$2.00/AUGUST 20 - 26, 2012 NEWSPAPER Repurposing vacant land Damien Forshe and Keymah Durden (above) are two of many pushing for greater community involvement in rehabbing inner-city plots. Real estate, PAGE 13 INSIDE Cities could get uniform tax code By JAY MILLER [email protected]Legislation to streamline munic- ipal tax collection in Ohio could be a reality by the end of the year. State Rep. Cheryl Grossman, a Republican from suburban Colum- bus, told Crain’s she is drafting for fall introduction legislation that would create a uniform municipal income tax code that all Ohio mu- nicipalities assessing a tax would follow. Getting the more than 600 Ohio cities that levy an income tax onto a uniform system would end a situa- tion that can be expensive and frus- trating for businesses. The Kasich administration and others have argued this complexity is keeping businesses from moving into Ohio. The legislation would create a single, statewide definition of tax- able income for municipal taxes, set a uniform schedule for employers to make withholding payments and create a generic income tax form. The Kasich administration raised the issue of uniform municipal tax- ation when it came into office in January 2011, even suggesting that the state would act as tax collector for cities. But the issue was stalled until May of this year, when municipal tax reform advocates took off the table centralized state collection of the taxes. “This is a unified tax code — it has nothing to do with centralized collections,” Rep. Grossman said in discussing the planned legislation in See TAX Page 12 See SHALE Page 12 See MRI Page 20 Advocates drop controversial goal of state collecting muny revenues CWRU to host center focused on shale study Rush’s many issues part of ‘holistic’ approach By TIMOTHY MAGAW [email protected]Case Western Reserve University is looking to put itself at the heart of the ongoing shale debate with the creation of a new academic center dedicated to exploring several aspects of the booming industry. Known as the Center for Shale Energy Research and Education, the idea is to band together researchers from multiple disciplines to study facets of the region’s shale rush that range from its impact on the economy to its effects on public health and the environment. “As an independent university, we feel that we have a major role to play because we are not funded by one side or another,” said Xiangwu “David” Zeng, chairman of CWRU’s department of civil engineering and one of the faculty members involved with the creation of the center. Other universities have centers related to shale gas, but they’re largely focused on certain aspects of the industry. CWRU’s center, Dr. Zeng said, will take a “more holistic approach.” At present, it involves more than 30 faculty members from the private university’s engineering, World Trade Conference see page 9 VOL. 33, NO. 32 A STIFF TEST IN THE STATES Solon’s AllTech brings MRImachine home, but firm is facing established industry foes By CHUCK SODER [email protected]S ure, AllTech International Group has sold about 40 of its MRI scanners in China over the past three years. But if the Solon-based company is to succeed in selling them in the United States, it will need to make its customers “ungodly happy,” according to Will Joliat, vice president and gen- eral manager of its U.S. subsidiary, AllTech Medical Systems America Inc. The parent company — which has nearly 40 employees in Solon and another 225 at a separate subsidiary in China — received regulatory approval to begin selling its MRI scanners in the United States in May. Now All- Tech is hiring people to fill out its lo- cal sales and customer support teams, as well as other functions, Mr. Joliat said. With a $487,000 Job Creation Tax Credit in hand as of last month from the state of Ohio, AllTech also plans to start building more of the scanner’s subsystems at its new, 50,000-square- MARC GOLUB Tracy Vaccaro, a software engineering support specialist at AllTech Medical Systems America Inc., shows the capabilities of the company’s MRI machine.
Transcript
$2.00/AUGUST 20 - 26, 20120
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Repurposing vacant landDamien Forshe and Keymah
Durden (above) are two of manypushing for greater community involvement in rehabbing inner-cityplots. Real estate, PAGE 13
Legislation to streamline munic-ipal tax collection in Ohio could bea reality by the end of the year.
State Rep. Cheryl Grossman, aRepublican from suburban Colum-bus, told Crain’s she is drafting forfall introduction legislation that
would create a uniform municipalincome tax code that all Ohio mu-nicipalities assessing a tax wouldfollow.
Getting the more than 600 Ohiocities that levy an income tax onto auniform system would end a situa-tion that can be expensive and frus-trating for businesses. The Kasichadministration and others have
argued this complexity is keepingbusinesses from moving into Ohio.
The legislation would create asingle, statewide definition of tax-able income for municipal taxes, seta uniform schedule for employersto make withholding payments andcreate a generic income tax form.
The Kasich administration raisedthe issue of uniform municipal tax-
ation when it came into office in January 2011, even suggesting thatthe state would act as tax collector forcities. But the issue was stalled untilMay of this year, when municipal taxreform advocates took off the tablecentralized state collection of thetaxes.
“This is a unified tax code — it has nothing to do with centralized collections,” Rep. Grossman said indiscussing the planned legislation in
See TAX Page 12
See SHALE Page 12 See MRI Page 20
Advocates drop controversial goal of state collecting muny revenues
CWRU tohost centerfocused onshale study Rush’s many issues partof ‘holistic’ approachBy TIMOTHY [email protected]
Case Western Reserve Universityis looking to put itself at the heart ofthe ongoing shale debate with thecreation of a new academic centerdedicated to exploring several aspectsof the booming industry.
Known as the Center for Shale Energy Research and Education, theidea is to band together researchersfrom multiple disciplines to studyfacets of the region’s shale rush thatrange from its impact on the economyto its effects on public health and theenvironment.
“As an independent university, wefeel that we have a major role to play because we are not funded by one side or another,” said Xiangwu“David” Zeng, chairman of CWRU’sdepartment of civil engineering andone of the faculty members involvedwith the creation of the center.
Other universities have centers related to shale gas, but they’relargely focused on certain aspects ofthe industry. CWRU’s center, Dr.Zeng said, will take a “more holisticapproach.” At present, it involvesmore than 30 faculty members fromthe private university’s engineering,
World Trade Conference see page 9
VOL. 33, NO. 32
A STIFF TESTIN THE STATESSolon’s AllTech brings MRI machine home,but firm is facing established industry foes
Sure, AllTech InternationalGroup has sold about 40 of itsMRI scanners in China overthe past three years.
But if the Solon-based company isto succeed in selling them in the United States, it will need to make itscustomers “ungodly happy,” accordingto Will Joliat, vice president and gen-eral manager of its U.S. subsidiary,AllTech Medical Systems America Inc.
The parent company — which hasnearly 40 employees in Solon and another 225 at a separate subsidiary inChina — received regulatory approvalto begin selling its MRI scanners inthe United States in May. Now All-Tech is hiring people to fill out its lo-cal sales and customer support teams,as well as other functions, Mr. Joliat said.
With a $487,000 Job Creation TaxCredit in hand as of last month fromthe state of Ohio, AllTech also plans tostart building more of the scanner’ssubsystems at its new, 50,000-square-
MARC GOLUB
Tracy Vaccaro, a software engineering support specialist at AllTech MedicalSystems America Inc., shows the capabilities of the company’s MRI machine.
Crocker Park, the mixed-use development in Westlake with theMain Street feel, often is filled withdroves of people at its shops, restau-rants and movie theaters. With highoccupancy in its office and retailspace and a waiting list for suites atits 218-unit apartment component,
the project raises the question,“What’s not to like?”
Fitch Ratings Service, the creditrating concern that occupies aunique perch to analyze the opera-tion, found something. And in sodoing, Fitch has indicated thatCrocker Park’s financial conditionmay not be as robust as the crowdsit draws — a depiction Crocker Park’s
AUGUST 20 - 26, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3
INSIGHTTHE WEEK IN QUOTES“I view the center (atCase Western ReserveUniversity) as a placefor research, educationand outreach thathelps people grapplewith the drillingboom.”— Beverly Saylor, CWRU associate professor of geology.Page One
Workers’comp suithinges ongroup cut
Jo-Ann adds to store roster, subtracts from their footprint
Plaintiffs say substantial discountwas subsidized by their high ratesBy JAY [email protected]
A class action lawsuit that, if successful, could end uppaying more than $1 billion to employers who believethey overpaid for workers’ compensation insuranceopens today, Aug. 20, in Cuyahoga County CommonPleas Court.
In San Allen et al v. Stephen Buehrer, attorneys for theclass argue that employers who qualified for member-ship in groups that received workers’ comp premiumdiscounts of as much as 90% did so at the expense of employers who did not qualifyfor a group. The plaintiffs saythe high rates class memberspaid subsidized the group-rating discount, which wentto companies with no injuryclaims against them, usuallyfor five years.
Mr. Buehrer is administra-tor of the Ohio Bureau ofWorkers’ Compensation; SanAllen is the corporate nameof Corky & Lenny’s restaurantin Woodmere, one of sevenoriginal plaintiffs in the lawsuit filed in April 2008. Thecase will be tried without a jury before Cuyahoga CountyCommon Pleas Court Judge Richard McMonagle.
“It’s a case of great interest to all of us” who representemployers for workers’ compensation, said David Mc-Carty, director of the workers’ compensation practice atKegler, Brown, Hill & Ritter, a Columbus law firm. “It’sabout a lot of money.”
Because the workers’ comp bureau is financed by employers’ insurance premiums, a victory for the classcould force the bureau either to raise insurance rates orto dip into its reserves to pay damages.
RUGGERO FATICA
Crocker Park on a quiet afternoon last Thursday.
Burdened by prior inventory, Hudson retailer right-sizes to rebound
Jo-Ann Stores Inc. is stitching itsfuture together one store at a timeby adding a slew of new — albeitsmaller — retail outlets across theUnited States and, potentially, intoCanada.
The Hudson-based specialty retailer of fabrics and crafts alreadythis year has opened 47 stores to
bring its total to 580. It wants toopen another 13 by year’s end andplans to launch another 60 in 2013.
Jo-Ann is taking advantage ofabundant retail vacancies, whichhave lowered rents, and a smallerstore format to expand its reach.
The company, which struggledwith profitability in the 2000s, nowis on a growth track, according toTravis Smith, who in August 2011became CEO of Jo-Ann. The com-
pany’s sales in 2011 roseto $2.2 billion, up 5% from2010, Mr. Smith said. Hedeclined to give year-to-date sales figures.
“We’re in a nice niche,”Mr. Smith said. “We’re thelargest national fabric retailer in thecountry and we fit really well in thecompetitive set. We don’t have aton of competitors.”
Mr. Smith said Jo-Ann’s earlier
troubles with gross marginslargely stemmed from itslarge-store format andhigh inventory levels.
“What happened to thecompany was inventorybloomed, margins wentdown — we had sort of alot of big stores that weren’tperforming to where the
company needed,” Mr. Smith said.“I had to spend a lot of money to getout of that inventory that wasn’tworking. It just took a big hit on thegross margins side and ultimately
earnings.”
Hello, ElkoJo-Ann now is in the midst of a
number of initiatives aimed at in-creasing market share and boostingprofits, according to Mr. Smith. Whileopening new, smaller stores is topof mind, Jo-Ann also is orderingmore products directly from thesource as opposed to using middle-men, is upgrading its inventory andis investing in mobile technology tobetter connect with customers.
See JO-ANN Page 20
See SUIT Page 21
See CROCKER Page 9
Smith
Analyst, Stark at oddsover Crocker conditionFitch: Cash flows have ‘eroded’; developer disagrees
“When times aregood, everybody actslike they’re never goingto end. And whentimes are bad, every-body acts like they’renever going to getgood again.”— Mike McHugh, owner of fourregional window companies, including Caliber Glass in Solonand Integrated Automation Sys-tems LLC in Aurora. Page 11
“The last six monthsis the first time we’veseen a steady increasein inquiries (since2006). … There’s an excitement in theindustry, and it’s notjust the number ofstudents.”— Tina Lapp, president, Schoolof Business at Hondros College,which offers real estate coursesat campuses throughout Ohio.Page 13
“Green is a locationwhere a lot of activityis taking place inNortheast Ohio. Ithink it’s a boomtown now.”— Joe Albrecht, vice presidentfor retail properties, Albrecht Inc.Page 16
CORRECTIONUnder Mayor Frank Jackson’s lakefront development
plan, the city of Cleveland’s Department of Port Controlwould control any development that would take place in thearea surrounding the East Ninth Street Pier and the city’swaterfront museums. An Aug. 6, Page One story on plans byGeis Cos. to lease for development 20 acres of lakefrontland incorrectly reported that the Cleveland-CuyahogaCounty Port Authority would develop the land near the pierand museums.
“It’s a case ifgreat interestto all of us. It’sabout a lot ofmoney.” – David McCarty, director of workers’compensation practice, Kegler,Brown, Hill & Ritter
20120820-NEWS--3-NAT-CCI-CL_-- 8/17/2012 11:29 AM Page 1
Spoiler alert: If you’re a Libertarian,or an uber-free marketer, or ifyou’re a smoker — especially ifyou’re a smoker — you’re not going
to much agree with this column item.It seems that Australia’s highest court
has ruled in favor of that country’s new,tough cigarette package labeling laws thathighlight the product’s perils.
The High Court of Australiaruled as constitutional a pro-posed new law requiring ciga-rette packages to display graphicimages of all sorts of health hazards connected to smoking.So if you’re an Aussie, and youhead to the store to buy yourcigarettes, you’ll no longer see abrand logo, which is prohibitedby the new law.
More impactful, however, will be theimages you’ll see on the packaging: mouthulcers, cancerous lungs, gangrenous limbs.
As you can imagine, Big Tobacco —concerned about the potential spread ofsuch legislation — fought this one hard.Lawyers for Philip Morris, British Amer-ican Tobacco, Imperial Tobacco and Japan
Tobacco argued that the new ban infringedon their intellectual property rights.
The court has not yet released the reasoning behind the ruling, which Australian government officials hope willhelp further drive down smoking rates.Australia already has imposed some of the world’s highest tax rates on cigarette
makers.The country’s health minis-
ter and attorney general issueda joint statement: “This is a victory for all those familieswho have lost someone to a to-bacco-related illness. No longerwhen a smoker pulls out a pack-et of cigarettes will that packetbe a mobile billboard.”
I lost my father — in his early60s — to a smoking-related ill-
ness. My wife tragically lost her fatherwhile he was still in his 40s. Other belovedmembers of our family struggle with theaddiction.
There is nothing good about cigarettes,a product that inarguably adds to our nation’s health care costs. The remains litter our streets and their costs drain
money from the pockets of our citizens.Anything that can be done to eradi-
cate cigarette smoking should be done,and as quickly as possible.
