NEW LOOK: Historic Ohio City mansion is being converted to apartments. PAGE 3
‘EPIC’ EXPECTATIONS Major events are back at Rocket Mortgage FieldHouse. PAGE 2
CRAINSCLEVELAND.COM I JUNE 14, 2021
EDUCATION
REAL ESTATE
‘We believe it has the ability to be an A mall’
How the ‘transcript trap’ impacts Ohioans
The last 25 for-sale units at Battery Park are scheduled to start going in during the summer of 2021.
SouthPark Mall’s new operator is big believer in Strongsville center
Unpaid bills prevent students from proving they’ve earned credits
BY MICHELLE JARBOE
BY AMY MORONA
On a recent afternoon, small clusters of teenage shoppers browsed at SouthPark Mall. The buttery aroma of soft pretzels mingled with the scent of perfume. Mall-walkers shuffled past signs encouraging entrepreneurs to “launch your business here!” The Strongsville mall, the region’s largest retail center, changed hands for $57.7 million in late April. The deal — at less than a quarter of what the mall was worth roughly a decade ago, to a buyer that appears bullish on the future of the troubled sector — was an unusual one in a region where recent mall sales have led to teardowns, industrial makeovers and, in a worstcase scenario for cities, slow death spirals under scavenger-like owners. Mall experts foresee a shakeout in the industry over the next few years, accelerated by the economic fallout from the pandemic. Even the strongest malls will look different, they expect, with coworking facilities, apartments and other uses filling voids. SouthPark, with small-shop sales of more than $400 per square foot, falls squarely into the pack of socalled Class B malls facing particularly uncertain futures. But Carmen Spinoso, whose New York-based company has been managing SouthPark for the past six weeks, predicts that the vast suburban shopping center will be one of the survivors. “We believe it has the ability to be an A mall. It’s just not there today,” said Spinoso, founder and CEO of Spinoso Real Estate Group, during a recent phone interview.
are the antithesis of the traditional single-family model, which values places with vast tracts available. “With each project it’s finding the right fit,” said Dru Siley, a Liberty vice president. “What also attracts us is that a significant number of buyers are already in the community where we are building. They’ve been in a single-family house a long time. They have not downsized, and they’ve looked a long time for something.” Some high-profile builders are making bigger bets on townhomes as part of their repertoire. Knez Homes of Concord Township remains an active builder of single-family homes but has added land development and more townhouses to its mix. Founder Bo Knez said the company has about 70% of its production geared to townhouses, compared with 30% a few years ago.
The country’s student loan debt crisis earns a lot of attention. But there’s also another type of college bill that can get in the way. About 222,000 people have unpaid bills totaling $556 million to colleges across the state for things such as unpaid tuition, parking tickets, library Average unpaid fines, or other balance for outstanding fees students who still or charges, ac- owe money to cording to an Oc- Ohio colleges tober 2020 report from education consulting company Ithaka S+R. Some experts label these “stranded credits.” Ithaka’s findings estimated 6.6 million students nationwide could be impacted by this, owing $15 billion to institutions. Those unpaid bills, though, do more than just harm students’ credit. Public colleges can withhold students’ transcripts over these unpaid balances. This prevents students from accessing proof of the credits they’ve earned. That’s a big deal. It could keep students from transferring those completed courses to another school to finish a degree. Those looking to get a job with a potential employer who requires proof of a transcript would be out of luck. Some have dubbed it the “transcript trap.” It’s further complicated by a state law that requires public institutions to turn over outstanding balances to the attorney general’s office after
See TOWNHOMES on Page 25
See TRANSCRIPTS on Page 26
See SOUTHPARK on Page 25
TOWNHOMES
ARE HAVING A MOMENT
Real estate developers embrace structures to tackle demand `BY STAN BULLARD WITH HOMEBUILDING BOOMING during a shortage of existing homes for sale and low interest rates, production of townhomes is ramping up in Northeast Ohio. New projects are going in as infill in land-shy suburbs such as Rocky River as well as vast tracts in more far-flung places, from Aurora to Painesville Township. For example, Liberty Development of Westlake has, among others, townhouses going in at a site in Bay Village with builder Oster Services LLC of Lakewood. It’s getting ready to start digging this month on townhouses next to St. Clement Catholic Parish on Madison Avenue in Lakewood. Tom Kuluris, Liberty CEO, said in an interview, “These are not obviously housing sites. Bay Village was partially an old gas station and bank branch. Lakewood is St. Clement’s School after it’s been closed 15 years. You have to add some creativity.” Other virtues of infill sites in inner-ring suburbs
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THE
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ENTERTAINMENT
At full tilt, FieldHouse prepares for ‘epic’ year With capacity limits lifted, Cleveland arena has a dozen major acts on docket for rest of ’21 BY KEVIN KLEPS
It’s been more than 16 months since a major concert was held at Rocket Mortgage FieldHouse. Brooke Bockelman, understandably, has been thinking a lot about what it will be like when the major touring acts return to Cleveland. “I can’t even wait until we have a full house and the music’s going and the drinks are flowing,” said Bockelman, the vice president of booking and events for the Cleveland Cavaliers and the FieldHouse. “Everybody’s joked about the Roaring ’20s, but 2021 and 2022 definitely have the opportunity to be epic in a lot of ways.” Rock Entertainment Group is ready to make up for lost time. Announced last month, the umbrella entity is, according to CEO Len Komoroski, a “formal designation” of the work that Dan Gilbert’s Cleveland-based sports and entertainment properties had been doing. Now, with Ohio’s pandemic restrictions lifted and events returning to full capacity, Rock Entertainment Group expects the FieldHouse to again be one of the busiest venues in North America. Starting with WWE Smackdown on July 23, there are 12 significant entertainment acts lined up in a span of five months at the FieldHouse. The list includes Michael Bublé, whose Aug. 21 performance will be the first major concert at the arena in 18-plus months, plus Harry Styles, Kane Brown, Genesis, Andrea Bocelli and Cleveland’s own Machine Gun Kelly. In late January, The Weeknd will perform. The 31-year-old singer, like Bublé and Styles, is among more than a handful of big-time acts whose scheduled stops at the FieldHouse were postponed in 2020. Also on the docket at the arena in the next eight months: the Rock and Roll Hall of Fame induction ceremony on Oct. 30 and the 2022 NBA AllStar festivities in February. “As you get to late summer, early fall is when I really think you’re going to start seeing things heating up,” Bockelman said. Major touring acts, who have largely been sidelined the past 15 months, are eager to hit the road. Komoroski said many in the industry think 2022 could be one of the best years ever for concerts. “If you look at these performers, a
Guitarist Angus Young of AC/DC performs at what was then Quicken Loans Arena in 2016. | GETTY IMAGES
Drawing power A look at how Rocket Mortgage FieldHouse has fared in Pollstar’s rankings of the busiest venues in the world. The rankings are based on tickets sold and don’t include sports events. World U.S. Year ranking ranking Tickets sold
Rocket Mortgage FieldHouse has hosted 10-plus high school graduations, including this one featuring Mentor High School on June 5. | CLEVELAND CAVALIERS
The bottleneck will be eased when the 2021-22 NBA schedule is announced, but that could occur later than usual because of the delayed start to the ’20-21 season. “It’s a good problem to have — especially if you like going to shows,” the Cavs’ VP of booking and events said. A $185 million renovation of the arena was completed in September 2019. Six months latthe facility was “I CAN’T EVEN WAIT UNTIL WE HAVE A er, closed because of FULL HOUSE AND THE MUSIC’S GOING the COVID-19 crisis. The FieldHouse AND THE DRINKS ARE FLOWING.” reopened in July by — Brooke Bockelman, Cavs VP of booking and events hosting a plethora of a smaller events, lot of their livelihood comes off of mostly youth basketball and hockey touring” — and for them, the eco- clinics, as well as blood drives and a nomics don’t work at “25% capacity,” voter registration event. When the NBA season tipped off in the CEO of the Cavs and the Fieldlate December, Rocket Mortgage House said. Bockelman said there are week- FieldHouse had an attendance limit ends in the first quarter of 2022 in of 300. The total increased three which the FieldHouse’s “calendar times, capping at 4,148 for Cavs games and 4,100 for Cleveland Monholds are five and six events deep.”
sters contests. The pandemic cost the Cavs five home dates after the NBA season was halted in March 2020, and a 2020-21 schedule reduction meant another downgrade — from 41 home games with no capacity restrictions to 36 with vastly limited attendance. The Monsters, the American Hockey League franchise the Cavs own and operate, played only 14 home games last season (24 fewer than normal) and lost seven home dates in 2019-20. That year, the club led the AHL with an attendance norm of 9,043 — the Monsters’ seventh straight top-three finish at the gate. NBA commissioner Adam Silver recently said the league planned to return to a normal schedule in 202122, with an 82-game slate that could start by mid- to late October. Once the schedule is released, Bockelman’s job gets slightly easier, though there should be no shortage of potential events to fill the calendar at the FieldHouse. “There’s a lot of juggling that we’re
344,783
2011
31
12
2012
60
27
236,246
2013
65
30
241,126
2014
53
24
2015
33
13
2016
93
51
2017
40
18
2018
74
39
302,764 434,581 163,288 457,725 237,053
NOTE: THE FIELDHOUSE’S RANKINGS IN 2016 AND 2018 WERE IMPACTED BY CLEVELAND HOSTING THE REPUBLICAN NATIONAL CONVENTION, FOLLOWED BY EXTENSIVE RENOVATIONS THAT WERE COMPLETED IN 2019. … THE FIELDHOUSE WAS RANKED 27TH IN THE WORLD BY POLLSTAR AT THE MIDWAY POINT OF 2019. SOURCE: POLLSTAR
doing,” she said. The arena rose to 27th in Pollstar’s rankings of the world’s busiest venues at the midway point of 2019. The FieldHouse was among the top 40 in the world and top 18 in the U.S. in Pollstar’s year-end rankings three times from 2011-17. Rankings are based on ticketing revenue for entertainment events. (The rankings don’t include sports events, which account for about two-thirds of the ticket sales at the FieldHouse.) Komoroski, who joined the Cavs as president in 2003, said the former Gund Arena was “a secondary player in the concert scene” in the early 2000s. Now, the expectation is the FieldHouse will get back to where it was in 2019, and maybe go beyond that, via a lift from the extensive renovations.
“We’re incredibly optimistic about the upcoming 2021-22 year in total,” the Cavs’ CEO said. Bockelman has watched livestreams featuring some of her favorite artists during the pandemic. She’s been reminded that “live music or live entertainment is something that can’t be replicated.” She has, however, enjoyed the 10plus high school graduations — some of which have included pyrotechnics from the FieldHouse’s huge scoreboard — that have been held at the arena in the past few weeks. “It’s been really emotional to host some of these events for kids and families that have had a lot of things taken away from them,” Bockelman said. Kevin Kleps: kkleps@crain.com, (216) 771-5256, @KevinKleps
Correction
` A June 7, Page 14 profile of Benjamin Collinger included an incorrect age and an incorrect name for his podcast. Collinger is 24, and the podcast name is “81/61.”
2 | CRAIN’S CLEVELAND BUSINESS | JUNE 14, 2021
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REAL ESTATE
Gorgeous Ohio City mansion is taking wing as apartments $4 million conversion of 1874-vintage Robert Russell Rhodes Mansion has started BY STAN BULLARD
As Tom Gillespie gave a tour of the Robert Russell Rhodes Mansion — 2905 Franklin Blvd., Cleveland — that was formerly the Cuyahoga County Archives, he listed its features. Then he suddenly paused. “It’s a miracle there’s this much left given all that’s gone on here over the years,” he said. He should know. Gillespie owns multiple properties in Ohio City that he’s redeveloped through the years. The latest is the $4 million conversion of the 1874-vintage mansion and an attached commercial building annex dating from 1914. It’s sideline to running his GETGO environmental site assessment company, based at one of his West 25th properties. “The brass hardware (such as doorknobs) was stolen after the county vacated the property,” Gillespie said. However, intricately carved fireplaces of wood or marble remained intact. A friese in the ceiling of the main sitting room is still in place, along with a delicate stencil on the ceiling. The bones of the place — from cornices around the windows to tall ceilings and wooden floors — are in place. On its way to the current owner’s conversion of the place to 33 apartments, the property had been the home of the county archives since 1975. The property went into play for redevelopment following the county’s 2019 move of the document repository to 3951 Perkins Ave.
The last Rhodes mansion Previously it had been, for decades, a juvenile detention center (which prompted the 1914 addition of the three-story annex) as well as a nursing home. However, unchanged through those years was its gorgeous red brick exterior. Extensive stone features abound, some carved with lines forming designs. Others are bas-relief designs on its many chimneys. The Italianate design reflected the time when it was constructed for Robert Russell Rhodes, a businessman who operated coal and iron family businesses launched by his father, Daniel Pomeroy Rhodes. Robert Russell Rhodes was also a scion of Cleveland pioneer Josiah Barber, who developed the land that became much of today’s Ohio City. Business and political royalty, Rhodes family members had several mansions nearby, including one where Robert Russell Rhodes grew up. However, the home he constructed is the only survivor, according to the Cleveland Historical website. Following guidelines for historic preservation to keep Ohio and U.S. tax credits means Gillespie’s team has to keep existing walls intact. So, for example, a first-floor sitting room will become two suites. Besides the requisite drywall, cabinets, bathrooms and new mechanical systems, a few other new things are going into the place. The former attic, never used previously, is becoming a two-bedroom suite. That space will include a staircase and access to a room in the mansion’s top area — called a belvedere — with views of the city and
Developer Tom Gilllespie heads the team remaking the former Cuyahoga County Archives building in Cleveland as apartments. He stands inside the turret-like top of the building, also known as a belvedere. | STAN BULLARD
lake. A patio will go in atop the annex. Another suite will go into the former boiler room, he said, as the building will have contemporary electric heating and cooling. Long-term plans call for building four townhouses on Franklin frontage west of the mansion. That will allow the former garden next to the mansion to become, effectively, a courtyard. That work will include the restoration of a one-time fountain. “We’re losing green space with all the development in Ohio City,” Gillespie said of the garden, which is on ground that could have become another apartment building. “We want to keep this green space in place. We also want to retain the den-
sity of the neighborhood with this design.” A new building in the garden area could have doubled the project’s unit count. In a change of pace from new apartments transforming sections of Ohio City, Gillespie is also trying to hit a niche for lower-priced units in the annex building. He hopes to offer suites, some for as little as $750 monthly. The two-bedrooms in the character-rich mansion will be pricier, upward of $1,000. That is below the $1,500 monthly rent typical of premium suites in the neighborhood. Some new apartments command about $1,800 monthly, according to CoStar, the online realty data service.
