Crain's Cleveland Business

FOUNDATION FOR FUTURE Report highlights the possibilities additive manufacturing could hold for Northeast Ohio.

SMALL BUSINESS: Map to the stars — lessons learned on fundraising journeys. PAGE 10

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CRAINSCLEVELAND.COM I AUGUST 9, 2021

Early look at Indians’ Progressive Field plans

The Lumen, at 1600 Euclid Ave., is now 83% occupied, and 90% of its suites are leased. | MICHELLE JARBOE / CRAIN’S CLEVELAND BUSINESS

Colleges introduce vaccine incentives

BY KEVIN KLEPS

BY AMY MORONA

Two years ago, John Sherman, a significant minority investor who had been on a path to eventual control of the Cleveland Indians, left the organization to purchase the Kansas City Royals.

Then there was the name change, from the Indians to the Guardians — a process that took more than a year.

Plus, the Thursday, Aug. 5, announcement of a $435 million public/private deal that could keep the Tribe at Progressive Field through at least 2036.

Oh, and the country has been in a pandemic for 17 months.

“It’s really been an interesting time for us,” Indians owner Paul Dolan told Crain’s.

The Tribe’s latest unveiling — a massive deal that includes a ballpark renovation that’s tentatively estimated at $202.5 million — occurred after months of negotiations among city, county and state officials. The projected tally includes about a 2-to-1 split between public and private financing, with the Indians paying $67.5 million over 15 years for ballpark improvements, plus $82.5 million for repairs, maintenance, interest and other costs.

There’s a million-dollar question hovering around college campuses: Will COVID-19 vaccinations be required this fall?

As of now, the answer varies. More than 600 campuses across the country are reportedly requiring the vaccine. The majority of those are in states that swung for now-President Joe Biden, a Democrat, in the 2020 presidential election.

But only three of those colleges are in Northeast Ohio — Case Western Reserve University, the College of Wooster and the Cleveland Institute of Art. Each is a private institution. All offered or indicated plans to offer a chance to apply for medical or religious exemptions.

The rest are encouraging campus communities to get vaccinated.

Some are incentivizing the process, launching drawings for prizes if vaccine documentation is shared.

It comes as a rise in cases and the Delta variant could threaten to impact what was hoped to be a return to “normal” in higher education after the pandemic brought on widespread enrollment declines and an uptick of online classes.

See INDIANS on Page 21

See VACCINE on Page 20

DOWNTOWN IN DEMAND

Worst may be over for apartment market after pandemic downturn

BY STAN BULLARD

Jose Ramirez and the soon-to-be Cleveland Guardians will have a new look in 2022. | CLEVELAND INDIANS RENDERING

Downtown Cleveland's apartment market is seeing some bright spots, although the continuing delivery of new properties is driving down occupancy as the city and nation ride the headwinds of the continuing pandemic.

The biggest bright spot is the 34-story The Lumen apartments, at 1600 Euclid Ave., which delivered 318 apartments last October amid high COVID-19 case counts and restrictions.

The Lumen is now 83% occupied, and 90% of its suites are leased.

That's the word according to Art Fal-

co, the recently retired president and CEO of the Playhouse Square Foundation. He has stayed on as a consultant to the operator of the city's historic theaters and theater district development group to see the project through to fruition.

See APARTMENT on Page 20

Kent State officials recently told students about twice-weekly drawings for vaccinated individuals. | KENT STATE UNIVERSITY

VOL. 42, NO. 29 l COPYRIGHT 2021 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

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THE

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A CRAIN’S CLEVELAND PODCAST

HEALTH CARE

Lazurite moving toward FDA submission Medical device startup hopeful for device launch next year

BY LYDIA COUTRÉ

From a $10 million financing round to a new name, Cleveland-based medical device startup company Lazurite (formerly Indago) is taking steady steps toward its plan to launch its ArthroFree wireless arthroscopic camera system next year.

The company plans to submit its premarket notification later this year and expects to receive FDA approval to launch in the first half of 2022.

“We’re now at a place — and we’ve been at a place since probably the end of last year — where I’ve been traveling the country installing and setting up ArthroFree temporarily on surgical towers and having surgeons interact with it, and the response has been just fantastic,” said Lazurite CEO Eugene Malinskiy.

In June, the company announced

it had closed a $10 million convertible note round of financing, bringing its total raised to date to $18 million since the company formed in 2015.

And in July, it announced it would collaborate with the Center for Health Affairs, the nonprofit advocate for Northeast Ohio hospitals, and its business affiliate CHAMPS Healthcare, as it works to bring the smart platform of tech-enabled surgical tools to market.

Malinskiy Brian Lane, president and CEO of CHAMPS and the center, said working with Lazurite is an opportunity to potentially create an economic lift through new jobs while also bringing to market a device that could help mitigate risks in surgeries.

“The perfect dovetail is to find things that are going to help the hos-

pitals, help the community and then elevate everybody,” Lane said. “I think this is the perfect example of that type of solution and partnership.”

Leah Brownlee, Lazurite president and general counsel, said CHAMPS offers unique access to a dataset, decoupled from names, to help figure out pricing within the market place and give the company a better chance of success. And going forward, she hopes to be able to leverage the CHAMPS Group Purchasing network as the company further develops.

Malinskiy co-founded the company in 2015 in search of a solution to a problem he witnessed in an operating room: a bundle of wires running across the floor. They were necessary to connect the video and light devices needed for surgery but

created limitations and a trip hazard.

Lazurite ultimately created two devices. ArthroFree is the wireless camera system for minimally invasive surgery that eliminates the connecting cables and aims to reduce costs and improve safety and

or manufacturing.

“So in essence, for a lot less power, we can produce the equivalent amount of light,” he said.

The company’s name change is a rebranding that reflects the technology of the broader platform of the technology, Brownlee said. The

“THE PERFECT DOVETAIL IS TO FIND THINGS THAT ARE GOING TO HELP THE HOSPITALS, HELP THE COMMUNITY AND THEN ELEVATE EVERYBODY. I THINK THIS IS THE PERFECT EXAMPLE OF THAT TYPE OF SOLUTION AND PARTNERSHIP.” — Brian Lane, president and CEO of CHAMPS

efficiency in the operating room. It is equipped with Lazurite’s second technology, the Meridiem light engine: a low-heat, high-efficiency light system. It is a non-LED type of technology with potential opportunities in markets beyond health care, Malinskiy said. For instance, it may have applications in aerospace

name “Lazurite” is both a play on the word laser (a nod to its laser-based lighting technology) and a mineral of the same color blue that its light emits.

Lazurite has added five employees in the last 10 months, bringing its FTE total to 14. The company is looking to continue growing with

The mod

MANUFACTURING

‘Roadmap’ for additive manufacturing lays foundation for future

BY RACHEL ABBEY MCCAFFERTY

Potential GDP impact of additive manufacturing

30000 Additive manufacturing could be $30B

Upper bound GDP impact

Relative impact GDP

Pre-impact GDP

both a tool to make existing companies $29.048B more innovative and efficient, and it could be an industry sector of its own, $29B drawing new companies to the region.

A new report highlights the possibil$28.210B ities additive manufacturing, commonly known as 3-D printing, could $28B hold for Northeast Ohio.

The Additive Manufacturing Road$27.748B map for the Northeast Ohio Region $27B $26.654B was created by representatives from Team NEO and MAGNET in Cleveland, the Youngstown Business Incubator and America Makes in $26B Youngstown, manufacturers, higher $25.535B education institutions and more. $25.458B This is the group’s second additive manufacturing roadmap. The first was $25B ’20 ’21 ’22 ’23 ’24 ’25 25000 released in 2016.

2020 2021 2022 2023 2024 2025 “The timing just seemed really right ent pool. Specific initiatives to do this,” said Jay Foran, senior vice what it was last year. in the report include propresident of industry and innovation at Richardson said JobsOhio moting programs about adTeam NEO. wants to make the state a ditive manufacturing careers The technology’s value was made “center of excellence” in adat the K-12 level, developing clear during the COVID-19 pandemic, ditive manufacturing, worka targeted business attracas companies worked to prototype ing with the additive cluster personal protective equipment, Foran in Northeast Ohio, adding an tion plan and creating a list of said. And beyond the immediate bene- additive cluster chapter in service bureaus by “materials, machine type, and cafits are the opportunities for growth. the southwest/central part of pacity.”

JobsOhio has identified additive man- the state and collaborating Foran Manufacturing is a crucial ufacturing as a “core strategy” toward with organizations like pillar of Northeast Ohio’s growing manufacturing across the America Makes. The goal is economy. It accounts for state, Foran said, and MAGNET’s re- to attract new manufacturers more than one-fifth of the recently released Manufacturing Blue- and service organizations to gion’s total gross regional print emphasized the importance of Ohio.

That aligns with the overall product, according to the rethe adoption of new and emerging goal of the region’s new roadport, which noted that additechnologies in the region. tive manufacturing could The report was shared as part of a map, too. present a competitive adThe vision described in virtual event last Wednesday, Aug. 4. vantage as manufacturers During the event, Glenn Richardson, the report is to create a “globgrow more productive. managing director of advanced manu- ally recognized” additive Duritsky During the event, Bob Pelfacturing and aerospace at JobsOhio, manufacturing cluster in the made the business case for additive region, building on Northeast Ohio’s letier, a retired engineering manager at manufacturing, noting that there is existing industrial design, supply chain Parker Hannifin, shared some thoughts strong competition across the country. and training resources. To achieve this, on how additive manufacturing can By 2024, global demand for additive the region needs to work to promote change the industry. Additive manumanufacturing machinery and ser- awareness of the benefits of additive facturing changes what’s possible in vices will reach about $27 billion, Rich- manufacturing, encourage adoption of terms of design, he said, allowing for ardson said. That’s more than double the technology and train a skilled tal- more customization or the creation

Additive manufacturing impact by sub-sector 2020

Potential 2025

Construction pre-impact $7.639B $8.271B Construction post-impact $7.639B $8.272B Plastics/rubber pre-impact $2.416B $2.724B Plastics/rubber post-impact $2.446B $2.754B Metal pre-impact $10.197B $11.203B Metal post-impact $10.212B $11.218B Transportation equipment manufacturing pre-impact $3.872B $4.233B Transportation equipment manufacturing post-impact $3.893B $4.254B Medical/dental manufacturing pre-impact $1.335B $1.317B Medical/dental manufacturing post-impact $1.344B $1.327B SOURCE: ADDITIVE MANUFACTURING ROADMAP FOR THE NORTHEAST OHIO REGION CRAIN’S CLEVELAND BUSINESS GRAPHICS

of less waste. It can speed up the time to market. And it shakes up the supply chain, because companies don’t need as much inventory on hand.

Jacob Duritsky, vice president of strategy and research at Team NEO,

said the impact of additive manufacturing is expected to be less than that of the Internet of Things, which has more widespread adoption potential.

Still, the technology could make a real difference in output in certain

2 | CRAIN’S CLEVELAND BUSINESS | AUGUST 9, 2021

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sect fies med met ber equ tion regi to $ note D othe port not doe gan dem port for five tifie “S ther ups num ritsk Th lear ping ritsk show nies imp of Th ed a pan in te nolo add mea to s nolo thei “I on t out,” real and bus dea with indu

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The novel ArthroFree platform, when approved, is expected to be the world’s first FDA-approved, fully wireless, minimally invasive modular camera system for the operating room, featuring the patented Meridiem light engine. | CONTRIBUTED

plans to add about six people per year for the next three to five years, Brownlee said.

The company plans to submit its 510(k) premarket notification later this year. Its FDA approval process doesn’t require any human or animal trials. Rather, they need to conduct studies showing the electronic compatibility of the device in the OR, the ability to effectively clean the device so it can operate in a sterile field as well as possible drop testing.

While the pandemic created a roadblock for many biomedical companies’ abilities to conduct necessary trials in the health care setting, Lazurite didn’t need to do any of these in hospitals or operating rooms. “It actually had a little bit of an opposite effect because our first target audience, which would be arthroscopic surgeons, tend to do elective surgeries often,” Brownlee said.

“They had a lot more time to talk to us in the last year.”

That gave the team at Lazurite an opportunity to talk with these surgeons about the product, gather interest and importantly, get feedback about the device.

“We let them use our device in a simulation and ask them a se-

ries of questions, and so the availability of doctors to participate and give feedback was fantastic within the last year,” she said.

This summer, the Lazurite team attended a national conference (the combined annual meeting of the American Orthopedic Society for Sport Medicine and the Arthroscopy Association of North America), marking the first time it had shared its technology with a wide public audience rather than private showings with surgeons around the country. At the event, hundreds of surgeons tried out the device and judges ultimately gave Lazurite an award for new technology innovation, which Malinskiy said was a “massive validation to the team here, but also really to all of our supporters and our investors and our board that we’re on the right track, we’re doing the right things.”

“Generally speaking, the feedback we’ve gotten has been incredibly positive,” Malinskiy said. “They’re very excited to be disconnected from the wires.”

Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre

e

03B

18B

facthat has tial. ke a tain

sectors, he said. The report identiThe team also has learned the fies those as construction products, importance of getting an “ecosysmedical and dental manufacturing, tem-level view” of the technology at metal production, plastics and rub- hand, Duritsky said. Manufacturber products and transportation ers, service providers, educational equipment. Depending on adop- institutions: They all need a seat at tion in those sectors, GDP in the the table.

And it’s not just about creating a region could grow by $500 million to $1.5 billion by 2025, the report report. It’s about creating the “stranoted. tegic buy-in” of that path forward, Duritsky said there’s potential for Duritsky said. other growth, as well, since the reDoing this kind of industry clusport is looking at “the base as it was, ter work can feel “amorphous,” said not as it could be.” For instance, it Barb Ewing, CEO of the Youngstown doesn’t capture companies that be- Business Incubator. But without an gan making PPE during the pan- intentional strategy, work is going demic. And the report only accounts “IT’S ABOUT MODERN PRODUCTS for growth in the five sectors it iden- AND PROCESSES. IT’S ABOUT NEW tified.

TECHNOLOGIES. BUT IT’S ABOUT THE “So I think there’s potentially ALIGNED TALENT THAT HELPS DRIVE upside in those THOSE FORWARD, RIGHT?” numbers,” Du— Jacob Duritsky, vice president of ritsky said. strategy and research at Team NEO The team has learned from its previous roadmap- to happen in isolation, instead of in ping processes. For example, Du- collaboration. This kind of work ritsky said they’ve learned that builds partnerships and leads to showing “proof points” to compa- new opportunities, she said.

For manufacturing to succeed nies is something they needed to improve. For its industrial Internet going forward, people need to unof Things roadmap, the team creat- derstand the “interdependent naed an assessment tool to help com- ture” of the work that needs to happanies figure out where they were pen, Duritsky said. It’s not just in terms of readiness for the tech- about additive manufacturing or nologies and in terms of need. For the industrial Internet of Things. additive manufacturing, it might “It’s about modern products and mean putting together case studies processes. It’s about new technoloto show companies what the tech- gies,” he said. “But it’s about the nology could do in their shop or on aligned talent that helps drive those their plant floor. forward, right? It’s about the educa“It’s one thing to lead companies tion system that’s in place. It’s about on the journey and let them figure it the supply chain assets. It’s about, out,” Duritsky said. “It’s another to to some extent, things beyond even really put that ROI in front of them our control, like state and federal and really start to articulate the policies, which help us think about business case to them in a way that that environment differently.” deals with their sector and deals with their size and deals with their Rachel Abbey McCafferty: (216) industry, specifically.”

771-5379, rmccafferty@crain.com

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Will two new laws hurt clean energy investment in Ohio?

Critics of the new laws say inconsistencies in regulations hurt the state’s ability to take advantage of an exploding market

BY KIM PALMER

The renewable energy market is booming across the United States as investors work to meet private and governmental climate targets. Ohio built 279 new clean power projects in 2020, which, according to a recent report by American Clean Power, ranked the state 11th nationwide for renewable energy growth.

But two pieces of legislation — Senate Bill 52 and House Bill 201 — passed by the General Assembly this summer and signed by Gov. Mike DeWine that take effect in October could present an obstacle to significant new clean energy investment in the state.

SB 52 gives residents the right to prevent the development of utility-scale solar and wind energy projects within their borders. HB 201 prevents local governments from limiting the use of natural gas and propane and ensures individuals access to distribution services or retail natural gas services.

Advocates of SB 52 drafted the bill to allow for local government control over the energy development regulatory process, permitting cities and counties to create exclusionary zones where large solar or wind projects are prohibited. The bill establishes a 90-day period of review not offered previously and requires developers to hold public meetings prior to an application hearing with the Ohio Power Siting Board. The legislation’s language also permits the addition of two “ad hoc” members with voting powers to the Power Siting Board to represent the interests of area residents where the wind or solar facility is proposed.

Ohio Sen. Matt Dolan, a Republican from Chagrin Falls and a member of the Senate Energy and Public Utilities Committee, was one of four GOP senators who voted against the final version of SB 52, which had been watered down from the original wording at the request of state business groups. Still, Dolan said he believes SB 52 will erect significant barri- Dolan ers to potential renewable energy investment and economic development in the state.

“What you don't want is energy treated differently," Dolan said. "Everyone should be going through the same regulation and with SB 52, it does add an additional layer, definitely treating solar and wind differently than any other generation.”

At present, wind and solar combined represent only about 2.1% of the state’s electricity generation, while natural gas comprises 43%, coal makes up 39% and nuclear makes up nearly 16%. But according to the U.S. Energy Information Administration, the country is projected to bring 50 gigawatts of solar and wind online in 2021, while liquefied natural gas production will remain mostly level. New investment in renewables reached a record $174 bil-

lion in the first half of 2021, with renewable energy companies raising 509% more investment than in the first six months of 2020, according to the latest Renewable Energy Investment Tracker from BloombergNEF, an energy industry research organization.

Business groups, such as the Ohio Business Roundtable, the Ohio Chamber of Commerce and the National Federation of Independent Business, are concerned Ohio's new law could disincentivize clean energy investment.

“We have already heard that international companies have raised concerns over this bill and believe we should be careful to not unintentionally stunt our state’s future eco-

governments are starting to demand renewable energy standards.”

SB 52 was stripped of a provision that would have applied retroactively to all wind and solar projects already underway in the state, including the high-profile Lake Erie offshore wind project known as Icebreaker.

Icebreaker, first proposed in 2014 by the Lake Erie Energy Development Corporation, or LEEDCo, is a six-turbine windfarm project of more than 20 megawatts. The project has had a long and difficult path to regulatory approval. The Ohio Supreme Court will hear oral arguments in a case related to Icebreaker this fall, and a decision will follow.

“WHAT YOU DON’T WANT IS ENERGY TREATED DIFFERENTLY. EVERYONE SHOULD BE GOING THROUGH THE SAME REGULATION AND WITH SB 52, IT DOES ADD AN ADDITIONAL LAYER, DEFINITELY TREATING SOLAR AND WIND DIFFERENTLY THAN ANY OTHER GENERATION.” — Sen. Matt Dolan, a Republican from Chagrin Falls and a member of the Senate Energy and Public Utilities Committee

nomic growth,” said Michael McLean, the Ohio Business Roundtable's vice president of policy, during a Senate committee hearing on SB 52.

Gas and oil supporters in the Republican-dominated Ohio statehouse drafted HB 201 to prevent local governments from enacting bans on the use of propane or natural gas to curb fossil fuels and from creating building codes that would prohibit connections for that type of energy in new buildings.

Miranda Leppla, vice president of energy policy at the Ohio Environmental Council Action Fund and an opponent of both bills, nonetheless commiserates with Ohioans who feel that they don’t have enough say in the process and is in favor of adding local voices to the Power Siting Board when energy projects are evaluated.

However, under the new Ohio laws, this type of enhanced representation will only apply to solar and wind — and not projects involving, say, fracking or nuclear power.

“There is no consistency. The laws in the state have singled out only renewable energy,” Leppla said. And that inconsistency, she said, "puts a lot of unknowns on investors” who are interested in clean energy projects.

“Such unequal treatment of wind generation will continue to stymie an industry that has potential to bring $4.2 billion in economic development to the state of Ohio, and block one of our most important potential sources of clean energy," Leppla said. “There is amazing movement at the local level. Local

Leppla is confident Icebreaker will get the approval it needs. “I believe this project will go forward,” she said.

The sentiment is echoed by Dave Karpinski, former LEEDCo president and now a consultant on the project who works for Boston-based Diamond Offshore Wind. In a statement sent to Crain's, he said, "Icebreaker is still in a holding pattern as we wait on the Ohio Supreme Court to rule on the OPSB decision that allowed the project to proceed.

LEEDCo is working in the meantime to advance the project by planning on marketing purchase agreements for the power. We’re confident that the Supreme Court will uphold the decision."

Meanwhile, the proposed $1.2 trillion bipartisan federal infrastructure bill, still awaiting approval, allocates $73 billion toward power infrastructure, grid and energy generation, largely focused on renewable and clean energy.

Dolan, who in July launched a listening tour exploring a bid for the U.S. Senate seat now held by soonto-retire Republican Rob Portman, is the lead sponsor of Ohio Senate Bill 89. That bill would require that electric distribution and electric services companies provide 8.5% of their electricity supply from renewable energy resources by “2027 and thereafter,” and that 0.5% of a portion of the electricity supply be from solar sources by 2026.

“Energy generation is not always very popular, but it's important to the entire state, and if we do it right, Ohio can be very important to the rest of the country,” Dolan said.

Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive

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GOVERNMENT

Westshore police will get a crash course in customer service Law enforcement is taking a cue from the service industry

BY KIM PALMER

Loyal Chick-fil-A customers waited in astonishingly long drive-thru lines after in-person dining rooms closed during the pandemic, but even with that annoying inconvenience, it didn't put a dent in the chain’s top customer service rating.

The chicken purveyor known for its staff 's courteousness was recently ranked as the country's favorite fast food restaurant for the seventh consecutive year, according to a survey by the American Customer Satisfaction Index.

A parking ticket will never be as satisfying as a chicken sandwich, but John DiJulius, CEO of The John DiJulius Group, a Cleveland-based customer service training and consultancy firm, believes that an emphasis on customer service can help police departments build trust and create more positive interactions with the public — and can perhaps turn around the negative perception of law enforcement since the killing last year of George Floyd by a Minneapolis police officer.

DiJulius is fresh from putting that idea into action in North Carolina with the nation’s first customer experience training program designed exclusively for law enforcement. He is planning a similar training for the Westshore Enforcement Bureau, a collaboration of the Fairview Park, Rocky River, Lakewood, North Olmsted and Bay Village police departments.

The Chick-fil-A customer service approach to policing is the brainchild of Charlotte-Mecklenburg police chief Johnny Jennings, who quipped to staff that he wanted to replicate in his department the polite, friendly customer service he consistently received at Chick-fil-A. In an interview with the Charlotte Post in June, Jennings said that every time he went to a Chick-fil-A, he left with a good feeling: “Why can’t we

The training will help overcome the “tough guy stereotype” police often have. | CRAIN’S CLEVELAND BUSINESS

DiJulius

Vogel

look at that and say we want to provide that customer service to our citizens?”

Fate had it that a member of Jennings' staff knew that DiJulius was behind the fast-food chain’s customer service. “He was sharing his vision for the department when someone on his executive team, who had worked with me in the past, knew I worked with Chick-fil-A, said, ‘Hey, I know that guy,’ ” DiJulius said.

The fact that DiJulius, who also works with Nestle, Progressive Corp. and National City Bank, among others, had never worked with police departments before was a plus for Jennings. “Progressive companies want someone outside of their industry to come in and not think like everyone else in the industry is thinking,” he said.

In his research to prepare for his work with Charlotte, DiJulius found that when data were analyzed, more than 97% of police interactions with the public do not Hennes result in an arrest and, of the 2.8% that do, less than 1% are for violent crimes.

“That means in 2020, CMPD had 514,000 interactions and 500,000 of them were non-life threatening," DiJulius said. "This is where this work is focused.”

Using a methodology that he said transcends industry, DiJulius argues there are a lot of similarities between the policing and private sectors.

Referring to policing as a grudge buy — akin to having to spend money on a new tire when you walk outside to see your current one is flat — DiJulius contends there are opportunities for officers to come to the rescue, to help and show empathy. The goal is not to alienate people and to go the extra mile when interacting with the public.

“With Chick-fil-A, we teach them

Mayor Martin S. Horwitz Mayor@BeachwoodOhio.com •216.292.1901 WWW.BEACHWOODOHIO.COM

“Any way you slice it, Beachwood is the best location.”

to say, ‘Is there anything else I can do when you have a problem.) for you today?’ But you don’t want Empathy is key, but only if it's peranother ticket, so when an officer is ceived as genuine, said Bruce wrapping up they say, ‘Is there any- Hennes, CEO of Hennes Communithing else I can answer for you to- cations, a firm focused on crisis day?’ That's not rushing; that's a little communications. courtesy and respect,” DiJulius said.

“Perception is a big issue right Westlake Police Department Capt. now,” Hennes said. “And often you Jerry Vogel cautioned that the pro- get punished not for what happens, gram does not mean his officers will but for what you don’t do right.” be halting arrests or traffic citations Traditionally, law enforcement is as a means to improve customer ser- taught to "command and control," vice. The goal, he said, is to create an Hennes said, but when they deal emphatic consistency throughout with a stressed and scared person, the department when staff interacts that posture can come off badly. with the public on everything from In a crisis situation, he said, you arrests to basic nuisance complaints. can do more harm if you don’t comLife-and-death situations will municate properly. “We teach the continue to be handled the same police that when they talk to the way, “but taking that second to ex- public — stop talking in jargon. Talk plain, in the right way, what’s hap- to people like they are human bepening — this is where customer ser- ings,” Hennes said. “It is not just the vice can help and could mean the words you use; it is how you use difference between a positive inter- them. You do more harm if you don’t action with the public and a negative do it right.” interaction with the public,” Vogel The area training is set to begin in said.