****ACACIA COUNTRY CLUB, the golf
club that has been the subject of potentialsales many times over the years, couldhave a new and quite surprising buyer.
Reportedly, the Conservation Fund, anonprofit that uses private money to pre-serve land or return it to its original state,has offered the club members nearly $15million, and the offer will be put to a vote.
The golfer in me mourns the potentialloss of a Donald Ross-designed course,but the changing finances of the golf in-dustry make it difficult to maintain somany fine operations in Northeast Ohio.
If the Acacia members accept this bid,it will be a surprising turn of events,since so many developers and retailershave coveted the valuable spot alongChagrin Boulevard for so very manyyears. It will be interesting to see whathappens next, given that the club hasbeen on and off the selling block a numberof times over the last few years. ■
44 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 20 - 26, 2012
The payoffN
o one expects health care institutions thatmust compete for patients to play nicewith each other all the time. However,with federal research money tight, there
are benefits to collaboration among those institu-tions as they pursue their research agendas — apoint proven with the Aug. 10 announcement thatan alliance led by Case Western Reserve Universitysnared the largest research grant ever awarded inNortheast Ohio.
The $64.6 million grant from the National Institutesof Health is a reward to the alliance for the work ithas done over the last five years to advance medicaldiscoveries of its members, which include ClevelandClinic, MetroHealth, University Hospitals CaseMedical Center and Louis Stokes Cleveland VAMedical Center. It was back in 2007 when thenascent partnership won a $64 million grant fromNIH; that grant allowed the collaborators to assistmore than 1,300 individual scientists and physicians,who went on to secure more than $150 million inadditional federal support.
“At that time, none of us knew for sure how thisattempt at cooperation actually would work in prac-tice,” said Dr. Richard Rudick, vice chairman of theClinic’s neurological institute and a co-author of the2007 grant proposal with Dr. Pamela Davis, dean ofCWRU’s School of Medicine. “But what we foundover time was that our shared commitment to worktogether to advance the health of all patients in ourregion has driven scientists and investigators in thepartner institutions to overcome barriers.”
A collaborative effort of this nature and scalewould have been impossible as early as 10 years before. For many of the years that Dr. Floyd Loopran the Cleveland Clinic and Farah Walters washead of University Hospitals, administrators ofCleveland’s two largest health care providers simply did not like each other. The rivalry betweenUH and the Clinic was intense and bitter, so muchso that each institution would carp about theamount of coverage the other was receiving in thisnewspaper.
The tenor of their relationship began to changeabout a decade ago. That’s when it became apparentto both that the federal government didn’t have aninfinite supply of research funds and was more likely to hand out the money it did have to researchefforts where two or more entities worked togetherrather than did their own thing.
Today, research collaboration among Cleveland’shealth care giants is commonplace, which is greatfor Northeast Ohio as the region continues to workon establishing its reputation as a center of medicalinnovation. CWRU celebrated the latest payoff ofthose efforts in taking out a full-page newspaper adAug. 12 to congratulate the participants in its alliancefor demonstrating the “Power of Partnership.”
“We applaud the partners who joined this initia-tive in 2007, and look forward to even greater advances in the years to come,” the ad stated.
So do we — and we seriously doubt we’ll be dis-appointed.
FROM THE PUBLISHER
PERSONAL VIEW
BRIANTUCKER
Another blow for nasty, deadly habit
Shared services solve squeeze in support By RANDY COLE
Ohio’s local governments andschools, and the taxpayers whosupport them, face a criticaldilemma that could force many
to the breaking point. While public expectations for government services andeducation continue to grow, the already-high costs of meeting those needs arerising at an even faster pace.
That’s not a new problem, but the oldsolutions no longer work. There is littlepublic support for higher taxes or feesthat might help cover the gap. We can’tattract businesses and young families toOhio by cutting services. That old standby,“belt-tightening,” is just not enough.
In the face of this challenge, it’s clearthat our schools and local governments
must find new and more creative ways toreduce their costs and improve efficiency.They must become smarter about spendingtaxpayer dollars and recognize that theold ways of doing business simply can’tcontinue. Shared services — a new andbetter way — can provide that hope.
Knowing that shared services can helpresolve this dilemma, Gov. John Kasich’sadministration has released a new, comprehensive plan of action: “BeyondBoundaries: A Shared Services Action Planfor Ohio Schools and Governments.”The plan, its 10 recommendations foraction and numerous other resourcesprovide local officials with a road map to
achieving the cost-saving efficiencies ofshared services. Using real-life examplesof successes already working in Ohio, theplan spotlights proven, positive resultsfrom collaboration that goes across tra-ditional boundaries and jurisdictionallines.
Among many examples documentedin the report:
■ Several years ago, the City of Greenpartnered with the Green Local SchoolDistrict to construct and share facilitiesin a new, 53,671-square-foot central administration building. The city alsopartners with neighboring jurisdictionsto save an estimated $2 million annuallythrough contracts to share police, buildinginspection and public health services.
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Subscriptions: In Ohio: 1 year - $64, 2 year - $110.Outside Ohio: 1 year - $110, 2 year - $195. Single copy,$2.00. Allow 4 weeks for change of address. Forsubscription information and delivery concerns sendcorrespondence to Audience Development Department,Crain’s Cleveland Business, 1155 Gratiot Avenue,Detroit, Michigan, 48207-2912, or email to [email protected], or call 877-812-1588(in the U.S. and Canada) or (313) 446-0450 (all otherlocations), or fax 313-446-6777.Reprints: Call 1-800-290-5460 Ext. 125
Keith E. Crain: ChairmanRance Crain: PresidentMerrilee Crain: SecretaryMary Kay Crain: TreasurerWilliam A. Morrow: Executive vice president/operationsBrian D. Tucker: Vice presidentRobert C. Adams: Group vice president technology, circulation, manufacturingPaul Dalpiaz: Chief Information OfficerDave Kamis: Vice president/production & manufacturing
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MATT MELENAClevelandI think it’s a smart move, just based on (Ryan’s) experience with the budget. I think he will complementRomney well. He may have hurt him inOhio by not choosing (U.S. Sen. Rob)Portman.
THE BIG ISSUE
TED KREITWilloughbyIf you are in favor of the president, asI am, it’s a good thing. Whatever chanceRomney had before he picked Ryan,and it was slim, he has none now. WithRyan’s views on Social Security andMedicare, they’re sure to lose Florida.
SHAWN MINORClevelandI think he will be a big help for Romney. Ryan has a good reputation.He’s a good family man and he’s always thinking about what’s best forthe people.
ROBERTA OSTROWSKIWickliffeI don’t think Ryan will help him. Every-one is scared, especially older people,about cuts to Social Security andhealth care. ... I want to researchRyan’s views now to make up my mind,and I did not feel that way before.
What do you think about Mitt Romney’s choice of Paul Ryan as his running mate?
20120820-NEWS--5-NAT-CCI-CL_-- 8/17/2012 9:58 AM Page 1
66 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 20 - 26, 2012
technology services, along with development of regional data centersand shared “cloud services,” couldyield at least $91 million in savings,with a potential savings of morethan $150 million annually.
■ Utilizing MARCS (the state’sMulti-Agency Radio CommunicationSystem) at a statewide level throughcoordination of a “system of systems”in areas of high communication de-mand could yield more than $500million in savings to ongoing capitaland operating expenses for publicentities between 2012 and 2020.
Based on an in-depth survey ofexisting efforts and attitudes in Ohio,Beyond Boundaries is the work ofnumerous education and local gov-ernment professionals from acrossthe state, including valuable inputfrom the Ohio Municipal League.Drawing on lessons learned from thatsurvey, the plan presents a compre-hensive study of public policy rec-ommendations, potential collabo-rations and needed changes both inthe law and in public attitudes thatcan transform the way of doingbusiness in Ohio’s public sector.
Three important steps are neces-
sary for the shared services solutionto take hold.
First, the governor and Legislaturemust continue making the statutoryand policy changes needed to expe-dite the use of shared services acrossOhio. Gov. Kasich and engaged legislators already have made important progress in that direction. Provisions in the Kasich Jobs Budget,passed and signed in June 2011, removed legal road blocks to sharedservices and added financial incen-tives to spur local government inno-vation.
A number of other improvementsin state law were made in June2012, a result of the governor’s Mid-Biennium Budget Review. BeyondBoundaries is not a report sitting ona shelf; it is a road map whose rec-ommendations are being put intoimmediate action.
A second crucial step is to provideinformation and tools that will beneeded by local leaders to realizethe shared services opportunitiesavailable to them and to act whenthose opportunities make sense.Beyond Boundaries is one great toolin that role.
Local leaders are encouraged to
visit the SkinnyOhio.org website andthe Shared Services Idea Center formore information. Following theBeyond Boundaries recommenda-tions, the Auditor of State is ex-panding the information containedin SkinnyOhio.org and the OhioDepartment of Administrative Ser-vices is creating a joint purchasingportal that creates a one-stop resourcefor local governments and to pursuethe savings offered through existingjoint purchasing programs acrossthe state.
Finally, as step three, local leadersmust truly be leaders, willing to takeimmediate, broad action.
These are hard steps to take, nodoubt, but they’re all necessary toensure the continued well-being ofcommunities where we live, raiseour families and hope to see localbusiness thrive.
Local government leaders inter-ested in the shared services solution,as well as citizens who want to encourage those leaders to succeed,should read “Beyond Boundaries”and take its lessons to heart. The fullreport and related materials areavailable at www.beyondboundaries.ohio.gov. ■
continued from PAGE 4
View: Leaders must make difficult choices
Umberto P. Fedeli’sItalian heritage andlove of entertainingare prominent in-
fluences inside his Gates Millshome, which he opened thissummer for a tour by Crain’sHouse Calls.
The biggest example: Mr.Fedeli, president and CEO ofThe Fedeli Group, an insur-ance brokerage firm in Inde-pendence, had an Italian bistrobuilt into his lower level, com-plete with a pizza oven.
European imports, rangingfrom light fixtures to a largegazebo out back, abound. Andwait until you hear who he’sentertained there. Watch now:www.crainscleveland.com/housecalls. STEPHEN HERRON PHOTOS
AUGUST 20 - 26, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 7
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Alliance to boost area’s stem cell researchersReminger movesinto Indiana
Cleveland law firmReminger Co. LPA isopening its 11th office —
and its first in Indiana — in earlySeptember.
Driven there by client demand,Reminger is opening the full-service office in Indianapolis atTwo River Crossing near thecity’s north-side business dis-tricts.
“We have expanded into Indiana because our existingclients believe that our style ofdelivering legal services canmake an impact in the state,” saidStephen E. Walters, managingpartner. “This expansion will alsoenhance our regional presence,allowing for our clients to haveconsistency of legal services inIndiana, Ohio and Kentucky.”
The office will be staffed withseven attorneys whom Remingeris relocating to Indianapolis;among them is partner Rick L.Weil, who will oversee it.
— Michelle Park
ON THE WEB Story from www.CrainsCleveland.com.
Leaders see coordinated effort helping youngbiotech companies seize ‘billion-dollar’ market
In the hope that Ohio can make asplash in a potentially multibillion-dollar market for stem cell therapies,a group of local business leadersand scientists are piecing together avehicle to help young biotech com-panies commercialize their research.
Dubbed OH-Alive, the so-called“manufacturing platform” will provide equipment, facilities andstaffing to assist researchers andsmall biotech startups with the often-expensive task of growing stemcells and eventually bringing theirideas to market.
“Stem cell therapy is emergingnow into, to put it frankly, the futureof medicine,” said Michael Gilkey,OH-Alive’s director and the marketingand operations manager for the National Center for RegenerativeMedicine at Case Western ReserveUniversity.
“It’s not like this is science fiction,”Mr. Gilkey said. “It’s in patientsright now. We’re looking at a billion-dollar market in the near term.”
Officials involved in the projectsaid its facilities — the sites for
which haven’t been determined —are expected to help researchersgrow stem cells more quickly andon a larger scale. Current processesused to grow stem cells only produceenough material for early stage clinical trials, whereas the new facil-ities — thanks to the equipmentand manpower of OH-Alive — areexpected to produce enough mate-rial for larger clinical trials.
Simply put, stem cell therapy isthe process of introducing livingstem cells in the body so they’ll regenerate or restore damaged tissues. Potential uses include thetreatment of diabetes or multiplesclerosis, according to Jan Jensen,OH-Alive’s technical director andthe Eddie J. Brandon Chair of Dia-betes Research at the ClevelandClinic.
“Cell therapy is knocking on thedoor and would allow these peopleto live a normal life,” Dr. Jensen said.
The OH-Alive project received aboost this summer when the OhioThird Frontier Commission awardedthe project $2.4 million to get it offthe ground. The funds were matchedby CWRU’s National Center for Regenerative Medicine, bringing
the total investment to $4.8 million.Other local collaborators on the
project include the Cleveland Clinic;BioEnterprise, a nonprofit that assists local health care startups;Athersys Inc., a Cleveland-baseddeveloper of stem cell technology;and Renovo Neural, a ClevelandClinic spinout company that developsand tests multiple sclerosis drugs.
Potential acceleratorB.J. Lehmann, president and
chief operating officer of Athersys,said his company likely would employsome of OH-Alive’s services in thefuture as it develops products. Hecalled the initiative an “importantnext step in the bigger picture of de-veloping a strong manufacturing andprocess development infrastructurefor cell therapies in Cleveland.”
In addition to the technology offered through OH-Alive, researcherswill have access to Case Western Reserve experts who have experiencenavigating the regulatory hurdlesrequired to bring a product to thebedside.
BioEnterprise’s outgoing CEOBaiju Shah likened the OH-Aliveproject to a “regenerative medicineaccelerator” that has the potentialto lure other early-stage companiesto the region.
“I look at OH-Alive as a potentialflywheel for a new generation ofmedical companies but also as being able to attract those types oftechnologies from other parts of thecountry or world,” said Mr. Shah,who plans to leave the nonprofit organization once his successor isnamed to steer the for-profit com-ponent of University Hospitals’$250 million drug development ini-tiative.
Mr. Shah noted that Cleveland isdeeply entrenched in the medicaldevice and health information technology arenas, and the OH-Alive investment will broaden theregion’s strength in therapeutic tech-nologies.
