Crain's Cleveland Business

VOL. 39, NO. 14

APRIL 2 - 8, 2018

Source Lunch

Akron Downtown real estate market is gaining momentum. Page 20

Jason Scales, business manager, education, Lincoln Electric Page 23

CLEVELAND BUSINESS

HIGHER EDUCATION

The List Largest commercial contractors Page 18 GOVERNMENT

Third time’s a charm? Akron hopes so Zones are

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

At this point, the University of Akron is no stranger to presidential searches.

Soon, the university will have to begin its third search in five years, following the announcement that Mat-

thew J. Wilson would step down after about two years in the job, having started the role as interim president in July 2016. He plans to remain at the helm through the end of July and then will rejoin the School of Law’s faculty.

Before Wilson was Scott L. Scarborough, whose tumultuous two-year tenure included several sweeping changes, namely an often-derided rebranding and steep budget cuts.

Wilson instituted a number of changes of his own, but the biggest headlines were those designed to appeal to students, like a new esports program or the near-elimination of Friday classes. That’s why it came as a bit of surprise to those in the community when the University of Central Florida named Wilson a finalist for its top job less than six months after Akron bumped up his pay and

extended his contract through 2023.

Wilson didn’t get the Central Florida gig, but soon thereafter chose to step down from the presidency at Akron, citing in a letter to the campus community “a host of personal and family considerations.”

Ultimately, the University of Akron has been in flux since Luis Proenza left in 2014 after 15 years at the helm.

SEE AKRON, PAGE 21

producing mixed reactions Optimists see move as investment spark

By JAY MILLER

SPORTS BUSINESS

OPENING WEEK: WAIT UNTIL THIS YEAR

INSIDE As big contracts loom, 2018 is key for Tribe. Page 10 Ballpark work pays dividends for Indians. Page 12 The Indians started the season as a World Series favorite and expected division champ.

(Jamie Squire/Getty Images) Entire contents © 2018 by Crain Communications Inc.

Cavs esports team enters ‘Real World.’ Page 16

jmiller@crain.com @millerjh

The recommendation late last month by Gov. John Kasich of 108 Northeast Ohio census tracts to be designated federal Opportunity Zones has generated both enthusiasm and disappointment among Northeast Ohio public officials and development professionals.

Opportunity Zones (OZ) are the latest wrinkle in tax incentives designed to stimulate economic development in low-income urban neighborhoods and rural communities that have difficulty attracting capital to grow their economies. They follow programs such as the federal New Market Tax Credit program, state and federal historic tax credit programs and the federal Enterprise Zone program.

The governor forwarded his recommendations to the U.S. Treasury Department, which is expected to officially certify tracts as Opportunity Zones later this month. A total of 320 zones statewide were in Kasich’s recommendation.

Once that happens, and regulations are published, new development opportunities, many hope, will open up.

There is optimism within the development community since several earlier targeted investment programs have proven to stimulate investment.

Investors in projects such as the University Hospitals Rainbow Center for Women & Children, in Cleveland’s Midtown; the Charter Steel Co. expansion in Cuyahoga Heights; and the transformation of the United Building in downtown Akron into a hotel have all benefited from tax credits.

There is hope that the OZ program will be as successful, in part because it is not as limiting as the tax credit programs, which focused on real estate development and redevelopment.

But most observers believe it is too early to tell how attractive an investment vehicle the OZ program will be.

The program was created in the recently passed Tax Cuts and Jobs Act of 2017 and implementing regulations aren’t expected until later this spring.

SEE ZONES, PAGE 21

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CRAIN’S CLEVELAND BUSINESS

Canadian, German firms hike DDR stakes

In

By STAN BULLARD

By S

sbullard@crain.com @CrainRltywriter

As retail woes and management turnover roiled DDR Corp. over the past year, acquisition-minded investor Brookfield Asset Management of Canada and Germany’s Alexander Otto family, which controls a massive European shopping center empire, have taken vastly increased stakes in the Beachwood realty firm.

Brookfield — known as an opportunistic investor that recently took control of Chicago-based General Growth Properties Corp. and was a rumored suitor for Forest City Realty Trust before the Cleveland company on March 23 announced plans to remain independent — has upped its stake in DDR to 12.8 million shares

by Dec. 31, 2017, according to a Feb. 15 filing with the U.S. Securities and Exchange Commission. Its stake a year earlier was 1.9 million shares.

With ownership of 3.5% of shares outstanding, Brookfield now ranks as DDR’s fourth-largest institutional shareholder, according to the Edgar Pro website, following Vanguard Group Inc., Blackrock Inc. and Goldman Sachs Group.

Meanwhile, Otto, who took a seat on DDR’s board in 2015 and has had a right to appoint another shareholder since a $100 million infusion into the company in 2010, and his family through a series of purchases this year increased their stake in the company by $4.6 million. They have made

nine open market trades since Feb. 21, according to SEC filings, as DDR’s stock fell near record lows of around $7 a share.

All told, Otto upped its stake in DDR to 51.8 million shares as of March 28 from 47 million shares on Feb. 21.

Counting investments by Otto, family members and staff, its stake in DDR totals 63.9 million shares, or 17.3% of the company. By contrast, other board members and executive insiders hold a total of just 1.2 million shares of the company, or less than 0.5%, according to SEC filings.

DDR does not comment on media inquiries. Brookfield and Otto spokespeople declined to comment on the investments.

Experts see different motives by both groups of investors, although both share a more global view of real estate and a longer time horizon than typical U.S. property players in public markets.

Rich Moore, a longtime former stock analyst who specialized in real estate investment trusts, said he believes Brookfield and perhaps Otto have wanted to gain not just holdings in U.S. real estate, but platforms for broader investment in the sector, which Brookfield began to gain with the GGP deal.

He said it’s likely Brookfield will continue to accumulate vast U.S. retail holdings. It’s strikingly similar to Brookfield’s 2015 takeover of Richmond Heights-based Associated Estates Realty Corp., whose assets were folded into its larger Fairfield Residential portfolio.

In Otto’s case, if the original invest-

“If (Otto) was not happy with what he sees at the company, he certainly would not be buying more of it.”

— Chris Kuiper, REIT analyst at CFRA Research

DDR Corp.’s headquarters is at 3333 RIchmond Road in Beachwood. (CoStar)

ment was a good deal, plowing more money into DDR only makes sense, Moore said.

Chris Kuiper, REIT analyst at CFRA Research, views the climbing Brookfield stake simply as an indication that it sees value in the DDR portfolio of about 300 shopping centers, despite the drubbing the stock’s share price has taken. Conversely, Otto’s rising stake is nothing but a plus.

Increased insider buying is universally viewed as a sign of confidence in a company’s future despite the current stock market.

“If (Otto) was not happy with what he sees at the company, he certainly would not be buying more of it,” Kuiper said.

DDR took an unfair amount of media criticism following the bankruptcy and closing of the Toys R Us chain,

where going-out-of-business sales have started, Kuiper said. He pointed out that DDR had the second-highest number of the stores among public companies, but the retailer accounted for little more than 1% of DDR’s annual rental income.

“People forget many of those stores are owned by private investors.

DDR can slice one of the stores up to serve two or three smaller retailers and secure higher rents than the toy store paid,” Kuiper said.

DDR’s current management, under CEO David Lukes, has been silent on the impact of Toys R Us on the company, a dramatic difference to prior management of the company.

“It will be interesting to hear what Lukes says about Toys R Us at its next conference call with analysts after it announces its next results,” Kuiper said.

TM

TEC H W EEK

Meantime, the Lukes team at DDR has continued to make progress on plans to divide the company into twos: one comprised of about 50 assets it plans to sell, and the other the nearly 250-center remainder of its portfolio seen as a growth play through improving or diversifying the assets.

DDR announced Feb. 14 it had put in place a $1.35 billion loan from a Credit Suisse affiliate on the 50 centers it intends to spin off into a new company.

Kuiper said that means DDR, which will continue to manage the spinoff, will not have to rush to sell the properties and can take time to secure strong prices for them. The spinoff is expected by late summer if the SEC approves the move.

For his part, Kuiper is more excited to see what Lukes, who has a deep real estate operational background, can do to find growth opportunities within the bulk of DDR’s portfolio. It’s still too soon to pass judgment on the direction that Lukes and two managers he brought with him are taking DDR in, Kuiper said. Lukes, when he took over 13 months ago, became DDR’s fourth CEO in five years.

Moore said he sees another story rising from increasing stakes by the likes of retail realty pros such as Brookstone and Otto.

“Yes, Toys R Us is closing. But retailers are always closing,” Moore said. “Perhaps REIT stocks such as DDR are so beaten down that the market will turn around and start to see them as a good value and they will start to rise.”

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CRAIN’S CLEVELAND BUSINESS

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PA G E 3

Independence lands medical technology firm

By STAN BULLARD sbullard@crain.com @CrainRltywriter

Great Lakes NeuroTechnologies, a medical technology company, plans to move to 6100 Rockside Woods Blvd. in Independence to get room to grow, although it will occupy less space than it will leave in Valley View.

Dustin Heldman, vice president and chief operating officer of Great Lakes NeuroTechnologies, said the company has leased 7,500 square feet on the fourth floor of the building. That’s about 25% less space than the 10,000 square feet it occupies on

Sweet Valley Drive, but the design will be more efficient.

“We’ll double the amount of space we have for assembling products but occupy less square footage as a whole,” Heldman said, because the new office is being designed for its current needs and will include an open-office format.

Although Heldman would not say how much the firm will pay to rent space on the top floor of the building where Vox Mobile has substantial signage, the renovation of the office to its requirements is in progress, and the company will be in place in July. He said the company looked at locations in other suburbs and downtown, but

opted for the Rockside Woods building because it’s near its current building and is centrally located for staffers who commute from throughout the region.

Great Lakes NeuroTechnologies will move 16 staffers and a payroll of about $1 million to Independence, and the company expects to grow payroll to $1.6 million in three years.

The suburb provided a $35,000 grant to Great Lakes NeuroTechnologies because of the payroll it will add in Independence. The grant is designed to help defray moving expenses, Jeremy Rowan, Independence economic development director, told Independence City Council on March 13, when council adopted legislation

to provide the incentive, according to online minutes of the meeting.

Heldman said the incentive is important to the company, which was spun off from Cleveland Medical Devices in 2010. The company assembles circuit boards manufactured elsewhere for its products in spaces meeting FDA standards for medical devices.

Independence Mayor Anthony Togliatti said the city has used the relocation grant several times as part of a policy of matching incentives to the needs and size of companies looking at moving to the city. He said he’s excited about gaining Great Lakes NeuroTechnologies at an early stage in its growth cycle.

“It has great growth potential,” the mayor said. “It’s a great addition to the portfolio of businesses in Independence.”

The bioinstrumentation firm is marketing two products.

One is BioRadio, a wireless body monitor that can record brain waves and heart signals used by educators and researchers. The other is called Kinesia, which uses a motion sensor and apps on smartphones and tablets to wirelessly allow doctors to monitor the symptoms of patients with Parkinson’s disease. The company holds more than 20 patents.

Heldman declined to disclose the firm’s revenues.

Empty Cleveland supermarket is target of $14M project

By STAN BULLARD sbullard@crain.com @CrainRltywriter

A Los Angeles-based real estate developer hopes to undertake a $14 million plan to remake a shuttered Giant Eagle store on Cleveland’s West Side as a self-storage center with an additional retail building fronting Lorain Avenue.

The 57,000-square-foot former supermarket at 13820 Lorain Ave., empty since 2016, would double in size with the addition of a second floor, according to plans that Dealpoint Merrill submitted and that Cleveland City Planning Commission approved on Feb. 16.

However, whether the plan proceeds will be decided at a Cleveland Board of Zoning Appeals meeting scheduled for Monday, April 2. At that time, the developer will seek several technical variances needed for the project.

Councilman Brian Kazy, whose Ward 16 includes the site, said he’s sure the variances will be approved and that the project will proceed. He views it as making the best of a bad situation. Another grocer was willing to go into the supermarket when it was closed in 2016, but Pittsburgh-based Giant Eagle refused to deal with the company, Kazy said.

“The dirty bird is known to let properties sit empty for years,” Kazy

said. “While a proposed Cube Smart is good only for Cube Smart, Dealpoint has agreed to simultaneously develop a 7,000-square-foot retail building on the Lorain frontage so it will create some jobs.”

The second building would make use of the large parking lot in front of the building that would otherwise have to be converted to green space under city codes, Kazy said.

CubeSmart is a Malvern, Pa.-based public company that owns more than 400 self-storage centers and operates thousands more across the United States. Dealpoint develops properties then sold or leased to Cube Smart. It’s undertaking such a project at the former Macy’s store in Rich-

mond Heights.

Dealpoint Merrill’s spokeswoman declined to discuss the Lorain Avenue venture in an email response to questions from Crain’s Cleveland Business.

Dealpoint is pursuing a strategy nationally of converting former bigbox properties to miniwarehouse operations through an alliance with CubeSmart, according to its website.

Dealpoint Merrill and CubeSmart have developed more than 10,000 such units through the years.

Ken Fisher, a Cleveland lawyer representing Dealpoint Merrill, said the project would start construction this summer if the board approves the variances, as he also expects. He

said that three storage buildings will be built behind the Giant Eagle store in the plan. The remade supermarket would offer climate-controlled storage.

Fisher said Dealpoint has a contract in place with Giant Eagle, which holds the property through an affiliate, to purchase the site.

Self-storage operations have been in an expansion phase in the region, partially because expanded apartment development creates additional storage needs, and small businesses frequently rent space in the centers. New and expanded centers have been put in by different operators in Westlake, Lakewood and Warrensville Heights.

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Matt Kiene, co-owner of Medina’s Lager Heads Brewery, figured spring 2018 would be an ideal time to package its beer in cans instead of bottles.