That’s not strictly altruism. Gillespie acknowledged that he’s intimidated by the nearly 1,400 new apartments hitting the market during the next two years, most nearby in Ohio City and Tremont. “My gut tells me it’s a lot of units,” said Gillespie, who a decade ago converted the skid-row Jay Hotel nearby to luxury apartments. “I believe the market will support it. But it’s a lot at once.” The rush to build bigger rental buildings is creating tensions in the neighborhood, but one developer praised Gillespie’s modest approach. Rick Foran, a co-developer of the Ohio City Lofts nearby, said: “I welcome these kinds of developments.
It’s not grandiose. It doesn’t add a hundred-plus units into a rental market I worry will be overbuilt. I like the scale. It preserves the spacial relationships of the neighborhood, not only architecturally but historically. It’s not cobbling it up to maximize the number of units. ... I love the trim on that building, and it can’t be replicated today.” Gillespie sees the Robert Russell Rhodes Mansion project as a legacy of his own. Asked if it might be converted to condos after the tax credits expire, he said such a decision will be up to his two children someday. Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter JUNE 14, 2021 | CRAIN’S CLEVELAND BUSINESS | 3
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For years, the power sweeping industry has been a fragmented one made up of small businesses serving local communities. That meant there was opportunity, if someone was willing to invest. “There hasn’t been a natural buyer for it, so we created that market,” said Chris Valerian, president and CEO of Sweeping Corporation of America. Sweeping Corp. in Seven Hills was founded in February 2017 with the company’s acquisition of the business for which it’s named. The investors saw an opportunity to “consolidate” and “professionalize” an industry, Valerian said. “It was a very fragmented market with no clear national player present,” he said. In the years since, Sweeping Corp. has completed 26 acquisitions. It has about 50 locations across the country and almost 1,500 employees. And the power sweeping industry is a $6 billion to $10 billion market, Valerian said, so there’s still plenty of room to grow. Prior to Sweeping Corp.’s founding, private equity firm Soundcore Capital Partners had reached out to Valerian, who had been in the waste disposal and hauling industry. That’s a similar business based on routes with recurring revenue, he said, which taught him how to create economies of scale and grow through mergers and acquisitions in that kind of industry. Sweeping Corp. plans to stay focused on the route-based revenue model, serving customers by sweeping surfaces like streets and parking lots, Valerian said. It also offers complementary services like storm sewer and catch basin cleaning. Valerian grew up in Northeast Ohio, but his career took him across the country. Sweeping Corp. was a chance to have a business headquartered back at home. The region has a low cost of living and a talented labor market, he said. “For a headquarters for a busi-
ness, Cleveland is particularly ap- ery month. Most recently, it acpealing,” Valerian said. quired Sunset Property Services in The company’s M&A team, based California. in Northeast Ohio, is constantly In addition to acquisitive growth, reaching out to well-run businesses Valerian sees organic growth opporlooking for good fits. In a fragment- tunities in the power sweeping mared industry, there are a lot of those. ket, as well. Keeping roadways clean Much of the work done by the pow- is good for the aesthetics of a comer sweeping industry has been done munity, but it’s also environmentally by municipalities, Valerian said, sound. Keeping roads clear of debris and the businesses it’s acquiring is easier and more economical than are the result of outsourcing, much having to clean out catch basins, Valike what happened in the waste lerian said. management industry decades beThe company does not share anfore. Outsourcing that work to a nual revenue, but it wants to exceed company like Sweeping Corp. can half a billion in revenue in the next help municipalities save money be- three years. And it’s on track to meet cause the larger company has more that goal, Valerian said. economies of scale than the small, The biggest challenge to Sweeping family-run businesses it tends to Corp.’s growth is the tight labor maracquire. ket. The company hired about 500 Post-acquisition, Sweeping Corp. people last year just to support its can offer those small businesses re- organic growth, Valerian said. sources they might not have had ac“There’s a constant pressure to cess to on their own, like stronger make sure that we’re doing the health insurance plans or new things that we need to do to be the equipment, Valerian said. Sweeping employer of choice, because it’s a Corp. aims to grow by taking “THERE’S A CONSTANT care of both its employees and PRESSURE TO MAKE SURE its customers, he said. THAT WE’RE DOING THE Most power THINGS THAT WE NEED TO sweeping companies are small and DO TO BE THE EMPLOYER privately owned, OF CHOICE. ” operating 10 to 20 trucks or fewer, — Chris Valerian, president and CEO, said Nancy Terry, Sweeping Corporation of America executive director of the North American Power Sweep- competitive market out there,” Valeing Association in Lebanon, Ohio. rian said. “Whether it’s better equipThat makes a company of Sweeping ment that we run every day or health Corp.’s size an “anomaly,” she said. insurance or opportunity for adThe company has acquired about vancement within our organization, two dozen of the association’s mem- it’s something that we spend a lot of bers and now has a member on the time on as an organization to make association’s board of directors. sure that we’re nurturing the relaThey’ve been a “responsible corpo- tionship with the folks that get the rate citizen,” Terry said, maintaining work done. Because it’s probably the membership dues and supporting biggest challenge of every industrial industry standards. business across America, and we’re In 2020, Sweeping Corp. acquired not exempt from that.” nine companies. Valerian said that, in 2021, the company will continue Rachel Abbey McCafferty: (216) to acquire one or two companies ev- 771-5379, rmccafferty@crain.com
4 | CRAIN’S CLEVELAND BUSINESS | JUNE 14, 2021
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HEALTH CARE
NOMS Healthcare deepens value-based care efforts with data BY LYDIA COUTRÉ
Sandusky-based NOMS Healthcare is deepening its data efforts with an investment into new artificial intelligence technology and the addition of a chief data science and analytics officer. Justin Coran joined NOMS in this new role on June 7 and will help the independent, physician-owned and -led medical practice take its population health efforts to the next level both operationally and clinically. He’s tasked with creating new advanced analytic products, including things like artificial intelligence, ma-
Coran
Frederick
chine learning or risk stratification algorithms. “We’ll be looking at to what extent can we segment our patient population in order to identify the patients that have the right diagnosis, or un-
derstand do they have the right diagnosis?” said Coran, who joins NOMS from University Hospitals, where he helped build a data science program that informed operations. “Are they on the right treatment, and are they getting all the different types of care that they can receive in order to achieve wellbeing and overall health and wellness?” NOMS also has invested in artificial intelligence technology, Navina AI, that can pull data from inside a medical chart and other sources to provide what is called a patient portrait, said Joshua Frederick, president and CEO of NOMS, which stands for
Northern Ohio Medical Specialists. The technology can, among many other features, find documents in the system, including those that were misfiled or misnamed, and the AI learns diagnoses codes and risk scoring codes to make recommendations, he said. It greatly reduces clicks in the electronic medical records (EMRs) and “hopefully minimizes physician burnout as well as helps you do better in the value-based world,” Frederick said. Adding the new C-suite role and deepening data analytics at NOMS is part of a path the practice has been on for years toward taking on more
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risk, Frederick said. COVID-19 allowed the team to take a step back and see where the organization needed to strengthen its infrastructure, Frederick said, noting that they knew NOMS was weaker in data analytics and having data in good formats. As NOMS has been growing significantly in recent years, “we definitely needed to be able to analyze the data more real time and in a better format than what we were currently using, which is very fragmented,” Frederick said. NOMS had used what data it was able to cobble together from different payers and other sources. COVID-19 both allowed NOMS the time to slow down to examine this and increased the importance of data as patients, employers and payers were looking for alternative ways to access care outside of traditional hospital settings. The pandemic “exponentially increased” the push to migrate care to outpatient, more cost-effective, high-quality settings, Frederick said. “The payers, the patients, the employers (were) all saying, ‘Look, we need to manage our costs of care better in the optimal setting,’ ” he said. “This allowed us to come to that conclusion and we said we needed somebody like this, and Justin’s name came to the table.” Bringing on Coran — who can pull that data from many different sources, generate it into a dashboard and into a real-time care management software — is going to take NOMS’s care management and population health team “to another level,” Frederick said. Navina will be complementary to the data analytic work Coran will undertake. Navina is a point-of-service software that can minimize time spent tracking down documents, specialists, consulting agreements, pre-authorizations on pharmacy or imaging studies and much, much more. While Navina helps with workflow, Coran will be helping build processes and systems to support care management. Modern health care systems run information through enterprise data warehouses, which centralize hundreds of disparate sources of data, such as electronic medical records (EMRs), claims files, census data, member enrollment files from payers and insurers, National Institutes of Health data, and more. “Once we have that data in one place, we then want to do something with it,” Coran said. “And so the next step is how do we get that data in the hands of the doctors in a way that they want to receive it, in a method that actually helps improve their workflow and really make a difference in the patient care that’s delivered? It ends up being the front-end user interface that doctors can interact with in order to see the relationships in the data and the insights in the data that’s most meaningful to them.” Coran aims to build a data management platform and system to be able to do that in his first few months at NOMS. When that’s built in-house, Coran said it offers a chance to use technology such as Navina’s AI system to advance how population health management and value-based care is conducted and delivered. Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre
TRANSPORTATION
Deliberate design: RTA rolls out new routes
Transit leaders say new system boasts more frequent, simplified service BY KIM PALMER
For the first time in two decades, Greater Cleveland Regional Transit Authority leaders embarked on a comprehensive system redesign not because they had to, but because they wanted to. In the past, RTA had to react to massive revenue losses or crippling budget cuts by making significant changes that over the past 15 years resulted in a doubling of fares and a 25% cut in overall service. The redesign, dubbed NEXT GEN, set its debut for Sunday, June 13, and is followed by a week of free rides. It was created to provide more efficient and consumer-friendly service for both the city and suburban residents served by RTA. “The big difference here is that some other big changes to our system were necessitated by cutbacks in federal and state funding,” said Joel Freilich, RTA’s director of service management. “There is no financial crisis here. There’s simply a desire to rework the system to better reflect the priorities of the community.”
RTA, like many transit systems nationwide, has been plagued by significant funding volatility. Primary support comes from a 1% share of Cuyahoga County’s sales tax, a process set up in 1975. Since the inception of the funding mechanism, the region has lost population, resulting in sales tax revenue losses of nearly $70 million annually. State support also fell. Although RTA saw ridership plummet during the pandemic, federal stimulus and recovery funds stabilized the agency’s budget, allowing the NEXT GEN redesign to continue as part of an overall strategic plan initiated in 2018 by the board of trustees. The redesign was not a result of any budgetary windfall, either. The goal was to rework the system based on current funding realities. That meant making a choice between increased coverage of service or more high-frequency service, Freilich said. “These objectives compete with each other for the same resources,” he said. “We had to get the community to say, ‘Is ridership or frequent service more important?’ ”
To answer that question, RTA hired Jarrett Walker + Associates, an international transportation firm out of Portland, Ore., to facilitate community engagement and find out what transit riders needed. After three rounds of online, in-person and telephone surveys, and numerous community meetings, the answer was that riders, for the most part, were willing to give up certain kinds of coverage to get frequency. However, they were not willing to sacrifice certain areas of coverage completely. “In this redesign, you see a balance between services in the frequent corridors and services into the rest of the county that generally serve major job centers, important institutions, places of real critical social value,” said Evan Landman, senior associate at Jarrett Walker + Associates. Landman was part of the team that engaged with the community asking the questions and prompting riders to choose from different plans that were possible with RTA’s resources. “The process gives members of the public a chance to understand and
The Greater Cleveland Regional Transit Authority’s NEXT GEN redesign was set to debut on Sunday, June 13, and include a week of free rides. | KIM PALMER
weigh in on the tradeoffs that planners have to consider when they actually do the technical work of designing routes,” he said The final product resulted in a 25% increase in the number of jobs located within a half-mile of a NEXT GEN route that runs every 15 minutes, all day long. The routes are aimed at providing transportation to job, education and health care destinations for the nearly 300,000 residents who live within a half-mile of an RTA public transit stop. Giving riders back time is how Freilich describes the system changes. With shorter intervals between
buses, there is less wait, he said. Another goal of the redesign was to offer more “one-seat trips,” eliminating the need for a transfer when traveling in and out of downtown. The process was achieved without eliminating many routes altogether, or by offering alternative routes with more frequent service within a five-minute walk. “In many cases, we are combining key pieces of key routes and knitting them together differently in order to meet the community’s articulated objective,” Freilich said. See RTA on Page 23
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PERSONAL VIEW
Lessons learned from ‘Just in Time’ manufacturing
RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS
BY REBECCA A. MORGAN
EDITORIAL
The right stuff I
t’s not easy work to revitalize the manufacturing sector, or even a prominent operation within it. The latest case in point: the serious financial struggles of Lordstown Motors, occupant of the giant former GM plant near Youngstown. The electric vehicle startup announced last week that it might not have enough cash to get its debut pickup truck — the ironically named Endurance — to market, and that it might not last for another year if it can’t raise more money from investors and lenders. Lordstown Motors’ filing with the U.S. Securities and Exchange Commission showed the company had $587 million in cash at the end of March, down from about $629 million at the end of 2020. There are issues specific to Lordstown Motors and to our time that have complicated the company’s launch. There’s a lot of competition, as Lordstown Motors is among about a dozen startups in the electric vehicle space. Those companies have gone public in the past 18 months by merging with special purpose acquisition companies, or SPACs. The New York Times noted that SPACs “have been criticized by some investors and analysts for doing a shoddy job of vetting the THERE’S A LOT OF businesses they acquire.” COMPETITION, AS Many of the electric vehicle deals “have been parLORDSTOWN MOTORS SPAC ticularly precarious because IS AMONG ABOUT A it takes a lot of expertise, and time to create an DOZEN STARTUPS IN money auto company capable of THE ELECTRIC mass-producing cars and trucks,” the Times said. VEHICLE SPACE. Lordstown Motors in its filing said it had received two subpoenas from the agency seeking documents and information, including about its merger with a SPAC called Diamond Peak Holdings that took the fledgling automaker public. In short, pretty much a mess, and a reminder there are no shortcuts to building a lasting industrial business. Lordstown Motors still could make it, and for the sake of the people working at the company and a region betting on it, we hope it does. But it’s not looking good.