“This initiative gives us an anchorpoint in one of the most excitingparts of therapeutics,” Mr. Shahsaid. ■
BRIGHT SPOTSBright Spots is a periodic
feature in Crain’s high-lighting positive businessdevelopments. To submitinformation, email man-aging editor Scott Suttellat [email protected].
■ Law firm Bucking-ham, Doolittle & BurroughsLLP announced that John F. Hill will join the firm’s Akron officein October as a partner in the Liti-gation Practice Group. He joinsBuckingham from Hill HardmanLLC, where he was one of the prin-cipals.
“John has developed an extremelysuccessful practice and he ranks asone of the best litigation attorneysin Ohio,” said John P. Slagter, Buck-ingham’s managing partner, in astatement. “He will help us expandour market-leading position in litiga-tion, which continues to be amongour core strengths in Akron andthroughout the region.”
Buckingham said Mr. Hill bringsa wide range of clients in complexcommercial cases. His work hasranged from contract litigation toshareholder disputes, including national class action litigation. Mr.Hill’s business litigation practicehas recently emphasized service tophysicians and other health careproviders, as well as attorneys, ac-countants and other professionals,the law firm said.
Mr. Hill earned his bachelor’s degree from Gannon University in1984 and his law degree from CaseWestern Reserve University LawSchool in 1987.
■ CardinalCommerce, a Mentorcompany that enables Internet andmobile commerce, said it haslaunched CustomerConnect, a self-service, web-based mobile marketingand commerce platform “aimed at turning passive consumers intoactive customers.”
The new product “facili-tates text message deal
generation, opt-in mobilealert databases and tar-geted marketing cam-paigns while being inte-grated to Cardinal’s
payment platform,” thecompany said.CustomerConnect is a new
addition to CardinalCommerce’sCardinal MAX mobile transactionplatform.
“CustomerConnect enables ourmerchants and merchant serviceproviders to realize the revenue potential of mobile commerce,” saidTim Sherwin, executive vice presi-dent and chief marketing officer, ina statement.
■ Western Reserve Partners ofCleveland said it served as exclusiveinvestment banker to CWS Indus-tries (Mfg) Corp. in its sale to Inter-national Equipment Solutions LLC,a portfolio company of KPS CapitalPartners LP.
CWS Industries, headquarteredin Surrey, British Columbia, makesattachments, cabs and conversionsfor heavy equipment used in high-growth end markets such as mining,oil and gas, forestry, agriculture andconstruction.
International Equipment Solutions,formed in September 2011, is aglobal engineered equipment plat-form serving the construction, agri-culture, landscaping, infrastructure,recycling, demolition, mining andenergy markets. Its operating unitsare manufacturers of engineered attachment tools and cab enclosuresfor operator driven equipment aswell as locomotive sub-assembliesand electronic enclosures.
Terms were not disclosed. Lead-ing the transaction for Western Reserve was managing director JoeCarson, supported by vice presidentBecky White and analyst CourtneyDowns.
“This initiative gives us an anchor point in one of themost exciting parts of therapeutics.” – Baiju Shah, outgoing CEO, BioEnterprise Corp.
Hours: Mon-Wed & Fri 10-7,Thu 10-8, Sat 10-6 and Sun 12-5
Telephone: 216-591-0344
www.allenedmonds.com
Engineer looks to market as datashow CSU turbines’ effectivenessAccelerator mountedat Progressive Fieldexceeds estimatesBy CHUCK [email protected]
A sturdy breeze is all it takes topush the wind turbines at Progres-sive Field to their limits.
That’s a good sign for Majid Rashidi,who invented the wind accelerator— the big white corkscrew just beyond the right field foul pole at theballpark in downtown Cleveland.
“It’s good for the demonstrationconcept, but we have to be carefulnot to burn them,” said Dr. Rashidi,referring to the wind turbines thatthe accelerator helps power.
The turbines in the wind acceleratorproduced between three and sixtimes more electricity than unaidedturbines typically do at wind speedof 11, 15 and 18 mph, according todata Cleveland State University col-lected in April, May and June. Thewind accelerator was installed inMarch.
Dr. Rashidi, a mechanical engi-neering professor at Cleveland State,said the accelerator must be redesignedif the concept is to become an affordable product. However, he believes the experiment confirms theidea that wind turbines can generatemore power if they are attached tostructures that channel wind intotheir blades.
“We have shown that the physicsof it works,” he said.
Cleveland State is working to fixglitches that have caused the turbinesto shut down on several occasions.But when they worked, they workedwell, according to Dr. Rashidi’s data.
The four Swift-brand turbines inthe wind accelerator on multiple occasions produced a total of morethan 1,250 watts of electricity whenfacing 11-mph winds. At that windspeed, the four turbines normallywould be expected to generate a total of just 200 watts, according todata from the manufacturer.
Likewise, the Progressive Fieldturbines produced more than 2,600watts under 15-mph winds, comparedto the 800 watts predicted by themanufacturer. At 18 mph, instead ofgenerating the expected 1,412 watts,they produced 6,100 watts. That’s1,525 watts per turbine, which isroughly equal to the maximumamount of power that the manufac-turer says they can generate.
“I have actually maxed the turbines,”Dr. Rashidi said.
The figures he recorded were thebest results generated on a singleday at the given speed. Similar results were repeated on other days,he said. The increases were sharpbecause electricity generated bywind grows exponentially as windaccelerates, he noted.
Path to marketCleveland State collected similar
numbers for another wind acceleratorit built a few years ago atop theschool’s Plant Services Building northof Chester Avenue, near Interstate90. That accelerator has four turbinesattached to a cylinder designed to resemble a water tower. When windhits the cylinder, it flows around it,hitting the turbines on each side.
Now the university aims to find entrepreneurs and companies interested in developing commercialversions of the patented designs.
The two accelerators were designedand built with a $1.1 million grantfrom the U.S. Department of Energy.Additional accelerators would beless expensive to make, Dr. Rashidisaid, noting that the university incurred several one-time costswhen producing the first two towersand learned several lessons in theprocess.
In late July, Dr. Rashidi met withtwo people he would not identifywho are thinking about forming astartup to develop a smaller versionof the Progressive Field acceleratorthat would attach to telecommuni-cations towers. Shrinking the accel-erator’s size should make it easier tobuild, Dr. Rashidi said.
“The smaller we get in size, theeasier it is to resolve those issues,”he said.
The university has received a fewother inquiries about the Progres-sive Field accelerator but has yet toengage in any serious conversationswith any party about commercializingit, said Leonard Young, who as director of technology transfer atCleveland State is tasked with com-mercializing the university’s inven-tions. Mr. Young also is associategeneral counsel at the university.
Both Mr. Young and Dr. Rashidisaid they knew of no other acceler-ators that are similar to the one atProgressive Field. A company calledOptiwind of Torrington, Conn., sellsa system that resembles the one onCleveland State’s campus, but Dr.Rashidi noted that it is not patented.
Breaking windThe university hasn’t recorded
data showing how much electricitythe Progressive Field accelerator
generated over the course of thethree-month period but plans tocollect cumulative data in the future,he said.
The total figure probably wouldn’thave been as impressive as the moment-to-moment data Dr. Rashidicollected because of two glitchesthat caused the turbines to shutdown on several occasions:
■ Unshielded wires connected tothe system that turns the turbines to face the wind were mistakenlystrapped to the cables that carryelectricity generated by the tur-bines. Electromagnetism from thecables had been disrupting the control system, so the turbines oftenweren’t turned toward the wind.The wires have been separated fromthe cables and shielded.
■ Cleveland State also plans toreplace the wind accelerator’sanemometer, which measures thespeed of the wind. The anemometerwas placed only a short distance infront of the accelerator, which endsup blocking some wind from reachingthe device.
The glitches aren’t a big deal tothe Cleveland Indians, said BradMohr, assistant director of ballparkoperations for the team.
Though the Indians want to generate between 30,000 and 50,000kilowatt-hours per year using itswind accelerator and the solar panelsit installed in 2007, the team is moreinterested in helping ClevelandState improve its technology and ingenerating interest in renewableenergy, Mr. Mohr said.
For instance, the Indians areplanning to create exhibits on themain concourse intended to teachvisitors about the wind accelerator,the solar panels and the team’s othersustainability efforts.
“It’s really here to inspire,” Mr.Mohr said. ■
PHOTO PROVIDED
A wind accelerator developed by a Cleveland State University engineering pro-fessor was installed at Progressive Field in March.
developer maintains is erroneous.Fitch recently downgraded to BB,
or speculative, from BBB+, which isinvestment grade, the credit ratingon a $69 million bond issue that theToledo-Lucas County Port Authorityauthorized to finance the four parking garages at Crocker Park. Thebonds were issued by the port authority on behalf of Crocker ParkLLC, the company led by Stark Enterprises of Cleveland that wasformed to develop Crocker Park.
In a news release it issued July 19on the downgrade, Fitch cited a factorseparate from the bond paymentsthemselves for the action. Fitch saidCrocker Park’s cash flows despitehigh occupancy rates “have erodedfrom already very weak levels and infiscal 2011 covered only about one-half of the substantial mortgagepayment.”
Noting “the developer is currenton mortgage payments through the use of other resources,” Fitch said it’s concerned about CrockerPark LLC’s willingness to continuerepaying the port authority bonds,which are also current.
Fitch does not identify the mort-gage lender by name or discloseCrocker Park’s cash flow figures.
Developer respondsThe developer disagrees with
Fitch’s view of the financial healthof the mixed-use complex, whichencompasses 700,000 square feet ofretail, office and apartment space.
Steve Rubin, Stark’s chief operatingofficer, said in an interview thatFitch is basing its decision on out-of-date, inaccurate information.
“We are a privately held company.Our financial results are typicallynot made public,” Mr. Rubin said.“They ask for specific informationand we have no reason to give it.”
Mr. Rubin said Crocker Park LLCmade its intention not to disclosesuch information clear at the time theport authority bonds were issued.
Asked how Crocker Park fares financially today, Mr. Rubin said,“The property is currently meetingexpectations. We are very pleased.Apartments are full with a waitinglist. There’s 2,500 square feet of office space to fill and a small retailvacancy. The property is performing.”
However, he refused to disclosestatistics on the actual performanceof the property.
Arlene Bohner, a Fitch directorwho was the primary analyst behindthe change in the parking garagebond rating, emphasized in an interview with Crain’s that CrockerPark LLC is current on its mortgage
and bond payments. But if the de-veloper decided to quit subsidizingmortgage payments and the prop-erty went into foreclosure, she said,there would be less incentive to repay the parking garage bonds.
Ms. Bohner said Fitch obtains itsdata for determining the credit ratingon the bonds from the servicer ofthe mortgage on Crocker Park.
“As far as the information beingout of date, our information is fromas late as 2011,” she said.
Happy mayorWhile financial types may be
wary over a credit downgrade, it is unlikely to derail a near-doubling of Crocker Park’s size with theplanned headquarters of AmericanGreetings Corp. and about 50,000square feet of additional retail space.
Westlake Mayor Dennis Cloughsaid based on his understanding,the credit downgrade will not affectfinancing for the expansion ofCrocker Park as American Greetingsmoves its headquarters to Westlakefrom Brooklyn. Mayor Clough notedthat the developer has missed nopayments on its obligations.
Crocker Park’s performanceshould not be an issue for the nextphase of the project’s financing, themayor said, as a planned $60 millionbond issue for parking garages tosupport the expansion will be ratedseparately by all the ratings agencies.
Bonds for the next phase will besignificantly different from the firstgo-round. They will be supportedby tax increment financing from thereal estate taxes paid by the addi-tional development, the mayor said.He said the next bond issue likelywill be readied in about six weeks.
Separate and apart from financialperformance, Mayor Clough said hehas been “very pleased with the wayCrocker Park has performed.”
“The community supportsCrocker Park much more than I everexpected because there was opposi-tion to Crocker at the beginning,”he said. “It’s become a destinationlocation. It’s serving the public. I’mexcited and enthused about it as Ithink everyone should be.” ■
“We are a privately heldcompany. Our financialresults are typically notmade public. They askfor specific informationand we have no reasonto give it.” – Steve Rubin, chief operatingofficer, Stark Enterprises
AUGUST 20 - 26, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 9
World Trade Conferenced C
PRESENTED BY
Luncheon Keynote:Robert SincheGlobal Head of Foreign Exchange Strategy, RBS Securities Inc., who directs the bank’sstrategy and forecasting efforts of the currencies of developed market (G10) countries.
The Internal Revenue Service filed taxliens against the following businessesin the Cuyahoga County Recorder’sOffice. The IRS files a tax lien to protectthe interests of the federal government.The lien is a public notice to creditorsthat the government has a claimagainst a company’s property. Liensreported here are $5,000 and higher.Dates listed are the dates the documentswere filed in the Recorder’s Office.
LIENS FILEDLakeside Building Services Inc.P.O. Box 470433, Broadview HeightsID: 51-0585756Date filed: May 24, 2012Type: Employer’s withholdingAmount: $8,243
Onevue LLC46 Shopping Plaza, Suite 218, Chagrin FallsID: 20-5828493Date filed: May 8, 2012Type: Employer’s withholdingAmount: $7,059
Zincon Inc.888 E. 222nd St., EuclidID: 81-0563873Date filed: May 3, 2012 Type: Employer’s withholding, unemploymentAmount: $6,295
Terra Serra LLC Café Ah-Roma
38 W. Bridge St., BereaID: 34-1943631Date filed: May 8, 2012Type: Partnership incomeAmount: $6,129
Kidsmobile Inc.26314 Center Ridge Road, WestlakeID: 34-1709825Date filed: May 10, 2012Type: Employer’s withholdingAmount: $5,734
LIENS RELEASEDAlliance of Transylvania Saxonsof US 1 Branch9005 Memphis Villas Blvd., BrooklynID: 23-7516941Date filed: March 23, 2012Date released: May 1, 2012Type: Employer’s withholding, unemploymentAmount: $21,860
H T V Industries Inc. Zook Enterprises30195 Chagrin Blvd., Suite 310, Pepper PikeID: 34-1355054Date filed: April 10, 2012Date released: May 22, 2012 Type: Employer’s withholdingAmount: $10,240
TAX LIENS
RUGGERO FATICA
Fitch Ratings Service recently downgraded the credit rating on a bond issue forCrocker Park’s four parking garages, from investment grade to speculative.
