Crain's Cleveland Business by Crain's Cleveland Business

SMALL BUSINESS: Neue Auctions wants to make selling valuables easier. PAGE 12

CRAIN’S LIST Foundations say weak stock market, economy could mean fewer grants. PAGE 34

CRAINSCLEVELAND.COM I NOVEMBER 7, 2022

MetroHealth opens key piece of makeover BY LYDIA COUTRÉ The MetroHealth Glick Center — the centerpiece of the health system’s nearly $1 billion campus transformation — stands in glimmering,

stark contrast to the antiquated hospital towers it was built to replace. • The hospital’s 11 floors, which opened Saturday, Nov. 5, offer 316 private patient rooms, each with the ability to flex into double rooms during a surge. It stands next to a 3-acre park, a glimpse of the full 12 acres of park space planned once demolition of the old hospital and other buildings being replaced makes way for the full vision of MetroHealth’s new campus. • The new hospital offers families, patients and caregivers a very different experience than the current facility, starting with the front door, said Walter Jones, senior vice president of campus transformation. See METROHEALTH on Page 36

The MetroHealth Glick Center’s 11 floors offer 316 private patient rooms, each with the ability to flex into double rooms during a surge. | COURTESY OF HGA/NIC LEHOUX ARCHITECTURAL PHOTOGRAPHY

Cleveland to assess impact of Burke Beacon Journal building City is seeking consultant to quantify economic benefits of closing the airport BY MICHELLE JARBOE

The city of Cleveland is seeking a consultant to assess the economic benefits of Burke Lakefront Airport — and the potential impact of shutting it down. On Thursday, Nov. 3, Mayor Justin Bibb’s administration released a request for proposals, in search of a consulting team equipped to study the facility. The goal is to gather data

that will help officials decide whether to maintain the city-owned airport or close it to free up 445 acres of waterfront property at the northeastern end of downtown. The city already is evaluating the potential costs and regulatory hurdles associated with closing Burke, said Jeff Epstein, the mayor’s chief of integrated development. The economic-development analysis outlined in the request for proposals will explore the other side

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of the equation — the potential positive effects of a shutdown. The study won’t be a master-planning exercise, laying out anticipated land uses. Instead, it will be about numbers: how much money Burke pumps into the local economy today and how impactful it might be, by contrast, as a public park or a mixeduse development site. See BURKE on Page 35

THE

LAND SCAPE

is given 90 days to sell

BY DAN SHINGLER

The former Akron Beacon Journal building, a landmark structure in downtown Akron as well as a site important to the city’s history, might be getting its last chance to survive. After being rebuffed by the city when he asked for permission to tear down the building last month, owner Michael Mouron said he has

agreed to make a last-ditch, 90-day effort to sell the building. If he’s not successful, and no tenant or other profitable use for the building is found, he’ll return to the city seeking permission to demolish it, Mouron said. “The Akron Beacon Journal (building) has just proven See JOURNAL on Page 38

A CRAIN’S CLEVELAND PODCAST

11/4/2022 11:55:53 AM

TECHNOLOGY

SupplyNow sets sights on challenges for food vendors BY JEREMY NOBILE

A Cleveland startup sees itself as the Instacart for food vendors who need supplies, and now. In an economic environment where restaurants are short-staffed and budgets are being squeezed by inflation, there may be no better time for SupplyNow to prove itself in the market. But it’s not just food SupplyNow is offering to procure in a hurry. The company wants to be there for businesses in a pinch who need anything from coffee, ground beef or produce to specialty ingredients, paper products or dishwasher soap. Think of it as an on-demand supplement to a restaurant’s usual suppliers. “We are the Swiss Army knife there to help restaurants and food distributors in a crisis,” said SupplyNow founder Aaron George. The cornerstone of the tech-enabled SupplyNow is a 24/7 text-to-order system that employs a proprietary algorithm to find requested products at the best price and location, be that Restaurant Depot, ALDI or somewhere in between. The platform already has more than 30 suppliers in its network to scour so far. When orders are placed, drivers are dispatched from SupplyNow’s downtown Cleveland headquarters to pick up and drop off the requested items right at the customer’s door for a flat fee. The cost is higher if the order is urgent and lower if it’s scheduled for a later date. There’s already an app for users to try that can list products a user is searching for with dynamic pricing and where they’re coming from. The text-to-order function is there for anyone who may not want to fuss with building their own cart. George contends that items procured through SupplyNow typically are available for 25% to 40% cheaper than Instacart, which is seemingly the only other comparable on-demand service that food vendors might use. “Saving cost and time are the big things for us,” George said. “Labor is a big issue that is impacting not just

who is also an investor in SupplyNow. While Greenlight and SupplyNow have some common ground, the latter is more of a crisis version of the former, which is more focused on general procurement and bulk buys. Officially, they are two separate business entities. “But we have a vested interest in each other’s success,” Vann said. “The big thing with both of these companies is we are in this thing to help restaurants. That is imperative to us. What we are building are restaurant-wellness engines.”

The road ahead

SupplyNow founder Aaron George says the company aims to help restaurants and food distributors in a crisis. | CONTRIBUTED

restaurant but distributors with CDL licenses. Us being a plug-in, on-demand, specialized partner can fill in those gaps without fixed commitments or higher overhead costs. That is where clients can get a lot out of our services.” It’s a rather compelling proposition, said Cleveland chef and restaurateur Douglas Katz. The owner of Zhug and Amba is a mentor of George’s who was connected with him in recent months through Global Cleveland’s new Global Entrepreneur in Residence program. He is not a SupplyNow investor but said that he is ready to use the platform when he might need it. Katz notes that when restaurants need items in a hurry, they tend to send cooks or managers out from the kitchen to find those things themselves. Besides being inefficient, it can be a racket — especially when restaurants are dealing with staffing issues. “Everyone is searching for labor, so you are already much more timecrunched there,” Katz said. “At a minimum, these guys are there to help with procurement you may be look-

ing for in Cleveland. When you don’t have time, or someone forgot to get something, or you have an emergency because you used too much, these guys are a text away and so flexible. They really are interested in helping these businesses and being a partner in a restaurant, much like another employee.” “SupplyNow is creating a model for food buying that has not always been available to independent restaurants,” he added.

An idea is born George, 25, is a native of Dubai who came to Cleveland in 2015 and graduated from Case Western Reserve University with a degree in civil engineering. But entrepreneurship is in his blood. His mother owns a chain of beauty salons, and his other relatives run restaurants. While studying abroad in Madrid, George worked with a professor with a background in food tech. This inspired him to look into a platform that would allow people to share leftovers of home-cooked meals with

their neighbors. That was never anything that could work in the United States due to cottage food laws, though, as George came to learn. At one time, George was working on PastryNow, which allowed local bakeries to sell their surplus products to college students after they were closed. Its only real competitor was Insomnia Cookies. But when the pandemic struck in spring 2020 and students retreated from campus, its customer base dissolved with them. “That’s when I went back to the drawing board,” George said. It was during his work on PastryNow that George met restaurateurs like Matthew Vann, owner of the Jolly Scholar, who counseled him on the procurement challenges facing food vendors. That’s when the SupplyNow concept took shape. There probably couldn’t have been a much better partner for George than Vann, who also has his own startup, Greenlight Grocery. That is a digital ordering platform that “puts transparency in pricing,” said Vann,

SupplyNow officially launched in October 2021. Since then, the startup has raised approximately $660,000 in venture capital over three funding rounds. Some of its backers include Comeback Capital and Drummond Road Capital. It also received about $137,000 in grants from the Youngstown Business Incubator. The business includes 18 employees, including several software developers. And it’s actively filling additional positions, including on-call delivery drivers who are being offered hourly wages of $17.50 plus compensation for gas. The business may look at raising about $5 million in cash in the next 12 to 18 months, depending on how things play out. And George already has sights set on growing the platform beyond Northeast Ohio and the 50-plus operators currently using it. There are early talks of expanding the business to Columbus and Boston, which could serve as launchpads for even further growth. “Longer term, we want to make this not just a nationwide service offering but go beyond that and expand into the global market,” George said. “Europe has a high concentration of restaurants, more than the U.S., and China has even more.” Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile

REAL ESTATE

City of Cleveland seeks proposals for alternative police headquarters sites BY MICHELLE JARBOE

The city of Cleveland is seeking proposals for a new police headquarters, two months after confirming that a planned project along Opportunity Corridor is on hold. On Monday, Oct. 31, Mayor Justin Bibb’s administration sent out a request for proposals to property owners, developers and real estate brokers. The 57-page document outlines a swift turnaround time. Officials want responses by noon on Nov. 14. “I think we have a pretty good sense that we know what’s there, but we want to see if something else arises,” said Jeff Epstein, the city’s chief of integrated development, during an interview Monday afternoon. The city has not ruled out proceed-

ing with a ground-up construction project on East 75th Street, on vacant land in the Kinsman neighborhood. But officials have been considering other possibilities, including existing buildings much closer to downtown that could be renovated to allow for a much faster move out of the county-owned Justice Center complex. Epstein would not talk about specific properties the city has looked at. “We’ve been having some conversations but felt like we wanted to put this RFP out just to make sure we heard from all the options, that we were comparing apples-to-apples and that we were going through a transparent process,” he said. He stressed that the city has three major goals: getting the police department into new digs as soon as

possible; ensuring that the new space meets the police force’s needs; and being “as judicious with the use of public dollars as we can.” The request for proposals says that the division of police needs about 250,000 contiguous square feet for offices, interview rooms, conference rooms and other uses, including public spaces. The complex must have a secure garage that can accommodate at least 450 cars, plus a minimum of 50 on-site parking spaces for visitors. And the building must be close to a freeway, within 2.5 miles of Cleveland City Hall. The city is open to leasing at the outset but ultimately wants to own the building — with the police department as the only occupant.

A rendering shows the proposed Cleveland police headquarters at East 75th Street and Opportunity Corridor, on the city’s East Side. | JMT ARCHITECTURE; DEWBERRY

“Proposers should present their best realistic overall schedule for design, construction and move-in,” the document reads. “The longest acceptable project duration is 24 months from execution of contract. Shorter durations will receive higher scores.” The request for proposals does not say when, exactly, the city will make a decision. Last year, in the waning days of former Mayor Frank Jackson’s adminis-

tration, officials held a ceremonial groundbreaking at the Opportunity Corridor site. But construction never started. The cost of the project, pegged at $107 million a year ago, has grown by $8 million to $19 million since then — at least — amid rising interest rates, supply-chain shifts and broader inflation. Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe

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The writer John Steinbeck once said that ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen. Vince Guerrieri’s newest book was sort of like that, only with birds. Or, more specifically, tweets. At the beginning of the COVID-19 pandemic, Guerrieri was on Twitter when Cleveland’s most famous Twitter fan/comedian/troll Chris “Reflog” McNeil and his army of followers started tweeting about the weirdest moments in the city’s sports history. “There were enough of them that I started to think, ‘This could be a book,’” said Guerrieri, a longtime Northeast Ohio journalist who currently works as the web editor for the Chronicle-Telegram and the Medina Gazette. So Guerrieri put together an outline and pitched it to David Gray, the president and founder of Cleveland-based Gray & Company. “He was receptive to the idea,” said Guerrieri, “and I was off and running.” The result is “Weird Moments in Cleveland Sports: Bottlegate, Bedbugs and Burying the Pennant,” a 198-page book that was released on Wednesday, Nov. 2. The book covers moments like when an Indians manager got into a fight during an exhibition game with a Triple-A farm team, a rookie pitcher who was shot in the leg while riding on the team bus wearing a cheerleader outfit and go-go boots and the Cleveland team owner once called “the dumbest man in pro sports.” It is Guerrieri’s third book, joining “Ohio Sports Trivia” (which he co-wrote with J. Alexander Poulton in 2011) and “The Blue Streaks and Little Giants: More than a Century of Sandusky and Fremont Ross Football,” which was released in 2013. The Youngstown native and Bowling Green graduate is also one of the region’s busiest freelancers, joking that he is “highly motivated by high overhead.” “Our family motto is, ‘Never turn down overtime,’” he said. Guerrieri recently spoke by phone about his new book. The interview has been edited for length and clarity. — Joe Scalzo Obviously, some of the moments you cover are familiar, but not all of them. For instance, the book’s preview talks about a Cavaliers player shooting at the wrong basket and you immediately think “Ricky Davis,” and then find out it’s another player. So you cover moments that fans will know, but also a lot of ones they wouldn’t necessarily know. I actually covered both of those (wrong baskets). I wrote a piece for Ohio Magazine in 2015 and it was the 45th anniversary of the first season for the Cavs. I must have had a lucky star because I was able to get everybody. I talked to (play-byplay announcer) Joe Tait, (coach) Bill Fitch, I had a brief but productive conversation with (former owner) Nick Mileti and I got a bunch of players. Oh, and I got Burt Graeff, who covered them for the Plain Dealer at the time. And they all told me this story about winning this tip-off and shooting at the wrong basket. (Former player) John Warren said it was “a total team effort.” How do you pick and choose which moments to include? Obviously, you want to narrow it down so the book isn’t 500 pages long. There’s no real magic to it. In some instances, I said, “I can’t include this.” I tried to keep it as light as possible, so I obviously didn’t want to talk about (former Indians player) Ray Chapman getting beaned and dying from it, and I didn’t want to talk about Don Black having a stroke when he was stepping up to the plate for the Indians. Sometimes what happens is you do the research and one thing leads to another. I did a story about (former Cavalier) Tyrone Hill having such a bad experience with flying that he rented a limo to go to a playoff experience in New York City. That was something I stumbled on that I didn’t realize. There’s a whole chapter on goofy injuries and that got me thinking of Marty Cordova and (suffering facial burns in) a tanning bed. But he did that with the Twins, not the Indians, so I had to leave that one out. You mentioned Ray Chapman. This book is 200 pages and I wonder how long a book called “Sad Moments in Cleveland Sports History” would be. I don’t know. I don’t feel like I have the

wherewithal to write that one. I can tell you that I watched the Indians lose the World Series in 1997 and I started therapy a couple months later. I’m not saying they were related, but I’m not saying they weren’t related, either. What else should we know about your book? Read it, buy it, enjoy it, laugh about it. That’s basically what I hope comes from this. I also hope that, somewhere along the line, you say, “I had no idea” about certain things in the book. There’s a whole chapter called, “Wait, that guy was here?” It’s about all the big names you may have forgotten or never knew played for one of the teams in Cleveland. For instance, (Kansas City Chiefs legend) Len Dawson very briefly played quarterback for the Browns. (Knicks legend) Walt Frazier came to Cleveland at the tail end of his career. I also go over (controversial closer) John Rocker’s brief time with the Indians. I did not realize this until I got into the research, but he actually got the win in that 15-14 game between the Indians and Mariners on Sunday Night (in 2001). (Note: The Indians were down 14-2 entering the bottom of the seventh before rallying to win in the 11th.) Adding John Rocker got Cleveland fans used to the idea of holding their nose while they’re rooting for their team, something that will come in handy with a certain quarterback who will soon be playing for the Browns. Fortunately, that (John Rocker’s addition) was a very brief and absurd deal. They got him at the trade deadline and he was in Cleveland pretty much through the end of that season. (Former GM) John Hart dealt for him and John Hart was already out the door at that point. He ended up in Texas and the Indians dealt him to John Hart in Texas in the offseason. I feel like that was one of those moments where you grit your teeth and hang on. But the real hold-your-nose and watch with your hands over your eyes (moment) was a few years earlier with Albert Belle. He was definitely an intimidating hitter and kind of an intimidating person, too. Let me ask you about your writing

COURTESY

New book explores city’s weirdest sports moments

process. What goes into putting a book like this together? I have an office job at the Chronicle in Elyria and if you know anything about working at a newspaper office, your office hours are usually terrible but fairly steady. I work what is more or less an afternoon newspaper shift, which usually starts at 6 in the morning to about 2:30 in the afternoon. I would usually go home and do some writing before dinner and sometimes after dinner, depending on how productive I felt. That’s usually when I do my freelance stuff as well. I think I actually sat down and started writing this in the summer of 2020 and submitted the manuscript in either March or April of this year. It’s the longest book I’ve ever written. I’ve never written a book, but I know that when I finish writing a long or a hard story, I don’t want to see it again for a long time. I wonder if you feel the same way when you get the manuscript back, or if it’s exciting to see it. I totally get that. I’ve written a lot of things — and this goes back to college — where I’ll revisit it a few months later and say, “This is terrible. What the hell was I thinking?” I’m usually not one to revisit a lot of what I write, beyond maybe research purposes. But with a book, you can’t do that, at least until it gets published. There are rounds of copy editing and line editing and checking page proofs. You have to live with it. I submitted it earlier this year and I think I read the book very carefully at least three times since. So I still have to live with it. It’s very easy to say, “I am spent, I am over it,” but you have to go through the whole editing process. Obviously, after that, I have to tell people what a great book I’ve written and why everyone should read it, or at least buy it. The release is timed ahead of Christmas, but I’m sure you’re open to people buying it for all major holidays. That (Christmas) was kind of the plan. David said they usually try to publish in the spring, so it’s out in time for summer beach reads, or to put it out in the fall, so it’s out in time for the gift-giving season. Do you have another book idea where you say, “OK, I would love to write this someday,” or do you just get an idea and then write it when you have it? I have a couple ideas like that, but I don’t want to get into them too deeply, just because I’m afraid someone might hold me to it. I just read “Glory Days” by L. John Wertheim and he mentioned some book advice he got from his friend: “If you have a book idea and it would kill you if somebody else writes it, then it’s a good idea.” That’s the thing. It’s like Toni Morrison said, “If there’s a book you want to read and you can’t find it, that means you have to write it.”