Lordstown Motors’ filing came on the same day that MAGNET: The Manufacturing Advocacy and Growth Network introduced “Make It Better: A Blueprint for Manufacturing in Northeast Ohio.” The 30-page report is the product, MAGNET says, “of 300 hours of conversation with 150 industry influencers — manufacturing CEOs, community and business leaders, academics, workers, students and nonprofit leaders” focused on five big issues: talent, technology, innovation, leadership and the industry’s path for the future. The report is a good, high-level overview of where the region stands in its manufacturing pursuits, even if it doesn’t break a lot of new ground or offer splashy new proposals. That might be one of its virtues. As Crain’s manufacturing reporter Rachel Abbey McCafferty wrote in our article about the plan’s unveiling, MAGNET president and CEO Ethan Karp “said the report isn’t a ‘silver bullet’ or an indictment of past efforts, and it doesn’t assign completely new efforts to specific parties.” It does, though, implore the region to find ways to improve collaboration — a much-used Northeast Ohio buzzword that hasn’t produced sufficient results — to bolster manufacturing. As McCafferty pointed out, the report found fewer than 20% of regional manufacturers “are using automation profitably, and just one in 10 patents are turned into startups, far below the average.” Possible solutions, including an early stage venture fund for Industry 4.0 commercialization, have promise, as well as a champion in Baiju Shah, the new president and CEO of the Greater Cleveland Partnership and leader of the Cleveland Innovation Project. Most of the manufacturing backbone of the region comes from small or midsize business; the MAGNET report notes they make up 98% of Northeast Ohio manufacturers, and account for about 270,000 jobs. It’s critical that efforts to help retain, sustain and grow manufacturing focus on those companies and not just big players. While Lordstown Motors is the cautionary tale, Northern Ohio has two big wins of late: plans by solar panel maker First Solar and exercise equipment maker Peloton to build plants in the Toledo area. We’d love to have seen those commitments in Cleveland, obviously, but they underscore that Ohio still has the right stuff to compete for meaningful industrial investment.
Executive Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com
Top national business papers as well as business and manufacturing industry journals are blaming current supply shortages on the concept of JIT (“Just in Time”), most notably The Wall Street Journal, New York Times and Forbes. Each recently published articles referencing business leaders declaring that most manufacturers have discovered that JIT blew up in their faces. The les- Morgan is son learned will be increasing invento- president ry levels throughout the supply chain. of Fulcrum That would be the entirely wrong les- ConsultingWorks son to learn from current conditions. Inc. in First and foremost, for those who Cleveland. have a reasonable understanding of the Toyota Production System (TPS), the alleged forebearer of lean, JIT is a goal, not an inventory strategy. All too many who jumped on the JIT bandwagon, and now clammer to jump off, have no understanding of that critical distinction. Anyone who blared devotion to JIT, requiring that suppliers hold inventory whenever they think necessary to ensure responsive deliveries, was choosing to step in front of a gun not checking to find if it held bullets. For them, it most certainly did. Understanding the intention behind the phrase Just in Time is time well spent. The concept, when becoming part of company vision, is a driver to discover what obstacles exist to immediately providing value to the market. To those, it has not been confused with an inventory management technique. JIT refers to the goal of providing product and services with UNDERSTANDING no lead time. Toyota initial- THE INTENTION ly described this goal as “the three-day car,” mean- BEHIND THE PHRASE ing an elapsed time of three JUST IN TIME IS days between the customer decision to buy and receiv- TIME WELL SPENT. ing the vehicle made just for them. It’s an ongoing effort. If you’re wondering why Toyota is not suffering a chip shortage while most automotive companies are, look back slightly over 10 years. The earthquake and tsunami most famous because of the damaged Fukushima nuclear power plant dramatically impacted manufacturing in Japan. Toyota didn’t learn the lesson to carry increased inventories, because that would not have helped. They did learn to prioritize understanding the full supply chain and identifying risk. They also understood that power to the plant and equipment was part of that full supply chain. That thinking can help. Consider the 2021 Texas outages. By beginning to create a type of digital twin of their full supply chain all the way to original material sources, Toyota began the process of identifying where risk is unacceptably high. The company’s risk management processes, which include supply chain experts, continuously monitor conditions to recognize likely future problems. Last fall, they decided to acquire a several month supply of chips, a critical component to automobiles that is relatively inexpensive and requires little storage space with no chance of a shelf-life challenge. Earlier they had
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.
See LESSONS, on Page 9
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PROPERTIES SOLD
OPINION
Construction
◆
Facility & Property Management
PERSONAL VIEW
Ohio wisely declines more federal unemployment funds BY LOGAN KOLAS
The latest round of unemployment insurance funds from Washington threatens to harm the very things it purports to help — workers and the businesses that depend on them. Gov. Mike DeWine is wisely rejecting Washington’s handout, hoping to turn “Help Wanted” signs into “Just Hired” success stories. Ohio has weathered the brunt of the pandemic’s economic storm, but now, like many states, it faces a new problem: a labor shortage. At the outset of the pandemic, employers reduced hours, slashed services and furloughed staff in order to survive a diminished clientele. Now, as the economy reopens, businesses across the state have struggled to restaff their operations and keep pace with resurgent consumer demand. The Chick-fil-A chicken chain at the Cleveland airport operated by Cleveland-based United Concessions Group is one major employer that needs employees to return. Small businesses like The Grainery in Plain City have taken a 1-2 punch from the pandemic and now staff shortages — confirming a National Federation of Independent Business report that 42% of small businesses cannot fill job openings nationwide. The same holds true for manufacturing, with manufacturers in Northeast Ohio reporting disturbing labor shortages. And now, just as travel and vacations seem poised to make a summer comeback, the leisure and hospitality sector warns that even rising wages cannot keep job openings at bay. Ohio’s iconic Cedar Point amusement park has greeted frustrated thrill-seekers with long lines and ride closures while it searches for more employees and offers signing bonuses and cash awards for recruiting new hires.
Reopenings mean available jobs Expanded, temporary unemployment insurance being pumped from Washington has made it harder — and more expensive — for companies of all sizes to reattract workers and reopen their doors. The additional weekly unemployment benefits made some fiscal sense as a stop-gap safety net for the broader economy last year when economists could only guess at the pandemic’s effect on employment, foreclosures and household spending until research showed job
applications far exceeded job openings. But not so today. Vaccines are now prevalent. Schools and sports venues have reopened. Restaurants and hotels are taking reservations again. And businesses across industry sectors are itching to fill their staffing vacancies. National job postings now stand at an all-time series high of 9.3 million. Ohio’s career Kolas is an counseling center, OhioMeanseconomic policy Jobs, reports more than 180,000 analyst with available jobs, with more than the Economic half of those paying more than Research Center $50,000 per year. And with Ohio at The Buckeye still down more than 246,000 jobs Institute. from March 2020, employment checks — not unemployment benefits — are the way to a fuller recovery. With businesses across the state and across the country now struggling to rehire the unemployed as the pandemic recedes, taking additional unemployment insurance from Washington only risks troublesome pre-pandemic effects on employment, workers and businesses — unintentionally hurting many that the program claims to help. Expanding unemployment benefits may put some more temporary cash in some pockets, but accepting those benefits carries long-term risk. Research shows that long spells of joblessness reduces the labor skills of the unemployed. Diminished skills make would-be workers less attractive to would-be employers, and ultimately reduce future employment and earnings. A little more money today can mean a lot less money in the long run. And it’s not just the unemployed who will suffer. Washington’s extra cash payouts separate businesses from capable employees — which means that businesses will continue to struggle to provide their usual goods and services, and consumers will suffer poorer service and limited availability, and the economy will limp into recovery. Gov. DeWine is right to decline Washington’s misguided generosity. Ohio should prioritize policies and incentives that get Ohioans back to work and its businesses back to business as usual.
LETTER TO THE EDITOR
News media must refrain from cheerleading It is critically important that the news media — from The Plain Dealer and Crain’s to the major local TV stations — not become a cheerleading squad for whatever the Cleveland Browns’ ownership wants to do to our lakefront. It cannot be their private prerogative to push the community into another major costly expenditure simply because they have the wealth to spend on planning. This is public land. They cannot be allowed — no matter how much reporters or editorialists are inspired by such big plans — to
LESSONS
From Page 8
redesigned the way chips are placed in vehicles to enable a few sizes to fit, should that be required. These actions don’t mean they won’t run short of chips; it means they took what they deemed reasonable precaution to address a highly probable challenge. Think about that. By focusing on impediments, current and future, to immediate delivery of value to the market, the process helps manage risk. JIT is not about minimizing inventory. It is about reducing the order-to-deliver lead time of your value. Many consider lean the same as TPS. I wish we could
jump their costly desires ahead of the many needs that have tragically been ignored. For too long, certain interests with the power and finances have pushed agendas that demand public attention and funding via regressive taxation with little attention to priority of needs. Fairness is required. And news outlets have the responsibility to inform, not cheerlead. Roldo Bartimole Cleveland do that, but the fact is that the term “lean” has no standard meaning or implication in North America. It is rarely a thinking system. It is, for most, a temporary effort to copy/paste tools that have good press. Now that JIT has bad press, it will be eliminated. The good news is that the JIT that is being tossed out should be. It had and has NO relationship to the Toyota intent and of itself has been a very detrimental tool. Abdication is not strategic. My intent here is to clarify why the distinctions between lean and TPS, and between JIT as inventory system and as improvement system, reflect important differences. I encourage you to verify what those terms mean inside your business and inside your supply chain. After all, both are distinctions with a very big difference.
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THE
LAND SCAPE
A CRAIN’S CLEVELAND PODCAST WITH DAN POLLETTA SPONSORED BY
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PERFECTLY IMPERFECT The produce rescuer is taking root in new markets thanks to its delivered meal kits. PAGE 12
SMALL BUSINESS
R one part duri Koi, Sha ness pers had nan her whe P Lee com it wa soci bus was so s how B Leer mak nect com line Even opti keep und busy A her “B tegr
Alex Budin worked to add an online retail component to the Jukebox bar and restaurant, selling bottles of wine and packaged cocktails.
The
LEARNING TO PLUG IN More small businesses seeing value of technology tools during the pandemic
F
or small businesses, the digital divide tends to be less about access to technology and more about knowing how and why to use it. But the pandemic has shown business owners just how valuable the internet can be to their bottom line. Take Jukebox in Cleveland, for example. The bar and restaurant has been around for about seven years, but before the pandemic, it didn’t have much of an online presence beyond a website and social media. But when the pandemic shut the doors to bars and restaurants, owner Alex Budin worked to add an online retail component to Jukebox, selling bottles of wine and packaged cocktails. Even when Jukebox reopened to in-person dining, Budin kept the retail side going. Adding it was a “reactionary” move last year, but it has become “a key part of how we do business now,” Budin said. On-premise dining will always be the core of Jukebox, but the online options help.
“IF YOU WERE TO DEFINE JUKEBOX’S BUSINESS STRUCTURE PRE-PANDEMIC, WE WERE A ONE-LEGGED TABLE. WE WERE PROPPED UP BY ON-PREMISE DINING.” — Alex Budin, Jukebox owner
JUKEBOX
`BY RACHEL ABBEY MCCAFFERTY
And that goes beyond food and drinks. Jukebox long has had an active music trivia night, Budin said. So when the pandemic pushed everything online, that went virtual, too. And it “took off like wildfire,” drawing in people from outside of Cleveland, he said. So even though music trivia is back in person, Jukebox also hosts the event online simultaneously. “If you were to define Jukebox’s business structure pre-pandemic, we were a one-legged table,” Budin said. “We were propped up by on-premise dining. And when you take away on-premise dining, we didn’t really have anything to support the business. So I’ve used online ordering, carryout like using the food delivery apps like Uber Eats and Grubhub, to create more legs at the table.” Jukebox’s story isn’t unique. Small business owners are typi-
SCOTT ESTERLY
In day
cally about a “decade behind the technology curve,” said Roger Geiger, the Ohio executive director for the National Federation of Independent Business. Resources are limited, and there can be a lack of tech familiarity because many small business owners are 45 or older, he said. That aspect, though, has been changing as more younger people start businesses. Small business owners often hesitate to spend to upgrade their technology, said Lorne Novick, senior partner of services and deal flow management at JumpStart Inc. in Cleveland. But that can hold them back and hurt their revenue, especially during a pandemic that pushed business online. Small businesses have been asking JumpStart for help to increase their digital literacy in areas such as digital marketing, social media and financial technologies, Novick said.
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e r e f y r , -
FOCUS | SMALL BUSINESS Rashida VanLeer-McHargh was one of the business owners taking part in JumpStart’s Impact program during the pandemic. She runs Iron Koi, a boutique fitness studio in Shaker Heights that has been in business for almost a decade. She offers personal training and classes and had wanted to learn more about finances. But the program also helped her adapt to an online environment when that became necessary. Prior to the pandemic, VanLeer-McHargh didn’t even own a computer. Iron Koi had a website, but it wasn’t interactive, and she handled social media and banking for the business from her mobile phone. She was making a profit and doing well, so she didn’t see the need to change how she did business. But when the pandemic started, VanLeer-McHargh realized she did need to make a change. She got her studio connected to the internet and bought a computer, connecting with clients online and starting a YouTube channel. Even now that in-person sessions are an option, virtual meetings allow clients to keep sessions if they’re feeling a little under the weather, traveling or just busy, VanLeer-McHargh said. And she can’t imagine running her business any other way. “Because we are so seamlessly integrated,” she said.
