Crain's Cleveland Business

VOL. 39, NO. 1

JANUARY 1 - 7, 2018

CLEVELAND BUSINESS

CLEVELAND’S FUTURE IS CRYSTAL CLEAR Crain’s beat reporters make their 2018 predictions Pages 10-14

Entire contents © 2018 by Crain Communications Inc.

Illustration for Crain’s by Mitch Gee

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CRAIN’S CLEVELAND BUSINESS

Small hospitals set stage for big move MetroHealth’s new facilities give preview of what’s ahead for huge campus transformation

By LYDIA COUTRE lcoutre@crain.com @LydiaCoutre

MetroHealth’s two new small hospitals opening this week in Cleveland Heights and Parma are a peek at what’s to come in the health system’s planned 270-room hospital slated to replace its aging patient towers.

MetroHealth is opening small community hospitals — 12- and 16bed facilities — in Cleveland Heights and Parma, respectively, to treat patients with less complex conditions that require shorter lengths of stay.

Officials hope to replicate the design and feel of these two locations in the new hospital, which is part of MetroHealth’s nearly $1 billion campus transformation.

“This is a great example of MetroHealth going to where the patients are,” Dr. Bernard Boulanger, MetroHealth’s executive vice president and chief clinical officer, said of the two new community hospitals. “It’s access to inpatient care close to home.”

The Parma facility, at 12301 Snow Road, welcomes patients on Jan. 3, while the Cleveland Heights facility at 10 Severance Circle will begin seeing patients Jan. 4.

With these additional locations, 80% of residents in Cuyahoga County now live within a 15-minute drive of a MetroHealth hospital, according to the system.

Both locations are former HealthSpan facilities, which housed urgent care and medical offices.

MetroHealth and HealthSpan came to an agreement in 2015 to transition the sites to MetroHealth, which opened emergency departments at the locations in early 2016, followed shortly by medical offices.

The bright, spacious patient rooms in the new inpatient units are reminiscent of MetroHealth’s Critical Care Pavilion, which opened in 2016.

The system is taking lessons from all three projects and applying them to the new main campus hospital.

“It was so exciting to be able to build the Critical Care Pavilion and really redesign how we take care of patients, and then to take that design out here and use it in a lower acuity setting,” said Kim Svoboda, director of business development and integration for MetroHealth. “That’s intensive care, this is lower. And really start there and put in little tweaks and improvements, so we just keep getting better.”

The private rooms, each of which has a private bathroom, offer ways for patients to make their room as comfortable as possible, with white noise options, various lighting settings and remote control blinds to let in natural light.

The rooms all have new state-ofthe-art beds with features like a USB port and a pocket for phones — a convenience for patients, as well as a safety measure to avoid risks of falls.

Patients can control the firmness of the beds’ air mattresses, which can help turn patients and can even grow in length to accommodate patients.

Safety lights at the end of the bed can let a nurse know from the hall whether the bed rails are up, if the bed is in its lowest position, and other critical information.

“The two hospitals, they’re not just in the community — we actually build them for the community, which is very, very important,” Boulanger

MetroHealth’s 16-bed hospital on Snow Road in Parma will open its doors to patients on Jan. 3. The patient rooms at the hospital each have a private bathroom (below left), and the high-tech beds project treatment alerts onto the floor for quick assessment by medical staff (below right).

The admissions area (bottom center) at the Parma facility leads to a window-lit family lounge. (Photos by Peggy Turbett for Crain’s)

said. “And the features and the personnel and how the staff are going to interact with the patients — it’s all to provide that really personalized touch, to provide personal care.”

Based on the number of patients admitted from the Cleveland Heights and Parma emergency departments, as well as the number of patients who come to the main campus from those areas, MetroHealth expects to average about 12 patients in its 16 beds at Parma and about eight to 10 patients in its 12 beds at Cleveland Heights.

Patients requiring more intensive, specialty care will go to MetroHealth's main campus.

“We’re not trying to take care of all patients like we are down at the main campus,” Svoboda said. “The type of equipment and services we offer here is designed for a specific patient population.”

Both the Cleveland Heights and the Parma facilities offer a range of

ON THE WEB

For more pictures from a tour of MetroHealth’s new hospital in Parma, go to www.crainscleveland.com.

services, including: emergency services, lab services, radiology, pharmacy, endocrinology, ophthalmology, OB/GYN, podiatry, pulmonology, chemotherapy/infusion, dermatology, nephrology, neurology, oncology, orthopedic surgery, physical therapy, psychiatry, rheumatology and gastroenterology/endoscopy. Additionally, Cleveland Heights offers pain management services and Parma offers urology, ENT and weight management.

“We believe we will offer the citizens of Cuyahoga County a very different experience, one that is significantly more personal … a facility and team that is focused on replicating a homelike environment as much as possible and one that is focused on holistic approach to their recovery,” said Dr. Akram Boutros, MetroHealth’s president and CEO. “So we believe we will define a new patient experience for individuals who require admission at these two facilities.”

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Now in ‘position of strength,’ Metro seeks partnership

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

MetroHealth plans to seek out other hospitals and health systems to enter into a “strategic partnership,” in the hopes of enhancing services and reducing costs.

As the system concludes an “extraordinary year,” and enters a “very promising” 2018, president and CEO Dr. Akram Boutros believes the system has a lot to offer, and now is the right time to begin looking for such opportunities. The system’s board of trustees agreed, approving a resolution in December to engage an adviser to help evaluate strategic partnerships.

“From our point of view, MetroHealth is at the best position it has been in decades,” Boutros said. “That creates a position of strength, which — coupled with enormous changes and uncertainty in government payers and sig- Boutros nificant consolidation within Northeast Ohio and the U.S. market — makes it the right time for us to seek relationships with either a national or regional partner.”

The resolution approved by the board of trustees explicitly takes off the table any merger, sale of assets or any affiliation or joint venture that would result in any change in control of the system.

Selling a minority stake of MetroHealth also is not an option, as the system doesn’t have the authority to sell any stakes, “neither do we want to,” Boutros said.

But beyond those parameters, the system hasn’t determined any specific model for a partnership.

“MetroHealth today is in excellent position to meet the immediate health care needs of the community,” the board resolution states. “However, the long-term prospects for standalone safety net hospitals may be less certain.”

According to the resolution, safety net hospitals face numerous challenges — declining government reimbursement, uncertainty about the fate of the Affordable Care Act and other reform efforts, the move toward value-based payments, the population health shift, declining inpatient services, market disruptions, industry consolidation and increasing consumerism.

A partnership could help combat many of these challenges, as well as offer financial and clinical advantages, Boutros said.

The purchasing power of a larger network could help reduce costs by consolidating back-office enterprises, such as IT and the purchasing of insurance or medical equipment.

MetroHealth also would look for a partner with clinical expertise that could help expand the scope of services and benefit the continuum of care.

With a strategic partnership, national provider contracts would be more available to the system, such as clinically integrated networks. It could also allow more opportunities for research and education and help MetroHealth recruit clinical talent, Boutros said.

“We’re approaching this from a position of strength,” he said. “Unlike other hospitals that only seek partnerships when they are in trouble, we are looking

at this at the height of MetroHealth, which I think is a prudent thing to do from a board and management standpoint.”

Since Boutros joined MetroHealth in 2013, the system has had discussions with “over half a dozen large and moderate size health systems within Northeast Ohio,” he said, declining to name the institutions. But nothing ever came to fruition, for a variety of reasons, he said. For one, some larger health systems are often looking for acquisitions or mergers. Plus, ongoing relationships require a lot of investment over many years.

“There’s been, at times, a lack of appreciation for what MetroHealth brings to the table,” Boutros said. “And that’s been reasonable because we were developing our population health team.

People needed to see that MetroHealth can achieve its promise, and it took us some time to demonstrate that. … And frankly, five years ago, the future of MetroHealth was in question. I don’t think it is today.”

An adviser, which Boutros said the system plans to select in the first quarter, will help define goals, establish metrics, identify partnership models, find preferred partners and evaluate success of the partnership. The hope is to put out an RFP in the second quarter and have a partner identified by the end of 2018.

Boutros said he wants to see local, regional, state and national parties apply for the RFP process. Partnering with a for-profit hospital or system would “hold significant hurdles,” while nonprofit and other public health systems would be easier and “much more aligned with our mission and values,” he said.

Faith-based organizations also would be an option, so long as the partnership allows for MetroHealth to continue as a secular public hospital and not conform to faith-based requirements.

“What I would tell you is that there is also significant synergy in mission and future focus with health systems like Geisinger,” Boutros said. “They’re focused on population health, so are we. They have an academic and research based platform. So that’s an opportunity, we think.”

He hopes to see systems like the Mayo Clinic, Johns Hopkins and the University of Pittsburgh Medical Center interested in a partnership. He also mentioned Toledo-based Promedica.

MetroHealth has a lot to offer a partner, Boutros said. A strategic relationship would enable the system to leverage its strengths to help other institutions.

The system’s expertise in managing Medicaid patients and achieving high quality and low costs is becoming an attractive asset as other large health systems and hospitals struggle to do the same. Other programs that the system brings to the table include its trauma services, its nationally recognized population health and primary care services and its physical medicine and rehab centers.

Plus, MetroHealth is embarking on a nearly $1 billion campus transformation plan, including a plan to replace its aging patient towers. This, Boutros believes, will help attract high-caliber health systems.

“I think this is about changes in health care landscape that are coming at a very rapid rate, and it’s about our commitment to the population that we serve at MetroHealth,” he said. “We want to make sure that no one in Cuyahoga County is left without health care.”

Dan Gilbert, founder and chairman of Quicken Loans Inc. and owner of the Cleveland Cavaliers, is luring top tech talent to Detroit from Silicon Valley.

(Bloomberg)

After beating banks, Gilbert takes on tech

By BLOOMBERG

Billionaire Dan Gilbert’s Quicken Loans Inc. outgrew almost every U.S. mortgage provider by unfurling technology like its online Rocket Mortgage platform faster than big banks.

Now closing in on the industry’s leader, Wells Fargo & Co., he’s picking more fights: Luring top tech talent to Detroit from Silicon Valley giants like Facebook Inc. and Google.

“Everything is about innovation, creativity, newness, trying to keep the culture non-bureaucratic,” said Gilbert, 55, in a phone interview. “To me, that’s how you compete in the world today.”

Gilbert, who owns 77% of the mortgage lender he founded more than three decades ago, boosted stock awards to employees 56% to $1 million during the first nine months of 2017, according to a marketing document for a $1 billion bond sale in December. The closely held firm runs an internal system that lets recipients — many of them technology recruits — eventually cash out their equity.

Gilbert is counting on creative millennials, who he said “love that Detroit thing,” to be drawn to a city with an underdog mentality and a dirt-cheap cost of living compared with Silicon Valley. Estimated to be worth $8.5 billion by the Bloomberg Billionaires Index, he’s been a big investor in Detroit and Cleveland, where he owns real estate, casinos and the Cavaliers.

Even in a rough year for mortgage providers, Gilbert has invested aggressively. Spending on tech staff contributed to a roughly $50 million increase in compensation costs and an 8.6% increase in total expenses in this year’s first nine months, according to the bond document obtained by Bloomberg. Companywide, net revenue fell 5.1% and net income tumbled 38%. By contrast, mortgage-related revenue fell 27% at Wells Fargo and 75% at Bank of America Corp. as a refinancing boom ended.

As a closely held firm, “we have that luxury of just investing back in” instead of constantly worrying about earnings targets, Gilbert said. He said the firm’s culture adheres to Amazon.com Inc. founder Jeff Bezos’s philosophy of staying in “Day 1” mode — pushing itself to behave like a startup.

Tech know-how has enabled Quicken to close loans faster and more profitably than banking rivals. It typically funds loans about 33 days after applicants upload their information. The industry average is 40 to 45 days, according to newsletter Inside Mortgage Finance.

Quicken has an average gain-on-sale margin of about 4.1%, according to the bond document. The broader industry booked a 1.3% effective margin in early December, according to a Mortgage Bankers Association proxy for gains on such sales.