Kiene was seeing some slight increases in the cost of glass, but consumer and brewer preferences have been shifting toward cans in recent years anyway. They’re more portable for drinkers. And for brewers, the aluminum containers are better at protecting beer from light and air.

This March, though, President Donald Trump’s administration decided to pursue tariffs on aluminum and steel. The reasoning there, Trump has said, is that imports threaten the longterm viability of steel and aluminum makers in the U.S. If more plants in the country close, that could present a national security issue because the domestic industry wouldn’t be able to meet demands for steel and aluminum in an emergency.

Those actions are raising questions about how tariffs could affect U.S manufacturers, including craft brewers.

“We’re a little disappointed that our can price might go up,” said Kiene, who’s working with a mobile canning service, Iron Heart Canning, to release 11 Lager Head beer styles in the aluminum vessels. “At the end of the day, you’re going to have to take it on the chin somewhere.”

For narrow-margin small businesses that fuel the growing industry of craft beer, those tariffs are likely to saddle brewers with unanticipated costs that could hinder innovation and growth potential at a time when the field is becoming only more competitive even if some of that cost is passed on to consumers at shelves and taps.

“It’s definitely a big deal. Any time there’s an unplanned raw material price increase for small business, it’s tough to bear,” said Bob Pease, president and CEO of the Brewers Association trade group, in an interview with Crain’s.

Exactly how big of a deal is up for debate so far. For one, there’s a lot of uncertainty over whether the tariffs will actually be imposed, what countries will be affected and to what extent.

In recent weeks, the administration has said Canada and Mexico would be exempt from the 25% tariffs on steel and 10% tariffs on aluminum. That’s a dull silver lining for a U.S. brewing sector that happens to get the bulk of its bottle caps from Canada.

But suppliers to the craft beer industry are already talking about raising prices, Pease said. The pulse is that tariffs on aluminum could amount to a one-cent increase per can. And while that seems objectively small, the costs add up for a volume-driven industry.

If a brewery buys a quarter-million cans, that’s another $10,000 of cost.

“We don’t know any legislator that’s really in favor of this,” Pease said, noting the trade group is working with lawmakers to keep tariffs from applying to sheet aluminum from which cans are made. “It’s curious to us that small and independent craft brewers are a growth segment for America’s economy. Why the administration wants to put a burden on them like this is a bit beyond us.”

Lager Heads Brewery is releasing 11 beer styles in aluminum cans.

(Contributed photo)

“It’s going to raise costs and slow innovation that has made the craft brewing industry in Ohio the most vibrant point it’s been in (recent) history.”

— Acacia Brush Perko, Reminger attorney

The Beer Institute, a national trade association and one of several with which the Brewers Association is working closely, condemned the tariffs in March. Citing third-party analyses, the group said the 10% aluminum tariff alone will amount to a $347.7 million tax on the beverage industry overall and cost 20,291 jobs.

Of course, those numbers would most greatly impact Big Beer. According to new data released in March from the Brewers Association, the craft beer industry composes an ever-growing sector of all beer sales, but still just 12.7% of it in terms of total volume (up from 12.1% in 2016).

Large companies, though, simply have the scale to spread out those costs that are more difficult to offset for small businesses.

“This is the type of thing that will get passed on to the beer drinker,” Pease said. “And for our members, who operate on small, slim margins, any unbudgeted or unplanned expense can really throw a wrench into operations.”

Meanwhile, it seems finished steel products, like beer kegs, are not subject to the tariffs. It’s another dull silver lining.

But most brewing equipment comes from overseas. Cheaper pieces tend to come from China. But more premium systems come from European countries, like Germany.

“If you are doing a brewery expansion, or looking to increase size or build a new brewery, and you’re faced with the price of steel being increased by 25%, that’s going to stifle growth,” Pease said. “Do we know exactly what’s going to happen? No. You can’t say steel prices across the

board are going up 25%. But if it were to happen, it could have a chilling effect on new brewery builds and brewery expansions.”

In Ohio specifically, there are 265 active breweries today and an estimated 100 or so more in planning stages, according to the Ohio Craft Brewers Association. That’s the most activity in craft beer since Prohibition, said OCBA spokesman Justin Hemminger.

“This is something that we’re monitoring and actively opposed to,” Hemminger said. “These tariffs are bad for small business, like breweries and brewery equipment manufacturers, and it’s just kind of a bad thing for a growing part of the economy to stifle growth like that.”

“There is some concern with this,” said Acacia Brush Perko, an attorney with Cleveland-based law firm Reminger, which is an allied member of the OCBA. “It’s going to raise costs and slow innovation that has made the craft brewing industry in Ohio the most vibrant point it’s been in (recent) history.”

Matt Cole, co-owner of Fat Heads Brewery, which is building a destination beer hall and brewery mothership in Middleburg Heights in a $13 million expansion, said the tariffs could “affect us in massive ways.”

Fat Head’s leases kegs, and Cole said he’s expecting fees for those to increase. Even though finished steel might be exempt from the tariffs, the costs for raw materials for U.S. keg manufacturers could still be affected.

There’s also a possibility that domestic manufacturers could increase prices some in light of the tariffs because they could charge more and still undercut costs of goods from overseas.

“So what do we do there? It’s going to go from vendors to packaging to producers. It’s going to trickle all the way through to the consumer,” Cole said. “Beer prices will be affected by this.”

If the brewery were planning its expansion of its production facility today — it’s nearing the end of the project and expecting an opening later this spring — “we would’ve had to look at things a little differently with an increase in steel.”

Despite room for craft beer to claim more market share from Big Beer, the rise in the number of breweries means more competition all the same. Many brewers have been keeping prices relatively flat at retail shelves because of that. And Cole expressed concern that passing on prices to consumers, even slightly, could hamper sales.

The tariffs come just months after the passage of the Craft Beverage Modernization and Tax Reform Act, something the Brewers Association had been working on for a decade, Pease said. A feature of that bill effectively cuts the excise tax for craft brewers in half.

“Basically, all the hard work that went into that just went out the window,” Cole said. “It’s frustrating. We won one battle and lost another, basically.”

Whether the tariffs actually equate to a wash of those tax savings is hard to say at this point. The smallest breweries are more likely to see the effects of tax savings negated, though.

“That excise tax was a big step forward,” Pease said. “And the tariffs are at least a half-step backward.”

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With the Trump administration acting to squeeze China on trade, U.S. governors and mayors are delivering a different message to Chinese businesses looking to invest: Bring it on.

Making trips to China and setting up liaison offices in the country, officials aim to position their states, cities and towns as desirable destinations for Chinese companies looking to invest and operate overseas.

“We are not shy about talking about our relationship with China,” said Mike Preston, executive director of the Arkansas Economic Development Commission, in a March 16 phone interview. Since Governor Asa Hutchinson, a Republican, took office in 2015, “we decided to really target China and try to bring more investments from China,” Preston said.

The outreach continues as President Donald Trump imposed sweeping trade tariffs on March 22, against China, saying as he signed the order, “This is the first of many.” He also directed Treasury Secretary Steven Mnuchin to propose new investment restrictions on Chinese companies. In the past year, multiple acquisitions of American companies by Chinese buyers have been either blocked or abandoned following opposition from the Committee on Foreign Investment in the U.S. on national security grounds.

When the federal government is taking a “massive step backwards” in free trade, “cities and mayors have an important role to play in keeping America open to business and attracting investments that inject dollars and energy and jobs,” said Christopher Cabaldon, mayor of West Sacramento, Calif.

Several people interviewed for this article spoke before the tariff details were announced. Cabaldon’s office said his remarks still stand.

“Smart governors are taking their economic future into their own hands,” said Nancy McLernon, president of the Organization for International Investment, a lobbying group for foreign companies operating in

the U.S. They “are out there reassuring companies that are already invested in their states, and their open investment policy statements are very impactful,” she said.

$2 billion Shandong Ruyi, a Chinese apparel producer, announced in 2017 that it would open a factory in Forrest City, Ark., and create as many as 800 jobs, according to the Arkansas Economic Development Commission. As incentives, the state will provide tax benefits and cash rebates.

In the past three years, according to the commission, Arkansas went from having no investments from China to securing more than $2 billion through commitments from Chinese firms in textile, paper and heavy equipment sectors.

JobsOhio, a nonprofit authorized

by Ohio’s government to represent the state, sends staff to China several times a year.

“We view it as very important,” said Kristi Tanner, senior managing director of JobsOhio, in a March 18 phone interview during a business trip in Fuzhou, China. She said that in meetings with companies and provincial leaders, she used Fuyao Glass, a Chinese automotive glassmaker whose factory in Moraine, near Dayton, employs about 2,000 workers, as a case study for other Chinese companies.

Self-driving technology Tanner said Ohio wants to capitalize on Chinese investments in the automotive sector, particularly in self-driving technology. She added that China’s interest in the U.S. resembles that of Japanese automakers’ American expansions in the 1980s.

“We see a similar path with China,” she said.

Other states and cities have similar delegations. San Francisco is expanding its quasi-government agency, ChinaSF, which has three branches in China and provides Chinese companies with access to the city

government.

Preston, the Arkansas development executive, said Trump has come up in conversations with potential Chinese investors, “But we are really trying to focus on state-tostate, governor-to-governor relationships. Those relationships have been strong and have been good.”

“Certainly the rhetoric is going to be a risk, but we’ve also done our best to mitigate that,” he added.

Only about 6% of Chinese investments in the U.S. from 2000 to 2017 are so-called greenfield projects, in which a Chinese company sets up a local operation from scratch. The rest of the deals are mergers and acquisitions, according to Rhodium Group, a research consultancy in New York.

Investments drop And Chinese investments in the U.S. dropped by 35% in 2017 to $29 billion of consummated deals from a record-high number in 2016, Rhodium Group said. Much of the decline was due to China’s capital control rules, but also growing regulatory hurdles in the U.S., mostly scrutiny from the Committee on Foreign Investment in the U.S., Rhodium said.

ChinaSF has facilitated transactions that came under Cfius review.

The city is a popular destination for Chinese investors in the biotech, real estate and fintech industries.

China has responded to Trump’s tariff announcement by threatening to impose tariffs on $3 billion of U.S. imports, including agricultural, steel and aluminum products. Beijing’s ambassador to the U.S., Cui Tiankai, said his nation did not want a trade war, but all options were on the table.

“They will always find a way to get things done. Already, China is starting to be more sector-specific in their investments,” Darlene Chiu Bryant, executive director of ChinaSF, said Monday. “China has been exporting to the USA for more than 200 years, and trying to turn back the clock with tariffs alone is not going to help the country.

It will ultimately hurt the consumer.”

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APPs’ roles, job counts rapidly expanding

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

The advanced practice provider will see you now.

In Northeast Ohio and across the country, these caregivers — a group that includes physician assistants and nurse practitioners, for example — are playing an increasingly important role in health care. And the region’s health systems are embracing such providers, helping to push them to work at the top of their license and setting up governance structures to support them. “It’s safe to say we couldn’t provide the excellent care we now provide to our community without the dedication and work of our over 300 advanced practice providers,� said Dr. Bernie Boulanger, executive vice president and chief clinical officer at MetroHealth.

Advanced practice providers, or APPs, typically include physician assistants and advanced practice registered nurses: nurse practitioners, certified nurse midwifes, certified registered nurse anesthetists and clinical nurse specialists.

And the market for these professionals’ services is hot.

Between 2016 and 2026, for example, employment of physician assistants nationwide is expected to grow 37% and overall employment of nurse anesthetists, nurse midwives and nurse practitioners is projected to grow 31%, both of which are much faster than the average for all occupa-

tions, according to the U.S. Bureau of Labor Statistics. As for pay, according to May 2016 data from the bureau, physician assistants’ annual mean salary in Ohio is $104,680 and nurse practitioners’ is $99,680.

In Cleveland, APPs are helping to expand patient access, relieve physician stress, promote population health and more.

Cleveland Clinic CEO Dr. Tom Mihaljevic made a point to highlight these caregivers in his late February State of the Clinic address when he said he believes the system will eventually have as many APPs as it has physicians.

APPs have “steadily been more and more important,� and the Clinic has been accelerating its growth of them, said Dr. Brian Donley, the Clinic’s former chief of staff and new CEO of Cleveland Clinic London. Between 2010 and 2017, the Clinic more than doubled the number of APPs practicing in the system. By the end of 2017, there were 1,936 APPs, a 19% increase from 2016 alone.

Donley said it will probably take three to five years for that to match the number of physicians in the system, which now total 3,500 and will continue to grow. The growth, he said, will be across the board, incorporating APPs into research, education and clinical care. They’ve been involved in research and education in the past, but there is a “heightened focus� on it, he said. “This is not a replacement of physicians,� Donley said. “We continue to grow our physicians also — both specialists and primary care physicians are an important part of our growth

“We use the advanced practice providers so our physicians can work at top of license and have more time to spend with a patient.� — Dr. Brian Donley, CEO of Cleveland Clinic London

model. But we use the advanced practice providers so our physicians can work at top of license and have more time to spend with a patient.�

MetroHealth, too, has been rapidly growing its APPs. Between 2013 and 2018, MetroHealth’s APPs grew by 147%, far outpacing the growth of its physicians, which increased by only 26% in that time. “I think with respect to our population health strategy, advanced practice providers are really an important part of meeting that strategy,â€? Boulanger said. “They allow us to staff our locations where we might not be able to recruit a physician ‌ They allowed us to meet our demand.â€?

APPs work throughout the MetroHealth system, from primary care to patient hospital teams to the operating room. Going forward, Boulanger said he expects both physicians and APPs to increase as the system grows,

but he expects APPs to continue to rise more quickly and it is “quite possible� that MetroHealth will one day have the same number of APPs as physicians.