The long game
SCOTT ESTERLY
In addition to helping with day-today tasks, access to the right technol-
Brian Hall
Jim Griggy
ogy plays a role in long-term planning for small businesses. The digital divide can be a hurdle for people who want to start a businesses, said Jim Griggy, a business advisor at the Ohio Small Business Development Center in Akron. If someone doesn’t have a home computer, it makes it difficult to research and put together a comprehensive business plan, which is necessary to get funding. And that challenge became even clearer last year, when the pandemic took away access to a lot of public computers. “Existing businesses have business systems in place. Good or not, they have their systems in place,” Griggy said. “And so, if they don’t have access, or don’t use digital technology, or don’t use computers ... they don’t miss it.” But there are challenges for existing businesses, too, such as those looking to apply for financial assistance like the CARES Act. The Small Business Development Center at the Urban League of Greater Cleveland has been running a financial literacy program, but the
The pandemic prompted Iron Koi owner Rashida VanLeer-McHargh to get more digitally connected to her fitness clients, including starting a YouTube channel.| CORE CITY: CLEVELAND IMPACT PROGRAM VIA YOUTUBE. COM
group found that many entrepreneurs were participating on their mobile phones, said director Shashonna Duckworth. Not only can such a small screen make it hard to see, it’s difficult to complete tasks like uploading documents, which is necessary for applications for assistance. The organization has been working to get donated devices to participants, and its computer lab has been open. The Greater Cleveland Partnership also has been hearing from companies that faced access challenges
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while trying to apply for financial assistance this past year. A lack of access to high-speed internet — which is the case in many low-income Cleveland neighborhoods — can lead to a lack of digital literacy, too, because people aren’t gaining familiarity by using the technology, said Brian E. Hall, senior vice president and executive director of equity and inclusion at GCP. A map of the neighborhoods without that access looks similar to a redlining map, Hall said. Those areas
with high-speed internet connections, and those without, were intentional decisions. And that affects people living in those neighborhoods, as well as the small businesses located within them. To close the gap, the access issue needs to be resolved first, Hall said, and then businesses will need exposure to and training on the different digital tools at their disposal. Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com
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Ashley Weingart found herself at an interesting crossroads in 2017. One year earlier, the marketing professional had started Perfectly Imperfect Produce (PIP) while working at Forest City Weingart Produce, a Cleveland Produce Terminal-based wholesaler operated by her in-laws. Weingart’s goal at the time was to sell discolored, bruised or undersized produce, which is often rejectMEDINA, OH ed by grocers and food service companies, at a discount to residents who 1-800-547-1538 lived in the neighboring East Side Salt Distributors Since 1966 communities and who, ironically, www.saltdistributormedinaoh.com had little access to fresh fruits and vegetables. Because a retail configuration was impractical, however, she found herself boxing the “ugly” rejects along with surplus crops and recipe ideas. Customers could either pick up a box or have it delivered via a partnership with Clockwork Logistics. And for every box purchased, PIP donated imperfect or excess finds to local food pantries. Word of the subscription service spread fast. Buoyed by social media and high-profile customers such as WKYC’s Betsy Kling, PIP cleared about $50,000 in revenue its first year, according to Weingart. But when Forest City Weingart Produce closed in 2017, after 117 years of business, the fledging entrepreneur was forced to 4/28/2020 1:25:01 PM decide “what to do next.” “Was I going to just chalk it up to good experience for the next thing or find a way to carry this thing through?” she said. “It was a strange position to be in because I never set out to start a business. I just thought I was creating this program that would help the farmers and the suppliers, and our community.” Ultimately, Weingart continued the rescue service by leasing space at Produce Packaging Inc.’s Carnegie Avenue facility. Today, PIP operates as a brand under her From Seed to
Spoon company. It was a good call. Sales “grew steadily,” she said, reaching roughly $300,000 in 2018 and about $600,000 in 2019. Then COVID hit, and PIP soared. Weingart said revenue for the five-person operation surpassed $2 mil- Weingart lion in 2020. “Last year was a wild ride,” she said. “April was our best month ever and then May was even better. … Over the course of a few months, we had something like five times more sales than we did before the stayhome order.” While not all those pandemic customers stuck with the service, PIP has “managed to keep a lot of them,” according to Weingart. “We’ve also learned over time that people come and go,” she said. Some prefer to shop at farm stands and farmers markets this time of year, Weingart said, but “will come back in the fall when they get back into their school routine.” Others enjoy using PIP during the summer because of the abundance of vegetables and fruits from local growers. “It’s like a farmers market that comes to them,” she said.
Produce aplenty Weingart and her team recently used the COVID windfall to roll out a meal kit that offers easy-to-cook dinners designed around its imperfect bounties. The service caters to people who don’t have the time or inclination to craft a meal from a produce “grab bag,” she said, but still want to eat healthy and support From Seed to Spoon’s mission. “To me, the meal kits are sort of the next evolution of what we’re all about, figuring out as many ways as possible to reduce food waste,” Weingart said.
She estimates PIP has rescued more than 1 million pounds of produce to date —200,000 pounds of which has been donated to Greater Cleveland food panties. The company has also kicked off distribution into Columbus, Toledo, Cincinnati and Dayton, Weingart added. As the customer base outside of Northeast Ohio grows, she said, the company will identify food bank partners in other regions as well. Greg Fritz, owner of Produce Packaging, said alongside the community benefit, produce-rescue services are “valuable” to food processors and their suppliers because they provide a revenue stream — even if at “a reduced rate” — for waste they would otherwise have to pay to dispose or compost. “It’s obviously better to get some income out of it before you have to dump it,” said Fritz, whose company renovated and relocated to a former Sam’s Club warehouse in Willoughby Hills in 2019, taking PIP with it. “And it’s just convenient to have a customer right in our facility. It cuts down on the freight, and we can work closer together.” Produce Packaging provides sliced and diced, ready-to-eat fruits and vegetables for restaurants, schools and food distributors. In addition to leasing space from Produce Packaging, PIP contracts the company’s packing employees and uses some of its equipment. Weingart foresees limited headwinds to sustained growth. While keeping packaging lines well-staffed and sourcing cardboard are two challenges in the recovery economy, “there’s never a shortage of produce that needs a home,” she said. “We can always find plenty of that.” Contact Judy Stringer: clbfreelancer@crain.com
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FOCUS | SMALL BUSINESS | TAX TIPS
Meals and entertainment rules are on the move again BY JONATHAN CICCOTELLI
The meals and entertainment (M&E) deduction got a massive overhaul when President Trump signed the Tax Cuts and Jobs Act (TCJA) in 2017. Entertainment expenses became nondeductible, and businesses lost a good portion of their meal expense deductions. But the rules have changed in the years since to restore at least some of the M&E deduction. These allowances are only temporary, but they come at a time when businesses are recovering from the economic downturn. You’ll want to take advantage of them while you can.
Timeline of changes In 2017 and prior, businesses could deduct half of most meals and entertainment expenses, with a few exceptions that allowed for a 100% deduction. This changed in 2018. ` TAX CUTS AND JOBS ACT Beginning in 2018, the TCJA made virtually all entertainment expenses nondeductible. The law did not amend the meals deduction, but taxpayers found themselves questioning if that is what the TCJA intended. ` IRS NOTICE 2018-76 IRS Notice 2018-76, published in October 2018, reminded taxpayers that in general meals continued to be 50% de-
ductible if the following was true: ` The expense was not lavish or extravagant. ` The expense was an ordinary and necessary business cost. ` The taxpayer Ciccotelli is a (or their employ- partner-inee) is present charge for when the meals Meaden were furnished. &Moore’s Tax ` The meals went Service Group. to a current or potential customer, client or other business contact. ` The meal costs were separately stated on the invoice. But taxpayers wondered how they should differentiate between meals and entertainment expenses, especially in situations where meals were provided alongside a recreational activity. ` FINAL REGULATIONS (TD 9925) In late 2020, the IRS released final regulations that reiterated that entertainment expenses were almost never deductible. This includes dues or fees paid to social, athletic or sporting clubs or organizations. But it did provide a caveat: A business could take a 50% deduction for meals served during entertainment activities as long as those costs were separately stated on the invoice.
What to deduct in 2021 and 2022 Meals may or may not be a significant line item for you, but it’s important you classify your expenses correctly so you can optimize your deduction. Below is a summary of what expenses are deductible in 2021 and 2022, and how that deduction will change in 2023. 2021-2022
2023+
Entertainment expenses Not deductible Business meals provided by a restaurant 100% deductible Restaurant costs incurred while traveling for business 100% deductible Restaurant meals incurred alongside an entertainment activity (like the cost of a hot dog while at a baseball 100% deductible game), as long as the cost is separately stated Meals treated as de minimis fringe benefits (like snacks provided in the break room) 50% deductible Food purchased at holiday parties and company picnics 100% deductible Food made available to the general public (like waiting room snacks) 100% deductible Meals provided for the convenience of the employer 100% deductible if food is (like when food is served during a monthly meeting) purchased from a restaurant Meals included in employees’ gross wages 100% deductible
Not deductible 50% deductible 50% deductible
SOURCE: JONATHAN CICCOTELLI
The regulations listed exceptions to the 50% meals deduction, allowing a full deduction in the following scenarios: ` Meals that are treated as compensation or as taxable fringe benefits (nontaxable de minimis fringe benefits are only 50% deductible). ` Food available to customers, clients, visitors and members of the general public (such as waiting room snacks). ` Meals provided to employees during a recreational activity for their benefit (such as food provided at holiday par-
50% deductible
50% deductible 100% deductible 100% deductible 50% deductible 100% deductible
CRAIN’S CLEVELAND BUSINESS GRAPHIC
ties where all employees are invited). ` CONSOLIDATED APPROPRIATIONS ACT, 2021 (CAA) Not long after the IRS released its final regulations on the TCJA’s amendments, Congress passed yet another law that changed M&E deductions. The Consolidated Appropriations Act (CAA), which was passed in late December 2020, temporarily reversed some of the TCJA’s restrictions on 100% meals deductions. In general, it
allows businesses to take a 100% deduction for meals provided by a restaurant in 2021 and 2022. For purposes of this temporary allowance, a “restaurant” is a business that prepares and sells food or beverages for immediate consumption (including takeout) but does not include businesses that sell prepackaged food or beverages. This means that food purchased from grocery stores, liquor stores, drug stores, vending machines, convenience stores and more continues to be subject to the 50% limitation. The CAA also clarifies that an eating facility located on the premises (like a cafeteria) is not considered a restaurant for the 100% deduction. Unfortunately, the M&E deduction is still on the move. The meals deduction will change again in 2026. Unless another law is passed that changes this provision, the TCJA will disallow expense deductions for the following costs beginning in 2026: ` The operation of an eating facility and the food costs associated with that eating facility. ` Meals for the convenience of the employer. One of the best things you can do to stay on top of these law changes is to try to classify your expenses properly from the beginning. Even if you’re unsure which expenses are deductible, if you group like expenses together, an accountant can determine the correct deduction come tax time.
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State and Federal Communications dangles feet in acquisition pool Akron compliance agency sees more growth opportunities on the horizon BY JUDY STRINGER
Growth historically has been more of the organic nature for State and Federal Communications Inc. Over nearly three decades, the Akron firm — which educates and consults clients on lobbying regulations — has expanded its reach among Fortune 500 companies, heavyweight nonprofits and national trade associations while also broadening its scope of expertise both stateside at the municipal level and internationally in Canada and Europe. Employment has increased from two people in 1993, when president and CEO Elizabeth Bartz set up shop in Akron, to 40 today. Yet Bartz predicts growth through acquisition could play a more dominate role in the future. “There are quite a few [consultants] out there who are looking to retire and who have been doing this
ton. The acquisition, which closed in December, was announced in April. While Bartz declined to provide terms of the deal, she said MER Consulting brings her company a fresh client roster. Owner Mary Roche catered exclusively to political compliance reporting and registration in Massachusetts, one of the strictest states in terms of lobbyists and campaign contributions.
A good fit
And given that many of Roche’s clients have operations outside of Massachusetts as well, Bartz and her team will have an opportunity to bolster business elsewhere. Bartz said Roche will stay on with the company for one year to help transition her clients. MER did not have any other employees. The MER acquisition is precisely the kind of deal Bartz thinks State and Federal is well positioned to re“THERE ARE QUITE A FEW peat a few times over. Roche had [CONSULTANTS] OUT THERE WHO ARE built the consultancy from scratch and LOOKING TO RETIRE AND WHO HAVE 21 years was BEEN DOING THIS AS LONG AS I HAVE.” after ready to retire. — Elizabeth Bartz, president and CEO, “Because we’re State and Federal Communications in the same business, she knew that as long as I have,” she said. “And we if we took over her clients, we would have the legs to keep going. My staff treat them with the same love and is strong.” affection she always has given State and Federal recently got its them,” Bartz said. first taste of takeover, buying MER The CEO said other “Marys” are Consulting Services LLC out of Bos- out there — sole-practitioners or
small compliance agencies whose principals would gladly ride off into the sunset if they could find “someone to care of their clients.” That’s not to say Bartz has been pounding the pavement looking for targets, at least not yet. She’s put out a few feelers but admits even with the MER deal, Roche called her. Nor does it mean Bartz isn’t thinking about retirement herself. “I’m looking at other options, an [employee stock ownership plan] or something like that. I’m not looking to sell my company,” she said. “My staff has a huge investment in State and Federal Communications, and I have a huge investment in them.” Bartz founded State and Federal after buying the communications department, which she managed at the time, of her former employer State and Federal Associates in Washington, D.C. The Akron company specializes in helping clients adhere to the rules and regulations that govern lobbying and political donations, which vary from state to state and even among municipalities and quasi-public entities like port authorities and lottery commissions, according to Jonathan Spontarelli, the company’s marketing and digital media manager. “The Los Angeles Metropolitan Transit Authority, for example, has its own set of lobbying and government relations and campaign finance laws,” Spontarelli said. “It’s so vastly different across these different jurisdictions that it’s really
impossible for individuals and organizations to keep track of all of that without the kind of service that we provide.” Some clients are solely subscribers to the firm’s online publications and resources and navigate compliance on their own. But the lion’s share of the business — about 75% of the State and Federal’s revenue, according to Bartz — is direct compliance consulting with clients. The latter has been particularly important of late, she said. Take salespeople who are used to meeting and greeting politicians and other purse-string pullers in person over cocktails and golf tees. “Now they’re doing everything by Teams and Zoom, and they just really need to know is what considered lobbying in this state versus that state,” Bartz said. “We’re doing a lot of that kind of training for sales staffs.” The pandemic aside, Bartz noted consulting services to pharmaceutical and medical device trade groups as one of State and Federal’s growth segments. Spontarelli said the company also has built on its municipal work. It currently covers 300 local government or public-private agencies. He added that retail construction, particularly pre-pandemic, and the emergence of new markets like cannabis have buoyed business, too. “We have a big foothold in retail. Mostly they are dealing with local zoning issues when they’re trying
Elizabeth Bartz
to build a new location,” Spontarelli said. “Cannabis is coming on the scenes, so it’s not nationwide yet or a super deep market, but we are early to the table.” Looking ahead, Bartz anticipates a groundswell of work related to state elections. One-third of the country will vote on governorships and/or other statewide offices in 2022, she said. “So, yes, it will be a busy year,” said Bartz, an enthusiastic business traveler, who is eager to trade Zoom meetings for the real thing. “And the timing will be good because I miss these people. I miss going to events.” Contact Judy Stringer: clbfreelancer@crain.com
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14 | CRAIN’S CLEVELAND BUSINESS | JUNE 14, 2021
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SPONSORED CONTENT
2021
EXECUTIVE GOLF GUIDE
An in-depth look at some of the region’s courses and their amenities Last summer, golf became an increasingly popular sport among those eager to find outdoor activities within social distancing guidelines.