Gilbert founded Quicken in 1985 as a local mortgage bank and transformed it into a national online lending business.

While banks typically hold at least some mortgages on their balance sheets, Quicken makes loans

almost exclusively through its website and call centers and then sells them.

About 2 million people have used Rocket Mortgage, which lets people apply for mortgages on their smartphones. The company advertised the product in a 2016 Super Bowl commercial, bought leads from aggregators such as LowerMyBills.com and sponsored a NASCAR racing team.

Wells Fargo is piloting a digital application for release next year, and in August it partnered with Blend Labs Inc. to move more forms online. Still, Gilbert said he’s confident that Quicken can catch up to its loan volume.

“We’ll be the largest retail market share lender within a short period of time,” he said.

A Wells Fargo spokesman declined to comment.

Seeking coders The company employs 12,000 people. About 1,900 focus on technology, including 500 who develop software.

“I don’t think you can overspend on great technology people,” Gilbert said. “If there were 500 of them that walked into our door tomorrow and they were all proven to be top notch, I’d hire them in two seconds.” He would do that, he said, “whether we needed them that minute or not.”

Its growth hasn’t come without turmoil. Quicken has been feuding with the Department of Justice for years over mortgages backed by insurance from the Federal Housing Administration. In 2015, the U.S. accused the company of falsely certifying loans that weren’t FHA compliant between 2007 and 2011.

Quicken has said the assertion is based on a “cherry-picked” sample.

Tax plan Many other big lenders settled similar claims.

Gilbert, who says his firm has made about a half million FHA loans, said he’s not interested.

“You had a very aggressive DOJ decide several years back to put the largest lenders of FHA on a board, and say, ‘Let’s go after them,’ ” Gilbert said.

“When we start to treat the good guys and the bad guys the same, then that’s a real problem.”

Quicken has reserved $10 million to deal with the legal issue — unchanged since at least 2015, according to the bond document and a similar 2015 document. Gilbert said he’s “very confident” that will be enough.

He said he’s also unfazed by a clause in the Republican tax overhaul that President Donald Trump recently signed, capping the mortgage-interest deduction at $750,000, instead of $1 million. The change may cost home buyers in areas with high property values, such as parts of California and around New York City.

But few people are going to decide against buying a house because they can’t get the larger deduction, he said. “It’s not affecting a huge chunk of America.”

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JobsOhio and two other nonprofit organizations that promote business development in Northeast Ohio are escalating their efforts to find businesses in Cuyahoga, Geauga and Lake counties that are thinking of expanding, to make sure they do so here rather than elsewhere in the United States or beyond.

Between them, JobsOhio, the state development nonprofit, Team Northeast Ohio, the regional JobsOhio counterpart that serves 18 counties, and the Greater Cleveland Partnership, the local chamber of commerce, expect to add as many as a dozen staffers, who will be calling on companies in the three counties to identify those that are evaluating the longterm location strategies for their businesses. That will double the number of business development and engagement staffers the three organizations now send out.

The idea is to be ready with financial incentives or sites available for expansion before the businesses decide to expand a plant at a location out of state, or leave the region altogether.

“We have come to the conclusion that there is an opportunity to invest differently, and all of us are thinking about how we align our strategies,” said Bill Koehler, Team NEO’s CEO. “That has culminated into a series of ideas of how we can invest differently and coordinate better in this community to better drive economic development outcomes.”

This new strategy is still in its infancy and neither Kristi Clouse, JobsOhio’s executive director of operations, nor executives with the other partners could put a price tag on this expanded effort. JobsOhio, though, already supports Team NEO financially. In 2015, the latest information available, JobsOhio contributed $2.2 million to Team NEO’s $5.5 million budget, according to tax forms the nonprofits filed with the IRS. Team NEO also is funded by area corporations, foundations and chambers of commerce, including GCP. JobsOhio’s financial support comes from its ownership of the state-run liquor business.

The glamour in the economic development world comes from attracting new businesses — like Amazon. com Inc.’s recent move to build two fulfillment centers in Northeast Ohio — that are in the business sectors of the future. JobsOhio was created by Gov. John Kasich after he took office in 2011. Initially, Kasich saw JobsOhio competing to bring new businesses in key growth industries to the state through financial incentives.

The job of retaining existing businesses or helping them expand was left to the regional partners, like Team NEO, that JobsOhio began to fund after its creation.

But, Clouse said, JobsOhio is stepping up its involvement in retention and expansion because the bulk of the job creation, about 80%, comes from the expansion of existing businesses.

So the JobsOhio strategy has evolved, with greater emphasis on finding sites, including spending to clean up environmentally contaminated sites, and supporting worker training programs needed to attract new businesses.

In addition to the two fulfillment centers planned for Northeast Ohio, an Amazon pickup store opened in downtown Akron (pictured) in August 2016, and another debuted in downtown Cleveland last May. (Contributed photo)

This focus on Cuyahoga, Geauga and Lake counties is a recognition of their importance to the region’s and the state’s economy.

“This is pretty unique for the Cleveland and Northeast Ohio market,” Clouse said. “Northeast Ohio is very important to Ohio’s economy overall, and any assistance we can provide to spur that and continue to spur that, I think was a very important decision for us.”

Economic development organizations, and public development departments as well, have always realized that making personal calls on business owners or plant managers is one of the best ways to learn about a company’s needs or what needs to be done to improve a company’s comfort at its existing location. A key goal of this staffing expansion will be making more of those calls.

“We have come to the conclusion that there is an opportunity to invest differently, and all of us are thinking about how we align our strategies.”

— Bill Koehler, CEO, Team NEO

“This is just combining resources in the Northeast Ohio market,” Clouse said. “If we can more than double the calls that we are all making, just by that ratio, we’re going to get to more people and make sure with that number of more calls we’re not going to (miss) opportunities.”

This staff growth also will help the organizations look at developing an inventory of buildable sites for businesses that are looking to expand.

Clean sites — those that don’t require time-consuming and costly environmental remediation — are hard to find, especially in Cuyahoga County. If the local organizations can find sites that might be attractive with a little work, JobsOhio has money available to clean up sites for businesses that need to expand.

This buildup is happening now because the organizations are hearing more often that companies, which may have operations scattered

around the country, are looking to grow. The three organizations also plan to create a business council of business owners and chief executives to keep in closer touch with the needs of businesses in the three counties.

“Companies are interested in growing again, and we’ve got to get out to more of them,” said Joe Roman, president of GCP. “When we call on people, there is more likely an interest. They’re saying, ‘Yeah, I have been thinking about this,’ or ‘I am looking at another building.’ That’s more than we were seeing five years ago. We’re definitely seeing it.”

Other organizations that do economic development are just beginning to hear about this expanded outreach effort and welcome the support.

“As this region continues to gain national recognition, it is terrific to see this addition of resources that will be devoted to both retaining and supporting our local businesses, as well as to telling the great story we have to communicate to businesses who are thinking of relocating to Northeast Ohio,” Cuyahoga County Executive Armond Budish said in an emailed statement. “The county has a longstanding partnership with both Team NEO and The Greater Cleveland Partnership. We know that this ongoing public-private relationship is something that strengthens us as we reach out to businesses who are considering a move here and as we help our current businesses expand and grow.”

Mark Rantala, executive director of the Lake County Ohio Port & Economic Development Authority, sees it as a boost to his county’s economic development programs.

“Probably the greatest proportion of new job creation is actually on the perimeter (of the three counties), so we probably will get the most out of the program,” he said.

Geauga County has the least commercial development of the three counties, and Tracey Jemison, president of the Greater Geauga Partnership, said his small staff of two fulltime and two part-time people made only 18 company calls in the past year. He said he already planned to get out more in 2018 before he heard about the JobsOhio plan.

“Making these calls, timewise, is difficult,” he said. “We welcome this help.”

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At the Table

Break those habits: Embrace a new trend or two in 2018 I’ve written dozens of “dining trend” stories over the years, and I’ve come to at least one conclusion: It’s often a lot of malarkey.

Why? Simply Joe put, humans are Crea creatures of habit. Styles and culinary influences may change, but we tend to stick with the foods and flavors we enjoy.

Years ago, during a talk with a college instructor who taught a course in food and culture, she made a point that remains vivid. She observed that immigrant cultures coming to America routinely changed their language, housing patterns, style of dress and other matters of lifestyle, yet still embraced the dishes they’d grown up with. Diet is a most intimate form of personal expression, and satisfaction.

Barring an ultimatum from the cardiologist or some personal epiphany, it’s the rare individual who embraces an entirely new dietary path.

But that doesn’t mean it isn’t fun to speculate on the cultural shifts that may influence at least some of what, and how, we eat.

It’s easy to think of trends in terms of styles of preparation, ethnic roots and flavor profiles. But other matters come into play, such as service and customers’ awareness of what really is GOOD food.

Through conversations with Cleveland chefs and combing through a few prominent trend-spotters — and my own recent observations — here are some changes in the restaurant and dining landscape you might look forward to in the year ahead.

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You can interpret that in lots of ways, especially in the era of Yelp — that intriguing (often maddening) world where “everyone’s a critic.”

Dante Boccuzzi, who has cooked around the world and owns Dante restaurant in Tremont and several other spots, sees better-educated diners as the key to a growing and improved restaurant scene.

“The general public, thank God, is becoming more knowledgeable and in tune to food: what’s good for you, what’s healthy, what’s ‘properly’ prepared. A greater understanding of what’s on the plate, and maybe even ‘etiquette.’

“The worst thing for a chef like myself is (that) you pour in all your thoughts and creativity, talent and efforts into what you serve, and they don’t understand it. But with time, people have become more aware,” Boccuzzi said.

As time unfolds, Cleveland is catching up to the nation’s top dining scenes, he adds.

“I’ve been to New York City a couple times over the past year, and on certain levels the dining experiences I’ve had there I’ve ALSO had in Cleveland. That’s a great thing,” Boccuzzi said.

Better service When Tom Sietsema, restaurant critic for The Washington Post, visited

Chef Adam Lambert, late of several area kitchens, teamed with purveyor Trevor Clatterbuck to open Ohio City Provisions, which sells fine meat products in the Ohio City neighborhood.

That’s evidence that our hunger for great fare doesn’t necessarily require a restaurant reservation.

Low country influences

Young culinary professionals are heading to bakeries and other food purveyors, such as On the Rise bakery, which offers specialties like the ones pictured here. (Contributed photo)

Cleveland before the 2016 Republican National Convention, his biggest complaint was lackluster service.

Scott Kuhn, co-owner of Driftwood Restaurant Group (Cibreo, Welshfield Inn, Hodge’s), said that is changing.

“From an employment standpoint, the never-ending hunt for more great employees will continue,” Kuhn said.

“As the number of (Northeast Ohio) restaurants seemingly continue to grow, that forces you to operate sharper than ever before.”

When employees bounce around from restaurant to restaurant, seeking better opportunities, businesses struggle. The best ones rise to the occasion through more flexible scheduling, menu promotions that draw customers, and more.

Because of that, restaurants have gone back to the basics, Kuhn added.

“There’s got to be a renewed focus on consistency. We’re not impervious. In the year ahead, guests will see restaurants focusing more on that: that the dish is the same every time they come in.”

More artisan purveyors These past 10 years or so, I’ve wondered whether we’ve hit the wall in terms of restaurant openings.

In a sense, we have — at least if you consider the very rough equation that every time a place opens, another closes. (Not counting new construction of chain restaurants, which continues unabated.)

But I’m seeing a change in direction by chefs who forgo traditional sit-down spots to take a different route: the realm of prepared foods.

Young culinary professionals are heading bakeries, dessert shops, and cheese-making and other specialty retailers.

Adam Gidlow, Britt-Marie Culey and Bridget Thibeault took the retail path with bakeries such as, respectively, On the Rise, Coquette Patisserie and Luna Bakery.

Classically trained chefs Melissa Khoury and Penny Barend moved from the restaurant sector to open Saucisson, a shop that focuses on sausages, cured meats and other products in Cleveland’s Slavic Village neighborhood.