September and is paid for with One of the key obstacles to over- money forfeited in drug trafficking come, both DiJulius and Vogel said, cases as part of the Westshore Enis the "tough guy stereotype" police forcement Bureau law enforcement have and how that might affect the trust fund. The price tag for Chartraining buy-in. lotte's program was $60,000. WithAnd with recent upticks in crime out giving an exact number, Vogel across the country, the training said the Westshore training will be could be seen as a distraction from less expensive because of fewer staff the tough-on-crime narrative members. echoed by media and politicians “WE TEACH THE POLICE THAT WHEN THEY bristling against calls to defund or TALK TO THE PUBLIC — STOP TALKING pull back law en- IN JARGON. TALK TO PEOPLE LIKE THEY forcement involvement in domestic ARE HUMAN BEINGS.” and mental health — Bruce Hennes, CEO of Hennes Communications situations.

Even with an arrest or ticket, Vogel All 100 members of the Westshore said he believes a customer-ser- department — dispatchers, revice-type mentality can build trust cord-keeping staff, law enforcement and create a positive touchpoint officers and supervisors — are with the community on what other- scheduled to go through at least wise might be a pretty lousy day. three, 90-minute training sessions, DiJulius suggested language and and what DiJulius calls an immerapproaches when dealing with an sion into the whole customer service upset or scared member of the pub- concept and methodology. lic. (Think of how many times a customer service employee has said, Kim Palmer: kpalmer@crain.com, “I’m sorry that happened to you” (216) 771-5384, @kimfouroffive

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HEALTH CARE

Hyr Medical, Axuall collaborate on clinician credentialing

BY LYDIA COUTRÉ

Two Cleveland startups — Hyr Medical and Axuall — are working together to streamline the credentialing process for health care practitioners.

Hyr connects health care providers with places to practice, while Axuall has developed technology that enables health care providers to acquire authenticated digital versions of their credentials and qualifications in real time. After initially partnering at the start of 2020 to pilot their concept of portable digital credentials, the two now have integrated their technology and are addressing what many have long viewed as a cumbersome part of the approval process to get physicians working.

Jhaveri Hyr is building a two-sided network of qualified physicians and health care systems for freelance (“locum tenens”), telehealth and permanent jobs. A crucial element in that connection is ensuring the clinicians have the necessary certifications, licenses, skills and experience through a credentialing process.

“Think of doing taxes but 10 times worse, and you have to do it over and over and over again — more than just every year, because you often have

privileges at multiple places,” Axuall CEO Charlie Lougheed said. “So it was this stumbling block for the entire industry.”

Traditionally, to speed up the credentialing process would mean sacrificing quality, said Hyr CEO Manoj Jhaveri. But Axuall’s blockchain technology means avoiding that trade-off and getting thorough, quality credentials and background checks quickly. The partnership leverages Hyr’s networks of providers and practitioners and Axuall’s national network of primary-source credential issuers to enable physicians to present fully compliant credential sets to places where they apply.

“All of our providers that we present to employers are going to be primary source verified, that they’re going to have a background check and that they’re going to have talked with our clinical staff, and been screened before being presented,” Jhaveri said. “So we’re able to do that very quickly, but we’re also able to have a high standard of quality bar.

So, high quality bar but very short cycle time; whereas most places have to trade off between one or the other."

Although Axuall is working with other large health systems (including University Hospitals and Metro-

Health), its partnership with Hyr allowed it to test its system and quickly implement changes, Lougheed said.

“Because we’re two Cleveland companies, we were able to innovate and test very rapidly together, and at probably a pace and cadence that is really hard to do with a much larger health care organization,” Lougheed said. “Because we were so close and two small companies, we could iterate extremely quickly on newer things, try things out, see what worked, and then we could rapidly expand on them. So it was a really nice fast flywheel for innovation between the two companies.”

Axuall announced in July it closed a $10.4 million Series A funding round, driven largely by support from health-care-focused funders.

“This was the health care community basically saying we have an absolute need for this,” he said. "We plan to spend money in this area because it’s important for us as an investment. ... We want to have a stake in the game.”

Hyr, meanwhile, is in the midst of its own seed-plus round and plans to do a Series A funding round a couple of years from now.

Last year, as staffing needs grew and shifted during the pandemic, Hyr responded by diversifying the pool of providers on its network, growing the number of providers on

“BECAUSE WE’RE TWO CLEVELAND COMPANIES, WE WERE ABLE TO INNOVATE AND TEST VERY RAPIDLY TOGETHER, AND AT PROBABLY A PACE AND CADENCE THAT IS REALLY HARD TO DO WITH A MUCH LARGER HEALTH CARE ORGANIZATION.” — Charlie Lougheed, Axuall CEO

the platform, as well as the hospitals and medical groups. Those moves helped the company’s revenue grow by 300% in 2020. (It doesn't disclose specific figures.)

To date, the network has grown to 1,200 providers, about a quarter of which have completed profiles. Revenue has remained level as the market begins to rebound, Jhaveri said, adding that he hopes the Delta coronavirus variant doesn’t cause things to slip backward. As patient volumes are returning the staffing needs are

growing, which is reflected in the nearly 70 openings for jobs Hyr currently has on its platform, he said.

Hyr currently has a dozen full-time-equivalent employees with two open positions, which will be key for further expansion, Jhaveri said, noting that the technology integration with Axuall means Hyr can scale without requiring a ton of new hires.

Hyr is also in the early stages of building out an option to license its technology as a software of service monthly fee arrangement, Jhaveri said, “enabling hospital systems as well as physicians to essentially harness the power of what we’ve built in a different way.”

“That’s one of the key things we’re looking at in terms of as a strategy,” he said.

He said Hyr is fortunate to be able to collaborate with Axuall and Lougheed, whose work so closely complements his own.

“It meant a lot to us to have that kind of close relationship with his team and Charlie,” Jhaveri said. “We can just pick up the phone and get calls going quickly. ... I’m sure Hyr won’t be the only company they integrate with like this, but it’s cool to be the first with them.”

Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre

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HEALTH CARE

New funding may boost local medical technology startups

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$30.5M awarded to four Cuyahoga County-based organizations

BY JAY MILLER

Area startup health care businesses could be getting a boost from a recent round of investments by the state's Third Frontier program.

In March, Third Frontier awarded $30.5 million to four Cuyahoga County-based organizations. The money will be available to help fund pre-seed and seed rounds for technology startup companies, particularly in the health care and biotechnology areas. Those are the earliest stages of funding for startup companies.

One of the investments will be the basis of a new collaboration between two local organizations.

It will provide $4 million to kick off the Healthcare Collaboration Fund, an investment fund that JumpStart Inc., the Cleveland-based nonprofit business accelerator, and University Hospital Ventures, the innovation and commercialization arm of University Hospitals, are creating to make investments in Northeast Ohio technology startup companies in the biomedical and life sciences.

Each of the partners will add $2 million, creating an $8 million fund that will seek to grow its clout with co-investment partners. The fund will focus on a broad range of the biomedical and life sciences, including diagnostics, imaging, surgical instruments and equipment, implant devices, therapeutics and regenerative medicine, as well as software applications for health care.

Jerry Frantz, chief investment and services officer of JumpStart, said the idea to create a working relationship came from UH Ventures, and it kept building until they decided to create the fund.

“It really is for this region a novel approach to how ... you create and support deals,” Frantz said.

David Sylan, president of UH Ventures, agreed, adding that having University Hospitals as a partner can be attractive to potential co-investors. “We bring clinical knowledge to the equation,” he said.

That means, Frantz said, that co-investors know that one of their partners is a potential user of the startup’s technology, a partner who also has a purchasing department that can help assess the marketability of the technology. And, as part of a research hospital, UH Ventures may even be able to find an in-house place for a pilot program.

“As much as we are sharing the process of putting dollars in to invest, they are also bringing in clinical specialists as subject matter experts and the perspective of the actual marketplace. And that is very attractive to entrepreneurs,” Frantz said. “If you're piloting at University Hospitals, then you've got your pilot going with your funder. So it's a very exciting model.”

Scott Shane, a professor of economics at Case Western Reserve University’s Weatherhead School of Management, sees bringing University Hospitals, through UH Ventures, into the investment arena as a positive move for a region that, he said, has not had a strong venture capital base to draw on.

“Drawing (UH Ventures) into doing more, it's definitely a step forward because what you really want to have is more different players with more different perspectives, doing more different kinds of deals,” said Shane, who also is the founder of Comeback Capital, a Cleveland-based venture capital firm that invests in technology-based startups.

Frantz said the new fund is close to making its first investment, which he would not disclose.

“We are preparing to close on our first investment and are building a strong pipeline of new opportunities,” he said.

Early-stage funding is considered a two-step process — first what’s called a pre-seed round, followed by a seed round.

Pre-seed funding may be sought before the business has a prototype or pilot, done market re-

North Coast Ventures, a local early-stage investor, for example, would only be interested in investing in what managing director Todd Federman calls a “subset” of the technologies the new fund is targeting.

“The opportunities that we are most interested in tend to have a software component,” Federman said. “So that means we're going to be looking more at healthcare (information technology) and digital health.”

Federman said UH Ventures recently invited several North Coast principals to make a presentation to a group of UH physicians to share how private investing works and explain what North Coast is interested in.

In fact, Third Frontier, in its recent round of funding, directed investments to both North Coast and Comeback Capital.

Two North Coast funds will divide $9.5 million. Both its North Coast Angel Fund IV, which was awarded $5 million, and its North Coast Venture Fund II, which received $4.5 million, will invest in business-to-business software startups in Northeast Ohio.

Comeback Capital won $1.5

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“AS MUCH AS WE ARE SHARING THE PROCESS OF PUTTING DOLLARS IN TO INVEST, THEY ARE ALSO BRINGING IN CLINICAL SPECIALISTS AS SUBJECT MATTER EXPERTS AND THE PERSPECTIVE OF THE ACTUAL MARKETPLACE. AND THAT IS VERY ATTRACTIVE TO ENTREPRENEURS.” — Jerry Frantz of JumpStart Inc. on University Hospitals Ventures

search or, perhaps, hired any employees. Funding at this stage may come from family, friends and, more and more, from close-tohome investors or investment funds that see themselves as what the financial markets call angels. A pre-seed round may need as little as $50,000, but can be significantly larger.

Seed funding follows, designed to accomplish those first steps and reaching out to a broader pool of investors. A recent study by Wing Venture Capital, an investment firm that focuses on early-stage businesses, found that the median seed round of financing was $4 million in 2020.

That level of funding is more than the Healthcare Collaboration Fund could handle on its own, so its founders know that they will need partners.

Shane said his Comeback Capital fund could be a co-investor.

Several other local investors have also expressed an interest, though some medical technologies, because they require a long federal government approval process before their products make it to market and begin to show a return on investment, may not be attractive to some early-stage investors.

million for its Comeback Capital Pre-Seed Fund, which will invest in Ohio-based early-stage technology companies, primarily those developing software applications for business and health care.

Lee Zapis, president of the Zapis Capital Group, believes this new fund and the partners it will attract will help some of the region’s would-be entrepreneurs, and it fits into the investment strategy he has embraced. Zapis, like Shane, believes Northeast Ohio has suffered from a scarcity of early-stage investors.

Zapis, a former business owner — his family’s Zapis Communications owned radio stations in Northeast Ohio and around the country — said that as he has moved away from operating a business to being an investor in a handful of startups, he needs the kind of expertise that UH Ventures brings to this new fund.

“I find as I’ve gotten older and I've gotten further away from actually operating a business, I find myself being not much of an expert in anything other than early-stage investing, and then some people may not call me an expert in that, either,” he said.

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AUGUST 9, 2021 | CRAIN’S CLEVELAND BUSINESS | 7

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PERSONAL VIEW

Would you get a COVID shot for a lower health bill?

RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

BY MAX NISEN/BLOOMBERG OPINION

EDITORIAL

Restore faith T

hese are not the best of times for voter confidence in our election systems.

Some of that skepticism stems from bad-faith attacks on processes and the work of election professionals, and those who believe in our form of government have an obligation to continue to deploy facts to fight lies and disinformation.

A more nuanced challenge is partisan gerrymandering. It's an age-old issue in America, and it's getting worse in our hyper-politicized country. The Washington Post wrote last week that "Americans are on the verge of some of the most aggressive gerrymandering in the country's history," as 18 states, including Ohio, face tight fall deadlines for completing maps, and another 14 states "could pass new maps by the end of the year or shortly thereafter based on historic practices." The paper noted that the gerrymandered map in Ohio "has held Democrats to just four of the state's 16 congressional districts all decade." You might love that system if you're a devoted Republican, but dispassionate observers can see that it leads to a path of political disengagement for many voters.