1100 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 20 - 26, 2012
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GOING PLACESJOB CHANGES
EDUCATIONCLEVELAND INSTITUTE OF MUSIC:Char Rapoport Nance to develop-ment officer for alumni and parent relations.CLEVELAND STATE UNIVERSITY:Joseph Han to assistant vice presi-dent, facilities and safety; KathleenMurphy to controller and assistantvice president.
ENGINEERINGCIVIL & ENVIRONMENTAL CONSULTANTS INC.: Brett A.Blevins to consultant.
FINANCIAL SERVICECEDAR BROOK FINANCIAL PARTNERS LLC: Jennifer Falb tochief experience officer. LANDING POINT FINANCIALGROUP: Susan S. Vasu to financialadviser. PEASE & ASSOCIATES INC.:Nicholas J. Mazzone to director ofbusiness development; ElizabethKroll to supervisor, CFO Services Department.
HEALTH CARESUMMA WESTERN RESERVE
HOSPITAL: Vince Allen to senior application support analyst.
INSURANCEWILLIS OF OHIO INC.: Joni Alexanderto client service specialist.
LEGALTHACKER MARTINSEK: Mark I.Wallach to of counsel.
MANUFACTURINGASW GLOBAL: Bryan Steel to leadbusiness development, Midwest region. EATON CORP.: David Keifer to director, Eaton University. WEATHERCHEM: Kristin Springerto product application engineer.
MARKETINGFAHLGREN MORTINE: ChristyBykowski to managing director,Cleveland. LESIC & CAMPER COMMUNICA-TIONS CLEVELAND: Meagan Mulloy to senior account executive. MELAMED RILEY: Lisa Holmgrento media planner.
MEDIASMART BUSINESS NETWORK INC.:David W. Fazekas to vice president,digital marketing.
NONPROFITCLEVELAND HEIGHTS-UNIVERSITYHEIGHTS PUBLIC LIBRARY: BrianC. Hare to youth services manager.COMMUNITY PARTNERSHIP FORARTS AND CULTURE: Megan VanVoorhis to chief operating officer. GIRL SCOUTS OF NORTH EASTOHIO: Jackie Ford to chief operatingofficer.
PHARMACEUTICALRICERCA BIOSCIENCES: Dr. G.Lynn Miesel to technical director.
REAL ESTATEFOREST CITY ENTERPRISES INC.:Geralyn M. Presti to executive vice president, general counsel andsecretary. GLOBAL REAL ESTATE ADVISORSINC.: Richard Senn to vice president.
SERVICEW.F. HANN & SONS: Chuck Piazzato residential and commercial salesconsultant.
STAFFINGAREA TEMPS INC.: Lonni Hender-shott, Cynthia Fenton and Patricia
Crowley to sales representatives.
BOARDSCITY CLUB OF CLEVELAND: HewittShaw (Baker Hostetler) to president;Robert Littman to vice president andtreasurer; Barbara Danforth to secretary. CONNECTIONS HEALTH WELLNESSADVOCACY: Ethel Robitson tochair; Jeanette Brzoska to vicechair; Rochelle Lipson to treasurer;Giovanni DiLalla to secretary.MANDEL JEWISH COMMUNITYCENTER OF CLEVELAND: Arthur A.Weisman (Wells Fargo Advisors) topresident. YOUNG AUDIENCES: Katie Solenderto chairperson; Andrew Koonce tovice chairperson; Frederick Ramseyand Art Ward to co-treasurers; DrewOdum to secretary.
AWARDSSOCIETY OF FINANCIAL SERVICEPROFESSIONALS CLEVELANDCHAPTER: Neil R. Waxman (CapitalAdvisors Ltd.) received the FinancialService Professional of the YearAward. SOCIETY FOR VASCULARSURGERY: Roy Greenberg, M.D.,(Cleveland Clinic) received the Medalfor Innovation in Vascular Surgery. UNIVERSITY OF PHOENIX CLEVE-LAND CAMPUS: Phil Stella (Effec-tive Training & Communication Inc.) received the Distinguished ScholarAward.
RETIREMENTCLEVELAND HEIGHTS-UNIVERSITYHEIGHTS PUBLIC LIBRARY: SusanBlack, after 34 years of service.
The Cleveland office of the GrantThornton LLP accounting firm plansto move to a full-floor office at OneCleveland Center from the HalleBuilding.
Dan Zittnan, Cleveland managingpartner, said in an email that GrantThornton “is moving towards a moreopen configuration for their officespaces in order to promote produc-tivity and communication.”
“The firm considered several locations around Cleveland and ulti-mately selected a space we believe isbest suited for our future needs,” Mr.Zittnan stated.
Mr. Zittnan said the audit, tax andadvisory firm plans to have its 100employees in the new office, on thebuilding’s 15th floor, Dec. 17. He saidGrant Thornton will occupy about thesame amount of space at One Cleve-land Center as at the Halle Building,
1228 Euclid Ave. A full floor at OneCleveland Center consists of 21,000square feet of space, according toCoStar, an online realty data supplier.
Grant Thornton declined to com-ment on its reasons for moving or onthe rent it will pay at the new building,1375 E. Ninth St.
Jeff Linton, spokesman for the HalleBuilding’s owner, Forest City Enter-prises Inc. of Cleveland, declinedcomment on the tenant’s planneddeparture.
Chaim Schochet, the investmentexecutive who operates One Cleve-land Center for Optima ManagementInc. of Miami, Fla., did not returnthree calls to discuss the deal.
Grant Thornton said its Clevelandoffice serves companies in NortheastOhio, western Pennsylvania and up-state New York.
With the move, Grant Thorntonwill exit a former department storeconverted to offices in the 1980s inthe city’s Theater District. Its desti-nation is a chisel-shaped contempo-rary office tower dating from 1982 indowntown’s NineTwelve District,the current name of the city’s one-time finance district. ■
Innovation essential to surviving window industry’s painBy GINGER [email protected]
Window makers and retailers nationwide are feeling the draft of astill-sluggish housing market, but afew local companies tied to the busi-ness are insulating themselves by offering new products and expandinginto new markets.
For instance, Mike McHugh saideach of the four regional windowcompanies he owns is experiencingyear-over-year revenue growth. Twoof his companies — both of which areinvolved in the process of making R-5 windows, a more energy-efficientwindow than Energy Star windows— were started after 2008 in the wakeof the recession.
“Recessions are hard, but wintersare hard,” Mr. McHugh said. “Butwhat recessions do is thin out weakcompetitors.”
The key to growth as the industryconsolidates is in developing a prod-uct for the future, industry officials say.
Companies that can introduce anew product, innovation, method ofdelivery or an improved process arethe ones proving to have stayingpower, said Jeff Lowinski, vice presi-dent of technical services for theWindow and Door ManufacturersAssociation, a Chicago-based tradeassociation.
“We’re in the mode now that com-panies are positioning and alteringfor when the market turns,” Mr.Lowinski said.
Mr. McHugh started Caliber Glassin Solon, a fabricator of insulated glassfor the residential housing market,and Integrated Automation SystemsLLC in Aurora, a manufacturer ofproduction equipment for insulatedglass fabricators, because he saw afuture in energy-efficient products.
“When times are good, everybodyacts like they’re never going to end.And when times are bad, everybodyacts like they’re never going to getgood again. … We’re not buildingmany new houses right now, buteventually we’re going to have to,”Mr. McHugh said. “It’s the chickenand the egg. People aren’t going tobuy better insulated windows ifsomeone else isn’t making them.”
Caliber Glass and Integrated Automation, both of which use anew proprietary gas-filling processfor insulated windows, are on trackto boost sales by 300% this year from2011 levels, Mr. McHugh said, thoughhe would not disclose sales figures.Caliber Glass has doubled its workforce to 12 in the last six months.
Mr. McHugh said he believescompanies that are doing well now“tend to be companies that are wellcapitalized and will continue to spendmoney to make their products better.”
They’re also buoyed by risinghome sales statewide. Home sales inOhio were up 12.8% during the firstsix months of the year from the firsthalf of 2011, while average sale pricesrose 4%, according to the Ohio Asso-ciation of Realtors. Northeast Ohiodid even better, with home salesclimbing nearly 17% in the first halfof the year.
So, what’s new?Bringing new products to market
is helping Polaris Technologies inAustintown, a maker of windows anddoors for the remodeling industry.
The company in April updated itstop window line, an insulated win-dow line called Thermalweld. Polarisredesigned the vinyl profiles of its insulated windows to improve
their efficiency and introduced newclasses, or thicknesses, of insulatedwindows to earn higher thermalratings, or R-values, on its windows.
Dave Cicozi, systems manager atPolaris, called the upgrade a “majorinvestment,” but wouldn’t sharefigures about the cost of the under-taking. He did say, however, thatthe last time Polaris completedsuch an upgrade to the line and invested in new equipment wasmore than 10 years ago.
Mr. Cicozi said Polaris made theinvestment because of a growingdemand for insulated windows.
Ancillary companies, too, arebenefiting from strength of the local window industry.
Even as its customers — window
and door manufacturers and glassfabrication companies — closed orconsolidated, FeneTech, a companyin Aurora that provides automationsoftware for makers of replacementwindows, has managed to grow itssales at least 30% each year, includingthrough the recession.
The secret, FeneTech CEO RonCrowl said, is innovation.
FeneTech, which produces anenterprise resource planning soft-ware to track orders and inventoryand manage production, in Junerolled out a big software overhaul,FeneVision NEO, and regularly offersa few minor software upgrades peryear. Continuing to provide newproduct for its clients has enabledthe company this year to hire six
people, bringing its staff to 45.Mr. Crowl expects FeneTech’s
sales this year to grow 35% to 40%from levels of 2011, though hewouldn’t disclose sales figures.
Driven by strong sales, FeneTechis about to expand the role of its 2-year-old Luxembourg office. Mr.Crowl said the company this yearwill begin selling its products inGermany and will continue to boostthe role of its European office.
More carnage likelyMr. Lowinski said the consolida-
tion of the industry has not yet runits course, and midsize companieslikely are the most vulnerable.
Early on in the housing slowdown,a number of small window compa-
nies with weaker services or finan-cial situations closed their doors,unable to endure the loss of busi-ness, while some midsize companieswere able to weather the initialstorm by reducing staff or relyingon reserves or secondary business.
“At this point here, that strategyis starting to wear thin. If they weresurviving, they can only survive solong,” Mr. Lowinski said. “Theyhave all of the challenges and issueslarge companies face and they aren’tseeing the resources. It’s harder forthem to diversify and harder to putcapital investments in.”
He predicts there will be moreacquisitions within the industry ascompanies look to diversify prod-ucts or expand geographic reach. ■
Youngstown State University wasthe first regional university to makea splash in the shale arena, with thelaunch late last year of its NaturalGas and Water Resources Institute,which focuses on the study of thewater used in the shale gas extrac-tion process. Also, faculty membersat Cleveland State University’s Max-ine Goodman Levin College of UrbanAffairs have studied the economicimpact of the shale gas rush.
CWRU’s center perhaps will bestructured similarly to Ohio StateUniversity’s Subsurface Energy Resource Center, which launchedlast September as a multidisciplinaryeffort among faculty to advance research into the pros and cons ofthe shale boom.
“I view the center (at CWRU) as aplace for research, education andoutreach that helps people grapplewith the drilling boom,” said BeverlySaylor, an associate professor of geology at CWRU involved with theinitiative.
Finding a balanceCase Western Reserve is in talks
with several companies entrenchedin the shale industry about workingwith the center, but those involvedin the project said it was too early to disclose any by name. Dr. Saylornoted that the center’s leadershipstill is grappling with how it best caninteract with businesses in the industry, especially if the center isto maintain its independence.
“How do you balance being asource of information, an honestbroker and work with industry?” she
said. “We’re still trying to work outthat balance.”
However, Dr. Zeng said there areaspects of the center where its researchers could collaborate withindustry. For example, he saidCWRU’s researchers are interestedin developing better protectivecoatings for pipes used in shale gasexploration to prevent corrosion.
“We want to use the expertise ofour faculty to make a big impact onsome of the major challenges,” he said.
Drs. Zeng and Saylor said the approach of CWRU’s center couldmake it an attractive investment forgrant-making agencies that in recent years have preferred to fundprojects steered by multidiscipli-nary research teams. Dr. Zeng saidthe center, which now is wholly financed by the university, plans toseek additional dollars from the U.S.Department of Energy and the OhioThird Frontier technology program.
Dr. Zeng said the educationalcomponent of the center initiallywill involve a new course this fall exploring issues related to hydraulicfracturing, or fracking — the often-controversial process by which mil-lions of gallons of water, sand andchemicals are used to extract naturalgas from shale deposits deep beneaththe earth’s surface. Ultimately, hesaid the educational component ofthe center could evolve into a fullconcentration or degree program. ■
“We want to ... make abig impact on some ofthe major challenges.” – Xiangwu “David” Zeng, chairman, CWRU department ofcivil engineering
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an interview. “We are in the processof working through parts that wecan all agree on and support, andthere are a couple of areas left forfurther discussion.
“It is my goal to start drafting legislation soon,” with the hope ofpassing the measure by the end ofthe year, Rep. Grossman said.
The Grove City Republican saidshe recently spoke with a site selectorwho brought an unidentified com-pany to Ohio. Rep. Grossman saidthe site selector told her the companywould not have come to the statehad it known in advance about theconfusing municipal tax situation.
Achieving a balanceAmong the business organizations
that are part of a coalition pushingto streamline municipal tax collec-tions are the National Federation ofIndependent Business/Ohio, theOhio Society of CPAs, the OhioChamber of Commerce, the OhioState Bar Association and the OhioManufacturers’ Association.
“Our hope is that we can achieveconsensus on the issues,” said AmyMignogna, director of tax policy forthe CPA group. “Ultimately, thecoalition would like everything to
be uniform for predictability andsimplicity’s sake so it mitigates therevenue impact for everyone involved,businesses and local governments.”
Cities have been represented inthe hubbub over uniform taxationby the Ohio Municipal League.They balked at the early proposalsbecause those measures turnedcollection of the taxes over to thestate. Cities were concerned aboutcash flow, fearing that adding thestate to the collection process wouldslow down getting tax collectionsinto their own bank accounts.
“There are business issues andthere are (local) home rule issues andwe’re trying to balance it as best wecan,” said Bay Village Mayor DebbieSutherland, who has been involvedin some of the discussions aboutuniform taxation.