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SPORTS BUSINESS

Bally Sports pleased with early response to streaming service BY JOE SCALZO

On Sept. 26, Clevelanders celebrated a very important milestone. It was the date when they were finally able to stop complaining that Bally Sports didn’t have a direct-to-consumer streaming option and start complaining about how much they hated Bally Sports+, the company’s new direct-to-consumer streaming option. Sure enough, on the morning after the Cleveland Cavaliers’ season-opening loss to the Toronto Raptors, Cleveland Scene ran a story with this headline: “Cavs Fans, Cleveland Mayor Spend Night Trashing Bally Sports for Continued Ineptitude in Broadcasting Games.” But here’s the thing: Bally Sports insists that, social media complaints aside, the first few weeks have actually gone well and that most people who signed up for the one-week trial are converting to a monthly subscription. What’s more, Bally Sports insists it wants to help the people having a bad experience. (More on that in a second.) “There’s a lot of misinformation out there and we’re just encouraging people to give it a chance,” said Randy Stephens, senior vice president and general manager of Bally Sports Ohio. “We’ve had really good initial feedback for the most part. We think

and has no intention of trying to convince those customers to switch to streaming, Stephens said. That helps explain why Bally Sports+ is $20 a month, which is double the cost of the basic plan for streaming services like Netflix or HBO Max. Cable and satellite companies provide a steady stream of income, even though only a fraction of those viewers watch Cavs or Columbus Blue Jackets games, and Bally Sports doesn’t want to mess “WHENEVER YOU LAUNCH SOMETHING with that. NEW, THERE ARE GOING TO BE HICCUPS “We believe AND HURDLES, BUT THE PEOPLE HAVING the traditional television bunPROBLEMS ARE A SMALL SUBSECTION.” dle is one of the best values out — Randy Stephens, senior vice president and general manager of Bally Sports Ohio there and that is going to be the works fine on my Amazon Fire Stick, case for a long time,” Stephens said. provided I just leave it alone and not “Bally Sports+ is an opportunity to try to watch something else during reach consumers who have already commercials. I’ve also watched made the decision to opt out of that through a Google Chrome browser experience, or were never (cable or on my MacBook Air and found it to satellite) customers.” The $20 price tag has given many be glitchy. But, again, it generally viewers sticker shock, including works as long as I leave it alone.) Here are five things they want you one on the website Awful Announcto know about the $20-per-month ing who called it “an absurd, prohibitive cost.” But, in fairness, he service: had to choose between the Indiana Pacers and the Detroit Pistons. 1. It’s not a replacement for cable Cavs guard Donovan Mitchell or satellite. It’s a gap-filler. Bally Sports sees cable and satel- has done his best this season to lite companies as great partners, make that $20 a bargain. it provides something that will really help the fans and the teams of Northeast Ohio.” Stephens and Michael Allen, Bally Sports’ chief product officer, spoke to Crain’s Cleveland Business in separate interviews last week to talk about Bally Sports+ service in general, the solution it offers and the company’s objectives around it. (Side note: I signed up for the service on Oct. 19 and I’ve found that it

2. The early response has been positive. Yes, this fits into the “What else are they going to say?” category, but Stephens insists the company has received an “overwhelmingly positive response” so far. “Whenever you launch something new, there are going to be hiccups and hurdles, but the people having problems are a small subsection,” he said. “We’re laser-focused on resolving those problems and getting those products as close to perfect as possible.” Some of the problems stem from the fact that viewers are using different devices to access the service. Bally Sports+ is available on 90% of streaming devices, Allen said, including Roku, Amazon Fire TV, Android TV and XBox, with more on the way. But a first generation Amazon Fire Stick might not work as well as the latest generation, he said. “There are challenges because each platform is different and we need to make sure we build to make sure it operates and functions on each of those respective platforms,” he said. “There are a bunch of different versions of each of those platforms, which we built for. So, it’s complicated in the sense that there are multiple platforms, but it’s something obviously

that is very important to us so that we extend our reach to its maximum.” Bally Sports Ohio did see great ratings for the opener against the Raptors, with the 78,250 household impressions (5.1 rating) marking a 72% increase over last year. It was the No. 1-rated NBA telecast of the 15 airing that night and 80% greater than the next-highest rated game. 3. They’re serious about customer service. Bally Sports+ has a FAQ page that can answer many streaming questions. It also has a help page with links to customer service reps via telephone and chat. Bally Sports also has an active support handle on Twitter: @ballysportshelp. “There are an array of ways for fans to contact us if they’re having issues and it’s also giving us good input for how to make improvements,” Allen said. If you do reach out, the company will want to know three things: which device you’re on, how you’re watching (for instance, if you’re a Bally Sports+ subscriber or if you’re authenticating through your TV provider) and your zip code. “Those three things help us serve fans pretty quickly,” Allen said. See BALLY SPORTS on Page 35

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REAL ESTATE

Huge shuttered factory sells for $1.2M in Medina County BY STAN BULLARD

Given the big building projects transforming Northeast Ohio’s industrial real estate market, it is ironic that a distressed situation, a sheriff ’s sale, has brought in a new owner and put back in play a 250,000-square-foot factory on a 30-acre site in Valley City. A new ownership group called 700 Liverpool LLC that is led by Rico Pietro, a principal and office expert at Cushman & Wakefield Cresco realty brokerage in Independence, is repainting and updating the structure constructed in 1968 in hopes of landing a manufacturing concern or other user for the site. “My hope is that this doesn’t wind up a warehouse play,” Pietro said. “We hope that it can play a part in the reshoring of companies from Mexico and China. Our own research shows this is a great area to recruit mechanical engineers in Northeast Ohio who would be primary hires in such a case.” The new ownership bought the building through an indirect means, acquiring a distressed mortgage on the property from Aegis Asset-Backed Securities LLC and stepping into foreclosure proceedings and disputes regarding the prior owner, Fulton Properties of Cleveland, since 2017. The 700 Liverpool group paid $1.2 million to Medina County sheriff Terry Grice, according to Medina

County land records. That amount did not include more than $64,000 in unpaid Medina property taxes. The identity of the buyer group only surfaced in late October as George Pofok, an industrial realty expert and fellow principal at Cresco, began marketing the property. Multiple realty agents said they had not known Pietro was at the helm or that the property was available after a long hiatus. That changed after Pofok’s marketing emails were circulated among brokers, businesses and property owners. Pietro said although he owns other commercial and industrial properties, it is the first time he has secured one by buying a note from a lender and completing a foreclosure to gain title. He said he thanked his mortgage brokerage, Bellwether Enterprises of Cleveland, and others for helping him through the process. The building was last fully operated as a facility that Shiloh Industries Inc. of Valley City closed in 2009. The prior owner had paid $525,000 for the mostly empty building in 2017. An appraisal for Medina County Courts had valued at it at just $425,000 prior to the sheriff ’s sale, which was actually conducted in 2021. Pietro said he and his investors believe the property has attributes that will make it a potent offering besides their multiple physical updates.

The industrial building at 700 Liverpool Drive in Medina County is getting a refresh from a new ownership group. | CONTRIBUTED

That’s because it has a railroad connection valuable for production companies, a huge crane inside and the ability to provide industrial-strength electrical power. Bethany Dentler, executive director of Medina County Economic Development Corp., which assists businesses with expansions in the county, said, “We’re excited to have someone make those kinds of investments in the property, which has been largely vacant except for part of the building where the roof was in good shape. “Until we had large speculative industrial projects in Westfield Township and Seville, this was the largest available building in Medina County,” she added. The Westfield and Seville warehouses surfaced earlier this year. In the past, she said, prior sale efforts for 700 Liverpool came to naught. “It needed more work than anyone would want to put into it,” she said. “Now it’s a good time to invest in it with the (busy) industrial market.” Although Medina County is not in

as much demand as other industrial areas such as the southeast industrial market along I-271, observers of the industrial market see the 700 Liverpool property as attracting attention given the volume of demand in the current market. They noted the current market sometimes leaves out manufacturers not ready to pay prices paid by logistics concerns in the growing e-commerce market. The 700 Liverpool site is 25 miles southeast of downtown Cleveland’s Public Square. David Stover, a principal and executive managing director of Hanna Commercial’s Cleveland office, said the market is stronger for a buyer than a tenant because “so few industrial buildings are available for sale with this low vacancy rate. As an existing building, it would be available faster than one being built from the ground up.” David Stecker, an executive vice president at the Cleveland office of JLL Inc. active in the industrial market, said, “The building has good bones

and a 20-ton crane. Few buildings also can provide the heavy power piece. It’s a long lead time to add it if the building doesn’t have it already. With what I’m sure is a low basis (to buy the property), I’m sure they can make improvements and attract attention.” JLL estimates just 3.3% of Northeast Ohio’s industrial real estate is vacant, even with about 6 million square feet of new industrial space being completed by the end of September. For her part, Dentler said she and many Medina County stakeholders have felt for years that the county has been unfairly overlooked in the most recent speculative industrial and warehouse boom. Dentler said industrial activity in Medina is the strongest it has been in more than five years. She said that so far this year, more than $463 million has gone into such projects in the county. Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter

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AKRON

Canal Square bids hit $8.3M at auction, but no sale so far BY DAN SHINGLER

Downtown Akron’s Canal Square apartment building failed to sell at auction on Wednesday, Nov. 2, despite a reported high number of registered bidders apparently interested in the well-known building. But it may sell yet, as negotiations between the seller and potential buyers continue. The 79-unit building, at the intersection of West Bowery and State streets, garnered a top bid of $8.3 million in the three-day auction, which many followed on the website Ten-X.com. But that wasn’t enough to meet the auction’s undisclosed reserve, so the property did not sell, at least in the auction itself. Privately, two registered bidders said the auction attracted more than 100 others, including some who registered from outside of Ohio. The ultimate high bid, which equates to a price of just more than $105,000 per unit in the building, was lower than some predicted, but apparently enough to keep the seller interested. Gary Cooper, senior vice president of Colliers International, the brokerage for the property, said he was

pleased with the level of participation. “We’re happy with the activity. I can’t talk about it because it’s an ongoing process,” Cooper said. “It’s an ongoing negotiation process with people who were at the table. We had a ton of interest in qualified bidders registered, and we’re hoping for a positive outcome. Your chances of a positive outcome expand when you have a lot of people at the table.” Pricing such properties is tough, Cooper said, because there just aren’t enough comparables in a market like downtown Akron. That’s especially true for nicer buildings, he said, including Canal Square. Owned by Testa Cos., the 15-story building overlooks much of downtown Akron and is close to attractions such as the Bowery District, the Towpath Trail and the Canal Park baseball stadium. “There’s a limited quantity to begin with and an even lower quantity at the upper end,” Cooper said of comparable multifamily buildings that have sold downtown. Many of the nicer buildings in the city center have never sold since they were redeveloped in recent years, he said.

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Cooper said he’s far from discouraged by the auction results and heartened by the high level of interest. “It’s a very good sign for the health of the market and for Akron,” Cooper said. “Obviously, there’s a lot of headwind right now with interest rates and other factors.” He also noted that auctions, once the realm of last-ditch sales efforts for properties that could not be sold otherwise, have changed dramatically in recent years. Today they often are a seller’s first choice, because they attract buyers from a much larger universe, and they often result in sales even after an auction is completed without hitting a reserve price. “This is just another marketing channel now,” Cooper said. Besides, it’s entertaining and might even amp up the excitement of selling real estate. The Canal Square auction, like many on Ten-X, was extended multiple times as late bids came in. “If you’re watching it on-screen, it was like a video game,” Cooper said. Dan Shingler: dshingler@crain.com, (216) 771-5290

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PERSONAL VIEW

Right talent in the right seat at the right time is an aspiration

RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

BY DANIALLE LYNCE

EDITORIAL

Building on a legacy W

hen it comes to all the key indicators of growth, Ohio has one shining star surrounded by satellites of varying, but lesser, power. The state’s brightest spot, not surprisingly, is the state capital, according to a new report, “Ohio + Columbus: A Tale of Two States,” from the Greater Ohio Policy Center. The report is based on an analysis of 2020 Census data, and, as the organization notes in a summary, “confirms demographic and economic trends in Ohio reflect one high-growth metro and city (Columbus) while much of the rest of the state exhibits the hallmarks of legacy places, characterized by aging populations, marginal population change and slow income growth.” If you’re from a non-Columbus part of the state, you might think, “Tell us something we don’t already know.” But the 16page report is rich in data, about population changes, job gains (or losses), income growth, housing and other topics. It’s nuanced in the way it encourages policymakers to think about challenges in different parts of the state, and sophisticated in its suggestions for helping to bring growth to places not experiencing it. You will learn a lot from reading it. The report’s central thesis is that apart from fast-growing Columbus, which has the huge advantages of being home to state government, Ohio State University and lots of greenfield sites, the state is dominated by “legacy” cities — those that “came to prominence in the early-to-mid 1900s around a manufacturing economy but experienced significant population and manufacturing industry losses in the mid-to-late twentieth century.” Ohio has 22 such cities, including Cleveland, Akron and Canton. The toughest times are past, in terms of population loss, and those cities still are home to “a significant concentration of jobs, residents and anchor institutions that positively impact the state’s economy,” the report finds. But they struggle to keep pace as economic engines. One striking statistic: From 2000 to 2020 (a year marked, if you need to be reminded, by the pandemic’s onset), the state’s labor force “decreased by 91,000 workers, but Columbus and its metro gained twice as many employed workers as the rest of the state.” There’s also this: “Ohio had a population gain of 3% from 2000 to 2020, but when the Columbus metro is removed, the parts of Ohio outside the Columbus area experienced loss of –1%, or net loss of 100,000 residents.”

As such, the report noted, “Much of Ohio functions like a legacy state rather than a rapidly growing place. As a result, state policy makers need to think differently about the needs and challenges of the Columbus area versus other places in Ohio.” It recommends four areas of policy focus: stabilizing existing populations; addressing the needs of an aging population; promoting new housing development; and attracting and retaining higher-wage jobs. Easier said than done, right? Fair. But the report offers some solid, specific ideas, such as providing Community Development Financial Institution grants for lending to local businesses and real estate projects; helping cities modernize zoning; establishing a loan-loss reserve for small-dollar mortgages to help weak legacy city real estate markets; and investing in public transportation that makes it easier for more people to get to good jobs. Columbus’ successes aren’t fully replicable everywhere in Ohio. But lawmakers in the capital and local leaders, working together, can do a better job of bringing a higher level of growth to the legacy places that built the Buckeye State.

Do your part I

f you do things old-school and prefer to cast your vote in person on Election Day, the time is near — and duty calls. Tuesday, Nov. 8, will bring to a close a particularly contentious campaign season in Ohio and most everywhere. It will start up again soon enough — 2024 is just around the corner on the political calendar — but for now, there are important issues and races to be decided that will have an immediate impact on our lives. These are highly polarized times, and it’s tempting for those who aren’t caught up in partisan politics to tune out the noise and ignore the election. That’s understandable. We’d like to make a final plea, though, for more casual voters to be part of the process and to make their voices heard. Our democracy is stronger when large percentages of citizens are participating in it. It’s easy to be cynical about elections and sit them out. It’s better to care enough about your community to have a hand in choosing who leads it — and to accept the legitimacy of the results, regardless of how your side fares.

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

We hear it all the time, right? We need the right talent, in the right seat, at the right time. But how do we achieve that? The good news is — we don’t. Wait, you say — that doesn’t make sense! Hear me out. The idea of having the right talent in the right seat at the right time is an aspirational goal, something business owners and operators need to be thinking about all the time. It Lynce is the HR isn’t a one-and-done, check-it-off-the- director to-do-list action. Businesses are dynam- consultant for ic and ever-changing. Our key contribu- Clevelandtors, whether leaders or employees, are headquartered growing and developing. Life circum- ConnectedHR, stances change. People’s rationale for which also has an office in working in your business changes, too. With so much constant change, we are Austin, Texas. better served to think about the complex process of talent evolution within the context of business evolution. This means always scanning the virtual room looking at how each individual, and how the team collectively, is performing. We may hit a stride where we have some of the best people working for us at the ideal time and magic happens. Then, the dynamic shifts. That really talented operations leader moves out of state to follow his wife’s career. The conscientious accounting expert faces a family crisis and takes an extended leave of absence. That WE ARE BETTER charismatic leader who has drawn everyone in, leaves for SERVED TO THINK her next and bigger role. ABOUT THE COMPLEX If we think about right talent/ right seat/right time as a one- PROCESS OF TALENT and-done proposition, we’ll be EVOLUTION WITHIN frustrated and pulling our hair out when these inevitable tran- THE CONTEXT OF sitions happen. However, by BUSINESS starting the game with the belief that we are constantly evolving, EVOLUTION. and by believing the definition of “right” person/seat/time is fluid, these bumps can become opportunities and part of the expected evolution rather than throwing us into reaction mode. With me so far? Great! There’s benefit in this thinking for your employees, too. When they see a company providing opportunities for employees to do their best work, and they see that the inevitable change is met with hope and resiliency, they are encouraged and excited to see where the road leads and what the future holds. Maybe their turn is next. Maybe they will be seen as someone who can share a seat at the table. Maybe they will voluntarily be called to perform at their best level — assuring that a future pool of eager leaders is ready for the next challenge. Conversely, if your employees see you step into panic mode as you react to the next seismic shift in talent in the organization, they will fall into reaction mode, too. Maybe this isn’t the right place for me. Maybe I’m not in the right seat. Maybe I can find more future-focused leadership at another employer. In today’s tough labor market, that’s dangerous and costly thinking. Instead, we recommend business owners and leaders adopt a philosophy of constant evolution. The right person in the right seat at the right time is the direction we are heading, not the final destination. It means there will be detours along the journey and the team will be ever-changing — and that’s OK. In fact, it’s exactly as it should be. Evolution is the name of our game.

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.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

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OPINION Private Travel Made Easy PERSONAL VIEW

Port of Cleveland is offering supply chain solutions, securing jobs BY WILL FRIEDMAN AND STEFAN HOLMES

We’re all feeling the heat from supply chain issues these days. Companies can’t get the materials they need to make their products. Shippers face fines when they can’t unload their cargo quickly enough. And all of us as consumers are left paying the bill. Although West Coast ports have seen congestion ease up in recent months, the bottlenecks have shifted to East Coast ports, with more ships waiting for dock space. The outlook for our supply chain is so grim that one investment company went so far as to suggest that we’ll just have to let it run its course. Fortunately, part of the solution is in our own backyard. The Port of Cleveland has the capacity, and the ability, to get goods on and off the ships efficiently, while providing faster access to major regional markets. Clevelanders have always valued our port — after all, Cleveland was founded as a port city and our major industries continue to rely on waterborne shipping. Locals and visitors still gape in awe when the giant freighters navigate the twists and turns of the Cuyahoga River. As the only port with regular container service on the Great Lakes, the Port of Cleveland is an essential link in the supply chain for companies that employ thousands of people in our region and make products reliably here in America. Now, the world is taking notice, too. Companies in our region have called on the Port of Cleveland to provide a work-around to supply chain congestion at the big coastal ports. The port has responded, working with shipping lines to add capacity to get locally made goods to market more efficiently

and speed the inbound flow of materials critical to manufacturers, distributors and the construction industry. To build and modernize the Friedman is president and CEO of needed facilities the Cleveland-Cuyahoga County and infrastrucPort Authority. Holmes, who was ture, the port reappointed to the port's board of lies on a very directors in 2018 by the mayor of small property Cleveland, is the current chair. tax levy that will be on the ballot for renewal on Nov. 8 in Cuyahoga County as Issue 6. The port uses the levy proceeds to bring state and federal grant dollars into our community. In fact, every levy dollar collected over the last decade has generated more than $3 in state and federal grants the port has won. Every penny of these funds is used for construction projects that employ local workers who build the port facilities used for shipping by local companies. This tiny investment by property owners in Cuyahoga County ($2.72 per year for each $100,000 in assessed value) allows us to continue offering the best shipping facilities and services on the Great Lakes. Once again, the port is not seeking a tax increase. The port levy would remain at the same millage rate (0.13) for the next five years that it's been since 1969. To keep our port strong, please vote for Issue 6.

DEI efforts can help construction industry do well by doing good

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In high school, I was like many students and didn’t know exactly what I wanted to do with my life. Then, I had the opportunity to interview with a local construction company for a scholarship to study construction technology at the State University of New York at Delhi. I received the scholarship, which was part of the company’s affirmative action program, and later earned my associate’s degree. After an internship, I began working for that same construction company in upstate New York. Today, with a career in construction spanning more than 40 years, part of my job is to advance diversity, equity and inclusion (DEI) through my work at Gilbane Building Co. It is still necessary work, as evidenced by recent data from the Bureau of Labor Statistics (BLS): 89% of the construction workforce in the United States is male, and 88% is white. This work will also require many in the industry to shift their mindset about how to approach DEI. As little as 10 years ago, many construction companies approached efforts to increase diversity in the industry on a project-by-project basis, primarily driven by owners requiring diverse participation. But owner mandates for job-site diversity are not enough. Construction companies would do well to realize that DEI efforts can help their businesses grow, attract talent and enhance their reputation by doing good. Moving the needle in this space starts with fostering candid conversations from the board room to the front line about the need to increase diversity in the industry. Consider the impact the lack of diversity has on your business. Identify opportunities to increase diversity, create an inclusive environment, and offer equitable opportunities. Having candid conversations at Gilbane

has made the company take a hard look at our approach and establish DEI positions in each of our markets to help drive change in our workplace. This kind of initiative offers a lot of promise for our future talent attraction and retention efforts. Externally, our commitment to raising awareness regarding the need for DEI in our industry led us Cunningham is to co-found Construction Inclusion vice president Week. This industry-wide, national and program event encourages open dialogue director at among construction companies. It Gilbane also provides a platform to share Building Co. best practices in DEI. More than 2,000 companies from across the country registered to participate this year. Next, companies would do well to engage their future workforce today — while they are in high school and trying to determine, as I did 40-plus years ago, what they want to do with their life. In 2008, Gilbane helped found the ACE Mentor Program’s Cleveland chapter, and today, we’re seeing a return on our investment in young, diverse talent. Several of our colleagues mentor and work with Cleveland high school students, many of whom are students of color, to encourage them to seek college degrees in architecture, construction and engineering. Many students are now full-time employees working at Gilbane, with the potential for future leadership roles in the field. This pathway is vital for developing talent, especially at a time when the construction industry has approximately 400,000 jobs going unfilled, according to BLS. See DEI on Page 37

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SOLD! Neue Auctions aims to give Clevelanders an easier way to sell prized possessions.