The cuisine of the nation’s Southeast — specifically the “low country” regions of South Carolina, southern North Carolina and southeastern Georgia — always have held a place in my heart. Fresh seafood, stoneground grits, okra and a slew of other vegetables come together in a melange of soul-satisfying dishes.

Chef Eric Wells is a convert, too. He sees dishes like shrimp-and-grits, she crab soup, Hoppin’ John and hummingbird cake as mouthwatering additions to Northeast Ohio tables.

“I see it happening more and more here and in other parts of the country,” said Wells, a caterer and private chef who operates Skye LaRae’s Culinary Services.

“The appeal is so down to earth: taking simple ingredients and just making a phenomenal dish,” Wells said. “The great thing with low country is that it’s not 25 ingredients you have to have shipped in from around the country. It’s five or six ingredients, simple things you can easily get, then cooked low and slow. Elevating those simple things to a wonderful dish.”

The coming flavorings Annually, Baltimore-based spice company McCormick Co. produces a flavor forecast for the year ahead. It’s always interesting, as much for the spices they’re extolling as for a beam on cooking trends they’re spotting around the nation.

This year, McCormick spotlights three sectors worth noting.

In terms of seasonings, you may want to explore the little-known flavors of East Africa. The company’s forecasters specifically cite berbere, the most popular blend common to Ethiopia that contains “an array of spices like paprika, allspice, coriander, cardamom, ginger, cinnamon and red pepper,” which yield a “hot, sweet and citrusy flavor perfect for chicken stew and meats, as well as lentils and veggies.”

Come summer, fans of grilling may want to try the Tanzanian approach: Start with a marinade using lemon, tomatoes and green papaya to help tenderize the meat, followed by garlic, red pepper, ginger and curry “for a bold flavor,” according to the forecasters.

Looking for other trends? Two more are already in play.

I’m seeing more “hand-held” dishes, especially tacos, pork buns, empanadas and the like. They’re big players in the whole “sharing” trend.

Also popular are nutrient-packed “green” drinks, such as morning smoothies (to kick off the day with a big dose of antioxidants, vitamins and other essential phytochemicals); afternoon sippable soups (a midday energy boost); and evening elixirs that have a restorative effect at the end of a crazy day.

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More colleges turning to faculty buyouts

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

Oberlin College hopes some of its faculty members retire soon.

The liberal arts college in Lorain County has too many professors compared to students, and it has struggled financially, as expenses continue to grow faster than revenue.

To address those concerns, the college recently rolled out a so-called voluntary separation incentive program, aimed specifically at tenured faculty members. Oberlin offered another such program last year that was more broad and included staff and administrators, but participation from tenured faculty wasn’t as high as had been hoped.

Oberlin isn’t alone in turning to programs that incentivize faculty and staff to retire early in an attempt to reduce costs. Several Northeast Ohio colleges and universities — public and private — are looking to trim their ranks in hopes of improving their bottom lines and ultimately investing in other programs aligned with the institutions’ strategic goals.

The University of Akron’s board of trustees recently approved a buyout program aimed at faculty. Nathan J. Mortimer, CFO and vice president of finance and administration for the university, said plans like these have been more common at colleges and universities in recent years.

“People are talking about this, if not actually doing it,” Mortimer said.

The 2017 Inside Higher Ed Survey of College and University Business Officers supports that idea. Respondents were significantly more likely to agree with the idea that their institutions would promote early retirement programs for faculty, staff and administrators this academic year, compared to the 2016 survey. For example, this year, 38% of respondents said they agreed or strongly agreed, based on a scale of one to five where five is “strongly agree,” that their institutions would implement such a program for faculty. In 2016, 27% of respondents to the Gallup and Inside Higher Ed survey agreed or strongly agreed with that statement.

As for the University of Akron, its financial difficulties have been well documented, Mortimer said, and these types of programs can help alleviate those pressures. Recently, the university decided to offer a onetime buyout program for full-time faculty and administrators with fulltime faculty rank, which the board approved in early December. The university is still working through the details, Mortimer said, but the hope is to officially announce it around the holidays and open it in early winter.

People who will take the buyouts will likely be older, higher-paid faculty. And the university usually hires in lower-level faculty members. So a buyout program can help it save money, but also strategically invest in the programs that need new faculty members, he said.

That idea was also behind the strategy of Kent State University’s re-

cent separation plan for faculty, announced in May. The university also had a plan for staff announced earlier in the year.

Part of the goal for the faculty-related plan was to free up funds and allow the university to hire more tenure-track faculty focused on research. Over the last several years, the university has been significantly trying to amp up its research enterprise. Kent State in 2015 hired Paul DiCorleto away from the Cleveland Clinic to lead the effort, and recruiting more research-producing faculty has been one of his top priorities.

Almost 100 faculty members opted in to Kent State’s plan, and before replacement costs and program and administration costs, the university said $11.5 million in salary and benefits savings will be realized Mortimer said the University of Akron first began considering a buyout last winter. After talking with the faculty union, it settled on a transition after retirement program, a customizable program that lets faculty members retire but then resume limited duties on campus, which was implemented last spring and will continue on an ongoing basis. About 10 faculty members have opted for it so far, he said.

Similarly, Hiram College recently announced a new step-down retirement program for tenured faculty, aimed at improving its finances. The program would let eligible faculty choose a one- or two-year step-down schedule, during which they would teach one to three classes a year,

President Lori Varlotta said. Faculty will be able to opt in through the end of January, and the reduced schedules would begin next academic year.

Retire-rehire programs, which the University of Akron also offers, can also lead to savings for colleges and universities. Lakeland Community College in Kirtland in 2012 and in 2017 offered a retire-rehire program for non-teaching employees, which allowed them to retire and come back at lower salaries. In 2012, it was all about money, said Cathy Bush, chief of staff and senior vice president for institutional development and effectiveness, noting the college was able to save about $500,000 through the program. But in 2017, there were more factors at play.

Changes to the SERS pension tables could have incentivized people to retire early, she said, and the college was afraid a lot of people would take that option, draining it of institutional knowledge. Bush said the college learned from the 2012 version of the program that most of the people who took part have already left and chose it as almost a staged exit strategy. So the plans have helped the college both save money and plan for when people may retire.

“For us, it’s been great,” Bush said.

Lakeland has also used voluntary separation programs and early retirement incentive programs in the past, and seen success in terms of saving money.

Oberlin College, meanwhile, is in the midst of its second voluntary separation program after last year’s

didn’t get as much faculty participation as hoped, said Dean Tim Elgren.

Almost 100 employees participated in the 2016 plan, but only 15 of those were faculty members, according to the university.

The new plan is just for tenured faculty members — those that typically have the highest salaries — and is designed to appeal to them. For example, the last program was based on most recent pay, Elgren said. But if a faculty member was on sabbatical, their most recent pay could be lower than their base salary. The new program is instead based on that base pay.

Costs at Oberlin are outpacing revenue, Elgren said, and the college has more tenure-track faculty than ever before at a time when the student population isn’t growing. In 2007, Elgren said, Oberlin had 194 tenure or tenure-track faculty members. This academic year, there are 226.

Last spring, the College of Arts and Science faculty agreed that eight tenure-track lines needed to be cut within five years. But since tenure-track faculty can’t lose their jobs due to cuts, barring a total restructuring, the college needs open positions to eliminate those lines.

“People don’t lose their jobs,” Elgren said. “That’s not how this works.”

Elgren said the goal would be for individuals to work with their departments if they’re planning to participate in the voluntary separation plan. The plan allows for three departure options in June 2018, June 2019 or June 2020.

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CRAIN’S CLEVELAND BUSINESS

Opinion From the Editor

It shouldn’t be so hard to say you’re sorry

Editorial

Meet and greet Cleveland State University has been one of the engines propelling the city’s urban revival. In as much, the leader poised to take over as president for Ronald Berkman upon his retirement this summer instantly will be — or at least should be — one of the city’s most visible leaders.

So, who’s in the running? Thanks to a creative — and often scorned — maneuvering of public records law, we simply won’t know until that individual has been chosen. To prevent the names from being made public, all paperwork regarding the finalists is in the hands of the private firm handling the search, according to a recent Cleveland.com report.

As a business publication, we understand the sensitivities that go along with filling a high-profile post. These types of roles require a certain type of candidate — individuals likely holding visible roles elsewhere. Still, the idea of filling the Cleveland State post without any sort of public vetting session or meetand-greet among finalists and the Cleveland State community is concerning at best.

Since arriving in 2009, Berkman has spearheaded the transformation of what was once a sleepy commuter school in downtown Cleveland to a true residential urban university. The university’s academic profile has risen alongside new buildings, and its ability to connect with the business community continues to impress.

It’s clear Cleveland State’s board made a solid choice in Berkman’s hiring. Still, the Cleveland State community most certainly has questions for his possible successors, and it must defer such activities to the search committee without any knowledge of who is being considered for the post.

A number of critical issues have bubbled to the surface over the last few years at Cleveland State — many of which, it could be argued, Berkman and the board failed to address adequately.

Just a few months back, for example, in his initial statement, Berkman failed to equivocally condemn anti-LGBT fliers that appeared on campus. What followed was an important campus

dialogue that we believe should continue with the presidential finalists. It’s worth noting that Berkman, admirably, held an open forum to address the fliers. However, the blurred lines between hate speech and free speech isn’t an issue that is going away any time soon, and students, faculty and staff most certainly are interested in what their future leader has to say on the issue.

Berkman Likewise, Cleveland State’s handling of the presidential residence during his tenure — the shifting between fancy East Side residences and a posh downtown apartment — presented some challenging optics for a university that prides itself on inclusivity and affordability. Again, a worthwhile topic to publicly address with Berkman’s potential successors.

Cleveland State, of course, isn’t the only public university to shroud its search in secrecy. Kent State, Ohio State and the University of Cincinnati all handled their searches similarly. The University of Akron’s last search was remarkably transparent with open visits and a throng of biographical information posted on its website, but that search resulted in the hiring of Scott Scarborough — and we all know how that turned out.

It’s fair to say that transparency is one of those issues that journalists seem to care about more than others. And, quite frankly, many people likely aren’t interested in the machinations of presidential searches. But that doesn’t make this issue any less important.

Too many decisions in this town are made behind closed doors. Too often public meetings are simply a final staged act.

Cleveland State likes to pride itself on “Engaged Learning,” but that’s a difficult mantra to defend when the most important decision facing the university is limited to a small group of individuals in a board room.

True engagement is a university-wide process.

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

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216-522-1383

You know we’re living in interesting times when the simple act of a heartfelt apology makes headlines.

Actress Jenna Fischer, who starred in the TV comedy “The Office,” apologized on Twitter last week for spreading misinformation about the GOP tax bill.

“I made a mistake and I want to correct it.

After reading your feedback and doing additional research, I discovered that I tweeted something that was not accurate,” Fischer wrote. “Last month, the House of Representatives voted for a tax bill that did kill a $250 deduction for teachers to buy classroom supplies, but in the final bill the deduction was restored. I feel genuinely bad about getting my facts wrong and I’m sorry.”

Elizabeth The actress had gotten heat days earlier McIntyre when she incorrectly tweeted, “I can’t stop thinking about how school teachers can no longer deduct the cost of their classroom supplies on their taxes...something they shouldn’t have to pay for with their own money in the first place.

I mean, imagine if nurses had to go buy their own syringes.”

The tax bill was a fast-moving piece of legislation and Fischer got her facts wrong. It’s understandable at such blazing speed, and with such a lack of public discussion before it was passed.

She realized her mistake, deleted the original post, apologized fully and moved on. Seems like a pretty simple formula, and it is a great example of how to apologize. But Fischer’s mea culpa stands in sharp contrast to the dozens of half-hearted “apologies” issued recently in the wake of sexual misconduct allegations leveled at powerful men in multiple industries.

Too often, the person issuing an apology is vague or evasive.

TV journalist Charlie Rose told The Washington Post: “I have behaved insensitively at times and I accept responsibility for that, though I do not believe that all of these allegations are accurate.”

Movie mogul Harvey Weinstein, whose public outing of his misbehavior sparked the #MeToo movement, placed the blame for his misdeeds on the era he grew up in: “I came of age in the ’60s and ’70s, when all the rules about behavior and workplaces were different. That was the culture then.”