The focus at University Hospitals, meanwhile, has been getting APPs to practice at the top of their license, said Erin Slay, director of advanced practice providers for UH, a position that was created two years ago. “We won’t see a lot of ebb and flow from the advanced practice provider perspective,� Slay said, noting that the system has added both APPs and physicians in recent years. “Part of the initiative that I undertook was really to identify what our current advanced practice providers were doing and then to ensure that we had them aligned so that they could see patients and they could actually do what they were licensed to do.�

For instance, many APPs find themselves in a role that’s similar to a registered nurse. UH has worked to help move them to more of a provider role and help them take on the independence of caring for patients, Slay said.

Physicians will always be “very important� to care teams, she said.

When APPs are added to that team, they’re able to care for patients with chronic illnesses while freeing up physicians to see higher complexity patients. “So it really benefits both the providers, but more importantly it benefits our patients,� Slay said. “It allows our patients to have increased access to our providers, to both physicians and advanced practice providers.�

Today, the “vast majority� of APPs

in UH are practicing at the top of their license, Slay said, noting that in just one year, the system went from the 23rd percentile to the 77th in a national benchmark of APP productivity. Physician productivity also rose in that time, she said. “We’re actually seeing them both move together as a team,� Slay said.

As APPs have grown, systems have taken a look at how they support and accommodate them.

MetroHealth, for example, revised its medical staff bylaws last June, and the system’s doctors voted APPs into the medical staff, which Boulanger said shows the value the system places on APPs and the recognition of doctors who understand the importance of APPs. Cleveland Clinic created a common governance structure for APPs. Advanced practice registered nurses and physicians assistants used to have two parallel reporting structures within the system, but those were combined to establish a common set of expectations from a managerial, patient experience and quality and safety standpoint, Donley said. The system has also developed training programs for its APPs to ensure they’re prepared to work in specific areas of the hospital. “I think when you look at the access issues that exist around health care and when you look at the financial issues that exist around health care, I think those market dynamics support the continued growth of the outstanding advanced practice providers that exist in our country,� Donley said.

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

We need to talk about nation’s debt addiction

By DENNIS TEREZ

Editorial

Heartbreak What happened at University Hospitals is a tragedy. There’s no other way to characterize it.

In early March, a cryofreezer storing embryos in a UH facility malfunctioned, rendering all 4,000 eggs and embryos in the hospital system’s care nonviable. UH revealed in a letter to patients that a deactivated alarm and ongoing issues with cryofreezers were to blame. The heartbreaking stories of affected families have started to emerge in The Plain Dealer and elsewhere. In many cases, those stored embryos represented their last chances to have children.

Questions remain, and UH will be — and should be — pressed to continue to answer questions from the press, the medical community and, most importantly, its patients.

UH appears to be doing everything in its power to do right by its affected patients. The health system — the region’s second largest behind the Cleveland Clinic — is offering personalized in vitro treatments for those affected.

UH also says it will refund storage fees and waive any storage fees for future treatments for the next seven years. UH said signed releases will not be requested to obtain these services.

Certainly, those offers do little for some patients who stored eggs and embryos before, for example, cancer treatment that would render them infertile. So, at this point, there’s little UH can do besides offer answers, apologies and any sort of monetary compensation that will stem from the nearly two dozen lawsuits that have already filed.

UH CEO Tom Zenty’s first public comments about the incident came on March 27. In a recorded message posted online, he said, “I know that many of you are upset about what happened. We understand that our patients are grieving, and we grieve with them. Clearly, we can’t give back what was lost.”

He added, “I can’t say it any more plainly. We failed our fertility clinic patients. We are sorry. I am sorry, and we’re going to do everything we can to regain our patients’ trust.”

For decades, UH has been one of Northeast Ohio’s most revered corporate citizens, and its clinical might and quality scores

rank among the best in the world. It will undoubtedly take time for the health system to mend its relationship with the public.

More importantly, though, we hope what happened at UH results in a collaborative effort among medical providers and accrediting bodies across the country to ensure a similar incident does not occur.

Unfinished business

Baseball fans love numbers. As Cleveland Indians fans, in particular, here are a few we like, courtesy of 2018 season projections from the data crunchers at FiveThirtyEight.com: a record of 99-63, an 88% chance to make the playoffs and a 14% chance (tied with the Houston Astros for the highest in baseball) to win the World Series.

Of course, projections based on data analysis are just that, and no matter how teams look on paper, they have to earn it on the field. After heartbreaking conclusions to the last two postseasons, we trust the Indians are highly motivated to bring to town a title that fans and the franchise have been chasing since Cleveland’s last World Series winner, in 1948.

It’s a pleasure to have baseball back, but especially so to go into a season with high expectations for the best-run pro sports team in town. As assistant editor Kevin Kleps points out in a story in this week’s Sports Business special section, the Indians have done “an extremely efficient job” of managing their roster, with a payroll that has risen dramatically but still ranks in the mid-level of Major League Baseball. The performance of late, though, is quite a bit higher than that, a testament to smart front-office moves and the on-field leadership of Terry Francona, dubbed by The New York Times last week as “one of the best managers in baseball for his ability to blend numbers with a deft handling of players and the news media.”

Here’s to a great summer, and a season that ends with a parade we all can enjoy.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

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Timothy Magaw (tmagaw@crain.com)

Contact Crain’s:

216-522-1383

That nasty four-letter word.

No, not that word. I have in mind another one that carries consequences for all of us: debt.

Now is the perfect time for a conversation about our debt — on the 10th anniversary of the financial meltdown and the Great Recession, as Congress just negotiated a $1.3 trillion spending bill, just after new Federal Reserve chairman Jerome Powell’s first news conference, as winter thaws.

Let’s add a couple of other benchmarks to our list. Earlier this month, our national debt surpassed $21 trillion. Here is what that really looked like on March 20: $21,050,409,012,718.72. That’s the number you get when you sum the federal debt held by the public and so-called intragovernmental debt, or debt owed by government agencies to other governmental agencies. That total is growing at roughly $3.3 billion a day. Our debt now exceeds our country’s gross domestic product. Debt to GDP stands at 106%. Economists point to this kind of number when explaining why economies fail.

Here are a couple more sobering benchmarks. Just as we private citizens pay interest on money we borrow, so too must our nation. When you owe over $21 trillion, the interest gets pricey.

Like to the tune of more than $203 billion for just the first five months of the current fiscal year. Last fiscal year, interest on our national debt totaled almost one-half of a trillion dollars. The very first paragraph of the Congressional Budget Office’s news release on March 7 announced that our federal budget deficit was $392 billion for the first five months of the government’s current fiscal year (October through February), a shortfall of $42 billion more than for the same period last year. Although revenues were higher by 2%, spending was higher by 4%. Our nation’s addiction to debt is getting worse.

The CBO identified three areas where the largest spending increases occurred: the Department of Homeland Security, Social Security benefits, and — the largest one of all — outlays for net interest on the public debt. The interest payment on our debt increased by $15 billion, a 13% increase over last year. The Fed’s recent announcement to increase interest rates by a quarter of 1% will find its way into a new increase in interest payments down the road. Remember that interest rates for all of us, including our government, have been at historic lows for the last decade. That is changing as interest rates increase. The U.S. Treasury estimated a 2.347% average interest rate on total interest-bearing debt held by the government as of the end of February. Last year, that estimated average interest rate was 2.249%. The higher rate means billions of additional dollars we the public pay in interest alone. That’s the cost of addiction.

Our private debt should also worry us. Total consumer credit has continued to climb since the late 1950s, except during the Great Recession. According to data gathered by the Federal Reserve, the average amount financed for new car loans at finance companies at the end of 2017 was $30,295. The average maturity on those loans was 67.35 months. Car loans are part of our addiction. Student loan debt recently surpassed the $1.5 trillion mark, increasing last year alone by 5.2%. We might not be addicted to learning, but we certainly are addicted to student loans.

As for the increasingly expensive government debt, are we better for it? As for the ballooning credit card debt, are we happier for it? As for the skyrocketing student loan debt, are we smarter for it? Let our conversation continue.

Terez, a practicing lawyer in Cleveland, received his MBA from Case Western Reserve University’s Weatherhead School of Management, and will complete a master’s degree in finance from Weatherhead in May.

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.

CRAIN’S CLEVELAND BUSINESS

Personal View

Yes, natural gas is safe, and it can be a big money-saver

By COLLEEN RYAN

Is natural gas safe? Those of us in the energy industry hear that question a lot.

The short answer is yes, and the longer answer is yes and yes. Natural gas is safe in numerous ways.

What may come to mind first is the need for natural gas to be safely extracted then delivered to our homes, businesses, schools, hospitals, factories, farms and so much more. It is imperative that the infrastructure to move natural gas to customers is not only safe, but protected.

Safety is the top priority for natural gas producers and for those building and operating the systems to transfer this energy source. State and federal agencies diligently regulate and oversee the industry, especially the underground systems that move gas to the end users. In fact, the U.S. Pipeline and Hazardous Materials Safety Administration determined that our nation’s pipeline system is the safest in the world. Consider too, that new technologies, such as plastic pipes, are improving our underground systems to move gas efficiently and reliably to customers. Our underground system also means fewer trucks and other overland transport required to meet energy demands.

But the idea of safety, when it comes to natural gas, can mean a lot more than the pipelines used for delivery. Let’s consider this clean-burning energy in terms of the environment, our health, job security and our food supply.

For the environment, natural gas is one of our cleanest sources of energy and works right alongside renewables to cut carbon emissions. Natural gas generates 40% of our electricity. Solar, wind and hydro power contribute varying supplies of energy, while natural gas offers power on demand. With natural gas in the overall energy portfolio, we are reducing pollution and meeting energy goals for Ohio and the nation.

It is encouraging to see so many local governments, as well as businesses, turn to natural gas for clean-burning motor vehicles. Our public transit systems, waste pickup trucks, delivery vehicles and more are turning to compressed natural gas (CNG) for fuel. These tailpipes have fewer harmful emissions and the economic benefit of affordable CNG is a plus for taxpayers.

For our health, consider that Ohio’s hospitals use a tremendous amount of energy. Historians will point to the emergence of modern energy systems as one

game-changer for better health.

New medical technologies and facilities, running on a reliable power source, keep us healthy. In the case of emergencies, when power goes out, natural gas-powered generators keep health systems running and patients safe.

Health systems work closely with energy suppliers to use gas Ryan and electricity as efficiently as possible. In fact, the Ohio Hospital Association’s Energy Star program reports that in a recent five-year period ending in 2016, hospitals participating in a benchmarking project saved enough money to hire 137 nurses, and reduced their carbon footprint equivalent to taking 22,168 cars off the road, or the climate benefits of 2.7 million mature trees.

For job security, natural gas is a reason many employers are looking to Ohio to build or expand plants and facilities. Our increased domestic production means natural gas is affordable, and in good supply. A number of Ohio manufacturers depend on our state’s abundant supply of natural gas to power facilities and keep machines running.

For our food supply, natural gas is an essential component in many agriculture operations. As a feedstock for nitrogen-based fertilizers, natural gas helps provide vital nutrients for crops. In addition, many farmers choose natural gas to power grain dryers and greenhouses, as well as facilities that produce meat, dairy and eggs. Transport and preservation systems for food products are increasingly fueled by natural gas. And at the end stage, the kitchens in our homes, restaurants and bakeries use natural gas to deliver good food to our tables.

This year, Ohio will continue the home-grown production of natural gas, and new infrastructure to bring this product to market will bring jobs in construction and operations. Ohioans should keep in mind the serious attention to safety in every aspect of this industry.

At the same time, we can applaud the lower costs, cleaner air and the fact that the United States has become the No. 1 producer of natural gas in world.

Ryan is chairwoman of the Ohio Gas Association Board of Trustees and president of Vectren Energy Delivery of Ohio.

Web Talk Re: FirstEnergy Solutions to close three nuclear plants

what people want, or will a new facility (at twice the price) be required? — Robert Salmon

Since FirstEnergy customers were forced by the PUCO to pay “stranded investment” recovery costs for nine years, I believe customers should all be reimbursed now, when the plants are sold. If FirstEnergy was able to use the plants for off-system sales, the recovery money belongs to ratepayers who were forced to fund operations.

— powrguy

Re: New Shaker Heights mayor

Re: More Hopkins talk

Re: Opening minds to hiring workers with disabilities

Cleveland Hopkins International Airport has announced a new master plan that is supposed to take three years to prepare. After three years of paying down the airport’s present debt, the timing will be just about right for a major expenditure — perhaps a half-billion dollars or so.

The question is, will half a billion make Hopkins

Outstanding choice to replace Mayor Earl Leikin, now chief of staff for Cuyahoga County Executive Armond Budish, with former DDR Corp. general counsel David Weiss. David is an excellent leader — smart, modest, and with high integrity. Shaker is fortunate! — Daniel Blain

I agree with the sentiment in a March 23 guest blog from Adam Ross of Vocational Guidance Services.

My roofer is blind. The young guys help him out. He doesn't handle any tools, but there's a lot of great energy that he brings to his customers.

— D Jones

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Focus: SPORTS BUSINESS

TRIBE TIME: NOW?

Indians can sustain success, but 2018 season is crucial If you were in Las Vegas prior to last week’s start of the baseball season — say, for the Indians’ exhibition series against the Cubs on St. Patrick’s Day weekend — putting a wager on the Tribe to win a third consecutive division title would have made about as much sense as betting against LeBron James in the Eastern Conference playoffs.

The reason: The Indians are such prohibitive favorites that it would have taken a $550 bet just to win $100 Kevin on a Tribe division crown.

Kleps In the franchise’s 117-year history, the only Tribe clubs to make three straight playoff trips were the much-revered teams from the “Perfect Storm” era — the 1995-99 Indians, who won five consecutive division titles and made a pair of World Series appearances.

The current group seems poised to join that exclusive company, but one thing with which many of us sports fans struggle is enjoying the moment. (See the last four years with LeBron.)

Something at which we excel, meanwhile, is fretting over the future.