Ohio, at least, has a roadmap to a better system, and it started last Friday, Aug. 6, when Gov. Mike DeWine called the first meeting of the Ohio Redistricting Commission, a seven-member panel tasked with redrawing political maps. (DeWine is a member of the commission, which has five Republicans and two Democrats. House Speaker Bob Cupp and House Minority Leader Emilia Sykes are co-chairs.)

The commission is the result of state constitutional amendments voters approved in 2015 and 2018, so voters have expressed a clear preference for ending gerrymandering. Easier said than done? Maybe. But the goal of the commission, as Cleveland.com put it, is to "discourage gerrymandering by requiring greater input from the minority party while encouraging more compact, rational districts by limiting how lawmakers can split up counties and cities."

That's a good start.

On Aug. 16, Ohio is scheduled to receive population data from the U.S. Census Bureau that will be used as the basis for new congressional and state legislative maps. There's then a series of deadlines for the process. With respect to state legislative lines, the commission by Sept. 15 must approve a 10-year

map, and it needs both Democratic votes. Short of that support, the commission by a simple majority could approve maps good for only four years. On the congressional side, the General Assembly has until Sept. 30 to approve 10-year maps, requiring at least 60% of both the House and Senate, including at least half of each chamber’s Democrats. A final deadline on 10-year maps comes Nov. 30, requiring at least 60% of both chambers, but only one-third of Democrats.

Cupp said last Friday there will be nine hearings statewide so Ohioans can make their voices heard. They should take every opportunity to do so.

Team players

L

ast week's announcement that the Cleveland Indians reached a $435 million agreement with Cleveland, Cuyahoga County and the state to extend the team's lease at Progressive Field and make improvements to the ballpark was notable in many ways, including this: It did not include a community benefits agreement.

Perhaps such an agreement is forthcoming, but for now, this is puzzling. Cleveland and Cuyahoga County collectively will kick in $17 million per year, or $255 million over the 15-year lease extension period. The deal needs the approval of Cleveland and Cuyahoga County councils, but as it stands now, the main promise from the team is to stay here until at least 2036.

The heated debate over public financing for upgrades to Rocket Mortgage FieldHouse eventually led to a community benefits agreement that set (and met) targets for a local, diverse group of subcontractors, vendors and trades workers to be a part of the project. It included other elements, such as mental health and substance abuse crisis centers, that address important needs.

We're glad there's a deal to keep our soon-to-be Guardians in town. The ratio of public-to-private funding, with the public picking up about 65% of the cost, is in line with the realities of the pro sports market. But it's reasonable to expect, as was the case with the Cavaliers and their arena redo, that the Indians will step up to show they're team players.

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

With the highly transmissible Delta variant spreading rapidly in the United States and COVID-19 vaccine uptake in some areas still disappointingly low, it makes sense to push every lever available to get people protected. One underused tool is is the cost of health coverage.

Health insurance is a significant expense for many Americans and could create powerful financial motivation for holdouts to get shots. Using it isn't just the right thing to do for public health as cases surge. Higher vaccination rates can also save money for health plans by reducing avoidable and expensive COVID cases. Further, extra costs don't just fall on the unvaccinated, but on their employers, colleagues via potential monthly premium increases, or other taxpayers.

As always with vaccine incentives, the question is whether to use a carrot with discounts or a stick such as a premium hike. In this case, the carrot is a safer option, with fewer unintended consequences.

Here's how it could work. The Affordable Care Act and the Health Insurance Portability and Accountability Act typically prohibit adjusting individual insurance costs for anything but a few limited factors including age, geography, tobacco use and family size. But there is an exception for employers, who provide insurance for nearly half of the population. They can modify premiums to offer potentially tax-free incentives worth as much as 30% of the cost of coverage as part of workplace wellness programs. You may have encountered these via efforts like annual health screening questions or step count contests. Government guidance released in May suggests that as long as providing proof of vaccination is voluntary and the employer itself isn’t giving the shots, significant incentives for jabs are fair game.

According to the Kaiser Family Foundation, the average premium for employer-sponsored single coverage was $7,470 in 2020. Of course, employers aren't about to offer a thousand-plus dollars to newly vaccinated people. But the offer of even a few hundred dollars in coverage savings or as a onetime rebate would be a meaningful incentive to get a shot, especially in combination with other cash awards that some states and cities are offering. Most employer incentives have been small, though Walmart Inc. just doubled a cash incentive for employees who get vaccinated to $150.

But why not hike premiums for people who refuse to get vaccinated instead? The notion has appeal because many unvaccinated people create higher costs for themselves and others by choice. That path comes with problems, however. Allowing direct price increases would require an unlikely intervention by Congress. And while wellness incentives can take the form of a penalty, that could be more likely to be viewed as coercive or punitive.

Incentives are most likely to be used by businesses that feel like they can't require vaccination because of employee resistance or a tight labor market. A substantial fine may alienate employees in the same way as a mandate. The middle of a surging pandemic is also a bad time to do something that might encourage people to drop or avoid coverage. For employers, then, increasing positive incentives seems to be the better way to go.

Health plans can spend significant sums and still come out ahead. After all, there are obvious savings in avoiding unnecessary illnesses and hospitalization. But the benefits of broad vaccination go beyond that. It means fewer sick and quarantine days that disrupt businesses. And it could diminish continuing costs from COVID's long-term effects and the health issues that can arise when people postpone needed care during case surges.

It’s an investment worth making.

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.

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OPINION

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PERSONAL VIEW

Ensuring family business success across generations

BY LARRY GODDARD

CEOs tend to be known for strength, vision and reliability. But when family and business mix, tensions can exceed typical boardroom expectations and rise to frightening heights. You would expect a seasoned CEO running a meeting with quiet reassurance – not on his office floor, being pummeled by his two middle-aged sons. That was the reality for a 75-year-old CEO client after he refused to give his sons pay raises, increased ownership and more control.

The fact is, family business disputes are rarely just business. Relationship dynamics, the fluidity between work and home life and complicated succession issues can undermine an otherwise successful enterprise. Add in generational divides, sibling rivalries, in-laws, inter-family disputes and conflicts about compensation and control, and it’s a perfect storm.

But it doesn’t have to be that way. At its heart, family is strength: It brings an enviable level of commitment and continuity to an enterprise. And because close to 90% of businesses are family owned, family is strength for the overall economy.

Here are four best practices for using the advantages of family to boost growth and performance, and equally important, to enhance family relationships.

1. Raise humble stewards of wealth Children of family business owners often are born into wealth, which creates both privilege and burden.

It can foster assumptions and expectations about their role in the family business, as well as the next generation of leaders. Parents can mitigate this by setting the expectation that leadership isn’t automatically bestowed. Instead, it’s earned. At the same time, parents should respect children who don’t choose to work in the business or take different career entirely.

Emphasizing the value of hard work and occasional sacrifice will help teach the next generation to spend money with intention, while conveying egalitarianism by encouraging volunteerism or charitable giving to instill a sense of responsibility at a young age.

Remind the next generation that the skills essential to running the family business are learned, not inherited, and with guidance, they too can develop them.

EMPHASIZING THE VALUE OF HARD WORK AND OCCASIONAL SACRIFICE WILL HELP TEACH THE NEXT GENERATION TO SPEND MONEY WITH INTENTION, WHILE CONVEYING EGALITARIANISM BY ENCOURAGING VOLUNTEERISM OR CHARITABLE GIVING TO INSTILL A SENSE OF RESPONSIBILITY AT A YOUNG AGE. 2. Create a clear plan for succession Even after cultivating a sense of stewardship in the rising generation, it can be hard to hand over the reins, especially when individual identity is so intertwined with the business. Statistically, only 13% of family businesses reach third generation succession, and only 3% reach fourth. The older generation often questions if the younger is prepared for ownership. They wish to ensure that their interests remain protected after stepping down and letting go of their “baby.”

But even the reluctant must eventually pass the torch.

Consider the second-generation CEO client who recognized his niece as a potential successor. He knew she

Goddard has served as CEO, consultant and coach to more than 300 middle-market and family businesses. As CEO of the Parkland Group, he has authored three books and now focuses his practice on family-owned businesses.

wasn’t ready to become CEO, so he appointed her president of a key division, connected her with important contacts and enrolled her in vital training.

As she developed increasing acumen, the CEO and his niece worked together to implement cultural changes that would allow the company to thrive after his retirement.

By scaffolding her rise up the ranks, the CEO prepared a potential successor for leadership.

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3. Form advisory board

Many family business owners naturally tend to be conservative in their growth strategies, especially if the business is comfortably meeting family needs. What’s more, objectivity is challenging when a business supports multiple generations.

A board of trusted advisers can offer input on a variety of important matters, from letting go of underperforming employees to appointing successors and determining fair compensation for all. A board also can collaborate with key stakeholders to assess and define the family’s growth philosophy and risk tolerance, while ensuring the business maintains the cash flow to fund family needs.

If and when the time comes, a board can provide unbiased counsel on the expediency of salvaging unprofitable divisions and take a more objective view on selling all or part of the business. There may be costs associated with a board, but it represents a valuable investment.

Arm’s length expertise can diffuse emotional issues, facilitate succession and balance the needs of different generations.

4. Show respect for non-family member employees

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Hiring and retaining valuable employees, while compensating them fairly, is a key to success in any business. In family businesses, equity can fall short. In one client company, non-family employees threatened to quit when they learned about the higher salaries of family members who worked just a few hours each day.

The inherent imbalances of power between family and non-family employees can cause resentment and distrust unless concrete steps are taken to motivate and retain key staff. Offer equitable salaries and PTO, and create merit-based opportunities for advancement and leadership.

Consider equity (or "phantom" equity) opportunities for superstars. In other words, for the long-term health of the business, invite all valuable employees into your “family.”

Working with loved ones can be a rewarding experience, but it can also be rife with seemingly innocuous moments that turn toxic without appropriate care and sensitivity.

Of course, no one wants to end up like the CEO father and his angry sons.

Fortunately, there’s hope.

Leaders committed to setting clear expectations about leadership, holding family members accountable to well-defined standards of performance, instilling responsibility at all levels, and drawing on the strength derived from non-family managers and advisers are likely to see their businesses prosper.

The best way to run a family business is to act like it’s a regular business and award merit where it is due, not where it’s inherited.

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PANDEMIC COMEBACK Owners, experts say they are optimistic as businesses optimize for flexibility.

SMALL BUSINESS

PAGE 14

Bud don Som beca that wan wro

Min

H inve ture Jum star fund seed roun deve A esse nap have prod eng Eac es o ture tal o grow “Th mon team than sup nee fit a back The earl hea soft get c siste com St basi ket r lem

GETTY IMAGES/ISTOCK PHOTO

MAP TO THE STARS Harsh lessons don’t have to be part of the small business fundraising journey, experts say

M

BY DOUGLAS J. GUTH

edPilot co-founder Matt Buder Shapiro recalls, not without some embarrassment, the starry-eyed optimism he had when pursuing investment for his Cleveland digital health platform. Reading stories on generous venture capitalists had Buder Shapiro ready to race out of the gate before his business was ready for prime time.

“That was the biggest mistake we made,” said Buder Shapiro. “We put together our concept, our team and a little bit of product, so we said let’s go get funded. When you meet with a lot of venture capitalists, you get a false sense of interest. It’s the job of an associate VC to meet a lot of companies — they have to build relationships, so they’re going to be nice to you.”

“SOME PEOPLE SAY IT’S EASIER EARLY ON BECAUSE YOU’RE SELLING A DREAM, BUT THAT’S ALMOST NEVER THE CASE. INVESTORS WANT TRACTION — EVEN WHEN THINGS GO WRONG, THEY CAN SEE YOU WORKING.” — Matt Buder Shapiro, MedPilot co-founder

Health in February, the Lessons learned on company raised upward Buder Shapiro's and other of $3.5 million over a fiveexperts' fundraising jouryear period. Like many neys, though, offer wisstartups, MedPilot relied dom for other small-busion personal capital and ness owners exploring the angel investors for seed funding process. investment, then cultivatAs for Buder Shapiro, ed additional funding with MedPilot spinning its wheels, leadership Buder Shapiro apace with growing business momentum. paused fundraising efFor his part, Buder Shapiro forts to focus on product creation.

Re-strategizing coincided with learned not to trust the siren song Buder Shapiro meeting a hedge of “big, fancy VC rounds” before fund manager at a cousin’s bar gaining purchase with his product. mitzvah, leading to MedPilot’s Meanwhile, building networks gave then-largest capital raise as well as him a better grasp on the mechaninroads to a cash-rich New York in- ics of fundraising.

“It’s rare when you can have too vestment community.

Before its acquisition by Vytalize much traction in your business,”

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FOCUS | SMALL BUSINESS

CK

es

ing for perfection is a deadly — if understandable — mistake numerous fund-seeking enterprises make in their startup phase.

“Be comfortable with having a product at 50% or 70%,” Desai said.

“Embrace the minimum viable product and getting it into the hands of users. Some companies will Minimizing risk is key spend months on features and funcHardik Desai, senior partner of tionality without understanding the investing at Cleveland-based ven- product. The more engaged you are ture development organization with early adopter customers, the JumpStart, has worked with tech better your growth prospects.”

