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Expecting shortage, insurers tout jobs
Bank files foreclosure on Tower at Erieview Lawsuit includes garage, but not adjacent Galleria
Demand likely will rise, so sales pitches intensify
By STAN BULLARD sbullard@crain.com
After nearly a decade of trying to make a go of the 40-story Tower at Erieview, an investor group led by co-owner Werner Minshall is in danger of losing the landmark property in downtown Cleveland to its lender. The office building and its 400-car underground parking garage are the subject of a foreclosure action filed March 23 by U.S. Bank in Cuyahoga County Common Pleas Court. The lawsuit against Mr. Minshall’s Erieview Tower & Parking LLC looks to satisfy a $44 million mortgage issued by the bank. However, the attached, glasstopped Galleria, 1301 E. Ninth St., is exempt from the foreclosure action as it was financed separately and Mr. Minshall controls it through a different company. Mr. Minshall said last Tuesday, March 27, he was surprised the bank filed to foreclose. The real estate owner based in Bethesda, Md., said he hopes to retain the asset. “We’ve been trying to work it out for more than a year. They must have gotten tired of talking to me,” Mr. Minshall said. “We’re making a lot of progress (with the complex). It’s not been an easy deal, but there are reasons for them to back off and let me continue it.” He declined to See ERIEVIEW Page 21
By TIMOTHY MAGAW tmagaw@crain.com JASON MILLER PHOTOS
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David Hazen isn’t surprised young professionals aren’t flocking to the insurance industry. After all, he said, it isn’t perceived as the most riveting career. But there are jobs to be had in the business — and more likely are on the way. “When you were growing up and your uncle asked what you wanted to do for a living, you probably said you wanted to be a teacher, fireman or a doctor,” said Mr. Hazen, vice president for commercial insurance lines at Huntington Insurance in Salem. “The last thing you would have said is that you wanted to be an insurance agent or in the insurance business.” That situation creates a problem, industry insiders say, as the state’s insurance work force by 2016 is expected to grow by 7.1% due to heightened demand, bringing along 16,900 new jobs, according to market research from Kent State University. Moreover, other studies suggest as much as 50% of the insurance industry’s current work force will reach retirement age by 2016. As such, local insurance companies and brokerage firms are looking to expand in-house training programs to lure young employees, partner with local colleges to beef up the talent pool and, perhaps most importantly, better sell their industry as a See INSURERS Page 20
Next for Cedar Fair CEO: Take record years to greater heights By TIMOTHY MAGAW tmagaw@crain.com
14
Matt Ouimet’s biggest challenge these days is tearing people away from their jam-packed schedules so he can scare them to death on a 400-foot-tall roller coaster. OK — maybe the new Cedar Fair LP CEO wasn’t that dramatic in his assessment
of the challenges facing the amusement park industry, but he said the company’s largest hurdle is what he’s characterized as a “time poverty” issue. The former longtime Disney executive admitted spending a lot of time thinking about how to convince consumers to spend their time and hard-earned cash at Cedar Fair’s 11 amusement parks and six water parks throughout the country,
including Cedar Point in Sandusky. “Because we are such an extraordinary value, we tend to win that battle, but I think about it a lot,” Mr. Ouimet said in an interview last week with Crain’s Cleveland Business. “If you’re off doing something else besides coming here in July, I call you a ‘why not?’” Getting those so-called “why nots” into the parks will be one of Mr.
Ouimet’s paramount tasks during his first full season with the company since becoming Cedar Fair’s president last summer. He stepped into the CEO role Jan. 3 after longtime executive Dick Kinzel retired. This year, the company is rolling out a new marketing campaign, an upgraded online platform to sell tickets and, in See HEIGHTS Page 19
Ouimet
0
NEWSPAPER
74470 83781
7
INSIDE
Stow golf agent R.J. Nemer struck while the time — Tiger’s time, specifically — was right ■ Page 4 PLUS: RENTAL RATES RISE ■ AGILE SOFTWARE DEVELOPMENT FIRM ON THE MOVE ■ & MORE
Entire contents © 2012 by Crain Communications Inc. Vol. 33, No. 14
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CRAIN’S CLEVELAND BUSINESS
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Rents to hit record, driven by occupancy Rates expected to climb 3%, but some owners can’t raise prices By STAN BULLARD sbullard@crain.com
Northeast Ohio apartment owners have entered History City. A just-updated forecast by the Marcus & Millichap real estate brokerage estimates multifamily rents in the Cleveland market will hit a record this year. Average effective rents — actual rent payments landlords receive after concessions and discounts in negotiations — are
expected to rise 3% to $725 a month in 2012 from $704 in 2011. Monthly asking rents, or advertised rates before concessions such as a month of free tenancy, are expected to increase 2.6% this year to $756 from $737 last year. The spread between asking and effective rents shows that apartment owners still need to market competitively even as regional occupancy sits at 94%. Michael Barron, a vice president of
investments at Marcus & Millichap’s Independence office, said he and his colleagues specializing in apartment sales hear evidence of the rent increases from owners on a regular basis. They also see it in financial data they gather to list and evaluate for-sale apartment buildings. “Savvy owners are taking advantage of occupancies and are raising rents as leases come up for renewal and for new tenants,” Mr. Barron See RENTS Page 19
BEHIND THE RENTAL DATA Multifamily rental rates are back on the upswing, according to data from Marcus & Millichap Research Services and Reis. The numbers:
Year
Asking rent
Percentage change
2012
$756
4.7%
2010
722
-2.3
2008
739
5.4
2006
701
3.1
2004
680
1.5
2002
670
3.6 (over 2000)
INSIGHT
Community banks seek investor infusion Aging demographics force institutions to recruit shareholders By MICHELLE PARK mpark@crain.com
JANET CENTURY
LeanDog CEO Jon Stahl has tried to encourage a culture of creative thinking. “Why do I have to work in a cubicle? Why do I have to wear a tie?,” he asks. By CHUCK SODER csoder@crain.com
AGILITY ABILITY Cleveland software developer LeanDog grows, renovates floating headquarters
P
retty soon LeanDog might have to change its name to BigDog. The software company best known for working out of a barge on Lake Erie more than doubled its sales and the size of its staff in 2011. That wasn’t the plan, according to CEO Jon Stahl. LeanDog — which uses “agile” methods to develop software and teaches other
companies to use agile techniques — was supposed to top out at 20 employees, Mr. Stahl said. “Now we’re at 50 and probably headed to 100,” he said, adding that the company has 25 positions open. To accommodate that growth, the company is expanding its offices. Mr. Stahl and Jim Hickey, cofounder of marketing firm Arras Keathley, about a month ago finalized a deal to purchase the barge See LEANDOG Page 19
THE WEEK IN QUOTES “We’ve been trying to work it out for more than a year. They must have gotten tired of talking. ... We’re making a lot of progress (with the complex).”
“If I bought it, I would be stuck in a job I hated. I was looking out my office window one day and said there has to be more to my life than this.”
— Werner Minshall, co-owner, Tower at Erieview. Page One
— R.J. Nemer, founder, Icon Sports Management in Stow. Page 4
“Nobody involved with this is tired. … It’s 7 a.m. in Ohio City, and there’s still a full day ahead.” — Cleveland City Councilman Joe Cimperman. Page 11
“As a corridor, Lorain has not functioned well for a long time. … A more vibrant Lorain Avenue would bring people together.” — Eric Wobser, executive director of Ohio City Inc. Page 11
Visible through the glass walls of president and CEO Ed McKeon’s office is a big banner that tells all those who come inside Western Reserve Bank in Medina, “You can become a shareholder in your bank.” The banner was hung three months ago and is a 7-footMcKeon tall sign of the lengths to which community banks in Northeast Ohio are going to interest their customers in buying stock in the institutions where they bank. Their primary goal is to line up new investors to replace longtime stockholders, some of whom want to liquidate their holdings. Both Western Reserve and Cortland Savings and Banking Co., which operates in five counties, including Ashtabula, Geauga and Portage, have trained their staffs to educate customers that they can invest in their hometown banks. Cortland has gone so far as to charge each employee with generating leads by asking clients directly about investing in the bank and giving information forms to those who seem interested See INVESTOR Page 20
REGULAR FEATURES Big Issue........................8 Classified.....................22 Editorial.........................8 From the Publisher.........8 Going Places ...............10 Letter ............................9 Personal View ................9
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Timing right for Stow golf agency Icon steadily builds roster of pros, clients in corporate world By JOEL HAMMOND jmhammond@crain.com
The Ohio Energy Challenge We have the team for that. Energy development in Ohio is on the fast track. Our legal team includes diverse specialists who have been at the forefront of the growing energy industry in our state. The stakes are high. We have a high-energy group that is focused on providing insight for your energy challenges and foresight for the issues on the horizon.
Cuyahoga Falls and Stow native R.J. Nemer admits he’s a horrible golfer. But Mr. Nemer has carved out quite a nice niche for himself in representing those who are good at the sport. The founder of Icon Sports Management in Stow got started in 1997 as the circus surrounding Tiger Woods’ rise was perhaps at its peak: Mr. Woods, who’d won two lesserknown tournaments in 1996, blew away the field at fabled Augusta National Golf Club to win the Masters by shooting a four-day total of 18under, 12 shots ahead of second-place Tom Kite. Later that month, at the Jack Nicklaus-designed Muirfield Country Club in Dublin, a suburb of Columbus, Mr. Nemer and his father, Bob, saw a change happening at the Memorial Tournament. “We’re looking in the gallery, and see all kinds of different races and ethnicities watching him,” Mr. Nemer said of Mr. Woods at the Memorial. “And you look at Tiger, and he looks different athletically than everyone else. I thought, ‘Maybe golf is the next big thing.’” At about the same time, Mr. Nemer was at a career crossroads. He’d earned his bachelor’s and law degrees from the University of Akron, and was working in Summit County Probate Court,. Yet he was unfulfilled. Every Monday, he said, he’d wish it was Friday. He had money saved to buy his first house, but hesitated. “If I bought it, I would be stuck in a job I hated. I was looking out my office window one day and said there has to be more to my life than this,” he said. Sports giant IMG still was headquartered in Cleveland at the time, and he spoke with the company about coming aboard. But he decided against joining a big company, and as a 30th birthday present to himself, he signed a six-month lease on an office in Akron and founded Icon. The thinking: The legal field was in good shape at the time, so if his plan went awry, he always could rejoin a law firm or practice in another area. “I actually thought, ‘How hard can this be?’ In retrospect,” he said, “I ask myself, ‘What were you thinking?’”