When it comes to the Tribe, any concerns that go beyond 2018 usually involve money.

The Indians, even with a franchise-record payroll, have done an extremely efficient job of maximizing their roster. Their 2017 Opening Day payroll of $126 million ranked 18th in baseball. The season before, the Tribe started with MLB’s fourth-smallest payroll, at $87.2 million.

A day before the 2018 opener, Spotrac estimated that the Indians’ $137.4 million payroll would rank 16th — and the Tribe’s salary total actually was about $700,000 above the MLB average.

The Indians — via president of business operations Brian Barren’s “15 and 5 battle cry,” which calls for the Tribe to be in the middle of baseball’s revenue rankings by 2019 (Year 5 of the plan) — believe just being average in the financial standings will

give an astute front office sufficient resources to succeed.

But no matter how sharp the likes of president of baseball operations Chris Antonetti and general manager Mike Chernoff are, the Indians will have some very difficult decisions to make after the 2018 season — tougher even than last offseason, when Carlos Santana, Jay Bruce and Bryan Shaw left as free agents.

At the risk of not enjoying the present (we promise to do our best), let’s widen the scope and take a glance at the Tribe’s roster from a business perspective ...

Who can leave The Indians’ two best relief pitchers — closer Cody Allen and fireballer Andrew Miller — are scheduled to become free agents after the season.

The same goes for a pair of outfielders, Michael Brantley and Lonnie Chisenhall, plus starting pitcher Josh Tomlin and reliever Zach McAllister.

From left: Jose Ramirez, Francisco Lindor, Corey Kluber and Andrew Miller. (Composite image/Getty Images)

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CRAIN’S CLEVELAND BUSINESS

If all six depart, that would clear about $42.6 million from the Tribe’s books, including two of the top five salaries on the team (Allen and Miller). Keeping either of the two stud relievers likely would require an eight-figure annual commitment that the Indians might deem exorbitant.

Who should stay Assuming the Indians exercise what appears to be a no-brainer of a $9 million team option on Carlos Carrasco’s contract, the Tribe has nine players scheduled to make a combined $81 million in 2019 salaries.

That group — Edwin Encarnacion, Corey Kluber, Jason Kipnis, Carrasco, Yonder Alonso, Yan Gomes, Jose Ramirez, Roberto Perez and Dan Otero — includes a slugger who landed the largest free-agent contract in Tribe history (Encarnacion) and an MVP candidate whom the Indians wisely signed to a favorable longterm extension (Ramirez).

What it doesn’t factor in are two crucial players — starting pitcher Trevor Bauer and All-Star shortstop Francisco Lindor — who are eligible for arbitration. Bauer landed $6.525 million in arbitration in 2018, and could be in line for an eight-figure salary in 2019. Lindor, meanwhile, is eligible for arbitration for the first time next season, after playing at the bargain rate of $623,200 in 2018.

Climbing the ranks The Indians’ 40-man year-end roster cost a combined $151.8 million in 2017, according to Baseball Prospectus. That marked an increase of almost $65 million in just two years. A look at the Indians’ year-end payrolls, along with their respective MLB rankings, since 2010: 2017: $151.8 million, No. 18 MLB 2016: $117.6M, No. 21 2015: $87M, No. 25 2014: $83.7M, No. 26 2013: $89M, No. 21 2012: $69.2M, No. 25 2011: $53.5M, No. 26 2010: $60.5M, No. 27 Source: Baseball Prospectus

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Even with those sizable raises thrown in, the Indians — as is their custom during the good times — have more than a few standouts, or potential standouts, who are multiple years away from arbitration.

Starting pitcher Mike Clevinger isn’t eligible for arbitration (when a player’s salary significantly increases from the near-league-minimum standard at which it had been set) until 2020, and outfielders Bradley Zimmer and Greg Allen won’t get there until 2021. Then there’s top prospect Francisco Mejia, whose arbitration clock has yet to start ticking.

SEE INDIANS, PAGE 14

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SPORTS BUSINESS

Ballpark tweaks have been a hit with fans

By KEVIN KLEPS kkleps@crain.com @KevinKleps

For Alex King, it was a moment prior to the 2015 season, when the Cleveland Indians invited a group of social media influencers to check out the new Right Field District at Progressive Field.

“I distinctly remember being on the second deck (of The Corner bar) and sort of soaking that all in, watching this group of 20-something-yearolds having a good time,” said King, the Tribe’s senior vice president of marketing and strategy. “I thought it was really cool.”

Andrew Miller had a similar experience during the Indians’ home opener that year — from a nearly identical perch.

“I was standing on top of The Corner bar watching fans flow into the ballpark,” said Miller, who, at the time, was the Tribe’s senior VP of strategy and business analytics. “Seeing their expressions, their reactions to it, but also seeing that they gravitated to the areas we expected in ways that were natural — going to the drink rails, to the Corner bar.”

The two-year renovation of a ballpark that is tied for the 11th-oldest in Major League Baseball was completed prior to a 2016 season that was one of the most memorable in franchise history. There have been tweaks since — including a round of less-noticeable improvements prior to 2017 (think suite, concrete, press box and security upgrades) — but the bells and whistles have been around since the Indians’ on-field product transformed into an annual World Series contender.

The work has been largely well-received, and has been well worth the Indians’ considerable investment.

From 2014-17, a total of $77 million has been spent on ballpark improvements in a near-even mix of private and public investments. The latter, which have been funded by Cuyahoga County’s tax on alcohol and cigarettes, includes the monstrous scoreboard that debuted in 2016.

“The Corner bar and District Ticket have been game-changers for us,” said Tim Salcer, the Tribe’s vice president of sales and service.

For Miller, who joined former Tribe president Mark Shapiro in Toronto in 2016, the planning went all the way back to 2010. Then, he was part of a small group that included Shapiro and Jeff Wilen, the organization’s former director of strategy and business analytics.

A year later, King joined the fold after a five-year stint at Procter & Gamble. Others high-ranking club executives, such as Nicky Schmidt, Kurt Schloss, Neil Weiss and Jim Folk, were heavily involved, too, Miller said.

King estimates that the Tribe visited 30 ballparks, arenas and stadiums across five sports — baseball, basketball, football, hockey and soccer. The latter two were “tougher to translate to baseball,” King said, but the idea was to get a sense of what worked and what didn’t.

The Tribe also dug into fan behavior, via a combination of research and meetings with various focus groups. What the Indians found is a lot of what you see now at the gracefully aging 24-year-old ballpark.

King said the key takeaways from the years of studies were connections (to the city, the players and the field

The Right Field District livened up what had been a “dead” area at Progressive Field. (Contributed photos)

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SPORTS BUSINESS

s

Sweet Moses, a staple in Cleveland confectionery circles, made its ballpark debut in 2015.

Great Lakes Brewing Co., an anchor of the Ohio City neighborhood, opened its ballpark outpost in 2015.

of play), the need for unique food and beverages, the neighborhood concept that houses the local food offerings and creating better family spaces.

“And the last thing was a little more subtle,” King said. “We wanted to make sure we got into the details about how to bring those areas to life, and we wanted to do it in a thoughtful way. That’s where the research helps tremendously.”

The focus groups were shown conceptual sketches of upgrades the Indians were considering, and the feedback helped to shape the many improvements.

“I specifically remember a guy who said, ‘I want to go out with my friends first and have a good time. I feel like I’m missing out on the social scene when I’m kind of glued to my seat watching the game,’ ” King said of one focus-group encounter. “We wanted to have that person be able to do both, and do it here.”

Hence, The Corner, which Shapiro told Crain’s in 2015 had helped to create a lively atmosphere in a right-field area “that was largely dead prior.”

‘People are coming back’

++ ++ +

Water Softener • Industrial • Food Ice Melt • Sea Salt

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SALT • SALT • SALT

+

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Barrio is another neighborhood staple at the park.

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New family spaces have earned rave reviews, too.

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In addition to the local food offerings — 12 new spots were introduced to the Right Field and Infield districts during the two phases — Round 1 of the renovations also brought the District Ticket. That standing-room-only purchase, which was $13 at the time, includes the first drink.

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CRAIN’S CLEVELAND BUSINESS

SPORTS BUSINESS

INDIANS

CONTINUED FROM PAGE 10

Lindor — the electric 24-year-old who seems destined to land an insanely rich contract in free agency — is still under the Tribe’s control through 2021.

The issue is he, as is the case with Bauer, at some point will have a salary that is finally in the same ballpark as his production.

That is when things tend to get tricky for the Indians, who will never be on a level playing field with the likes of the New York Yankees, Los Angeles Dodgers and Boston Red Sox.

‘Fundamental difference’

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When we met with Barren in January, he pointed out how the respective salary caps in the NFL and NBA compare to the highest payrolls in MLB, which is the lone major pro sports league in North America without a cap. “For perspective, the salary cap in the NFL this past year ($167 million in 2017) would have been like ninth or 10th in Major League Baseball in terms of team payroll,� Barren said. “A salary cap in the NBA ($99.1 million this season) would be in the bottom third, 25th or 26th in Major League Baseball. “It’s not harder or easier,� Barren continued, “but it speaks to the fundamental difference of competing in a professional sport where that salary cap doesn’t exist and some of those unique challenges of being the smallest market among the 20 teams that have NFL, NBA and Major League Baseball franchises.�

There are always salary-cap exceptions — see the Cavs and their threetime NBA Finals foe, the Golden State Warriors. The two basketball powers, because of their willingness to pay the luxury tax, are on pace to spend a

combined $357 million in salaries and taxes this season.

But Barren’s point is a valid one.

The Indians have a smaller margin of error than the Yankees, Dodgers and Red Sox — who have paid the luxury tax for 15, five and three consecutive seasons, respectively.

What’s in their favor, though, is something you don’t necessarily witness in the NBA. There have been 17 World Series champions since the 1998-2000 Yankees completed a threepeat. Of the 17, the lone club that had the sport’s top Opening Day payroll during the year in which it won the title was the 2009 Yankees. And only four of the 17 champs had a top-five payroll on Opening Day. Nine of the 17 clubs in that span, however, had an Opening Day payroll that ranked outside the top 10, including the last three champs — the 2017 Houston Astros, ’16 Chicago Cubs and ’15 Kansas City Royals.

The catch, of course, is that when a mid-market MLB team has success, sustaining those results gets more difficult as young standouts become much more expensive.

The Indians, though, are poised to contend well beyond 2018.

Yet there is no question that this season is crucial, since two very valuable bullpen arms could be embarking on their final seven months with the club. “We want to be able to sustain performance over time,� Barren said. “Having our fifth consecutive .500 or better season on the field is a tremendous accomplishment and speaks volumes to what our baseball operations team, Tito and his staff are capable of doing.�

Three consecutive playoff trips, with a second World Series run in three years, would be an even better barometer.

The Indians can do that this season, and it’s a testament to how important something as simple as an average revenue — and payroll — ranking can be.

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SPORTS BUSINESS

Q&A: Nic Barlage

President of business operations, Cleveland Cavaliers When Nic Barlage joined the Cavs as a vice president of sales and service in 2009, they had recently traded for Shaquille O’Neal. Barlage left the organization during the 2013-14 campaign — a few seasons after LeBron James left and a few months before he returned — to become a senior vice president of the Phoenix Suns. ¶ The 33-year-old Barlage, with a little less fanfare than James’ comeback, returned to the Cavs early last fall as the club’s president of business operations. ¶ “I wouldn’t rewrite it any differently,” he said of leaving in 2014 to become the Suns’ chief sales officer. “I would have done it all over again because I did it for the right seasons. I did it to grow my experience and my skill set, and I did it from a personal perspective.” ¶ Back then, Barlage’s fiancée, Traci, was working in Los Angeles and could transfer her job to Phoenix. The couple is now married with two young daughters, Brooklyn and Kennedy, and they’ve traded winters in the desert for snow — and a much better basketball team. — Kevin Kleps When you left for Phoenix, did you think you were leaving here for good? Did you have any sense that you could be back?

I would say that when I first got there, the first couple years, no, but after it started to evolve and things started to go, I could see it becoming more and more (likely), because of the culture and environment and everything going on with our family of companies. It became pretty clear to me that it was the right place for me and just how I look at things. So there was kind of a seed in the back of my mind that this could work out again (in Cleveland).

How did your time in Phoenix prepare you for your current role?

My experience in Phoenix was great.

It gave me the opportunity to work with different parts of the business, specifically more of the creative side of the business — marketing, digital, game presentation — and that gave me a much wider-lens look at what it takes to run an organization. I’d say it was vital.

About five months after you left, LeBron made the announcement that he was coming back. What were your thoughts then?

Five months almost to the day. You can never plan for things like this in sports, which is part of the reason

why I love the business as much as I do, because of how crazy it can go.

The thing I was the most happy about honestly was we went through four years of what I’ll call very opportunistic times relative to team performance and business performance, but our culture never really wavered. All the people that were here that were able to see the benefit of that, I couldn’t have been happier for them.

How much different is your job day-to-day compared to when you left?

I would say that it’s extremely different, but there is a lot of transference, specifically some of the management and leadership things from a cultural perspective.

But yeah, I’d be lying if I told you that it wasn’t significantly different, just in regard to the role, the responsibility that I feel to all of our team members, as opposed to kind of a subset of our team members. I’ve always tried to look at every job I’ve had as if I was the owner of the team, would I be proud of what I’m doing? I’ve always taken that approach, but now that’s even more needed just in making sure that we account for every team member we have, every stakeholder we have, every part of our business.

The Barlage file College: St. John’s University NBA teams: Barlage has worked for the Cavs (two stints), Phoenix Suns (also two) and Minnesota Timberwolves.

First NBA job: He was a sales consultant for the Suns in 2006.

Barlage was hired as a Timberwolves season-ticket sales rep the following year.

Hobbies: Barlage enjoys working out and playing golf, but with two kids age 3 and under, he said he doesn’t have a lot of time for the latter.