Entrepreneurial enthustartups at all stages of siasm is wonderful, funding — from the prethough showing you’re a seed friends-and-family pragmatic dreamer is perround to more established haps more important, development phases. maintains Buder Shapiro.

At pre-revenue stages — As an angel investor himessentially an “idea on a self, Buder Shapiro is napkin” — founders must wary of owners who behave a minimum viable lieve the world will be product, or MVP, to help theirs in two years. To that engage potential investors. Desai end, surrounding yourself Each funding round hingwith a knowledgeable, es on de-risking the venlevel-headed team can ture, with investment capimoderate more egregious tal overshadowing revenue founder impulses. growth in the early going.

“When you’re an inves“That’s because the tor hearing people talk money you need for your about their journey, do team is going to be greater they think it’s a get-rich than what revenue can scheme?” said Buder Shasupport,” said Desai. “You piro. “If you’re talking like need that product market Goldberg that, you’re absolutely fit and sufficient users to back that this is an urgent need. screwed. Investors will question There’s also lots of randomness in anyone talking exit opportunities early customer acquisition — a right at the beginning, because you health care system might use your just started your company. How do software, but might not be your tar- you know who you’re selling to?” get customer. Having the same consistent use case separates successful A never-ending cycle companies.”

Startups often fail due to lack of Fundraising never stops in tobasic messaging, whether it’s mar- day’s business world, with the curket research or detailing what prob- rent era of remote communication lems their product is solving. Striv- making it easier to connect with hyBuder Shapiro said. “Get as much done before bringing investors in.

Some people say it’s easier early on because you’re selling a dream, but that’s almost never the case. Investors want traction — even when things go wrong, they can see you working.”

pothetical backers, notes Michael Goldberg, a venture capitalist and entrepreneur now serving as an associate professor at Case Western Reserve University’s Weatherhead School of Management.

Raising capital is an education for founders, insofar as that money goes faster than they may expect. A solid business plan can alleviate stress, further showing would-be backers that you have thoroughly tested pre-revenue assumptions.

“You’re investing in that growth story,” said Goldberg. “Someone pre-revenue or early in their revenue cycle will be projecting out some optimistic future. Investors are going to be skeptical of that model — that’s just natural.”

Not only will founders burn through money quickly, they also must understand the time tax involved with fundraising.

Goldberg said, “Entrepreneurs are trying to run their companies, but just setting things up and getting meetings with investors is very time-intensive.”

Some owners believe running a business means being your own boss, an assumption that Buder Shapiro said could not be more incorrect. Board members, clients and even employees all count on you for inspiration, while investors are as crucial to startup success as the founders themselves.

“They are your partners,” said Buder Shapiro. “A bad investor will cause you problems, so make sure you’re interviewing them. Being prudent when letting them in on the capital table can be the difference between success and failure.”

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FOCUS | SMALL BUSINESS

Orbital Health, NeverEnding close early-stage fundraises

BY JEREMY NOBILE

Two Cleveland startups have completed early-stage fundraises led by Cleveland venture capital firm Comeback Capital.

The VC firm has been hunting for investments in its local market as part of broader efforts to back young companies across what it describes as the U.S. heartland. It's also acting as a vehicle for coastal investors to gain exposure to early-stage Midwest companies, something investors are increasingly keen to do.

Orbital Health, a registration and scheduling platform for the health care industry, said it has raised $600,000 in a pre-seed round led by Comeback.

Other participating investors include Right Side Capital Management (San Francisco), EV Private Investments (Florida) and GAM Investments (Zurich, Switzerland).

Separately, NeverEnding Inc., a social media platform with built-in content creation tools that let users design their own custom avatars — future plans call for tools enabling creation of entertainment-minded multimedia-like animated videos and web comics incorporating their characters — raised $425,000 in a pre-seed round led by Comeback.

Other participating investors include Zapis Capital Group (Westlake), Sky Point Financial Group (California) and Mucker Capital (California).

Orbital Orbital was founded in early 2020

by Mat Coolidge, who was previously an IT product director for the Cleveland Clinic, where he had worked for nine years before starting his business.

Per a company overview: Orbital Health partners with health care providers to proactively offer appointments to patients, enable self-registration, and recapture underutilized capacity. 95% of top U.S. hospitals still require a phone call to schedule an appointment and up to BRYAN SCHAUER, Schauer Group

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NeverEnding NeverEnding founder Jamie Van Doren got the idea for his social media platform in early 2020.

Van Doren, a native of California who battled homelessness as a young teenager, leaned into creative storytelling to cope with challenges he faced in life. He’s an avid tabletop

gamer and Dungeons & Dragons veteran.

These experiences inspired the inception of NeverEnding.

“It’s an entirely new kind of social platform with built-in content-creation tools that allow everyone to create anything from web comics to animated videos as easily as they play a video game,” Van Doren said. “At its heart, we are about providing a way for people to share ideas and community stories without having to live in front of the camera or curating their private lives.”

Being at an early stage, NeverEnding’s core offering today is an avatar-creator tool, of which a beta version was launched in December.

“We think there is a real opportunity here for people to share things that are not necessarily so person-centric and share more interesting ideas and stories without personally putting themselves on display.”

The startup’s only true employee today is Van Doren, but he contracts with about 15 illustrators, designers and developers.

The fundraise will support more 3-D modeling and otherwise accelerate development of the platform. That includes rolling out tools enabling users to create those videos and web comics to tell stories with their characters.

Its next milestone will come with the launch of a “scene creator” with which a user can build a theme using background elements and props from their own asset library.

The goal, Van Doren said, is to have a strong functioning beta version of that running by November. A story animator is on track to roll out next February.

NeverEnding has about 5,000 active users today. That’s set to double in the near future, Van Doren said, pending a partnership with a small Ohio university that is expected to include an e-sports team and possibly the broader on-campus community.

Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile

BLU-tique Hotel puts off opening

BY DAN SHINGLER

SCOTT GNAU, First Federal Lakewood

80% of recommended care goes unscheduled. Orbital Health’s scheduling solution aims to change that by ensuring patients are scheduling their recommended appointments which increases revenue for health care providers and improves longterm patient outcomes.

Orbital includes its founder and two employees. With the fundraise, Coolidge said he’s looking to bring on at least three more people.

“What we are looking to do is scale the platform ... and reach out to more prospective partners, health systems,” Coolidge said. “To do that, we need to bring in some additional developer resources to help take over a lot of what I’ve been doing as an early-stage founder, CEO and developer.”

Coolidge says he’s looking to partner with smaller hospital systems that could benefit from his platform’s scheduling technology.

The Cleveland Clinic is not currently a client — but he’d certainly love it if they were.

“Right now, we’re focused on smaller and midsize hospital systems who have that burning need (to address challenges with patient scheduling) and who are probably a bit more open to working with an early-stage company,” Coolidge said.

Orbital has approximately $15,000 in monthly recurring revenue and is in active conversations with at least three hospital systems that it could serve.

Orbital Health participated in this spring’s cohort for the gBETA business accelerator program in Cleveland. The startup generated $190,000 in revenue during its first year of operation, according to a gBETA bio.

The reopening of downtown Akron’s BLU-tique Hotel has been put off until October.

Developer Tony Troppe had planned to open the hotel for the Pro Football Hall of Fame events in Canton this past week, he said. In fact, Troppe said he had the entire hotel booked with visitors coming in for the Canton events, for several nights.

But guests canceled because of ongoing construction on Main Street downtown, including right in front of the hotel, until that part of the street reopened on Tuesday, Aug. 3.

Troppe, in his usual manner, is taking it in stride. He’d rather wait, he said, than disappoint guests.

“You only get one chance to make a first impression,” Troppe said. “We’re real close, but we’re not quite ready.”

It’s a disappointment for Troppe, who had just opened the hotel that he redeveloped at the intersection of Main and Market streets in January 2020, only to have to close it soon after as the pandemic struck.

But Troppe said he’s willing to trade in some short-term disappointment for the long-term returns he thinks he and the rest of downtown will reap from the city’s massive streetscape project, which has been going on for more than two years. The city completed $31 million worth of renovations on Main Street between Cedar and Mill streets and has now begun Phase 2 of the project, which entails $14 million in renovations on the street between Market and Mill streets.

The city is doing a great job on Main Street, Troppe said, walking down the side of a gleaming new street in front of his hotel, where new

streetlights were about to be installed.

“This is something we’re going to see benefits from for 50 years,” Troppe said. “It’s worth it.”

That echoes what Akron Mayor Dan Horrigan said Tuesday, when he announced the reopening of Main Street at Market Street.

"The improvements being made to our infrastructure downtown will last for generations to come, benefiting current and future Akronites,” Horrigan said. “I'm proud of the progress we've made so far and look forward to the full completion of the downtown corridor improvements.”

Troppe said he’ll re-evaluate the situation in the weeks ahead, but currently plans to open the hotel in October.

Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

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FOCUS | SMALL BUSINESS TAX TIPS

BY CARL GRASSI

Prior to passage of the Tax Cuts and Jobs Act (TCJA) at the end of 2017, individuals could deduct the full amount of their state and local taxes (SALT) on their federal income tax returns. TJCA limited that deduction to $10,000 ($5,000 for married filing separate) effective for taxable years beginning after Dec. 31, 2017, and will continue to apply until 2026.

However, recent IRS guidance suggests that Ohio resident and nonresident pass-through entity (PTE) owners may be able to work around this limitation by participating in Ohio composite returns and satisfying certain other requirements.

Owners of PTEs report their share of the business’ income on their individual tax returns and pay applicable state and local taxes on that income.

As a result, the taxes paid by the owners on the income of the business are subject to the SALT cap. By contrast, taxes paid by PTEs at the entity level are not subject to the SALT cap limitation. Those taxes instead reduce the owner’s distributive share of income, but they are not paid and deducted directly by the owner.

In Notice 2020-75, the IRS announced plans to release proposed regulations permitting a PTE’s Speci-

of their nonresident owners and report and pay the tax by filing a composite return.

Composite returns allow the PTE to report and pay any taxes due on its income in the state. PTE owners are then entitled to claim a credit for their distributive share of Ohio income tax paid by the PTE. The credit is applied against any income reported on the owners’ individual Ohio returns. Because the tax is imposed and paid at the entity level, it appears that the mandatory Ohio PTE withholding tax is a SITP that may not be subject to the SALT cap.

Prior to release of Notice 2020-75, the question arose whether Ohio residents owning PTEs could qualify for the SALT cap relief because the mandatory withholding tax only applies to income allocated to Ohio nonresidents. Based on the IRS notice, it now appears that Ohio resident owners of PTEs may also qualify for relief from the SALT cap, because Ohio permits PTE owners to elect to join in the PTE’s composite Ohio income tax return, and the notice specifically states that the deduction would apply even if imposition of tax at the entity level is the result of an election.

For Ohio residents, the composite return process essentially replicates the SITP described in Notice

fied Income Tax Payment (SITP) to be deductible as an ordinary and necessary business expense in determining the entity’s non-separately stated taxable in- Grassi is senior come or loss. counsel at SITP is any McDonald amount paid by a Hopkins LLC. PTE for income taxes to a state (or a political subdivision of a state).

The deduction applies without regard to whether the tax is the result of an election or whether the PTE owners receive a credit or other tax benefit that is based on their share of the amount of tax paid by the PTE. Essentially, the IRS provided a roadmap in Notice 2020-75 for PTE owners to bypass the SALT cap limitation in states that require or allow state and local taxes to be paid at the PTE level.

Ohio imposes a mandatory PTE withholding tax on the distributive share of income allocated to nonresident owners. The tax functions in a manner similar to the SITPs described in the notice. PTEs must withhold from the distributive shares

GETTY IMAGES/ISTOCK PHOTO

SALT cap relief may be available for Ohio residents, nonresidents alike

2020-75: PTE owners elect to have tax imposed at the entity level and can receive a credit for the tax paid by the PTE on their behalf. Accordingly, based on the IRS notice, it now appears that Ohio residents may be able to qualify for the IRS-approved workaround by electing to participate in a composite return. If you are an Ohio resident PTE owner, this is a topic to review with your tax adviser.

There may be an additional advan-

tage to participating in a composite return if the PTE pays state income tax at a rate higher than its owners, but owners would need to check with their tax adviser to determine whether this is the case.

The workaround is only available to PTE owners, which does not include owners of single-member LLCs. There are still steps you can take to qualify, but the cost and benefits should be weighed with your tax and legal advisers.

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FOCUS | SMALL BUSINESS

Planning pandemic comeback an ongoing challenge

BY DOUGLAS J. GUTH

Staff and faculty at Ursuline College are enjoying the studio’s full-body balanced workouts, while Ferrante is providing additional classes at University Hospitals in partnership with the North Union Farmers Market.

Barre3 spent the pandemic’s earlier months livestreaming studio classes, a crisis-spurred pivot that’s now a staple of Ferrante’s offerings. Indoor classes are at limited capacity, expanding in June from a dozen to 18 patrons. With no plans to max out occupancy to 27, Barre3 provides outdoor activities at Legacy Village — in case of inclement weather, classes are moved under a tent.