For example, Manakiki in Willoughby is among one of the few Donald Ross courses in the state open to public play since it was obtained by the Cleveland Metroparks.
As restrictions end, golf clubs can return to full operations and utilize all amenities such as clubhouses, restaurants, pro shops and more.
Architect and design are not the only contributing factors of a great golf course, though.
In a 2020 Golfweek ranking of states with the best private golf courses, Ohio was top-rated for elite golf ahead of staple destinations like Florida and North Carolina.
Our Executive Golf Guide also details course amenities, varying fees, golf shop highlights, event information and everything else you need to know to help you make the most of NEO’s golf course offerings.
Yet, you do not have to be a member of a private club to play at a high-caliber course designed by highly renowned architects.
– Shannon Smith, Crain’s Content Studio-Cleveland
CONTENTS
Pg. S2 - Bunker Hill Golf Course Pg. S3 - Cleveland Metroparks golf courses Pg. S4 - Firestone Country Club Pg. S5 - Pine Hills Golf Club Pg. S6 - Westfield Country Club
This advertising-supported section/feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.
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EXECUTIVE GOLF GUIDE
S2 June 14, 2021
WHAT’S NEW
BUNKER HILL GOLF COURSE
In 2017, Bunker Hill Golf Course hired general manager Chad Gibson. Three years later, Steve and Sue Ross became co-owners — the perfect additions to the history and excellence that superintendent Scott Brickley and owners Arnold and Cheri Ingraham had already put in place for decades.
330-722-4174 3060 Pearl Road, Medina, OH 44256 www.bunkerhillgolf.com COURSE FEATURES Voted one of Ohio’s top golf courses, as well as the Medina Gazette’s “Medina County Readers Choice Best of the Best” for several years, Bunker Hill Golf Course offers golfers four sets of tees to choose from: Black (6,711 yards), Blue (6,211 yards), White (5,316 yards) and Gold (4,972 yards). The course is also known for having some of the best greens in Northeast
Since then, the Rosses have played a major role in the course’s and clubhouse’s recent improvements, as equipment has also been upgraded, a new event center has been developed and new landscaping has been added.
Ohio, while offering some of the state’s best golfer experiences and customer service too. Aside from its four tees, greens and service, Bunker Hill also provides golfers six state-of-the-art indoor simulators, so they can work on their games all year long, while enjoying various events, leagues and outings. The simulators, which have a large seating area, cost $32 per hour.
PUBLIC Additionally, Bunker Hill is currently overseeing a three-year, roughly $1 million renovation that will include concrete cart paths (from the tee boxes to the greens), drainage under the greens and throughout the course, and the complete construction of a new 18th green, along with its surroundings. FEES – WEEKDAY/WEEKEND On weekdays, rates for 18 holes with a cart are $45 for adults. As long as they play before noon, seniors only have to pay $35 for 18 holes with a cart. On weekends and holidays, rates
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are $55 before 2:30 p.m., and then $45 afterwards. Early bird specials ($25 for 18 holes with a cart) are also available on weekdays before 7 a.m. OPTIONS FOR CATERING/ GROUP OUTINGS/EVENTS General manager Chad Gibson and his team deliver the ultimate golfer experience and specialize in golf outings, corporate events and client/ customer appreciation. He is also known for his expertise in hosting turnkey fundraisers that support the local community. In addition, the Bunker Hill Event Center
hosts weddings, showers, rehearsal dinners, reunions, graduations, concerts and fall clambakes. For more information on golf outings and events, send an email to chad@bunkerhillg.com or a text to 216-469-9241.
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CLEVELAND METROPARKS GOLF COURSES 216-635-3200 www.clevelandmetroparks.com/golf Cleveland Metroparks’ eight golf courses lay nestled in a ring of forests, rivers and valleys, which surround the city of Cleveland and are locally coined “The Emerald Necklace.” While each course is unique in its own right, Manakiki in Willoughby and Sleepy Hollow in Brecksville rank among the top public courses in Ohio — and for good reason. BIG MET AND LITTLE MET GOLF COURSES Tucked in the rolling hills of Rocky River Reservation, the 6,481-yard, par-72 Big Met Golf Course (4811 Valley Parkway, 440-331-1070) and the 2,527-yard, par-34 Little Met Golf Course (18599 Old Lorain Road, 216-941-9672) offer something for everyone. Believed to be Ohio’s most played 18-hole golf course, Big Met
(built in 1926) features rolling hills, a moderate length and the scenic beauty of the Rocky River Valley. Built in 1924, Little Met, meanwhile, provides a longer nine holes than Mastick Woods, but not nearly the length of its neighbor, Big Met.
in 1964 and located in Rocky River Reservation (19900 Puritas Road, 216-267-5626), is ideal for juniors, new players or those looking for a leisurely golf experience. Meanwhile, the 1,460-yard, par-29 Washington Golf Course in Newburgh Heights (3841 Washington Park Blvd., 216-641-1864), which was built in 2006 and features a driving range, is only 10 minutes from downtown Cleveland. SENECA GOLF COURSE Located at the highest point in Cuyahoga County, Seneca Golf Course in Broadview Heights (975 Valley Parkway, 440-526-0043)
June 14, 2021 S3 offers 27 scenic holes, many of which have been newly renovated, as they were built in 1940. The course is primarily known for some lengthy par-4s and par-5s. SHAWNEE HILLS GOLF COURSE Shawnee Hills Golf Course in Bedford (18753 Egbert Road, 440-232-7184) is often noted as Cleveland Metroparks’ most versatile course, as it’s able to serve golfers of all skill levels on its 6,366-yard, 18-hole regulation course and ninehole, par-3 course. Shawnee Hills offers hills, large pines, maples and oaks, along with the beautiful Deer Lick Creek.
MANAKIKI GOLF COURSE Located 17 miles east of downtown Cleveland, the 6,643-yard, 18-hole Manakiki Golf Course (35501 Eddy Road, 440-942-2500) is an elegant, par-72 public course with a classic Donald Ross design. It offers a variety of challenges, including doglegs, water hazards, up-and-down shots, back-to-back par-5s and two canyon holes. MASTICK WOODS GOLF COURSE AND WASHINGTON GOLF COURSE Due to its executive length, Cleveland Metroparks’ 1,900-yard, par-31 Mastick Woods Golf Course, built
SLEEPY HOLLOW GOLF COURSE The 6,893-yard, 18-hole Sleepy Hollow Golf Course in Brecksville (9445 Brecksville Road, 440-5264285) provides spectacular views of the Cuyahoga River Valley and a classic “out and in” layout. Designed by Stanley Thompson in 1924, the par-71 course is known for its aesthetic beauty and challenging play.
WHAT’S NEW In addition to the various golf courses across Northeast Ohio, Cleveland Metroparks offers lessons for golfers of all ages and skill levels. Golf camps, golf leagues and tournaments are also provided throughout the golf season. Learn more about Cleveland Metroparks golf courses, including ways you can save on your next round, by visiting clevelandmetroparks.com/golf.
PUBLIC
Choose from eight courses throughout Northeast Ohio. Play Sleepy Hollow and Manakiki - two of Golfweek’s top courses in Ohio. Enjoy scenic beauty.
Book your tee time today at clevelandmetroparks.com/golf ©Registered trademark of Cleveland Metroparks.
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S4 June 14, 2021
WHAT’S NEW
FIRESTONE COUNTRY CLUB
Since 2019, Firestone Country Club’s South Course has hosted PGA TOUR Champions’ the Bridgestone SENIOR PLAYERS Championship. It is set to host the tournament — one of the tour’s five major championships — until 2022, joining a tradition that dates back more than 65 years, as the club has consistently hosted a variety of tournaments, including the World Series of Golf.
330-644-8441 452 E. Warner Road, Akron, OH 44319 www.firestonecountryclub.com YEARS BUILT: South Course (1929); North Course (1969); Fazio Course (2002); Raymond C. Firestone Public 9 Course (1995) GENERAL MANAGER: Jay
Walkinshaw YARDAGES, BACK TEES: South
Course (7,400 yards); North Course (7,125 yards); Fazio Course (6,904 yards); Raymond C. Firestone Public 9 Course (3,008 yards) NUMBER OF HOLES/PAR:
South Course (18 holes, par-70); North Course (18 holes, par-72); Fazio Course (18 holes, par-70); Raymond C. Firestone Public 9 Course (9 holes, par-35) COURSE FEATURES AND DESIGNERS Renowned for its length, as it has long par-4 holes, along with a par-5
that’s 667 yards, the South Course features bentgrass fairways and greens. In addition, the Bert Way and Robert Trent Jones Sr. design, which has hosted major championships and PGA TOUR events, has a rating of 76.1 (course)/132 (slope). Meanwhile, the North Course, marked by numerous lakes and streams and meticulously designed to showcase Firestone’s natural beauty, has served as host to both the American Golf Classic and the World Series of Golf. Golf & Travel magazine once listed this Robert Trent Jones Sr.-designed course, which has a rating of 74.8 (course)/134 (slope), among the top 100 best modern courses. On the other hand, the links-style Fazio Course, which has a rating of 73.5 (course)/128 (slope), along with bentgrass fairways and greens, was designed by Tom Fazio. It was built around the perimeter of the South Course.
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As a result, attendees can walk in the footsteps of legends like Jack Nicklaus, Arnold Palmer and Sam Snead, along with present-day stars, such as Fred Couples, Retief Goosen, Jerry Kelly and José María Olazábal.
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A PRIVATE CLUB WITH LIMITED PUBLIC “STAY AND PLAY ” OPPORTUNITIES In addition, the Raymond C. Firestone Public 9 features four sets of tees, fast greens, undulating terrain and a heated driving range. OPTIONS FOR EVENTS, MEETINGS AND OUTINGS Firestone Country Club welcomes members and guests to bring their business associates, potential clients and business contacts to its courses, in order to enjoy the golf experience of a lifetime. Aside from golf, Firestone also offers 30 dormitorystyle rooms (in its men’s locker room) that feature nostalgia and pay
NU homage to the club’s history, dating back more than 50 years. Furthermore, Firestone’s clubhouse has men’s and ladies’ locker rooms, a pro shop, and casual and fine dining options as well. And, for a resort golf experience, the club also provides 57 private, golf villa rooms, each of which has stunning views of Firestone’s courses. From its championship golf courses, to its well-equipped conference rooms, the club also offers the perfect spaces for all types of business
activities, including interviews, executive board meetings, seminars and training sessions. Guests’ and members’ various business needs are covered with all-inclusive meeting packages, along with a team of onsite private event directors, who are fully prepared to serve members and guests. For more information, visit clubcorp.com/clubs/firestonecountry-club/amenities.
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PINE HILLS GOLF CLUB
a wide selection of clothes, golf shoes and clubs from Callaway, FootJoy, Mizuno, Ping, TaylorMade, Titleist and Under Armour. Furthermore, it offers guests a comfortable clubhouse with food and drinks, a large, covered, outdoor patio and a premier short game practice range with target greens and a chipping area.
330-225-4477 433 W. 130th St., Hinckley, OH 44233 www.golfpinehills.net
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YEAR BUILT: 1957 HEAD GOLF PROFESSIONAL AND GENERAL MANAGER:
David Kinnell, PGA YARDAGE, BACK TEES: 6,748
yards NUMBER OF HOLES/PAR: 18
holes, par-72 COURSE FEATURES AND DESIGNER Designed by renowned golf course architect Harold (Paddy) Paddock, who designed a wide array of courses throughout the United States, including many in Ohio (like Avon Oaks Country Club and Columbia Hills Country Club), Pine Hills Golf Club offers golfers a traditional course layout. Featuring a slope rating of 133 from the back tees, Pine Hills also has a variety of tree-lined holes, undulating
terrain (which leads to elevation changes), bentgrass fairways and fast greens that will test golfers of all skill levels.
ACCOLADES An annual host of the OHSAA Northeast Boys Division 1 District Tournament, as well as various boys and girls high school tournaments,
Providing golfers an array of natural features too, including creeks, lakes and ravines, Pine Hills is especially known for its downhill par-3 4th hole, as well as its signature 18th hole, one of Northeast Ohio’s best finishing holes.
Pine Hills Golf Club was rated one of Golfweek’s top 10 public courses in Ohio this year. In addition, it is consistently rated one of the “must play” courses in Northeast Ohio. TESTIMONIALS “Pine Hills is a beautiful course. Plenty of challenging hole layouts keep you focused. The course is well maintained and the staff is friendly. Today, the greens were super-fast, but that’s part of the game. Pine Hills is worth playing frequently.” – A monthly customer
“Pine Hills is an absolutely gorgeous course to play, and is well worth every dime you pay. Greens are like glass and the fairways and rough are well maintained so that the lies aren’t bad for anyone, unless it plugs. [It also has a] friendly staff and [a] beautiful driving range, putting green and chipping area.” – A frequent customer
WHAT’S NEW Pine Hills Golf Club’s practice area has recently been renovated, and is now available for public use. The club is currently renovating its bunkers and cart paths though; the bunker renovation project should be completed in 2022. Meanwhile, the cart path renovation project will be completed in stages over the next several years to minimize disruption to players.