SMALL BUSINESS

PAGE 12

Cleveland chef-owner Doug Katz, whose Middle Eastern-flavored cafe, Zhug, is located across the street from Dave’s, visited the store several times a week to shore up restaurant stock. | PATRICK KEARNS

Cleveland Heights weighs what’s next for Cedar-Fairmount Dave’s Market space BY DOUGLAS J. GUTH

Cedar-Fairmount bills itself as the “gateway to Cleveland Heights,” with new housing and development bringing further excitement to the growing business district. For now, the district also has a grocery-shaped hole that supporters hope gets filled quickly. On Oct. 25, the Dave’s Market at Cedar-Fairmount shut its doors. The closure came following an announcement that Dave’s — owned by the Saltzman family — would be acquiring Zagara’s Marketplace on Lee Road near Cain Park. The new store, rebranded as Dave’s Market & Eatery, is expected to undergo significant renovations in 2023, with updated lighting and flooring listed among the expected improvements. Meanwhile, the city of Cleveland Heights is talking to Heights Medical Building owner Sal Russo about what comes next for the former Dave’s location at 12438 Cedar Road. The space has hosted the Cedar-Fairmount Dave’s since 2007, following previ-

ous stints as a Giant Eagle and a Russo’s grocery store — the same Russo family that owns the building today. While Russo did not respond to several phone calls from Crain’s, city officials are confident about filling the vacant 20,000-square-foot space, ideally with another grocery-related enterprise. Cleveland Heights business development manager Brian Anderson pointed to the forthcoming Ascent luxury apartments, a reopening Nighttown restaurant, and student housing on Euclid Heights Boulevard as potential attractors for a new food business. The landlord’s history is another reason to feel bullish about the future of the space, said Anderson. “They have a default position of seeing a grocer there and understand the fresh food component of the whole district,” Anderson said. “They know what this means for the overall attractiveness of the district long-term.” See DAVE’S on Page 16

The Dave’s Market at 12438 Cedar Road in Cleveland Heights closed its doors on Oct. 25, leaving a hole in the growing business district. | DOUGLAS J. GUTH FOR CRAIN’S CLEVELAND BUSINESS

10 | CRAIN’S CLEVELAND BUSINESS | NOVEMBER 7, 2022

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A winning bid Neue Auctions aims to provide an easy, affordable way to sell prized possessions to a larger audience BY KRISTINE GILL

The painting was big, a fixture consisting of three canvases and several metal pieces that fit together like a puzzle on the wall. It had been in the family for years, handed down from his mother, but when Jeff Young and his wife moved to their new home in Moreland Hills, they realized there just wasn’t a good spot for the Sam Gilliam painting anymore. The same was true for a geometric bronze sculpture by Clement Meadmore and about 15 other fine art pieces they’d carried with them over the years. “We debated putting them in storage. We even thought about raising the ceiling in the living room for a higher wall, but that wasn’t a possibility,” Young said. “We just came to the recognition that it was time.” So Young went searching for the fine-art appraiser his mother had used years ago but found the business boarded up. Across the way was Neue Auctions, and hanging in the gallery was another Sam Gilliam painting. “I walked in and they said, ‘Well, you’ve accidentally come to the right place,’” Young recalled. Neue Auctions, located in Beachwood’s Ohio Design Centre, is a local auction house with international

A painting by Sam Gilliam consisting of three canvases and several metal pieces that fit together like a puzzle. | COURTESY

reach, offering Clevelanders an easier, more affordable way to sell their prized possessions to the top bidder, wherever he or she might be. Cynthia Maciejewski started the company in 2018, offering the same luxury experience buyers and sellers have come to expect from top auction houses in places like New York City, but from the comfort of their own backyard. “The buyers aren't in New York, the buyers are global,” Maciejewski said. “They're bidding online and phone bidding and the stuff is getting shipped.” Plus, as a smaller auction house, Neue Auctions can offer complimentary walk-throughs of estates and the like, earmarking items that

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an o som “U tate goin cieje pho with sura fees Y sult tion “F like

FOCUS | SMALL BUSINESS

in fine art, antiques, jewelry and luxury accessories. She has plans to seek out more designer handbags and high-end watches in the coming year because those items are easy to ship but fetch high commissions. But Maciejewski’s background is in the arts. A graduate of the Savannah College of Art and Design, she has a soft spot for 16th-century and earlier engrav-

ble ce

“WE’RE ONLY STEWARDS OF THESE THINGS FOR AS LONG AS WE ENJOY THEM, AND OUR MOTTO IS BUY WHAT YOU LOVE AND BUY WHAT YOU CAN AFFORD AND ENJOY IT, AND THEN ONCE YOU STOP ENJOYING IT OR YOU CHANGE YOUR STYLE, LET’S FIND ANOTHER HOME FOR IT.” — Cynthia Maciejewski, founder of Neue Auctions

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to poking around in basements and attics and came across items they no longer needed. Typically, though, clients find Neue Auctions after inheriting an estate, but Maciejewski would love for clients to realize that auction services are useful even when you aren’t dealing with an estate. “There are people who don't know who we are, they don't know that we

A geometric bronze sculpture by Clement Meadmore. | COURTESY

an owner might not realize can fetch some money. “Unless you’ve got a massive estate, (bigger auction houses) are not going to send anyone out there,” Maciejewski said. “They’ll have you send photos, but then you have to deal with shipping it out there, getting insurance, higher commissions, higher fees.” Young liked the one-on-one consultation he received from Neue Auctions throughout the process. “From the moment we met, it felt like we were speaking the same lan-

guage, and if she could deliver in the way she was talking, this would be a great fit,” Young said. Young was also thrilled to learn that the same movers who were shuttling his furniture to Moreland Hills worked with Neue Auctions. And so they handed over the Gilliam painting and the Meadmore sculpture as well as the other pieces. Neue held an auction one Saturday in September, and Young and his wife logged in to watch the bidding commence. “They said if you adjust down the reserve you’ll have a better outcome,”

Young recalled “We said, you guys are the experts, and we trust you. Once that happened, we just waited.” The strategy worked. After some painful seconds in which the Gilliam listing stood stagnant, the $50,000 reserve was met with an opening bid and the number crept up slowly after that, finally reaching $67,000. The sculpture sold for about $27,000. “The Meadmore went to Australia and the Gilliam went to D.C., where he lived and died, so it made us feel good to know that, too,” Young said. Maciejewski’s business specializes

ings and woodcuts. She recently came across one in her basement by an artist who went by “Master E.S.” from 1466 that she plans to reframe and hang in the house. “They go by Master E.S., Master I.S., so you really have to know what you’re looking at, because they’re just initials,” she said. But for someone who deals in physical objects of high value, Maciejewski has an interesting take on collecting, storing and even hoarding those things. “It is people's property, and it's people's money, and that I take seriously,” she said. “But you know, you can't take it with you. We're only stewards of these things for as long as we enjoy them, and our motto is buy what you love and buy what you can afford and enjoy it, and then once you stop enjoying it or you change your style, let's find another home for it.” Maciejewski said that business boomed during the pandemic as folks who were confined to their homes got

exist,” she said. “I just would love for people to know that we are a resource.” The company holds about one auction per month and also features items in its gallery, open to the public. They also provide valuations and appraisals of items. Maciejewski and her staff of all women have decades of experience in the business among them. Maciejewski ran another local auction house for about 20 years before starting Neue Auctions. As a native of Green in Summit County, she’s thrilled to be offering the same high-caliber service of larger, metropolitan auction houses to locals who can earn more for their property, given their proximity. She said she enjoyed creating her last business and building Neue Auctions from the ground up. “I went to art school thinking I would be an artist,” she said. “And I was OK at it, but I had more fun selling it.” Contact Kristine Gill: clbfreelancer@crain.com

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FOCUS | SMALL BUSINESS TAX TIPS

State tax incentives bring in big manufacturers — can your business benefit? BY DAVID KALL

2022 has proven to be a big year for Ohio industry. In January, it was announced that Intel Corp. would begin a $20 billion manufacturing project in Licking County, just south of Columbus. The site, spanning nearly 1,000 acres, will initially house two semiconductor factories, with capacity for an additional six. According to a Jan. 21, 2022, news release from Gov. Mike DeWine’s office, the investment is the largest single private-sector investment in Ohio’s history and is estimated to create 3,000 Intel jobs, 7,000 construction jobs and tens of thousands more across the economic ecosystem. In early October 2022, Honda announced plans to build a $3.5 billion electric-vehicle battery factory in Fayette County, with an additional $700 million investment to retool the company’s Marysville, East Liberty and Anna factories. The project is a joint venture between Honda and LG Energy Solution and is estimated to create more than 2,500 jobs. In both instances, the state of Ohio promised significant tax and economic incentives to win the deals. On Jan. 28, during a press conference, state development director Lydia Mi-

halik shared details of Intel’s incentive package, which is expected to top $2 billion. Incentives include a $650 million, 30-year Job Creation Tax Credit, a $600 Kall is chair of million “onshorthe Tax and Benefits Practice ing” grant, $691 million in infraGroup at structure imMcDonald provements, $150 Hopkins. million in economic development and workforce grants from JobsOhio, and a 30-year, 100% property tax abatement from the city of New Albany. In addition to $85 million in infrastructure updates, Honda may be eligible for a 30-year Job Creation Tax Credit valued at $71.3 million, according to Todd Walker, a state development spokesperson. Honda is also set to receive financial assistance from JobsOhio, though the details are still under wraps. The good news for Ohio business owners is that you do not have to be a global conglomerate to benefit from these tax incentives. Careful planning and analysis could result

in tax incentives for your business as well. The Job Creation Tax Credit, which is a refundable, performance-based credit, is available to any company meeting certain requirements, including a minimum annual payroll of $660,000, compensation of at least 150% of the federal minimum wage, and creation of at least 10 jobs in three years. The credit is calculated as a percent of created payroll and applied against a company’s commercial activity tax (CAT) liability. Any portion of the credit exceeding the company’s annual CAT liability will be refunded to the company. One item to note is that the project must receive prior approval from the Ohio Tax Credit Authority. Businesses may also be eligible for certain grants from JobsOhio. The Economic Development Grant is an option for companies looking to expand and create new jobs. To be eligible, businesses must be engaged in specific industries or business functions and meet job creation, payroll, fixed-asset investment and return-on-investment metrics, which are determined by JobsOhio on a case-by-case basis. The grant funds can be applied to a wide range of project-based costs, such as site development, invest-

An employee installs bumpers on Honda Accord vehicles at the company’s Marysville plant. Honda may be eligible for a 30-year Job Creation Tax Credit. | TY WRIGHT/BLOOMBERG

ment in buildings and equipment, and infrastructure. Another option for businesses is the Workforce Grant, which provides funding to improve the skills and abilities of a company’s workers. With eligibility requirements similar to the Economic Development Grant, the Workforce Grant can be applied to a wide range of training costs, such as on-the-job training, quality management, safety courses, skilled

trades and information technology. Business owners looking to benefit from these tax incentives may want to consult with a tax professional to help maximize incentives received and to ensure compliance with application processes and eligibility requirements. More information about the Job Creation Tax Credit, Economic Development Grant and Workforce Grant can be found at jobsohio.com.

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When a digital business loan makes good business sense Know your options for obtaining convenient and timely capital By Dollar Bank Business Banking If there’s one thing business owners can use more of, it’s time. As the head of your company, you wear many hats — CFO, CMO, HR director, sales rep, to name a few — in addition to overseeing day-to-day management and operations. When it comes to borrowing, business leaders want convenient options, especially when their financial need is immediate. For these critical moments, digital lending platforms can speed up the application and funding process.

Speed and convenience win the day

Some business owners feel they don’t have time to go through the conventional process of applying for a business loan, waiting for a decision and then funding. A digital lending platform accelerates all three of these processes.

Here’s what differentiates a digital business loan from a conventional business loan:

Apply in minutes

Most or all of the application process is done electronically. You provide basic information about your business and its owner(s), upload any required documents and submit your application. It’s fast and easy.

Paperwork is limited

Part of the hesitation of business owners to apply for a conventional loan is the timeconsuming task of gathering paperwork, which is where the digital express business loan process sets itself apart. Some lenders, for example, require just a valid driver’s license, business tax ID, the applicant’s most recently filed business tax return and information about the company owner(s).

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Less paperwork means less review time than the traditional underwriting process. A digital business loan provides an instant decision and approved loans are funded within a couple of days of e-signing the loan documents.

Look for stability and value

Digital business loans are available through a variety of sources, but those sources — and the products they offer — vary widely. In addition to comparing loan rates and terms, be sure you know the company or financial institution behind the product and understand what level of service you can expect once your loan has been funded.

Ask yourself what you would do if you ran into a challenge making a payment or otherwise upholding your loan commitment. Could you call your lender and talk with someone who could help resolve the issue? Easy access to a business banker is a definite plus and what you get when you work with an established, full-service financial institution. Keep in mind, too, that rates and payment terms can vary dramatically from one lending organization to another. Lenders know that borrowers seeking digital business loans are willing to pay a higher rate for their convenience and speed, and some take advantage of that willingness by attaching exorbitant APRs to their loans.

the convenience of an express loan, compare APRs and understand how much borrowing the funds will cost your business so that you can make a well-informed decision. If you’d like more information about a Dollar Bank Business Express Loan or want to discuss your borrowing needs, contact the Dollar Bank Business Banking team at 216-736-8998 or visit Dollar.Bank/BizExpressLoan.

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urban area remains strong. Katz wants the vacancy filled by an independent, delivery-friendly grocer willing to spend money on renovations. A drugstore, a fast-food place or a fly-by-night establishment would not fit within the community fabric, he noted. “Businesses like that hurt neighborhoods,” Katz said. “It’s important for the landlords to take their time. It’s like when you hire employees just because you need bodies, then that’s what you’ll get. But good employees stay with your business. Create something special for the district instead of looking for someone who’s just going to pay for the space.”

From Page 10

A relatively small footprint could present a challenge, as even scaleddown supermarkets need 40,00060,000 square feet to fully operate, noted Anderson. The space also is saddled with older infrastructure, meaning a new tenant will be adding upgrade costs to the purchase price. If a traditional grocery is not in the offing, Cleveland Heights leaders, including Mayor Kahlil Seren, support a food hall concept that would allow customers to patronize multiple vendors under one roof. The suburb is designated as a C-2 Local Retail District, which allows for “small neighborhood commercial establishments and new retail businesses that typically locate side by side in order to promote pedestrian activity.” “The space is flexible for different types of uses, so a food hall would fit right in,” said city planning director Eric Zamft. “It’s critical to have local food service with the new housing units going in.”

Walkable grocer needed Cleveland Heights currently has two Dave’s locations — one at Severance Town Center and the other on Harvard Avenue. The community also has smaller stores such as Marc’s and Ungar’s Kosher Market that offer groceries and various fresh food options. The loss of the Cedar-Fair-

A grocer makes sense

Lynn Quintrell, who owns the independent bookstore Appletree Books in Cedar-Fairmount, considers the loss of a grocer ‘a negative’ for the Cleveland Heights neighborhood. | DOUGLAS J. GUTH FOR CRAIN’S CLEVELAND BUSINESS

mount Dave’s has residents and entrepreneurs concerned about the lack of a walkable grocer in the near term. Cleveland chef-owner Doug Katz, whose Middle Eastern-flavored cafe, Zhug, is located across the street from Dave’s, visited the store several times a week to shore up restaurant stock.

“I live five blocks from there — it’s a great, convenient spot,” Katz said. “Russo’s was there, and Dave’s was a space people got used to shopping at. (The space) has always been a grocery store. People in the district have aged with it.” For Katz, Dave’s departure is more disappointing than worrisome, as the district’s reputation as a walkable

Cleveland Heights resident and entrepreneur Lynn Quintrell shopped at Dave’s for bottled water, cleaning supplies and other goods she used at Appletree Books, her independent bookstore at Cedar-Fairmount. “A grocery right in the middle of the neighborhood meant everything,” Quintrell said. “Losing it takes away a major walkable component. I’ve been here for 20 years. We had a market, dry cleaner and coffee place. Now there’s no market, which is a big negative.” Replacing Dave’s with a smaller-scale Heinen’s location is Quintrell’s ideal vision for the district. In the interim, she expects outreach from city leaders on any future successors for the vacancy.

“I certainly hope the neighborhood pressures City Hall to fill the space quickly,” Quintrell said. “My wish is Heinen’s going in there. It will be tough financially because the building needs renovations, but the community would love to have them.” Cedar-Fairmount residents are also wondering what will become of the corner of Cedar Road and Grandview Avenue now that Dave’s is gone. Gabrielle Jarrett moved to the Alcazar Hotel three years ago after selling her Cleveland Heights home of 20 years. Though Dave’s was not her goto grocer, she appreciated the convenience as well as how the store fit the community. “Dave’s was handy for me, and I loved the friendly atmosphere,” Jarrett said. “For many people, Dave’s was not just handy, but essential. This neighborhood is filled with students, residents and people living in apartments. Many of them might not have a car.” Anderson, the Cleveland Heights official, knows a new grocery store is fundamental for the burgeoning district. Whether the replacement at Cedar-Fairmount is a food hall or traditional grocer, it is at least conceivable that a food-centric option is in the offing for the space. “Something grocery-focused is both the largest need and makes the most sense in that location,” Anderson said. Contact Douglas J. Guth: clbfreelancer@crain.com

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Staying ahead of the curve on modern fraud, cyber crime By Vince Guerrieri, Crain’s Content Studio-Cleveland For as long as there have been financial institutions, fraud has always been a risk.

MEET THE PANELISTS

There are steps that companies can take to minimize fraud. Drennen recommended the use of multi-factor authentication for email, as well as better “patch management,” the regular updating of existing software. He said that 90 percent of data breaches could be prevented by regular updates.

Currency gets counterfeited. Checks get forged. Employees or customers fall victim to a con artist. It’s estimated conservatively that the global cost of fraud is $5.4 trillion annually, and nearly half of all companies reported some type of fraud activity in the past two years. Against this backdrop, hacking and cybercrime continue to evolve into more sophisticated threats. Technology is being used to help make banking and purchases more convenient, but this in turn increases the potential exposure of personal data, which can then be used to access bank and credit accounts. The information itself can also be sold off on the dark web to set up fraudulent accounts. Farmers National Bank information security officer, Blake Drennen, warned of the dangers of ransomware and hacking during a recent Crain’s webinar, titled “Protecting Your Business and Customers from Fraud and Cybersecurity Issues.” Data compromises – the catchall term for when personal, health or financial data gets into the hands of someone who shouldn’t have it – have increased 68 percent from 2020 to 2021 – and are up 23 percent over the previous all-time high in 2017. Some companies might be too small to have a designated cybersecurity staff. But all companies can – and should – make sure their employees

potentially open the way for dangerous malware. And never allow any outside remote access to your computer or mobile device, they added.