Juggling classes and services have yet to bring Barre3 back to 2019 revenues. Paycheck Protection Program funding, which ended for most borrowers on May 31, had been an additional lifeline for the business that Ferrante must now do without.

The pandemic’s evolving nature motivated Ferrante to start an online newsletter, where she shares motivational messages as well as surveys about clients’ readiness to return to in-person classes. Although her 12-person staff is completely vaccinated, Ferrante is keeping close watch on local variant transmission.

Masking and even vaccination cards are a possibility pending a new surge of the virus.

“There was a shock that took place when we had to close the business — I had so much uncertainty about the health of my family and the community,” said Ferrante. “It makes you think about what we’ll do if this happens again.”

Since March 2020, small businesses have been cutting through a thicket of restrictions and recommendations in determining how to continue operations.

Owners and industry experts interviewed by Crain’s Cleveland Business believe there is reason to be optimistic as businesses optimize their shops for flexibility. Embracing technology, prioritizing work-life balance and valuing empathy are just a few strategies entrepreneurs should be considering in an ever-changing (and stress-inducing) pandemic environment.

Small businesses across industry sectors are being deluged by pent-up demand, an issue exacerbated by a shallow talent pool, notes Mike Ozan, chief creative officer of the branding and design company Twist Creative.

Ozan said remaining present with customers is a crucial step that overwhelmed businesses can take even as the economy recovers. Enterprises in the B2B or B2C realm would even be wise to share their rebuilding stories on social media.

“Find a way to be assertive and stay in front of people,” said Ozan.

“Ask for those follows, and tell your story. Everyone loves transparency when we’re all going through the same thing. If you had to let employees go and pay half their salaries, customers will be more empathetic.”

A silver lining of the last 16 months has been a kinder working world where everyone is not only thinking about themselves, Ozan adds. While prioritizing work-life balance is a challenge in any marketplace, the rise of video meetings has illuminated the need for employee flexibility outside the office.

Among other outcomes, this change in atmosphere is pushing out “curmudgeon leadership” in favor of a more nimble generation.

“Put a millennial in charge who understands brands and wants a company to be exciting and engaging,” Ozan said. “The old way of doing business doesn’t exist anymore. Millennials have a totally different way of evaluating their partners.”

A place for empathy

Dealing with the ups and downs Vaccines unveiled earlier this year brought hope to struggling businesses, a trend somewhat muted by the spread of the highly contagious Delta variant of COVID-19. With infections and hospitalizations increasing again in the United States, founders with the right technology in place are better prepared than contemporaries lacking those digital tools.

From an anecdotal standpoint, the move to remote work has helped smaller shops keep productivity at pre-pandemic levels, observes Robert Cohen, chairman of SCORE, a Cleveland-based small business mentoring organization.

Cohen said, “People I’ve talked to across sectors are more focused on what they do, and can control their time a bit better not being in meetings all day long. If management understands and trusts their workers, they’ll see productivity can be as good as it was when people were in the office.”

SCORE, which provides volunteer

Liz Ferrante, above, owner of a Barre3 studio franchise in Legacy Village, is reaching out to potential clients via free outdoor classes and other pop-up events. | ALEXIS ROSEN PHOTOS

experts for free mentoring sessions, suggests small businesses reintroduce any “deep-dive discovery” tactics they previously used to engage customers. Liz Ferrante, owner of a Barre3 studio franchise in Legacy Village, shifted classes almost immediately to Zoom when the first wave of state-mandated stay-at-home orders came down in spring 2020.

Today, Ferrante is reaching out to potential clients via free outdoor classes and other pop-up events.

“PEOPLE I’VE TALKED TO ACROSS SECTORS ARE MORE FOCUSED ON WHAT THEY DO, AND CAN CONTROL THEIR TIME A BIT BETTER NOT BEING IN MEETINGS ALL DAY LONG. IF MANAGEMENT UNDERSTANDS AND TRUSTS THEIR WORKERS, THEY’LL SEE PRODUCTIVITY CAN BE AS GOOD AS IT WAS WHEN PEOPLE WERE IN THE OFFICE.” — Robert Cohen, chairman of SCORE

Twist Creative tells its clients to forecast ahead, taking into consideration the possibility of future shutdowns and preparing for the worst.

Such changes can put undue stress on staff, meaning simple empathy should be part of any workplace roadmap, says creative officer Ozan.

“It’s about companies going through their own training so they get a vision of what their culture can be,” Ozan said. “And if that culture is realized, what are businesses providing in value from a recruitment, customer service and quality of life standpoint? (Empathy) is an essential, not just nice to have, because workers have more choice now. It’s an employee market.”

Ozan is seeing a renewed push for diversity and inclusion at larger entities, a mantle that smaller businesses can take up as well. Such expectations may not be as intense at a 15-person office, but it never hurts to invest in your people.

“You have to create an atmosphere that inspires people so they stay,” said Ozan. “A commitment to teaching and training is ongoing and takes time and money.”

Cohen of SCORE believes empathy goes both ways, insofar as staff must understand how virus shutterings have impacted founders.

“Remember that the employer has a lot of skin in the game, whether it’s loans or dealing with equipment,” Cohen said. “It’s not a one-way street. Both sides communicating is important.”

Contact Douglas J. Guth: clbfreelancer@crain.com

14 | CRAIN’S CLEVELAND BUSINESS | AUGUST 9, 2021

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AKRON

Trendlines for Akron office-space market turn negative

BY DAN SHINGLER

Stuck in a fog of uncertainty and increased subleasing, Akron’s office-space market has had a tough time over the last 12 months.

Vacancy and absorption rates have both turned negative, resulting in the highest vacancy rate the city has seen since 2016, according to recent research by Cleveland’s JLL real estate services firm.

Colliers, meanwhile, reports the city recorded its fifth consecutive quarter of negative net absorption between April and the end of June, adding another 32,458 square feet of space to the market during the threemonth period. All told in the last five quarters, an additional 324,000 square feet of new space hit the market, Colliers found.

The question now is whether the latest trendlines reflect a short-term phenomenon driven by the pandemic and stay-at-home workers, or reflect a long-lasting change in the ways that people work and use — or don’t use — traditional office space.

Neither real estate professionals nor tenants seem to know the answer just yet.

“People right now are trying to understand their real estate needs — and this is all still a moving target,” said JLL senior vice president Warren Blazy III. Perhaps most worrisome among JLL’s latest findings is the reversal in the direction the city’s office vacancy rate has been moving. After falling for several years to 17.4% at the end of the first half of 2020 in JLL’s data, the rate has since gone up to 21.3%, wiping out five years of decreases.

Colliers found a lower current vacancy rate of 14%, but it looks at Canton in its study area, while JLL focuses more exclusively on Akron and its suburbs. Colliers also found the rate rising, though, and reported it’s up 1.1 percentage points in its data, from 12.9% a year ago.

In the near term, JLL doesn’t expect things to get much better. It found negative absorption of just less than 68,000 square feet in Akron for the second quarter. “Further occupancy losses are expected over the course of 2021,” it said in the recent report.

For at least the time being, the landscape has changed in favor of tenants, JLL concluded — though rents have yet to fall, and asking rents are still at $18.46 per square foot.

“Through the course of the pandemic the market has turned tenant-favorable. While landlords are holding firm on starting rents, there has been a considerable uptick in concessions on long-term deals,” the report stated.

But there also aren’t many longterm leases being signed, which constrains landlords in terms of how much they can safely invest in tenant

During the day, much of downtown Akron is largely dormant as major office buildings have yet to fill back up with workers — creating both uncertainty for employers and subleases competing with other vacant space on the market. | DAN SHINGLER/CRAIN’S CLEVELAND BUSINESS PHOTOS

improvements.

“There’s no one out there going long-term now. … The landlords would love to have someone say something other than ‘What can I do for a year?’ ” said Colliers associate Cori Voltz.

The sublease market, made up largely of companies that have determined they lease more space than they now need, also is creating headwinds.

While there was virtually no sublease space available in Akron a year ago, the market now has 182,072 square feet of sublease space available, with an average rent discount of 10.4%, JLL found. That’s almost like plopping a completely empty large office building in town — the 27-story Huntington Tower, downtown Akron’s tallest building, has about 240,000 square feet of space, for example. There’s still no word on

a potential sale of that building, which was put on the market in spring 2019.

Blazy said the entire office market is in an unsteady state, as employers grapple with whether and how to institute back-to-work policies in a pandemic that is not going away and with employees who have mixed opinions on returning to the office.

“As people put more policies into place, they’ll understand it more," Blazy said. "We’re seeing all sorts of reactions. A third (of client employees) can’t wait to get back, a third say either way is fine and a third say, ‘You’ll never see me in the office again.' ” Other real estate professionals are finding clients less than certain about their needs.

“I think a lot of business owners are in a position of uncertainty in terms of which direction to move,” said Jerry Fiume, founder and managing director at SVN Summit Commercial Real Estate Group in Akron.

“There’s no question there’s a fundamental change in terms of how office space is going to work going forward. I think the market is in the middle of trying to figure that out right now.”

Akron might be seeing more subleasing than some other cities, Blazy said, in part because it has several large companies moving or reducing their footprints. Babcock & Wilcox, Signet Jewelers and A. Schulman have all put space on the market and others are following suit, he said.

“I think in Akron, maybe more than Cleveland or some other markets, you’re seeing that space hit the market,” Blazy said. “Akron does have some call-center space, and a lot of that is now looking at the hybrid model, too.”

Signet Jewelers is working to sublease a significant amount of its space on Ghent Road in West Akron.

Signet vice president of corporate affairs David Bouffard said by email that two of the company’s large buildings are currently being offered, with a total of 115,000 square feet of available space between them.

Blazy predicts the best buildings, with Class A space, will have the best fortunes going forward. “(Companies) want to look at new opportunities. If you’re going to change your workplace, you’re probably not going to make a parallel move, you’re going to take a flight to class,” Blazy said.

That said, the market is far from dead, and Blazy said his firm’s agents are still seeing both activity and demand.

“Just today we had a tech company that’s not in downtown Akron, they’re looking to grow and they want to take a look at what’s out there. They weren’t even on our radar, and now they’ve toured 7,000 square feet of space just this morning,” Blazy said in a July 26 interview.

“There are a number of companies out there looking to take advantage of this opportunity.”

Fiume also is optimistic about the office sector’s prospects, once the dust settles.

“I’m bullish on office long-term," he said. "It’s just going through a transformation in terms of what it looks like.”

And there is one part of the market where real estate sources say they’re seeing particularly strong demand — small spaces.

But, with large companies often subleasing large spaces, or hoping to do so, there’s a mismatch, Colliers vice president Jon Caiazza said. So, his firm is working to divide up some larger parcels. That might take time to eat away at the available space, though, because the spaces some tenants are looking for are very small.

“We’re talking about taking 5,000 or 10,000 square feet and making it available as a couple hundred square feet for office tenants,” Caiazza said.

Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

16 | CRAIN’S CLEVELAND BUSINESS | AUGUST 9, 2021

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CRAIN’SCONTENTSTUDIO CLEVELAND

CRAIN'S LIST | EMPLOYEE-OWNED COMPANIES WITH ESOP PLANS Ranked by active participants in 2019 PARTICIPANTS 2019 COMPANY

ACTIVE 1

TOTAL 1

EMPLOYER SECURITIES IN PLAN 2019

1

THE DAVEY TREE EXPERT CO. 1500 N. Mantua St., Kent 44240 330-673-9511/davey.com

4,980

6,284

$119,832,501

$267,004,394

$16,155,293

$24,984,854

Jan. 1, 2002

2

BUEHLER'S FRESH FOODS 1401 Old Mansfield Road, Wooster 44691 888-283-4537/buehlers.com

1,527

1,689

$5,359,500

$5,559,500

$200,647

$647

Oct. 1, 2017

3

THE GARLAND CO. 3800 E. 91st St., Cleveland 44105 800-641-7500/garlandco.com

1,047

1,142

$855,745,035

$855,842,224

$20,500,000

$60,715,373

Jan. 1, 1985

4

ACRT INC. 4500 Courthouse Blvd., Suite 150, Stow 44224 800-622-2562/acrt.com

965

1,378

$33,200,497

$33,237,724

$3,058

$1,925,942

Dec. 31, 1998

5

CLEVELAND STEEL CONTAINER CORP. 30310 Emerald Valley Parkway, Suite 400, Glenwillow 44139 440-349-8000/cscpails.com

380

468

$254,067,066

$254,067,066

$1,295,949

$1,652,345

Jan. 1, 2014

6

ROBIN INDUSTRIES INC. 6500 Rockside Road, Suite 230, Independence 44131 216-631-7000/robin-industries.com

379

581

$48,416,690

$52,069,527

$1,200,000

$700,883

Jan. 1, 2012

7

ORIGINAL MATTRESS FACTORY 4930 State Road, Cleveland 44134 866-841-1421/originalmattress.com

