’s safe to get back in.” Randy Mowdy, an adviser with Alliance Trust Co., took a similar tack, placing about $800 million into cash on Aug. 5 and staying there. “That’s a lot of money that we’ve preserved,” he said. “Because of our economy today and the potential for another recession, the chances are good that we’re going to go back and test those [market] lows.” Mr. D’Amico noted that although the tactical model doesn’t buy back into the market at the absolute lowest, nor does it bail at the summit of a climb, the concept keeps plan clients disciplined. “People sell into the fear and buy back 20% higher,” he said. “These tactical strategies are tools advisers can use to better manage their risk and stick to long-term discipline.” ■ Darla Mercado covers insurance and retirement products for Investment News, a sister publication of Crain’s Cleveland Business.
BRIGHT SPOTS Bright Spots is a weekly web feature that highlights positive developments in the Northeast Ohio business community. Send information for Bright Spots to managing editor Scott Suttell at ssuttell@crain.com.
demand of customers. ■ Mobile app developer Figure 8 LLC of Cleveland has launched an app called Paint Pro for the iPad, the iPhone and the iPod Touch. The app “makes choosing paint simple by letting you quickly find a paint color, compare it with different manufacturer choices and share your color ideas with others,” the company said. Paint Pro, priced at $1.99, allows users to “capture a color from a picture or stored image and instantly match colors from thousands of choices,” Figure 8 said. It also “instantly suggests coordinating colors and additional close-color matches for reference.”
■ ERC in Mayfield Village said it has made a “major addition” to its health insurance program with the launch of ERC Health Select. The new program “includes an exclusive network of physician clinics that offer $5 co-pays and on-site generic medications,” according to ERC, the former Employers Resource Council. Organizations also are eligible rate reductions of up to 10%. Earlier this year, ERC announced it beat market averages for premium rates for the 11th consecutive year. It also retained 95% of its enrolled pool, which ERC characterized as “an unheard of rate” in the health insurance industry. The ERC Health middle-market program is designed for companies with more than 50 benefit-eligible employees. It’s underwritten by Anthem Blue Cross and Blue Shield.
■ Kowit & Passov Real Estate Group in Mayfield Heights said it’s bringing a Jacksonville, Fla.-based barbeque chain to Northeast Ohio. Woody’s Bar-B-Q has 30 stores in Florida and four other states and is coming to Streetsboro this fall. Carla Massara with Kowit & Passov represented the landlord on a 3,000-square-foot lease for a site in Streetsboro Commons near Interstate 80 and state Route 14.
■ Rad-Con Inc. of Lakewood, a supplier of batch annealing furnace (BAF) equipment and software to manage BAF shops, is helping a customer expand in Indiana. The customer, Stripco Inc., said it’s adding three annealing bases and a building large enough to more than double the current existing annealing capacity at a plant in Mishawaka, Ind. Rad-Con is providing the pure hydrogen batch-annealing equipment, a continuation of a 15-year business relationship between the companies. Construction has begun on the nearly 10,000-square-foot addition to Stripco’s existing precision cold-roll strip plant. Production will begin December. The expansion allows Stripco to meet the growing
■ LaunchHouse, a pre-seed investment fund and business accelerator in Shaker Heights, said it has made an investment in Purus Health LLC, the company that makes Good Greens Nutrition Bars. The size of the investment was not disclosed. Good Greens bars “cater to a variety of different food restrictions because they are 100% vegan, gluten-free and have a lowglycemic index,” LaunchHouse said. “Being a LaunchHouse portfolio company is beneficial to a company like mine because I am surrounded by like-minded entrepreneurs,” said Keith Pabley, founder of Purus Health, in a statement. “The advisers, business services and access to talented individuals also working out of LaunchHouse has made the startup process seamless.”
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Craft: New legislation aimed at easing permit restrictions continued from PAGE 3
distributed for the first time 800 bottles of his Seven Brothers Distilling Co.’s artisan vodka to liquor stores throughout Ashtabula, Cuyahoga, Geauga, Lake, Lorain, Portage and Summit counties. About 20 stores in Columbus also are set to receive a shipment. “I’ve rejected so many batches,” he said. “I wanted it to be perfect.” Mr. Suttman is among a fledgling group of local artisan craft distillers who are taking advantage of Ohio’s fresh water and crops to produce spirits that they hope satisfy the palates of quality-conscious consumers. Craft distilling represents a mere 1% of the $40 billion spent annually on spirits in the United States. However, Bill Owens, president of the American Distilling Institute, expects that percentage to grow during the next few years. According to the distilling institute, there are 306 distilled spirits plants in the country. That’s nearly five times the 68 plants in existence in 2003, when the group formed to promote a burgeoning craft distilling renaissance. Eight craft distillers are located in Ohio. The organization projects between 400 and 450 craft distillers will be located in the United States and Canada by 2015. Mr. Owens said antiquated state laws are standing in the way of further growth among craft distillers. Many local craft distillers agree,
lamenting that Ohio’s stringent laws prevent them from expanding their businesses in much the same way wineries and breweries have. A bill is moving through the Ohio Legislature that would ease restrictions on craft distillers and would open the market so that more spirited entrepreneurs could participate in the burgeoning business.