Kristi Blue Corporate security officer, Farmers National Bank

are trained to spot signs of cyberattack or fraud. “Employees are our first line of defense, and it’s important to know they are our human firewall,” Drennen said. Employees should be careful what they send via email – never passwords or other sensitive information, Drennen stressed – and carefully examine incoming email. Is it expected? Do you know the sender? Do you recognize the domain? Kristi Blue, the corporate security officer for Farmers National Bank, echoed those sentiments and advised caution when getting unsolicited texts and phone calls, as well as emails. And if you get a call from someone claiming to be from a vendor, don’t be afraid to look up that company’s number and call them

Blake Drennen Information security officer, Farmers National Bank

back if they sound suspicious, she said. Blue also warned of physical mail theft, and recommended that mail be dropped off inside the post office or in a secure facility. Mail can be stolen from mailboxes – even U.S. Postal Service mailboxes – while awaiting pick-up. Also, Blue said, business owners should keep the items they use for financial transactions – their own checks, credit cards and signature stamps – secure. Outside attacks are cause for concern, but 31 percent of fraud instances are from internal sources (and another 26 percent are a combination of internal and external parties).

Additionally, Drennen and Blue advised the limiting of privileges in order to manage access by allowing only certain people to have access to sensitive information. Duties can also be divided as an added layer of security. “Whenever you have more than one person involved, the threat of fraud goes down,” Blue says. Overall, Drennen said, most compromises are crimes of opportunity, so it’s important not to be an opportunity. “Threat actors target low-hanging fruit because they know you don’t have your defenses up,” he said. “Be a tough mark and enable defense and depth tactics. You should stack your security and IT controls like the layers of an onion.”

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Lifetime planned gifts are win-win By Katie Shames

lanned giving is often associated with bequests and other payable-upon-death gifts. But gifts received during one’s lifetime (often referred to as “inter vivos”) are sometimes overlooked. This has always bothered me because it deprives the donor of the pleasure of seeing their funds used to fulfill missions they care deeply about. The opportunity to witness young people experiencing a concert, improve access to education or hasten a new medical treatment can bring a type of satisfaction that defies description. It’s at the heart of charitable giving. Below are some options that will allow donors to enhance their own lives by seeing their generosity in action.

see the funds in action, an institution can budget based on known payments coming in and beneficiaries will still inherit after death. While the rates vary for these trusts, there can be real tax advantages — plus the valuable benefit of seeing your gift at work. It’s always wise to consult with a financial adviser and the gift planning team at your recipient institution.

Lifetime gifts to the endowment

Charitable lead trusts

These gifts provide obvious immediate benefits to the institution, but they often also provide a naming opportunity and can inspire others to give. There’s a common misperception that millions of dollars are needed to endow a space. But often, that’s not the case. Check with your gift planning team to discover what’s available.

These split-interest trusts, which have lifetime and death payments, provide income to a chosen institution during the donor’s lifetime, allowing a beneficiary to inherit the balance after the donor’s death. This is a win-win-win option! The donor can

Naming a seat in a concert hall, a theater or a bench in a park can honor a loved one who spent time there. It also marks the space as one that has provided pleasure and comfort. Endowing a program — like a lecture or concert series or a

scholarship program — ensures meaningful impact for the donor and recipient. What better satisfaction is there?

Retirement benefits When your required minimum distribution outweighs your budget needs, that overage can immediately impact your chosen organization while also achieving tax benefits and benefiting others in the process. There is a tendency to think that an IRA can only be earmarked as a death benefit. Assuming financial stability, why not contribute to the critical annual fund of a beloved charity? You’ll experience the joy of knowing that you’re ensuring its survival for future generations.

Lifetime gifts These benefit a donor’s estate by reducing the ultimate value to below the IRS tax threshold, which is currently $11.2 million. Estate taxes can harm donor intent by considerably lowering an intended inheritance to a beneficiary. Careful planning can avoid this outcome by staying below the statutory set amount. It’s important to remember

that an estate’s assets are comprised not only of fungible cash and other liquid assets but also of real and personal property that must be accounted for in estate inventories. Consider the option of donating a valuable painting, collection or vacation house to benefit others, and removing that asset from being counted in the estate. Most institutions will have their own guidelines for non-cash gifts, so check ahead of time as you make your plans. Remember, this is a gift to a meaningful cause, and the institution needs to use it in a way that best realizes its mission. But this opportunity can be transformative for both institution and donor, allowing them to share the excitement of a wonderful gift. Strategic planning of lifetime gifts can eliminate the risk of estate taxes altogether, so the donor’s heirs will benefit in the way intended. There are other lifetime gift options, including donations from donoradvised funds and private foundations, to name a few. It pays to reach out to both a personal expert and gift planner associated with your institution of choice. Don’t deprive yourself or your family of the joy of seeing your values in action.

The great Booker T. Washington once wrote, “those who are happiest are those who do the most for others.” That happiness is available for you right now. A planned gift is exactly that: one that involves some forethought and planning. Give yourself a gift by supporting the causes that mean the most in your own life. Everyone wins!

orchestra.com.

Katie Shames, JD, is senior planned giving & major gift officer at The Cleveland Orchestra. Contact her at kshames@ cleveland

“Those who are happiest do the most for others.” —Booker T. Washington A planned gift can bring joy to your life and allow you to see your generosity play out onstage and in our community! Contact us to learn how you can plan a thoughtful gift that benefits you, your family, and the music you love. Katie Shames, JD 216-231-8006 legacy@clevelandorchestra.com

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Estate planning considerations for cryptocurrency and cryptographic tokens By Jaclyn M. Vary and Maureen T. Pavicic

s investors flock to crypto assets, especially the 67% of millennials who see Bitcoin as a “safe haven asset,” there are several important estate planning considerations for investors with cryptocurrency and Non-Fungible Tokens (NFTs).

Cryptocurrency and NFTs: A quick overview Cryptocurrency (think Bitcoin or Ethereum) is a digital currency in which transactions are verified and records are maintained using cryptography, rather than by a centralized authority. Cryptocurrencies are held in a “digital wallet,” the structure of which can vary depending on the online platform. NFTs are cryptographic assets on a blockchain with a unique identification code and metadata. Unlike cryptocurrency, NFTs are often types of unique digital art (like a

numbered art print) that cannot be traded or exchanged easily. A popular example of an NFT is Jack Dorsey’s first tweet, which was auctioned for more than $2.9 million.

Estate planning considerations It is important to make your estate planning attorney aware of cryptocurrency and NFT holdings. Fiduciary access: Who will be named as a fiduciary to handle your digital assets, and is this person technologically savvy enough to access and transfer the assets? Most states have now adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which governs access to a person’s online accounts when the account owner dies or cannot manage the account. Additionally, many estate planners routinely include specific language in wills, powers of attorney and trusts that specifically grant fiduciaries access to digital assets. Naming fiduciaries who are trustworthy and capable of understanding the nature

of cryptocurrency and NFTs is essential. Recordkeeping: Keeping a record of cryptocurrency holdings, including purchase date, your basis or purchase amount, location, and the passwords and access codes is essential for security purposes during the owner’s lifetime but also for estate and trust administration purposes at the owner’s death. Individuals holding cryptocurrency and/or NFTs should consider keeping a detailed guide explaining how to access every digital wallet. If the individual tasked with gathering and distributing your digital assets cannot access your digital wallet, those assets may be deemed lost. Titling: The most popular holding mechanism for cryptocurrency is an online platform; Coinbase and Robinhood are two popular options. Titling and transfer of the crypto assets will depend on the specific platform. For example, Coinbase does not give users the ability to add a beneficiary designation but gives a vague statement that “naming a

beneficiary on your Coinbase account would be done with your estate planning attorney… the ownership of your Coinbase account would be transferred according to your will or other arrangements….” For estate planning purposes, a user may title a Coinbase account directly in a revocable trust; however, the Coinbase account must be linked to a traditional checking or savings account with the same titling. Clients using the Robinhood platform can add a beneficiary designation with the limitation that it must be to an individual and not to an entity or trust. Gifts and valuations: Some online platforms allow users to gift cryptocurrency. Robinhood’s terms of service detail that it does not track gifts, which opens the door to potential underreporting. Estate planners with clients wanting to gift cryptocurrency or NFTs will likely be required to have crypto assets valued for estate and gift tax purposes. However, the cryptocurrency market’s volatility makes it difficult to calculate a traditional value, and few

appraisers can handle such work, adding to the difficulty. Smart contracts: Ownership and titling of NFTs are much more complicated as only one person may own the actual token. Still, others may own the intellectual property rights to the content behind the token, and additional individuals may own digital copies. Some NFTs include a smart contract feature allowing the NFT creator to earn a percentage each time the NFT is sold or transferred. Holding NFTs in a limited liability company (LLC) may facilitate more efficient ownership transfers by allowing LLC membership interests to be transferred rather than going back to the blockchain for each transaction.

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N to By

N Helping Clients Solve Complex Estate and Succession Planning Needs The attorneys with Calfee, Halter & Griswold’s Estate and Succession Planning and Administration group can help you make some of the most important decisions of your life. With deep knowledge and experience in finance and the law, our professionals provide exceptional value to clients seeking: • • • • •

Sophisticated estate, gift and generation-skipping planning Comprehensive estate and trust administration Business succession planning Asset protection planning Complex probate and trust litigation

Calfee’s Estate and Succession Planning and Administration Attorneys Joseph M. Mentrek, Practice Group Chair Jaclyn M. Vary, Practice Group Vice Chair Amy K. Friedmann Stephanie M. Glavinos Maureen T. Pavicic Zachary J. Stackhouse

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Cryptocurrency self-directed IRAs: Many individuals want to invest their retirement assets in cryptocurrency. While traditional IRA rules would be at play, individuals holding such assets should be aware of the associated

FTs

income tax implications. Due to the cryptocurrency market’s volatility, the required minimum distribution calculation could lead to a large income tax bill or could hinder a distribution if the market is particularly low.

Jaclyn M. Vary is partner and vice chair in the Estate and Succession Planning and Administration Group at Calfee, Halter & Griswold LLP. Contact her at 216-622-8338 or jvary@calfee.com. Maureen T. Pavicic is an associate attorney in the Estate and Succession Planning and Administration Group at Calfee, Halter & Griswold LLP. Contact her at 216-622-8485 or mpavicic@calfee.com.

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New program allows Ohioans to turn taxes into scholarships By Karen M. McCarthy

ew Ohio tax legislation in 2021 makes it possible for individual taxpayers to receive a credit toward their Ohio state income tax liability. Here’s how it works: first, a donation is made to a Scholarship Granting Organization (SGO), which then qualifies the donor to receive 1:1 credit toward their state tax liability. The tax credit is equal to the lesser of the total liability or the contribution amount (up to a maximum of $750 or $1,500 if married filing jointly, where each spouse makes a $750 contribution). The donation must be made by Dec. 31 to claim the tax credit for 2022 with a tax receipt that is provided by the SGO. The Catholic Community Foundation and Diocese of Cleveland are collaborating on the Angel Scholarship Fund (ASF), an SGO that will generate tuition assistance for students attending one of the 105 schools in the Catholic Diocese of Cleveland. This program is a way to turn tax dollars into tuition for families that seek Catholic education opportunities for their children. Priority is given to families with income below 300% of the poverty threshold. Contributors to the CCF Angel Scholarship Fund can support schools and students from across the diocese with the greatest financial need through an “undesignated” contribution or designating a specific Catholic school to be the recipient. All Catholic elementary and high school students across the eightcounty diocese soon will be able to apply for an Angel Scholarship for the 2023-24 school year.

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“Catholic schools serve their communities, and the Angel Scholarship Fund is a new opportunity for the community, in turn, to support students to attend a Catholic school,” said Frank O’Linn, superintendent of Catholic schools. The Diocese of Cleveland Catholic schools comprises the largest school system in Ohio and the sixth-largest Catholic school system in the country. Currently, Catholic schools serve 38,312 students in Northeast Ohio. Patrick Grace, executive director of the Catholic Community Foundation, reports that as of September, more than $660,000 has been contributed to the Angel Scholarship Fund. So far, 98 schools have been earmarked by donors to receive designated contributions. “We’ve had several folks express how great it is for Ohio taxpayers to be able to support Catholic education with no net out-of-pocket cost,” he said.

Karen M. McCarthy, CPA, AEP, is vice president of the Personal Tax Advisory Group at Meaden & Moore. She also serves on the Catholic Community Foundation’s Professional Advisor Committee. Contact her at kmccarthy@meadenmoore.com. For more information about the Angel Scholarship Fund, visit catholiccommunity. org/angel or call 216-902-1312.

The ZooFutures Planned Giving program ensures the Zoo will thrive for generations to come. For more information, contact the Cleveland Zoological Society Advancement Team at (216) 661-6500 X4461 or Johnson@ClevelandZooSociety.org.

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Estate Planning Resize 9-28-22.pdf 1 9/29/2022 10:53:02 AM

Create a plan to fulfill charitable goals By Amanda M. Steyer

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lanning an estate is a very personal and private task. It’s common for people to feel uncomfortable about sharing their estate plans with their children or other relatives. However, those who are leaving gifts to charity may want to consider notifying their charity of choice about their intent to make an estate gift. Many individuals who are unable to make major gifts during their lifetimes choose to do so through their estates. Sharing their plans now with their chosen recipient charities allows benefactors to discuss their visions and motivations for their gifts, which will help to ensure that the charities use the gifts as they were intended.

Awareness of future philanthropic dollars gives charities an opportunity to better plan for the future and set long-term goals. “I am grateful when I can personally thank and recognize our friends and supporters and assure them that their gifts will be used to fulfill their philanthropic goals,” says Nelson J. Wittenmyer, Esq., at Cleveland Clinic. “It’s my great pleasure to show them how their legacy will be created and live on in the way that they imagined.” One of several options may be chosen to convey estate planning information to a charity. Many individuals send documents to the charity through their attorneys, and some even include a copy of their will or trust as confirmation of the gift designation. Some charities have a simple one-page form that a donor can complete. The charity will keep the information on file as a record of the intended use of the gift. It is estimated that charities are aware of fewer than 30% of the gifts that they receive through estates. Awareness of future philanthropic dollars gives charities an opportunity to better plan for the future and set long-term goals. When charitable wishes are made known, the gift can be recognized, the donor and family can be honored, and the gift is more likely to be used as it was intended.

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Why 2022 is an ideal time for a Charitable Gift Annuity Establishing a charitable gift annuity (CGA) with Cleveland Clinic can provide benefits while also supporting the mission of providing world-class health care to patients and communities. A charitable gift annuity is often the gift of choice for donors because of its simplicity and security. By establishing a CGA, a person sets up a guaranteed income stream for themselves and/or one other person for life. The income amount is based on a payout rate specific to a person’s age (older beneficiaries will enjoy a larger percentage than younger ones). This is a great year to consider a CGA, as gift annuity payout rates were significantly increased as of July 1, 2022. For example, an 80-year-old previously received a payout rate of 6.5%; the increased payout rate is 7%. The previous rate for a couple ages 76 and 75 was 4.7% and is now 5.3%. The payout rate for a CGA is also typically higher than many other popular income-producing investments such as CDs, money market funds or bank savings accounts. A contribution for a gift annuity is treated as two transactions for tax purposes: one portion is a gift to the entity, and the other is an investment in an annuity. When a CGA is established, part of the donor’s income will be tax-free based on their life expectancy and anticipated income stream. The donor will also receive a charitable income tax deduction in the year the contribution is made. Whether establishing a charitable bequest or a charitable gift annuity, a donor’s gift can be directed to support the area of their choice, enabling them to give with the confidence that their generosity is making a positive impact on the lives of our patients and their families.

Amanda M. Steyer, Esq., is executive director of Gift Planning at Cleveland Clinic. Contact her at 216-4445021 or giftplanning@ccf.org.

CONTACT: Lia Jones, J.D. Director, Center for Gift & Estate Planning n

LiaJones@uakron.edu

330-972-2819

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A Legacy Can Advance the Healthcare Breakthroughs of Tomorrow

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Since our founding in 1921, Cleveland Clinic’s mission has been “better care of the sick, investigation of their problems and further education of those who serve.” Philanthropy has played a significant role in a century of fulfilling this mission for our nonprofit organization. There are many ways to include Cleveland Clinic in your client’s personal philanthropic plans. Working together, we can integrate their charitable, family and financial goals with the mission of Cleveland Clinic to transform healthcare for our patients and shape the future of medicine around the world.

“We pride ourselves on bringing creative investment solutions to our clients. The Gift Planning team at Cleveland Clinic guided us seamlessly through the process, making this gift a reality for Jan and her family.” —LORAN ANSBERRY, SENIOR VICE PRESIDENT WEALTH MANAGEMENT, FINANCIAL ADVISOR, UBS RIDGETOP WEALTH MANAGEMENT

Together, we can help achieve your client’s ﬁnancial and charitable goals. Call our Gift Planning experts at 216.444.1245 or email giftplanning@ccf.org.

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NOVEMBER 7, 2022 | S6

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WEALTH MANAGEMENT

Market volatility versus economic volatility

Evaluate performance through long-term trends By John Micklitsch

ightfully so, much is made of market volatility. Seeing the shift in value of hard-earned savings can make anyone feel uncomfortable, but a missing ingredient in the assessment of market volatility is often time. Time, along with other best practices such as diversification and quality, remains one of investors’ greatest and most underappreciated assets. In addition to time, separating the economic juggernaut of capitalism from short-term market concerns is also an important factor in being a successful long-term investor. With data, we’ll attempt to explain how a simple shift in the time horizon utilized for performance evaluation can make you a less stressed and more effective market participant. The value of our most productive assets, such as ownership in a business or a loan to a business, is associated with two primary inputs: the future cash flows that it can deliver and the level of interest rates. Businesses, in delivering cash flows, ride the long-term trend of the economy while

interest rates are influenced by Federal Reserve policy and inflation levels. Therefore, it would stand to reason that the variability in the value of a collection of diversified business interests (your stock portfolio) would carry the same amount of volatility as the two primary inputs. Yet that is far from the case; the stock market is much more volatile than either the economy or interest rates.

being a tight set of dots around an average line and a high standard deviation as being a more spread-out set of dots around an average line.