Is there something that the Cavs do exceptionally well that you’re really proud of?

That’s a hard one to narrow down.

One is I’m extremely proud of the civic role that we play in our community.

We take a very active role in a lot of different things. We’re not going to run and grab a flag and plant it in the ground per se, but I look at our Habitat for Humanity projects, our STEM programming we’re doing in

partnership with Goodyear, our reading and learning centers, all these things that we’ve done to make an impact. And these are in areas that need it. These are in areas that really benefit from things like this.

Let’s say you’re meeting with a college student or an intern who wants to work in the NBA. What advice would you give them?

I always tell them that we look to hire great people first, and then our goal is to mold them into great professionals. We look for people who have a work ethic, first and foremost, who have a positive attitude. I always tell the story that I wouldn’t be here if I didn’t have a degree of positivity to me. For instance, when LeBron left the first time, we looked at it like this is our opportunity to do something with it and be positive about it. I think a lot of people would have looked at it differently. I think you also have to have a passion for what you do. I tell people it’s easy if you’re passionate about sports. There are a lot of people who are passionate about sports. But you have to be

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How much has the league changed in your decade-plus in the business?

It’s totally different. Just the bandwidth of our group, of our team, is so much more significant even than it was in ’09. And that goes back to the thing I love about working for Dan (Gilbert). He reinvests every penny into the organization, whether it’s into people or resources or specific players and basketball. But it’s changed so much.

The technology has changed, and it’s going to continue to change. We’re going to do things in the new Q (transformation project) that I think people in this market, in this region, in this state — however wide you want to go — people are going to look at it and say, “Wow, this is something we’ve never really seen before.” You see it in other new venues, don’t get me wrong. But it will be phenomenal.

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Cavs gamers ready to enter ‘Real World’

By KEVIN KLEPS kkleps@crain.com @KevinKleps

What if I told you that six professional video game players employed by the Cleveland Cavaliers would be living in upscale accommodations that included Hot Pockets-filled freezers?

“It’s almost like professional sports meets ‘The Real World,’ ” said Jonathan Sumers, the Cavs’ senior director of digital partnerships.

The Cavs’ version of an MTV reality show will be taking place the next six months at the Edge32 apartment complex at 3219 Detroit Road. There, the Cavs Legion Gaming Club — one of 17 entries in the new NBA 2K League — will be living, practicing and training.

The six gamers, plus a videographer, will occupy four two-bedroom apartments, complete with a great view of Lake Erie, high-end furnishings and a space in which they can analyze previous competitions.

A fourth-floor apartment will serve as the “practice facility,” where the videographer, contractor Patrick Brouder, will live and the six gamers — whose identities will be revealed in the 2K League’s April 4 draft — will train. The gamers — part of a 102-person draft list that the league narrowed down from an initial group of 72,000 qualifiers — will live in three sixth-floor apartments. There, they can take a step back from NBA 2K — or, as many gamers do, play in even more video-game competitions.

All the while, their day-to-day routines will be livestreamed, tweeted and be part of online docuseries that will chronicle the first esports league operated by one of the four major North American sports leagues.

“From a content perspective, the possibilities are endless,” Sumers said.

After the league, which reportedly required commitments of three years and $750,000 per team, was announced last year, the Cavs hired Mentor native Anthony Muraco as their director of gaming operations and Halina Malik as the manager of content and marketing for Cavs Legion GC. Brouder was later brought on as the live-in videographer, and Tom Bogomolny transitioned from the Cavs’ business team to head up corporate partnership marketing and activation for the esports club.

Sumers will be working for the Cavs and the gaming club, and Cavs Legion GC will also get helping hands from the NBA club’s public relations, marketing, production and social media crews.

BALLPARK CONTINUED FROM PAGE 12

The Indians now have almost 1,000 District Tickets (the total was nearly doubled prior to 2016), at $15 a pop, available for each game. Salcer said the sales for 2018, at 3%, are slightly ahead of the pace from this time last year.

Those tickets, which can be used at The Corner and the Home Run Porch in left field, are most popular on Friday and Saturday nights, and the inventory for some weekend contests is already getting low, Salcer said.

“That specific product has done a tremendous service-to-retrial for us,”

The Cavs Legion Gaming Club will be occupying four apartments at the Edge32 complex at 3219 Detroit Road. (Ken Blaze for Crain’s)

Competitive edge A look at the setup for the Cavs Legion Gaming Club at Edge32: Fourth floor: A two-bedroom suite will be used for practice, streaming, content creation and video editing.

Sixth floor: The six gamers will live in three two-bedroom apartments.

Featured amenities: Quartz countertops in the kitchens and bathrooms, stainless steel appliances, walk-in European-style tile showers, expansive windows, washers and dryers, bike storage and a first-floor fitness center. The practice facility will have six desks at which the gamers will compete.

Featured branding: Hot Pockets, the club's founding partner, will be omnipresent in the kitchens, and Levin is providing the furnishings for each apartment.

The four apartments at Edge32 won’t be home to official NBA 2K League battles — those weekly competitions will be held at a yet-to-be announced neutral location — but the suites will be the sites that represent many of Cavs Legion GC’s branding opportunities.

Hot Pockets, the esports club’s founding partner, will “own the kitchen,” Bogomolny said. The refrigerator and microwave in each apartment will be wrapped with the company’s branding, and the logo will be present any time a video or picture is shot in one of the kitchens.

And believe it or not, the gamers have to watch what they eat in a manner in which you might not expect.

“There are some rules on what frozen foods they can and cannot eat,” Bogomolny said. “No, they don’t have to eat Hot Pockets or DiGiorno (pizza, a longtime Cavs sponsor) every day. The freezer will be stacked.

The plan is once a month, (Hot Pockets is) going to drop off food.”

The practice facility on the fourth floor will also present what Bogomolny describes as endemic sponsorship opportunities — obvious branding chances such as official laptops, headsets, gamer chairs, controllers and gaming systems.

The sixth floor could get some type of “gamer house” partnership, similar to Rocket Mortgage’s sponsorship of the 100 Thieves luxury house in California. The latter, which is one of the world’s most recognizable esports franchises, has received significant backing from Cavs majority owner Dan Gilbert.

But it’s another element — the reality-show type content that Bogomolny described as a potential cross between “Cribs,” “The Real World” and “Keeping Up with the Kardashians” — that could be the most intriguing.

Malik, Cavs Legion GC’s 22-yearold manager of content and marketing, was a top Call of Duty player in her teens. Prior to landing with the Cavs, she was the chief marketing officer of Pnda LLC, a Lexington, Ky.based gaming organization that created one of the first esports mascots — a person in a panda suit who would pass out fliers at competitions.

That type of zany creativity is expected in a millennial-driven industry that is projected to top $2 billion by 2021.

“There will be a breakout star player that people will follow,” Malik said.

“We’ll be branding these guys into the personalities they will be and

making people fall in love with them.

There will also be brand affiliations — people who don’t necessarily care about the roster so much. They fall in love with the logo or they love Cleveland as a city. That’s what draws them to it.”

Until the April 4 draft, the Cavs won’t know which personality types will fill the six-player roster that in May will tip off the four-month 2K League season.

What’s certain, they say, is there will be some partner-related content, such as pieces that feature Edge32 owner Vintage Development Group.

Malik will be in charge of the “organic” pieces, which could range from gaming challenges and practices to behind-the-scenes videos about their daily routines, trips to the weekly 2K League competitions, a look at how they became professional gamers and tours of Cleveland.

“With gaming, and 2K in particular, one of the things that is a big differentiator is that there is no arena, per se,” Sumers said. “That’s why everything we do has to, first and foremost, be done in the lens of content and how that content in particular plays on mobile and social. We don’t have a 20,000-person arena where fans are going to aggregate. Our fans are going to aggregate around our virtual arena, which is really our social feed and our content pieces.”

Twitter and Twitch — two popular platforms for gamers — will be the go-to promotional tools. The videos that aren’t livestreamed, such as a documentary-type series, will be posted on Cavs Legion GC’s website.

Those also come with sponsorship opportunities.

The videos that are produced in advance can go live at any time, but Malik said the content that is livestreamed should occur later in the day because of gamers’ night-owl tendencies.

Bogomolny, Cavs Legion GC’s corporate partnership marketing manager, said there will also be a health and wellness plan that each gamer must follow. Cavs Legion members will work out at Edge32’s fitness facility, and will have access to the Cavs’ trainers and nutritionists.

“Eports in general is trying to flip that script to make it seem not like a burnout situation,” Bogomolny said.

“They’re active, they have to stay in shape, they have to eat right to stay up late to play.”

OK, so that isn’t exactly a “Real World”-type plot.

Soon, though, a half-dozen gamers’ reality, complete with competitive salaries and first-class living spaces, might seem too good to be true.

in the 2015 season, said “the foresight” shown back in 2010 is playing a key role in the team’s attendance and revenue gains.

The Indians are on pace to be in the middle of the pack in the MLB revenue rankings by 2019, Barren told Crain’s in January. Four years ago, the Tribe’s revenues were among the three or four lowest in the sport.

“It’s had a significant impact,” Barren said of the renovations.

King, who was so involved in the minute details of the project that he recalls selecting which type of chrome would look best for a tap in The Corner bar, said seeing how fans reacted during the electric 2016 postseason was the “biggest exclamation

point” on everything that had transpired in the previous six years.

“Everything sort of came together,” he said. “That helped validate all of the work.”

Miller, the Blue Jays’ executive VP of business operations, wasn’t with the Indians then. But, as was the case during the 2015 home opener, he had quite a view.

The 2016 Indians advanced to their first World Series in 19 years after knocking off Toronto in a five-game American League Championship Series that started with a pair of Tribe victories in Cleveland.

“That was the loudest crowd I ever heard at Progressive Field,” Miller said.

Content will be crucial Once the spaces are fully furnished this week, the kitchens in each apartment will be adorned with Hot Pockets branding.

The six gamers will be regulars at the Edge32 fitness center.

Indians president of business operations Brian Barren said. “People are coming back again.”

Without getting into specifics, King said surveys that measure fan satisfaction consistently have produced “really, really strong” results, especially pertaining to The Corner, the family areas and the Home Plate Club.

The Tribe believed that catering certain parts of the ballpark to a specific fan segment (i.e. millennials in The Corner, families in the Kids Clubhouse and season-ticket holders in the Home Plate Club) would increase the likelihood that they would return.

What the business team couldn’t plan on was the emergence, at last, of a fun club that produced the fran-

chise’s first back-to-back playoff appearances since the beloved teams of the mid- to late 1990s.

The winning — an average of 98 victories the last two seasons and a 2018 club that is the most prohibitive division favorite in MLB — is the biggest factor in the Indians finally posting a 2-million season at the gate in 2017.

And it has played the largest role in the club currently having 13,400 full-season equivalents — the Tribe’s most sizable season-ticket base since 2008 and a 54% jump from 8,700 in 2016.

But Barren, who was promoted to the organization’s top business role after Shapiro was named president and CEO of the Toronto Blue Jays late

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At the Table

LAND FOR SALE

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CLEMENS ROAD The Ritz-Carlton Cleveland’s new Turn Bar + Kitchen is “refined and elegant, but also approachable — a more lounge/residential setting, all incorporated in one space,” chef Richard Arnoldi says. (Contributed photos)

With Turn, Ritz-Carlton puts new spin on ‘hotel restaurant’ Hotel restaurants? Who cares?

That’s been a perennial question, at least for me, throughout my career. My first real paying job was working Joe in a hotel restauCrea rant kitchen more than 50 years ago. And though I loved that work — I mean, it paid a solid $1.35 an hour — a sort of shadow of disdain often hung over it.

Because people who ate in hotel restaurants only did so as captive audiences, or so the thinking went. Inevitably, the legend goes, the folks found lingering in the dining room were businessmen whose flights had been delayed and every “decent” place nearby was closed. So the predictable template meal was a menu staple: a wilted green salad, 12-ounce strip steak and baked potato.

Meanwhile, among independent chefs, creativity was soaring. Hotel guests must be served, true, but competition for their expense account dollars grew to a white-hot frenzy.

Especially, these days, in a city like Cleveland, where dinner at some of the hottest tables in America is a five-minute Uber ride away.

Chef Richard Arnoldi of the Ritz-Carlton Cleveland refuses to think of his realm in the conventional terms of a “hotel restaurant,” he said.

His perspective is thoughtfully grounded, more than a culinary flight of fancy.

Arnoldi also holds the title of executive assistant manager for culinary/ food and beverage. It’s more than his personal creativity that’s on the line, he said. For Arnoldi, its the bottom-line stuff of Excel spreadsheets.

“I’m a hotelier, not just a chef,” Arnoldi said. “Gone are the days that the dining room is just an amenity for the hotel property. What you want is to be accepted into the community, so you have social and local foot traffic coming throughout your space.”

That makes sense, considering that about 70% of the Ritz-Carlton’s dining guests are locals, Arnoldi said, quickly substantiating that surprising number.

“We get a lot of people just coming off the elevator from street level,” he

Chef Richard Arnoldi of the Ritz-Carlton Cleveland

said. “We chart that through OpenTable reservations, through phone numbers we get when tables are booked, and from guests who don’t sign their bill to a room, which is how hotel guests typically cover their bill.”

Some locals are drawn simply by curiosity. The Ritz-Carlton marquee carries a certain mystique, after all.

Remember, too, that during the decades leading up to Cleveland’s restaurant renaissance, many of the city’s hotel dining rooms ranked among their era’s foremost destinations: the Kon Tiki at the Sheraton-Cleveland, Marie Schreiber’s Tavern Chop House at the Hollenden House, the Keg and Quarter at Jim Swingos’ Celebrity Inn, the French Connection at Stouffer’s Inn on the Square.

“And if you’re going to a game, what’s better than valeting at the curb, coming up to our sixth floor to eat, then walk through the mall and head for the stadium?” Arnoldi said.