PRACTICE RANGE Opened in 2019, a small practice range, utilizing shots of up to 200 yards, was constructed to offer golfers a chance to warm up before their rounds, or to work on their games, while using premium Titleist range balls. In recent years, a short game area and large grass tee have been added to the area too. PRO SHOP, CLUBHOUSE AND OTHER AMENITIES Pine Hills Golf Club also has one of the area’s largest pro shops, as it provides
June 14, 2021 S5
During these renovations, the club will continue to host weekly men’s and women’s leagues, various outings, including the Northern Ohio Hemophilia Foundation Outing, and high school boys and girls golf tournaments.
PUBLIC
A PUBLIC GOLF COURSE WITH COUNTRY CLUB CONDITIONS & HOSPITALITY
Visit our website at www.golfpinehills.net to
See Specials & Book Tee Times WITH ONE OF THE LARGEST FULL SERVICE PRO SHOPS IN THE AREA, WE ARE A SHORT DRIVE AWAY. LOCATED ONE MILE FROM THE INTERSECTION OF STRONGSVILLE, NORTH ROYALTON, BRUNSWICK, AND HINCKLEY, 20 MINUTES FROM THE AIRPORT, AND 25 MINUTES FROM DOWNTOWN. 433 WEST 130TH STREET | HINCKLEY, OHIO 44233 | (330) 225-4477 Pine Hills CC.indd 1
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S6 June 14, 2021
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WHAT’S UNIQUE
WESTFIELD COUNTRY CLUB
Westfield Country Club offers two distinct courses in one location. The North Course transports members to a rustic, open terrain for a links-style experience. Meanwhile, the South Course offers a traditional parkland-style experience. Both courses also use a five-tee system that facilitates greater playability for all skill levels.
330-887-6606 6500 Greenwich Road, Westfield Center, OH 44251 www.westfieldcc.com YEARS BUILT: North Course (1975); South Course (1937) DIRECTOR OF GOLF: Chad
Kitzmiller, PGA YARDAGE, BACK TEES: North
Course (6,733 yards); South Course (6,774 yards) NUMBER OF HOLES/PAR:
North Course (18 holes, par-70); South Course (18 holes, par-71) COURSE DESIGN In 1937, Westfield Country Club’s historic South Course’s original nine holes were completed. Since then, nine more holes have been added to the course, as another 18-hole course has also been developed: the North Course, which opened in 1975. Forty years after this opening,
Westfield decided to partner with Hurdzan Golf Design to redesign both courses. Now that the multi-year renovations (which occurred from 2017 to 2020) have been completed, the par-71 South Course offers golfers 6,800 yards of meticulously manicured playing surfaces, tree-lined fairways and beautiful water features. On the other hand, the 6,733-yard, par-70 North Course is a links-style motif that features firm playing surfaces, open vistas, sod- and timber-walled bunkers, and fescue in the secondary rough. GOLF AMENITIES AND EVENTS Westfield Country Club’s 36-hole facility is complemented by a new 17-acre practice facility, which features a lighted, 25,000-squarefoot putting green, along with two practice holes. The facility provides a variety of practice options for those who find it difficult to dedicate several hours to a full round of golf.
PRIVATE In addition, the club hosts frequent golf events and men’s and women’s leagues — and is the selected site for the 2021 U.S. Women’s Amateur qualifier, as well as the 100th annual Ohio Open. GOLF SHOP The club’s well-stocked Golf Shop, awarded “Merchandiser of the Year” by the Northern Ohio PGA and recognized as a “Top 100 Golf Shop” by the Association of Golf Merchandisers (AGM), offers a wide selection of items, including custom orders. From clubs, golf bags and shoes, to the latest in golf fashion, the Golf Shop is equipped to prepare you for a great day on the course.
ADDITIONAL AMENITIES As a place to entertain for business or pleasure, the club also has an Olympic-sized swimming pool with a snack bar, tennis and pickleball programs, and lawn sports that appeal to golfers and non-golfers alike. Furthermore, the club has a restaurant, known as Firemark Grille, which features cuisine that uses fresh, locally sourced ingredients.
array of events, ranging from small golf outings, to strategic business meetings, to weddings. These facilities, conveniently located between Cleveland and Columbus off US 224, I-71 and I-76, feature a variety of outdoor event spaces too, including a large, tented patio, a pavilion and multiple outdoor seating areas that have beautiful championship golf course views.
BUSINESS EVENTS AND CELEBRATIONS Westfield Country Club — and its sister properties, Blair Conference Center and Westfield Inn — have the amenities and experience to host an
Milestones Happen Here Growing a business. Inspiring a team. Meeting the future in-laws. Life’s biggest moments come more easily when you’re surrounded by impeccable amenities and warm hospitality. At Westfield Country Club, we help you create those meaningful experiences – for business and for life. Join today and start building the relationships that matter most. www.westfieldcc.com
®
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INTRODUCING THE 2021 WOMEN OF NOTE! Ayonna Blue Donald
Director, Department of Building and Housing City of Cleveland
Diane Beastrom President and CEO Koinonia
Laura Duda
Senior Vice President, Chief Communications Officer Goodyear
Barbara Faciana
Co-CEO Pleasant Valley Corporation / NAI Pleasant Valley
Sarah Flannery
Partner Thompson Hine LLP
Katharine Goss GOLD SPONSOR:
President and CEO Lakeview Cemetery
Heidi Gullet
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Marcia Moreno
President and Founder AmMore Consulting LLC
Jill Paulsen
Executive Director Cuyahoga Arts and Culture
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President/Editor Global Chinese Service LLC Erie Chinese News, Yili China News
Cheryl Stephens
President and CEO East Akron Neighborhood Development Corp, member of Cuyahoga County Council
Jodi van der Wiel Design Director Vocon
Carla Harwell
Medical Director, UH Otis Moss Jr. Community and Health Center University Hospitals Health System
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CRAIN'S LIST | FAMILY-OWNED BUSINESSES Ranked by full-time equivalent employees in Northeast Ohio RANK
1 2 3 4 5 6 7 7 9 10 11 12
COMPANY
LOCAL FTE STAFF 3-1-2021/ 1-YEAR CHANGE
MINUTE MEN COS., Cleveland 216-426-9675/minutemenhr.com
FIRST-GENERATION OWNER
YEAR FOUNDED
TYPE OF ORGANIZATION
TOP LOCAL EXECUTIVE(S)
21,760 1 3.1%
Sam Lucarelli
1967
Staffing and employment services firm
Jay Lucarelli, CEO
MTD PRODUCTS INC., Valley City 330-225-2600/mtdproducts.com
3,000 —
Theo Moll
1932
Design, manufacture and sale of outdoor power equipment
Robert T. Moll, chairman, CEO, and president
GOJO INDUSTRIES INC., Akron 330-255-6000/gojo.com
2,178 24%
Goldien and Jerry Lippman
1946
Manufacturer of skin health and surface hygiene products
Carey Jaros, president, CEO Marcella Kanfer Rolnick, executive chair
GANLEY AUTO GROUP, Brecksville 440-584-8202/ganleyauto.com
2,022 7.8%
Thomas D. Ganley
1968
Auto dealership group
Kenneth G. Ganley, president, CEO
HEINEN'S INC., Warrensville Heights 216-475-2300/heinens.com
1,738 —
Joe Heinen
1929
Grocery store chain
Jeffrey Heinen Tom Heinen, co-presidents
SPRENGER HEALTH CARE SYSTEMS, Lorain 440-989-5200/sprengerhealthcare.com
1,043 -11.6%
Grace Sprenger
1959
Senior housing and care continuum services provider
Nicole Sprenger, CEO Michael Sprenger, COO
AIM TRANSPORTATION SOLUTIONS, Girard 800-321-9038/aimntls.com
1,000 0%
Tom Fleming
1962
Truck and trailer rental and leasing, logistics maintenance
Tom Fleming, chairman, CEO
SPITZER MANAGEMENT INC., Elyria 440-323-4671/spitzer.com
1,000 0%
George G. Spitzer
1904
Automotive retail, real estate development, golf course and marina management
Alan Spitzer, chairman, CEO
INFOCISION, Akron 330-668-1400/infocision.com
908 -24.3%
Gary Taylor
1982
Telemarketing/direct marketing firm
Craig Taylor, CEO Karen Taylor, board chair
GREAT LAKES CHEESE, Hiram 440-834-2500/greatlakescheese.com
900 25.9%
Hans Epprecht
1958
Packager and manufacturer of natural and processed cheese
Dan Zagzebski, president, CEO
DAVE'S SUPERMARKETS, Bedford Heights 216-763-3200/davesmarkets.com
805 -1.7%
Alex Saltzman
1935
Supermarket operator
Daniel Saltzman, president
SANDRIDGE FOOD CORP., Medina 330-725-2348/sandridge.com
780 14.7%
Vincent R. Sandridge
1960
Manufacturer of refrigerated entrees, salads, soups and side dishes
Mark D. Sandridge, chairman, CEO
YOUR BUSINESS IS OUR BUSINESS Contact Jon Ruple + jruple@maloneynovotny.com + 216.363.0100
13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
VITAMIX, Olmsted Township 800-848-2649/vitamix.com
730 17%
William G. “Papa” Barnard
1921
Manufacturer of blending equipment for home and commercial use
Jodi L. Berg, president, CEO
OHIO CAT, Broadview Heights 440-526-6200/ohiocat.com
659 8.9%
Thomas H. Taylor Sr.
1945
Service, sales and rental for Caterpillar equipment and engines
Kenneth E. Taylor, president
JANITORIAL SERVICES INC., Cuyahoga Heights 216-341-8601/jsijanitorial.com
645 17.3%
Ronald Martinez Sr.
1969
Janitorial services company
Ronald Martinez Jr., president
OATEY CO., Cleveland 216-267-7100/oatey.com
630 —
L.R. Oatey
1916
Manufacturer of plumbing products
Neal R. Restivo, CEO
THE RESERVES NETWORK INC., Fairview Park 866-876-2020/trnstaffing.com
625 1 -7.8%
Don Stallard
1984
Temporary, temp-to-hire and direct hire staffing services firm
Neil Stallard, CEO
EAST MANUFACTURING CORP., Randolph 330-325-9921/eastmfg.com
500 -4.8%
Howard Booher
1968
Manufacturer of aluminum semi-highway trailers, truck bodies and parts
Gary Brown, senior vice president, operations
COMPONENT REPAIR TECHNOLOGIES, Mentor 440-255-1799/componentrepair.com
440 -2.2%
Thomas Wheeler
1985
Aviation maintenance repair and overhaul
Rich Mears, president Thomas Wheeler, owner
CAR PARTS WAREHOUSE, Brook Park 216-676-9304/carpartswarehouse.net
435 -3.3%
Tonino and Carmelina Di Fiore
1975
Automotive parts distributor
Tony G. Di Fiore, owner
VALLEY TRUCK CENTERS, Valley View 216-524-2400/valleyfordtruck.com
418 4%
Brian E. O'Donnell
1964
Dealership management group
Brian E. O'Donnell, president, CEO
FAMOUS ENTERPRISES INC., Akron 330-762-9621/famous-supply.com
400 0.3%
Hyman Blaushild
1933
Distributor of HVAC, plumbing, industrial/PVF and building products
Marc Blaushild, president, CEO
THE K&D GROUP, Willoughby 440-946-3600/kandd.com
385 0%
Douglas E. Price III, Karen M. Paganini
1984
Owner and manager of 10,000 apartments throughout Northeast Ohio
Karen M. Paganini, president, COO Douglas E. Price III, CEO
RON MARHOFER AUTO FAMILY, Stow 330-688-6644/marhofer.com
361 -12.2%
John Marhofer
1919
Auto dealer
Ron Marhofer, chairman, CEO
KING NUT COS., Solon 440-248-8484/kingnut.com
360 -2.7%
Michael Kanan
1927
Snack nut and food manufacturer
Martin Kanan, president, CEO
ORLANDO BAKING CO., Cleveland 216-361-1872/orlandobaking.com
330 -17.5%
Guistino Orlando
1872
Baker serving breads and rolls
John Anthony Orlando, president, CEO
SIRNA & SONS PRODUCE, Ravenna 330-298-2222/sirnaandsonsproduce.com
320 -5.3%
Gaetano Sirna
1979
Food distributor
Tom Sirna, president Vince Sirna, vice president
THE CAFARO CO., Niles 330-747-2661/cafarocompany.com
300 0%
William M. Cafaro
1949
Real estate development and shopping mall management firm
William A. Cafaro Anthony M. Cafaro Jr., co-presidents
OHMAN FAMILY LIVING, Newbury 440-338-8220/ohmanfamilyliving.com
275 2.2%
George H. Ohman Sr.
1965
Post-acute health care system
George H. Ohman Jr. Anderson C. Ohman Sr., co-presidents
NEW HORIZONS BAKING CO., Norwalk 419-663-6432/newhorizonsbaking.com
274 -0.4%
Tilmon F. Brown
1967
Commercial bakers
Trina J. Bediako, CEO
Research by Chuck Soder (csoder@crain.com) | Information is supplied by the companies. In addition to being majority owned by a single family, to be eligible for this list companies must have at least two family members in management, or they must have been passed down from a previous generation. NOTES: 1. This is a staffing firm; the vast majority of these employees work on behalf of other companies.