Now, here’s the shocker. Over the same sixty-year period, the S&P 500 produced a 10.5% annualized return, but did so with a standard deviation of 17%, almost six times the volatility of its two primary drivers. Why is that and what does it mean? How do we take something that is reasonably steady, such as economic Instead of evaluating how your growth and interest rate levels, and turn it into portfolio is doing this year, you something that requires times the stomach could look at how it is doing over six from a volatility standpoint? It happens the last five years. because, collectively, market participants have different For example, from 1962 to 2021, the objectives, time horizons and U.S. economy’s average annualized understandings of how businesses are nominal growth rate (real + inflation) valued, which results in wild, was 6% and carried a standard speculative and emotion-filled swings deviation of 3%. During that same in public business values, despite period, the ten-year Treasury yield long-term inputs that would suggest a averaged 5.8% and had a standard smoother ride would be more deviation of roughly 3% as well. Standard deviation is simply a measure appropriate. This delta is often attributed to “Mr. Market,” a term of how much annual variance was coined by Ben Graham in 1949, to evidenced from the entire data set describe the market’s periodic relative to the average. Think of a data disconnect from longer-term set with low standard deviation as

fundamentals. So, what can an investor do to not get dragged into the morass? For starters, to paraphrase Warren Buffett, just because somebody is offering you a low price for your investment interests doesn’t mean you have to sell. Provided you’ve secured your liquidity needs from the portfolio in advance, you can always choose to ignore the short-term noise. Second, you can use Mr. Market’s mood to your favor and allocate capital in accordance with his mood. Be cautious when he is euphoric and lean more towards buying when he is cranky. Lastly, you can shift your evaluation period for stocks from annual measurements to rolling five-year evaluation periods, or even longer. Instead of evaluating how your portfolio is doing this year, you could look at how it is doing over the last five years. The reason this shift in evaluation mindset can be so powerful is because, as mentioned before, time remains one of the most underappreciated forces in investing. Not just from a compounding of money standpoint, but as a volatility reduction tool as well. For example, during the previously referenced 60 years, the standard deviation of

five-year average annualized returns was 7% versus 17% when evaluating the market’s return on an annual basis. This is almost a two-thirds reduction in perceived volatility, and the associated stress, simply from a shift in evaluation period from one-year intervals to five-year intervals. The average annual five-year return remained roughly 10% as well. In closing, it seems that everything these days is framed through a short-term lens. The forces that create short-termism do not have your objectives in mind. By simply shifting your evaluation mindset to a longer lens, you can significantly reduce the emotional distractions and noise caused by Mr. Market and increase your odds of being a successful long-term investor.

John Micklitsch, CFA, CAIA, is chief investment officer at Ancora. Contact Ancora at 216-825-4000 or info@ ancora.net.

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NOVEMBER 7, 2022 | S7

WEALTH MANAGEMENT

The dynamic mindset of millennial donors By David M. Lenz and Alexander C. Campbell

millennial donors are highly influenced by their peers, and many use the power of their network to influence others, particularly through online engagement. They are more likely to view issue advocacy as part of their philanthropy. Millennial donors also seek out leadership positions, whether volunteer or otherwise, even if, and sometimes because, they do not have the capacity to make large financial gifts at this stage in their lives and careers.

s advisers to philanthropists and the organizations they support, we see many marked differences in the millennial generation’s approach to philanthropy, as compared to previous generations. Of course, the millennial generation — roughly those born 1981 and 1996 — is large and extraordinarily diverse, and not everyone fits the mold we describe. Still, some general trends, confirmed in reports such as the Case Foundation-sponsored Millennial Impact Report, indicate how advisers and organizations need to adapt their approach for the next generation. One of the biggest generational shifts is that millennial donors want to be active now, at a relatively early stage of their lives and careers, rather than waiting until later to become philanthropically active. Likewise, many millennial donors

regard philanthropic giving as a kind of investment. Like any investor, these donors tend to play an active role throughout the relationship with the organizations they support, demanding that the organizations demonstrate effective use of a gift. Millennial donors also value data and metrics and are willing to move funds elsewhere if they do not see adequate progress. Contrast this with previous generations’ tendency to stay loyal to

Communication essential to estate administration By Richard C. Humiston

ou’ve gotten out of the way one of the most important decisions you will face when creating your estate plan: choosing your executor. What steps can you take now to make it easier on your executor when it comes time to administer your estate? Start by thinking about what your executor’s duties will be and what actions you can take in advance to make those duties easier to carry out. First, your executor will need to locate your original will. If you keep this document with your attorney, make sure your executor has their contact information. If you keep your original will at home, make sure you store it in a safe place and somewhere to which your executor has access. Your executor likely will be the person to arrange your funeral, cremation or burial. If you have specific preferences in this area, it’s best to express them in writing. Making your wishes clearly known can remove an especially difficult decision from your executor’s plate. One of the most time-consuming duties of an executor is to identify, collect and determine the value of your assets as of the time of your death. Whether you have a multitude of assets, or just a few, by keeping a clearly organized and updated list, you can help your executor quickly identify them and determine their value. Some simple information that will be helpful to

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your executor includes: • Name of financial institution and account number for any financial accounts; • Vehicle title information; • Insurance policy numbers; • Real estate information; and • Contact information for any financial services professionals you have worked with. Your executor also must address your debts, expenses and taxes, if any. Keeping an updated list can prepare your executor to ensure they are taken care of promptly upon your death and can prevent surprises from surfacing down the road. Finally, once the assets have been collected and debts and expenses paid, the executor must distribute the remainder of your estate to your beneficiaries. Keeping an updated list of contact information for your beneficiaries is essential. Organizing the above information will be a great help to your executor, but it will only be useful if they are able to access it upon your death. Talk with them in advance about how they can gain access to your residence when you pass away and where you store this vital information.

Richard C. Humiston is of counsel at Frantz Ward. Contact him at 216-515-1470 or rhumiston @frantzward. com.

established organizations. Stated another way, millennial donors tend to bet on causes, not institutions, and are willing to make difficult changes if a particular institution is seen as not effectively serving the cause.

Millennial donors are also keenly aware of, and highly sensitive to, an

In addition, millennial donors are eager to engage with more than money in causes they care about. Among other things, research and anecdotal evidence show that

organization’s commitments to the communities they serve and in which they are located. These donors expect that organizations not only do right by their clients but that they are also good corporate citizens that “walk the walk” by embodying values of diversity, inclusion and environmental sustainability. From benefit corporations to purpose trusts, the urgent, impact mindset of millennial donors is leading advisers and organizations to embrace a new generation of philanthropic planning and tools.

David M. Lenz is managing partner at Schneider Smeltz Spieth Bell. Contact him at dlenz@sssb-law.com. Alexander C. Campbell is partner at Schneider Smeltz Spieth Bell. Contact him at acampbell@sssb-law.com.

encouraging

faithful

philanthropy Since its inception in 2000, the Catholic Community Foundation has connected donors to the causes they care about most, providing for the spiritual, educational and charitable needs of people throughout Northeast Ohio. To create your Catholic legacy, contact Jean Ann Montagna, Planned Giving Relationship Manager, 216-696-6525 x8070, jmontagna@ catholiccommunity.org

Learn more about the Angel Scholarship Fund, Ohio’s NEW income tax credit program by visiting us at: catholiccommunity.org/angel

11/3/2022 8:22:46 AM

SPONSORED CONTENT

NOVEMBER 7, 2022 | S8

WEALTH MANAGEMENT

Retirement plan strategies for individuals, businesses Famed baseball catcher’s quote offers insight into the right direction By Dan Cvercko

ometimes you find the best business quotes in the unlikeliest of places. I have a line from Yogi Berra that I had framed and now hangs in my office: “If you don’t know where you are going, you might wind up someplace else.” A workable, realistic financial plan is crucial to reaching your goals. So, with Yogi’s words resonating in your ears, you and your financial planner’s attitude should be, “Let’s get to work and figure this out. Let’s start now. Where do you want to go?” Right out of the gate, we need to touch on some vital things for your eventual retirement. If your company offers a 401(k) company match, you want to take full advantage. If a company is matching 5%, that is a 100% return if

you are putting in 5%. Some employers don’t match, which is important to understand, too. But the company match could be a good opportunity for individuals to save money. Most people usually don’t even miss the money when a plan is set up for automatic paycheck withdrawal. That is a great way for them to save for retirement. So, if you don’t have an employer-sponsored plan, consider it critical to start looking into your own traditional pre-tax IRA or a Roth after-tax IRA for your retirement. That cannot be overemphasized. Another critical piece of the puzzle is understanding your full retirement age for Social Security purposes. Realize that if you take Social Security at an earlier age, you are giving up a specific amount of future income. What amount, and how will

that impact your retirement goals? All these subjects are stark reasons why you need to work with a financial

HELPING CLIENTS PROTECT THEIR LEGACY Protecting what you have built for the next generation takes careful planning and an experienced partner who a plan to help you achieve them. At Hahn Loeser, we work with our clients to navigate the evolving tax laws, minimize tax exposure and create a strategy that will help them preserve their legacy.

LET US KNOW HOW OUR ESTATE PLANNING TEAM CAN HELP

Arthur E. Gibbs III Partner 216.274.2253

Stephen H. Gariepy Partner 216.274.2224

Erica K. Williams Partner 216.274.2290

Christina D. Evans Partner 216.274.2442

M. Patricia Culler Partner 216.274.2534

Joan M. Gross Frank C. Krasovec, Jr. Senior Of Counsel Of Counsel 216.274.2277 216.274.2373

Douglas C. Carlson Partner 216.274.2313

Cynthia K. Port Of Counsel 216.274.2307

Christopher T. Cheh Associate 216.274.2519

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That conversation additionally comes with a raft of other decisions —whether it’s health insurance or Medicare. Having a seasoned financial planner in your corner who understands the ins and outs of this topic is essential. The age of the client is a hugely relevant component. A 25-year-old clearly has a much longer time frame to save for retirement than someone who is 50. If I have a client who is trying to start saving at age 50 to generate $5,000 worth of income monthly in the future, he or she will probably have to take some investment risks to accomplish those

understands your goals and objectives and can tailor

Dana M. DeCapite Partner 216.274.2465

professional and/or a tax professional. Should you be doing after-tax contributions or pre-tax contributions? You need to look at these key components of your plan squarely and be sure you understand them. And the earlier in your career, the better.

implemented and serviced by a dedicated team of retirement plan professionals. They should offer resources in plan design and consulting, plan administration, investment management, employee education and communication. Remember, this is your bespoke plan for your employees for which they are assisting you in planning. You have the responsibility, the duty, to ask probing questions. So, ask them. Does my proposed plan • maximize fiduciary protection available to plan sponsors? • minimize administrative responsibilities required by organizations? • equip and educate employees to retire on their own terms? • provide value by offering a robust suite of services at a fair fee? Remember, you are the one driving this. You will certainly see and learn

Going into the conversation with research accomplished and a list of detailed questions can only result in an outcome that will benefit you and your business. types of goals. You take those risks where you need them, which is why it’s important to sit down with a professional who will help you identify what risks you have or shouldn’t have. What if you are not an individual seeking retirement advice but a small business owner planning and hoping to see your company booming in the near future? You will need to provide an affordable workplace retirement plan that is easy to use and easy to understand, both for yourself and your employees, and one that will help attract and keep new hires. What do you do? First off, due diligence is required to find a financial institution that truly has a passion for creating customized retirement plan solutions that meet the needs of both the employer and the plan participant. The company should offer solutions that are designed,

new things when negotiating plan specifics with your financial institution. But going into the conversation with research accomplished and a list of detailed questions can only result in an outcome that will benefit you and your business. So, what’s the takeaway? Whether it is an individual or an employer plan, do the research, find a professional you can trust, and implement your plan. As our esteemed Mr. Berra reminds us, this is too important to wind up someplace else.

Dan Cvercko is senior vice president and brokerage manager at Farmers National Bank. Contact him at 888-988-3276.

11/3/2022 8:23:02 AM

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NOVEMBER 7, 2022 | S10

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Recruit, retain and reward key employees with executive benefits By Bob S. Harting

xecutives increasingly find saving enough for retirement challenging. The amount they can put aside through their employer’s qualified plan is often far from what they need. Even worse, if participation by rank-and-file employees in an existing plan is not high enough or the plan is considered top-heavy, an executive could find they can save significantly less than a plan’s limit or perhaps not at all.

Many solutions exist for employers to help key executives bridge this retirement gap.

Split-dollar arrangement A split-dollar arrangement is a method of sharing the benefits of a cash value life insurance policy between an employer and a key employee. In addition to providing executives with a source of income, they also receive death benefit protection for their families.

Coupled with a tight labor market and the explosion of remote and hybrid work opportunities that have created a

The employer selects who receives benefits, and when and how much they receive. As a result, the plan costs little to implement and Creating the right executive administer, and benefits plan could be the solution there are fewer limits and rules than to recruiting and retaining key traditional qualified employees. plans.

global talent pool, employers find that the executives they need to attract and retain have more prospects than ever. Creating the right executive benefits plan could be the solution to recruiting and retaining key employees.

The policy’s cash value becomes an employer asset. There is an opportunity for the employer to recover its entire cost when the covered executive quits, retires or dies.

Executive bonus arrangement

To motivate executives to stay with the company and remain engaged, employers are paying the premiums on a specially designed employeeowned life insurance policy. The premium amount becomes a compensation bonus to the executive. With these plans, the premium amount is tax-deductible to the employer as compensation. These plans are typically designed so the policy can provide tax-free income and a tax-free death benefit. As executive retention is usually a major concern, the employer can limit the executive’s access to the policy cash values until a certain date. If the executive quits prior to vesting, the employer can recoup previous bonuses from the policy’s cash value.

Nonqualified deferred compensation plan Giving an executive the option to defer a portion of their compensation to a later date may be a solution to limitations in traditional qualified

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11/3/2022 8:23:36 AM

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SPONSORED CONTENT

NOVEMBER 7, 2022 | S11

WEALTH MANAGEMENT

ZooFutures a mutually beneficial program By Andrea Ponikvar

or more than 60 years, Cleveland Zoo Society donors have helped Cleveland Metroparks Zoo thrive, grow and evolve through the ZooFutures program. This philanthropic vehicle enables donors to create their own legacy by supporting the future success of the zoo. This program is open to anyone who invests in the future of the Zoo Society by making a planned gift. Many special friends of the zoo have joined ZooFutures after expressing their commitment to the Cleveland Zoo Society through their estate plans. Remembering the Cleveland Zoological Society during the estate planning process leaves a legacy and ensures that the zoo and the community it serves will continue to thrive for generations to come. Donors interested in making

plans. Nonqualified deferred compensation plans can be designed to emulate familiar features of basic 401(k) plans, but without the limit on the dollar amount saved or contributed. Nonqualified deferred compensation plans allow deferral of various forms of pay, including base, bonus, commissions and special incentives. More flexible payout schedules can be arranged as well. Most companies find cash value life insurance an attractive informal funding choice due to its tax-free death benefit, potential taxdeferred cash value accumulation, and tax-free income via policy loans and distributions.

These plans can be structured so that the employer is able to recover its plan costs, effectively making the plan cost neutral.

Supplemental executive retirement plan A supplemental executive retirement plan is an employer-paid deferred compensation arrangement that provides supplemental retirement income to a participant, based on the employee meeting certain vesting or other specified conditions, including productivity targets. This plan can also incorporate voluntary executive deferrals in which the employer and executive defer compensation to a pre-determined

point in the future. As with a nonqualified deferred compensation plan, the employer can recover 100% of its costs by incorporating cash value life insurance.

Stay competitive Staying competitive in today’s labor market is more important than ever. Creating an attractive executive benefit program can be the key to recruiting, retaining and rewarding top talent.

Bob S. Harting, LUTCF, CLU, ChFC, is vice president, senior product design specialist and senior client executive — Life at Oswald Companies. Contact him at 216-367-4956 or bharting@ oswaldcompanies.com. Founded in 1893 and employeeowned, Oswald is one of the nation’s largest independent insurance brokerage firms. As a partner of Assurex Global, the world’s largest association of privately held insurance brokers, our risk management professionals service and support the needs of our clients worldwide. To learn more, visitoswaldcompanies.com/ construction.

Staying competitive in today’s labor market is more important than ever. Creating an attractive executive benefit program can be the key to recruiting, retaining and rewarding top talent.

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planned gifts to the Cleveland Zoological Society should reach out to their estate planning attorney and financial adviser to discuss the best gift planning path for their personal circumstances. Some easy ways to leave a long-term legacy at the zoo include utilizing a will or trust, naming the Zoo Society as a beneficiary of an IRA or retirement plan, and contributing via an IRA charitable rollover or charitable gift annuity. By creatively using assets to maximize impact, donors can provide support for the programs they are most passionate about. The Zoo Society is committed to recognizing these incredible gifts with special engagement opportunities and experiences while donors are still living. The Cleveland Zoo Society is the independent nonprofit partner of Cleveland Metroparks Zoo. The organization exists to raise philanthropic support for the zoo.

This public/private partnership allows both organizations to flourish. Each year, the Cleveland Zoo Society provides Cleveland Metroparks Zoo more than $5 million for programs, operations, and capital improvement projects such Daniel Maltz Rhino Reserve, which opened in 2020, and the upcoming Bear Hollow, now under construction. This funding is a blend of generous donations, membership revenue and legacy giving.

Andrea Ponikvar, MPA, CFRE, is an advancement officer at Cleveland Zoological Society. Contact her at ponikvar@ clevelandzoo society.org.

The World’s Best Private Bank* is here for you in Northeast Ohio J.P. Morgan raises the standard in private banking, delivering a uniquely elevated experience shaped around you. Whether you’re focused on building, preserving or transferring wealth, we bring you a team of specialists in planning, investing, lending and banking, carefully curated to match your goals.

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INVESTMENT PRODUCTS: • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE “J.P. Morgan Private Bank” is a brand name for private banking business conducted by JPMorgan Chase & Co. and its subsidaries wordwide. JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bankmanaged investment accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (“JPMS”), a member of FINRA and SIPC. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase & Co. © 2022 JPMorgan Chase & Co. All rights reserved.

11/3/2022 8:23:51 AM

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NOVEMBER 7, 2022 | S12

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WEALTH MANAGEMENT

The case for private investments in today’s markets By Brent Horvath

022 has seen one of the worst market performance years in history with the traditional 60/40 portfolio down 16% so far this year. Through the first half of the year, the S&P 500 Index had its worst returns since 1970, losing almost 21%. Meanwhile, the Bloomberg US Aggregate Bond Index was down more than 10%, a rare dynamic given that bonds typically stabilize portfolios when stocks are down. If these returns hold, that performance ranks behind only two depression-era downturns, in 1931 and 1937, that saw losses of over 20%. We believe returns going forward for a traditional 60/40 portfolio may range from 4% to 6% with higher volatility a possibility. The end of quantitative easing and the rise in inflation will likely dampen the higher returns we have had over the past decade and return us to more historical norms. In times like these, where can investors turn? Private investments can provide lower volatility and steadier returns when traditional public markets offer uncertainty.

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The appeal of private investments

In an expected low-return investment environment, portfolios must combine a core strategic premise with tactical investments that seek to add yield, uncover inefficiencies in the markets and take advantage of illiquidity premiums to allow portfolios to obtain the 5% to 7% planning targets the traditional 60/40 portfolio may not be able to meet over the next few years. Only private strategies can provide all three of these characteristics. We generally look at private investments in three categories: equity, debt and real assets. Private equity funds invest in private companies, restructurings, secondary investments and other private deals to provide equity-like returns with lower volatility than publicly traded markets. Because their assets aren’t subject to the day-to-day volatility of the markets and because they can’t be bought and sold daily, investors benefit from the illiquidity premium of tying up their money for longer periods of time. Private debt funds provide direct

lending across multiple investment sectors and many specialty areas where traditional banks typically don’t lend. Because they do their own underwriting, maintain the loans, and often specialize in smaller boutique areas of the markets like renewable energy projects or senior health care facilities, they can command higherthan-market interest rates. In addition, many of these have floating rate terms, so investors make more money as rates rise. While capital may be locked up for five to seven years or longer, receiving coupon payments of 8% to 10% annually provides a compelling rate of return that by itself bests most financial planning targets. Private real asset funds invest in real estate, infrastructure projects and natural resources to provide cash flow and appreciation. Private real estate funds, for example, invest in a diversified portfolio of cash-flowing real estate that provides, many times, tax-free income and appreciation without the day-to-day volatility of a public REIT. Excellent for taxable accounts, clients receive a 5% to 6% annual dividend that is mostly, if not completely, shielded by depreciation while also having the underlying properties appreciate over time.