Mayor Sutherland said she believesthe state backed off on the central-ized collection issue when it realizedthe state tax department was notprepared to handle the monthly,rather than quarterly, distributionsof withholding payments to thecommunities that cities now handleon their own.
Art of compromiseWith that issue off the table, three
key issues remain — occasional entry, net operating loss carryfor-wards and taxation on S corpora-tions and limited liability companies.
Cities at present may tax anyworker who works more than 12days a year in their communities;they even use different definitionsof how many hours constitute aday’s work. That occasional entrystandard could be changed to 30 days.
Also unresolved is how communi-ties treat prior-year net operatinglosses of sole proprietors. Some citiesfollow the federal tax code and allowthe loss to be deducted from the cur-rent year’s income; others do not.
Communities also vary in theway they tax income on limited cor-porations such as S corporationsand LLCs. Some tax the corporateentity and others do not.
All parties appear to understandthe value of streamlining theprocess. The big concern for citiesis to maintain current levels of in-come tax revenue.
“It’s good for all of us to havegood economic conditions in ourstate, but not to the detriment tothe operations of communities,”Mayor Sutherland said. “There’sgoing to have to be some compro-mise.” ■
Tax: Business attraction plays role continued from PAGE 1
For decades, the Forgotten Trianglein Cleveland’s Kinsman neighbor-hood was an illegal landfill, anopen-air Dumpster littered with
tires and trash.Now the triangle is taking on a new
shape after a massive cleanup and shaving of the land cleared the way for afarming project that looks as if it could bepart of a reservation in the Metroparks.
There are greenhouses where vegeta-bles and even tilapia are growing. Or-ange trees dot the manicured grounds.Nearby, crates of waste from restaurantsand food banks meet mounds of woodchips and other earthly derivatives to becomposted into rich soil that feeds thisurban food system.
The operation at East 81st Street andOtter Avenue is one of dozens of projectsthroughout Cleveland that are turningvacant swaths of land into food reservoirswhile linking city dwellers — many ofthem poor — to fresh, local produce. Butthe real key to planting sustainable urbanagriculture projects lies in developers’ability to empower people in the sur-rounding communities to become a partof the rehabilitation.
The architecture website ArchDailyrefers to the phenomenon as “urbanagripuncture,” or the use of pinpointed,productive landscapes to revitalize abandoned communities and connectthem to healthy foods.
Kimberley Hodgson, who last year co-authored a report, “Urban Agriculture:Growing Healthy, Sustainable Places,”examined how local governments areweaving social, environmental and economic aspects of agriculture into theurban fabric. The report categorizedcities’ initiatives by noncommercial (social purposes such as education),commercial (sales) and a hybrid model,which incorporates both.
“Cleveland has a strong hybrid model,”said Ms. Hodgson, who noted other citiessuch as Philadelphia, Seattle and Milwaukeeshare the hybrid model designation.“These local governments are really attentive by reaching out to local foodsystems, farmers, low-income groups,coalitions” and reusing vacant land withcommercial, social and environmentalconsiderations in mind.
Seeds of changeAt the 1½-acre agriculture incubator in
Kinsman — known as the Rid-All Green
See AGENCIES Page 14
Improving traffic, olderwork force combine toboost interest in fieldBy JENNIFER [email protected]
“Wanted: One GoodReal Estate Agent.”
So read theheadline of an
email blast sent last month by DavidSharkey, president of ProgressiveUrban Real Estate, his cautious firststep into agent recruitment afterseven brutal years in the real estatebusiness.
“That’s literally what we’re looking for. One good agent,” hesaid. “I’ve grown quickly in thepast. That’s not what I’m looking todo now. I’m looking to grow slowlyand make sure we have the rightpeople in place.”
Grow. It’s a word not heard muchin real estate in recent years, butimprovements in the real estatemarket and a steady increase innew talent entering the businesshave local agencies carefully looking to grow their staffs again.
“The last six months is the firsttime we’ve seen a steady increase ininquiries (since 2006),” says TinaLapp, president of the School ofBusiness at Hondros College, whichoffers real estate courses at cam-puses throughout Ohio. “There’s an excitement in the industry, andit’s not just the number of students.It’s a difference in the enthusiasm.”
The media effectIn Northeast Ohio, the number of
houses sold in the first six monthsof the year was up nearly 17% overthe same period last year, with dollar volume up more than 20%.
It’s the kind of good news that’sbeen proclaimed across media out-lets, and it’s tracked nearly exactlywith Hondros’ increased enrollment.At the college’s Northeast Ohio location alone, YTD enrollment isup 17% over year-to-date 2011.
“It is absolutely influenced by the news,” Ms. Lapp said. “It’s consumer confidence. They aremore confident in their personallives, and that makes it easier tomake a career change.”
At Howard Hanna Ohio, presidentHoby Hanna said he expects 300new associates in his 2,000-strongCleveland/Akron/Canton workforce in 2012 — besting a projected250 — a continuation of a three-yearhiring upswing.
Yet Mr. Hanna also said that
MCKINLEY WILEY
Damien Forshe (left) and Keymah Durden are co-founders of the Rid-All Green Partnership in Cleveland’s Kinsman neighborhood. Not pictured is fellow co-founderRandell McShepard.
See GROWTH Page 14
“I believe we are a transformative forest in this neighborhood ...” – Timothy Smith, founder and executive director, Community Greenhouse Partners
Partnership — volunteers compostsoil and harvest the produce, whichis supplied to Cleveland producedistributor Sirna & Sons, St. VincentCharity Medical Center, farmersmarkets and restaurants, includingPure & Supreme Cuisine in Cleve-land and Sandwich King in Bedford.
“We’re also talking to a restaurantin Chinatown,” said Randell Mc-Shepard, who founded Rid-All GreenPartnership with childhood friendsDamien Forshe and Keymah Durden.
The Rid-All Green Partnership isan arm of Milwaukee-based non-profit Growing Power; the lattergroup’s CEO is former NBA playerWill Allen, who was named in 2010as one of Time magazine’s most influential people in the world.
To facilitate its mission of educa-tion, outreach and local food pro-duction, Rid-All plans to breakground this fall on a $650,000,6,000-square-foot greenhouse thatwill shelter a farmers market andcommercial kitchen for local residentsand other food enthusiasts.
The Rid-All campus anchors thelarger, 26-acre Urban AgricultureInnovation Zone between East 79th
and East 84th streets off KinsmanRoad. Ohio State University Extensionis using six acres there for demon-stration purposes and farms.
Landing land a keyDown the road at Kinsman,
Ensign and Grand avenues in thecity’s Central neighborhood, GreenCity Growers Cooperative is devel-oping a $17 million hydroponicgreenhouse on 10 acres that isscheduled to come online in No-vember. The project will use shallow
14 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 20 - 26, 2012
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Agencies: Joining fray noeasy task for newcomers those numbers reflect an expectednet increase of about 100 agents.That’s because while the real estatejob market is recovering, it’s alsochanging significantly.
According to the Ohio Divisionof Real Estate & Professional Li-censing, more than 30% of Ohio’sreal estate licensees are 61 to 70years old, and another 27% are 71or older. Nationally, the average realestate agent is a 57-year-old female.
“A lot of our agents are retiringwho have been at it a long time,”said Ed Dolinsky, of Coldwell BankerHunter Realty. “They thought itwas going to rebound. … It’s betternow, but it’s not 2004 or 2005.”
Six of Mr. Dolinsky’s 340 agentshave died over the last year. Othersare snowbirds who retain theirOhio licenses but sell only a fewhouses a year.
It’s not just demographics; thebusiness approaches of agentswho slogged through the toughyears are also different.
“Part-timers have disappearedfrom the industry,” Mr. Hannasaid. “The clients are much moresophisticated now. … I tell agentsit’s going to take three years to buildthe foundations of your business.”
Newbie acceptanceAll of these factors demand a real
estate newcomer who is dedicatedfull time to the job, bringing healthydoses of realism and optimism.
But how do long-time agents feel about this new wave of upstartsshowing up just as the rough seasare calming?
“There are probably some whoare resentful,” Mr. Hanna said.“The successful veterans say,‘Come on in, the water’s warm,’but you’re going to have to work.”
Mr. Sharkey agreed that any potential brew of resentment willcome not from the arrival of new-comers but from any lingering notions that real estate can be aneasy side business.
“If you’re not serious about it,you’re not going to get the business,”Mr. Sharkey said. “Things are different today. It’s not as easy toget financing, deals don’t close ontime. … Agents have learned howto deal with things that in 2005might not have come up.”
Cause for optimismIn 2005, Progressive Urban Real
Estate had four offices and morethan 70 agents. Now Mr. Sharkeyhas one office and 19 agents.
He’s seen strong response to his“Wanted” ad, some job seekerscoming from other agencies or returning to the business, butmany just starting their real-estatecareer. Demand is up, and in somemarkets exceeds supply.
“This year’s different,” he said.“Based on the demand we’re seeing,it appears that things are going tobe OK.” ■
continued from PAGE 13
continued from PAGE 13
Growth: Vacant land plentiful in citypools of nutrient-rich water, ratherthan soil, to annually produce 5million heads of lettuce and leafygreens and 300,000 pounds of herbs;the produce will be distributeD togrocers and food service companieswithin a 150-mile radius.
The city of Cleveland assembledthe land and cobbled together $10million in federal loans and grantsto support the initiative. GreenCity Growers plans to employ about35 residents, who will be allowedto assume an ownership stake inthe business and share any profits.
Neighborhood development organization Burten, Bell, Carr Development Inc. is helping to bringonline both the Green City GrowersCooperative and the Urban Agricul-ture Innovation Zone, the latter ofwhich required 18 months of privateland acquisitions and working withcity officials to assemble land bankparcels for development. The non-profit that serves most of Cleveland’sWard 5 still is looking to acquireabout 70 more parcels at the site.
“There are various degrees of interest (from 32 different land-owners) in selling their property,”executive director Timothy Tramblesaid. “Some were adamantly op-posed, but we were ultimately ableto inspire them with our vision.”
The city of Cleveland has roughly20,000 vacant lots, with about10,000 in its land bank. The city in2007 began revamping policiesand codes to make urban farmingeasier; the changes included theintroduction of an urban gardenzoning district and chicken andbee zoning, and allowing for agri-culture in residential districts.
Pending adoption is an urban
agriculture overlay district thatwould allow large-scale farmingactivities.
Making a statementOver on East 67th Street and
Superior Avenue, in the city’s St.Clair-Superior neighborhood, fourhoop houses rise from the shadowsof a vacant church, which nonprofitCommunity Greenhouse Partnersbought “for a song” in December2010 from the Catholic Diocese ofCleveland, said the nonprofit’sfounder and executive director,Timothy Smith.
The operation so far has garneredabout $40,000 in private grantmoney to advance its vision of hiring locally and enriching thecommunity with inexpensive organic goods.
Carrots, kale and other greensshare the earth with weeds andbrush on the nearly 3-acre property,which Mr. Smith continues to clearas his urban agriculture projectgains ground.
“This is our statement garden,”he said.
Mr. Smith is providing micro-greens — small, young shoots of aplant used as salad greens — toCleveland eateries such as Noodle-cat and Flying Fig, and HawkenSchool, and he is in talks with charterschool operator BreakthroughSchools about introducing micro-greens or other produce to studentsat Citizens Leadership Academy inthe city’s Hough neighborhood.
Meanwhile, Mr. Smith plans totransform the former St. Georgechurch into a grocery store, coffeeshop and market, which he saidwould sell on-site produce and
other goods cheaper than whatresidents pay at the conveniencestore. The basement of this esti-mated $5 million project wouldfunction as a commercial kitchenthat would educate residents onfood utilization.
“I believe we are a transforma-tive forest in this neighborhood,and people are starting to figure itout,” Mr. Smith said. “The resi-dents are waiting and watching.”
An area resident of the Kinsmanfarm has moved beyond observa-
tion and has been volunteering atthe Rid-All Green Partnership.
Aaron El-Amin said he previouslyknew nothing of agriculture. Hesince has taken on-site farmingworkshops and enjoys helping withthe composting.
“It’s the hardest work I’ve everloved,” he said.
As to whether the exposure haschanged his habits and approach tolocal food, Mr. El-Amin said: “I’mlearning a lot about nutrition.They’re winning me over slowly.” ■
AUGUST 20 - 26, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 15
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Construction cranes in thesky and hard hats on theground mean one thing:Cleveland is building —
and growing — again.Specific areas of the commercial
real estate market are particularlyhot, especially around downtown,University Circle and Ohio City.
High occupancy rates and waitinglists in the central business districtare driving a frenzy of activity forstill more residential and mixed-useprojects, as well as creating an expanding area for planned and potential projects throughout the city.
Despite the optimistic marketforecasts, financing challenges stillexist. While traditional lenders aremaking funds available, developersoften must contend with conservativeappraisals and restrictive loancovenants in order to access capital.
Tighter lending standards do notprevent deals from getting done,but instead force developers to relyon diverse funding sources to ade-quately bridge the gap betweenneeded funds and what is availablethrough conventional lending.
The Cleveland area is ripe withan array of financing assistance tosupport projects and add to thecapital stack, including grants, taxabatements, tax credits and low interest rate loans, assuming youknow where to look and how to apply.
Or, conversely, you may retainexperienced legal counsel with theknowledge and contacts to help you structure and weigh the manycreative financing options. Theseoptions include:
■ Tax credits: A variety of bothstate and federal tax credit programshave been instrumental in fundingsome of the area’s recent revitaliza-tion developments, including EastFourth Street, MidTown Tech Center,Allen Theatre and the ClevelandGreenhouse Project.
Historic tax credits have been used effectively to revitalize histori-cally significant buildings. The renovation of Woolworth’s into theHouse of Blues, the conversion ofthe National City building on EastSixth into the Rosetta Center andthe resurrection of the United Bankbuilding into a new location forCrop Bar and Bistro are examples ofprojects that likely would not havelaunched without the developers’abilities to leverage historic taxcredits as a funding source.
New Markets Tax Credits are especially valuable for encouragingdevelopment in economically chal-lenged neighborhoods. Projectsthroughout Cleveland have beenaided by NMTCs, as much of thecity falls below the poverty level.The regeneration of the Tudor Arms/Doubletree Hotel and the renova-tion of the Capitol Theater and Uptown at University Circle eachrelied on NMTCs to connect planswith reality and bridge what likelywould have been insurmountablelending gaps.