Those are supposed to be apologies? Sorry, no.

Why is genuine contrition so difficult? Psychologist Harriet Lerner, author of “Why Won’t You Apologize?: Healing Big Betrayals and Everyday Hurts,” recently told National Public Radio that apologizing is difficult for most people.

“Humans are wired for defensiveness,” Lerner told NPR. “And it’s very hard for us to take clear and direct responsibility for specific things we have said or done — or not said or done — without a hint of blaming, obfuscation, excuse-making (or) bringing up the other person’s crime sheet.”

That’s what we can learn here. Forget the excuses, cast aside the blame, the so-called “mitigating factors” and the squishiness. Take a look at yourself and the facts and come clean. Fully.

“I’m not ashamed to say I was wrong and I’m not ashamed to correct it,” Fischer wrote. “I was taught that taking responsibility is the right thing to do (Thanks Mom and Dad!) Please accept my apology.”

The stakes, of course, are higher for those who act inappropriately or even criminally. A true apology, an acknowledgment without condition of wrongful behavior, would, as Fischer says, display that “taking responsibility is the right thing to do.”

Even better, in the cases of those men who can’t seem to face their own facts, would be to comport oneself in a manner that doesn’t require any apology.

Doing the right thing is also the right thing to do.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

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The Weeks: Dec. 18-29, 2017 Maybe you were lucky enough to spend the last couple weeks of 2017 on vacation. Or perhaps you were busy with a last-minute deal, or closing the books for the year. Either way, if you didn’t pay a lot of attention to what happened in Northeast Ohio’s business world since mid-December, here’s a summary:

SHORT STAY

After less than one year at the helm, Timothy L. Jarm stepped down as president and CEO of The Center for Health Affairs and CHAMPS Healthcare after he and the board didn’t agree on how to move the organization forward. A nationwide search will be launched for the next leader of the nonprofit advocate for Northeast Ohio hospitals. Phil Mazanec, chief operating officer and a 39-year veteran of the organization, will take over as interim president and CEO of the center.

PRESERVING HISTORY

The Millennia Cos.-owned Illuminating Building at 75 Public Square scored a key Ohio Historic Preservation Tax Credit in awards announced Dec. 19 by the Ohio Development Services Agency. Seven other Northeast Ohio projects landed the credits, but the iconic Terminal Tower at 50 Public Square was not among them, although building owner K&D Group of Willoughby had applied. All told, the state awarded Northeast Ohio almost $9.8 million in tax credits that will help property owners finance an estimated $95 million in adaptive historic restoration projects if they also receive federal historic tax credits and meet U.S. preservation standards for them.

NO MORE FIGHTING

After more than three years of legal battles, Summa Health, Western Reserve Hospital Partners and Western Reserve Hospital came to an agreement to end litigation. Under terms of the agreement, Summa will sell its 40% interest in Western Reserve Hospital to an independent, third-party investor, Gbswrh LLC. The health system also agreed to sell the facility housing Western Reserve Hospital to the hospital, 900 23rd St. in Cuyahoga Falls.

IF YOU SAY SO ...

The U.S. Department of Justice is requiring Cleveland-based aircraft components maker TransDigm Group Inc. to sell two businesses it acquired earlier this year from Takata Corp. The divestitures, announced Dec. 21, “will restore competition in markets for several types of restraint systems used on commercial airplanes,” the justice department said. TransDigm acquired the businesses — SCHROTH Safety Products GmbH in Arnsberg, Germany, and SCHROTH Safety Products LLC in Pompano Beach, Fla. — from Takata last February in a $90 million transaction.

their affiliates. The notice stated that “based on the best information currently available to TCP,” about 34 employees will lose their jobs on Feb. 11, 2018, “or during the 14-day period commencing on that date.”

COURT CHALLENGE

Summit County Public Health and 21 communities filed a civil lawsuit in Summit County Court of Common Pleas against 11 manufacturers and three distributors of opioid pain medication. Summit County executive Ilene Shapiro made the announcement on Thursday, Dec. 21. Shapiro in October declared a state of emergency in the county because of the opioid epidemic. The county said that in the past five years, it estimates it has spent $66 million to address opioid-related issues. Shapiro estimates that over a 10-year period, the county will spend more than $150 million.

CHANGES AT THE TOP

Cedar Fair Entertainment Co. is filling out its executive ranks ahead of a leadership change coming Jan. 1.

The Sandusky-based amusement park operator on Dec. 18 announced that Tim Fisher will join the company as chief operating officer, effective immediately.

Fisher, 57, will oversee operations at all the company’s parks and resorts. He will report directly to Fisher incoming president and CEO Richard Zimmerman. Zimmerman, who had been COO, in October was tapped to take the top job effective Jan. 1, succeeding Matt Ouimet.

PROMISE KEEPERS

The King isn’t just looking out for the education of his youngest subjects. He’s now looking out for their health, too. The Cleveland Cavaliers superstar’s LeBron James Family Foundation has partnered with the Crystal Clinic Orthopaedic Center to provide students in the foundation’s I PROMISE program and their families with orthopedic and other health care services. The foundation made the announcement on Dec. 21. Its I PROMISE program works in myriad ways with Akron kids to help them stay in school. Those who complete the program through graduation will receive scholarships to the University of Akron.

Through the partnership, Crystal Clinic, which operates several locations in the Greater Akron area, will provide I PROMISE families with monthly health care clinics and preventative education, annual student-athlete physicals and expedited access to services for program students, the release said.

GENEROUS GIFT

Parker Hannifin Corp. will sell its global Facet filtration business to settle a lawsuit filed against it in September by the U.S. Department of Justice that challenged the company's $4.3 billion purchase in February of Clarcor Inc. Parker said it filed a Proposed Final Judgment with the justice department in U.S. District Court for the District of Delaware. The judgment is subject to court approval.

Sara and Chris Connor donated $6.5 million to Connor Integrative Health Network at University Hospitals, bringing their total giving to $8.5 million. The gift, announced Dec. 20, will enable UH to recruit a core team of physician leaders to conduct research, treat patients and educate physicians about how to effectively incorporate integrative therapies (the combination of traditional medicine with evidence-based nonpharmacologic therapies) into their patient care plans. To inspire additional donors, a portion of the gift will match future donations. Chris Connor is the former CEO of Sherwin-Williams Co.

SMALLER STAFF

SIXTEEN YEARS LATER ...

THAT SETTLES THAT

A planned sale isn’t the only big change coming at TCP International Holdings Ltd., a maker of energy-efficient lighting products. The Aurora company filed a notice with the state of Ohio indicating it “will be significantly reducing its workforce as an outcome of a pending merger and the need to restructure operations” at its headquarters, 325 Campus Drive. The notice was filed after TCP announced it had entered into a definitive merger agreement with a group controlled by brothers Ellis and Solomon Yan — its founder/former CEO and former vice chairman, respectively — that will acquire all TCP shares not already owned by the buyers or

LEARN MORE TODAY ABOUT HOW CRAIN’S CAN HELP YOU AND YOUR CONTENT MARKETING PROGRAM. Contact Amy Stoessel at 216.771.5155 or astoessel@crain.com.

The city of Brook Park on Dec. 20 sued the city of Cleveland to force it to live up to a 2001 agreement to buy homes in the suburb near Cleveland Hopkins International Airport. Brook Park law director Carol Horvath said the lawsuit “comes as a last resort after years of negotiations” over a group of 70 Brook Park homes that city contends Cleveland agreed to purchase to clear land for a planned new runway at Cleveland Hopkins. Cleveland law director Barbara Langhenry said via email, “Cleveland has fully complied with its agreements with Brook Park and is prepared to vigorously defend against the claims made in this lawsuit.”

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CRAIN’S CLEVELAND BUSINESS

Focus 2018 PREDICTIONS

Should he decide to re-sign with the Cleveland Cavaliers in the summer of 2018, LeBron James could get a deal worth as much as $210 million for five years. (Andy Lyons/Getty Images)

SPORTS BUSINESS

Kevin’s call: King James will continue his reign

By KEVIN KLEPS kkleps@crain.com @KevinKleps

LeBron James, now age 33 and approaching a combined total of 52,000 career regular-season and playoff minutes, is on pace for one of the two or three best seasons of his 15-year career.

With Kyrie Irving in Boston, James has improved from superhuman to cyborg (is that the next step up?), and the Cavs entered their customary Christmas Day showdown against the Golden State Warriors having lost just twice in their last 21 games.

Yet, as has become custom for the world’s best player, his upcoming free agency is looming over everything.

At various points in the last six months, James’ chances of leaving the Cavs to play for the Los Angeles Lakers have been described as “likely” (by Adrian Wojnarowski in June, after the Cavs lost to the Warriors in the Finals) and a “long shot” (by ESPN’s Brian Windhorst and Ramona Shelburne in mid-December).

From a non-basketball perspective, the Lakers, should LeBron decide to leave the Cavs for the second time in seven years, make a ton of sense for a billionaire-in-waiting with a production company and two houses in La La Land.

But James has proven time and again that winning takes precedence when it comes time to sign his next contract. And few places give him better championship odds than the Cavs, who have the potent combination of playing in the Eastern Conference (away from the Warriors and Houston Rockets), a deep roster and an owner who is willing to make annual eight-figure payments to the league’s luxury tax.

Another thing James routinely has shown: He’s as well-versed on NBA business as any player. It’s not a coincidence, then, that the league’s new collective bargaining agreement has an “Over 38

LeBron’s impact: By the numbers A look at some notable statistics stemming from LeBron James’ return to the Cavs in 2014:

19, 22, 16 JJThe

Cavs’ respective NBA attendance rankings in the 2011-12, ’12-13 and ’13-14 seasons. The team averaged 15,926, 16,192 and 17,329 fans per game in the three seasons, respectively.

2 JJThe

Cavs’ attendance ranking in each of the three full seasons since James returned. The Cavs have sold out every game at the 20,562-seat Quicken Loans Arena since 2014-15 — a total of 169 contests (141 in the regular season and 28 in the playoffs) entering Jan. 2.

$515 million JJThe

Cavs’ franchise value, according to Forbes, in 2014.

$1.2 billion JJThe

Cavs’ franchise value, according to Forbes, in 2017. Dan Gilbert paid $375 million for the team in 2005, and Forbes estimates that the franchise recorded $233 million in revenues in 2017. That’s up from an estimated $145 million in 2014.

Rule” that would allow the superstar to sign a fiveyear contract this summer that could be worth as much as $210 million.

James, the vice president of the players’ union, would be among the biggest beneficiaries of the NBA adding two years to a rule that, in the prior CBA, would have made it impossible for the Cavs to re-sign him for five years.

Sure, any team with salary-cap space would

gladly sign the King to a maximum deal, which would extend four years and result in sizable raises to his league-high salary of $33.3 million. And sure, LeBron could play for the NBA minimum until he retires (at age 45?) and be just fine.

Which move, however, would make the most sense for an otherworldly athlete who has said he eventually will own a team?

The answer, to us, seems easy, though it would go against the omnipresent “LeBron is leaving” narrative.

Our bold prediction for 2018: LeBron James, after a spirited-but-championship-free postseason run by the Cavs, re-signs with his hometown team for five years.

That might not be enough to disrupt a Warriors dynasty. Nor would it allow him to finally team up with Chris Paul.

We wouldn’t be surprised, however, if James had Paul George by his side in Cleveland — a 2018 trade-deadline acquisition by the Cavs that only further cements LeBron’s resolve to stay.

As for the other two members of Cleveland’s Big Three teams, we’re not nearly as optimistic about the Indians’ outlook for 2018 — not after such a lackluster start to the offseason.

Still, we believe the Tribe, thanks in part to playing in a bad division, will return to the playoffs for a third straight time, only to be knocked out again by the New York Yankees.

The Browns, meanwhile, are going to embark on yet another search for a franchise quarterback (and hopefully a new head coach), and we feel oddly confident that new general manager John Dorsey is the right person for the job.

That won’t be nearly enough for Cleveland’s laughably bad NFL franchise to field a winning product in 2018, but that’s to be expected.