On the roster Icon now employs 12 and counts 10 PGA Tour members as clients. Among them are popular Englishman Ian Poulter and rising stars Kevin Streelman and Bud Cauley; the latter is only the sixth player in
JOE CASTRO/EPA
R.J. Nemer’s Icon Sports Management has paired PGA Tour pro Ian Poulter with Mutual of Omaha. tour history — Mr. Woods is one of the other five — to earn his playing card without attending the PGA’s Qualifying School. He did so by finishing 116th on the tour’s money list in 2011 by playing under sponsors’ exemptions, which give a Nemer tournament sponsor the discretion to admit players into an event’s field. Players in the tour money list’s top 125 automatically earn their tour cards. At the start, though, Icon needed a break. Mr. Nemer said he got it when he met someone who introduced him to someone who had played collegiately for Duke University; that former Blue Devil knew a Lancaster, Ohio, native named Joe Ogilvie, who had just earned his Nike Tour card. (The Nike Tour is the predecessor of the current Nationwide Tour, a kind of minor league for pro golf.) Mr. Ogilvie gave Mr. Nemer six months. Today, they’re still paired, with Mr. Ogilvie winning $10 million in his career thanks in part to one victory and 26 top-10 finishes. Mr. Nemer has stories like that for everyone: For Mr. Poulter, perhaps his best-known client who has his own clothing line and a reputation for being a showman, Mr. Nemer was meeting someone for dinner at the U.S. Open a few years back when he saw two caddies talking. One was Mr. Poulter’s, and after striking up a conversation, Mr. Nemer learned that the golfer was transitioning to the United States full time from the United Kingdom. Mr. Nemer connected with Mr. Poulter’s longtime manager in England and became his agent in the States.
Mutual benefit In addition to player representation, Icon also counts among its clients companies such as Kent-based Davey Tree Expert Co.; Columbusbased NetJets, a seller of fractional
ownership interests in private jets; insurer Mutual of Omaha; candymaker Lemonheads, and Waste Management. For its corporate customers, Icon develops marketing strategies within pro golf, such as player sponsorships — think Mr. Poulter’s Sunday polo with Mutual of Omaha’s logo on it — or sets up customer entertainment, such as pro-am events and golf clinics. Waste Management, in another example, pays for naming rights to the Waste Management Phoenix Open, held each February. It features one of the PGA Tour’s most-celebrated holes, the raucous 16th at TPC Scottsdale where more than 20,000 fans whoop it up in grandstands that surround the par 3. John Hildenbiddle, the senior vice president of brand management and public relations at Mutual of Omaha, said the company has worked with Icon since 2003, when it decided to venture into golf marketing. He called the PGA Tour for a list of agents, and said he quickly found that Mr. Nemer was the best of the bunch. Icon’s players, Mr. Hildenbiddle said, were amenable to partnerships with corporations that involved much more than simply putting the company’s logo on their shirt, though that is part of the arrangement. Mutual of Omaha, then, hosts players at small events with its customers, such as outings and clinics. In addition, the company brings all 17 of the pro golfers it sponsors through Icon to Omaha for the “Mutual of Omaha Showdown,” with those players grouped randomly with about 60 of Mutual’s customers for the pro-am event. “Our players are very interested in integrating with customers at outside events, outside of the time they spend attempting to win tournaments,” Mr. Hildenbiddle said. “That’s where we see the most value.” ■
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With production back in U.S., Suarez turns up the heat on exports By DAN SHINGLER dshingler@crain.com
A year after it pulled the trigger on the decision to “reshore� its manufacturing operations by moving them to North Canton from China, Suarez Manufacturing Industries says it avoided a big inventory problem thanks to the move. Now the maker of high-end EdenPure portable heaters needs to export what it makes here in order to increase its geographic reach into the southern hemisphere and thereby blunt the wild swings that occur in its sales and production cycles. “In the beginning, no one believed we were going to do it,� said Michael Giorgio, Suarez general manager and chief financial officer, of bringing production back to the United States. But not only did Suarez move 100% of the final assembly work for its heaters to North Canton, it also sourced all but one of the product’s 123 parts from U.S. manufacturers in a process that took three years of planning and ultimately involved 30 suppliers. (If you’re curious, it never did find a U.S. maker of lithium batteries that would work in its
products.) Skeptics thought U.S. workers wouldn’t work as hard as their Chinese counterparts, but Suarez found the opposite to be true, said operations manager Hope Paolini. Many of the workers are new immigrants, and a visitor might hear not only Spanish, but also French and German spoken on the company’s assembly line. The company pays workers at least $9 an hour. That’s more than a Chinese worker makes, but the company saves money by not transporting its products from China and by reducing its reaction time when it sees changing market conditions. Besides, Suarez found its labor cost advantage in China already was shrinking, Mr. Giorgio said. A study on reshoring — the process of bringing foreign production backed to the United States — released March 22 by the Chicago office of Boston Consulting Group confirms Suarez’s experience. Ten years ago, the average U.S. worker made about 25 times what his or her Chinese counterpart was paid, compared with only about 10 times as much today, the report found. When productivity gains are considered, the gap in terms of
total production costs between the United States and China is closing even faster, Boston Consulting Group said.
Glut avoided, but not layoffs Wages aside, producing its product here made Suarez faster on its feet, which allowed it to react quickly to a surge in demand for its heaters last fall, Mr. Giorgio said. It also avoided a big mistake over the past winter, Mr. Giorgio said, because the company normally would have ordered its heaters from China months in advance but was able to reduce its output in North Canton in light of the mild winter in much of the country. “While we do have some inventory, if we would have purchased for a normal winter from China, we would have a glut of heaters,� Ms. Paolini said. Using the company’s newfound ability to change output quickly isn’t without its downside, though, Ms. Paolini acknowledged. The company’s product is so seasonal, she said, that its need for employees swings rapidly. Last December, when Suarez still hoped for a strong sales season in its principal market of North America, the
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company had more than 400 employees assembling, testing and packing its heaters for shipping. But when the winter turned warm, the usual spring slowdown came quicker than normal. Today, only about 125 workers are still at the company. “It’s painful and we’d really like to avoid that in the future,� Ms. Paolini said.
It’s always winter somewhere It has avoided some of the pain by hiring employees who have other jobs that are seasonal as well. For example, Ms. Paolini said the company employs a group of roofers, because they are busy with their roofing jobs in the warmer months but are looking for work when the weather turns cold and Suarez ramps up its EdenPure production. But, long term, the company hopes to broaden its geographic reach, said Ms. Paolini, who noted, “It’s always winter somewhere.� That means selling into places such as South America or Australia, where it’s winter when it’s summer in the northern hemisphere. The company already is working on exporting its product: On March 20, it was cleared by Japan to sell its heaters there after they were approved for safety. The southern hemisphere might have fewer opportunities, but does have some, said Sue Whitney, director of the Cleveland office for the U.S. Commercial Services, which helps U.S. companies sell products abroad. For instance, Brazil — South America’s largest market — does not have a free trade agreement with the United States, so exporting to that country is difficult, Ms. Whitney said. However, the United States does have agreements in place that make it easy to export to nations such as Chile and Australia. An owner of three EdenPure heaters by coincidence, Ms. Whitney
said she didn’t think the company would have trouble exporting its product, especially if it can sell them in Japan, where Suarez said it already has orders waiting. “Japan is a very tough market to get into, so if they’ve done that, they’re doing very well already,� Ms. Whiney said.
‘Made in U.S.A.’ still sells The southern hemisphere also is a tough market for some products because its populations generally are poorer than those of North America or Europe. EdenPure’s expensive heaters — they cost between $200 and $400 in the United States — might appeal to only a small segment of buyers. But if the company positions itself correctly with retailers that reach those highend buyers, it still can find a market for its heaters, Ms. Whiney said. There might even be an advantage in this respect, because EdenPure heaters are made in the United States. Foreign buyers often still put a premium on goods made in the United States, said Boston Consulting senior partner Hal Sirkin, a lead author on his firm’s recent report on reshoring. “We’ve seen this, particularly in the developing world, where there is a premium for (U.S. products) versus domestic manufacturing. We’ve seen as high as 20%, but on luxury goods it can be even higher,â€? Mr. Sirkin said. In the meantime, Suarez is working on other ways to take some of the seasonality out of its business. The company is not ready to disclose them yet, but Mr. Giorgio said Suarez has other products it hopes to bring to market soon. Like its heaters, they’ll be in-home devices aimed at improving home comfort and convenience, he said. But they won’t, he noted, require cold weather outside in order for consumers to need them. â–
Private equity firm sells Twinsburg’s ESSCO Beachwood primillion and its ON THE WEB Story from vate equity firm MCM www.CrainsCleveland.com. employee count Capital Partners has to about 70 sold Twinsburg-based ESSCO Inc., during MCM’s ownership, ESSCO generating an “excellent return� for CEO Tom Bianco said. He said its investors, MCM said. MCM proved to be “an ideal partner� Terms of the sale of ESSCO to in sourcing and negotiating a highly Cardinal Equity Partners, a private accretive acquisition. The company investment firm in Indianapolis, also built a state-of-the-art primary were not disclosed, nor were distribution center and licensed a specifics of the return generated. nationally recognized consumer MCM had owned ESSCO, a brand during MCM’s hold period. distributor of floor care products, “The company is clearly the since 2005. ESSCO distributes to leader in the markets it serves ... independent dealers, specialty floor and is extremely well-positioned to care internet retailers and discount capitalize on numerous growth retailers. prospects,� said Jay Poffenberger, ESSCO, founded in 1924, doubled MCM managing director and — Michelle Park its annual sales to more than $30 partner.