342

553

$41,110,573

$41,469,310

$3,933,127

$104,724

Jan. 1, 2011

8

WILL-BURT CO. 401 Collins Blvd., Orrville 44667 330-682-7015/willburt.com

230

353

$34,403,553

$35,010,787

$1,939,371

$3,779,415

Jan. 1, 1985

9

GBS CORP. 7233 Freedom Ave. N.W., North Canton 44720 330-494-5330/gbscorp.com

211

217

$85,541,115

$87,706,401

$1,050,235

$5,103,622

Jan. 1, 1987

10

PRC-SALTILLO 1022 Heyl Road, Wooster 44691 330-262-1984/prc-saltillo.com

204

264

$56,509,099

$56,509,099

$1,979,823

$3,522,506

Oct. 1, 2003

11

GRAND RIVER RUBBER & PLASTICS CO. 2029 Aetna Road, Ashtabula 44004 440-998-2900/grandriverrubber.com

203

233

$12,180,000

$12,605,000

$531,274

$381,274

Dec. 15, 2010

12

FASTENER INDUSTRIES INC. One Berea Commons, Suite 209, Berea 44017 440-243-0034/fastenerind.com

193

259

$59,119,190

$86,212,982

$1,965,380

$4,025,640

Jan. 1, 1964

13

ATLAS STEEL PRODUCTS 7990 Bavaria Road, Twinsburg 44087 330-425-1600/atlassteel.com

173

196

$50,928,104

$69,646,751

$1,708,828

$4,075,616

Jan. 31, 1973

14

JHI GROUP INC. 309 Monroe St., Monroeville 44847 419-465-4611/jhigroup.com

170

238

$14,169,677

$21,065,668

$750,000

$917,940

Jan. 1, 2000

15

FIN FEATHER FUR OUTFITTERS INC. 652 U.S. 250 E., Ashland 44805 419-281-2557/finfeatherfur.com

156

176

$22,350,000

$23,451,091

$386,055

$32,302

Jan. 1, 2016

16

KIRKWOOD HOLDING INC. 1239 Rockside Road, Parma 44134 216-267-6200/kirkwoodholding.com

140

145

$25,555,145

$25,555,588

$525,000

$767,751

July 31, 1974

17

GREAT LAKES CONSTRUCTION CO. 2608 Great Lakes Way, Hinckley 44233 330-220-3900/greatlakesway.com

138

156

$50,602,817

$52,354,233

$1,635,623

$6,016,652

Sept. 15, 1980

17

MANTALINE CORP. 4754 E. High St., Mantua 44255 330-274-2264/mantaline.com

138

267

$12,174,560

$12,186,338

$303,935

$1,263,627

Oct. 2, 1989

19

E2G|THE EQUITY ENGINEERING GROUP INC. 20600 Chagrin Blvd., Suite 1200, Shaker Heights 44122 216-283-9519/e2g.com

111

145

$24,189,519

$25,733,252

$1,023,070

$1,339,511

Oct. 1, 2012

20

DURAMAX GLOBAL CORP. 17990 Great Lakes Parkway, Hiram 44234 440-834-5400/duramaxmarine.com

89

106

$27,000,000

$27,000,000

$584,226

$462,626

Dec. 11, 2012

21

O.E. MEYER CO. 3303 Tiffin Ave., Sandusky 44870 419-625-3054/oemeyer.com

85

105

$18,653,196

$20,484,262

$1,669,685

$1,149,562

Jan. 1, 1989

22

MARSH, BERRY & CO. 28601 Chagrin Blvd., Suite 400, Woodmere 44122 440-354-3230/marshberry.com

78

83

$29,800,000

$29,800,000

$258,433

$41,280

Jan. 1, 2016

23

COM-CORP INDUSTRIES 7601 Bittern Ave., Cleveland 44103 216-431-6266/ccioh.com

73

76

$114,000

$114,000

$487,485

$0

Jan. 1, 2018

23

THE RUHLIN CO. 6931 Ridge Road, Sharon Center 44274 330-239-2800/ruhlin.com

73

73

$7,687,118

$7,873,598

$1,000,000

$1,483,452

Jan. 1, 1977

RANK

TOTAL PLAN ASSETS 2019

TOTAL CONTRIBUTIONS 2019

TOTAL DISTRIBUTIONS 2019

PLAN EFFECTIVE DATE

SOURCE: Ohio Employee Ownership Center, the National Center for Employee Ownership and Crain's research (researcher@crainscleveland.com) | This list includes majority employee-owned companies that also have

Employee Stock Ownership Plans. Numerical data is for ESOP plans only and excludes assets held through other forms of ownership. The listed companies were all majority owned as of the most recent data gathered by The Ohio Employee Ownership Center and the National Center for Employee Ownership. The data was compiled from forms the companies filed with the U.S. Department of Labor. Crain's excluded companies if a Form 5500 for the plan year beginning in 2019 wasn't yet available through dol.gov. Participant numbers and assets figures are as of the end of the company's 2019 plan year. Plan effective date may not reflect when a company's ESOP plan was originally created. In some cases the date may have been updated if significant changes were made to the plan. NOTES: 1. Active figures include all current employees who are eligible for the company's ESOP plan. Total figures include former employees and others who no longer meet eligibility requirements.

Get all 47 firms and historical data in Excel format. Become a Data Member: CrainsCleveland.com/data 18 | CRAIN’S CLEVELAND BUSINESS | AUGUST 9, 2021

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DATA SCOOP

BY CHUCK SODER

Nearly half of the companies on the Crain’s Employee-Owned Companies list are manufacturers, and that’s probably not a coincidence, according to Chris Cooper, director of the Ohio Employee Ownership Center at Kent State University.

The full digital list — assembled with data collected by the OEOC, the National Center for Employee Ownership and Crain’s — includes 47 Northeast Ohio-based companies that have Employee Stock Ownership Plans (ESOPs) and are at least 50% employee-owned.

Of those 47 companies, 20 are manufacturers. That’s 43%.

Why is the percentage so high on this list?

Of course, the Greater Cleveland area has long been known as a manufacturing hub, For instance, the industry accounts for 29% of the companies on the Crain’s Family-Owned Businesses list.

But Cooper said there are other reasons why a lot of employee-owned companies with ESOP plans are manufacturers.

For instance, it’s easier for employees to buy a manufacturing company because they “can be asset heavy,

which can make financing easier,” he said. Cooper also noted that early efforts to create ESOPs focused on manufacturers. Indeed, the five companies on the list with the oldest ESOP plans are all in manufacturing.

Granted, the top two companies on the list are in other industries.

The list is ranked by 2019 active participants — aka employees who were part of the company’s ESOP plan at the end of the 2019 plan year (the most recent year for which data is consistently available from the U.S. Department of Labor’s website). The Davey Tree Expert Co. of Kent easily took the top spot, with 4,980 active participants at the end of 2019. At No. 2 is Buehler’s Fresh Foods of Wooster, with 1,527.

If the list were ranked by ESOP plan assets, however, The Garland Co., No. 3 on the list, would easily leap up to No. 1. The fast-growing Cleveland-based building materials manufacturer had a plan worth $855.8 million as of 2019, up nearly 20% from the previous year. Davey Tree’s $267 million plan would still take No. 2, even though that figure excludes most of the company’s shares, which are owned directly by employees, outside of the ESOP plan.

Companies on the full digital list

saw their combined active participants grow 5.8% between 2018 and 2019, and the combined value of their ESOP plans grew by 13.9%, judging by historical data in the Excel version of the list.

Though there are a handful of companies on the list that didn’t have qualifying ESOPs when we last published the list two years ago, the number of companies on the list hasn’t changed much. Similarly, the number of Ohio companies with ESOP plans, including companies that aren’t majority employee-owned, has been flat recently, Cooper said.

“More are created every year, but we’re seeing consolidation and mergers of ESOPs; also because ESOPs tend to do so well financially they are becoming purchase targets,” he said. One example from the list: Automated Packaging Systems of Streetsboro was No. 3 on our 2019 list but was acquired by Sealed Air of Charlotte, N.C., later that year.

But acquisitions aren’t always a bad thing if you’re an employee-owner, Cooper noted. “Employees/participants are becoming wealthy in the process,” he said.

Chuck Soder: csoder@crain.com, (216) 771-5374, @ChuckSoder

SUSANA GONZALEZ/BLOOMBERG

Manufacturers well-represented on Employee-Owned Companies list THE WEEK PARKER'S BIGGEST DEAL: Parker Hannifin Corp., the Mayfield Heights-based maker of motion and control technologies, agreed to buy a United Kingdom-based rival, Meggitt plc, for about $8.8 billion. On Monday, Aug. 2, Parker said Coventry, England-based Meggitt posted revenue of about $2.3 billion in 2020 and has more than 9,000 employees worldwide. Meggitt, which is listed on the London Stock Exchange, makes motion and control technologies for the aerospace and defense markets. "The combination of Parker and Meggitt is an exciting opportunity for both companies' team members, customers, shareholders and communities," said Tom Williams, Parker's chairman and CEO. The deal would be the biggest ever for Parker, which has accelerated its buyout activity under Williams. The company, which supplies a variety of industries, was on a tear before the coronavirus pandemic, with the $4.3 billion purchase of filtration-products manufacturer Clarcor in 2017, and materials-science specialist Lord Corp. for $3.7 billion in 2019. Adding Meggitt will

nearly double the size of Parker's aerospace systems unit.

BROADENING BROADBAND: After much back-and-forth between Gov. Mike DeWine's administration and the two chambers of Ohio's Legislature, the process to award $250 million from a broadband expansion fund for unserved and underserved areas has been approved. The criteria and timeline for grant applications from nonprofits, local governments and private businesses looking for gap funding to help provide affordable high-speed internet were agreed upon during the first meeting of the Broadband Expansion Program Authority. Lt. Gov. Jon Husted told the advisory board members that the process, unveiled at the Wednesday, Aug. 4, meeting, would take about five months and was designed to make it economically feasible to provide internet service in unserved and underserved areas quickly. "Our goal is to get these applications in as fast as possible and to get the money out as fast as possible," Husted said.

Winning companies are categorized as one of the following:

WEATHERHEAD 100

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NOMINATION FORM NOW OPEN

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UPSTARTS

Companies whose percentage of sales growth qualifies for the Weatherhead 100 and who employed 15 or fewer employees, and/or had less than $5 million in net sales in the last year.

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AUGUST 9, 2021 | CRAIN’S CLEVELAND BUSINESS | 19

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VACCINE

From Page 1

Just 44% of 18-to-24-year-olds nationwide are fully vaccinated. Only those 17 years old and under have a lower rate. Being fully vaccinated can prevent getting COVID-19 and significantly reduces the chances of serious illness and/or death, per the Centers for Disease Control and Prevention.

Knowing how many people are vaccinated on campuses is vital for college administrators. How high or low those rates are can help shape other parts of mitigation strategies, like mask requirements and testing.

Last month, Ohio Gov. Mike DeWine signed House Bill 244. The legislation bars public K-12 schools and higher education institutions from mandating vaccines that haven’t received full approval by the U.S. Food and Drug Administration. The current slate only is authorized for emergency use.

The law doesn’t go into effect until October. Public colleges could institute vaccines for all between now and then. They aren't, though.

Ohio State University’s vaccination rate currently sits around 70%. But president Kristina Johnson said last month it’s suspected the rate could be higher if more people reported their information, so the state’s flagship university is now requiring people to indicate their status as well as offering an incentive program for students, faculty and staff.

More than $50,000 in prizes will be awarded in four weekly drawings for those who get all doses of the shot, upload information to an online portal and complete an entry form. The effort is being paid for by the university’s strategic cash reserves.

OSU has used a “carrot and stick” approach throughout the entire pandemic, said Melissa Shivers, Ohio State’s senior vice president for student life. Strategies around testing, mask wearing, and now getting the vaccine center on the idea that good behavior gets rewarded.

“Students are more responsive when you can give them a goal and give them the reason why something is happening or why they need to re-

APARTMENT

From Page 1

"Our leasing has been strong, given the COVID-19 experience last year," Falco said in an interview. "We had a great experience at Match Day (when medical residents get assignments and snap up places to live).

We're actually a little ahead of our expectations."

He said he is eager to see and hear the response when the landmark theaters reopen after the pandemic shutdown.

"A lot of people have not been downtown," he said. "Imagine what it will be like when we have a million people a year visiting the district again."

With a strong spring and summer leasing season coming to a close, the blues among downtown rental companies are waning even though market-wide occupancy is also down, due to the large number of suites in new structures and converted office buildings hitting the market.

Yardi Matrix, a Santa Barbara, California-based provider of apartment data, reported occupancy in the downtown, Ohio City and Tremont areas at 89.7% this June, down from

A rise in cases and the Delta variant could threaten to impact what was hoped to be a return to “normal” in higher education after the pandemic brought on widespread enrollment declines and an uptick of online classes. | KENT STATE UNIVERSITY

spond in a certain way,” Shivers said.