Because of all that, Arnoldi and his management team felt strongly about creating a new concept that Clevelanders would love. That led ownership to completely revamp the property at 1515 West Third St. downtown. Among the endless cosmetic updates came one of the most prominent changes: abandoning the long popular Muse Restaurant and transforming the space into the fresh and lively Turn Bar + Kitchen.

Turn is a marked departure from

the procession of more conventional venues the Ritz-Carlton Cleveland has served up over the past 20 years.

For years, the hotel’s Riverview Room offered traditional fine dining on the Ritz-Carlton’s sixth floor. Then came a daring move: the year 2000 saw the opening of Century, a seafood-themed restaurant created under the direction of famed chef Claude Rodier. Its name, drawn from the fabled 20th Century Limited train, leaned on the restaurant’s storied locale: Cleveland’s beloved Terminal Tower, once the major crossroads for transcontinental. Again, tradition reigned, albeit with a keen gleam of the contemporary.

When that space, overlooking the transformed Tower City’s shopping plaza, finally closed, the hotel’s formal dining space was moved back to the hotel’s sixth floor and became Muse. When Arnoldi took over that venue, he met the expectations of a traditional customer base while bringing an upscale freshness commensurate with the hotel brand.

Muse consistently earned high ratings from local and national critics.

While talk of another revamp started more than a half-dozen years ago, Arnoldi said, the timing wasn’t right.

“The conversion of the hotel entailed a lot of architecture, planning and execution,” he said. “We have one of the best ownership teams in the business, and they wanted it done right.

“When the (Republican National Convention) was booked, that certainly wasn’t the right time to pull out walls and blow out elevator shafts. Construction like that puts things to a full halt.”

Once the RNC was over, the transformation could move forward.

Among the procession of structural and cosmetic changes undertaken came the decision to bid adieu to one of the property’s last vestiges of its classic style and replace it with something decidedly unstodgy.

Note how the name Turn Bar + Kitchen prioritizes the watering hole aspect. A massive, contemporary lounge, bright with shimmering glass lighting, takes center stage. It’s flanked by an array and variety of tables — the better to, well, lounge, nosh and people watch.

SEE RITZ-CARLTON, PAGE 18

(330) 659-2040 cmarshall@mccdesignbuild.com

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RITZ-CARLTON CONTINUED FROM PAGE 17

It’s a companionable setting for the way we eat nowadays. Granted, many of us still want our three courses, a big protein, some kind of starch or maybe an interesting side dish, and other conventions. Just as often, though, many prefer a couple of shared plates or a generous sandwich, or go right for dessert.

“We wanted to create a beautiful social setting,” Arnoldi said. “In the past, we’ve had a very formal R-C-style dining room. This is refined and elegant, but

also approachable — a more lounge/ residential setting, all incorporated in one space. It’s a very dynamic place.”

The “Turn” concept came from a moment when the chef was standing in the middle of what was then a construction zone and he had a bit of an epiphany.

“I turned around and said, ‘Over there is the West Side Market. There’s AsiaTown. There are all the neighborhoods and heritage of the city.’

“Everywhere you turn in Cleveland, there’s something good to taste. So Turn became the name, and then I began to create dishes I feel are indicative of the city, and put my own spin on them.”

You’ll find a menu as diverse as its urban backdrop. Selections include sumptuous Polish-style meatballs drowned in a lavish cream gravy laced with wild mushrooms; a playfully zesty mango arugula salad with citrus vinaigrette; Thai-inspired Tom Yum Goong shrimp and coconut broth; a Hungarian paprika-sausage-topped, dry-aged beef filet with mustard cream; cunning little minipaczki filled with a dab of raspberry jam and doused with cinnamon sugar.

“When you look at food as a core philosophy, one that pleases the diners and sets a tone for the restaurant, the food must be recognizable and

approachable — but they can’t stand alone at the center of your menu. On this menu, I do a New York strip steak, but instead of the traditional demi-glace or a hotel d’maitre butter, I do a roasted eggplant compote: silky with a bit of bite and a touch of sour.

“At the end of the day, it’s still a great steak and cooked whatever way you want it prepared. You need to be able to ebb and flow with what the diner will accept, and hopefully love — yet be truly different.”

In the end, of course, it’s back to that initial assertion: Hotel restaurants must at least serve the needs of

the room holders. Some guests will go for such creativity; others will ask the server to “hold the sauce.” Today’s customer has a million different faces.

A hotel dining room is a vital interface between patron and the hotel property, and, by extension, the city itself. Any manager that fails in that first encounter loses an opportunity to distinguish his or her property, expand its reputation and retain customers.

“How do we compete with the Zack Bruells and Michael Symons?” Arnoldi asked rhetorically. “Well, that’s where I go to eat. I think we’re all one dining community in this city.”

THE LIST

Commercial Contractors Ranked by 2017 Local Revenue THIS YEAR COMPANY

LOCAL REVENUE (MILLIONS) 2017/2016

TOTAL REVENUE (MILLIONS) 2017

NEW CONTRACTS 2017 (MILLIONS) LOCAL TOTAL (1)

STAFF LOCAL TOTAL (2)

PRIMARY INDUSTRIES SERVED

PRIMARY SERVICES OFFERED

PROJECTS UNDER CONSTRUCTION IN 2017

TOP LOCAL EXECUTIVE

1

Kokosing Inc. 13700 McCracken Road, Garfield Heights (216) 587-4900 / kokosing.biz

$319.7 $133.8

$1,004.3

$84.9 $626.8

1,412 3,540

Water, power, industrial, transportation, marine, commercial

General contractor: designbuild, construction management at-risk, aggregate asphalt supplier

ODOT project, Liverpool Wastewater Treatment Plant, NEORSD Southerly WWTC Second Stage Lift Station

Brett Burgett owner, vice president

2

Gilbane Building Co. 950 Main Ave., Suite 1410, Cleveland (216) 535-3000 / gilbaneco.com

$227.5 $376.8

$4,969.0

$310.0 $5,052.5

62 2,753

Corporate, health care, K-12, higher education, sports/entertainment

International construction management firm

CSU Washkewicz College of Engineering, Cleveland Heights High School, LCC Health Technologies

Kyle Merrill area manager

3

Pride One Construction 387 Medina Road, Suite 600, Medina (330) 239-6100 / prideoneconstruction.com

$200.0 $150.0

$220.0

$250.0 $300.0

50 82

Real estate

Construction, general contracting, construction management

Quay 55, The Vine - Town Homes, Quattro Condos, Little Italy Apartments

Doug Leohr president

4

Panzica Construction Co. 739 Beta Drive, Mayfield Village (440) 442-4300 / panzica.com

$148.5 $128.5

$148.5

$150.0 $150.0

140 140

Commercial, industrial, institutional

Construction management, design-build, general contracting

One University Circle, Centric, Centers for Dialysis Care, Greater Cleveland RTA

Anthony M. Panzica owner, president, CEO

5

Donley's Inc. 5430 Warner Road, Cleveland (216) 524-6800 / donleyinc.com

$147.0 $173.0

$250.0

$108.0 $17,300.0

223 515

Higher education, health care, commercial, institutional

Construction management, concrete services, restoration

CCF/CWRU Health Education Campus, UH N. Ridgeville, Summa Tower, MH Parking Deck

Malcolm M. Donley president, CEO

6

The Albert M. Higley Co. 2926 Chester Ave., Cleveland (216) 861-2050 / amhigley.com

$140.1 $133.9

$140.1

NA NA

92 93

Corporate office, health care, education, cultural/ nonprofit, hospitality

Construction management, general contracting, designbuild, preconstruction/ estimating

Encore Medical Center, Edgewater Beach House, Key Tower, Cleveland schools, Mentor Wellness Center

Gareth D. Vaughan president, CEO

7

The Ruhlin Co. 6931 Ridge Road, Sharon Center (330) 239-2800 / ruhlin.com

$111.9 $120.6

$139.9

NA NA

125 156

Health care, industrial, transportation, education, commercial building

General contracting, construction management services

ODOT CCG6A (I-77 over I-490 in Cleveland)

James L. Ruhlin president, CEO

8

Independence Construction 5720 E. Schaaf Road, Independence (216) 446-3700 / ind-con.com

$80.0 $43.0

$80.0

$13.0 $13.0

18 18

Retail, entertainment, automotive, higher education

Development through preconstruction, construction and commissioning

Pinecrest, University Market, The County Club in Pepper Pike

Kevin DiGeronimo president

9

Infinity Construction Co. Inc. 18440 Cranwood Pkwy., Warrensville Heights (216) 663-3777 / infinityconstruction.com

$69.6 $70.9

$72.6

$57.0 $63.2

62 65

Commercial, health care, education, sports/ recreation, retail

General contracting, construction management design-build

Beachwood Fire Station #2, World Shipping HQ, Nestle Renovations, North Ridgeville Fire Station #1

Charles A. Izzo president

10

Rudolph Libbe Group 4937 Mills Industrial Pkwy., North Ridgeville 216-369-0198 / rlgbuilds.com

$62.0 $53.0

$659.0

NA NA

120 1,000

Manufacturing, automotive, metals, chemical, food processing

New construction, industrial site maintenance, HVAC, energy services

Marathon Petroleum Training Center, Lubrizol Vision Project

David L. Boyer GM, NE Ohio

11

Shook Construction Co. 10245 Brecksville Road, Brecksville (440) 838-5400 / shookconstruction.com

$61.1 $47.4

$178.9

NA NA

67 251

Education, health care, industrial, mission critical, water resources

General contracting, construction management, design-build

Canton South High School, Summa Health's Akron Campus West Tower, various projects with NEORSD

Chris Halapy executive vice president

12

Independence Excavating 5720 E. Schaaf Road, Independence (216) 524-1700 / indexc.com

$60.0 $105.0

$195.0

$54.2 $106.6

313 525

Power, automotive, health care, transportation, entertainment, federal

Site development: demolition, earthwork, utilities, environmental remediation

NEORSD Superior Stones CSO and Woodland Central Green Infrastructure, Rockside Woods Sanitary Sewer

Victor DiGeronimo Jr. CEO

13

John G. Johnson Construction Co. 1284 Riverbed St., Cleveland (216) 938-5050 / johngjohnson.com

$57.8 $23.7

$60.4

$42.3 $46.9

38 38

Hospitality, Multifamily, corporate, sr. living, worship, education, civic

Construction manager, general contracting, designbuild

Breaker's Express Hotel, City of Wooster Safety Center, Truth for Life Headquarters, CMSD schools

Marty Weber, president, owner; Mike Weber, vice president, owner

14

Precision Environmental Co. 5500 Old Brecksville Road, Independence (216) 642-6040 / precision-env.com

$37.1 $37.2

$40.1

NA NA

227 227

Industrial, commercial, government, health care, education, historical

Asbestos/lead abatement, selective demolition, concrete sawing/drilling, GPR

GE at E. 152nd St., Chagrin Falls schools, Tri-C NEST, Cleveland Athletic Club renovations

Anthony DiGeronimo president

15

Drake Construction Co. 1545 E. 18th St., Cleveland (216) 664-6500 / drakeconstructionco.com

$21.0 $15.0

$21.0

$19.0 $19.0

45 45

Medical, retail, multifamily housing, tenant build-out, hospitality

General contractor

Multiple projects for Cleveland Clinic Foundation, Yorkview Apartments

Steve Joseph Ciuni president

The Krueger Group Inc. 12600 Triskett Road, Cleveland (216) 252-0222 / buildwithkrueger.com

$13.3 $6.4

$13.3

NA NA

23 23

Commercial, residential, nonprofit, educational, industrial, historic

General contracting, construction management, design-build

Hyland Software Building 3, Stonebrook Montessori, West Side Catholic Center

Robert E Krueger II president

Fiorilli Construction 1247 Medina Road, Medina (216) 692-5845 / fio-con.com

$12.4 $9.4

$33.4

$16.5 $23.2

29 29

Commercial, industrial, office, student housing & retail

General contracting, construction management, design-build

YSU The Enclave, Aldi-Amherst, McDonald's-Westlake, AldiFairlawn, ABC Painesville SherwinWilliams

Carmen Fiorilli president

18

Fortney & Weygandt Inc. 31269 Bradley Road, North Olmsted (440) 716-4000 / fortneyweygandt.com

$6.1 $13.7

$76.0

$10.8 NA

100 113

Senior living, hotel, retail, restaurant, commercial, office and industrial

National account general contractor

Melt Bar & Grilled (multiple Northeast Ohio locations), ClusterTruck, and Arby's (multiple)

Greg Freeh president

19

B&B Contractors & Developers Inc. 4531 Belmont Ave. # A , Youngstown (330) 270-5020 / bbcdonline.com

$3.5 $8.7

$15.0

NA NA

10 80

Commercial and industrial

General contracting, construction management, concrete, foundations, etc.

Various

Geno Leshnack president

16 17

RESEARCHED BY CRAIG MACKEY (CMACKEY@CRAIN.COM)

Want the full Excel version of this list Ñ and every Crain's list? Become a Data Member: CrainsCleveland.com/data Information is supplied by the companies. Crain's does not independently verify the information and there is no guarantee these listings are complete or accurate. Send all feedback to Chuck Soder: csoder@crain.com.

(1) Total value of all contracts won in 2017. (2) Full-time equivalent employees as of March 1, 2017.

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AKRON

Renewal efforts proving good for real estate

By DAN SHINGLER

What’s available

dshingler@crain.com @DanShingler

Total Akron commercial vacancies by year.

Akron must be doing something right — its vacancy rates for commercial real estate are dropping as demand, especially for Class A space, often exceeds supply downtown and in some of the city’s suburbs. That’s the finding of recent research by the Akron office of Chicago’s Jones Lang LaSalle, a real estate firm more commonly known as JLL. Across Akron, vacancy rates have fallen substantially in recent years, the firm found — from a high of 23.1% in the city in 2015 to a current level of 15.8%.