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Fedeli urges LNB to repay TARP investment 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editor: Joel Hammond (jmhammond@crain.com) Sports Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Manufacturing Tim Magaw (tmagaw@crain.com) Health care & education Michelle Park (mpark@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing director: Lori Grim (lgrim@crain.com) Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Marketing/Events coordinator: Jessica Snyder (jdsnyder@crain.com) Advertising sales manager: Nicole Mastrangelo (nmastrangelo@crain.com) Senior account executive: Adam Mandell (amandell@crain.com) Account executives: Dawn Donegan (ddonegan@crain.com) Andy Hollander (ahollander@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com) Digital strategy and development manager: Stephen Herron (sherron@crain.com) Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Lauren M. Rafferty (lrafferty@crain.com) Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com) Audience development manager: Erin Miller (emiller@crain.com)
Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) 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. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-2912, or email to customerservice@crainscleveland.com, or call 877-812-1588 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation
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Although the top executive at LNB Bancorp sees “no reason to rush” to action to repay the U.S. Treasury’s investment in the company, activist share- Fedeli holder Umberto P. Fedeli wants to discuss making an investment that would compel the bank to repay sooner than later — preferably this year. Daniel E. Klimas, president and CEO of LNB, the parent company of Lorain National Bank, sent a letter to shareholders March 23. He wrote it to update them about the bank’s steps to eventually repay the gov-
ernment, given the “discussion in the media lately regarding TARP and TARP repayment.” Under the Troubled Asset Relief Program, the Treasury invested in hundreds of banks beginning in 2008. While there’s no deadline for repayment, the dividend, or interest, banks pay on the money increases to 9% from 5% after five years. For LNB, which received $25.2 million, that rate is set to increase at the end of 2013. Speaking to the impending increase, Mr. Klimas wrote, “This is no reason to rush into a transaction that could be detrimental in the long term to our institution and to
you, our shareholders. We are taking a measured and analytic approach to our review of alternatives.” Mr. Fedeli, president of The Fedeli Group, an Independence business insurance brokerage, said he respectfully disagrees. The anticipated rate increase is an 80% hike, he noted. “Anytime I have a cost that increases 80%, to me, that’s something that needs to be treated with urgency,” he said. Mr. Fedeli owns more than an 8% stake in LNB. He recently wrote a letter to bank leadership, expressing a desire to provide capital, Mr. Klimas noted in his letter. What Mr. Fedeli would like to do, given that he can access certain financials to do his due diligence, is
invest by himself or put together an investor group, he said. “What I’m saying is I will help them solve this issue of TARP,” Mr. Fedeli said. “My concern is if you wait too long, you will be competing with hundreds of banks that have the same issue (and are) looking for capital.” Mr. Fedeli hesitated to say how much the investment could be or what form it might take, but Mr. Klimas noted in his letter that Mr. Fedeli has suggested verbally that it would be in the form of convertible preferred shares. Mr. Fedeli, though, said he’s flexible on terms. Mr. Klimas declined to comment beyond his letter about Mr. Fedeli’s desire to invest. ■
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
APRIL 2 - 8, 2012
PUBLISHER/EDITORIAL DIRECTOR:
Brian D. Tucker (btucker@crain.com) EDITOR:
Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
It’s a gas
G
ov. John Kasich and the Ohio Oil and Gas Association hold opposing views of just how heavily the state should tax energy companies that want to unlock the oil and natural gas that sit within Ohio’s shale fields. Achieving a happy medium will be important if the state is to tap the full economic potential of the natural resources that lie beneath hundreds of thousands of acres in the eastern half of Ohio. The association formally made it known last week that it’s against raising the severance tax — the tax assessed against oil and gas producers — as proposed recently by Gov. Kasich in his 10-point energy plan. The group engaged in a bit of saber-rattling in the process, hinting that development of an energy industry in Ohio’s Utica shale region might stop before it really gets started if taxes are raised. “The specter of a tax increase has induced a sense of uncertainty among oil and gas companies which have to rethink their original business plans for drilling in Ohio,” Tom Stewart, the association’s executive vice president, said in his group’s March 26 announcement of its opposition to a tax hike. “Ohioans deserve prosperity through growth, and this tax proposal has placed that opportunity at risk,” Mr. Stewart stated. But as Crain’s reporter Dan Shingler informed readers in last Monday’s issue, various industry observers say it would be an expensive proposition for energy companies not to proceed with drilling in Ohio after paying billions of dollars to lease the mineral rights to vast amounts of shale land. The catch for energy companies is that the leases require drillers to begin production on each property in three to five years. A company that fails to do so by the end of a lease either loses the lease or must pay a cash bonus to renew it. And, as Mr. Shingler reported, there’s no escape clause even if the state raises the severance tax. “For better or worse, the companies have created a contractual obligation to drill,” said former oil and gas attorney Andrew Thomas, who’s now an executivein-residence at Cleveland State University. Even though the oil and gas producers have put themselves over a barrel with their leases, they’re more likely to invest aggressively in Ohio if the tax climate here is favorable relative to other states. And that’s where the Kasich team must be mindful of the total impact of Ohio’s tax policy on energy companies. As the Ohio Oil and Gas Association notes, oil and gas producers also pay the state’s income tax and its commercial activity tax — a tax assessed on a company’s gross receipts — besides the severance tax. If the Kasich administration’s goal is to keep Ohio competitive with other oil- and gas-producing states, then it can’t focus solely on the severance tax. That said, Gov. Kasich also shouldn’t miss an opportunity to derive more revenue for the state if the severance tax can be structured in a way that keeps Ohio in line with the tax policies of other states as they affect energy producers. It’s OK to squeeze the golden goose a bit — just don’t do it so hard that it won’t lay eggs.
FROM THE PUBLISHER
Health care debate causes confusion
Y
but forcing Americans to buy something ou could almost imagine the that they may not want or need has simultaneous jubilation and hackled conservatives the most. The exasperation across the land legislation assuredly was labeled with last week as people read — or the pejorative Obamacare label after heard, if they were lucky enough to have some poll or survey showed it was a hotone of the treasured seats in the button term that would help rally the Supreme Court — these words: opposition. “One way or another, Congress is The justices’ real work begins going to have to reconsider this. now as they deliberate and try Why isn’t it better to have them BRIAN to influence their colleagues reconsider it in toto?” TUCKER one way or another. It would Now, I don’t remember very not necessarily be a good thing much from my high school for the country if the five conLatin, but I know this: Justice servative justices carried the Antonin Scalia, a conservative day in a 5-4 vote that would justice and Ronald Reagan throw out an entire piece of appointee, wants this whole major legislation, and they “Obamacare” thing handed know it. right back to the lawmakers who So they’ll write, present, passed it. debate and perhaps even argue a bit “It,” of course, is the Patient Protection between now and the summer. In the and Affordable Care Act. The sweeping meantime, however, businesses don’t law, among many, many other things, have any clarity on how to proceed. And requires Americans to buy some sort of those in or around the health care industry, health care insurance if they do not have whether they’re hospitals, insurers, it provided by their employer. suppliers, physicians, attorneys, accounThere are plenty of other provisions,
tants, government officials or others, can’t sit by and wait. They’ve been planning for this for a long time and can’t gamble that the high court will overturn the entire law. That’s one reason why health care reform and its impact on employers is a major topic at our April 18 General & In-House Counsel Summit at LaCentre in Westlake. If you are an attorney or accountant advising businesses, or own or run a company with a health care plan, you’ll want to hear from this highpowered panel: Patricia Decensi, vice president and assistant general counsel, Medical Mutual of Ohio; Janet Miller, chief legal officer, University Hospitals; Sue McBride, healthcare advisory principal, KPMG; and Jerry Grisko, president and chief operating officer of CBiz Inc. The other topics are data privacy and risk, executive compensation and risk management, and all panelists are widely regarded experts in their fields. Register at www.crainscleveland.com/counsel or by calling Jessica Snyder at 216-5221383. ■
THE BIG ISSUE If you live within the city of Cleveland, what’s your favorite part about living there? If you don’t live in the city, what might persuade you to consider it?
MICHAEL BARTELME
ALLIE HOLLISTER
DAVE CONDON
JUDY BARABAS
Cleveland (West Park)
Cleveland (downtown)
Cleveland (Edgewater)
Medina
I would because of the restaurants, and I could walk to sporting events. I don’t know that I can afford living in the (inner) city at this particular moment.
Safety. Just more police around. I hear stories about how people are robbed and cars broken into, and that in itself is enough for me to stay away.
I do live in the city of Cleveland, and it’s easy access to downtown. I like not being stuck on 480 or I-90.