■ Tax Increment Financing:Used throughout Cleveland andOhio, TIFs leverage taxes from newconstruction to help fund the con-struction of infrastructure to readya neighborhood for developmentthrough such additions as roads,lights, sidewalks, etc. East FourthStreet is an example of how TIF-supported infrastructure improve-ments, including street reconfigu-
JOHNWALDECKJR.GEOFFREYGOSS
ADVISERS
ration and specialty street lighting,were integral to the success of theproject.
■ Special Improvement Districts:The Downtown SID is the mostnoteworthy special improvementdistrict. It funds the DowntownCleveland Alliance, which encour-ages people to live, work and playdowntown by making the neigh-borhood more inviting. Among other things, DCA is responsible for keeping the streets clean andproviding an additional securitypresence.
■ Brownfields loan program:Operated by the county, the brown-
fields loan program provides funding to clean up and redeveloppreviously contaminated property.Much of the redevelopment of the
health-tech/MidTown Corridorbenefitted from Brownfields loans.
What are the challenges? Moneyfor the right kind of commercialreal estate development and rede-velopment does exist!
The challenge, however, is thecomplexity of the transaction. Manyof today’s commercial real estatedeals can have as many as 15 layersof financing to make the project areality. That’s a lot of paperworkand a lot of lenders to keep happy.
The job of managing such com-plexity typically falls on the attorney.Lenders have their own attorneys,but the developer/owner/landlord
must also be represented. Amongother things, it is the attorney’s jobto ensure that all parties understandthe pecking order of who gets paid,how the money flows, and whathappens in case of default.
Getting the deal done in goodmeasure depends largely on legalcounsel’s ability to navigate the mazeof options and connect the right dotsto keep all parties satisfied. Do yourhomework and choose wisely. ■
Messrs. Waldeck and Goss are part-ners in the real estate practicegroup of Cleveland-based Walter &Haverfield.
16 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 20 - 26, 2012
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REAL ESTATE
City of Green being groomed for another growth gusher By STAN [email protected]
Green building is all therage in development circles these days.
It’s a term, though,that has taken on new meaning inSummit County, where growth inthe city of Green looms large, especially since Diebold Inc., theautomatic teller and voting machinesupplier, this year announcedplans for a new, multimillion-dollar headquarters there.
The suburb on the southernedge of the county, best known ashome to bustling Akron-CantonAirport and the site of three Inter-state 77 interchanges, is positionedto catch another round of high-profile business development incoming years.
Indeed, the almost 34-square-mile suburb is sowing planningstrategies and is growing aroundhighway interchanges as carefullyas one would cultivate a well-keptEnglish garden.
The city’s transformation isstriking to Bob Raskow, vice president and business managerof the Akron-based NAI Cumminsreal estate brokerage. He has livedthere since he was 15 and remem-bers when he first saw ArlingtonRoad in 1968.
“At the interchange, there was agasoline station and a chickenhouse. That was before the (now-defunct) Clarkins store,” Mr.Raskow said. “The rest was all farms.”
Now, he estimates that 95% ofcommercial space is leased on Arlington Road, which in the 1970sand 1980s partially became a retail
and commercial area and nowconsists of car dealerships, a Targetstore and other retailers south of I-77. Arlington also became hometo multiple residential developmentsrunning to the Summit Countyline, and more residential land remains today.
That growth has set the table forthe current rise of Massillon Road,the suburb’s second node of development. Work on MassillonRoad was completed in 2008, converting it from two lanes to acenter-lane road with two lanes ineach direction, from I-77 to a traffic circle at Steese Road.
Green, which became a city in1992, is lucky enough to have rawland and the ability to capitalizeon contemporary city planningstandards. It’s also ready to growat an opportune time: Green is inthe path of development that’sreaching south from Akron andnorth from Canton.
‘Realization of a dream’Two developers, DeHoff Devel-
opment Co. of North Canton andGreen-based CAM Inc., both havebig sites cued for developmentnear Massillon Road.
DeHoff has been building inGreen since 1969 and now is doingsite preparation for its largest project yet, the 200-acre UnionSquare master-planned develop-ment.
Union Square, which is under-going excavation for roads and infrastructure, spans an area onthe west side of I-77 from Massillonto Wise roads. The centerpiece isthe planned Diebold headquarters,which is targeted for nearly 70
acres with highway visibility. Two other areas are set aside
for a total of almost 20 acres of office buildings, another 15 will bethe site for hotels, restaurants andoffices, and eight acres closest toMassillon Road are targeted for retail or office use.
The hope is to attract a drug store and other retailers thatwould serve future office tenants, according to Beth Borda, DeHoffsenior director of commercial development. Yet another 13 acresis set aside for multifamily use,which DeHoff will develop or willsell to an apartment developer formore than 200 units, Ms. Bordasaid. Remaining land will be usedfor roads and detention basins tocontrol rainwater runoff.
“This is the realization of adream for us,” Ms. Borda said.
DeHoff assembled the property— much of it farmland — prior to2001 by buying it from a half-dozen owners. The property received planned developmentzoning in 2001 and drew increasinginterest until 2008, when the economic downturn started.
Now, interest is piqued again,energized by the planned Dieboldproject. A key part of the plan is aplanned four-lane road dubbedTown Park Boulevard that willopen the acreage for buildings, including Diebold.
That road also would set thetable for Park Place, a second DeHoff land development of morethan 90 acres that would be hometo additional office and retailspace, perhaps some big-boxstores, Ms. Borda said. Plans callfor the new Town Park Boulevard
to connect with existing Lauby Roadto open the site for development.
“The road is huge. It will allowpeople to drive from the (Akron-Canton) airport to Diebold andother offices without going on thehighway,” Ms. Borda said.
In the marketAlso off Massillon Road is
Heritage Crossings, a 72-acre landdevelopment by CAM. Most of thesite is scheduled for commercialdevelopment, but some of theMassillon Road frontage will go toa new grocery-anchored shoppingcenter by Albrecht Inc., an Akron-based developer that includesowners of the Acme supermarketchain among its principals.
Acme announced plans earlierthis year to build a 70,000-square-foot supermarket in HeritageCrossings. The plan also calls formore than 30,000 square feet ofselling space for smaller neighbor-hood-oriented tenants in threebuildings.
Demand is substantial, accordingto Joe Albrecht, the family-ownedfirm’s vice president for retailproperties.
“My phone is ringing off thehook,” Mr. Albrecht said, as he isfielding more than five calls dailyfrom retail prospects or their realestate agents.
“Green is a location where a lotof activity is taking place in North-east Ohio. I think it’s a boom townnow,” he said.
The design at Heritage Crossingswill call for an extra five feet ofsidewalks outside the buildings toaccommodate patios of hoped-forrestaurants.
Mr. Albrecht said constructionshould start this fall and the build-ings should be in place next year.
Work in progressAll this action builds on other
activity in Green through the years.CAM has developed more a
half-million square feet of office,office/warehouse and tech-orientedspace in 18 buildings in theAkron/Canton Corporate Park offMassillon Road near I-77.Frontage of the park is devoted tothe Shops of Green, a retail center.
Diebold already is in the suburb,as is InfoCision Management Corp.,one of the nation’s largest tele-communications marketing firms.FedEx Custom Critical is also in themix of more than 1,200 businesses.
Mr. Raskow of NAI Cumminshas a counterintuitive indicator ofthe strength of development todayon Massillon Road.
“I have had people say to me,‘Find me a site on Massillon Road,’”Mr. Raskow said. “But sometimesthe (property) owners don’t wanta particular user.” That selectivityis a gauge of the market’s strength,Mr. Raskow concludes.
For all the commercial develop-ment, a large part of the southwestcorner of Green is reserved for rural-residential zoning to keep itsbucolic nature. Wayne Wiethe,Green director of planning andcommunity development, consid-ers it a strong combination — acity that can range from suburbanhomes to corporate headquartersto sites with their rural nature preserved.
AUGUST 20 - 26, 2012 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 17
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REAL ESTATE
Cleveland Sight Center
PLACESOFNOTEA look at Northeast Ohio’s interesting spaces
The design elements thatmake up the core of the $10million makeover of the
Cleveland Sight Center on East101st Street are not full of high-techbells and whistles. Rather, they arequite basic: Colors, textures,straight lines and acoustics arelargely what are used to help guidethose who have low or no vision.
“We didn’t need more space,” saidSteve Friedman, executive directorof the Sight Center. “We just neededto use our space efficiently.”
Much of the year-long renovationproject, during which the SightCenter vacated its home before returning in May, was guided bysuggestions from the agency’s users.
“In the end, what we learnedwas the building needed to functionthe same way the outside worlddoes,” said Vocon Inc.’s TomGalvin, who worked on the designwith Lindsay Masarik and SteveSmrdel. The Albert M. Higley Co.of Cleveland led construction.
“The whole purpose of the building is to teach people to survivein the real world,” Mr. Galvin said
The project, financed by privatedonations raised over seven years,encompasses 75,000 square feet. Itwas a complete overhaul of thespace, which was built in 1965 andadded onto in 1973 and 1976. Thechanges included the addition ofenergy-efficiency measures.
One of the key differences sincethe renovation is that staff officesnow are housed on the second floorof the building, while client servicesare grouped together on the firstfloor, a more navigable scenariofor those with vision impairments.
“It was a fascinating study. … Thesimple things make the most dif-ference,” said Mr. Galvin of learningwhat the center’s clients wanted.
As part of the renovations:■ Color is incorporated in a way
that elements are easily distin-guishable. For example, Dr. Fried-man said, an all-white, institutional-style bathroom can be difficult tonavigate for those with low vision.Instead, the Sight Center’s newbathrooms have black walls andwhite plumbing fixtures, and themen’s and women’s restrooms aremarked with different colors.
■ Different textures are usedalong the walls and floors. In frontof elevators, for one, the texture on
the floor is different to serve as atactile clue, and architect Mr. Galvinsaid guide dogs even factored intoflooring design decisions. Two setsof rails along the wall — one at aheight that’s appropriate forpreschoolers receiving services —are in place as guides.
■ A 27-station call center hasbeen created and is used in part foran employment partnership with
Akron-based InfoCision. A new“muscle room,” or activity roomwhere children can work on reach-ing physical development mile-stones, is located among the otherchildren’s services housed in thebuilding.
■ The center’s auditorium alsowas expanded and reworked to improve the acoustics, an important consideration for those
RUGGERO FATICA PHOTOS
ABOVE: Gathering spaces are part of the design of the new Cleveland Sight Cen-ter. Client services now are located on the first floor, and employee offices areon the second floor. RIGHT: The Sight Center features a 27-station call center,used in part for an employment partnership with Akron-based InfoCision.
Steve Friedman, the Cleveland Sight Center’s executive director
ON THE WEB: More photos of theCleveland Sight Center’s $10 millionupgrades. www.CrainsCleveland.com/SightCenter
who rely on their sense of hearing.Jason Gromek, whose 2-year-old
son is legally blind and receives ser-vices at the Sight Center, said whenhe first walked into the Sight Centerprior to the renovations he was“underwhelmed” by the facilities.
Now, he said, the agency is up todate and prepared for the future.
“The building has caught up withthe people,” Mr. Gromek said.
20120820-NEWS--17-NAT-CCI-CL_-- 8/17/2012 11:51 AM Page 1
18 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 20 - 26, 2012
LARGEST SUBURBAN OFFICE PROPERTIESRANKED BY NET RENTABLE SQUARE FOOTAGE
Rank
NameAddressPhone
Net rentablesquare feet
Square feetavailable
Rent persquare foot(in dollars) Major tenants Owner
134,0005,500 24.00 Air Gas Great Lakes, Wegman, Hessler,
Vanderburg, Brown and Caldwell 6055 Properties Ltd. Dalad Realty Lloyd Mazur(216) 447-0070
29Parkway Business Plaza(2)4350-4400 Renaissance Pkwy., Cleveland 44128(216) 453-3089
125,33852,574 9.50
Doosan Industrial Vehicle America Corp.,Stephen Gould Corp., DirectBuy, Max Wellness,Eventready TMI
Parkway Business PlazaLtd. (I & II) Grubb & Ellis Co.
David Hollister, (216)453-3089; Terry Coyne,(216) 453-3001
Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee theselistings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. The Book of Lists and enhancedversions of most lists, with more companies, are available to purchase at www.crainscleveland.com.(1) Information from CoStar Property, www.costar.com.(2) Information is from the 2011 Largest Suburban Office Properties list.
RESEARCHED BY Deborah W. Hillyer
20120820-NEWS--18-NAT-CCI-CL_-- 8/17/2012 10:06 AM Page 1
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Anticipating rent rise,tenants grab bargainsCleveland-area office space may cost more soon By STAN [email protected]
As businesses regain theirappetite for office spaceamid the slowly recoveringeconomy, some office
tenants are snatching up bargains,thus beating potential rent hikes.
Office rents have been beatendown during the prolonged down-turn and slow recovery, thoughreal estate brokers do not expectthem to fall much lower.
For the long haul, the price foroffice space will be headed upward.Continued scarce construction ofmultitenant office buildings in thesuburbs and just a sliver of newspace available in the under-con-struction Ernst & Young Tower indowntown Cleveland mean the office market is poised to absorbvacancies — and prices will rise.
Chandler Converse, a managingdirector at CBRE Group Inc.’s Cleve-land office, sums up the outlook:“We don’t see rents dropping at allfrom here. We see them stabilizing,and see them starting to climb.”
In some respects, that trend already has emerged. Online realtydata provider CoStar Inc.’s mid-year2012 Cleveland market survey reports that average quoted officerents for the total office market inNortheast Ohio edged up to $16.61a square foot from $16.53 a squarefoot at the same time last year.
The biggest shift in the officemarket is in downtown Clevelanddue to a confluence of factors.
Office brokers expect severalolder office buildings to becomeapartments in the next few years;among the buildings they believeno longer will compete for officetenants are the Hanna AnnexBuilding and the 1717 E. Ninth St.building, formerly known as theEast Ohio Gas Building. Still otherolder buildings may become hotelproperties in response to the newCleveland Medical Mart & Conven-tion Center coming online.
Plans by Cuyahoga County tolease space for a consolidatedheadquarters complex of more than200,000 square feet also wouldshift office vacancy downward. Inaddition, many of the buildings thecounty hopes to sell in its drive tocombine operations from disparatelocations could become residential.