Growing pains Most craft distillers in Ohio, including Mr. Suttman in Lake County, hold A-3 liquor permits that enable them to sell their products through state liquor stores. However, only three permits known as A-3a permits are available in Ohio that also allow consumers to purchase a distiller’s products on premises. According to current state law, only one A-3a permit may be issued in each of the three counties with populations greater than 800,000 — Cuyahoga, Franklin and Hamilton. Artisan distillers say those limitations stymie the ability to grow their business. “This is such a successful industry, like the breweries and wineries,” said Don Outterson, owner of Woodstone Creek in Cincinnati, which holds Hamilton County’s A-3a permit. “There’s plenty of room for more. And the state talks about needing to create more jobs?” House Bill 243, co-sponsored by state Reps. Ron Young of Lake County and Casey Kozlowski of
“There is plenty of room for more. And the state talks about needing to create more jobs?” – Don Outterson, owner, Woodstone Creek in Cincinnati Ashtabula and northern Trumbull counties, seeks to ease the restriction on the number of A-3a liquor permits issued. The bill passed the Ohio House 96-0 on June 23 and next will be heard by the Insurance, Commerce and Labor Committee in the Senate. Its session begins in mid-September. “The high points are, it opens up the free market so a lot more people can participate, and consumers would be able to sample the product on site,” Rep. Young said. “Right now, they can purchase on site, but they can’t taste. If you’ve never tried a product, it’s important to have the opportunity to sample it.”
They’ll drink to that The A-3a permit in its current form also restricts the volume of liquor a consumer can buy on premises. The permit holder cannot sell more than one-and-a-half liters of liquor per day to the same consumer. Rep. Young said he’d like to see that limit raised to nine liters. The Ohio Department of Commerce supports the bill as it currently stands, said Lyn Tolan, communications director. “It’s a nice secondary market for
farmers and the agriculture industry in Ohio,” Ms. Tolan said. Craft distillers aren’t the only ones who stand to gain if the law’s restrictions are relaxed. A number of Northeast Ohio wineries also have expressed interest in distilling. They include South River Vineyard in Geneva, which already has bought the appropriate equipment. “The wineries out here, they are growing,” Rep. Young said. “If you could follow their growth and the hundreds of people they employ … boy, if craft distilleries could have the same amount of growth, boy.” Mr. Suttman said he would pursue an A-3a permit, should it become available. “I’m excited about (the bill). I can’t wait to expand,” Mr. Suttman said. “We’re ready for Phase II. I’m looking for investors or may pursue a loan to build a local facility that would produce and store whiskey. “We’d ultimately love to have 15 to 20 products on the shelves,” he said.
Go with the flow A line already is forming for Cuyahoga County’s A-3a permit. Market Garden Brewery, which recently opened in Cleveland’s Ohio City neighborhood and is owned by Sam McNulty, has applied for it; so has John Marek, who plans by mid-2013 to open Portside Distillery, a 5,000-square-foot restaurant, brewery and distillery on West Ninth Street in Cleveland’s Ware-
house District. Mr. Marek said he hopes H.B. 243 passes by the time he’s ready to open Portside so that he’s able to sell his premium rum (and later whiskey, bourbon, vodka and absinthe) on site to customers. “If House Bill 243 passes, there will be a drastic increase in distilleries in Ohio,” he said. “There’s been a huge increase in Ohio in the last three to four years, and that will continue.” Tom Herbruck, owner of Tom’s Foolery in Chagrin Falls, said he doesn’t plan to pursue the A-3a permit, even if it becomes more ubiquitous. “It works well for us to distribute through the current state liquor system,” Mr. Herbruck said of his operation’s artisan applejack. “We’ve only released one batch, and that sold out pretty quickly, mostly in Cuyahoga and Geauga counties.” Mr. Herbruck last week was set to release 300 bottles of his second batch of Tom’s Foolery Applejack, which this year was awarded “best in category” at the American Distilling Institute’s national competition. He also plans to begin distilling whiskey this fall and will be ready to release his first batch of bourbon in a few years. “The A-3 license permits us to do what we want to do,” Mr. Herbruck said. “Our plans are to focus on quality, and to take time to enjoy what we are creating.” ■
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Languishing Shaker Heights condos may see new life By STAN BULLARD sbullard@crain.com
the property Aug. 31 from Heartpoint Devco LLC, the entity that Heartland used to develop the multimillion-dollar project at 1678 Van Aken Blvd. The project sold a dozen units but was left with 39 unsold condos when the market tanked in 2008. However, negotiations between Shaker Heights, the developer and the lender made the transfer possible. Southern Financial agreed to pay $200,000 in disputed property tax bills unpaid by Heartpoint Devco as residential property values plummeted.