Relationship-building bolsters accessibility

A few firms such as GFP have been using private strategies for many years, but high minimums and high regulatory thresholds have made them difficult for most investors to participate. Since private funds are exempt from registering as investment companies, investors need to meet net-worth minimums of either $1 million or, for most, $5 million to even qualify to invest. In addition, private firms typically have had minimum investments of $1 million or more per investment. Our firm has built relationships with many of the top private firms in the country to enable clients to invest at levels as low as $50,000. This has allowed us to add private investments to many of our client’s portfolios that in prior years would not have been able to meet fund minimums. The AltAlpha portfolio, a Gries-specific vintage fund, is designed to provide investors with a single point of access to a carefully constructed and diversified portfolio of best-in-class private investment strategies. Clients will commit, say $100,000, to the fund. An investment team will allocate those dollars to a variety of their best private strategies over the course of a fiscal

year. The fund will target both annual cash flow and long-term capital appreciation. This will allow investors to participate in a diversified mix of private investments with an extremely low correlation to public equity and fixed income and provide attractive absolute and relative return streams. In an investment environment where the global economy has entered the late-cycle phase and inflation has caused monetary policy to become more restrictive, we believe investors face an extended period of muted investment returns and heightened volatility for the next few years. Proper implementation of private investment strategies can provide the additional return and lower volatility that investors will need to meet their planning goals.

Brent Horvath, CPF®, is senior director of Wealth Management Services at Gries Financial Partners. Contact him at 216-8611148 or brent@gries.com.

11/3/2022 8:24:05 AM

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SPONSORED CONTENT

NOVEMBER 7, 2022 | S13

WEALTH MANAGEMENT

Education helps prepare next generation for wealth By Dan Griffith

or many affluent parents, few things are more satisfying than knowing their wealth can give those they love a financial head start in life, the freedom to pursue education or a dream career, and, possibly, a measure of security for later on. Yet, when children come into money before they’re ready, temptations may be overwhelming. Without proper financial education or controls, money that was intended to be used for education or housing might go for a fancy car or to friends seeking investors for unsound deals. Other heirs, out of generosity, may simply give away more than they can afford. In fact, the Ohio State University’s Center for Human Resource Research reports that heirs researched as part of a study spend, lose or give away nearly half of what they inherit. And research from the Family Trust Institute shows that 70% of surveyed families fail to sustain their wealth across multiple generations. Even if the money survives from one generation to the next, it may not yield the positive results the founders

envisioned. One family I’ve worked with, for example, whose large business has provided wealth for several generations, struggled with younger family members being prone to reckless spending and poor life decisions. The family preserved the wealth, but they didn’t pass on the values that enabled the founders to create it in the first place. The following considerations could help ensure that the wealth you’ve created not only survives, but also inspires the best in your descendants.

Educate early on money and values With money, children often learn best when starting young. It’s important to start teaching them about spending and saving by first grade, when they’re learning basic math. One teaching method is to provide each child with three piggy banks: one for charity, one for personal savings and the third to spend. It’s a good lesson that you can’t spend everything you have. During adolescence, progressively larger allowances can be tied to jobs around the house or volunteering. A better way to communicate is by example, so if your kids see you making careful,

deliberate spending decisions, they’ll be more likely to adopt that behavior. Philanthropy can be an excellent teaching mechanism, especially when practiced as a family. For families with private foundations, involving the children and even letting them choose some causes to support can instill a sense that wealth involves responsibility for others. And consider donating time as well as money, as it communicates the importance of living according to your values. Another valuable lesson involves learning from mistakes — especially as children enter high school and college and begin to control more of their own money.

Establish your own legacy goals As you teach your children financial responsibility, think about your own legacy, the amount and the way you intend to give to them, both during your lifetime and in your estate. The more specific you can be, the better. For some parents, a legacy means entrusting the next generation with significant funds from the time they reach adulthood. For others, it may mean help with education or buying a house.

Many of our clients struggle with the question of how much is too much. Well-meaning gifts or bequests can backfire emotionally, dulling a recipient’s ambition and drive, or even engendering feelings of guilt or failure when the money runs out. For some, the answer lies in tying gifts or bequests to positive behaviors. I’ve seen situations in which, by age 25, the child has to have graduated from college or a vocational school or started a business. Once you’ve defined your goals, you can look for strategies to help accomplish them.

Communicate your intentions Once your goals are in place, don’t keep them to yourself, though exactly how much you share about the specifics of your wealth depends on what you’re comfortable with and the age of your children.

A financial adviser can help you organize and even facilitate meetings. They can be the financial moderator, and when things start to go off course or get emotional, they can help keep the conversation focused. They also can help you assemble a team of professionals, including estate planning specialists, an attorney, a tax specialist, and others, to help ensure that your legacy plans work smoothly with your other financial needs. In the end, it’s not about controlling your children’s future or denying their desire to make their own choices. Rather, it’s about instilling a sense of responsibility that they are part of a larger tradition. It means understanding that they should stay true to the values they’ve inherited and pass them on to the next generation, so the legacy continues.

Formal family meetings can be an excellent way to share your plans, especially after your children have grown up and moved away. I would suggest meeting at least once a year, since life, health and financial conditions continually evolve.

Dan Griffith is director of wealth strategy at Huntington Private Bank. Contact him at 330-258-2379 or Daniel.R.Griffith @huntington.com.

WE TEAM UP WITH SOMEONE

UNIQUELY QUALIFIED TO UNDERSTAND YOUR NEEDS. YOU.

Is your bank listening to you? When you work with the Huntington Private Bank®, we meet with you face-to-face, taking the time to understand you and your goals. Using our Listen, Plan, Advise® approach, we work with you to create a clear plan that ﬁts your needs, giving you meaningful advice about your choices. Then as your goals and life progress, we review your plan and make the adjustments that are right for you. And we keep you involved every step of the way. Learn more by calling your local Cleveland team at (216) 515-6802 or visiting huntington.com/PrivateBank.

Huntington Private Bank. Get the personal attention you deserve.

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Huntington Private Bank® is a team of professionals dedicated to delivering a full range of wealth and financial services. The team is comprised of Private Bankers, who offer premium banking solutions, Wealth and Investments Management professionals, who provide, among other services, trust and estate administration and portfolio management from The Huntington National Bank, and licensed investment representatives of The Huntington Investment Company, who offers securities and investment advisory services. Member FDIC.⬢®, Huntington®, ⬢Huntington®, Huntington Private Bank® and Listen. Plan. Advise.® are federally registered service marks of Huntington Bancshares Incorporated. ©2022 Huntington Bancshares Incorporated.

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F c h le

SPONSORED CONTENT

SPO

How family enterprises can survive,

NOVEMBER 7, 2022 | S14

WEALTH MANAGEMENT

Best practices for preserving wealth for future generations By Linda Olejko

hat might cause a family business not to succeed past the first generation? External disruptions like societal changes and economic shifts matter, but more prevalent are internal forces, such as delaying or

ignoring estate and succession planning, failing to promote financial literacy in the second and subsequent generations or lack of asset protection planning. Family businesses are a dominant force in the economy. The Family Business Alliance reports that nearly

5.5 million businesses in the U.S. are family owned, accounting for 50% of the U.S. workforce and almost 50% of GDP. Yet only 30% of all family owned businesses survive into the second generation, 12% into the third and just 3% into the fourth generation and beyond, according to Family Business Alliance.

How, then, does a family business avoid the so-called shirtsleeves-toshirtsleeves outcome? With diligent adherence to a customized strategic plan consistently over time, many highly successful family businesses and wealthy families have done just that. Here are some best practices for family business owners that can be applied in any family of wealth to

develop good habits that connect them to their family’s values, stewardship and philanthropy.

Make it a family affair For family operations, business transition and continuity of operations are real concerns. Knowing that your children are committed to your business can provide a sense of security surrounding your company’s future. Creating and maintaining open lines of communication is essential. When business and family roles overlap (or collide), conflicts may arise that need to be addressed in a timely and constructive manner. Families should be prepared for personal concerns that carry over into the workplace and have mechanisms in place that facilitate impartial resolution. A family business that succeeds will leverage the expertise of outside advisers to ensure shareholder or operating agreements are in place and appropriate to the circumstances.

Share your story

How are you shaping your legacy? Confidently pursue your goals Whether you want to leave more to your family, do more for a cause you believe in or simply enjoy more of the good life, our experienced investment and wealth management professionals help you clearly define your vision. Personalized solutions, proactive advice Our team of trusted advisors live and work in your community and welcome the opportunity to have a conversation about your wealth objectives.

We have found that successful family owned businesses, those that survive multiple generations, have owners who share their stories — how the family wealth was created, who created it and what family members sacrificed to make the venture successful. It is important for family firm wealth holders to transfer their financial wealth and their values to subsequent generations, encouraging children to earn their own money and engage in philanthropy.

Start early Families that operate successful businesses over the long term tend to be close-knit across generations and inclined to honor family traditions. Play an active role in educating the next generation. Your adviser should be able to introduce programs designed to facilitate responsible stewardship of assets by exposing younger family members to age-appropriate financial concepts early and often. To be effective, education must be a continuous process.

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11/3/2022 8:24:40 AM

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NOVEMBER 7, 2022 | S15

WEALTH MANAGEMENT

SPONSORED CONTENT

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thrive Business owners contemplating a transition in favor of a subsequent generation or a strategic buyer must understand who will continue to hold business interests and the rights and tax implications of that ownership. This understanding can factor largely into the choice of one technique over another. Will the transition be part-gift, part-sale? Will it take place immediately, or over time? Is it a stock sale or an asset sale? Titling of equity interests will determine who exercises control over business decisions and who bears the burden of tax or other liability resulting from a transition. This structure should be analyzed and, if necessary, equity interests transferred appropriately well in advance of any transaction.

Conclusion There are no guarantees that your family business will survive for multiple generations. As a business owner, you may have to decide who will operate the company after you retire, if something should happen to you or when you simply want to move on to something new. Ideally, you will plan for this transition before it is too late to implement many tax efficiencies.

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Linda M. Olejko, CFP, CEPA, is a business development director in Glenmede’s Ohio office. Contact her at 216-514-7876 or Linda.Olejko@glenmede.com. This presentation is intended to provide a review of issues or topics of possible interest to Glenmede Trust Company clients and friends and is not intended as investment, tax or legal advice. It contains Glenmede’s opinions, which may change after the date of publication. Information gathered from third-party sources is assumed reliable but is not guaranteed. No outcome, including performance or tax consequences, is guaranteed, due to various risks and uncertainties. Clients are encouraged to discuss anything they see here of interest with their tax adviser, attorney or Glenmede Relationship Manager.

Navigating borrowing rates during high inflation

Engaging donors, advisers and charitable beneficiaries

By David Allen

e’re often asked by clients, “what is the best option to borrow under a floating line of credit?” This becomes an increasingly important decision in light of the current interest rate environment and options available to borrowers.

On average, the one-month variable LIBOR was 18 basis points (bps) higher than overnight SOFR over the last year. Clients in late 2021 In loan agreements, clients can saved an average 8bps of borrowing choose different interest rate options costs for those that changed to — typically either a Secured overnight SOFR from one-month Overnight Financing Rate (SOFR, a LIBOR borrowings. A 10bps upward benchmark interest rate), or they can credit spread adjustment on SOFR lock in a rate for a defined period. borrowings is typically It’s important to work with made when converting from LIBOR.

advisers to make informed decisions around rate exposure.

Both options have pros and cons, so it’s important to discuss the various factors before making a decision. We recently reviewed how the rising rate environment moved variable borrowing options and what would have been the most cost-efficient borrowing rate options for clients over the past year. Not surprisingly, during periods of prolonged upward shifts in the interest rate curve, extending rate maturities would have been advantageous before sustained shifts in the curve are recognized in the market. Overnight resetting SOFR, a very common borrowing rate option now, performs a bit differently than what we have seen with its predecessor, the one-month variable London Interbank Offered Rate (LIBOR, the prior benchmark rate that is being phased out). Overnight SOFR tends

P017_P033_CL_20221107.indd 31

to track the Federal Reserve rate hikes with minimal volatility between rate hike cycles, largely because the one-month forward market expectations of interest rate movements are not accounted for in the rate as they would be with one-month variable LIBOR.

It’s important to re-evaluate borrowing options and conversion of structures, which are permitted under loan agreements, and work with advisers to make informed decisions around rate exposure. This includes anything from margin loans, lines of credit on marketable securities, aircraft to commercial real estate. These ongoing decisions can make a meaningful difference to the bottom line.

David Allen is an executive director and market team lead in the Cleveland office of J.P. Morgan Private Bank, covering Northern Ohio. Contact him at 216-781-2597.

By Lia Jones t is exhilarating and rewarding to support charitable organizations with missions near and dear to our hearts. Through outright and estate giving, we have the power to establish legacies with these organizations that can positively impact their work now and in the future. Charitable gifts are often inspired by a deep connection to the institution and its mission. The decision to give can be very easy. However, the question of which assets to use and how the gift should be designated might be more nuanced. Therefore, it is important for donors to involve both professional advisers and a representative from the charity in major gift decisions. All parties can draw upon their respective areas of expertise to maximize the impact of the gift and ensure alignment between the donor’s intent and the charitable mission. The strategic decision to give certain assets over others can result in significant tax savings. For example, naming a charitable organization as the beneficiary of IRA assets or giving appreciated stock are considered tax-wise gifts to make. By contrast, naming individuals, such as one’s children, as the beneficiaries of an IRA can result in those individuals being taxed at their ordinary income tax rate and them receiving a lesser distribution than perhaps was intended. Consulting with financial and estate planning advisers to determine

which assets to give can ensure the totality of a donor’s circumstances is being considered to maximize both tax savings and the impact of the gift. Similarly, by including a representative from the charitable organization in your gift conversation, you can ensure your wishes are understood now so they are honored in the future. This is particularly important in the context of deferred gifts that will be received from a donor’s estate. For example, The University of Akron has a donor-centric model in which it strives to align the donor’s goals with growing areas of opportunity for the university. This is best accomplished through a conversation to discuss how a donor might designate his or her gift, such as by establishing a named endowment or supporting a particular program or initiative on campus. When donors, advisers and charitable beneficiaries join together to discuss the donor’s intentions and how they might be carried out, the donor is likely to be more satisfied with the resulting gift.

Lia Jones is executive director of the Center for Gift and Estate Planning at The University of Akron. Contact her at 330-9722819 or LiaJones@uakron.edu.

11/3/2022 8:24:57 AM

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NOVEMBER 7, 2022 | S16

WEALTH MANAGEMENT

The time to consider wealth transfer is now Significant gift and estate tax exclusions are set to expire in 2025 By PNC Private Bank

hen it comes to estate planning, there may be no time like the present. The opportunity to make significant and tax-efficient wealth transfer gifts is set to expire at the end of 2025. As a result of the 2017 Tax Cuts and Jobs Act, the gift and estate tax exclusion, as well as the generationskipping transfer tax exclusion effectively doubled from their 2017 levels – allowing individuals to make generational wealth transfers at a reduced transfer tax cost. Indexed for inflation, the current exclusions allow gifts of more than $12 million before triggering gift, estate and transfer taxes. Those exclusion levels expire at year-end 2025, when the exclusion level for those taxes will drop to just more than $6 million. “The most important part of estate planning is simply to make sure you have a plan,” said Geoffrey Williams, senior wealth strategist with PNC Private Bank in Cleveland. “Regardless of your financial scope, having an estate plan allows individuals to share their wealth with family values in mind and in a way that is most beneficial to the whole family.” Part of the immediate estate planning process should consider whether now is the time to make significant wealth transfer gifts before the exclusion rate

drops in 2026. Making wealth transfer gifts before death comes with both tangible and educational benefits for recipients. Gifting now allows individuals to pass along financial wisdom and experience to a recipient and allows a beneficiary to access the financial gift sooner. “Three years seems like a lot of time to act, but decisions about generational wealth are important, require consideration and can take significant time and resources to implement,” Williams said. “We’re encouraging people to act now, not only because 2026 will come faster than we realize, but because there’s also the possibility that legislative changes to the exclusion could be made sooner.” Despite the encouragement to act quickly, Williams recommends that each family consider their overall financial picture before making any decisions around gifting family wealth. Individuals should consider whether the loss of control of an asset or its potential future income would outweigh the advantage of the current estate tax benefits. Will gifting a large number of assets significantly inhibit the donor’s ability to support their lifestyle? Is the recipient ready to manage such a large financial gift? These are among the questions individuals should consider when determining whether to gift wealth, and how and when to do so.

This section was produced by:

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P017_P033_CL_20221107.indd 32

“Everyone’s situation is different, and some are more prepared than others to give or receive substantial financial gifts,” Williams said. “Working with a financial planner to help determine the best course of action is a critical part of the process.” PNC advocates for three potential strategies when considering making a gift of generational wealth. 1.) Reduce – For individuals who can afford to do so, gifting the exclusion amount during their

lifetime can provide significant benefits to the family, including possible transfer tax savings. 2.) Freeze – Consider moving growth out of the estate by taking advantage of techniques such as Grantor Retained Annuity Trusts (GRAT) or family loans. Freezing techniques may be most effective for those already at or near the exclusionary gift limit. 3.) Replace – Life insurance can be an effective means of replacing

wealth lost to taxes with applications for estates of all sizes. The current tax environment may mean now is the time to revisit an estate plan to determine if gifting substantial wealth is the right decision for both donors and recipients. “There’s a window of opportunity now to make significant generational wealth transfers in a very taxfavorable manner,” Williams said. “It’s a decision families should at least consider before that opportunity becomes a thing of the past.”

Key considerations for choosing an executor By Christopher Cheh

Location

hile in the State of Ohio, the legal requirements for an executor are limited to an individual being at least 18 years old, and that they are competent, a variety of characteristics are advisable when choosing the person who will carry out your final wishes. These characteristics include the following:

Generally, an executor must reside in the State of Ohio unless one of the exceptions is met, including being a family member. The administration of an estate is typically much smoother with a local executor. Naming a local executor who can establish a local bank account, visit real estate, arrange for the organization and distribution of tangible personal property, and prepare the real estate for sale, makes for a smoother administration.

Responsible

Good standing

Choosing an executor who is responsible and will treat the appointment as a part-time job is crucial to the effective administration of the estate. Most estates are open for more than a year. There are deadlines that need to be met, documents that need to be reviewed, final tax return filings, communication with beneficiaries, and many other responsibilities required from an executor. A task as seemingly simple as failing to open the mail for the estate timely can have significant consequences if the executor does not diligently perform their duties.

Choosing an executor with no criminal history and good financial standing is critical for an estate. If the probate court requires the executor to obtain a bond, an executor with a criminal record or poor credit may not be able to be bonded. Some probate courts require background checks for executors.

Age Many times, individuals execute estate planning documents early in life and erroneously never revisit them. A young person often appoints a parent or an older relative to be their

executor. By the time the estate plan is put into action, the named executors may be too old to serve or no longer alive. Naming at least one successor executor who is near to or younger than the testator is advisable.

Fiduciary duties It is highly recommended that the executor retain legal counsel as the executor is a fiduciary of the estate and responsible for ensuring proper distribution of assets and filing of final tax returns. The executor can be held personally liable for mismanagement of the estate assets, which highlights the need for a responsible executor. In some cases, a corporate executor may be advisable for complex estates, or for individuals with no qualified executor.