By then we could still be riding the high of LeBron finally giving the Cavs the long-term commitment for which we’ve all pleaded.

What better way to set up his purchase of the team from Dan Gilbert in 2032?

THE EXPERTS SAY ...

“In 2018, we’ll continue to look for ways to use mobile technology, coupled with smart process and an understanding of what our fans want, to deliver the best ticket management, service and support to our fans every time they visit Progressive Field. While the game is ‘in play,’ we’ll deliver a deeper level of stats and calculated metrics that the modern fan is asking for, utilizing our best-in-class scoreboards. At the same time, we’ll continue to test technology that fans are asking for and mimic some of what they see outside the ballpark, such as new payment types, concessions pilots and mixed reality entertainment.”

— Neil Weiss, chief information officer, Cleveland Indians

"With the growing awareness and popularity of esports, there will be more large-scale gaming events hosted at major sporting venues across the world. This goes hand-in-hand with the general public becoming more accepting of competitive video gaming as a career and form of entertainment."

— Anthony Muraco, director of gaming operations, Cleveland Cavaliers

More predictions: Education and government, Page 11 | Health care, 12 | Manufacturing, 13 | Finance and real estate, 14

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2018 PREDICTIONS GOVERNMENT

Jay’s call: Amazon will pass on Northeast Ohio

By JAY MILLER jmiller@crain.com @millerjh

The Cleveland Institute of Music is lowering its cost of tuition by 15% for the 2018-19 academic year.

(Contributed photo)

HIGHER EDUCATION

Rachel’s call: Colleges adjust their value propositions

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

Higher education is in a state of transition. When it comes to costs, some may even call it a crisis.

Colleges and universities have been under fire in recent years because of high tuition rates and fees, which have drastically driven up debt for at least a generation of students. While schools do face increased costs, raising prices is no longer a viable option for most. And in 2018, I expect colleges and universities will take big steps toward making higher education more affordable.

For example, take the Cleveland Institute of Music — an almost century-old music conservatory in University Circle. In 2017, the institute announced plans to lower tuition by 15% for incoming students to $40,000 for the 2018-2019 academic year.

I don’t think they’ll be alone in lowering their tuition rates, even if by at least a little. Even more popular will be efforts to promise students so-called tuition guarantees, assuring freshmen that rates won’t go up as they work toward graduation. Many schools see this predictability as a selling point. While schools like Hiram College, a private school in Portage County, have had such guarantees for more than a decade, the idea seems to be catching on.

Just this past December, the boards at Kent State University, Youngstown State University and the University of Akron all approved tuition guarantees for incoming freshmen. Cleveland State University’s board of trustees approved one in November, though it’s still pending state approval. These new programs would likely increase costs up front (that’s the plan in Akron, Youngstown and Cleveland, at least, though Kent hasn’t specified), but would lock those prices in place for four years for undergraduates.

But costs aren’t just an issue for students and their families. Colleges

THE EXPERTS SAY ...

“In 2018, college professors will incorporate explicit and ongoing information discernment lessons into their formal and informal teaching. Regarding this issue, the biggest information travesty of 2017 wasn’t that fake news was being issued (from many people and from many angles), but that so many others were buying it themselves and then promulgating it through likes, shares, retweets and rumors. Higher education’s charge in 2018: Let’s not only teach students to give truth a chance, let’s model how to do it.”

— Lori E. Varlotta, president, Hiram College

“Higher education will continue to be a pathway to upward mobility and a better quality of life. New academic programs will open the doors to careers of the future. Dual enrollment by high school students will increase as parents seek affordable opportunities for their children to earn a college degree.”

— Morris W. Beverage Jr., president, Lakeland Community College

and universities have been facing increased costs at a time when the traditional undergraduate population — recent high school graduates — is pretty flat. Institutions have to work harder than ever to differentiate themselves and ensure they’re offering a valuable product.

I’ve written plenty about the challenges colleges and universities face in adapting to modern workforce needs, and how they’re working to better integrate themselves with employers in the region. That adds value by making it more likely that students will have relevant skills for today’s jobs.

But colleges are now realizing they have to go beyond that.

This past fall, I spoke with a number of local schools that put in significant work toward revamping their general education or core curriculum requirements. Sure, maybe on the surface that looks like a school adding or cutting a few required classes, but it’s a sign that the universities are re-examining what exactly they want to accomplish.

What skills do they want their students to graduate with? What lessons are most important for graduates to remember?

That’s significant, particularly at

this time of transition. What I found was that most schools were putting a focus on flexible skills that can be applied in most any job: critical thinking, cultural literacy and writing.

Colleges and universities are on the cusp of taking this even further and may soon start to put their majors and minors under a microscope. I think we’ll see a lot of schools looking at what majors are underperforming, either in terms of enrollment or in terms of job prospects, and making the tough choices on what to keep. Some majors may survive in new, updated forms, but others may get cut entirely.

Higher education can move slowly in this regard, but I think we’ll at least see this process start at schools across the region.

Colleges would be wise to find a collaborative way to take on this challenge. Northeast Ohio is rich in higher education institutions, and colleges and universities can use that to their collective and individual strengths. Programs that are duplicated across nearby schools are likely to become less common as colleges aim to differentiate themselves from the crowd.

Those that don’t could be left behind.

Northeast Ohio will not win the Amazon sweepstakes.

The Seattle-based company will build its much-ballyhooed second North American headquarters in one of the other 238 cities that made bids.

That’s not a knock on the pitch local officials put together to woo Amazon, of course, since no one involved is sharing the details.

In a news release, regional economic development officials simply said the bid “portrays the city’s and county’s economic momentum, livability, geographic advantages and other assets.”

Rather, the online retailer is likely to find the region falling short for two reasons the bid preparers would not have been able to overcome. First, the metro area lacks a knock-’em-offtheir-feet location that would create an Amazon campus.

The more important reason, though, is that Northeast Ohio would be hard pressed to supply the workers with the skills Amazon demands for the 50,000 jobs it says it will fill over a decade.

Its proposal cited the need for software development engineers and non-college graduates with computer science skills.

Of course, no one will be unhappy if this prediction is wrong.

With that out of the way, it’s easy to predict what will have the greatest impact on the efforts of government and the business community to build the region’s economy — the new federal tax plan. It’s just difficult to know what that impact will be.

Will the major corporations pass their tax savings on to shareholders?

Will small business owners put the money in their pockets?

Or will the dollars be invested in new equipment or the hiring of new workers? Will current employees get raises?

Or will the tax savings end up on black at the roulette wheel at the Hard Rock Rocksino?

It’s too soon — and the best answer is too variable from business to business — to know whether the

choices made will pay off for the region and its economy.

New investment and putting people to work at better pay would make the jobs of public officials easier.

But if Congress decides to make deep cuts in social services and other nonmilitary spending, those decisions will trickle down to the local level. That could mean additional police aren’t hired, abused children aren’t placed in foster homes quickly and potholes go unfilled.

Whatever happens, it will have an impact on the elections in 2018.

Since all the incumbents in state executive jobs are term limited, Ohioans will be electing an entirely new slate of office holders. Given recent election results, the advantage falls to the Republicans, who now hold all of the statewide jobs.

Though no incumbents are keeping their jobs, some of those incumbents will be looking for promotions.

The current lieutenant governor, Mary Taylor, and the attorney general, Mike DeWine, have already announced their intentions to be the Republican candidate for governor, for example. The secretary of state, Jon Husted, is joining the DeWine ticket as lieutenant governor.

Former Ohio attorney general and former head of the federal Consumer Financial Protection Bureau Richard Cordray likely will lead a field of Democratic hopefuls for state office that already includes Clevelander and former U.S. District Attorney Steve Dettelbach, who is running for attorney general.

The early odds, though, are on DeWine to land the governorship.

The state treasurer, Josh Mandel, is seeking to win his return bout against Democratic Sen. Sherrod Brown.

That race is considered a toss-up early on.

There is little to say yet about county-level races.

A handful of county commission seats will be contested. The seat of incumbent Cuyahoga County Executive Armond Budish is up. Budish hasn’t announced his re-election campaign yet, and no Republican candidate has surfaced. In his initial run in 2014, Budish defeated Republican County Councilman Jack Schron, 59% to 41%.

THE EXPERTS SAY ...

“Building off the region’s momentum, Cleveland Hopkins will continue to see record growth. Included in that growth, and along with Iceland Air and Wow Air’s new service beginning in May of 2018, an additional new line of direct service to the European mainland will be announced as the first such flight operating out of an Ohio airport. That flight will enable only a maximum two-stop flight to almost anywhere in the world, enabling more investment in Cleveland by many firms.”

— Joe Roman, president and CEO, Greater Cleveland Partnership

“Shocking experts, Facebook and Twitter will report a significant decline in users as the nation begins to realize that social media’s growth and profits depend in large part on dividing us and fueling our anger. 2018 will see us starting to return to real friends, conversations and connections.”

— Bernie Moreno, president, Bernie Moreno Cos.

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2018 PREDICTIONS HEALTH CARE

Lydia’s call: Insurers, providers continue to shake hands

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

Partnerships are likely to continue to drive strategy for many of Northeast Ohio’s health care institutions in 2018.

Be they strategic partnerships or mergers and acquisitions, hospitals and health care companies are increasingly looking for ways to collaborate and — hopefully — save money and improve care.

We saw this most actively in 2017 in the insurance space, with Cleveland Clinic teaming up with New York City-based Oscar Health to offer an exchange product as well as with Humana Inc. (NYSE: HUM), and then with Anthem Blue Cross and Blue Shield in Ohio to offer Medicare Advantage plans.

University Hospitals, meanwhile, entered into a collaborative agreement with SummaCare to co-brand existing SummaCare Medicare products in markets with UH facilities.

As pressure continues to lower the cost of care while improving outcomes, collaboration between payers and providers is making more and more sense.

In most of the above arrangements, both sides share risk or have incentives to keep patients healthy.

Arrangements like these are likely to continue going forward.

Partnerships will also be key in combating the opioid epidemic.

Hospitals in Northeast Ohio have already positioned themselves to collaborate on that work, forming the Northeast Ohio Hospital Consortium

Collaboration will be key for the Cleveland Clinic, which enters 2018 with a new CEO, and other regional health care institutions. (Contributed photo)

on Opioid Addiction. Headed by an executive director housed at the Center for Health Affairs (a nonprofit advocate for Northeast Ohio hospitals), the consortium includes the Clinic, MetroHealth, St. Vincent Charity Medical Center, University Hospitals and Louis Stokes Cleveland VA Medical Center.

Efforts led by the Cuyahoga County Opiate Task Force and the United

States Attorney’s Office for the Northern District of Ohio brought together hospital CEOs who decided to go forward with the effort in a decision born out of years of discussions.

These discussions also led to the Heroin and Opioid Action Plan, which included recommendations such as improved prescribing practices, expanded use of Naloxone and increased use of medication-assisted

treatment.

Partnerships will also be especially important to those hospitals and providers that want to maintain their independence.

In 2017, Premier Physicians Centers and Jubilee Healthcare, which does business as NorthShore Healthcare, joined together in a merger that aimed to push against a trend of independent doctors considering selling or joining larger systems.

Remaining providers are likely to increasingly rely on partnerships to control costs and improve quality.

That said, the last few years Northeast Ohio saw virtually all of its community hospitals gobbled up by the region’s largest health systems. So, if the Clinic and UH are interested in adding more hospitals to their portfolios — barring the construction of new ones locally — they’re going to have to look elsewhere in the state.

Both UH and the Clinic have already eyed opportunities beyond their traditional local footprints in the Cleveland area. UH added Samaritan Medical Center in Ashland to its portfolio, and the Clinic is in the process of adding Union Hospital in

Dover.

As for MetroHealth, it’s opening two small — very small, in fact — community hospitals the first week of this year.

The 12- and 16-bed hospitals coming online join the ranks of a series of other so-called “micro-hospitals” around the country in hyper-local markets that couldn’t support a fullscale hospital.