Get all 94 firms and more than 380 executives in Excel format. Become a Data Member: CrainsCleveland.com/data 22 | CRAIN’S CLEVELAND BUSINESS | JUNE 14, 2021
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DATA SCOOP
Number of female family members in management rises on Crain’s list BY CHUCK SODER
Local family-owned businesses appear to be putting more female family members in management positions, judging by data from our 2021 Family-Owned Businesses list. Women account for 29.6% of all family members in management at the 94 companies on the full Excel version of the list. That’s up from 23.2% in 2019 and 16.7% in 2017, according to data from previous lists. Granted, the list doesn’t include the same companies every year. Dozens of businesses have been added to the list since 2017, and some companies no longer appear on the list. New additions to the list drove almost all of the increase between 2017 and 2019. Over the past two years, however, the increase has been broader. The percentage of female family members in management drops only slightly if you exclude companies added over the past two years, or if you limit the sample to the 61 companies with at least 100 full-time equivalent employees in Northeast Ohio. And the percentage would have been slightly higher if we included a handful of companies from the 2019 list that aren’t on this year’s
Johnson & Sons ... & Daughters? The number of female family members in management is on the rise for companies on our Family-Owned Businesses list. Percent of female family members in management 30% 29.6% 23.2%
20 16.6% 10
0
2017
2019
2021
SOURCE: CRAIN’S LIST
edition, assuming they didn’t make major changes to their management teams. A list of family members in management submitted by each company appears in the Excel version of the list. The percentage of women in the top local executive column on the list is 28.3%, though it falls to just 17.9% for the 30 largest companies appear-
ing in print. A few of those women are family members who took over in recent years, including Marcella Kanfer Rolnick, who in 2018 became executive chairman of GOJO Industries. The woman next to her in that column, Carey Jaros, was promoted to CEO in 2019. They also happen to work for one of the fastest-growing companies on the list. GOJO has been expanding rapidly to meet the huge increase in demand for Purell and other sanitizer products brought on by the coronavirus pandemic. The Akron-based company had 2,178 full-time equivalent employees in Northeast Ohio as of March 1, up 28% from last year. That puts it at No. 3 on the list. As usual, staffing and employment services firm Minute Men Cos. is No. 1, with 21,760 local, full-time equivalent employees, the vast majority of whom are working on behalf of other companies. At No. 2 is outdoor power equipment manufacturer MTD Products with 3,000 local employees. Overall employment on the list increased 2.6% over the past year, but if you exclude staffing firms and GOJO, that figure falls to 0.65%. Chuck Soder: csoder@crain.com, (216) 771-5374, @ChuckSoder
RTA
From Page 7
But not everyone is overjoyed with NEXT GEN since the unveiling about a month ago. The public transit advocacy group Clevelanders for Public Transit (CPT) said in a statement just days before the rollout that although the frequency changes during the weekdays were beneficial, more service is needed during weekends, when essential workers still rely on public transit. “It’s an improvement, but look at the maps: The entire network is still too focused on Monday-to-Friday service,” said Chris Stocking, president of the group. He said CPT “wants to see a seven-day frequent transit network.” During COVID, ridership declined significantly more on weekdays than the weekend, he said, adding, “Essential workers need transit seven days a week.” Another criticism from the advocacy group revolves around the time and resources RTA spent planning the changes. Stocking noted that RTA spent only $250,000 on the route study, far less than is spent on average by transit systems of comparable size for similar studies. CPT members do not think there was sufficient community engagement, and Stocking said 47% of survey responses came from semi-regular RTA riders — those who use the RTA one ride per week or more. Only 12% of the
respondents, he noted, did not own a car. That criticism was echoed by Ward 1 Cleveland City Councilman Joe Jones, the new chair of the Transportation Committee, who called an impromptu meeting just days before the NEXT GEN rollout. Over the course of two hours, Freilich, after presenting the changes ward by ward, sparred with council members Kevin Conwell (Ward 9) and Anthony Hairston (Ward 10), who were upset about losing Bus 38, which travels from the Warehouse District through Hough and into East Cleveland. During the back and forth, both councilmen urged the RTA to declare a moratorium on the new system, claiming their constituents collected 500 signatures opposing the route elimination. Conwell said he was “hot and mad” about what he considered the short notice of the route changes, and Hairston blamed the problems on “neither efficient or effective communication” in his ward by RTA representatives. Freilich pushed back, informing council that most of the cuts were to downtown Trolley and Park-nRide service, not those in underserved communities, and that even with the elimination of Bus 38, less than 1% of RTA riders will have to walk more than five minutes to reach another bus or transit stop to get service. Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive
NOMINATIONS NOW OPEN
Crain’s Notable Entrepreneurs recognition will honor business owners of all stripes, from those creating innovative tech and manufacturing solutions to those who are bringing their wares and services to the realms of retail, food, marketing, finance and more. We are looking for entrepreneurs whose businesses reflect the diversity of companies in the Northeast Ohio economy. Winning candidates will be featured in the Oct. 25 print and online issue of Crain’s Cleveland Business.
CrainsCleveland.com/Nominate
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AKRON
Grass keeps getting greener for ForeverLawn Growth-minded artificial turf company expects to expand within two years BY DAN SHINGLER
Between football, dogs and folks who just want a manicured lawn with little to no care involved, business is booming at Louisville-based ForeverLawn, which may soon have to expand. The company, located just east of Canton, has developed several types of artificial turf for specialized applications, along with a national network of more than 70 dealers that sell and install its products. What started as a small family business has grown to an enterprise that generates between $25 million and $35 million in annual company revenue, and revenue of $70 million to $80 million representing the total sales of its national dealer network, said ForeverLawn CEO Dale Karmie. “We’ve actually been growing very fast. We’ve probably doubled (revenue) twice since 2014,” said Karmie, who co-owns the company he founded in 2004 with his brother Brian. The artificial turf market has been growing as a whole as more people and organizations seek to avoid devoting labor and resources toward the care of real grass, Karmie said. Plus, turf has improved over the years, he added. Most sports fans are aware of how artificial turf, once known almost universally by the brand name AstroTurf, has improved. Gone are the days when artificial fields offered athletes the chance to get a concussion and rug burn all in the same fall
or tackle. The new artificial fields now provide the feel and padding of real turf. But ForeverLawn has taken the concept a step further — several steps in fact. “We’ve kind of divided into five market segments that we call vertical markets,” Karmie said, noting that each segment has its own specialized turf, designed by ForeverLawn and made for it by a third-party manufacturer in Georgia. Among them is the company’s perennial big seller, which it calls K9 grass. Designed for dogs, it allows urine to flow through without staining, is made to not cling to thatwhich-must-be-scooped, and is chew- and dig-proof while still being an ideal surface for dogs to run on, Karmie said. It’s also anti-microbial, he added. Then there’s the company’s playground grass, which is softer than most other turf to be safe for falling kids; golf-green grass that is short and puttable; sports grass for athletic fields; and regular turf for lawns at homes and businesses. “Landscape, K9 and playground drive the majority of our volume. … But what’s been growing in recent years is the sports grass and the golf greens,” Karmie said. Business has been good since the company moved to Ohio from its original home in Albuquerque, N.M., Karmie said. He and his brother initially thought its product would do best in the water-starved Southwest, but soon found it didn’t need to be located there and the owners moved it back to their native Ohio. Karmie thinks the company can continue to grow by capturing more market share. “I’d love to say that we’re dominat-
ForeverLawn has found success installing its turf at high school athletic fields and will do its first college installation at Malone University later this year. | CONTRIBUTED
ing the market, but we’re not,” he said. “We’re probably less than 10% of the residential turf market. We have so much opportunity to grow.” If the company can get more of that market and continue its upward trajectory as planned, ForeverLawn probably will need to build more space for itself in Louisville. Currently, the company operates from a 12,000-square-foot office building and 30,000 square feet of warehouse space on a 35-acre site with room to build more, Karmie said. “We already do,” Karmie said when asked if he’ll need to expand. “We moved in here in 2018 and we thought we had enough space to last us a decade, but we’re full. We’ll probably look at an expansion in the next 12 to 24 months.” The company hasn’t decided what it will build, but Karmie said it needs to house a larger staff. ForeverLawn has grown in all aspects, including revenue, dealers and direct employees, Karmie said, adding it also needs more workers. “We have 70-plus people employed by ForeverLawn, and we also have, I think, 75 dealers across the country,” said Karmie.
THE WEEK AROUND THE BEND: Real estate developer and restaurateur Bobby George is seeking a permit to transform a long-vacant Ohio City building into a wellness center — on a high-profile corner earmarked to be part of a 23-acre riverfront park. On Monday, June 7, design firm Richard L. Bowen and Associates submitted plans to the city for an estimated $4 million makeover of the two-story building, perched atop the Irishtown Bend hillside at West 25th Street and Detroit Avenue. That submission came only days after the Cleveland City Planning Commission approved a potential rezoning that would limit the use of that parcel and adjoining land to open space and recreational uses. The 0.41-acre property, which George bought in early 2018, is a source of vexation for park advocates who are working on a roughly $45 million endeavor to shore up the unsteady hillside and turn it into an expansive green space. City officials are in long-running negotiations with Bobby George and his fa-
A conceptual rendering shows the proposed renovation of a long-vacant building at West 25th Street and Detroit Avenue in Cleveland’s Ohio City neighborhood, at the entrance to the future Irishtown Bend park. | RICHARD L. BOWEN AND ASSOCIATES, VIA CITY OF CLEVELAND
ther, Tony, about a potential real estate trade that would free up the corner as a key gateway to the park. CENTRAL TO THE NEIGHBORHOOD: The Sisters of Charity Foundation of Cleveland has engaged MASS Design Group, a Boston-based global design collective, to create a health campus in the city’s Central
neighborhood anchored by St. Vincent Charity Medical Center. Depending on what is recommended during the planning and engagement process with MASS Design Group — which is dedicated to architecture that promotes justice and human dignity — new services, programs and partners could be added to the main campus of St. Vincent, which
ForeverLawn is currently looking for people, he said, including a marketing director, installation support team members and other positions. “We’re not running lean. We’re not trying to keep our staff as small as possible to maximize profits; we’re probably doing the opposite,” said Karmie, who added his priority is to make sure the company adequately serves its customers and its dealers to support further growth. It does that well, too, said Tim Bast, a dealer and owner of ForeverLawn of South Jersey, near Philadelphia. Though he’s only 31, Bast already has a long history with the company as a dealer. His father started the dealership when Tim was still in high school, and he would sometimes miss class to help with an install, he said. Bast said he likes ForeverLawn because the Karmies treat their dealers well and, perhaps even more importantly, because the company has what he thinks is the best turf on the market. “We’ve been installing it for 15 years, and we’ve never had to replace it at a single project,” Bast said. In and around Philadelphia, ForeverLawn’s K9 grass has been an especially big hit with customers, ac-
cording to Bast. “As places are becoming more pet friendly, they really need a place for dogs to run around and play. Especially in the Philadelphia area, we’re doing a lot of dog parks,” Bast said. “We’ve actually done all the synthetic turf (municipal) dog parks in Philadelphia. They all have K9 grass. … We’re doing apartment complexes, rooftop dog parks downtown and then a lot of residential homes, too.” Here in Ohio, though, Karmie said sports stadiums are becoming his biggest customers. To date, the company has done mostly high school fields, he said, in addition to sports turf installations for the NFL Network, ESPN, Disney and Universal Studios. But that’s about to change. “In the field market, it’s mostly been at the high school level. But we’re doing our first collegiate field at Malone University down here in Canton,” Karmie said. “That’s happening this summer. It will probably start in about four weeks (in early July). That will be our first college competition game field.”
will also be the namesake of what will be known as the St. Vincent Charity Health Campus. Sisters of Charity and MASS Design Group are committed to including residents in developing the vision for the health campus. “We didn’t want to come up with, ‘This is exactly what the health campus is,’ and then go to the community and say, ‘What do you think?’ Tweak it and then implement it,” said Susanna H. Krey, senior vice president of Sisters of Charity Health System and president of the Sisters of Charity Foundation of Cleveland. “We really want the community to own this. We want the residents to own it, and we want to shape it according to the unmet need and the gaps that we learn from the community and that community engagement process.” The campus will encompass property owned by the Sisters of Charity at East 22nd Street (also known as Sister Ignatia Way) and aims to be a catalyst to revitalize the surrounding area.
more than $10 million gift from Monte and Usha Ahuja, University Hospitals will name its health center in Cleveland’s MidTown neighborhood the UH Rainbow Babies & Children’s Ahuja Center for Women & Children. A portion of the gift, which builds on a family legacy of community engagement, will establish the Monte and Usha Ahuja Chair in Clinical Excellence in honor of UH physician Dr. Richard L. Stein, according to UH, which noted that funding from the Ahuja chair will advance Stein’s efforts in community health, outreach and education to medically underserved populations. The gift was made in honor of the Ahujas’ daughters, Manisha Ahuja Sethi and Ritu Ahuja Khanna. Located at the corner of Euclid Avenue and E. 59th Street, the UH Rainbow Ahuja Center for Women & Children is a hub of coordinated, family-focused care with a goal of addressing the health and social needs of patients and families in a one-stop location. Since opening in July 2018, the center has served more than 114,000 patients.