Avalon Station, a long-stalled condominium project next to the Greater Cleveland Regional Transit Authority rapid line in Shaker Heights, may start rolling again after its lender gained ownership of the project from its builder, Heartland Development Co. of Cleveland. Residences at Avalon Station LLC, a corporation formed by Southern Financial Group LLC of Waco, Texas, received the deed to
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Margaret Cannon, Shaker Heights law director, said the city revised a development agreement to release Heartpoint Devco from developing an adjoining two-acre parcel, and the developer returned the parcel to city control. J. Gordon Priemer, chairman of Heartland Developers, declined to discuss in detail why he agreed to sign over the deed to the lender. “I’m not in that business anymore,” Mr. Priemer said, adding, “A lot depends on timing.” Allan Morris, president of Southern Financial, said gaining clear title to
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PUBLIC NOTICE PUBLIC NOTICE TO BIDDERS The Alcohol and Drug Addiction Boards of Cuyahoga, Franklin and Hamilton Counties are seeking proposals to develop a new health care management information system. Specifications for the bid proposal are posted at www.franklincountyohio.gov/commissioners/prch. Subject: Shared Health and Recovery Enterprise System “Proposal Request” #ADAMH 2011-01.
BUSINESS OPPORTUNITY
BUSINESS SERVICE OWNERS! Submit your business card to promote your service and receive a SUBSTANTIAL DISCOUNT off your ad price.
To find out more, contact Toni Coleman at 216.522.1383
Cleveland-based interactive marketing firm seeking to grow We are interested in acquiring /assuming a smaller web marketing firm or working with freelance marketers & consultants who want to change careers without disappointing their customers. If you would like to speak confidentially, contact Mark: 330-220-6100 ext. 222. MarkP@proximitymarketing.com www.ProximityMarketing.com
Crain’s Executive Recruiter Sales Account Executive This position is responsible for generating revenue using all station platforms with a focus on client retention. • Strong skill set in communication, presentation and organization. • 3+ years experience in broadcast preferred. • College degree required. • One Domain, PowerPoint, Excel, Nielsen Ratings, and Scarborough Research experience required.
Send resumes to: Cory Jackson, Local Sales Manager jobs@wkyc.com No phone calls please
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THEINSIDER
THEWEEK SEPTEMBER 5 - 11 The top story: Energy giant Hess Corp. has made one substantial investment and has lined up another in eastern Ohio’s Utica Shale region, where large amounts of oil and natural gas are thought to be trapped. The New York company agreed to acquire a 50% interest from Consol Energy Inc. in nearly 200,000 acres in the Utica Shale area for total payments of $593 million. Hess also bought Marquette Exploration LLC and other leases in the Utica Shale area, boosting its position by 85,000 acres at a cost of about $750 million. Appraisal activities on the Marquette Exploration acreage are planned to begin in the fourth quarter. Benz there, done much: K. Michael Benz, president and CEO of the United Way of Greater Cleveland for the last 17 years, said he plans to retire in June 2012. Former KeyCorp CEO Henry L. Meyer III will lead a search committee to find the replacement for Mr. Benz, who will be 65 when he retires. Mr. Benz has not confined his community involvement to United Way. He was instrumental in bringing the Rock Benz and Roll Hall of Fame and Museum to Cleveland and served as that institution’s executive director before joining United Way. He also served 12 years as executive vice president of the Greater Cleveland Growth Association and seven years as executive director of the Council of Smaller Enterprises.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Here’s your chance to swim with a shark ■ You don’t have much time, but if you’re good at putting video together, you may get a shot at presenting your business idea to an actual shark. If that sentence is too cryptic for you, read on. The Council of Smaller Enterprises small business group is staging a “Business Pitch Competition” similar to the concept of the ABC television reality show, “Shark Tank.” To add pizzazz to the competition, “Shark Tank” panelist Daymond John — founder of iconic fashion brand FUBU — will be one of the judges of the COSE event, which is set for Oct. 18 from 5:30 to 8 p.m. at Pickwick & Frolic on East Fourth Street in downtown Cleveland. Here’s where the time crunch comes in. To have a business idea considered, participants need to provide an executive summary and a two-minute video to COSE by the deadline of 5 p.m. Friday, Sept. 23. The top 20 ideas will advance to secondary judging, and eventually the top four business ideas will get the chance to present in front of Mr. John and other expert panelists. For a full list of contest details and rules, go to www.cose.org/pitch. — Mark Dodosh