Leaders at Northeast Ohio’s largest university have a similar approach when it comes to incentives. Kent State officials recently told students about twice-weekly drawings that will run through mid-October for vaccinated individuals who share their status. The university also recently reintroduced indoor mask requirements, as did the University of Akron.

There’s a laundry list of available prize offerings at Kent, including expensive headphones and Apple watches. Plus, the region’s largest university broke out the big-ticket

items: chances to win a semester of room and board or a semester of free tuition.

The university is tapping into its federal relief money, as well as arranging strategic partnerships with places like Barnes and Noble, to pay for the efforts.

That tuition offer caught the attention of incoming freshmen Nataliya Kallergis. The 18-year-old student already got vaccinated earlier this year.

After the announcement, she noticed more chatter about the topic in a group chat of other soon-to-be students. The threat of a potential lockdown or a move to online classes, as

happened last fall, isn’t what they want for their kickoff to college life.

She assumes most Kent students are already vaccinated or are planning on it, she said, but knows that not all of her peers will be able or interested.

“If they're really too into the conspiracy theories of the vaccine, they're not going to do anything about it,” Kallergis said.

The intention at Walsh University isn’t to use incentives to coerce the students who have no intention of getting the vaccine, said Teresa Fox, chief public affairs officer. Officials there are using a drawing that offers

90.5% last June.

Even though the continuing government bans on evictions create a cloud on the rent-collections front, asking rents have continued to climb and concessions have shrunk.

As of July, Yardi Matrix reported, asking rents in downtown and nearby areas climbed almost 1%, as the average asking rent rose $14 monthly to $1,492 from $1,478 in June. That follows a tough year, as rents fell nine months of the last 12, with landlords competing for tenants while the pandemic tamped down demand.

John M. Carney, a principal of Landmark Management (which owns three Warehouse District rental buildings and The Shoreline on Lake Erie near East 55th Street), said in an interview that leasing teams have worked through several brutal months last winter.

But things are far different now.

"We're having people walk in off the street for tours," Carney said. "We don't always get foot traffic. We tend to get one visit every few weeks. Now it's two or three a week."

Carney tracks the turning point to the spring.

"If I told you that you needed a reservation to get into Johnny's (restaurant) downtown at lunch last July,

people would laugh,” Carney said.

“You could walk in and find a seat.

But that has changed since this June.

It's amazing to watch how parking lots are starting to fill up during the day."

Prospects now are focused on finding places downtown, Carney added. Last year, prospects would tell leasing agents they were also looking in Beachwood, Shaker Heights or other suburbs. That's no longer the case.

"They are coming here because they can't find a place in Westlake," Carney said.

The majority of new suites are going on the market in the city. Meantime, the suburbs have benefited over the last year from a drive for less dense environments to cope with the pandemic and working from home without seeing a substantial number of new apartments.

Regional Cleveland and Akron occupancy climbed to 95.7% this June from 95% last year, according to Yardi Matrix data. The average asking rent in the Cleveland-Akron area climbed 5.5% to $1,021 monthly in July from $968 last July.

Ralph McGreevy, executive vice president of the Northern Ohio Apartment Association trade group,

said that despite pandemic headwinds, the rental market is benefiting from a combination of factors.

"This is the first time we have had large numbers of empty nesters downsizing to go into the rental market, while it's prime renting age" for Gen Z, he said.

According to Doug Price, CEO of K&D Group in Willoughby, the owner of the largest apartment portfolio in the region, "We're the fullest we have ever been. Urban apartments have come back really strong, although there is a lot of new supply.

We're full at Terminal Tower and Halle. Reserve Square has gotten back to pre-pandemic levels as leasing for Cleveland State University students has come back. We're about 100% leased in the suburbs, which stayed strong throughout this."

Several observers say Sherwin-Williams Co.’s continued planning for a new skyscraper helps the city’s outlook.

"It's substantial and it's real," McGreevy said. "It's not another case of trying to do something."

Michael Deemer, CEO of the Downtown Cleveland Alliance, said he expects downtown occupancies to climb in the next few months and believes the strongest indicator of the

10 spring tuition scholarships to target those who might just not have gotten around to it yet.

“We're hoping that this will get them a little bit inspired," said Fox. About 418 students have told the university they’ve received at least one dose, roughly a quarter of the 1,700 students Fox said attend in-person classes on the North Canton campus. But every student, every shot, counts. The university is also using some of its federal relief funding to pay for its incentive program.

The “Cav Nation Vaccination” scholarship announcement didn't garner much attention when announced via email in July. Things changed when it went on the campus’ Instagram account. Fox said about 100 students submitted the form that night.

The comments section of that post received both praise and pushback.

Walsh isn’t alone. Other colleges' social accounts get flooded with similar comments on similar posts.

“The opinions sort of echo what is kind of a reflection of society right now,” Fox said. “It's very polarized.

There's people with very strong opinions on either side, so the best thing we can do is just constantly communicate what we're doing and why we're doing it.”

And when it comes to creating what’s essentially a lottery system, many legalities are involved. A FAQ on Ohio State’s website rattles off related questions: Will these prizes be taxed? How do I enter without a computer? The official rules clock in at four pages.

“We consulted with a number of people to make sure that we were staying within the guardrails, but also providing the types of incentives that we knew our students, faculty and staff would be interested in,” said OSU’s Shrivers.

On a federal level, the White House introduced what’s been dubbed the “COVID-19 College Vaccine Challenge” as a way to offer guidance to universities as they encourage vaccinations. Nearly 20 colleges in Ohio have signed on.

Amy Morona: amy.morona@crain. com, (216) 771-5229, @AmyMorona market’s strength is that additional apartment developments remain alive.

Looking back over the past year, Deemer said his takeaway from the pandemic will be the need to focus on the downtown experience.

"We're competing with virtual reality in a way we were not before the pandemic,” Deemer said. "The only way we can continue to accelerate downtown is by continuing to focus on the experience. And by that I mean everything from architecture and green space to events."

Neil Weinberger, chairman of the Playhouse Square Foundation's real estate committee and president of JND Development of Cleveland, talks about the downtown experience from first-hand knowledge. He moved into The Lumen when it opened after decades in the suburbs.

"It's increasingly a case of friends calling me and saying they are having dinner downtown, so stop by for a drink," Weinberger said, adding, "It's great to go to sleep looking at the lights of the city and then wake up to be energized by the view of the city."

Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter

20 | CRAIN’S CLEVELAND BUSINESS | AUGUST 9, 2021

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From Page 1

The largest chunk of the total will go toward improvements of a ballpark that, in its 28th season, is the 11th-oldest in baseball.

The Indians, according to Dolan, never asked for a new ballpark, which would have come with a 10-figure price tag, during the negotiations.

What the franchise wanted, the owner said, were renovations to fan-facing elements, plus work done to “the guts of the building, where age is more apparent.”

“Would we prefer a retractable roof stadium somewhere? Absolutely,” Dolan told Crain’s. “But we know this community and we know what makes sense for this community.

This was not the time to come to the community and ask for a new ballpark.”

Instead, the Indians’ requests, at least early in a process that still requires approvals from Cleveland City Council and Cuyahoga County Council, are focused on five key areas of Progressive Field.

Left field terraces The Terrace Club, “once a shining star in our ballpark, is now outdated and really needs to be repurposed in some shape or form,” Dolan said.

The restaurant is still a viable space, club officials said, but it needs to be reimagined. The Corner, the bar and social gathering spot in right field that has been a hit since its debut in 2015, could be used as inspiration.

The Indians also are hoping to transform the left field gate, making the entrance more open and providing much better views of the city. An improved connection between the upper deck and the rest of the ballpark also is part of the plan.

One option the team is considering: a wide stairway that would easily allow fans to go from one level to the next, rather than having to rely on escalators.

A new-look upper deck The top level hasn’t been improved “since the ballpark opened” in 1994, Indians president of business operations Brian Barren said.

One concept being considered is an inner ring, through which fans could walk from one side of the ballpark to the other. The area would be much more open, similar to how the main concourse was redone.

The upper deck also would have enhanced food and beverage spaces, with the goal of giving fans a reason to gather and move around.

And yes, the boxes in the upper deck in right field, which even Dolan refers to as “shipping containers,” are “on the list” of areas that need improvements, the owner said.

The Indians in the past have studied the concept of private terraces that would be modeled after The Rooftop at Coors Field in Denver and the Connie Mack Club at Oakland Coliseum.

“Those are the kinds of things that we’re going to be exploring in the coming weeks and months,” Barren said.

Better dugout areas The Tribe is looking into the addition of larger social areas behind the dugout suites that are located on each side of home plate.

There could be a club-like area for

A reimagined left field would include a renovated Terrace Club and a transformed left field gate.

| NBBJ/CLEVELAND INDIANS RENDERINGS

Be future-proof; Be more than a ballpark (with improved functions and views of the city); Be true to the game (baseball is still the focus); Be a sustainable investment (which includes a pledge to contribute to the long-term good of the community).

C R A I N ’ S C L E V E L A N D B U S I N E S S | S E P T E M B E R 3 - 9 , 2 018 | PA G E 2 5 Barren said that should the deal get the necessary OKs, the work would “most likely” start after the 2022 season.

Ohio Gov. Mike DeWine, who became involved in the discussions once he was told the $30 million from the state “would help us close this deal,” said the lease extension was done with the big picture in mind.

“It brings us more stability and it makes me feel better, and I think it should make fans feel better,” the governor said. “Everybody has looked at this from a long, long point One concept being considered for the upper deck is an inner ring, through which fans could walk from one side of the ballpark to the of view, and we’re all assuming that other. The area would be opened up, similar to how the main concourse was redone. this is going to go on for a long period Another area of concern, accord- the city and county will be approved. of time.”

“IT BRINGS US MORE ing to sources, is a lackluster kitchen A club official said the Indians have STABILITY AND IT MAKES and dining area for players. Good- approached the process with five Kevin Kleps: kkleps@crain.com, year Ballpark, the Tribe’s spring design principles: Be of Cleveland; (216) 771-5256, @KevinKleps ME FEEL BETTER, AND I training home in Arizona, has a vastly superior dining area for the playTHINK IT SHOULD MAKE ers, a team source said.

FANS FEEL BETTER.”

— Gov. Mike DeWine

Office renovation and Gateway Plaza connection

food, and maybe some type of lounge behind home plate, like fans experience at other big-league ballparks.

The Indians are “very early” in the planning for this area of the ballpark, a club source stressed.

The work in left field would be integrated with a new design for the club’s offices.

The Tribe’s employee count has tripled since the ballpark opened, and the way people work — whether it’s at home or in a huge sports facility — is massively different.

Among the possibilities under consideration are shared community spaces near the box office, the majority of which isn’t used on game day, since tickets are delivered on mobile devices. There could be a redesign of Gateway Plaza, the common area between Progressive Field and Rocket Mortgage FieldHouse, but that, like everything else, is early in the planning stages.

The Indians first started discussing a major round of renovations to the ballpark two years ago. The talks, though, didn’t get serious until the last few months, when focus groups became involved.

The team plans to start working with architects this fall, should it become apparent that the deal with

Clubhouse modernization The service level and clubhouses are areas fans don’t experience, but the decline, the team said, has been evident to players and employees for years.

A team source said the visitors’ clubhouse has received failing grades in player surveys, and the home side hasn’t graded much higher. The areas could be expanded to accommodate advances in sports science.

“It’s something that we have to address,” Dolan said.

The Indians are considering switching dugouts, moving the home team from the third- to the first-base side, where there’s more room for a possible expansion.

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The Menorah Park Foundation welcomes Brian Sokol as Chief Development Officer.

Responsibilities include development strategies for our large non-profit healthcare organization. Along with decades of experience, Brian brings a passion for the welfare and future of our Northeast Ohio community.

Brian was most recently the Case Western Reserve University Senior Director of National Development and Associate Campaign Manager. Additional lead roles: AIPAC, GOJO Industries, William Morris Agency.

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Joseph Ferraro has joined Western Reserve as a Vice President and Relationship Manager in its Family Office group. Mr. Ferraro has significant experience as a trust and estate lawyer for affluent individuals and families.

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Western Reserve Trust Company Katherine M. Lammert has been promoted to Trust Officer. Ms. Lammert, who is also the firm’s Compliance Officer, previously worked with Western Reserve as an Account Administrator.

MANUFACTURING

Nicole K. Kline has joined Benesch as an associate in the firm’s Corporate & Securities Practice Group. Nicole focuses her practice on representing publicly and privately held entities and private equity funds in strategic transactional matters. She has experience in mergers and acquisitions, divestitures, and equity financings in a variety of industries including healthcare, manufacturing, technology, and professional services.

Hannah Delis has been promoted to vice president, global human resources for Swagelok. In her new role, she will be responsible for Swagelok’s global human resources programs and initiatives. Her tenure at Swagelok has been marked by her expertise in designing and implementing new programs, and her proven ability to build strong, productive relationships and support teams undergoing change. Delis previously served the company as director of global human resources business partnerships.

1x5 INDUSTRY ACHIEVERS ADVANCING THEIR CAREERS

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