STEPPING UP: In recognition of a
Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler
24 | CRAIN’S CLEVELAND BUSINESS | JUNE 14, 2021
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TOWNHOMES
From Page 1
“Right now, we’re working on 500 units,” Knez said, “and we have another 500 in the works.” Locations for Knez homes are varied. In Chagrin Falls, the company just sold the last nine homes of a project called Belltower, and it plans to start another 10 units on land purchased from the railroad in the $600,000 range. Knez also is building in a variety of Cleveland neighborhoods. In Glenville, its townhouse offering is the first 20 of 54 units at Ashbury Pointe. In Ohio City, it’s putting in foundations for the first 13 of a planned 34 units in a project called Bailey Bridge on a one-time junkyard site at Bailey and Fulton avenues. Downtown, more units are on the way at The Avenue. Besides the market demand and advantages of a maintenance-free lifestyle, Knez said a factor in the recent rise of townhomes is the willingness of suburbs to embrace changes in zoning to open doors for more new housing. Townhouse density could up the yield of an acre to as many as 30 units from two single-family homes, depending on each city’s legal requirements. “The cities have found denser forsale projects are financially helpful to them,” Knez said, putting more people to pay income taxes on the same parcel or, depending on the design, not having to care for roads. For instance, a nonprofit launched
SOUTHPARK
From Page 1
Spinoso owns a minority stake in SouthPark — what industry onlookers described as “sliver equity.” The majority owner is Kize Capital LP, a New York investment firm. Property managers and brokers characterized Kize as a small player in circles dominated by midgrade mall buyers Namdar Realty Group and Kohan Retail Investment Group. Kize and Spinoso have joined forces on one other enclosed shopping center, a 600,000-square-foot California mall called Santa Maria Town Center. SouthPark is nearly three times that size, a behemoth that opened in 1996. The property hit the market last year, as prior owner Starwood Capital Group faced a looming debt maturity and could not replace the loan. Starwood retail executives did not respond to interview requests. Neither did Kize, which keeps a low profile. “I think this group will be a real good thing for SouthPark,” said George Good, a CBRE Group Inc. executive vice president who represented Starwood. “I think they are hands-on. They’re knowledgeable. They will invest money in the mall. And their goal is to make it worth more than they bought it for.” Good declined to discuss the real estate transaction. Spinoso, which runs roughly 30 malls across the country, is part of a growing crop of third-party managers chasing troubled or transitioning assets. Carmen Spinoso predicts an increase in mall defaults as mortgages mature and owners struggle to find new debt. “We really believe that these assets can be viable, and they’re really important to the communities that support them,” he said. “We truly believe that’s a part of our mission, to help make these properties better and avoid the blight that can be created when these assets are allowed to dete-
by the city of University Heights selected Knez to develop the 30-unit South Taylor Place on formerly city and school-owned land at South Taylor Road near Cedar Road. Other townhouse plans are scoring sales. WXZ Development of Fairview Park has sold all 13 units in the townhouse portion of its College Club project on Overlook Road in Cleveland Heights. The joint venture of Brickhaus Partners of Warrensville Heights and the Carney family of Westlake, the 700 Lake project in Rocky River, includes 13 townhouses. All the townhouses are reserved, even though the actual site of the suites with lake views currently serves as a massing area for contractors constructing the project’s 30-suite condominium next door. Although many of the makers in this market are building and development pros, the economics and in one case, the design, can attract others. Such is the case at Hallberg Townhomes, a 12-unit project starting to rise in Westlake on Center Ridge Road near the suburb’s recreation center. Suites there will cost about $600,000. The developer of Hallberg is Patrick Greller, a self-described chronic entrepreneur who owns a window-making machinery company in Berea. The design is inspired by contemporary homes he has seen in Germany and Austria that offer light-rich designs and smaller houses than new properties here. “People there seem to be just as happy in smaller homes with less stuff,” Greller said. “I’m in my 50s and
“They are completely different anilive in a ranch in Westlake. But I can see a desire for a smaller place and a mals,” Knez said. garage that isn’t filled with stuff you Marous Development Group of Wilaccumulate over the years. I figure loughby is in the planning stages for its there are a lot of people like me out last parcel at Battery Park, which offers there.” condominiums that look like townGreller has two units on hold so far, houses near Lake Erie in Cleveland’s but he’s already in search of addition- Detroit-Shoreway neighborhood. Building permits are being obtained al sites for more of the same. “I don’t want to do hundreds of for Park Place, a development of 25 these, but I like building things and townhouses, likely in the $430,000 price range, that would start going in want to do more,” he said. Some of these projects enjoy long- this summer on West 78th Street, acterm property tax abatements, but cording to Mike Marous, chief operatothers don’t. The more important fac- ing officer of Marous Development. Even though some of the more tor is that townhomes offer fee-simple ownership of the ground under the than 350 units at Battery Park have building. That makes them easier for sold as existing properties for both builders and buyers to finance $900,000, Marous said the famithan condominiums. Condos entitle ly-owned development concern is CRAIN’S CLEVELAND BUSINESS | owners only to air rights in a property. trimming the last units in size to
riorate. Because even B and C and D malls are often in A locations.” In Strongsville, Spinoso and Kize hope to announce some improvements later this year. The ownership and management team is “still in the development phase,” Spinoso said. Excluding four department stores, which own their real estate, the mall is between 87% and 91% leased, a Spinoso spokesman wrote in an email. Sears closed its SouthPark location in late 2018 and is marketing the two-story building for sale through a Kentucky real estate brokerage. Inside the mall, stalwarts including Victoria’s Secret, H&M and Forever 21 are flanked by less traditional tenants. There’s an airsoft shooting range called Lock N Load; a market research firm; and the newly opened CLE Selfie Studio, where 30-plus sets serve as backdrops for photos. “Dining and entertainment are two obvious areas that can be enhanced,” Spinoso said. “Those are two that jumped off the page to us.” Real estate developers who are familiar with SouthPark said the biggest hurdles at the property are the severe pain being felt by full-priced clothing stores — an industry-wide challenge — and the sheer size of the complex, where a Dick’s Sporting Goods and a Cinemark theater round out a lineup of six anchors linked by long concourses. To be successful, Spinoso and Kize will need to do more than recruit eateries, shops and entertainment venues. They’ll have to aggressively pursue creative concepts, such as apartments, a hotel or, perhaps, medical offices or senior housing to complement a neighboring Cleveland Clinic family health and surgery center, developers said. Top-tier malls, typically owned by real estate investment trusts, already are morphing, adding office space, housing, medical facilities and other uses to the retail mix. That movement is spreading to midlevel malls like SouthPark, but a broad wave of redevelopment still is a few years away,
said Mark Hunter, CBRE’s managing director of mall and large-format retail for the Americas and a leader of a newly launched mall repositioning group. The investors buying malls today might not be the ones who pull off those projects, he said. “You’ve got to get your capital stack right. It may be the next buyer who has the capital, the strategic plan,” said Hunter, whose team manages 50 malls for various owners. Over the past year, only a handful of U.S. malls have been sold. Buyers typically pay cash for those properties in deals that often spring from foreclosures or imminent defaults. At SouthPark, Kize did obtain a $22 million mortgage, according to public records. But that loan, from a family investor group in Florida, covered less than 40% of the purchase price. “It’s the nature of this business right now where, quite frankly, malls are just overvalued — and they have been for some time,” said Greg Maloney, president and CEO of retail for real estate services provider JLL in the Americas. “It’s not the mall’s problem. It’s a financial problem.” The pandemic put a deeper dent in mall values as government restrictions forced shops and food courts offline and shoppers, stuck at home, flocked online. In a May 25 report, credit ratings agency DBRS Morningstar pointed out that the average worth of troubled malls tied to commercial mortgage-backed securities plunged more than 60% since the start of the pandemic, based on appraisals that docked 77 properties by a collective $7.9 billion. Maloney, whose team manages approximately 85 malls and similar centers, does see encouraging signs. He and other mall experts noted that traffic at some properties is exceeding pre-pandemic levels as public health restrictions lift and stir-crazy consumers look for relief. “We always like to refer to it as revenge shopping,” he said.
Hallberg Townhomes in Westlake are inspired by residences the developer has visited in Germany and Austria. | AODK ARCHITECTS
Spinoso said that rebound isn’t getting enough attention, amid ceaseless headlines about the mall industry’s woes. If brick-and-mortar retail really is in its death throes, he said, then the pandemic would have dealt malls the final blow. “It’s not the mall asset class that’s the problem,” he said. “People will go to good malls. People will go to malls that are well-managed. When malls fail, it’s likely for other reasons than just, ‘People don’t want to go to a mall.’ ” Public officials in Strongsville are hopeful about the future of SouthPark, based on early discussions with representatives of Spinoso and Kize. “We had occasional conversations with corporate at Starwood, but never
about 1,900 square feet. “There’s a lot of product coming to market,” Marous said. “We want to avoid the box that some of our competitors have gotten into of offering very expensive units. Get above $500,000 and it becomes a shallow market, even with tax abatement. Stay under that and it remains a strong market.” Besides its single-family offerings, Petros Homes of Broadview Heights has townhouses in the works for a site in Broadview Heights Town Center; 18 unites at Eighteen Riviera in Fairlawn; and, in a joint venture with Liberty, Westin Pointe, which will have 25 units on a 5-acre parcel at 23123 Center Ridge Road in Westlake. The Broadview and Fairlawn units cost upwards of $300,000. The Westlake suites, with first-floor master bedrooms, start at $400,000. Sam Petros, founder of Petros Homes, puts the strategy succinctly. He said they offer younger buyers a way to get into pricier suburbs, sometimes even their hometowns. The strategy is the same at products by national builders in townhouses at lower price points. Renaissance at Geauga Park by Pulte Homes in Aurora and Riverwood Village by Ryan Homes in Painesville Township are, respectively, below $300,000 and around $160,000. If lumber prices don’t push up prices too much, all these developers say they are pursuing additional, similar projects. Stan Bullard: sbullard@crain.com, | PA G E 21 (216) 771-5228, @CrainRltywriter
S E P T E M B E R 3 - 9 , 2 018
the type of commitment that we had right off the bat with Spinoso Group,” said Brent Painter, the city’s economic development director. In Santa Maria, a California city 150 miles northwest of Los Angeles, Spinoso has been a good steward for the mall that the company took control of in 2018, said Mark van de Kamp, the city’s public information manager. “They’ve been great,” he said, citing new retailers and activities for families with children. “They’re involved in the community and understand how to evolve the mall to meet current demands.” Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe
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about 45 days, where additional fines and fees can then get added to original balances. These rules often impact students of color, first-generation students and older students to a greater extent, according to a 2020 report from Policy Matters Ohio. That same report found there were about 390,000 active accounts with the Ohio attorney general’s office by the end of the 2019 fiscal year. That’s a big chunk of the roughly 1.5 million Ohioans who have completed some college but don’t have a degree or credential. “How many people would that be if you could help them finish?” said Julie Szeltner, senior director of adult programs and services at College Now. “How many businesses would then have their trained talent that they’re looking for?” Jarrod Robinson holds one of those accounts. The Cleveland Heights native, 25, started out at Ohio University in 2014. Robinson, who identifies with they/their pronouns, left Athens about a month into the second semester of their sophomore year due to mental health issues. Robinson said there wasn’t a lot of support when it came to figuring out how to withdraw. They said they shared the plan to leave with an adviser, who didn’t mention any related red flags. Yet a balance of about $9,000 remained for outstanding room and board charges. They said they tried to get on a payment plan, but having to put down several thousand dollars just to begin the process of making monthly payments wasn’t financially feasible. The initial balance has ballooned up to about $18,000 or so as of last year, they said, though they’re not exactly sure. Navigating the situation has been filled with red tape. The balance has moved through agencies, Robinson said. A phone call searching for answers resulted in a busy signal. Notices go to their mom’s house, not their current residence. They answer every robocall that comes through, thinking it might be someone else on the other end with some related context. “I feel like, to give all that energy and time to an institution like that, (then) have them completely turn their backs on you,” Robinson said. And the lack of a transcript for courses completed years ago still shapes their current reality. Robinson has since taken classes at Cuyahoga Community College and Cleveland State University but could be further along toward a degree if those credits from OU weren’t in limbo. “How do you expect me to pay this if you’re not going to allow me to get into a position to pay it?” Robinson said. The average amount owed at public four-year institutions comes in at $2,871, compared with about $611 at
Jarrod Robinson’s $9,000 in room and board charges have doubled. | CONTRIBUTED
Green
Wehner
community colleges, according to Ithaka’s findings. The bulk of the money students owe at Lorain County Community College comes from unpaid tuition or book charges, according to Tracy Green, the college’s vice president for strategic and institutional development. She said the college got rid of many other additional fees, such as parking, years ago in an attempt to remove barriers. Green said part of the reason students might not return is because they still owe money. “Their tuition that they may be behind on is not the only factor that’s going on in their lives, particularly for community college students,” she said. “It is one of many.” The college piloted a program this past spring called “Commodore Comeback” to reach out to students who left the school with a balance. The offering allows students to re-enroll at the college and get up to $1,000 of their balance wiped away, even if it’s already been turned over to the state. In exchange, students must take at least six credits and create an academic plan. It’s a start, Green said, especially considering the school’s strategic plan, which is linked to Ohio’s goal of getting 65% of the population to earn a credential or degree by 2025. It’s especially important at an institution like LCCC, where, she said, 85% of graduates live and work in the region. “If we ignore that constituent base, we’re not going to help move that needle at all in our community,” she said. Cleveland State University ran a similar program as a pilot in fall 2019. Those who fulfilled the program’s requirements could each have up to $5,000 forgiven, a num-
ber state higher ed officials said is one of the best offers across the country. About 45 eligible students inquired and 18 enrolled. About half of that group completed the semester and had $26,000 forgiven, according to Jonathan Wehner, CSU’s vice president for enrollment management. He said he wishes the university didn’t have to turn outstanding amounts over. He thinks the solution would be to better fund students at the institutional, state and federal levels to avoid these situations. But in the meantime, he said, students have incurred a debt they’re obligated to make good on. “The taxpayers in the state of Ohio, who in part fund our public institutions, have a right to collect on an outstanding obligation that is owed to them,” he said. Advocates calling for changes say it’s not just about the money, adding they’re not specifically looking for balances to be forgiven. They’re instead pushing for scrapping transcript withholding and giving institutions more flexibility to figure out how to get students back in the classroom before their debts are sent off. New guidance recently came out from the Ohio Department of Higher Education outlining how the state’s institutions have options to offer debt forgiveness in exchange for new tuition, similar to programs like those at CSU and LCCC. This comes as many institutions are dealing with enrollment woes amid the pandemic. The new information is a move advocates say is a nod to a recent increase of conversation and awareness on this issue. But it’s not a straight policy change. A line tucked into a state Senate bill could tweak the law. First proposed as getting rid of institutions’ power to withhold transcripts, the latest update calls for allowing potential employers to request access to trapped transcripts. The bill is still under consideration. Amy Morona: amy.morona@crain. com, (216) 771-5229, @AmyMorona
The transcript trap It’s estimated that about 222,000 people owe more than $556 million to colleges across the state. These amounts represent balances that haven’t been paid to an institution, like unpaid tuition or parking tickets. Outstanding balances, by institution type (totals $556.9 million) $268.6 MILLION
Public 4-year Public 2-year Private nonprofit SOURCE: ITHAKA S+R
$52.7 MILLION $235.5 MILLION CRAIN’S CLEVELAND BUSINESS GRAPHIC
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