City Enterprises Charitable Foundation, Cleveland’s Wills for Heroes program in July bought 12 laptops, plus software and printers. The equipment will be put to use for the first time Oct. 1 during an event for Beachwood police and fire departments. Wills for Heroes volunteers provide documents, such as wills and powers of attorney, at no cost to first responders. When Bruce Hennes, one of the non-lawyer members of the Cleveland Metropolitan Bar Association’s board of trustees, learned that program coordinators planned to raise money for equipment, he made a few phone calls. Forest City’s foundation “immediately stepped up to the plate,” he said. — Michelle Park
Cool idea from the Monsters
■ Local lawyers volunteering their time to draw up estate planning documents for first responders no longer will be doing it on borrowed equipment. Using an $8,000 donation from Forest
■ Pro sports teams always are looking for ways to enhance fan and sponsor experiences. It’s why the Indians offer batting practice access and kids the ability to run the bases; it’s why the Cavaliers allow kids to shoot free throws on the court. The Lake Erie Monsters think they’ve found another really, really personal way. The American Hockey League affiliate of the Colorado Avalanche that begins its season Oct. 7 is ratcheting up its marketing for its four-seat “Ice Box,” located between the teams’ benches. Single-game tickets go for $80, while five- and 10-game packages go for
MILESTONES
BEST OF THE BLOGS
Where there’s a will, there’s a way
$110 per seat and include free parking and Patron Club access, which covers all food, beer and wine. (Single-game seats don’t include food and beverages.) “Our goal is to always provide the most accessibility to our team and we think the Ice Box is a great way to deliver this to our fans,” said Mike Ostrowski, the team’s senior vice president and chief operating officer. “This is just another example of how we bring an up-close, exciting and unique game-day experience to hockey fans.” If you’ve ever smelled game-worn hockey equipment, you know the experience certainly will be unique. — Joel Hammond
Executive search with a European flair ■ First, Minneapolis. Now, the world. That has been the expansion track over the last year of Mansfield & Associates, an executive search firm in Cleveland. The firm recently celebrated the one-year anniversary of its Minnesota regional office, headed by David Bares, former manager of executive talent acquisition for Best Buy. Now, it has opened a two-person European office in Budapest, Hungary, that is led by Robert Mansfield, son of company president Ann Mansfield. Mr. Mansfield previously worked in Hungary and Serbia for the Simonyi Consulting Center, a provider of business development services at the University of Pecs in Hungary. — Mark Dodosh
Trading places:
Developers Diversified Realty Corp. in Beachwood and Glimcher Realty Trust in Columbus agreed to swap two shopping centers that they say are “better aligned with the other’s operating platforms and strategies.” Developers Diversified will sell Glimcher its Town Center Plaza in Kansas City, Kan., for about $139 million, and Glimcher will sell Developers Diversified its Polaris Towne Center in Columbus for about $80 million.
Ready to run: City of Cleveland law director Robert Triozzi is resigning his post to make a run for the Cuyahoga County prosecutor’s job. The current county prosecutor, Bill Mason, has said he will not run for re-election in 2012. Mr. Triozzi served 10 years as a former Cleveland Municipal Court judge before resigning to run for mayor of Cleveland in 2005. He lost that election to Frank Jackson, but Mr. Jackson named Mr. Triozzi as his law director upon taking office in January 2006.