That’s been driven, in part, by downtown development that is the result of organizations expanding or moving operations into the city center, JLL reported, adding that it expects employment downtown to continue to rise at least through 2018 and possibly beyond.

“Akron Public Schools is close to purchasing 10 N. Main Street with plans to move 300 administrative employees there,” the JLL report stated.

“United Way of Summit County, which is in need of more room, is purchasing the Sojourner Truth building and relocating its operations there.

And Akron Children’s Hospital is evaluating development options at 80 W. Bowery Street and 111 Center Street for additional office space to house nearly 500 employees.

“Downtown Akron is gaining momentum, and Mayor Daniel Horrigan’s administration is focused on growing businesses large and small.”

JLL’s vice president and director of research, Andrew Batson, said that the growing popularity of downtown among potential residents — a trend he also tied to recent city policies — is driving more organizations to locate downtown as well. Strategies such as streetscape projects, increased walkability and bikability, and incentivizing residential development are all working together to make downtown

19.9% 2014

23.1% 19.7% 17.5% 15.8% 2015 2016 2017 2018

Source: Jones Lang LaSalle

The downtown Akron real estate market is gaining momentum, according to a recent report from JLL. (Shane Wynn for AkronStock)

Akron more attractive to millennials and other new residents, Batson said.

“Most definitely, there are a lot of initiatives going on in downtown Akron as well as the suburbs, but particularly downtown.” Batson said. “And there are definite benefits to the office sector from the confluence of events — the vision, the streetscapes and some of the other stuff.”

JLL vice president Warren R. Blazy III, who works to lease space for clients downtown, said he also sees larger trends working in the city’s favor.

“You can see trends with Pittsburgh, Cleveland and Detroit — really a resurgence of the downtowns. Now we’re seeing that same resurgence in the second-tier cities like Akron,” he said. “You’ve got residential demand, and there are literally several projects that are months from coming online with new residential units.”

Companies and organizations are noticing and reacting to those trends, he contended.

“Companies are now asking critical questions — ‘How can we hire better talent, and recruit and retain, and have a better workplace?’ — and a lot of that centers around millennials. …

We’ve seen a big resurgence in the last 18 months of companies that were downtown before or have never been downtown and now are interested in moving there,” Blazy said.

Not that it’s difficult to find office space downtown — it’s not. Downtown Akron is still in flux and working to find the right blend of office and residential space, said Jerry Fiume, founder and managing director of Akron’s SVN Summit Commercial Real Estate Group.

“I can find you all kinds of space in downtown Akron, which is why so many office building owners are converting to residential there,” he said.

But that’s a reaction to increased demand for luxury apartments as much as anything, and Fiume continues to work with clients who are con-

verting office buildings to residential units, or are considering doing so, to take advantage of that trend.

JLL said the demand for highpriced rentals downtown remains strong.

“We’re seeing overwhelming demand for urban apartments with a lot of amenities,” Batson said.

Beyond downtown, activity is also picking up, according to JLL’s spring report.

“The suburbs of Akron are also welcoming corporate expansions and new developments,” the report stated.

Richfield is seeing much of the activity, the report said, including a new R&D facility for Nexen Tire, a new headquarters for GMS and a headquarters expansion at National Interstate Insurance. Plus, there’s FirstEnergy’s new technical center on Akron’s west side.

Fairlawn is also a hot spot, Batson said, with developments underway by entities such as the Crystal Clinic, which plans to build at $100 million orthopedic hospital there. Some office buildings also are being planned on spec, which Batson said has not happened often, if at all, recently.

The demand, however, is somewhat limited. Tenants are looking for prime, Class A office space and, in most cases, Class B and C spaces need not apply, Batson said.

That can be a challenge, because while many older buildings can be brought back to Class A status with renovation, such projects are tough to finance before a tenant is signed, Fiume said.

To the south of town, in suburbs like Green, demand is up, too, according to JLL and realtors like Dan Spring, president of the Canton-based NAI Spring real estate firm.

Spring said he’s seen an uptick in demand just recently.

“There’s no doubt. We had a building on the corner of Graybill and Massillon roads that sat there for a long time — and we just filled the entire thing, the first and second floor, with two different tenants,” he said. “It sat there for a long time, with two brokerages, and all of a sudden in the last six months we saw a lot of activity on it.”

Those two leases took up 17,000 square feet of office space, said Spring.

He said he sees demand for offices between about 7,000 square feet and 22,000 square feet in size in places such as Green, Jackson Township and into North Canton. But he’d like to see more supply come online.

“There’s still a lot of B and C space, but there’s very little Class A space,” he said. “If you have someone looking for 8,000 square feet of space with nice windows and in a nice area, that’s difficult to come by.”

That lack of new inventory is a concern in part because real estate is a cyclical industry and often by the time lenders are willing to finance speculative construction, the boom in demand is already starting to trail off.

But Akron’s market likely has room for further improvement, and JLL’s Batson said he’s optimistic, especially about downtown. That area stands to benefit from the city’s continued efforts toward revitalization, he said.

“We don’t see any negatives. I think what we see is opportunity as these (city) projects begin to start happening — the streetscaping, the residential conversions … You’re seeing the work by the public and private sectors in recent years starting to gain momentum in Akron,” he said.

We Can Code IT bringing software camp to Akron

By DAN SHINGLER dshingler@crain.com @DanShingler

We Can Code IT is coming to Akron.

The software boot camp, which has already established itself in Cleveland and Columbus, says it will start offering software development courses in Akron online this month and will have a physical presence in the city later this year.

We Can Code IT founder and CEO Mel McGee made the announcement to about 40 enthusiastic, tech-savvy supporters at an after-work event March 23 at Mustard Seed Market & Cafe in Highland Square. She was alongside her partner in the endeavor, Software Guild founder Eric Wise, who now runs Akron-based DriveIT and trains incumbent workers in advanced IT skills.

“We’re coming to Akron … and we’re very excited about it!” McGee said.

We Can Code IT will share space with DriveIT at its new headquarters

on Akron’s White Pond Drive later this year, McGee and Wise said.

The two organizations have the potential for a great synergistic relationship, they say. We Can Code IT works with those new to information technology and teaches them the basic foundations of software development, while DriveIT teaches specific and specialized skills to existing IT professionals, McGee said.

The synergy likely will extend to Cleveland as well. Wise said he’s currently working on plans to co-locate DriveIT with We Can Code IT there, expanding his company’s geographic reach as well.

“We haven’t put pen to paper on it yet,” Wise said in an email correspondence. “Our plan is to move up into Cleveland in Q3/Q4.”

Wise is smart when it comes to marketing, too. He’s going to use We Can Code IT to help market DriveIT, which offers training through a model akin to a gym membership. Client companies or individuals can buy memberships per person, and then workers can attend as many classes as they like in things like cybersecuri-

ty and various other IT topics. At the same time, Wise thinks his strategy will help We Can Code IT establish itself in Akron.

“We’re going to offer $100,000 in scholarships to new We Can Code IT graduates,” Wise said.

“Any company that hires a We Can Code IT graduate, we will give that company two free training sessions for that employee to use,” Wise said.

Each session is a full course in a specialized subject and normally costs about $1,000, he added.

That will give the new hires the ability to further their technical education in areas specifically needed by their employers, Wise said. It will, of course, also introduce new companies to DriveIT .

It might not take long to hit that $100,000 threshold if We Can Code IT does as well in Akron as it has in Cleveland and Columbus. About 120 students graduate from the company’s 14-week course in each of those cities every year, McGee said.

The education does not come cheap: The course costs $12,900, McGee said. There is some financial help

available for low-income students from We Can Code IT and the state of Ohio, she said, and veterans often can get a lot of assistance. But students still need to be serious and realize that a financial, as well as a personal, commitment is required to succeed.

That’s also why the courses don’t accept just anyone. McGee said all new students are tested for aptitude before they’re accepted and only about 10% of applicants are admitted.

Locally, workforce development advocates and government officials applaud both the expansion of DriveIT and the entry of We Can Code IT to the Akron market. That includes Sue Lacy, president of ConxusNEO, a workforce development agency in Summit County that seeks to match local training initiatives with the needs of area employers. Lacy said she’s been talking to McGee and her staff for more than a year, hoping they would establish operations in Akron.

“We see it as another example of the alignment of the talent ecosystem, which will be critical to us developing a world-class talent pool … with the right IT talent for companies

here in Summit County,” Lacy said.

DriveIT already is growing in Akron. It just signed up both the city and the county as clients, DriveIT co-founder Ian Schwarber said.

County chief information officer Mark Petit said DriveIT’s model is a good fit for government employees.

“The training programs are not as schedule intrusive as traditional allday classroom training,” he said.

“DriveIT’s unique perspective of a gym membership enforces engagement in the learning process with social groups, interactivity, assessments and follow-up.”

Both DriveIT and We Can Code IT will continue to support each other.

There’s really no competition between them, Schwarber said.

"I cannot think of a better strategic alliance than between DriveIT and We Can Code IT,” he said. “Mel's emphasis on an inclusive program, bringing members of diverse populations into the IT space and opening up opportunities that have been traditionally filled by white males, will only enhance the culture in Northeast Ohio."

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AKRON

CONTINUED FROM PAGE 1

At this point, several questions remain, including the types of candidates the university would seek or whether it would consider paying above the typical salary for a school of Akron’s size — Wilson makes, for example, $450,000 as president — to lure some of the top talent in higher education. Almost immediately following Wilson’s announcement, Akron Mayor Dan Horrigan issued a statement urging the university to invest in a national search.

Also, the university hasn’t indicated whether it would host another public search, as it did when it sought Proenza’s successor.

In an emailed statement, Wayne Hill, vice president and chief communication and marketing officer, said the university’s board would talk with the “various university and community constituencies to learn their views on the qualities desired in the next permanent president for The University of Akron, so it would be premature to speculate about what that outcome will be.” The board of trustees has an executive session scheduled for Monday, April 2.

This kind of turnover isn’t uncommon when universities are in times of transition, said Amanda Shaffer, director of the Ohio-Western Pennsylvania-West Virginia region for the Higher Education Recruitment Consortium. The California-based consortium of institutions like colleges, hospitals and research labs helps recruit and retain diverse candidates among its more than 700 member institutions.

A president’s vision can change a

ZONES

CONTINUED FROM PAGE 1

“We know how to do deals,” said Deb Janik, senior vice president for real estate and business development at the Greater Cleveland Partnership (GCP), whose Cleveland Development Advisors Inc. affiliate is active in development financing.

“We’ll learn quickly the (OZ regulations), find out what the appetite is for the investment and find where it makes sense. Those are all the exciting things we have to work out.”

GCP, the regional chamber of commerce, worked with Team Northeast Ohio, the regional economic development nonprofit, and other civic leaders and public officials to come up with the list of Northeast Ohio census tracts that were recommended to Kasich.

Cuyahoga County has 70 of its 252 distressed census tracts among Kasich’s 320 recommended tracts, most in the city of Cleveland. Summit County nominated 22 tracts, Lorain County, 11; Lake County, three; and Medina County, two. The goal was to recommend areas with the greatest need for new jobs and the greatest likelihood of new development.

“We see it as part of our larger site strategy that we’re looking at and how to focus investment in strategically important areas,” said Christine Nelson, vice president for project management and site selection for Team NEO. “We looked at ways it aligns with where other investments have occurred.”

Because only about one-quarter of the census tracts considered economically distressed could be recommended for OZ inclusion, there are winners and losers. Euclid considers itself a winner.

“The areas in Euclid that were se-

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JJScott Scarborough

JJMatthew J. Wilson

university’s focus and throw the institution off-balance, Shaffer said. It’s natural that there would be a “wobble” if that change doesn’t pay off as expected, she said. And the stakes are even higher when public universities bring in change agents, since the institutions have state expectations to meet and more restrictions on measures like tuition.

But that doesn’t mean searches at schools like the University of Akron are “doomed,” Shaffer said. It just means that the right candidate will need to have an honest conversation with the board of trustees so he or she understands the underlying problems. And in Akron’s case, the university will probably want someone who can bring the campus together, because this kind of turnover can be demoralizing and unsettling for the faculty and staff that serve as the backbone of a university, she said.

“They’re still doing all the work,” she said.

The leadership turnover at the University of Akron is a distraction

from its mission, but it’s not fatal, said Terry Hartle, senior vice president of the American Council on Education, a Washington, D.C.-based trade association for college and university presidents. And he doesn’t believe the recent turnover will be a deterrent to interested candidates.

The real challenge, Hartle said, is a broader set of issues facing higher education across the state: low economic growth, decreased state support, a smaller high school population. Finding the right person to lead a university has never been more important, he said.

But it’s difficult.

Boards often want someone with everything from management to fundraising skills. Even without turnover issues like Akron has seen, there’s little succession planning for college presidents, Hartle said, and searches can take a long time. And there’s no guarantee someone will succeed at the end of it.

“There’s really no magic formula for getting it right,” Hartle said.

A 2017 report from the Aspen Institute Task Force on the Future of the College Presidency highlighted the challenges facing today’s university presidents and outlined ways in which new presidents could be successful, such as by getting to know the community and creating a well-being plan to help new presidents keep work-life balance in check. The report predicted “massive turnover” would soon be coming to presidents’ and senior administrators’ offices due to retirements.

And fewer candidates from roles that used to serve as natural steps on the path to a presidency, like the provost’s office, are applying.

The California State University system is all too familiar with presidential searches. The system has 23 campuses and 23 presidents — and in the past five years, the system has conducted 17 presidential searches, said Lars Walton, chief of staff and senior adviser to the chancellor. Walton couldn’t speak to Akron’s situation, but he’s had plenty of experience with candidate searches.