Of course, the Clinic starts the year with a new leader, Dr. Tomislav “Tom” Mihaljevic, who is taking over for a retiring Dr. Toby Cosgrove.

In late 2017, Mihaljevic said his immediate goal as he steps into the role will be to continue the trajectory of the organization. While immediate, drastic changes for the health system are unlikely, Mihaljevic will begin carving out his voice in the health care community.

Speaking of leaders, Summa Health is undergoing a search for a new one. Whether or not Dr. Cliff Deveny, who’s been serving as interim CEO since March, will be in the running is yet to be known. The board has indicated they’d like to see him apply.

THE EXPERTS SAY ...

“In 2018, I definitely foresee some more acquisitions and partnerships, in particular between maybe providers and insurance companies, or even provider-owned insurance options for the market in general. When you think about the Cleveland Clinic and Oscar Health deal, that’s kind of a sign that it’s happening. Also with the Aetna-CVS deal that’s going down — we don’t know if it’s going to be completed, but it’s in the works — that’s going to create unique opportunities as well.”

—Jaime Lebròn, director, Medicare/individual, Cornerstone

“There will be a lot of positive disruption. On the payer side, employers will become more active in finding ways to address their health care costs in creative ways. I see competitive forces increasing, especially in the outpatient arena. I see the continued growth in programs such as Medicare Advantage, and hopefully a continued focus on population health."

—Thomas Campanella, director of the health care MBA program, Baldwin Wallace University

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2018 PREDICTIONS MANUFACTURING

Dan’s call: Industry looks good, but uncertainty abounds $2.3 trillion

By DAN SHINGLER

JJAmount

of cash former New York mayor Michael Bloomberg said corporations have been sitting on — the majority of which has been stockpiled since the end of the Great Recession in 2009.

dshingler@crain.com @DanShingler

Predicting anything in any year is tough — but the view of 2018 looks as much like a snow globe as a crystal ball.

Shaken, not stirred, too. Can anyone predict what will happen in Washington, D.C., these days, or how the president will approach trade deals, including the North American Free Trade Agreement? China? Still, onward we charge.

Let’s assume we don’t get into a major trade war with our largest trading and export partners, which are China, Canada and Mexico, in that order, with no one in a close fourth place.

If that assumption is wrong, all bets are off, but we can’t hold off the new year waiting to find out.

But what can we count on? The tax deal is done, and there’s little reason to think that the president won’t continue to try to dismantle the government’s regulatory functions and to tilt the courts in favor of business.

That’s likely to mean growth of both the nation’s oil and gas industry and of other industries that don’t like regulators telling them what they can and can’t put into the air and water, like chemical plants. Coincidentally, or not, those two industries are closely intertwined, and natural gas, in particular, creates feedstocks for plastics and some other specialty chemicals.

Gas, we’ve got, and if have more of it and fewer regulations, those two industries seem poised to take off — right in the middle of Ohio’s natural gas and ethane boom. Multi-billion-dollar ethane crackers are being built along the Ohio river and in other parts of Ohio to turn natural gas byproducts into vast quantities of ethylene, which will become polyethylene and then likely something we wear or otherwise use.

Now that the commitments for those plants have been made — many of them inked in 2016 — expect to see more chemical operations here. We might also even see some local chemical companies get ac-

The manufacturing industry should get a lift from a rise in consumer confidence. (Ty Wright/Bloomberg)

quired, as players with high stock prices as currency look for a faster entrance to this market, which means not only the region’s markets, but its network of engineers and executives.

But that’s only part of our region’s manufacturing economy, of course, and we still have big sectors such as automotive, other durable goods, general steel production and machining services, not to mention medical devices, 3D printing, aerospace and others.

For most, the cards look pretty good. There’s a move underway to increase the nation’s defense spending and, since we already spend more than the next half dozen or so nations combined, that’s not chump change.

In fact, it’s half of the money in the U.S. discretionary budget that Congress controls, so a massive increase, as promised, would mean more sales for aerospace, steel and some other industries.

And manufacturing is likely to get

THE EXPERTS SAY ...

“Ohio manufacturing CEOs tell us all the time that they will be using the new tax advantages to invest in new technologies that will continue to propel our economy forward. I’m concerned about the slowing of auto production in the U.S. caused by changes in consumer purchasing. So many of our small manufacturers depend on strong auto production. Non-defense and non-aerospace equipment purchasing has been flat, suggesting that concern is warranted next year outside of these industries.”

a lift from a general rising tide of public sentiment — consumer confidence is up along with the stock market, and paychecks are about to get a boost from the pending tax cut.

Whether we’ll see a large increase in domestic capital investment from the tax cut is another matter. American corporations are not suffering from a lack of capital, and in fact

more often complain about a lack of ways to deploy capital here than they do about access to it.

Former New York Republican mayor and multi-billionaire Michael Bloomberg as recently as Dec. 15 called the current tax cuts an “economically indefensible blunder,” because he said corporations were already sitting on almost $2.3 trillion in

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— Ethan Karp, CEO, Magnet

“Permitting and construction plans advance on the multibillion-dollar PTT ethane cracker complex in downstate Ohio triggering significant investment interest in downstream gas industries throughout Ohio, and especially with our chemical and materials manufacturers in Northeast Ohio. Ohio utilities will abandon their misguided efforts to extort subsidies for poor-performing nuclear and coal plants, allowing manufacturers in Northeast Ohio to finally realize the benefit of competitive electric market pricing and innovation.”

— Ryan Augsburger, vice president and managing director of public policy services, Ohio Manufacturers’ Association

cash — much of which has been piling up since the end of the Great Recession in 2009.

We’ll probably see some business investment, but it will be for the usual reasons because money can be put to work to earn a decent return and build businesses. So, expect to see investments made in some of the industries mentioned above and by companies seeing growth generally.

If there are fundamental challenges in the year ahead, they might be in automotive. Americans bought a lot of cars after the recession.

Those cars last longer than they used to, too, and last longer than the cheap lease deals that were helping support U.S. sales.

Now, with leases becoming more expensive and demand down, the industry is expected to report a decline in sales for 2017.

Most experts are predicting the slowdown will continue through 2018. It won’t rip the bottom out of the industry the way the recession did, but contraction is always a bad and painful thing, especially in the job-heavy auto industry.

The year ahead is chock full of opportunity, tail winds, a few bumps, and a lot of ifs. Let’s hope the ifs don’t get in the way of some good business growth that would benefit us all.

Tom Hart, Financial Counselor, LPL Financial www.middlefieldbank.bank/investments 888.801.1666 • Direct Line 440.632.3444 15985 E. High Street • Middlefield, OH 44062

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2018 PREDICTIONS REAL ESTATE

Stan’s call: Tax overhaul has major realty implications

By STAN BULLARD sbullard@crain.com @CrainRltywriter

Look for real estate to get real in 2018.

Unfortunately, that’s just for the little people.

For the commercial side of the property business, it’s going to be bedlam. As in overexuberant. In both cases, the source for the prediction is the same: The new federal tax law.

Consider history. The last time there was tax reform 30 years ago, the shock waves rocked commercial real estate for a decade. Lots of office buildings in the early 1980s constructed to take advantage of tax losses went to lenders in the 1990s.

It was shocking the first time we heard a real estate pro say he or she was doing a development project because it was a good real estate deal. They meant they didn’t do it for the losses the project would offer investors motivated by a generous tax shelter.

However, this time the hit is going to be for the homeowner. There will be less of the sentiment to build a mansion to shelter money from taxes, or at least as an excuse. However, $750,000 gets a lot of house in Northeast Ohio.

The other item will the loss of deductibility for home equity loans. Look for remodeling to slow some. But people will still want nice environments, especially with the HGTV effect selling them on the idea.

So for average folks, real estate will get a little more real. That has a familiar ring to it, doesn’t it?

Going back to the commercial side — wow.

With homeownership being less subsidized, that will keep the juice and loans going for apartment buildings. At least in theory.

In the end, big property owners got so many gimmes in tax reform, it’s going to be busy. Very busy.

My guidance here comes from popular

and J-Dek of Solon for sweeter tax increment financing than typically provided will make it through Cleveland City Council and the Jackson administration.

Developer Bob Stark may get to leave two marks on his hometown’s horizon as his Beacon skyscraper is already rising at East Sixth Street and Euclid.

Also, look for Dan Gilbert’s Bedrock Real Estate to get rolling on renovating the May Co. on Public Square to apartments. He’s too smart — financially anyway — to wait.

The federal tax reform that has been celebrated by Donald Both public real estate inTrump and other Republican lawmakers might not be met with vestment trusts based here as much enthusiasm by homeowners. (Bloomberg) will churn out headlines. non-fiction writer Martin Mayer. He wrote some- Look for DDR Corp. (NYSE: DDR) to be sold, its thing many people say now, but it was revelatory Beachwood headquarters shut. Chances are in his 1978 book, “The Builders: Houses, People, good the Ratners will continue running Forest Neighborhoods, Governments, Money.” To sum City Realty Trust (NYSE: FCE.A). Instead of the local power, it’ll be another Cleveland-based it all up: Builders like to build.

So that will be the thing to watch on the busi- corporation with out-of-town operations.

Finally, look for Playhouse Square to start ness side of real estate. It may even mellow the impact of rising interest rates, otherwise the big- building its 34-floor apartment tower at East gest threat to continued soaring development 18th Street and Euclid Avenue early this year. The plan got final design approval Dec. 15 from the trends.

Cleveland City Planning Commission.

Now for some specifics: It better be started soon. Otherwise the Look for a new partner to join the lineup with Delray Beach, Fla.-based Hudson Holdings in 319-suiter may be fighting for tenants when the the $300 million quest to turn the landmark apartment market finally softens.

The tower could be a fitting closing act for the Union Trust Building at 925 Euclid Ave. to a hotel, apartments and less office space than the generation of Cleveland volunteers and civic types who made saving the city’s old theaters million square feet it has now.

All that happened with the proposed 49-floor their cause.

It will be even more so for longtime staffers nuCLEus project last year was that small signs replaced big ones on the site between Quicken and board members at PlayhouseSquare FounLoans Arena and the East 4th Neighborhood. dation.

The drive by Stark Enterprises of Cleveland Let’s hope it’s not a $135 million tragedy.

THE EXPERTS SAY ...

"With the tax reform behind us, I would expect to see a slight pause in some real estate development transactions the first quarter of 2018 as investors and developers analyze the impact of the new tax provisions. However, with incentives like new markets and historic tax credits being retained in the tax code and additional capital available for investment, I would expect at least one or two new downtown Cleveland real estate developments of scale and at least a dozen neighborhood projects announced some time during 2018."

— Yvette Ittu, president, Cleveland Development Advisors

"The Downtown Cleveland office market will continue to see vacancies decrease and rental rates increase due to the conversion of additional office space to apartments and rising construction costs. Those office tenants who have leases expiring will need to move faster and be more aggressive in their searches for space. As more millennials and empty nesters move to live in Downtown Cleveland, demand for retail will increase.

Many of the street-level vacancies will be leased."

— Dyann Davison, president and broker, Davison & Co., Cleveland

FINANCE

Jeremy’s call: A perfect storm is brewing in banking

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

When coupling a confluence of events that could already lead to more bank M&A next year with some enticing characteristics of the banking sector in Northeast Ohio and the ongoing movement of out-of-town players into an already fragmented space, I see this region as one banks will hungrily work to grow in — or into — during 2018.

By the end of the year, the market will feel even more competitive as new banks enter the scene, big players become even bigger and everyone jockeys for market share. We’ll probably see a couple banks acquired in 2018 after a somewhat slow year for deals in 2017, but they may very well be absorbed by non-local players who want to break into the market. That means the total number of institutions should remain steady.

Ahead of his election in 2016, President Donald Trump crafted an image for himself as, among various things, an enemy of governmental red tape and a friend of business.

Financial institutions large and small and the investors in them, who have said they’re beleaguered by years of margin-squeezing regulations even as aggregate industry income consistently grows every quar-

ter, seemingly embraced Trump as their herald of regulatory relief. Expectations for Trump to support corporations through moves like tax reform and the dismantling of The Dodd-Frank Act created what was dubbed the “Trump bump” in financial markets as bank stocks collectively surged roughly 30% following the election. While some of that has leveled off, stocks are still strong and higher than they were a year ago.