Christopher T. Cheh is an associate at Hahn Loeser & Parks LLP. Contact him at 216-274-2519 or CCheh@ hahnlaw.com.

11/3/2022 8:25:12 AM

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I WANT TO PERFECT MY HOME A N D K E E P I T I N T H E FA M I LY. Everyone’s “why” is different. And we want to hear all about yours, because the answer gets to the heart of everything that’s important in life. Asking why can lead you to your ultimate purpose, your reason for working so hard, for protecting what’s valuable and for passing on what you’ve achieved. We’ll work with you on the how. You just tell us, what’s your why?

Let's talk about your why. Call John Beer, Managing Director, at 216-222-3316 or visit pnc.com/privatebank. The PNC Financial Services Group, Inc. (“PNC”) uses the marketing name PNC Private BankSM to provide investment consulting and wealth management, fiduciary services, FDIC-insured banking products and services, and lending of funds to individual clients through PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and to provide specific fiduciary and agency services through PNC Delaware Trust Company or PNC Ohio Trust Company. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Bank deposit products and services are provided by PNC Bank, National Association, Member FDIC. “PNC Private Bank” is a service mark of The PNC Financial Services Group, Inc. ©2022 The PNC Financial Services Group, Inc. All rights reserved.

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WEALTH PLANNING | INVESTMENT MANAGEMENT | CREDIT AND CASH MANAGEMENT | TRUST AND ESTATE ADMINISTRATION

P017_P033_CL_20221107.indd 33

11/3/2022 8:48:15 AM

CRAIN'S LIST | FOUNDATIONS Ranked by value of grants awarded in 2021

RANK

1 2 3 4 5 6 7 8 9 10 11 12 13 13 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

FOUNDATION

GRANTS AWARDED ASSETS (MILLIONS) (MILLIONS) 2021/ 2021 2020

LARGEST 2021 GRANT

GIVING FOCUS AREAS

TOP LOCAL EXECUTIVE

CLEVELAND FOUNDATION, Cleveland 216-861-3810/clevelandfoundation.org

$124.4 $130.7

$3,200.0

$3,000,000; Local Initiatives Support Consortium (LISC)

Enhance lives of Greater Cleveland residents

Ronald Richard, president, CEO

JACK, JOSEPH AND MORTON MANDEL FOUNDATION, Cleveland 216-875-6550/mandelfoundation.org

$55.8 1 —

$1,587.8 2

$17,783,250; Mandel School for Educational Leadership, Israel 3

Leadership development, nonprofit management, humanities, Jewish life

Jehuda Reinharz, president, CEO

GEORGE GUND FOUNDATION, Cleveland 216-241-3114/gundfoundation.org

$55.5 $39.9

$641.8

$5,000,000; Cleveland State University Foundation

Education, arts, human services, environment, economic development

Anthony Richardson, president

KEYBANK FOUNDATION, Cleveland 216-689-7394/key.com/foundation

$26.8 $27.3

-- 4

$6,000,000; JumpStart Inc.

Neighbors, education and workforce

Elizabeth Gurney, director of corporate philanthropy, KeyBank

CASE ALUMNI FOUNDATION, Cleveland 216-231-4567/casealumni.org

$14.0 $2.8

$74.2

$10,991,284; College of Arts & Sciences, Case Western Reserve University

Scholarships, laboratories, faculty support, students

Stephen Zinram, executive director

AKRON COMMUNITY FOUNDATION, Akron 330-376-8522/akroncf.org

$13.8 $20.8

$279.7

$500,000; Conservancy for Cuyahoga Valley National Park

Arts, culture, education, health, civic affairs

John Petures Jr., president, CEO

TIMKEN FOUNDATION OF CANTON, Canton 330-452-1144

$13.0 5 $13.6 5

$339.3 6

$3,000,000; The University of Akron Foundation 7

—

Mark Scheffler, executive director

STARK COMMUNITY FOUNDATION, Canton 330-454-3426/starkcf.org

$12.3 $13.6

$397.1

$500,000; Trinity United Church of Christ

Wide array of charitable causes

Mark Samolczyk, president

NORDSON CORPORATION FOUNDATION, Westlake 440-892-1580/nordson.com

$9.9 $11.4

$37.4

$400,000; Tech Corps

Education, human welfare

Cecilia Render, executive director

THE KELVIN & ELEANOR SMITH FOUNDATION, Pepper Pike 216-591-9111/kesmithfoundation.org

$7.7 $6.7

$218.0

$2,000,000; Greater Cleveland Food Bank

Arts, culture, education, economic development, environment, health

Ellen Stirn Mavec, chairman, president

GAR FOUNDATION, Akron 330-576-2926/garfoundation.org

$7.3 $6.8

$205.0

$500,000; Conservancy for Cuyahoga Valley National Park

Helping Akron become smarter, stronger Christine Mayer, president and more vibrant

MT. SINAI HEALTH FOUNDATION, Cleveland 216-421-5500/mtsinaifoundation.org

$7.0 $7.1

$168.4

$1,725,000; Jewish Federation of Cleveland

Academic medicine/bioscience, urban health, Jewish community, health policy

Mitchell Balk, president

EATON CHARITABLE FUND, Beachwood 440-523-5000/eaton.com

$7.0 $8.0

-- 4

$600,000; United Way of Greater Cleveland

Local interests of Eaton sites

Taras Szmagala Jr., senior VP, public and community affairs

IN HIS STEPS FOUNDATION, Independence 330-528-1785/ihsfound.org

$7.0 $5.8

$51.0

$550,000; CRU

Faith-based

Ben Lee, president

COMMUNITY FOUNDATION OF LORAIN COUNTY, Elyria 440-984-7390/peoplewhocare.org

$6.8 $6.2

$163.0

$732,316

Lorain County community needs

Cynthia Andrews, president, CEO

SAINT LUKE'S FOUNDATION, Cleveland 216-431-8010/saintlukesfoundation.org

$6.8 $7.0 8

$208.7

$475,000; Burten, Bell, Carr Development

Health equity; social determinants of health

Timothy Tramble Sr., president, CEO

BURTON D. MORGAN FOUNDATION, Hudson 330-655-1660/bdmorganfdn.org

$6.7 $4.8

$213.2

$500,000; Kent State University Foundation

Entrepreneurship and entrepreneurship education

Daniel Hampu, CEO

COMMUNITY WEST FOUNDATION, Westlake 440-360-7370/communitywestfoundation.org

$6.6 $7.4

$167.7

$100,000; Greater Cleveland Food Bank

Basic needs

Martin Uhle, president, CEO

MARGARET CLARK MORGAN FOUNDATION, Hudson 330-655-1366/pegsfoundation.org

$5.6 $5.0

$116.7

$1,200,000; Clear Pathways

Mental health, arts, education

Rick Kellar, president, CEO

PARKER-HANNIFIN FOUNDATION, Mayfield Heights 216-896-3000/parker.com

$5.1 $5.8

$10.0

$100,000; Cleveland State University

STEM education, community needs, sustainability

Thomas Williams, chairman, CEO 9

THE YOUNGSTOWN FOUNDATION, Youngstown 330-744-0320/youngstownfoundation.org

$5.1 $1.9

$152.6

$150,000

Unrestricted

Lynnette Forde, president

VEALE FOUNDATION, Pepper Pike 216-255-3205/vealeentrepreneurs.org

$4.9 $10.3

$187.1

$3,800,000; Case Western Reserve University

Arts, education, entrepreneurship, health/human services

Daniel Harrington, chairman

ELISABETH SEVERANCE PRENTISS FOUNDATION, Cleveland 216-222-2760/esprentissfoundation.org

$4.4 10 $4.6 11

$111.9 10

—

Health care

Pamela Alexander, president

COMMUNITY FOUNDATION OF THE MAHONING VALLEY, Youngstown 330-743-5555/cfmv.org

$3.5 $2.4

$96.9

$150,000

All community needs

Shari Harrell, president

REINBERGER FOUNDATION, Orange 216-292-2790/reinbergerfoundation.org

$3.4 $3.0

$85.6

$500,000; Mid Ohio Food Collective

Arts, education and human services

Karen Hooser, president

JOHN HUNTINGTON FUND FOR EDUCATION, Cleveland 216-321-7185/johnhuntingtonfund.org

$3.3 $2.9

$42.9

—

Post-secondary grants in scientific, technical and vocational fields of study

Peter Adams, president

MARTHA HOLDEN JENNINGS FOUNDATION, Cleveland 216-589-5700/mhjf.org

$3.2 $3.2

$86.6

$125,000; Columbus Museum of Art

Support for PK-12 pubic schools

Daniel Keenan, executive director

CHAR AND CHUCK FOWLER FAMILY FOUNDATION, Mayfield Heights 216-906-4578/fowlerfamilyfdn.org

$3.1 $3.4

$27.8

$400,000; Say Yes Cleveland Scholarship

Arts, criminal justice, adolescent and young adult cancers, reproductive health, environment

Holley Fowler Martens, president

EVA L. AND JOSEPH M. BRUENING FOUNDATION, Cleveland 216-621-2632/brueningfoundation.org

$3.1 $2.6

$70.7

$1,000,000; Greater Cleveland Food Bank

Learning and safety net services

Cristin Slesh, consultant

SISTERS OF CHARITY FOUNDATION OF CLEVELAND, Cleveland 216-696-5560/socfcleveland.org

$3.1 $3.1

$104.3

$115,000; YWCA of Greater Cleveland (A Place 4 Me)

Health, homelessness, Catholic sisters, Central neighborhood

Susanna Krey, president

BARBERTON COMMUNITY FOUNDATION, Barberton 330-745-5995/barbertoncf.org

$2.7 $2.9

$94.8

$2,168,400; Barberton City Schools

Education, social services, economic development, community

Suzanne Allen, executive director

JOHN P. MURPHY FOUNDATION, Cleveland 216-623-4770/murphykulas.org

$2.6 $1.0

$61.0

$1,000,000; Cleveland Clinic

Arts, community and higher education

Nancy McCann, president, treasurer

Research by Chuck Soder (csoder@crain.com) | Information is supplied by the foundations unless otherwise noted. NOTES: 1. 2020 figure from Form 990; represents grants paid. 2. 2020 figure from Form 990. 3. 2020 grant from Form 990; represents largest grant paid 4. This foundation is funded primarily on a pass-through basis. 5. From Form 990; represents grants paid. 6. From Form 990. 7. From Form 990; represents largest grant paid. 8. Includes grants recommended through Saint Luke's donor-advised fund at the Cleveland Foundation. 9. Jennifer Parmentier is scheduled to replace Thomas Williams as CEO of Parker Hannifin Corp. on Jan. 1, 2023. 10. Represents grant payments, not new grants awarded; from online meeting minutes. 11. Represents grant payments, not new grants awarded; from annual report.

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LIST ANALYSIS

Foundations say weak stock market, economy could mean fewer grants BY CHUCK SODER

Sure, local foundations gave out more money in 2021, but don’t be surprised if that trend doesn’t continue in 2022. A weak stock market and economic volatility are hurting foundation asset levels and in some cases making it harder to raise donations, according to comments made by organizations on Crain’s annual list ranking Northeast Ohio’s largest grantmaking foundations. Of the 39 foundations on the full digital list, 18 answered an optional, opened-ended question about what trend is having the biggest impact on their organization. Seven of them mentioned the stock market or the lackluster economy. Unprompted, four of those respondents specifically mentioned that those factors could push them to reduce the amount of money they award. One of those respondents was Ben Lee, president of the In His Steps Foundation of Independence. IHS, which supports Christian ministries and other charitable organizations, awarded a record $7 million in grants through 2021, putting it at No. 13 on the list. And the value of assets held by IHS jumped 32% in 2021 on the strength of new donations and investment performance, according to data submitted for the list. But donations have been down in 2022, and the value of IHS’ investment portfolio has declined 17% so far this year, Lee said. And he isn’t the only one seeing declines. “A lot of people are in the same ballpark,” he said. When the economy goes down, foundations are hit with a double whammy. The investment portfolios they use to fund their giving decline in value with the stock market, and donors can be less generous. That’s especially true of donors interested in giving stock and other assets subject to capital gains tax. Those donors are incentivized to make those gifts when their values are high, which lets them

BALLY SPORTS

From Page 5

4. They’re trying to add Guardians games ... but don’t get your hopes up yet. Bally Sports+ did a soft launch this summer in the five regions where it has baseball broadcasting rights: Bally Sports Detroit, Bally Sports Kansas City, Bally Sports Florida, Bally Sports Sun and Bally Sports Wisconsin. Although Bally Sports+ launched at the end of the Guardians’ regular season, the games weren’t available because Bally Sports Ohio doesn’t have the direct-to-consumer streaming rights. When asked if Guardians games will be available next season, Stephens said, “All I can really say is talks are ongoing. Our desire is to have the Guardians as part of the product and we’re having talks with the team and the league. We hope there will be a successful conclusion

avoid getting taxed on the gains and therefore make larger gifts, Lee said, noting that such gifts provide a “meaningful amount of income” for IHS. Granted, growth from 2021 and prior years does give organizations a bit of a buffer. The combined value of assets held by organizations on the list grew by 12.9% in 2021 and by 27.8% over the past two years, judging by data from the organizations that provided Crain’s with consistent data over time. Likewise combined grants awarded grew by 3.3% in 2021 and 14.9% over the past two years. Plus, most foundations average the value of their assets over the prior three years when determining how much money to award, said Laura MacDonald, immediate past chair of the USA Giving Foundation. That prevents the amount of grants awarded from swinging wildly, she said, noting that individual giving moves up and down much more than foundation giving. “It doesn’t experience the highest highs, it doesn’t experience the lowest lows,” said MacDonald, who also is founder of a fundraising consulting firm called Benefactor Group. But Lee noted that pessimism about where the economy is headed could cause foundations — and the donors they rely on — to hold onto their money. “Donors and even foundations can lead with emotion rather than with pure, raw data,” he said. Of course, other issues are on the minds of foundation leaders as well. In response to the open-ended question about what trends are impacting their organization, four mentioned the lingering effects of COVID on those they support, and three mentioned issues related to equality or social justice. The full Excel version of the list is available exclusively to Crain’s Data Members. To learn more, visit CrainsCleveland.com/data. Chuck Soder: csoder@crain.com, (216) 771-5374, @ChuckSoder but we don’t have any updates.” Right now, it doesn’t look good. MLB commissioner Rob Manfred recently told the Sports Business Journal that the league “was digging our feet in” when it comes to streaming rights because Diamond Sports didn’t explain how the digital rights would solve Diamond’s financial problems.” (Diamond Sports Group LLC is a subsidiary of Sinclair Broadcast Group Inc., which owns the Bally Sports regional sports networks.) “Our reaction has been, why tie up additional rights in an entity that by its own admission has financial problems?” Manfred told SBJ. 5. Bally Sports wants to grow the service. In addition to adding more devices — Samsung TV, for instance, could be on the way soon — Allen said the company has a number of items in the pipeline to boost the fan experience, including alternate broadcasts. (Think ESPN2’s “Man-

The city of Cleveland is studying the future of Burke Lakefront Airport, which occupies nearly 450 acres of waterfront property at the northeastern end of downtown. | MICHELLE JARBOE/CRAIN’S CLEVELAND BUSINESS

BURKE

From Page 1

“We have not made a decision to close Burke,” Epstein stressed. The technical complexities of a potential airport closure are part of a study already being conducted by CHA Consulting, which is developing an updated layout plan for Burke to meet Federal Aviation Administration requirements. That study is expected to be complete in early 2023. Officials want to see the separate economic-development analysis by April 28, according to the request for proposals. The city set a Dec. 9 deadline for responses from would-be consultants and a tentative date in early January for picking a team. Burke, which opened in 1947, serves as a reliever airport for the larger, busier Cleveland Hopkins International Airport. It’s also used for flight training, private air-shuttle service and air ambulances, along with the annual Cleveland National Air Show on Labor Day weekend. The airport sits on artificial fill, dirt dredged from the Cuyahoga River in the 1940s and used to create a new shoreline. The former lake bottom

technically belongs to the state and is controlled by the city through submerged lands leases. That complicated structure, both legal and subterranean, makes redevelopment more challenging — though not impossible. Past mayors have talked about the possibility of closing Burke, which has been a subject of debate among planners and developers for decades. But no one has acted. During his campaign for mayor last year, Bibb promised to initiate “an honest conversation” about the airport’s future. The topic came up, yet again, during a recent political forum convened by NAIOP Northern Ohio, the local chapter of a commercial real estate trade group. Chris Ronayne, the Democrat candidate for Cuyahoga County executive, and Lee Weingart, his Republican opponent, both said there needs to be a discussion about whether there’s excess capacity at the Cuyahoga County Airport in Richmond Heights, to accommodate shifting flights around. If Burke does close, Ronayne suggested starting with development along North Marginal Road, at the southern end of the property. The northern part of the site should be a park, with enough space for a large music festival that would capitalize on Cleveland’s place in rock ‘n’ roll history. “I’m so tired of this town not thinking big,” Ronayne said. “I’m so sick of people playing small ball.”

Weingart said he wasn’t going to tell a room full of real estate investors what ought to replace Burke. “You determine what you think should go there,” he said. “My only request is that it be something that generates property tax. … Make it great. Make it big. But make sure it pays for itself.” Ultimately, the decision rests with the city, which is taking a holistic look at the downtown lakefront. The administration is working closely with the Greater Cleveland Partnership, the metropolitan chamber of commerce, to study the feasibility of constructing a land bridge that would link the grassy Malls to North Coast Harbor and the water’s edge. And officials are interviewing consultants who submitted proposals to develop a master plan for the broader North Coast Harbor district. The Burke property is not part of that nascent planning effort. “For too long, we have turned our back on the region’s greatest asset,” Bibb wrote in a letter included in the new request for proposals to study Burke. “Further, the waterfront has been a source for physical, social and racial division in the city. … My belief is that the waterfront can become a source of healing for Cleveland’s communities.” Michelle Jarboe: michelle.jarboe@crain. com, (216) 771-5437, @mjarboe

Give the Gift

of a Legacy

ningcast.”) On mobile and web devices, Bally Sports already offers what it calls “interactive overlays,” which come in the form of trivia and poll questions that are designed to keep Be a part of the viewers involved during lulls in the at the Lone Sailor Monument in Voinovich Bicentennial Park. action and game breaks. “We’ve seen a really good turnout and participation on those features so far,” he said. “About 50% of our2008 2022 2008 2022 2008 2022 users are engaging with these types of overlays. That’s very promising John S. Smith John S. Smith John S. Smith MA1 MA1 and I think we’ll be doing more of MA1 Along with a permanent, publiclyThank you for your service. that to make the overall experience displayed plaque, your gift also includes Thank you for your service even more engaging for the users an official certificate and information and sacrifice to your country. that want that.” about the Honor and Memorial Wall And for the users who just want to to provide to your recipient. watch the game? “We’re not going to interrupt that The Honor and Memorial Wall officially opens September 8, 2023. 2022 2008 2022 2008 2022 viewing experience,” Allen said.2008 “But for our younger demographic, The wall will honor all who are serving and those Warnakulasuriya PUJ Warnakulasuriya PUJ PUJ who is more inclined to lean in and Chaminda Vasshave served who in the military seaWarnakulasuriya services. Chaminda Vass Chaminda Vass MA1 MA1 expect participation, we’ll provide Scan to learn MA1 Thank you for your service. those opportunities.”