On top of those considerations,said David Wagner, a principal ofthe Cleveland-based ChartwellGroup real estate brokerage, therising costs of drywall, utilities andlabor have set the stage for officerents to rise.
Bargain huntersAs a result, the bargains available
now may be the last ones for sometime. But to secure sweet deals,tenants increasingly must considerdifferent options in terms of building age or location.
Older buildings such as 1100 Superior Ave., One Cleveland Cen-ter, Tower at Erieview and, afterEaton Corp. vacates, Eaton Center,have large vacancies. Recent leasesat One Cleveland Center with the
Britton-Gallagher insurance bro-kerage and at 1100 Superior withmarketing services firm BrandMuscleInc. show the drawing power oflarge volumes of empty office spacein the market. Attractive deals forlarger tenants will dry up first as thoselarge empty office spaces fill up.
However, that does not meansmaller businesses can’t continue tofind attractive offers for some time.
David Browning, managing director of CBRE’s Cleveland office,said the abundance of emptysmaller offices will provide opportu-nities, giving the typical office tenantof 5,000 to 10,000 square feet manychoices. That’s especially true if acompany is willing to consider amove downtown from the suburbs.
Higher vacancies downtownmean rents at some buildings arebelow those of comparable subur-ban buildings. This is apparent evenon a broad basis. CoStar reports thatasking rents in downtown’s centralbusiness district are averaging$18.75 a square foot compared to$18.84 a square foot on or near Chagrin Boulevard, the heart of theoffice market in the eastern suburbs.
Other factors besides rent comeinto play in space decisions. RicoPietro, a principal at the Cresco realty brokerage in Independence,said downtown landlords oftenhave had empty space so long theyare willing to gut offices and rein-vest in redecorating space to attracttenants. Conversely, owners ofsuburban buildings may be less inclined to redo somewhat newerspace for prospective tenants.
“A little flexibility can go a longway for a firm seeking to move andreduce occupancy costs,” saidRocco DiPuccio, director of officeleasing at the Ostendorf-Morris Co.real estate brokerage of Cleveland.
“You can find larger floorsdowntown, so tenants can fit onfewer floors than in the suburbs,”which trims operating costs, Mr.DiPuccio said. A tenant of 80,000square feet can go on a couplefloors downtown compared to fourin the suburbs, he noted.
Downtown boundThe narrowing of rents between
historically pricier downtownspace and the suburbs also allowsdowntown landlords and tenantsto capitalize on the attractivenessof downtown as a place to liveamong younger employees.
As a result, a variety of companiesthat historically would not haveconsidered downtown just fiveyears ago will do so, Mr. Pietrosaid. Chartwell’s Mr. Wagneragrees, especially when it comes todowntown loft space.
“Two years ago I would hear oneinquiry a year about how to getfunky space. Now I hear four aweek,” Mr. Wagner said. “I hear ten-ants say, ‘Let’s get rid of the carpetand grind out the concrete. Get ridof the drop ceilings so I can seerafters. I want it to look funky.’”
The shift to more favorable rentsdowntown still is key, though.
“Price is what gets a deal done,”Mr. Pietro said. ■
20120820-NEWS--19-NAT-CCI-CL_-- 8/17/2012 11:27 AM Page 1
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The company’s stores used to boastan average of 35,000 square feet offloor space, but now typically takeup only 20,000 square feet. Smallerstores cost less to open and run, sothe smaller stores have increasedJo-Ann’s operating margins, Mr.Smith said. The reduced openingcosts also have allowed the companyto open more of the smaller stores,including some in smaller commu-nities such as Elko, Nev., which hasa population of about 18,300, hesaid.
“We open the size of the storethat fits for the market,” Mr. Smithsaid.
Jo-Ann isn’t alone in reducing itsstores’ sizes. Retail giants such BestBuy Co., Kohl’s Corp. and Gap Inc.are among a handful of nationalchains deciding smaller is better.
“I think that’s in the blueprintsfor a lot of large retailers,” said Gordon Gough, executive vice pres-ident and chief financial officer ofthe Ohio Council of Retail Merchants,a state trade association. Retailershit hard by the shift to online shop-ping are opting to open smallerstores with smaller inventories toremain profitable, Mr. Gough said.
Big on filling voidsAs some retail chains have closed
or filed for bankruptcy, the markethas been flush with vacant commer-cial space. That situation has allowedJo-Ann to find some bargains, Mr.Smith said.
Utilizing vacant stores that onceboasted names such as Circuit City,Borders and Sears, Jo-Ann is openingall its stores in second- and third-generation retail spaces at a lowercost than it would pay in new build-ings, Mr. Smith said. The strategyalso works, he said, because thesites of the departed retail storeslargely are in shopping centers andhigh traffic areas.
Jo-Ann in July started shippingproduct to online consumers inCanada and now is considering thenorthern neighbor of the UnitedStates as its next frontier for newstores.
“We feel like we have a lot of runway to open new stores in theUnited States, so that’s our first goal,to continue growing in the U.S., butwe absolutely are open to looking,”Mr. Smith said about potentially expanding outside the United States.
Other English-speaking countries,namely England and Australia, alsoare potential targets for internationalshopping, Mr. Smith said.
In 2011, Jo-Ann primarily expandedinto the Southeast, where it had lessmarket penetration, and this year it’sopening stores across the country incommunities where other craftstore chains have closed or whereJo-Ann doesn’t yet have a presence,Mr. Smith said.
So long, middlemenWhile smaller stores have helped
reduce overhead, one of the biggestsavings has been through the com-
pany’s switch to direct-to-sourceordering, Mr. Smith said. Jo-Annnow has its own artists, imports itsown fabrics and has an in-houseproduct development team.
The retailer also adjusted its inventory, dumping items that weren’tin demand or that had low marginsin favor of higher-quality, moreprofitable items, Mr. Smith said. Forexample, where Jo-Ann’s quiltingfabric offerings used to fall within therange of $3.99 to $5.99 per yard, nowthey are $11.99 to $13.99 per yard.
“We’ve really taken an aggressivestance against the independentquilt shops,” Mr. Smith said. “A lotof the growth has been in the bettergoods.”
The chain also has benefitedfrom a general spike in interest insewing and crafting that stems fromthe weak economy, according toJoyce Perhac, president of theSewing and Craft Alliance, a Mon-roeville, Pa.-based educational venture that runs www.sewing.org.
“Anytime the economy starts toaffect your ability to buy either ready-to-wear or gift items, it alwaysmakes people think, ‘I can makethis less expensively. I can make itmore personalized,’” Ms. Perhac said.
And, because a number of inde-pendent retailers couldn’t survivethe recession or are unable to com-pete with expanding chain retailstores, crafters are driven to the bigbox stores, Ms. Perhac said.
Going mobileWhile Jo-Ann caters to do-it-
yourselfers, it isn’t afraid to infusetechnology into its growth plans.
Mobile checkouts, such as thosemade popular by Apple Inc. stores,are undergoing tests in Hudson andcould be incorporated company-wide as soon as this winter.
Such checkouts would allow customers to avoid standing in linetwice, which often is the case at Jo-Ann, where customers need towait in line at the fabric counter aswell as the store checkout.
Jo-Ann also just launched a real-time inventory service on its web-site, which allows online customersto see what’s in stock at each store.
Jo-Ann is owned by LeonardGreen & Partners, a Los Angeles-based private equity firm that inMarch 2011 bought the then-publiccompany for $1.6 billion. LeonardGreen also holds stakes in David’sBridal Inc., J. Crew Group Inc. andNeiman Marcus Group Inc.
In the year since Jo-Ann’s tickersymbol has disappeared from theNew York Stock Exchange, the com-pany has seen little change in the wayit’s managed, according to Mr. Smith.
“In terms of where the company’sgoing, our strategic plan, nothinghas changed,” he said. The companyremains focused on upping storeactivity and store growth, improv-ing the customer shopping experiencehe said.
Jo-Ann has 2,500 employees inOhio, 1,200 of whom work in Hudson,and 23,000 companywide. ■
Jo-Ann: Retail vacancieshelp company find spacecontinued from PAGE 3
foot headquarters on FountainParkway in Solon. It moved from a13,000-square-foot building onCochran Road because it neededmore space for manufacturing andtesting operations — a necessitygiven that each of its magnetic resonance imaging machines takesup about as much space as a largeU-Haul trailer.
By the time AllTech officially reg-isters as a medical device manufac-turer with the U.S. Food and DrugAdministration, it will need to be“100% perfect,” Mr. Joliat said.
It also will need to meet a highstandard to win over U.S. customerswho long have been comfortablebuying MRI scanners from hugeconglomerates such as GeneralElectric, Siemens, Hitachi, Toshibaand Philips, which used to buildMRI machines in Highland Heightsand still has a large medical imagingoperation there.
“We’ve got to make people ungodly happy. They’ve got to beecstatic,” said Mr. Joliat, who washired last summer to move AllTechfrom a development phase to anoperational phase.
AllTech’s big advantage is price,according to Mr. Joliat and LarryKasuboski, director of sales andmarketing. When compared to larger competitors, they say, thecompany spends 20% to 30% less tobuild its MRI scanners. Lowerprices should help the company sellits EchoStar 1.5 Tesla scanner to independent imaging centers andsmaller health care providers thatmay not need high-end machines.
Extended familyThough AllTech assembles some
pieces of its MRI system in the UnitedStates, the magnet that forms the
heart of the system is built in China,as are several of its components,keeping labor costs low.
Plus, AllTech believes it has removed some costs through design.Though the firm is small, its staff isexperienced, Dr. Kasuboski said.
For instance, founder and CEOMark X. Zou worked for Picker Inter-national, which eventually morphedinto Philips’ Highland Heights operations, before leaving in 1993to start USA Instruments Inc. TheAurora-based company was boughtin 2002 by GE Healthcare, which con-tinues to make MRI coils at the plant.
Plus, 13 of AllTech’s first 15 U.S.employees at some point workedfor Picker or one of its predecessors.The other two spent time at USA Instruments, as did some of theircolleagues. The group had expertisein “about every subsystem youneeded to create an MRI machine,”Dr. Kasuboski said.
They had experience working together, too.
“This is probably the fourth MRIsystem that we’ve designed together,”Dr. Kasuboski said.
With a total of $50 million in capital — which included moneyfrom Dr. Zou, the venture capitalarm of the Chinese governmentand three Chinese investment firmswith U.S. ties — the company wonregulatory approval to begin sellingits scanner in China in 2009.
There, the company in 2011 soldmore MRI machines than any manufacturer other than GE andSiemens, Dr. Kasuboski said. In Chi-na, the government-owned healthsystem is the sole buyer, purchasingslightly fewer than 100 machineseach year. The broader market is farbigger, though: Dr. Kasuboski andMr. Joliet said the largest MRI makerseach sell several hundred scanners
per year. “We’re right there in China, but
that’s one market,” Mr. Joliet said.
Grow, or elseSelling MRI scanners in the United
States might be a challenge for All-Tech, said Derek Archila, who ishead of medical device coverage forbusiness intelligence firm Global-Data of London.
Many U.S. hospitals are moving toimplement more expensive MRI systems powered by stronger mag-nets, said Mr. Archila, who works inBoston. AllTech might have a hardtime winning budget-conscious customers given how competitive theU.S. market is, he said, noting that thecompany likely will find more opportunity in developing countries.
“The big players and even themidsize players have good marketcoverage” in the United States, he said.
There still is room for new imagingequipment makers to target smallerhealth care providers and other seg-ments that are not a high priority forthe major MRI manufacturers, saidBaiju Shah, president and CEO ofBioEnterprise Corp., which assistshealth care companies in NortheastOhio and often promotes the region’sbiomedical industry.
Still, scaling up sales and serviceoperations could be a challenge forAllTech, especially because its rivalsalready have people ready to delivertheir services all over the world, saidHiroyuki Fujita, president and CEOof MRI coil maker Quality Electro-dynamics LLC of Mayfield Village.AllTech is a QED customer.
AllTech knows it must grow. That’swhy the company hired Mr. Joliet.
“We have to grow in the next 18months. We’ll have to, or we’re notdoing what we set out to do,” he said. ■
MRI: Employees boast vast experience continued from PAGE 1
CCrraaiinn’’ss EExxeeccuuttiivvee RReeccrruuiitteerrSales and Marketing Assistant
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Attorneys James DeRoche andStuart Garson, who represent theplaintiffs, said they believe morethan 100,000 employers may be el-igible for $1.27 billion in restitution.
The bureau has argued in filingsthat its rate structure was not unfairto employers who were not groupmembers. A bureau spokespersonlast week declined to comment onthe coming trial.
Ohio, unlike most states, operatesa state-run workers’ compensationinsurance pool. Many other statesallow companies to buy private insurance.
When they filed their lawsuit in
2008, the plaintiffs’ attorneys soughtan injunction to force the bureau to adjust its rates immediately to better reflect the cost of actual claimsmade against employers; they con-tended that the actuarial techniquethe bureau was using to set the ratesviolates the Ohio Constitution. Theyalso sought to turn the case into aclass action suit.
Among the evidence presented bythe plaintiffs to Judge McMonaglewas a 2007 investigation by the Ohioinspector general that found the pre-miums paid by the groups that re-ceived discounts were not highenough to cover the losses they gen-erated. A 2009 study done for the bu-
reau by the Deloitte Touche LLC con-sulting firm came to the same con-clusion.
In addition, the judge heard fromseveral plaintiffs, including AladdinBaking Co. of Cleveland. In July 2006,after two of its 48 employees wereinjured on the job, Aladdin saw itspremiums rise to $55,000 a yearfrom $12,000 after it was droppedfrom its group.
Legislature steps inJudge McMonagle granted that
injunction in November 2008, ordering the bureau to change its rate structure by July 2009. Judge McMonagle also agreed to turn the
lawsuit into a class action. The bureau unsuccessfully challengedboth those decisions in appeals court.
However, a month after the November 2008 court decision, theOhio General Assembly changedthe workers’ compensation law tomake the existing rating system legal and postponed the rate changesordered by Judge McMonagle. Thebureau since has reworked its premium structure to reduce thediscount to group-rated employers.
Because of the change in the law,the class action lawsuit is seekingrestitution only for premiums chargedfrom 2001 until 2009.