While little progress was made in those efforts, the end of the last year has shown Trump getting closer to some of those promises.

Aside from the new tax plan, bills chipping away at parts of DoddFrank are gaining momentum with lawmakers, such as one effectively quadrupling the threshold for banks known as systemically important financial institutions (SIFIs), which invites its own layers of costly regulations and governmental compliance banks argue suck up resources they could use in other ways.

The X-factor with Trump has always been uncertainty. But the pulse among the industry is some bank relief is more likely in 2018, and these late-year developments on Capitol Hill support that view.

So let’s say bankers check some items off their wish lists in 2018.

Tax reform alone could free up capital for large corporations who face those taxes when buying companies or

THE EXPERTS SAY ...

"We will continue to see a continued focus on M&A among larger community banks as well as regionals both in Ohio and surrounding states. Acquirers will be focusing on targets with tepid financial performance, limited growth options and weak or nonexistent succession plans. This M&A activity will be coupled with a continuing focus by these institutions on organic growth opportunities in both legacy and new markets, resulting in additional branches and loan production offices."

— Patricia Oliver, chair, financial services industry team, Tucker Ellis LLP

“2018 will be a turning point in efforts to address the skills gap and connect young urban Clevelanders with jobs. More companies will engage in social capitalism — meaning they’ll deploy resources that benefit their businesses and also serve a higher common good.”

— Kip Clarke, Cleveland market president, Key Community Bank

selling off assets and may, in theory, feel disincentivized to pursue deals.

This is one reason why, although M&A remained strong last year, some banks likely tabled some deals to see what might shake out. After all, locally, we didn’t see any industry-shaking bank acquisitions in 2017 after seeing multi-billion-dollar deals in the past two years with some of this market’s largest players: KeyBank acquiring First Niagara Bank and Huntington Bank buying FirstMerit Bank.

So where will these corporate gains be put to use? Some will un-

doubtedly be used to enrich shareholders and buy back company stock.

But growth-minded banks will set up war rooms where they strategize ways to put capital to work as money is freed up. As banks see margins grow, they’ll likely invest in income-generating business lines, sell off less lucrative ones, flock to fintech investments and expand lending efforts.

Some players, particularly those who may feel less regulatory scrutiny in a deal as reforms trickle in, may

pull the trigger on an acquisition they’ve been lining up.

Ohio itself has more than 220 banks. Nearly all the state’s largest players have some presence in Northeast Ohio. And the community bank sector here is quite strong despite a dwindling number of those banks overall.

With Cleveland itself enjoying good press and its own economic renaissance in recent years, economically, there’s clearly opportunity for a bank to capitalize here. Meanwhile, the buzz of a city on a slow and steady rebound gaining national and international press creates an enticing sense of optimism.

And banks want a piece of it.

That’s why California’s Bank of the West, Atlanta’s SunTrust Bank, and Pennsylvania’s NexTier Bank have all nabbed local industry vets in the past year to open loan production offices, why local community banks are pushing deeper toward Cleveland proper and going after commercial customers and why geographically neighboring banks in Columbus, western Pennsylvania and even Michigan are finding ways not just to cast out into the pond here, but really make a splash.

There may very well be a perfect storm brewing, one that brings more banks to the market, stimulates deal activity and generally leads to more profitable institutions.

CRAIN’S SIGNATURE EVENTS 2018 EVENT CALENDAR

FAMILY BUSINESS FORUM Tentative Date: May Join Crain’s for a welcoming, educational and supportive event that will allow family businesses to walk out with actionable information, connections and ideas to improve their businesses.

CRAIN’S HEALTH CARE FORUM Tentative Date: June Industry experts will examine some of the top issues facing health care.

CRAIN’S TWENTY IN THEIR 20s Tentative Date: June Crain’s Cleveland Business singles out 20 up-and-coming professionals who haven’t turned 30 yet.

TWENTY IN THEIR 20s

WOMEN OF NOTE AWARDS Tentative Date: July Crain’s honors the dedication and achievements of Northeast Ohio’s top female business leaders who enrich our region with their professional talents and unique perspectives.

ARCHER AWARDS Tentative Date: August A tribute to Northeast Ohio’s leading human resources professionals who are building companies with the best people, talent, development and culture.

MIDMARKET PERSPECTIVES Tentative Date: August Learn how middle market companies can flourish in today’s ever-changing world.

MANUFACTURING ASSEMBLY Tentative Date: October Educational manufacturing assembly with presentations and breakout sessions.

FORTY UNDER 40 Tentative Date: November A tribute to the next generation of rising stars who have taken a leading role in our business community.

C-SUITE GALA Tentative Date: December Northeast Ohio's top executives are honored for their contributions, community commitments and outstanding professional performances.

CRAINSCLEVELAND.COM/EVENTS

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AKRON

Neighborhood Watch

Retail-friendly Chapel Hill holds surprises, too Known for its mall, the economically important area also is home to a good deal of manufacturers

By DAN SHINGLER

About this series

dshingler@crain.com @DanShingler

We thought we knew a fair amount about Akron, which is the hometown of some of us at Crain’s. That is, until we started driving around with Akron planning director Jason Segedy, who agreed to take part in an ongoing series to show us his knowledge and passion for the city — one neighborhood at a time. This month, we look at Chapel Hill, which may immediately bring to mind the mall by the same name, but is home to thousands of residents and a good deal of manufacturing as well.

When Akronites think “Chapel Hill,” it’s almost a certainty they think of the city’s shopping mall with the same name.

“When I hear Chapel Hill, I think of the mall, too,” said Jason Segedy, Akron’s director of planning and urban development.

But Segedy, who gave us a recent tour of the Chapel Hill neighborhood, insists the area is more than just a mall. A lot more. It not only has a slew of other retail clusters, but it’s home to about 5,000 residents and a bunch of small to midsize manufacturers.

“It’s actually one of the more economically important neighborhoods in the city,” Segedy said.

The place has a different feel than the rest of Akron, including adjacent neighborhood North Hill. Chapel Hill is full of busy streets, with big commercial sections on streets such as East Tallmadge and Home avenues running through it. Off to the sides are residential neighborhoods and small industrial areas that most folks, even longtime city residents, don’t know exist.

Between the busy streets and vast stretches of retail developments designed for cars, it’s not the most pedestrian-friendly neighborhood in the city, though.

“It’s probably one of the more suburban-feeling neighborhoods in Akron,” Segedy said.

Many of the neighborhood’s residents probably don’t even realize they live in the neighborhood of Chapel Hill.

“A lot of them, if you asked, would probably say they live in North Hill,” Segedy said.

So is Chapel Hill a residential neighborhood? A retail district? Or an industrial zone?

Yes. “It has a big mix of stuff. There’s a lot of retail. There’s a lot of residential areas, and then there’s industrial. It’s not smokestack industries. It’s more post-World War II light industrial. …

It’s really a mixed-use neighborhood,” Segedy said.

But to know that Chapel Hill has more than a mall, strip malls and former retail establishments that have been converted to something else — which is about all that you see along the neighborhood’s main drags — you need a guide like Segedy.

He turned onto streets like Hyde Park Avenue, north of East Tallmadge, or onto Annapolis Avenue off Home Avenue, and instantly you were in a residential neighborhood of what Segedy terms “Brady Bunch houses.”

“The ’60s would have been the big decade for this neighborhood in terms of residential building,” he said, pointing out some of the nicer ranch and split-level homes.

Many of the houses are newer than in other parts of the city, so they’re generally in good repair. Chapel Hill has not suffered the vacancies or tear-downs that other neighbor-

Though looking quiet a few days after Christmas, Chapel Hill Mall had a busy holiday shopping season, according to store employees and mall management. (Shane Wynn for Crain’s)

The mall, which lost two anchor stores in recent years, still struggles with vacancies, though.

The state has approved a marijuana grow site for this former city sewer department site on Home Avenue.

hoods have seen in recent years, and homes have kept their values, he said. It’s not a rich neighborhood, but it’s certainly not a poor one.

“It’s definitely a very middle-class area,” he said. “You’re not going to

find a lot of houses for less than $80,000, and you’re not going to find a lot that are more than $120,000.”

Segedy then headed to Moe Drive, and Evans Avenue, which resembles parts of Solon, Hudson and other

Northeast Ohio communities that have fostered industrial growth in hidden pockets.

“There would be almost no reason to come down these streets unless you were going to one of these businesses, so a lot of people don’t know these are even here,” Segedy said, driving past facilities such as Japan-based Shin-Etsu Chemical Co.’s site on Evans Avenue.

These aren’t the giant tire companies that built the Rubber City, but they are important employers and a key part of the city’s tax base, Segedy said. It’s a part of the economy the city would like to see grow, and Chapel Hill appears ready to participate.

Ready for industry For instance, Shin-Etsu in October announced that it’s investing $21.3 million to expand its facility with an addition the company said should be completed by 2019. The facility produces silicon products for a broad

variety of industries — from adhesives and cosmetics to automotive applications.

Meanwhile, the city owns about 90 acres along or near Evans, Segedy said, and it’s planning to make it available for more industrial expansion.

Commercial real estate brokers say the city has a dearth of decent industrial space available, so anything new coming on the market is likely to be welcome.

The city also has secured a federal grant to pay for improvements to the railroad track intersection at Evans Avenue, which carries about 35 trains a day and can be a problem for traffic, Segedy said.

The city is in the process of taking the road over the tracks, so that cars and trucks will no longer have to wait for the trains.

“That bridge project will really open up more of this land,” Segedy said.

The city is about to have a brand new industry move into Chapel Hill — marijuana.

The state has approved two grow sites to be located on Home Avenue.

One site will be in a building that used to be part of the Akron’s sewer operations that the city already has agreed to sell, Segedy said.

“Both of them would be grow sites — both our sewer building and the building across the street. … It’s a creative reuse for our space,” Segedy said.

The mall Of course, you can’t talk about the neighborhood without talking about “the mall.”

With its famous carousel and “Archie the Snowman” appearing again over the holidays in recent years, the mall is a place near and dear to many longtime city residents.

Like most malls, Chapel Hill has seen its fair share of challenges in recent years, most prominently losing anchors Sears and Macy’s, leaving J.C. Penney as the sole major department store. There are too many open spaces, both inside the mall and in its vast, 4,200-car parking lots, Segedy conceded.

No one’s counting it out yet, though. New York-based Kohan Retail Investment Group purchased the mall for $8.6 million in 2016 and has been talking to the city about ways to revitalize it.

SEE CHAPEL, PAGE 17

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CRAIN’S CLEVELAND BUSINESS

1. Remaking Akron

2. Signet Jewelers’ tough year

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health system in June announced it would eliminate more than 300 jobs and consolidate services to help avoid a $60 million projected loss for the year amid lower patient volumes.

By fall, though, Summa learned that the probation that restricted its emergency residency program was lifted. And while Moody’s Investors Service downgraded Summa’s bond rating, Deveny said that the prior three months had been profitable and that the system anticipated only a $35 million loss for the year.

Akron mayor Dan Horrigan unveiled some ambitious plans in 2017 — including a move to turn the tide on the city’s declining population.

However, two of the city’s biggest employers — Signet Jewelers and Summa Health — had rocky years, at best.

— Dan Shingler and Sue Walton

eally gedy

l by

PA G E 17

The Rubber City’s top five stories of 2017

king cars wait

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AKRON

Dan Horrigan wants to be known as the mayor who grows Akron’s population. It’s an ambitious goal, and he’s making that a focus of his administration.

In February, the city released its “Planning to Grow Akron” report, which outlined ways to bolster the city’s population, which has been dwindling for years, through several initiatives, including a citywide property tax abatement program.

Plus, Horrigan, along with leaders from Summit County and three area nonprofits, introduced the Strategic Welcome Plan to grow population and increase diversity by enhancing the network of private and public partners to serve new Americans.

But that’s not all that officials want to do to remake in the city. The city and Downtown Akron Partnership focused much of 2017 on refining the Downtown Akron and Vision Redevelopment Plan. Unveiled in late 2016, the plan outlined principles to help make downtown a more vibrant core.