Nothing, because I live out in the country and I don’t like having neighbors.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
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PERSONAL VIEW
Some internal trading should be exempt from financial reform law By MARCIA L. FUDGE and STEVE STIVERS
S
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
ome would say bipartisanship is on life support or nonexistent. Stories of pervasive arguments between Democrats and Republicans cover the front pages and fill television news reports. We even witnessed the downgrade of the credit rating of the United States because of the historic 2011 debacle over the debt ceiling. But not all hope is lost. It is possible for Democrats and Republicans to work together on legislation that stands to benefit American business and our nation’s economy. Although we have differing views on the effectiveness of the DoddFrank Wall Street Reform and Consumer Protection Act, we were able to come together to improve a portion of the bill dealing with inter-affiliate trades. Regulation of inter-affiliate trades should reflect the economic reality that internal trades do not increase systemic risk. That’s why we introduced H.R. 2779, which would prevent needless and costly regulation of internal trades while providing safeguards to ensure targeted application. H.R. 2779 would prevent internal, inter-affiliate trades from being subject to regulations that were designed to apply only to certain street-facing swaps. The measure was approved by the House Financial Services Committee by a vote of 530, the House Agriculture Committee by unanimous voice vote and it passed on the House floor last week. Inter-affiliate swaps are executed between entities within a single corporation or corporate group to allocate risk within the group. Companies, such as Clevelandbased Eaton Corp., use inter-affiliate swaps to hedge business risk. This centralization of hedging allows a corporation to use inter-affiliate swaps to combine its positions and execute most or all of its market-
U.S. Rep. Fudge represents the state’s 11th District and U.S. Rep. Stivers represents Ohio’s 15th District. facing swaps through a single or small number of affiliates. Proposed derivatives rules under Dodd-Frank could require both inter-affiliate swaps and marketfacing swaps to meet the same regulatory requirements, even though inter-affiliate swaps do not increase systemic risk. Companies currently use centralized hedging, where one or a small number of affiliates act as the external-facing party. This allows companies to concentrate trade expertise, better evaluate counterparty credit risk and secure better pricing through economies of scale. Centralized hedging also eliminates duplicative execution, compliance and reporting functions and allows a company to net positions held by its various affiliates. In addition, exchange execution and real-time reporting would mislead markets and flood data repositories with irrelevant information. Real-time reporting of inter-affiliate swaps would not improve price transparency because the “pricesâ€? of these swaps are not market determined. Imposing requirements that are designed to address systemic risk on inter-affiliate trades would create costs without a corresponding benefit. It would place substantial burdens on end users and consumers, increasing costs to the economy and could force companies to abandon proven and efficient methods of managing their risk through centralized risk-mitigation centers. We hope our colleagues will join us in reaching across the aisle and doing what is in the best interest of our nation’s economy and American business. We urge our colleagues in the Senate to bring up this bill for a vote. â–
Indians hire new premium sales leader Browns ex-exec charged with improving current numbers, charting future By JOEL HAMMOND jmhammond@crain.com
The Cleveland Indians are placing more emphasis on an area in which they’ve struggled recently. The team has hired Ryan Robbins, most recently the Oakland Raiders’ director of premium seating, to head the Indians’ premium seating efforts. Mr. Robbins is no stranger to Cleveland. Before joining the Raiders, the native of Marlington, Ohio, worked as the Cleveland Browns’ manager of ticket sales from 2004 to
2007. He also is a graduate of Mount Union College. In his new role, Mr. Robbins is charged with selling more of the Tribe’s extensive premium seating inventory now, while also charting how best to increase sales in the long term. “If we were going to build a ballpark, what mix of premium seats would it have? How many suites?,� said team president Mark Shapiro in describing Mr. Robbins’ task. That process will involve studying Cleveland’s current market trends as well as projections for what the market might look like down the road. It also will include studying “industry comparables,� Mr. Shapiro said, or teams in similar financial and market situations as the Indians. The Indians have not had an
executive in charge of the premium seating areas in a number of years, but Mr. Robbins’ hire will give the team leaders in premium, season ticket and group sales. Mr. Shapiro said Mr. Robbins emerged from candidate interviews that spanned two to three months, and possesses the right experience for the job: He has worked in Cleveland, so he understands the challenges here, but his experiences in Oakland and the NFL also give him the proper outside perspective. “It’s a tough job,â€? Mr. Shapiro said. “We can’t look at changes independent of other changes. What should the number of club seats be, and how does that then affect our suites? How does that affect a home plate club? We have to understand that mix.â€? â–
LETTER
Business bias taints view on fracking ■Your March 19 issue included a Personal View by Spencer Abraham that was headlined, “Fracking concerns formed out of fear, despite facts.� This pro-big-business, environmental-concerns-be-damned viewpoint smacks of the same blind stubborn responses big business has used in the past when opposing such ideas as tobacco smoke is harmful to health, asbestos inhalation causes respiratory health issues and many more instances we all can think of. It is shocking such nonsense should come from a man who served as U.S. Secretary of Energy and is currently CEO for a Washington, D.C., public affairs firm. Mr. Abraham contends that in
the past 60 years there are no documented cases of wells created by the hydraulic fracturing, or fracking, method that are tied to drinking water contamination. Mr. Abraham obviously lives in the proverbial ivory tower. Maybe we can ship him some tap water that one may light with a match. Too bad Crain’s cannot also include neutral and/or alternative positions and references in the Personal Views it publishes. Mr. Abraham’s bias and ignorant arguments don’t include any valid evidence or research, yet he belittles those who contend fracking is unsafe. The Ohio Department of Natural Resources’ Division of Geological
Survey recently released two new presentations about the Utica shale gas play in Ohio. They include a number of new maps showing many aspects of the geology, such as the extent, thickness and gas potential of the Utica in Ohio. There are several illustrations depicting how fracking wells are placed, and where in Ohio drilling has occurred. You can find the two presentations on the ODNR website at www.ohiodnr.gov/tabid/23014 /default.aspx. Hopefully you will hear from others in the scientific community about Mr. Abraham’s opinion piece. Tom Sampliner University Heights
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20120402-NEWS--10-NAT-CCI-CL_--
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Cureo cures stakeholder discussion ills Wooster firm’s social media site plays well with early adopters By CHUCK SODER csoder@crain.com
Both Andrew Vaeth and Theodore Frank used the word “nightmare” to describe how hard it is for a company to stay in touch with its investors, board members, employees, suppliers and anyone else who needs to stay up to date with the business. That’s why the two men, along with John Veney, decided to start Cureo, a social media site designed to give businesses a secure way to communicate with their stakeholders. The Wooster company last November received a $250,000 investment commitment from JumpStart Inc., a Cleveland nonprofit that assists startups. Since then, the company has built a test version of Cureo.com, and it’s preparing to launch a more formal version of the site this month. Between 20 and 30 companies already are using the site. Most of them are based in Northeast Ohio, said Mr. Vaeth, CEO of Cureo, which technically is called OptixConnect LLC. The conversations the company
has had with early users have confirmed that Cureo’s founders aren’t the only ones who wanted a better way to communicate, Mr. Vaeth said. “We are learning that we are right in spades,” he said. Businesses and other organizations eventually will pay a monthly fee to use Cureo.com, he said. They’ll then invite anyone they want to stay in touch with to follow them on the site. Followers get free access, but Cureo plans to give them an option to pay a fee for premium features. Companies can give some followers access to more information than others. For instance, key executives would be allowed to see financial data, internal documents and other sensitive information, whereas members of the news media would not. Followers also can access traditional social media tools allowing them to send private or public messages to others who follow a given company. And if they follow five other companies, they’ll see updates from all of them in a format designed to look like an online business magazine, said Mr. Vaeth, who with Mr. Veney founded ExpenseWire, which sells software designed to help companies manage employee expense reports. The company, which still has an office in Wooster, was sold
in 2008 for an undisclosed price to e-commerce software firm Reardon Commerce Inc. of Foster City, Calif. Cureo co-founder and chairman Ted Frank says the followers need the site as much as the companies do. Mr. Frank, who has helped start or run several businesses over the years, long has been looking for a way to make the process of communication easier. His desire to do something about it increased, however, when he became a venture partner at JumpStart, where he worked with many local startups. Today Mr. Frank is chief operating officer at payment card services provider SparkBase Inc. of Cleveland, one of Cureo’s first users. Mr. Frank said the site has made his life “so much easier.” JumpStart also is encouraging some of its portfolio companies to use the website, said Jerry Frantz, managing venture partner for the nonprofit. So far, followers have been quick to sign up, he said. Mr. Frantz lauded the company’s management team and the concept behind Cureo, noting that businesses need a better way to communicate with stakeholders. “There’s a big difference between marketing your product and marketing your business,” he said. ■
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APRIL 2 - 8, 2012
GOING PLACES JOB CHANGES CONSTRUCTION TURNER CONSTRUCTION CO.: Jack Kellogg to preconstruction manager; Lauren Sabol to marketing specialist.
DISTRIBUTION
Simmerly
Zampino
Sivak
Kowal
McGoldrick Cristell
Happel
Hoopes
BEARING DISTRIBUTORS INC.: Gary Simmerly to industrial automation manager.
ENGINEERING MANNIK & SMITH GROUP INC.: John A. Zampino to director of environmental services and brownfield redevelopment, Northeast Ohio.
FINANCE WESTFIELD BANK: Michael Gladysz to assistant vice president, commercial banking officer.
FINANCIAL SERVICE CEDAR BROOK FINANCIAL PARTNERS LLC: Christine Sivak to partner. LEAGUE PARK ADVISORS: Connie Kowal to M&A project manager; Shannon McGoldrick to executive assistant.
Cantor
LTD.: Michael Cantor to managing director. OSTENDORF-MORRIS CO.: Boris Rogulja to associate, corporate service group.
PLANNED FINANCIAL SERVICES: Cynthia Yang to wealth adviser assistant.
TRANSACTION REALTY: Frank Novak to sales associate.
HEALTH CARE VILLAGE AT MARYMOUNT: Elizabeth Cristell to director of nursing.
DAVEY TREE EXPERT CO.: Pat Covey to chief operating officer; Jim Stief to executive vice president, operations.
HOSPITALITY
EXPERIENT: John Hyland to strategic sales executive, association markets.