The vast majority of the recent searches in California have been due to retirements, Walton said. But the role of college president is one with a short tenure nowadays. Presidents are under a lot of scrutiny, and it’s a 24-7 job.

“There’s not really a down time,” Walton said.

California State has opted to run the past 17 searches confidentially, which Walton said allows the system to be more selective and find candidates that are really the best match.

With open searches, candidates are under pressure to essentially find a new job, or face their home campus after they’ve failed to do so, he said.

It’s clear that Wilson, for example, is familiar with the awkwardness that arises from one’s name being made public during a presidential search.

In his letter announcing his intention to step down at Akron, he offered his “sincerest apologies for any concern” his Central Florida candidacy may have caused.

Open records advocates, of course, will push for a public search, though public universities can skirt public records and open meetings laws by keeping all records related to searches in the hands of the search firms doing the legwork. That was the case at Cleveland State and Kent State universities in their most recent searches.

Meanwhile, while the needs of each campus are unique, there are some broad traits that California’s Walton sees as necessary. One is that candidates need to be even more publicly focused than in the past, interacting with students, faculty, donors and legislators.

“They’re really running small cities,” Walton said.

lected are most of our industrial corridor”, said Jonathan Holody, the suburb’s planning and development director. “The hope is this continues the movement we’ve been seeing.”

Ed FitzGerald, the former Cuyahoga County executive who now assists local governments and developers through his Great Lakes Economic Development Partners consultancy, said he is working with developers who are considering projects in Akron, Brook Park and Youngstown for OZ financing possibilities.

“People are still trying to figure out the ramifications of this,” he said.

“There have been previous attempts, like the Enterprise Zone, that never really drove investment the way people hoped it would. So we have to see whether or not this changes investor behavior.”

The federal Enterprise Zone program was created in the 1980s and offered a variety of tax incentives for development within the zones. Critics found that the program was not targeted enough to distressed areas — most of Cleveland was an enterprise zone — and not enough of the jobs created by the investment incentives offered went to enterprise zone residents.

This new program is more targeted. Of course, that means that many neighborhoods have been left off the list of recommended areas. For example, the tract that includes the planned redevelopment of the site of the former Lakewood Hospital was not included.

“I’m disappointed that this Lakewood Hospital redevelopment project, estimated to be $70 million to $90 million, didn’t make it on the economic development radar of the state,” said Lakewood Mayor Mike Summers. “I understand how it might have happened, but it’s a big project in an inner-ring suburb;

those don’t happen very often. Everyone is interested in Amazon and big shiny stuff, but this was fundamental, and it’s a 21st century transformational opportunity.”

Similarly, Cleveland councilmen Anthony Brancatelli and Kevin Kelley were upset that neighborhoods in their wards, Slavic Village and Old Brooklyn, respectively, did not make the cut.

However, OZ financing may be a boost to a new project in Cleveland’s Glenville neighborhood. Asked at the March 28 announcement of his apartment project in Glenville’s Circle North neighborhood if he would be looking into using the new financing tool on the project, Wes Finch, founder and CEO of the Finch Group, said, “Absolutely. It definitely could be used. The problem is the regulations haven’t been written yet.”

One thing that makes OZ financing more attractive is that, unlike existing tax credit programs focused on real estate, OZ financing is expected to be used for direct investment in startup or existing businesses that locate in a low-income area, whether they invest in property or capital equipment.

Programs like New Market Tax Credits grant credits against state and local taxes. This new program instead offers a deferment, and even a write-off in some cases, on capital gains earned. The tax law provides that an investor who makes a gain on the sale of an investment can write off 10% of the capital gain, once the investment is held for five years. Another 5% of the capital gain can be written off if the investment is held for at least seven years.

The big tax savings would come if an investor turns that use of capital gains into a successful investment.

After holding the investment for 10 years, the investor will not have a taxable gain for any appreciation in val-

ue in the OZ investment when the investment is sold.

At least that’s the expectation, since the tax law is new and not long on details, so investors and develop-

ers are waiting to see what the Treasury Department’s regulations say.

Said Finch: “Some lawyer told me that this tax bill that just passed, instead of a bill, it’s more of an outline.”

This fall, the University of Akron will have three former presidents in the classroom and on its payroll. Here are their titles and annual salaries for fall 2018, as provided by the university.

JJLuis Proenza is serving as president

emeritus and the Trustee’s Chair in Higher Education and the Economy.

For that, he makes $325,000 a year, plus a $50,000 stipend for the chair position.

is a professor of practice in accountancy. His annual salary is $292,500.

will serve as a faculty member in the School of Law. His annual salary will be $240,500.

SME-U WORKSHOP

Qualify, Close, & Then Present Tuesday, April 10, 2018 Rob Yoho Principal, Sandler Training | MP Solutions Inc. Business development/Sales is difficult, we spend countless hours working hard to get in front of new prospects to engage in initial meetings to present solutions on products & service offerings.

“Sounds good” says the prospect or “Follow up with me next week” they might say. Next week comes and go’s and the prospect won’t return your calls, he/she conveniently enters into the Witness Protection Program never to be heard from again! Come learn how to Qualify, Close, & Then Present. In this dynamic session we will cover: • Buyer Behavior • How to avoid Pre-Mature Presentation Syndrome?

• Why only decision makers can get others to make decisions.

• How to manage the variables that are in your control.

SME-U workshops are held 7:45-9:15a.m. the second week of every month at:

Doubletree by Hilton Hotel Cleveland – Independence 6200 Quarry Lane, Independence, Ohio 44131 SME Cleveland members $10, Guests $20 R.S.V.P. at 216-767-5951 or online at www.smecleveland.com

Sponsored in part by:

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weatherhead.case.edu

CONTRACTING

CONTRACTING

LAW

Colleen Flynn Goss

Mandy B. Willis

Russell O. Wulff

Jody L. Hasman

Partner

Partner

Principal

Project Manager

Fay Sharpe LLP

Fay Sharpe LLP

GrayWolf Services LLC

GrayWolf Services LLC

Fay Sharpe LLP is pleased to announce that Colleen Flynn Goss has been named a partner in the firm. She has over 25 years of experience representing domestic and international clients from small entrepreneurs to multi-national corporations in trademark and copyright matters. Colleen regularly advises clients on management and enforcement of intellectual property and provides guidance on transactional matters and disputes related to trade secrets, false advertising, trademarks, and copyrights.

Fay Sharpe LLP is pleased to announce that Mandy B. Willis has been named partner in the firm.

Having joined Fay Sharpe in 2008, Mandy specializes in patent and trademark procurement, enforcement and defense. She also advises clients on various IP strategies and manages existing and developing portfolios.

Russell Wulff brings many skillsets to the challenges of multi-tenant building projects and disaster recovery support as co-founder, Technical Director and Head Engineer of GrayWolf Services LLC. GrayWolf Services provides ongoing turnkey management of all out-of-the-ordinary, catastrophic, unexpected or otherwise unusual events of any sort not limited to Fire, Flood, Roof Loss, Riser Failure, Seismic Events, Structural Collapse, Explosions, Blown Transformers and other inexplicable Acts-Of-God.

Jody provides full-time, on-site project management, from delegation of tasks to crew and contractors to the coordination of all sub trades. She has 20 years as a Master Electrician, holds Certifications in Welding, Alternative Energy/Wind Turbine Major, Climbing and Safety at Heights, Rigging, Confined Entry Safety, Aerial and Scissors Lift. She holds the National Career Readiness Gold certificate.

Jody is an advocate for women in the trade and was a keynote speaker for Hard Hatted Women.

CONTRACTING Julie A. Lindstrom PhD. Project Specialist

GrayWolf Services LLC Julie holds a BA and MA in philosophy and a PhD in Radio‐TV‐ Film from Northwestern University a natural background for a 15-year veteran union film electrician. She has over ten years’ experience doing commercial electrical work. She has installed dozens of commercial and residential photovoltaic systems, completed American Solar Energy Society (ASES)‐ qualified training in grid‐tied photovoltaic systems.

LAW Kathryn E. Hickner

KNOW SOMEONE ON THE MOVE?

Partner

Kohrman Jackson & Krantz KJK is pleased to welcome Kate Hickner as a Partner in the firm’s Health Care Practice Group. Kate brings more than 15 years of experience in health care law, including transactions and compliance with federal and state regulations in such areas as HIPAA, federal Stark and state self-referral laws, anti-kickback laws and more. Kate is a graduate of Wayne State University Law School and serves on the boards of the PAGE 22 μ APRIL 2, 2018 μ CRAIN'S CLEVELAND BUSINESS McGregor Foundation and the Inamori International Center for Excellence.

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BUSINESSES FOR SALE Small Proprietary Machine Manufacturer for Sale Cleveland W. Niche Market. Producing machines/tooling, parts. Repair & service of same. Complete factory, intellectual property, tooling, programs and fixtures. Building and support equipment. Owner retiring, staff complete and able.

Owner will remain for transition.

Robert Weltman rweltcpa11@gmail.com

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Jason Scales

Business manager, education, Lincoln Electric Lincoln Electric Co. in Euclid has run a welding school since 1917. ¶ At that time, welding as it’s known today was still a relatively new process, said Jason Scales, business manager, education, and the company needed to show people how to use the equipment. ¶ A century later, Lincoln Electric’s recently opened Welding Technology & Training Center will let the company better train welding educators and professionals. The center is about 130,000 square feet, featuring classroom space, an auditorium and a virtual reality training lab. Lincoln Electric invested about $30 million into the new center. ¶ Lincoln Electric’s center is focused on its customer base, training people already in the industry on its equipment. ¶ “We’re not out there to develop new entrants into the welding career field,” Scales said. “We’re there to help our industry and prop up things within the industry, and provide them with that professional development.” — Rachel Abbey McCafferty

Five things His background Scales was a high school teacher and a college professor before coming to Lincoln Electric.

Hobbies He said he likes to “tinker” and is always remodeling or working around the house.

Alternate transportation People in his neighborhood like to ride golf carts to each other’s houses. Scales has a golf cart that he painted and updated.

What’s on?

Scales said he’s not a big TV watcher, but “How It’s Made” is a favorite.

Words to live by Scales said he’s sure his daughters could share some “Scalesisms” he says often, but he just tries to let his actions speak for him.

Lunch spot The Standard 779 East 185th St., Cleveland 216-531-9643 clethestandard.com

The meal One had a baby lettuce salad and the other had shrimp and grits. Both guests had water, and fresh bread was brought to the table.

The vibe This is a quiet spot for lunch. The restaurant’s decor — exposed brick and elegant light fixtures — lends it a classic feel.

The bill $23.76, plus tip

Tell me a little bit about how the training at the Welding Technology and Training Center has changed over time.

When we first started with the welding school, it was more about skill development — just getting people the skill of welding, so that they could successfully bond or weld the two pieces of metal together.

When we think about what we do in the Welding Technology and Training Center today, we’re focused more on advanced technologies. We’re focused on solving our customers’ challenges and issues. ... So we really think that we have a part in connecting that industry with that education sector that now we can start really graduating those individuals that industry really needs.

So we’re not out there doing that function of it. That’s what our community college partners, our trade school partners, skilled trades do. But we want to help provide them the knowledge to help them do that.

You clearly are passionate about this. What is it that you like about your job?

It’s really the challenge of it. ... When we do this, it’s taking what is needed either, a), in that local community, what those local industry partners are needing, or that school. Or you’re looking at it broadly, across the whole United States or even globally.

If you think about some of our industry partners are global, so how do they ensure the quality of products being developed in the United States versus India or Australia or Asia? And you’re solving those issues. You’re helping them develop training programs that are going to make them more productive, more profitable, and be able to produce it in a safer manner.

What are your thoughts on the skills gap? Do you think there is a skills gap right now?

I think the industry is challenged. And I think we need to take a step back and just try to understand what we’re really talking about. The true issue is — and Deloitte has a study out there where they project that by 2025, there’s 3 million or 3 1/2 million jobs that will be open by 2025 in manufacturing. Whereas, 2 1/2 million of those jobs are directly due to retirement. So when you think about the workforce, and you think about industry or manufacturing, 30 years ago, we used to have a turnover

rate of 10% of our workforce. To be able to replace 10% of the workforce with new entrants into manufacturing, or new entrants into those fields, on-the-job training really wasn’t an issue. I had enough capacity of seasoned veterans that could take somebody under their wing and kind of bring them through the system.

But if I start to lose 20, 30 or 35% of my workforce due to retirements, the amount of knowledge that is walking out that door becomes a harder thing to overcome. So I believe that yes, there is a skills gap. Do people have the true skill of running a piece of equipment or doing a tactile function? But the overarching issue is that there’s also a knowledge gap. So if I lose a lot of that knowledge, and it actually results in hundreds of years of knowledge walking out the door, it’s not just the skill of doing something, but can they understand what they’re doing and why they’re doing it? Do they have experiences to pull off of that allows them to be more productive and a safer worker and all that? And I think that’s put the challenge and the strain on education. Because when you used to be able to just teach the skill, well, now there’s a knowledge component that has to go back to that skill, the why and the how. And as technology keeps advancing, you have to understand the why and the how.

And a great example of that is in robotic welding.

What do you mean?

So if you’re driving a car down the road, and let’s just say it’s a manual car, it’s a five-speed transmission.

When you’re driving, you’ve driven that car for five, 10 years, and it’s time to shift from first gear to second gear, you don’t think about it. You automatically just shift gears. You’re letting off the gas, you’re pushing in the clutch and doing this. So your brain is on autopilot, shifting gears.

When you’re doing a skill in a manufacturing place, and you’ve done it for 30 years, you’re not even thinking about what you’re doing, right? You’re just doing it. And you’re successful at it. But the challenge becomes, if they understand and they know how to do it. If I go to try to operate a robot, and all I have is just the skill of welding — that means I can tactilely make that weld. I don’t understand the why and the how — I’m not going to be successful welding with that robot because the brain of the robot’s in my head.

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