Another big priority: What will take the place of Akron’s Innerbelt, the underused state Route 59 that is currently being dismantled? That will leave about 20 acres for green space and other development for city residents such as parks.

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There’s no getting around the fact that Fairlawn-headquartered Signet Jewelers, and its shareholders, had a bad year.

The headlines about the company were mostly filled with scandalous

5. FirstEnergy in limbo

Mayor Dan Horrigan and Akron officials not only want to reshape and revitalize the city’s downtown core, Horrigan wants to grow the city’s population. (Shane Wynn for Akronstock)

accusations that continued from 2016.

They included charges of ring swapping by customers and of sexual harassment by thousands of former female employees.

In July, CEO Mark Light stepped down, citing health reasons, and was replaced by current CEO Virginia “Gina” C. Drosos.

The company did have some accomplishments in 2017, too. In August, it purchased the online jewelry retailer R2Net for $328 million, in an effort to boost its internet revenues.

In October, Signet sold about half of its credit portfolio, nearly $1 billion in assets, to a credit card servicing company in Columbus.

But just as the 2017 holiday shopping season got underway, Signet disclosed in a Dec. 1 Securities Exchange Commission filing that it was being investigated by the Consumer Financial Protection Bureau for its in-store credit practices.

3. A Bounce in a new direction

gan its first task: the search for a CEO for the initiative.

Horrigan is hoping the city can spring forward with its new downtown innovation hub named Bounce.

Unveiled in August, the idea is to create a hub where established businesses, entrepreneurs, makers, mentors, investors, techies and more can gather.

Horrigan called the hub, which will be housed in the current Akron Global Business Accelerator building downtown, “a key part of my economic development vision.”

With help from a $2 million state grant, the space will feature co-working space and startup offices, the city said.

In December, plans were full speed ahead, as the city named five board directors, including chairwoman Deborah Hoover of the Burton D. Morgan Foundation. The board be-

4. Summa tries to right the ship 2017 was a rough year for Summa Health, but as the year closed the system learned that things were beginning to look up.

President and CEO Dr. Thomas Malone resigned in January in the wake of strong opposition to his decision not to renew the contract of an independent physicians group that staffed the ER. Things got worse when Summa got word its emergency residency program would lose its accreditation, and the system was put on probation by the Accreditation Council on Graduate Medical Education.

Enter Dr. Cliff Deveny, a former senior leader at Summa, who in March stepped in as interim president and CEO. Next came belt-tightening. The

FirstEnergy came off a $6.2 billion loss in 2016 by beginning 2017 with talk of possible bankruptcies at FirstEnergy Solutions, the subsidiary that owns many of the company’s coal-fired plants, and FirstEnergy Nuclear Operating Co., which operates the Perry and Davis-Besse nuclear plants. The company in February said it needed to sell or shut down the nuclear plants and has not changed its tune since.

In April, the company got the Ohio Senate to introduce legislation that would help bail out some of its nuclear plants, but that never made it to the floor.

That left the company with relatively few options, since efforts by the Public Utilities Commission of Ohio to bail out FirstEnergy’s old plants in 2016 were slapped down by federal regulators before they even took effect. But the problem remained, and FirstEnergy has been hanging in limbo, watching some of its credit ratings get cut.

Now, its likely best hope is the same federal government that previously prevented it from getting state help. Neil Chatterjee, chairman of the Federal Energy Regulatory Commission, said in November that he’s working on a short-term plan to keep at-risk coal and nuclear generators online. The plan would give FERC more time to evaluate energy secretary Rick Perry’s proposal to compensate certain plants that store fuel on-site.

CHAPEL

CONTINUED FROM PAGE 16

Segedy said a turnaround has happened before and pointed to Summit Mall, which he said was successfully reconfigured by “basically turning itself inside out” so that more stores have external fronts.

“Summit’s doing well now,” he said, adding that he’d love to see Chapel Hill take a similar course.

In the meantime, Chapel Hill reports it had a strong holiday season.

One store manager, who said her employer did not give her permission to be named in an article, said her retail clothing store was extremely busy in the days leading up to Christmas — “way more than I was even hoping for,” she said.

Chapel Hill operations manager Fred Salzwimmer said the stores, as well as the mall’s attractions, were all pretty busy.

“Christmas season was an upswing for us,” he said. “Santa did well, Archie did well. We probably had a couple thousand kids.”

If the mall can improve, possibly by reconfiguring or even repurposing all or parts of its more than 30-acre

Ace Precision Industries, a supplier of machined parts and assemblies, is one of the hidden manufacturing businesses on Moe Drive.

(Shane Wynn for Crain’s)

site, that would be a good thing for the neighborhood, according to Segedy.

In many ways, the Chapel Hill neighborhood has a lot of what it needs to succeed. One thing it has been lacking, Segedy and others said, is the sort of champions that are fostering other neighborhoods in the city.

But even that’s changing. In September, the John S. and James L. Knight Foundation awarded $240,000 to the new North Akron Community Development Corp., which will represent Chapel Hill along with North Hill and Cascade Valley.

The grant brings not only money, it brings more involvement from people like John and Tina Ughrin, long-

Located on Industrial Parkway between Moe Drive and East Tallmadge Avenue, Caliber Mold and Machine is a machine shop that specializes in tire molds and related parts.

time champions of North Hill and two of the city’s most active urban policy advocates.

Discussing the North Akron Community Development Corp. via email, John Ughrin said his group doesn’t yet have a formal presence in Chapel Hill but will be working to build one over the next few years.

He said it’s not a neighborhood

with enough local champions or a strong, unique identity — but that he’d welcome involvement from Chapel Hill residents to help change that.

“We like our activities to be driven as locally as we can, so we’d be interested to hear from anyone who lives, works or plays in Chapel Hill if they want to get involved,” he said.

PA G E 18

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CRAIN’S CLEVELAND BUSINESS

ADVERTISING SECTION

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Solon Manufacturing Co., located in Chardon, is pleased to announce newly appointed company President, Diane Popovich. Popovich joined Solon Mfg. in 2015 and previously held positions as VP of Operations and Sales & Marketing Director. As President, Popovich will oversee all areas of the organization with a key focus on strategic planning and infrastructure.

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Frantz Ward is proud to announce it has elected Christopher G. Keim to lead in the newly created the role of Managing Partner. Nearing completion of his interim year in this role, Chris will serve an additional three-year term. Chris is a litigator and a former Cuyahoga County Assistant Prosecutor. He has a J.D. from Case Western Reserve University School of Law and a B.S. from The Ohio State University.

TranSystems announces the promotion of Nabil Farah, PE, of the firm’s Cleveland, Ohio, office to Vice President and Master Professional Partner. Farah has more than 30 years of experience managing and designing highway/interchange projects as well as railroad grade separations, and serves as TranSystems’ Ohio Bridge Team Leader and Innovative Delivery Pursuit Manager. He has designed the replacement and rehabilitation of over 150 Ohio structures.

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Vantage Financial Group Frank Miotke has been elected as a Principal of Vantage Financial Group. The Principal’s Board is responsible for providing direction, leadership, and advice to the company’s management team.

Frank joined Vantage Benefit Advisors in 2008 as a Benefits Advisor. He brings over 23 years of experience in the major medical and ancillary markets. Frank is a graduate of Grand Valley State University and has a degree in Business Administration.

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PA G E 19

Galen Schuerlein

Director, Roetzel Consulting Solutions Convincing voters to increase their taxes or elect a Democrat is now only a small part of Galen Schuerlein’s job as director of Roetzel Consulting Solutions, a part of the Roetzel & Andress law firm. But it’s where her profile is the highest. For more than a dozen years, the Seattle native and 1997 Case Western Reserve University Law School graduate has been in the thick of many campaigns, starting with the election of Jane Campbell as Cleveland’s mayor in 2001. She worked in the Campbell administration, first as chief counsel and then as an executive assistant to Campbell. When Frank Jackson unseated Campbell in 2005, Schuerlein took a job with Burges & Burges Strategists, a political consulting firm. There, she helped pass a Cuyahoga County Public Library levy in 2008 and then, in 2009, the Cuyahoga County reform initiative that created the current county executive form of government. She left Burges & Burges in 2014 for Melamed Communications, another political consulting firm, before leaving there for Roetzel in 2016. — Jay Miller

Five things Book she’s reading “Beyond the Messy Truth: How We Came Apart, How We Come Together,” by Van Jones

Best advice you’ve gotten?

That a goal without a plan is just a wish.

In the car I listen to “Hamilton: An American Musical” over and over.

Favorite spot in Cleveland I started rowing for the Western Reserve Rowing Association, and the view of the city is even more amazing from the river.

Must-watch television “Jeopardy” and “60 Minutes”

How would you describe your job?

I help my clients in the public and private sector define and achieve their goals.

What’s a recent success?

The best, most recent victory for me was winning the North Royalton schools bond issue, because it had failed five times and this was the first time I had worked on it. (In the May 2016 election, the North Royalton City Schools passed a bond issue to build new school buildings with a 59%-41% vote.) When you think about working on a school bond issue, it’s changing the lives of the kids who go to school there. So I’m very proud of that.

What about on the ballot last November?

I did the Hudson City School District issue. (Voters in Hudson by a 54%-46% margin approved an $81.6 million bond issue to build and renovate school buildings.) I thought that was a good victory because it was a large bond issue.

You talk a lot about election issues, but how much of your work is actually on political campaigns?

About 20%.

Lunch spot TownHall 1909 West 25th Street, Cleveland

The meal One had the grass-fed cheeseburger (no cheese) with seasonal vegetables.

The other had a Caesar salad.

The vibe With its exposed brick, concrete floor and high-top tables, this could be a typical burger-and-beer hall. But its vegetarian, vegan, gluten-free, paleo, kids and brunch menus have made this a day-long hangout.

The bill $40.45 with tip

What’s the rest then?

It may be on procurement for companies, working with a trade association. It may just be research.

If a school district wants to go on the ballot — with a bond issue — I may have to find out if it’s even possible to sell it. I also do communications consulting. I help clients with their capacity to communicate. In this day and age, when the media is less centralized, and less prevalent frankly, I have to make sure my clients have the ability to communicate with their target audience and not just rely on news media.

Tell me about a success outside of an election campaign.

I don’t think I can talk about that (due to) client confidentiality. Often, my job is to avoid crises and find a workable solution. But my job is not to take credit for it. A lot of time you don’t know that I’ve been there. I also help Roetzel & Andress clients. The reason I went to a law firm is that it

gives clients a much broader depth of services. Sometimes litigation isn’t the answer.

What do you like best?

I like to be a part of finding solutions to difficult situations. I like being a part of organizations and understanding the things that are working. You have to understand the politics, the organization and the goal. If I have a difficult campaign, I really like it. The thing about campaigns is there is an end date and there is no excuse. That date is not moving, no matter what excuse you may have.

What’s your batting average?

I always say, “I rarely lose one that I don’t know I’m going to lose.” I lost one in Chagrin Falls by seven votes about six years ago. That was very upsetting.

You practiced law only briefly.

Why did you go to law school?

Well, my undergraduate degree was in political science, and there weren’t people who wanted to pay for my political opinions. I felt I wanted to get an advanced degree, and I didn’t want to do medical. That wasn’t me.

I’ve met people who have a love of the law. That wasn’t me. But it teaches you a way of thinking. It makes me see the world in a different way. I do occasionally practice law — not much, but I’m thankful I have the skill.

But you did start to practice law.

I really wanted to be a prosecutor, and I worked for Bill Mason (Cuyahoga County prosecutor from 1999 to 2012) for two years. I worked in child protection services, and then he pointed me in Jane Campbell’s direction.

Why did you get into political consulting?

After I was chief counsel for the city of Cleveland and then executive assistant for communications and labor relations to (Mayor) Jane Campbell, I realized that I liked the action and the idea of going to a law firm, and writing briefs seemed less appealing at the time.

So I went into consulting. It kept me in the political scene. Now I feel like I’ve come full circle being at a law firm.

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