INTERCONTINENTAL HOTELS CLEVELAND: Klaus Happel to executive chef.
EXECUTIVE CATERERS AT LANDERHAVEN: Melissa Marik to director of corporate sales.
SERVICE
ALEX N. SILL CO.: Preston Hoopes to vice president.
TODAY’S BUSINESS PRODUCTS: Jeff Fedor, CJ Milo, Kyle Brown and Lennie Brown to sales associates.
MANUFACTURING
TECHNOLOGY
BRENNAN INDUSTRIES: Christopher Mays Sr. to inside sales representative.
RAPID MARKETPLACE: Tony Pietrocola to executive vice president, global sales and marketing.
INSURANCE
CLIFFS NATURAL RESOURCES INC.: Timothy Flanagan to chief accounting officer, corporate controller; James Graham to vice president and general counsel, global operations; Dave Cartella to vice president, global environmental affairs and counsel; Carolyn Cheverine to general counsel, corporate affairs and secretary.
TELECOMMUNICATION TIME WARNER CABLE: Wade Pavlas to operations support team director, Northeast Ohio and Western Pennsylvania.
BOARDS
DIEBOLD INC.: Annette Campbell to vice president, financial shared services.
MENORAH PARK FOUNDATION: Richard S. Rivitz (Taft Stettinius & Hollister LLP) to president.
PRESTOLITE PERFORMANCE: Rob Koller to ACCEL and Mallory brand manager.
NEIGHBORHOOD HOUSING SERVICES OF GREATER CLEVELAND: Jeff Marshall (Hercules Tire & Rubber Co.) to president; Tanisha Rush to first vice president; Amy Kulisheck to second vice president; Kirby Freeman to treasurer; Lisa Nelson to secretary.
NONPROFIT CATHOLIC CHARITIES COMMUNITY SERVICES, SUMMIT COUNTY: Deacon John Green to agency director; Tracy Francescone to development director; Maureen McGinty to Camp Christopher director. NORD CENTER: Betsey Kamm to director of institutional advancement. STAN HYWET HALL & GARDENS: Toivo Motter to director of education. WOMEN’S RECOVERY CENTER: Hope Wheeler to development associate.
REAL ESTATE ALLEGRO REALTY ADVISORS
AWARDS BIG BROTHERS BIG SISTERS: Dennis Vaughn Jr. (SS&G) received the Ohio Big Brother of the Year Award. CLEVELAND ENGINEERING SOCIETY: Lynn S. Miggins (KS Associates) received the Hall of Fame Award.
Send information for Going Places to dhillyer@crain.com.
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SPECIAL REPORT REMAKING WEST 25TH STREET AND THE MARKET DISTRICT In outlying parts of Ohio City, work to do Leaders aim to extend progress to Lorain Ave. By SCOTT SUTTELL ssuttell@crain.com
A
Ohio City’s residents always have been fiercely independent, and the neighborhood in 1836 — then its own municipality — even waged a war of sorts with Cleveland by bombing a portion of Cleveland’s Columbus Road Bridge, which Ohio City residents felt hurt the commercial interests of their own neighborhood. Annexed by Cleveland in 1894, Ohio City became a hub for European immigrants and became one of the most ethnically diverse areas of the city. With its construction in 1912, the West Side Market, which now brings in about a million
t least a couple times a month, Julia Martin makes the short trip from her apartment on the West Side of Cleveland to Ohio City, usually to visit the West Side Market. The area around West 25th Street has almost everything Ms. Martin says she values about city life — interesting restaurants, eclectic local retail and a “distinct feeling” she can’t get elsewhere. “I definitely could see myself living here when I’m ready to buy a house,” says Ms. Martin, 25, who hopes to do just that in about a year. Ohio City has picked up that kind of momentum as its Market District concept, which is focused on artisanstyle businesses around the West Side Market, has struck a chord and attracted growing numbers of residents and visitors. But outside the Market District, particularly along stretches of Lorain Avenue, there’s a less-enticing Ohio City marked by older and struggling retailers, particularly used car lots. The rejuvenation efforts in Ohio City to date have been extensive, neighborhood advocates say, but they are by no means complete. “When you see some of those used car lots, it just cries out for something better,” says Cleveland City Councilman Joe Cimperman, who represents Ward 3, which includes Ohio City. That’s obvious to the naked eye. Mr. Cimperman, working with fellow Councilman Matt Zone and the city of Cleveland’s Planning Department, last year helped do something about it by passing a Pedestrian Retail Overlay (PRO) zone on Lorain Avenue, between West 24th and West 65th streets. As its name implies, the PRO is intended to protect and encourage pedestrian-oriented, mixed-use development in the district it covers. The designation requires,
See ALIVE Page 14
See OUTLYING Page 18
JASON MILLER
The West 25th Street/Market District area, as seen from the top of the United Bank Building
The awakening of a sleeping giant New resident pool in ’90s, last decade help cool prior prickly politics, propel growth By TIMOTHY MAGAW tmagaw@crain.com
W
hen Pat and Dan Conway opened Great Lakes Brewing Co. in 1988 in Ohio City, their cousin — a Cleveland homicide detective — told them they were crazy. Crusty bars with questionable clientele, constant threats of break-ins and regular drug peddling in a nearby park were daily realities in the district. Still, the area near the historic West Side Market off West 25th Street, which at one time was home to as many as 30 breweries, had character. “We felt there was so much possibility still in front of us, especially these old brick buildings that conjured up the romance of brewing days past. … They fit perfectly with the concept we had
INSIDE: The West Side Market’s centennial celebration offers a chance to lure new customers, bring back old ones. Page 17 in mind,” Pat Conway said. And as Great Lakes Brewing Co. grew into a regional powerhouse, the small district it called home steadily evolved from one of Cleveland’s most downtrodden neighborhoods to what’s now marketed as the city’s “artisan neighborhood.” What’s brought Ohio City out of the ditch is by no means secret — the venerable West Side Market, the presence of long-standing institutions such as St. Ignatius High School and Lutheran Hospital, the proximity to downtown Cleveland, and a group of community and political organizers dedicated to revitalizing the blighted neighborhood.
“The giant’s always been there, but the giant woke up,” said Cleveland City Councilman Joe Cimperman, whose ward includes Ohio City.
A storied past
ON THE WEB For expanded online coverage, including photo slideshows and video interviews, visit www.crainscleveland.com/w25th.
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SPECIAL REPORT: REMAKING WEST 25th
CRAIN’S CLEVELAND BUSINESS
APRIL 2 - 8, 2012
NEIGHBORHOOD LONG IN THE MAKING GETS NEW LIFE MORE THAN 20 BUSINESSES HAVE OPENED IN THE MARKET DISTRICT IN THE PAST 18 MONTHS. 1
Soho Kitchen and Bar 2011 Nolan Konkoski and Molly Smith always have loved Ohio City, so when they were looking to open their first restaurant the pair kept returning to the neighborhood. As luck would have it, a space once occupied by a Cuban bakery was available. “This neighborhood has such a buzz about it,” he said. The 65-seat restaurant serves “modern southern food,” and it currently employs about 15 people. Mr. Konkoski said that with no advertising he opened the doors to his restaurant late last year, and it’s been packed ever since. “We felt it would be very difficult to fail in this neighborhood,” he said.
2
Joy Machines Bike Shop 2011 Alex Nosse grew up in Ohio City, so it wasn’t a stretch when he located the bike shop he owns with Renato Pereira-Castillo on West 25th. Mr. Nosse describes Joy Machines Bike Shop as a shop for everyday riders, with many of the store’s customers coming from within a couplemile radius. As a native to the West 25th area, the swift pace of development is not lost on Mr. Nosse, who points to it as proof of a “healthy urban neighborhood.” “All of the business owners feel a great sense of camaraderie,” he said. Of course, he noted, he’d love to see more businesses that sell necessities — like a shoe store.
3
Campbell’s Sweets Factory 2011 Jeff Campbell loves popcorn. And well he should; his business is on track to do $800,000 in sales this year, and he projects that number to increase to $2.5 million by the end of 2014. His West 25th Street store is an outgrowth from his space at the West Side Market, where Mr. Campbell first opened about eight years ago. While he’s since expanded his venture to include selling cupcakes and juice, popcorn represents 60% of Campbell’s business, with its famed Dichotomy (a delectable mix of cheddar and caramel) selling 3-to-1 over any other flavor. Indeed, Mr. Campbell estimates he orders roughly 19,500 pounds of corn a year to keep his business popping. (Mr. Campbell’s favorite popcorn flavor, by the way: white cheddar jalapeno.)
4
United Bank Building (Penzey’s Spices, 2010; Crop Bistro & Bar, 2011) The bank vault in the basement of the United Bank Building might represent a time from days long past, but its use today as a private dining space for Crop Bistro & Bar represents a rebirth for the landmark structure. In addition to Crop, the building currently houses Penzey’s Spices and the Alcohol, Drug Addiction and Mental Health Services Board of Cuyahoga County, with Bonbon Pastry & Café next door. Ari Maron’s MRN Ltd., the developer behind the remake of East Fourth Street, not only has committed to the redo of this structure, but it has scooped up a number of nearby buildings. “This is a particularly exciting neighborhood within the city,” Mr. Maron said. Work is still taking place
on the top floors of the United Bank Building, which Mr. Maron anticipates eventually will be filled with office tenants.
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Market Square Park 2012 (projected)
Greg Peckham, managing director of LAND Studio, can walk across the street from his new offices on West 25th and see the results of his organization’s work. The under-renovation Market Square Park, a project in which he was involved, is expected to be done in May. The park’s design is tied into the idea of harvest and the neighborhood being the center for the city’s food culture. “A lot of it was understanding how the park fit into the development agenda of Ohio City,” Mr. Peckham said. “That park alone becomes a sort of a gateway into the rest of the business district.” (Park rendering courtesy of artist Mark Moskovitz.)