The history of the last five years
suggests to Kegler Brown’s Mr. McCarty that the class action willsucceed and that the fight is overhow much will be paid out. He citedin particular Judge McMonagle’sopinion calling the bureau’s grouprating program illegal.
“The plaintiffs here are seekingrestitution for those years, 2001 to 2009, when non-group rated employers were overcharged pre-miums to the benefit of group-ratedemployers,” Mr. McCarty said. “Sothere are 100,000 or more employerswho are not in group.”
Mr. McCarty said the outcome ofthe case likely will be appealed tothe Ohio Supreme Court. ■
20120820-NEWS--21-NAT-CCI-CL_-- 8/17/2012 11:28 AM Page 1
How I spent mysummer vacation■ A summer urban farming experience inCleveland has been quite a trip for eight indi-viduals who hail from locales that range fromPennsylvania to Japan.
The nonprofit Neighborhood ProgressInc. arranged for eight gardeners to learnmore about urban agriculture by workingon farms and gardens that are part of thecity’s ReImagining Cleveland vacant land reuseinitiative. The visitors spent their summerbreak weeding, planting and helping withconstruction projects on 10 agriculture sitesin exchange for a hands-on edu-cational experience through anotherwise-rural volunteer initia-tive.
The international volunteerproject is based on the WorldWide Opportunities on OrganicFarms, or WWOOF model, thatoriginated in 1971 in England.Similar programs now are oper-ating in more than 50 countries,according to a statement issuedby Neighborhood Progress.
“We have people from all overcoming to Cleveland to learnabout farming, of all things,” JoelRatner, president and CEO ofNeighborhood Progress, said in the state-ment. “This is truly a testament to how farwe’ve come in our efforts to put vacant landback into productive use in the city.”
Volunteer Tom Coulton, a photographerfrom Tokyo, said he was encouraged byCleveland’s efforts to become a more sustain-
able city and felt the program contributed tothe agricultural rejuvenation.
“It was refreshing to see how food pro-duction doesn’t have to be limited to ruralareas, but can happen even in the smallestof spaces within an urban environment andprovide city dwellers with fresh, locally produced food,” Mr. Coulton said in thestatement. — Kathy Ames Carr
What’s wrong with the name Shelly?■ Three recent additions to The ReservesNetwork staffing firm should have quite the
longevity, given that this speciesof tortoise typically lives for several decades.
Purchased and introduced tothe company’s Fairview Parkheadquarters in mid-May by chieffinancial officer Nick Stallard, thetortoises are named Te, Ar andEn, after the company’s abbrevi-ated name. The pet store ownerwho sold Mr. Stallard his firstreptile (an iguana) located theSulcata tortoises for him, Mr.Stallard said.
“It occurred to me, why not havethem in the office versus home somore people could see them?” he
said. Though palm-size when young, adult
Sulcata easily can weigh 70 to 100 pounds,according to www.sulcata-station.org. WhenTe, Ar and En outgrow their office surround-ings, Mr. Stallard said he probably will movethem to an outdoor pen he builds for them
at his home.Until then, he said, they make great office
pets.“They’re clean, very easy to maintain, (and)
they’re easy to handle,” Mr. Stallard said.“People like them, and they’re going to bearound a long, long time. I think it’s neat tohave a pet that long. It’ll outlive me, andhopefully the company will be around.” —Michelle Park
Firm grows by itsfocus on CFOs ■ A Columbus-based company that contractsout part-time chief financial officers and interim CFOs to other companies has watchedits own balance sheet improve as it’s grownits clients and revenues in Northeast Ohio.
The local practice of FocusCFO will billthis year about 10 times what it billed lastyear, said Tom Gentile, a Cleveland partner,though he wouldn’t disclose specific figures.
FocusCFO opened its Beachwood officewith three partners in August 2010; today,the office employs seven and aims to reach10 by year-end, Mr. Gentile said. An office inCanton also opened in June, staffed by onepartner.
In addition, the Beachwood team has begun developing leads in Akron, where Mr.Gentile anticipates FocusCFO will open anoffice within the next 12 months.
Mr. Gentile attributes the company’sgrowth to its business development effortsand to the recession, which he said revealedto business leaders that they have a need fora financial executive to better track their finances. — Michelle Park
WHAT’S NEW
THE COMPANY: Oasis ConsumerHealthcare, ClevelandTHE PRODUCT: Halo Oral Antiseptic
With its Halo Oral Antiseptic, Cleveland-basedOasis Consumer Healthcare wants to helpfight off the dangerous germs that causemany common afflictions.
Oasis says Halo is the first antiseptic sprayto kill 99.9% of infectious airborne germs, including those that cause the common cold,influenza and H1N1. The spray coats a user’soral cavity and blocks any airborne germsbreathed in through the nose or mouth, thelatter being the largest entry point for germs.
Trials on Halo were performed at UniversityHospitals Case Medical Center, and the drugis manufactured in Cleveland. The findings ofthe UH trials will be published by two leadingmedical societies.
“Unlike other products that support the immune system or protect from germs onsurfaces or hands, Halo is the first and onlyproduct of its kind to offer protection fromairborne germs,” said Dr. Mahmoud Ghan-noum, director for the Center for Medical Mycology and the Mycology Reference Lab-oratory at University Hospitals Case MedicalCenter and Case Western Reserve University.
The drug can be found in CVS stores cur-rently, with a rollout in Walmart, Target andRite Aid in the coming weeks. For more infor-mation, visit http://www.halogermdefense.com/.
REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS
THEINSIDER
THEWEEK AUGUST 13 - 19
Heart of the matter: A Korean private equity group has invested $30 million in Cleve-land Heart Inc. — a Cleveland Clinic spinoffformed in 2008 — to further the development ofthe local company’s artificial heart, coinedSmartHeart. The investment from Power HeartConsortium is the largest a Cleveland Clinicspinoff has ever received from a lone investor; itis expected to allow Cleveland Heart to continue itsinternational clinical trials, expand its laboratoryresearch and tweak the design of the artificialheart.
Dramatic entrance: As part of an estimated$30 million investment for the 2013 season, theoperator of Cedar Point Amusement Park plansto create a new thrill ride that come next Maywill be part of the entrance to the park in San-dusky. Cedar Fair L.P. said the new winged rollercoaster, named GateKeeper, will fly above themain entrance to the park, passing over arrivingguests with rolling flyover maneuvers. Gate-Keeper will be the longest winged roller coasterin the world and will boast the longest drop ofany winged coaster on the planet, according toCedar Point officials. A ride along the 4,164 feetof steel tubular track on GateKeeper will takeabout 2 minutes and 40 seconds.
Attention, motorheads: The I-X Center hasbought the Cleveland Auto-Rama car show andwill combine it with the I-X Center’s own PowerPiston event, which won’t be held as scheduledthis October. Instead, it will be combined withAuto-Rama at Auto-Rama’s already scheduledshow, set for next March. Ron Heitman of SouthEuclid, the man who owned Auto-Rama and hadbeen putting on the show since 1964, said that atage 72 and with the show becoming harder tomake a success each year, it was time to sell.
You say goodbye, and I say hello: Lead-ership changes are on the horizon at the AkronArt Museum. After 26 years as director, MitchellD. Kahan has told the museum’s board oftrustees that he will leave next Jan. 2, when he willassume the title of director emeritus. In addition,Janice Driesbach will join the museum’s staff aschief curator today, Aug. 20, after a year-long national search to fill that key post. Ms. Driesbachis a Lakewood native who is the immediate pastdirector and CEO of the Dayton Art Institute.
New at Dots: Women’s fashion retailer Dotshas a new CEO; she’s Lisa Rhodes, former seniorvice president of the U.S. apparel merchandising
division of Wal-Mart StoresInc. The Glenwillow-based retailer also plans to create aDots merchandise center inNew York City, all part ofwhat it calls the “next steps of its plan to grow into a1,000-store, national fashionretailer.” It now operates morethan 400 stores. Former CEORick Bunka remains president
of Dots and will oversee the balance of corporatesupport functions in Glenwillow.
On a roll: The Cleveland convention centerand medical mart has bagged another event.The 2014 CleanMed Conference & Expositionwill be held at the under-construction tradeshow complex in downtown Cleveland May 12-16, 2014. The conference on environmental sustainability in the health care field is expectedto attract 1,000 hospital administrators, physi-cians and other hospital staff and 100 exhibitors.Conference attendees are expected to use 1,500room nights in downtown hotels, and PositivelyCleveland, the region’s convention and visitorsbureau, expects the conference to have a directeconomic impact of more than $1 million.
BEST OF THE BLOGSExcerpts from recent blog entries onCrainsCleveland.com.
Amusement parks cater to adults, too■ The Wall Street Journal notes that amuse-ment parks nationwide — including CedarPoint in Sandusky — are stepping up theiradult-friendly offerings. Theirgoal: to “entice grown-up fans —who don’t have an early bedtime,curfew or school year — to spendmore time, and hopefully moremoney, at the parks.”
The numbers back them up,as about half of all amusement-park visitors, ages 25 to 49, comewithout children, according todata compiled for The Journal byInternational Theme Park ServicesInc., a theme park consultancy.
Cedar Fair Entertainment Co.this summer added Luminosity,an evening show, at Cedar Point.The show features drummers, acrobats, alight show, pyrotechnics and a disc jockeyrising from a stage. The Journal notes thatthe park also opened a beer garden with mi-crobrew beers and wine.
Park operators tell The Journal they rarelyhear complaints from families with childrenabout packs of grown-ups. Some parks tryto segregate the groups.
At Cedar Fair parks, “our children’s areasare a park within a park,” Stacy Frole, aspokeswoman, tells The Journal. “If you area thrill seeker, you’re generally in anotherpart of the park.”
Might want to cut those tailgates short, Browns fans■ The NFL has rolled out a new securitypolicy that requires each team to screen entrants with hand-held metal detectors
prior to allowing them to enter.Cleveland Browns PR man Neal Gulkis
said in an email that the team “will have signage at the gates informing people of thenew procedures” at the team’s preseasonhome opener on Aug. 24, and will ask fans “tohold their phones, keys, etc. in their hands.”
That process will eliminate the time nec-essary for previous pat-downs, but chances
are the process overall will takelonger. How long? Well, considerthat the Oakland Raiders, in anemail to season ticket holders,are advising fans to enter theirstadium two hours early to allow“ample time for this new securityprocedure.”
That could severely cut intotailgating time — or drive crazyBrowns fans to head to the parkinglots even earlier.
College educated inCLE shrink in number
■ Forbes.com recently broke down newcensus data on metropolitan areas that areenjoying the fastest growth in their college-educated populations, and Cleveland doesnot fare well.
Education levels are rising fastest not inconventional “hip” cities such as Boston orSan Francisco, but in places such as Char-lotte, Columbus, San Antonio, Orlando andNashville, demographer Joel Kotkin writes.(Find his report at http://tinyurl.com/8ls2oac.)
“The pattern is clear: brainpower isspreading out,” Mr. Kotkin wrote. “The notion that companies seeking skilled laborhave to go to one of the ‘hip’ cities — an idearelentlessly marketed by the New York andD.C.-based press — appears greatly over-stated. In reality, skilled, college-educatedpeople are increasingly now scatteredthroughout the country, and often notwhere you’d expect them.”
2222 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 20 - 26, 2012
Millennium Force atCedar Point
The Reserves Net-work’s new officecompanions
Rhodes
20120820-NEWS--22-NAT-CCI-CL_-- 8/17/2012 11:26 AM Page 1
The HR Community Honors Its Finest On Aug. 14, approximately 400 guests turned out to ap-
plaud the winners and finalists of the second annual Archer
Awards, presented by Crain’s Cleveland Business and Howard
& O’Brien . Designed to highlight Northeast Ohio’s standout
human resources professionals, the awards were presented
at the InterContinental Hotel in Cleveland to more than a doz-
en winners chosen by an independent panel of seven judges
comprised of executive level HR practitioners.
Recognition for those handling human capital in the region is
long overdue, if you ask Tom Hopkins, who has 31 years of
experience in the field and was chosen by a separate panel
of former Archer Award recipients as this year’s Lifetime
Achievement Award winner. The senior vice president of hu-
man resources for The Sherwin-Williams Co., Mr. Hopkins
said he has noticed only in the last 15 to 20 years that the
HR professional has become a much more integral part of
company strategy as emphasis on human capital has grown.
“In my opinion, this is the decade of the human resource pro-
fessional,” he said. And, that’s important in a region that’s
transforming itself from one focused on heavy manufactur-
ing to one driving resources to the sciences, technology and
other businesses that require very specific skills and com-
petencies, Mr. Hopkins said. “If the HR profession did not
exist in this transformational environment, we would have to
create it,” he said.
Another award winner, Charmaine D. Brown, director of di-
versity and inclusion for Forest City Enterprises Inc., hopes
recognition like the Archer Awards continues to elevate the
visibility of the field she entered 13 years ago. “The percep-
tion of HR is still very personnel-driven,” she said. “They
(people) think of HR as being payroll and the rulebook afi-
cionado. The reality is that the roles in human resources are
very strategic in nature. A lot of companies say talent is their
most critical asset, (and) it’s true.”
Event video, photos and finalist coverage:CrainsCleveland.com/archerevent
2012 Archer Award RecipientsTom HopkinsThe Sherwin-Williams Co.Lifetime Achievement
Daniel SerbinParker Hannifin Corp.HR Exec of the Year – Public
Diane ShieldsBendix Commercial Vehicle Systems LLCKnorr-Bremse GroupHR Exec of the Year – Private
Elise HaraCuyahoga CountyHR Exec of the Year – Nonprofit/Government
Charmaine BrownForest City EnterprisesRising Star – Public
Jacquelyn BellCiuni & PanichiRising Star – Private, Performance Management & Development
Krista FrazierBrandMuscle Inc.Rising Star – Private, Strategic Alignment
Jamie HerbstMenorah Park Center for Senior Living Citizenship
Tom TercekThe Lubrizol CorporationInnovation – Public
Cindy Torres EssellThompson Hine LLPInnovation – Private, Organizational Development
Patty HartmannMedical Mutual of OhioInnovation – Private, Leadership & Employee Development
Robert HattaJumpStart Inc.Innovation - Nonprofit, HR Consulting for Entrepreneurial Ventures
Suzanne BloomfieldUnited Way of Greater ClevelandInnovation – Nonprofit, HR & Mission Alignment
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