Scanning the market: The Ohio Third Frontier Commission awarded about $6.6 million that will be used to finance six technology development projects in Northeast Ohio. Among the projects are two run by the Philips Healthcare Global Advanced Imaging Innovation Center, a collaboration of Philips, Case Western Reserve University and University Hospitals Case Medical Center. The center received a $1.58 million grant to improve the performance of an existing Philips computed tomography scanner so it could be used to diagnose more heart problems than it can today. This and that: Energy Focus Inc., a provider of energy-efficient lighting systems based in Solon, said it was awarded a $5 million lighting retrofit contract with what it described as “a leading southeastern energy services company.” It did not identify the company. … Cohesant Inc. in Beachwood said it has sold its piperestoration business, Curaflo of British Columbia, for $1.875 million. Curaflo is being purchased by its former founding partners, Brian LeMaire, who continued to be an employee of the company under Cohesant, and Stuart McNeil.
Excerpts from recent blog entries on CrainsCleveland.com
THE COMPANY: Cresco Real Estate, Independence THE OCCASION: Its 20th anniversary Founded in 1991 as a four-person real estate company, Cresco has grown into a full-service real estate provider with 25 professionals. In 2005, Cresco was selected as a strategic alliance partner with Cushman & Wakefield, the world’s largest privately held commercial real estate service provider. The Cushman & Wakefield partnership enabled Cresco to provide clients with a full range of services globally. Despite the recent recession, Cresco said it “experienced its highest revenue year ever in 2010.” Go to www.CrescoRealEstate.com for more information.
THE COMPANY: The Dan Zola Orchestra, Solon THE OCCASION: Its 50th anniversary The big band/dance band is celebrating the milestone with a special concert slated for Oct. 29 at the Springvale Ballroom in North Olmsted. The evening “promises a chance to dance and dream to music from the 1930s and ’40s, complete with mirror balls (and) elegant attire,” says Dan Zola, the 19-piece orchestra’s founder and leader. General manager John Patai says the orchestra keeps busy with 30 to 50 gigs a year. Visit www.ZolaBigBand.com for more about the orchestra.
If he’s half as successful in D.C. as he was in business … ■ U.S. Rep. Jim Renacci, a Republican from Wadsworth who represents Ohio’s 16th district, is the wealthiest of the 87 freshman Republicans elected last year and is the 11thrichest lawmaker in Congress. So reported The Hill in its “50 Wealthiest for 2011” list. The publication found that 10 of the 50 richest members of Congress are freshman House Republicans. Rep. Renacci has an estimated net worth of $35.9 million. He made his money through LTC Management Services, the Ohio nursing home owner and operator that he founded in 1985. Rep. Renacci still has close to $2 million in holdings tied to the company. He’s the only Ohioan on the list. The Hill found the 50 lawmakers on its list this year “are substantially wealthier than the class of 2010. Together, they reported a minimum net worth of more than $1.6 billion, about $200 million more than the lawmakers on last year’s survey.” The rankings include 32 Republicans and 18 Democrats.
Congratulations! You’ve bought a lot of cheap homes ■ You and your fellow U.S. taxpayers own 248,000 homes, the result of record numbers of people defaulting on government-backed mortgages, according to a Bloomberg Businessweek story that quoted a Cleveland housing expert. With even more homes moving toward default, the magazine reported, “Fannie Mae, Freddie Mac and the Federal Housing
Administration are looking for a way to unload them without swamping the already depressed real estate market.” They’ve even issued a public plea for ideas to help do this; you have until Thursday, Sept. 15, to send ideas to reo.rfi@fhfa.gov. Bloomberg Businessweek said the government’s call for ideas is a sign it is deluged with repossessions. “It’s almost like having the captain of the Titanic go on the public address system and say, ‘Does anybody have an idea?’” said Mark Wiseman, a former director of Cleveland’s foreclosure-prevention program. “It’s not a confidence builder.”
Bad times bring out the best in ‘modern Steinbecks’ ■ Salon.com says the rough economy has created several “modern Steinbecks,” including Ohio writer Donald Ray Pollock, who are chronicling the impact of the recession on American families. The Midwest is particularly fertile ground for this literature, according to Salon.com, which cited Mr. Pollock’s “The Devil All the Time,” set in Ohio; Philipp Meyer’s “American Rust,” set in Pennsylvania steel country; and Frank Bill’s “Crimes in Southern Indiana.” Mr. Pollock worked as a driver in a paper mill for most of his adult life before enrolling in the creative writing program at Ohio State University at age 50. He told Salon.com that writers now are “working with an awareness and understanding of the poor and dispossessed that we haven’t seen ... since the Great Depression.” He added, “You can’t have a small minority of wealthy lording it over a vast majority of poor without something very bad eventually happening.”
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