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Market Garden Brewery 2011
It is entirely possible that Sam McNulty will wear out a path across West 25th Street. In addition to living there, last year he opened his fourth business on the street, next to the West Side Market and across from his other ventures: McNulty’s Bier Markt (2005); Bar Cento (2007); and Speakeasy (2009). Market Garden, which is slated to have a rooftop patio this summer, offers 12 of its own beers at any one time under the direction of brewmaster Andy Tveekrem. For Mr. McNulty, not only is Market Garden his first step into the world of brewing (and soon, distilling), it also may end up being a segue into his next move — he has dreams for a 70,000-square-foot production facility located within a 15-minute bike ride of West 25th.
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Salty Not Sweet 2011
Candra Squire is a letter-press printer who was looking for a permanent place beyond the typical craft show to show her wares, which are greeting cards she jokingly characterizes as “horrible” and “ridiculous.” Her store, a venture she runs with Melissa Major, is just that place. Originally located in the Waterloo Arts District before moving last year to its bigger, 1,200-squarefoot space on West 25th, the store features everything handmade and offers workshops for aspiring artisans. For her part, Ms. Squire said being among so many entrepreneurs in Ohio City has a strength-in-numbers kind of appeal: “It’s so hard for one little tiny shop to get people to come out to buy local. … It doesn’t feel like you’re out here alone.”
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Mitchell’s Ice Cream 2012 (projected)
An ice cream destination. That’s what brothers Pete and Mike Mitchell hope their location becomes when it opens on West 25th later this year. The space long ago occupied by a vaudeville theater — and more recently the night club Moda — will be home to Mitchell’s eighth shop and its production. “There’s going to be as thin a layer of glass as possible … you’re going to
see everything just a few feet away,” said Mike Mitchell of the two shifts a day that will be crafting frozen goodness out of local, homemade ingredients. “It’s like an ice cream show.” The Mitchells, who are preserving their building under historic standards, also hope to tap into some of the neighborhood’s resources — namely, make more ice cream with Great Lakes beer as an ingredient.
9
Cleveland Hostel 2012 (projected)
When Mark Raymond was in preschool, his teacher asked him for what he was thankful. His answer: the Terminal Tower. Today, the Geneva native with an urban planning degree can get a bird’s-eye look at that landmark by standing on the roof of his future Cleveland Hostel. Work on the circa-1900 building started in January, and it will have 15 rooms, accommodating 60 guests, as well as a community kitchen. Room rates will range from $25 to $70 a night, with private and nonprivate rooms available. As for Mr. Raymond, he will live on the hostel’s third floor — close to that spectacular view. It is anticipated the hostel will be ready in time for the festivities surrounding the West Side Market’s centennial.
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LAND Studio 2012
LAND Studio’s space on West 25th Street represents a new start for this organization, which is the result of the partnership between ParkWorks and Cleveland Public Art. The nonprofit, whose name stands for landscape, art, neighborhoods and development, is focused on “how good design is part of making a competitive city,” said Greg Peckham, managing director. The organization moved last month into 6,000 square feet above PNC Bank, marking an important step in the organizations coming together as one, said Mr. Peckham, whose previous office also was located on West 25th. “There is a real strong community and family of nonprofits centered around the Market District,” he said. “We have a window out to a very healthy, active neighborhood.”
Video coverage: What’s different about doing business on West 25th? www.crainscleveland.com/section/W25thMap
OTHER NEWCOMERS 11. Alaturka 12. Bonbon Pastry & Café 13. Market at the Fig 14. Johnnyville Slugger 15. Maggie’s Vegan Bakery 16. Orale Contemporary Kitchen 17. Proactive Controls Group (PCG) 18. Room Service 19. Vision Yoga 20. Deering Vintage 21. Bogtrotter’s Doorstep t L.E.A.P. (office tenant) (Lorain Avenue) t Cigar Cigars (Lorain Avenue) t Urban Orchid (Bridge Avenue) Source: Ohio City Inc. (The Market District is West 25th to 28th; Chatham to Jay.)
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CRAIN’S CLEVELAND BUSINESS
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2 Ohio City Farm
Bridge Fulton District
LONGTIME COMMUNITY ANCHORS 1
St. Ignatius High School 1886
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Lutheran Hospital 1896 West Side Market 1912
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Ask any of the business owners in Ohio City, and they’ll tell you the West Side Market is the lifeblood of the neighborhood. The venerable market, which turns 100 years old this year, brings more than a million people a year into the growing district. Home to more than 100 vendors, ranging from butchers to bakers, the market has gained national recognition as one of the premiere public markets in the country. Often touted by some of the region’s most popular chefs, the market draws its patrons from all over Northeast Ohio and even across the country. Christine Zuniga Eadie,
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the market’s director, said while the market’s centennial celebration is a huge opportunity for the market’s vendors, it also has the potential to spotlight the entire region.
Video coverage: Hear longtime vendors talk about how West 25th has changed. www.crainscleveland.com/section/W25thMap 4
Great Lakes Brewing Co. 1988 When Great Lakes Brewing Co. opened shop in the late 1980s, it was the only craft brewery, not only in Cleveland, but the entire state of Ohio. And since then, the company’s assorted libations have helped jumpstart a craft brewing craze (particularly around the holiday season with its sought-after Christmas Ale) that’s extended well beyond the brewery’s home in Ohio City. In 2010, the company invested $7 million in capital improvements to expand its brewing capacity in the district, and now distributes is roster of beers in 13 states and Washington, D.C. Last year, the company churned out 120,000 barrels of beer. And according to Pat Conway, the company’s co-owner, the company is running out of room to expand because, well, there are “just too many mouths to feed.”
Video coverage: Pat Conway discusses setting up shop in Ohio City almost 20 years ago. www.crainscleveland.com/section/W25thMap Business profiles by Amy Ann Stoessel and Timothy Magaw Layout and map design by Lauren Rafferty
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Alive: Anchor institutions contribute to district’s vitality continued from PAGE 11
people a year, became a focal point by bringing various ethnic groups together under one roof. Despite a residential boom in the 1960s spurred by historic preservationists, political discord hindered the development of the area for decades, resulting in the creation of two community development corporations with differing missions. However, in the 1990s and 2000s, a group of people started moving into the area who appreciated the urbanism and economic diversity the area offered.
ON THE WEB For smart phone users, scan this QR, or “quick response� code, with any QR code reader to view more photos from the present-day West 25th Street and Market District area. are intertwined, said Christine Zuniga Eadie, the manager of the West Side Market. “We’re rebuilding a partnership,� she said. “When something works
“We have a dynamic group of leaders at neighborhood institutions, a dynamic group of investors ... and strong political leadership.� – Eric Wobser, executive director, Ohio City Inc. “That was the group that really started to calm the politics of the neighborhood,� said Eric Wobser, the executive director of Ohio City Inc., which was the product of the two community development corporations that ultimately merged.
It’s all about the food While the West Side Market’s centennial celebration this fall wasn’t the main driver for the development of the district, it’s provided Ohio City’s business and civic leaders a timeline to work along and helped accelerate the rate at which the area is being transformed. The idea of one of Cleveland’s premier institutions turning 100 years old offered the opportunity to showcase the neighborhood in addition to the market, Mr. Wobser noted. After all, the success of the market and its surrounding neighborhood
for the market, it has an impact on the market district and vice versa.� The West Side Market has been a pillar for the growing food movement in Northeast Ohio with some of Cleveland’s most famous chefs, such as Jonathon Sawyer and Michael Symon, regularly touting the value of the market. In 2010, the local food movement received another jolt when the sixacre Ohio City Farm — the largest contiguous urban farm in the nation — opened at West 24th Street and Bridge Avenue. The farm’s bounty has gone to local businesses, including Great Lakes Brewing, one of the farm’s co-developers. Great Lakes Brewing’s success, coupled with the allure of the market, has attracted a number of other local, and now-thriving, operations such as Sam McNulty’s Bier Mrkt and the Market Garden Brewery. Also, local ice cream
JASON MILLER
A runner takes advantage of one of a spate of warm March days to exercise in the Market District area. For more present-day photos from the neighborhood, visit www.crainscleveland.com/W25thGallery. purveyor Mitchell’s plans to move into Ohio City. “To be in the shadows of the tower of the West Side Market, making gourmet beer, ice cream, breads or artisan cuisine ‌ it’s perfect,â€? Great Lakes’ Mr. Conway said.