Honor and Memorial Wall

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Joe Scalzo: joe.scalzo@crain.com, (216) 771-5256, @JoeScalzo01

www.usscleveland.org Message: 34 Character Max

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more and order Thank you for your service and sacrifice to your country. your plaque Name: 19 Character Max (Top LIne) online: 19 Character Max (Bottom LIne) Message: 79 Character Max3

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METROHEALTH

ro temperatures and brutal winds to the region and burst pipes and flooded rooms to MetroHealth. Over the years, MetroHealth president and CEO Dr. Akram Boutros has recounted sharing with business and civic leaders the story of the polar vortex and hearing that MetroHealth’s hospital was good enough for “those people.” “These statements demonstrated that there was a significant lack of understanding of MetroHealth’s critical role in our community, and they were emblematic of the attitude that some of our neighbors deserved less than others,” Boutros said in prepared remarks for the Glick Center ribbon-cutting. “In a way, we owe thanks to these people. They got us charged up. We were angry and determined to prove them wrong. Quickly, we designed and built two new floors on top of our Emergency Department. And we financed it on our own.” The Critical Care Pavilion, a 100,000-square-foot vertical extension with 85 Intensive Care Unit Rooms above the existing Level I Trauma Center, opened in 2016 as the first piece of MetroHealth’s main campus transformation. The discussions to replace the towers quickly grew to encompass the entire 52-acre campus on West 25th Street, Jones said. Leaders recognized that by nature of the project, the campus would need to be reconfigured and rearranged. That led into discussions of how to best deliver care not as a health and hospital system but as a health and wellness system. “It became more of a catalyst for a much broader community transformation, and that started then getting itself input into the actions of the organization,” Jones said. “First with the recognition of population health, the creation of the Institute for H.O.P.E., the development of our private, community development corporation CCH, and being able now to have a direct impact in terms of elements and the surrounding community.” In collaboration with public, private, nonprofit and civic partners, the CCH Development Corp., formed by MetroHealth aims to accelerate the pace of revitalization of West 25th Street and the surrounding neighborhoods. Jones also pointed to MetroHealth’s Institute for H.O.P.E. (Health, Opportunity, Partnership and Empowerment), which aims to tackle the social drivers of health, and to Via Sana, a health and housing project with 72 affordable apartments, spearheaded by Cleveland-based developer NRP Group in collaboration with MetroHealth. Also part of the campus transformation is what’s known as the Apex building, an outpatient facility expected to be completed in late 2023 with the first patients seen in the first quarter of 2024. The demolition of the current outpatient buildings on campus will follow, allowing space for the full park to open in 2025. MetroHealth anticipates the RFP for park design to go out before the end of the year. “The transformation piece, if you will, started to expand and still continues to expand beyond that,” he said. “And I think that’s really a key thing over my eight years — but you’ve gotta remember it’s Dr. Boutros’ 10 — that you know, that has grown significantly in terms of what the vision, how the vision of MetroHealth, and its role in the community as a corporate citizen in this corner of the Clark Fulton neighborhood has, you know, manifested itself over this period of time.”

From Page 1

“The welcoming nature of it, I think, is the first thing to now greet our families and patients properly in a health care environment,” he said. “To give them a sense that, you’re in a warm receiving space, you’re gonna get good care here. I mean, to the extent the building can communicate that, I think our main entry space starts to do that right off the bat.”

Families and caregivers The hospital took three-and-a-half years to build and is opening on time and “well within” the $767 million budget, Jones said, noting that the total also includes the future demolition of the towers, scheduled for 2024. MetroHealth completed the sale of $946 million in hospital revenue bonds in 2017 to fund the campus transformation. The hospital is named in honor of JoAnn and Bob Glick, who donated $42 million to MetroHealth, the largest gift in the system’s history, to support programs aimed at reversing health inequities and improving community health in Greater Cleveland. The Glick Center’s amenities also include the Nemat K. Boutros Meditation Room, Family Resource Center, Nature Gift Shop, on-site dining and more. The project involved 26 local firms, 10 of which are minority- or women-owned businesses. Turner Construction Co. led construction management, and HGA led design planning, architecture and engineering for the project, while Hammes Co., a health care facilities development company, served as the owner’s rep. The “corner offices” of the patient floors are dedicated to families and caregivers: each have two family spaces for loved ones to take a moment but stay near the patient, and two break rooms with floor-to-ceiling windows. The staff break rooms were deliberate choices and differ from what these spaces have traditionally looked like in hospitals: often internal, without natural light and can “look like they’re leftover spaces,” Jones said. Offering relaxation for staff, many of whom struggle with burnout, is incredibly important, he said, pointing to the wellness rooms that also are in every unit. These are small, carpeted rooms with a reclining chair that offer privacy and a quiet space to relax. They also can be used as a lactation space. “Staff need as much ability to take moments where they can get away, they can decompress, they can exhale, you know, for the moment,” he said. “They realize their duty; they realize what they need to do.” In the center of the units are large conference rooms with glass walls, offering the most convenient way for teams to quickly gather to discuss care, Jones said, noting there are additional meeting spaces with more privacy available. The clear rooms work in the reverse as well, offering families comfort to see that the caregivers are nearby.

Out of the vortex Plans for a new hospital were first announced in 2014, a few months after the aging infrastructure of the old facility was put to the test — and failed. A polar vortex delivered subze-

The sleek interior and exterior spaces of the MetroHealth Glick Center stand in stark contrast to the antiquated towers they were designed to replace, with a focus on comfort for families, caregivers and staff. | PHOTOS COURTESY OF HGA/NIC LEHOUX ARCHITECTURAL PHOTOGRAPHY

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

36 | CRAIN’S CLEVELAND BUSINESS | NOVEMBER 7, 2022

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THE WEEK

AKRON

Stow’s Binary Defense raises $36 million in private equity BY DAN SHINGLER

UBIZ Venture Capital, in partnership with the Urban League of Greater Cleveland, last week held the Business Legacy Award Reception at Rocket Mortgage FieldHouse and launched the Business Growth Institute. | CONTRIBUTED

TO THEIR CREDIT: Two Cleveland-based community development organizations collectively nabbed $80 million in federal tax credits to support investments in low-income neighborhoods. The U.S. Treasury Department awarded $35 million in sought-after New Markets Tax Credits to an affiliate of Cleveland Development Advisors and $45 million to the Northeast Ohio Development Fund. The awards were part of roughly $5 billion in tax-credit allocations that Treasury officials announced. The New Markets Tax Credit program offers taxpayers an avenue to offset their federal income-tax liabilities by investing in certified community development entities. Those entities, in turn, put the money they raise into projects — real estate, growing businesses or community-centric facilities — in economically distressed areas. Nearly 200 such community development entities applied for a combined $14.7 billion in tax-credit allocation in the recent round, according to the Treasury Department. Organizations based in Ohio secured $230 million in awards, or 4.6% of the total pool. BANK ON IT: Regional banks continue to hike their best lending rates for business clients in line with the Fed lifting its benchmark interest rate in an ongoing battle to rein in surging levels of inflation. Major regional banks in Northeast Ohio have raised their prime, base lending rates following the Federal Reserve’s decision Wednesday, Nov. 2, to lift its benchmark interest rate for the sixth time this year and the sixth time since cutting rates to zero in March 2020. Those prime rates are primarily used as a reference point for pricing some loans. In a repeat from the July and September rate hikes, the Fed’s latest action lifted

DEI

From Page 9

Finally, the key to having a broader community impact and increasing DEI in the business ranks is developing true partnerships with small, local, diverse firms looking to grow and compete for projects. This work is a two-way street and cannot be about checking a box or meeting a quota. Contracting with diverse

interest rates another 75 basis points to a range of 3.75% to 4%, its highest level since 2008. NEW LEADER: Big 4 accounting firm Deloitte has named one of its longtime tax partners, Fiona Chambers, the company’s new Northeast Ohio managing partner effective Jan. 2, 2023. Chambers will succeed Paul Wellener, a principal with Deloitte Consulting, who was appointed to the regional leadership post in 2016. Wellener is remaining with the firm and will continue to lead its U.S. industrial products and construction group. With this new title, Chambers will be responsible for Deloitte’s strategy, business development, corporate citizenship and other strategic initiatives in the region. Deloitte’s Northeast Ohio operations represent 586 employees, including 128 CPAs. That ranks the company as the fourth-largest accounting firm in the regional market, according to Crain’s research.

KEEP DEALING: Real estate software producer MRI Software of Solon is growing again internationally with the acquisition of a company that is publicly traded on the Australian Stock Exchange. MRI Software on Monday, Oct. 31, announced it has agreed to buy PropTech Group Limited for an estimated 93.4 million Australian dollars, which is about $60 million U.S. PropTech Group is an operator and investor in real estate software companies, primarily in Australia, New Zealand and the United Kingdom. It has about 100 employees, an MRI Software spokeswoman said in an email. MRI Software at present has about 3,300 employees worldwide. Due process to complete the deal is expected to take “a few months,” MRI Software said.

FOCUSED ON GROWTH: Align Capital Partners closed its third private equity investment fund, Align Capital Partners Fund III LP, at $620 million, 12.7% higher than its target size of $550 million. Align raised its latest oversubscribed fund in just two months. That’s noteworthy considering a tougher macroeconomic environment is leading to generally longer fundraising cycles, according to research firm Preqin. At the same time, investors in private equity funds have been showing a preference for re-upping with existing fund managers rather than new ones. Align’s previous fund closed at $450 million — 12.5% higher than its $400 million target — in 2020. In total, Align has raised about $1.4 billion in capital since 2016, when it was founded by a trio of principals who splintered off from The Riverside Co.

BOOSTING THE COMMUNITY: UBIZ Venture Capital, in partnership with the Urban League of Greater Cleveland, announced the launch of the Business Growth Institute, which set a goal to “sustain legacy Black businesses in our community.” UBIZ and the Urban League said the Business Growth Institute will help “develop more Black-owned businesses in highgrowth sectors, such as renewable energy, software development and advanced manufacturing with the potential to generate $1 million in revenue or more each year.” UBIZ provides counseling, technical assistance and loans to Black- and minority-owned businesses with high growth potential that are having difficulty securing capital. JPMorgan Chase is providing $500,000 in funding for the institute. KeyBank also invested $100,000 to launch the institute, in addition to its ongoing support of UBIZ’s economic development efforts.

partners should be an opportunity to grow together. Gilbane brings this business approach to life through our Rising Contractor Program, which offers educational sessions, on-the-job training and mentoring of diverse firms. We aim to help them build critical capacity to take on more significant projects and gain the business acumen and experience they need to be competitive and grow their business. This approach helps

Gilbane be more competitive with a deeper bench of partners who can help us achieve our customers’ goals. None of this work should be done as a standalone project. Instead, this is a framework for a business strategy — for doing well by doing good. This strategy led to Gilbane’s commitment to award $4 billion in contracts to diverse businesses nationwide over the next five years. And we think that’s a great example of doing well by doing good.

Stow’s Binary Defense cybersecurity firm has completed its first fundraising effort, bringing in $36 million that the company says will enable it to take advantage of market conditions that are providing a tailwind to its business. “We decided now was the right time to take in a great partner and accelerate our growth,” said Binary Defense co-founder and chief hacking officer David Kennedy. The partner is Invictus Growth Partners, a San Francisco private equity firm with a reported $3.1 billion invested in 64 companies and what Kennedy and Binary Defense CEO Bob Meindl said is an established expertise in cybersecurity. “Invictus Growth has their own machine learning engine, which is how they found us,” Kennedy said. “We’ll be able to leverage that and their machine learning scientists … we’ll also see how we can apply machine learning to our solutions set as well.” The new capital was a bit more than Binary Defense set out to raise, but the company was willing to sell a bit more equity to Invictus than it might have offered to others, and the deal leaves Kennedy and co-founder Mike Valentine as majority owners, Meindl said. Binary Defense will use the new capital to expand its sales and marketing efforts and to expand its offerings and development of new products, especially in the growing market for what’s known as managed extended detection response, or managed XDR, Kennedy and Meindl said. Managed XDR entails using an off-site partner, such as Binary Defense, to monitor a company’s IT systems for potential threats such as ransomware; analyze the threats; and make them go away before causing harm.

CRAIN’S CLEVELAND BUSINESS

“We become an outsourced supplier, sort of like an ADT,” Meindl said. “We manage and look at all sorts of alerts and alarms and make determinations of which alerts and alarms are real … then we stop it and address it.” The market for managed XDR is estimated to be about $2.5 billion annually today, but is expected to more than double to $5.6 billion in just the next three years, Meindl said. It’s being driven by an ever-increasing number of cyberthreats, often from criminal organizations whose tools are as sophisticated as those used by law enforcement — and at a time when there are fewer cybersecurity experts to hire, Kennedy said. Binary Defense, recognizing those trends, had already been transitioning to offer more managed XDR and similar services, but will do so faster now. “We’re right in the sweet spot of one of the hottest areas of cybersecurity, and this funding will really help us with the transformation we already had underway,” Meindl said. Binary Defense had already grown significantly since Kennedy and Valentine founded it in 2014. It’s grown to 150 employees already, though this is its first time raising outside money. “We bootstrapped everything until now,” Kennedy said. “It literally started in the basement of my house after I left a job at Diebold as chief security officer.” It will now grow bigger, as the company plans to devote much of its new capital to hiring new people and expanding the skills of existing employees. “I would say over the next year we’ll add about 50 people,” said Meindl. Dan Shingler: dshingler@crain.com, (216) 771-5290

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JOURNAL

From Page 1

impossible for us to redevelop,” said Mouron, founder of Capstone Development in Birmingham, Alabama, who bought the building in 2020 for $1.2 million. Mouron originally hoped to move an office tenant into the building. He said he had identified a large company that was looking to move to downtown Akron when he bought the building. Mouron said that prospective tenant — reportedly FedEx Custom Critical, though he declined to name it — balked at the move during the COVID-19 pandemic. Efforts to entice the potential tenant back failed; the

tenant said recent protests downtown over the June police killing of Jayland Walker played a role in the decision, Mouron said. “We had a beautiful design for that, but we couldn’t entice them to move downtown. I think part of it was the problems downtown — the riots,” he said. On top of that, the market for office properties in Akron and other cities has remained soft as many workers who once drove to downtown offices continue to work from home. Mouron briefly considered converting the building to apartments, but said he quickly realized that would not work because of the way the purpose-built structure was designed, with thick floors and a deep interior. “The building is far too deep to do

effective residential. You’ve got too much space that is too far away from an exterior wall,” Mouron said. Building codes don’t even allow the construction of interior apartments with no windows — not that such units would likely be attractive to renters to begin with, he said. Mouron also had hoped that the city would move the Akron Police Department into the building, but he said he has not made progress on that front, either. “I very much wish it was on the table, but no, there’s been no outreach from the city on that,” Mouron said. “I received a very short letter from the mayor saying they decided they were going in a different direction. But I’m not sure I understand why.” He also asked the Knight Founda-

PEOPLE ON THE MOVE

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Ahola Payroll & HR Solutions

BDO USA, LLP has named Thomas Kerr an Assurance Partner in the firm’s Financial Institutions & Specialty Finance practice. Kerr provides audit and advisory services to public and private companies in the financial services industry including global banks, broker-dealers, venture capital funds, and fintech firms. He has advised financial institutions, private equity funds, mortgage servicers and companies across a diverse range of industries, both domestically and internationally.

John Carroll University welcomes seasoned non-profit executive Ryan Daly ‘99, ‘12G as Vice President for University Advancement. Daly returns to JCU following 10 years as a development executive at Beaumont Health, Michigan’s largest healthcare system. At Beaumont, he was a member of the Foundation team that raised more than $370 million since 2012 in support of patient care. Daly will lead the Advancement, Development, and Alumni teams at JCU.

Ahola Payroll & HR Solutions is pleased to announce that Craig Slimmer has joined our team as Vice President of Sales. Craig will lead the sales organization in its aggressive growth and expansion plans across the region. Craig has successfully led numerous sales organizations in the financial services industry and has over 25 years of sales management experience.

LAW

Brouse McDowell, LPA Brouse is pleased to welcome James E. Ickes and Joel A. Holt as new additions to our Litigation and Business Transactions & Corporate Counseling Ickes Practice Groups, respectively. James (Jim) Ickes joins Brouse McDowell’s Akron office as Counsel with more than 20 years of experience in federal and state courts in the areas of business litigation and high-conflict divorce. He is also a Health Care Holt Information Security & Privacy Practitioner (HCISPP). Joel Holt joins Brouse McDowell’s Akron office as Counsel as an experienced and accomplished attorney concentrating his practice in the areas of business law, civil litigation, cannabis/hemp law, and information security and privacy.

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tion to consider buying the building, thinking it might be a good fit, given that the Knight family once owned the Beacon Journal and made a good part of its fortune there. That also hasn’t worked. Knight Foundation Akron program director Kyle Kutuchief said the foundation isn’t in the business of buying real estate and doesn’t have a mechanism to fund developments directly. “The developer and the city are going to have to make those decisions,” Kutuchief said. Left with few options, Mouron said he was approached by his son, Christopher Mouron, who offered to buy the building. He planned to tear it down and use the site as parking for his own project, The Standard, a 200-plus unit apartment building that was formerly student housing, known as 22 Exchange. Michael Mouron said that wasn’t his first choice. He’s a proponent of preservation, and he said some of his company’s best developments have involved preserving historic buildings. But he felt it was his best option when he went to the city seeking permission to tear the building down. He needs that permission because the city has designated the building as a historic landmark, which makes it eligible for certain tax credits but also limits what can be done with the structure. Akron planning and urban development director Jason Segedy said the city’s Urban Design and Historic Preservation Commission on Oct. 18 considered and denied the request to demolish the building. “Our recommendation was no,” Segedy said. “We truly don’t feel that it meets the requirements. ... One of those is that it’s a real economic hardship because the building can’t be reused. We don’t think they’re there yet.” Things between the city and Mouron have remained on friendly

terms. Mouron said he felt he got a fair hearing before the commission, and Segedy said he and other commission members thought Mouron was acting in good faith and trying to both save the building and cooperate with the city. “To his credit, he asked for 90 days,” Segedy said. “They want to try to find a new developer or some commitment to reuse the building. Our commitment to them was that we would redouble our efforts to help them.” So, while the building is on the market, the city will examine possible uses for it and will work to help Mouron find a buyer, a tenant or another developer who has a plan for the building. That will include the city working directly with Mouron through its economic development staff and also making introductions to development entities such as JobsOhio and Team NEO, Segedy said. If none of that works, Segedy and Mouron said the next step would likely be to take the matter to city council to see if it wants to approve a demolition. But, even if that happens, Segedy said he hopes at least some of the older parts of the building can be preserved. “We’re open to a demolition plan that would tear down part of the building,” Segedy said. “For example, there’s part of the building that was put up in the ‘80s. Then the 1929 portion, the older portion, would be saved.” That might not leave the city and Mouron too far apart. Mouron already has proposed keeping the building’s iconic clock tower in place, possibly with a small pocket park built at its base. But for now, at least, the city hopes the building can be saved. So does Mouron. “I’m frustrated,” he said. “I’ve never had to tear down a historic building.” Dan Shingler: dshingler@crain. com, (216) 771-5290

STAFFING / SERVICES

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Fortress SRM Fortress Security Risk Management is pleased to welcome Shawn Newman as Deputy Chief Information Security Officer. Shawn is an engineer, accountant, and life-long learner that brings over 2 decades of cyber warfare experience and expertise to the Fortress team. His key focus is to assess cyber threats and leverage new and emerging technologies to ensure protection and success for Fortress clients.

The Akron Beacon Journal building in downtown Akron. | SHANE WYNN/AKRONSTOCK

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