Strong partners While the West Side Market could be considered the heart of Ohio City, the neighborhood’s two other anchor institutions — St. Ignatius High School and the Cleve-
land Clinic’s Lutheran Hospital — also have invested heavily in the redevelopment of the area. “We’ve served the community for well over 100 years, and we are extremely excited about the continued rejuvenation of West 25th Street,� Lutheran president Dr. Brian Donley said. Collectively, Mr. Wobser said both institutions have contributed about $200,000 to the effort to clean up a blighted portion of the neighborhood as part of the creation of a special improvement district. While both institutions fall outside the borders of the SID, Mr. Wobser said the notion that both would commit resources to the effort speaks volumes about their commitment to the neighborhood. As part of the SID, neighborhood property owners in Ohio City last year agreed to assess themselves a fee to pay for better security and maintenance than Cleveland could provide. It’s that sort of unified vision, community leaders say,
that’s driving the success in Ohio City, which is bringing young people in droves to live in the area. “A number of good things are coming together at the right time,â€? Mr. Wobser said. “We have a dynamic group of leaders at neighborhood institutions, a dynamic group of investors, both real estate developers and entrepreneurs, and strong political leadership. We have the right people at the right place at the right time.â€? Mr. Cimperman said he’s heard from companies interested in setting up shop in Ohio City, and the neighborhood’s best days are right around the corner if the momentum can hold. Moreover, Mr. Cimperman said what’s happening in the neighborhood could be viewed as a model to help jumpstart the redevelopment of other neighborhoods in and around Cleveland. “Nobody involved with this is tired,â€? Mr. Cimperman said. “It’s 7 a.m. in Ohio City, and there’s still a full day ahead.â€? â–
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Monetary muscle still needed for market, district fixups By STAN BULLARD sbullard@crain.com
D
efining the difference in today’s West 25th Street near the West Side Market from hard-scrabble conditions for much of the time since the late 1960s takes one four-letter word. Cash. Millions of dollars — which will have to be raised from multiple sources in coming years — are needed in order to ensure a legacy fund for the West Side Market and to continue the transformation of the surrounding Market District. In the meantime, more than $50 million already has gone into West 25th near the market, remaking it into what it is today: a vital food resource with genuine character as well as an active entertainment, residential and commercial district that is a must-see for the social set, tourists and foodies. Two immediate financial tasks face the neighborhood today linked to the centennial of the West Side Market this year and its focus as the site of the International Public Markets Conference. First, the Centennial Commission and Cleveland Mayor Frank Jackson both want to use the celebration as a means to create a legacy fund to maintain the market. Meanwhile, Ohio City still needs to raise the last $200,000 to meet the $900,000 budget for centennial events. The tasks do not daunt Eric Wobser, executive director of Ohio City Inc., which the city of Cleveland has authorized to oversee the market’s centennial celebration. Planning is a big part of his solution, and a surprise source of funds — corporate sponsorships — is an evolving part of the solution of the funding challenge. Planning comes into play because an architectural study of the West Side Market building’s condition will not be finished until later this year. That study is crucial to determining how much repair work the brick landmark and adjoining wood market stands need to make it another century. As a result, Mr. Wobser said, the market’s legacy campaign will kick off at a Nov. 3 gala chaired by Cleveland celebrity chefs Michael Symon and Jonathon Sawyer. The Jackson administration already has earmarked $2.3 million for West Side Market capital needs. Even without the study, Councilman Joe Cimperman, whose Ward 3 includes the area, knows more will be needed without the study. “The last time the city of Cleveland really spent money on the market was in the (Mayor Ralph) Locher administration,” Mr. Cimperman said of a regime that ended in 1967.
the West Side Market,” Mr. Wobser said, “businesses are finding their way to the market for exposure.” For example, Charter One, the presenting sponsor for the West Side Market Centennial, has invested $500,000 in the Market District and the West Side Market Centennial. The bank counts $100,000 of its contribution to the neighborhood as sponsorship, according to Carrie Carpenter, senior vice president and director of public affairs at Charter One Ohio. Sponsorship funds directly benefit the bank through promoting its name, she said, while its foundation, to satisfy tax laws, can generate the bank nothing of value. Charter One decided the Market
District provides the bank with an opportunity to put its name before people from the neighborhood and region, Ms. Carpenter said, as well as banking on food’s new celebrity. “Our brand is that good banking is good citizenship,” Ms. Carpenter said, so signs and advertising at Ohio City events benefit the bank’s image. The decision is based on estimates of attendance and value of signage at events as well as entertaining bank clients at events. Some funds went directly to six different nonprofits, from Neighborhood Progress Inc. efforts to revitalize West 25th through several city neighborhoods to LAND Studio, the organization formed from the merger of Cleveland Public Art and
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Money doesn’t grow on trees Mr. Wobser argues the remainder of the legacy funding will come from philanthropic and corporate sources, and others see room for individual contributors. For example, while final centennial gala ticket prices have not been set, there most likely will be tiered ticket price options ranging from $150 to $500 with different event entry times. The other new-breed funding source is corporate sponsorships from others besides neighborhood bastions Lutheran Hospital and St. Ignatius High School. “Just like politicians for years have known it is good to be seen at
ParkWorks, to design the stand for the urban farm near the market. Other funds went into a $15,000 grant that helped 11 market vendors improve signs, lighting or shelving. And $40,000 went for a small business idea competition whose five winners now occupy neighborhood storefronts. Charter One’s funding for the small business idea competition worked so well — it even attracted applicants who did not get grants to the street — the bank and Ohio City Inc. are doing it again this year with grants of $5,000 to $20,000 for new or expanding businesses in the Market District. Requests for proposals for grants are due at 5 p.m. May 21 and avail-
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able at Ohio City Inc.’s website, www.ohiocity.org. Mr. Wobser hopes the competition fills the last five vacant storefronts.
Iconic campaign Contributing to the West Side Market centennial and the legacy program brings to mind the massive corporate and public campaign to rejuvenate the Statue of Liberty for its 1986 centennial. “The West Side Market is an international icon,” Mr. Cimperman said. “If I’m a CEO and have a chance to have my company associated with something with more visitors than the Rock and Roll Hall of Fame and Museum or Great Lakes Science Center, why wouldn’t I?” ■
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Housing interest in step with commercial improvement New development luring prospective residents, though maintaining affordability a priority ON THE WEB
By MICHELLE PARK mpark@crain.com
“Y
ou can’t miss ’em,” Greg Peckham assured. “One is covered in scaffolding, and they both look like hell.” No understatement there. Located at Randall Road and John Avenue in Cleveland’s Ohio City neighborhood, the two houses Mr. Peckham bought this year are eyesores — for now. The one slated to be a new home for Mr. Peckman’s family stands largely untouched by construction workers, its greenish paint peeling off, windows boarded up, door padlocked. The other two-unit building is covered in scaffolding, upon which workers are perched this March Tuesday, nailing shingles to the porch roof. Mr. Peckham’s renovations are two of many investments being made or already made in this historic district, where new schools have opened and more family-friendly activities, including a babysitting co-op, now exist. “What’s happening in this neighborhood, I think, is evolutionary,” Mr. Peckham said. “There’s a growing number of people who could be anywhere, and they’re choosing to be here.” While the population in Cleveland dropped 17% from 2000 to 2010, the area that comprises Ohio City rose in population by 1.2% during the same decade, said executives with Ohio City Inc. who analyzed U.S. Census data. Ohio City Inc. is the area’s community development corporation. Once in the “shadows” of other neighborhoods such as Tremont, Ohio City is in higher demand today, said Chris Schlenkerman, a real estate agent who manages the Ohio City office of the Howard Hanna brokerage. He observes the trend not only in closed sales, but in busy open houses, too. The surge in interest really began last year and has continued into this year, Mr. Schlenkerman said.
For the people The most recent census revealed that the neighborhood’s population of 25- to 34-year-olds increased most, but empty nesters also are settling in, said Eric Wobser, executive director of Ohio City Inc. The group talks to people “all the time who can’t find an apartment,” Mr.
For smart phone users, scan this QR, or “quick response” code, with any QR code reader to view before-and-after photographs of home rehabilitations in Cleveland’s Ohio City neighborhood. Wobser said. Mr. Schlenkerman said the big attraction to Ohio City “right now has quite a bit to do with the commercial growth that’s occurring in the district.” Already, Ohio City has townhomes, both new and renovated, and a former department store converted into condominiums in The Fries and Schuele Building. There’s more to come, too: One crew wants to redevelop a group of former warehouse buildings into 72 apartment units, and another has a 10- to 20-unit apartment development planned for the old Jay Hotel, Mr. Wobser said. All the while, rental rates are rising. One 20-unit building that used to pull 95 cents per square foot is pulling roughly $1.30 per square foot today, Mr. Wobser said. He also knows a homeowner who is renting at a rate twice his mortgage. Ohio City needs to maintain affordable housing, though, Mr. Wobser and others stressed. “We want to make sure that folks other than bankers and lawyers can afford to live here, and that won’t be easy,” he said, citing how property values are rising. The upward trajectory is easy to see. During a drive through the streets of Ohio City in February, Mr. Wobser points seemingly to every other house, describing renovations that have been done or will be done. “This was an empty house when I took this job,” Mr. Wobser says, pointing to a well-maintained house. “It was just falling apart, boards on the windows.” There’s also the large maroon house whose owners won an award from Ohio City Inc. for residential renovation, and the former YMCA, where a transformation into condominiums won it the same recognition two years ago. “Until recently, things changed slowly,” Mr. Wobser said. “Two businesses would open, one would close. But I think, always, things were moving to a positive momentum.”
That neighborhood feel As Ohio City’s commercial district booms, more visitors flock to the
area and get a taste of what living there could be like, Mr. Wobser said. Dave’s Supermarket and the West Side Market are neighborhood anchors, but other service businesses such as a florist, a bike shop and a fitness studio have hung their shingles, too. As they do, the neighborhood’s convenience grows. Lynn Phares — another person investing in the neighborhood — moved with her husband to Ohio City in 2007 from Washington, D.C., and formed the block club for their section of the neighborhood in early 2008. Such block clubs and the family-friendly events they coordinate — ice cream socials, pumpkin-decorating events and the like — are a common reason offered for the area’s influx of residents. Also, life is being breathed back into local parks, including renovations to Novak Park in 2010 and Fairview Park in 2004. A master plan for Greenwood Park is under way. And there are new schools, including Near West Intergenerational, a public charter school that opened in 2011, and Urban Community, a private school that opened in 2005. “Now there’s an educational opportunity that parents feel they can consider an option to stay in the neighborhood and not have to leave and go to the suburbs,” said Ms. Phares, who’s on the board for Near West and is in the process of renovating her house and another property she plans to rent. The Cleveland Metropolitan School District also plans to break ground in Ohio City this spring on two elementary schools, Paul Dunbar School and Orchard School, both of which are slated to open in August 2013. Many hope the momentum spreads to Lorain Avenue, a corridor that still has substantial blight, Mr. Wobser said. “If we can revitalize Lorain, we can unite the neighborhood,” Mr. Wobser said.
Battling the naysayers Though a lot of good is occurring, house seekers often ask how safe Ohio City is, real estate agents say. Many residents interviewed for
Did you know your ears never stop growing?
this piece have been victims of crime, but they are quick to note that they’ve been victimized infrequently. “If we were getting broken into every year, we wouldn’t be here,” said Mr. Peckham, whose house has been broken into once in the 14 years he’s lived in the neighborhood. This spring, Ohio City will have its own special improvement district, where property owners in a defined area will pay an assessment to pay for the kind of street cleanup, graffiti removal and visible security presence that has improved the image of downtown. Even without the extras of a special improvement district, though, Brandon Sitler sees a difference in the neighborhood. An Ohio City resident for eight years, Mr. Sitler opened his flower shop, The Urban Orchid, on Bridge Avenue last August. “When I first moved here, it was kind of scary to walk home,” Mr. Sitler said. “Now it’s like there’s always people walking around, laughing, hanging out. It seems more like a neighborhood than it did before.” It’s not just the perception of crime, though, that may deter people. Another issue for the neighborhood is the behavior of some people who come there for social services provided by places such as local churches, said Kathleen Knittel, a longtime resident. Though most of those people cause no problem, some act in ways that “at times has negative impacts on our quality of life,” she said. Hurdles to home renovations also can be a deterrent, Mr. Peckham said. It took him 18 months to unravel his family’s properties from a tangled history of previous ownership and to bring them up to code through costly work. “The number of curveballs that get thrown your way is unimaginable,” Mr. Peckham said. He suggests policy and finance improvements to facilitate more projects like his. Ms. Phares said she hopes Ohio City will continue to promote itself. Still, she said, critics will remain. “I don’t know what you do about the naysayers — the people who live in the suburbs and never have something good to say about Cleveland,” Ms. Phares said. “Some people, you’re never going to change their minds, and you’re never going to get them to give it a shot.” ■
A CLOSER LOOK To see these homes postrenovation, go to www.crains cleveland.com/W25thGallery.
■ David Hovis calls this renovation a “total gut job.” He and his wife, Jen, bought this fire-damaged W. 32nd Street house and the adjacent property for $45,000 in 2010 and poured roughly $400,000 into it. The most expensive renovations were energy efficiency upgrades, including new insulation. The work slashed the home’s energy costs to $2,000 from $8,000 a year, Mr. Hovis said.
■ At one time, this Lorain Avenue property was the Northeast Ohio headquarters for the Communist Party, according to property owner David Fleming, whose family purchased it in April 2007. During renovations that spanned nearly two years, they finished three upstairs residential units, including a different, very spacious unit in a former ballroom. The project’s cost exceeded $300,000, Mr. Fleming estimated.
■ The work done to this historic Italianate mansion cost more than $700,000, involved more than 30 contractors and took 18 months to complete, according to owner Norma Makar. Norma and Lou Makar purchased the Clinton Avenue home, built in the 1860s, when it was just a “big pile of bricks” without heating or electricity and transformed it with new roofing, exterior paint and $50,000 in new windows alone.
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Market, vendors hope for boost from centennial events
T
he West Side Market’s centennial celebration this year is as much a time to celebrate its rich (and tasty) history as it is to figure out how to make the market sustainable for at least another 100 years. Some of the goals this year are to increase the number of new shoppers coming to the market and bring back old customers who had left, according to Christine Zuniga Eadie, the West Side Market’s manager. The idea, Ms. Eadie said, is to ensure the West Side Market remains a living, breathing and usable market and doesn’t transform into a museum like other public markets around the country. Part of that, she said, is showing the community what the market’s vendors have to offer. “The vendors are by far the greatest asset the market has,” Ms. Eadie said. The celebration officially kicks off with fireworks and an ice cream social on June 2; a street festival and parade on Oct. 7; and culminates with a gala — co-chaired by renowned local chefs Michael Symon and Jonathon Sawyer — on Nov. 3. The gala will serve as the launching point for a fundraising campaign to help offset the costs of the market’s
ON THE WEB For smart phone users, scan this QR, or “quick response” code, with any QR code reader to watch videos of West Market vendors talking about their experience there. The videos can be found at www. CrainsCleveland.com/W25thGallery. mounting capital needs. “It’s a huge opportunity for not only the vendors here but the Greater Cleveland region,” Ms. Eadie said. “So many local chefs grew up shopping here.” Terry Frick of Frickaccios Pizza Market at the West Side Market said she’s already seen an influx of new customers at the market, as younger people have taken an interest in locally produced food. With the centennial events approaching, she anticipates the momentum only will grow stronger. “This is just the way shopping should be,” Ms. Frick said. “That’s what I believe.” For a full list of centennial celebration events, visit www.westside market.org. — Timothy Magaw
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OHIO CITY THROUGH THE YEARS
THE PRACTICAL
PHOTO COURTESY OF OHIO CITY INC.
ABOVE: The West Side Market under construction in 1911. ■ Ohio City originally was part of Brooklyn Township, founded in 1818. On March 3, 1836, two days before Cleveland’s incorporation, it became an independent municipality. On June 5, 1854, it was annexed to Cleveland. ■ Ohio City became known as the Near West Side when it was annexed to Cleveland. In the late 19th century, the area attracted those seeking jobs at the docks, mills, foundries, distilleries and bottling works. ■ The West Side Market is built on a site the first mayor of Ohio City, Josiah Barber, and another pioneer, Richard Lord, deeded to the city on condition it be kept a marketplace. Market Square was the site of the Pearl Street market, a one-story wooden market built in 1868 at Lorain Avenue and Pearl Road (West 25th Street). ■ Present-day Ohio City is home to more than 90 nonprofits. ■ In 1896, Lutheran Hospital opened at Fulton and West 29th Street in a residence that was
ON THE WEB For smart phone users, scan this QR, or “quick response” code, with any QR code reader to view more historic photos from the West Side Market and the Market District. The photos can be found at www. CrainsCleveland.com/W25thGallery. rented for $42 per month, and 25 patients were admitted the first year. Lutheran Hospital in 1898 moved to Franklin Avenue. In addition to several expansions and construction projects through the years, a new lobby and hospital entrance facing West 25th Street was built in 1997, the same year it became part of the Cleveland Clinic. ■ James A. Garfield, 20th president of the United States, in 1857 was pastor of Franklin Circle Christian Church. SOURCE: WWW.OHIOCITY.ORG; WWW.LUTHERANHOSPITAL.ORG
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for instance, that new buildings be set back no more than five feet from a street right-of-way. It also requires that parking lots, where feasible, be located in the rear of buildings. Most importantly, Mr. Cimperman said, it “specifically prohibits� new uses that detract from the pedestrian-oriented character of the district — automobile sales lots, gas stations, car washes and restaurant drive-throughs among them. “It’s about creating an environment that allows for dynamic spaces� in Ohio City, Mr. Cimperman said.
The West Side’s main street A major element of helping to create those dynamic spaces and generally raising the quality of life in Ohio City is a renewed focus on the health of Lorain Avenue and the neighborhood south of Lorain — a more working-class area, with longer-term residents, than the more gentrified area north of Lorain. Last November, Ohio City Inc. and Kent State University’s Cleveland Urban Design Collaborative kicked off what they called a community design charrette — a term for a brief, intense planning exercise — dubbed Launch Lorain to begin rethinking development along Lorain from West 20th Street to West 52nd, south to Interstate 90.
Two community meetings held to collect input drew more than 200 stakeholders, including businesses, nonprofits and residents. Almost everything is on the table for Lorain Avenue, which is, essentially, the main street of the West Side; the exercise includes a look at transportation, safety issues, retail development, housing, and parks and recreational space. The focus on Lorain is badly needed, said Eric Wobser, executive director of Ohio City Inc., the community development organization that serves as a fulcrum for initiatives aimed at improving the neighborhood. “As a corridor, Lorain has not functioned well for a long time,� Mr. Wobser said. “A more vibrant Lorain Avenue would bring people together.� Broadly speaking, Launch Lorain is designed to produce a long-term plan that would create better connections to adjacent residential areas along Lorain; bolster private investments already occurring there; and identify new opportunities for development and urban amenities. There’s no shortage of ideas for reaching those goals, Mr. Wobser said. “I think what you see from the community is a sense that yes, things are getting better, but there are a lot of things that still need to be done to reach our potential,� he said.
The initial Launch Lorain report touches on its share of small issues — fixing sidewalks and filling potholes among them — but it doesn’t shy away from thinking big on infrastructure improvement. For instance, one possibility it raises is a reconfiguration of the intersection of Lorain Avenue and Fulton Road so that Fulton meets Lorain at a right angle rather than diagonally. That would make the intersection safer, improve the pedestrian environment and create opportunities for more green space, as well as making it more conducive for private development.
Making connections Development in Ohio City, which boasts more than 12,000 residents, is helping the neighborhood become something of a rarity in Cleveland — an area with nearly 24-hour activity on some days, starting with the West Side Market’s opening at 7 a.m. and going to the closing of bars early the next morning. That kind of activity inevitably brings parking challenges. Ohio City Inc. is in the midst of a study of parking issues near the West Side Market. Depending on its findings, the group could begin a push to construct a parking garage that would make it easier for visitors to come to the neighborhood.
APRIL 2 - 8, 2012
There’s “not much news yet on the parking structure front,� Mr. Wobser said, other than that the need exists and that discussions have begun with city officials. But Messrs. Cimperman and Wobser noted that public transit is a key part of the future of Ohio City, with the Greater Cleveland Regional Transit Authority playing a key role. The Launch Lorain report raises the possibility of an “enhanced transit waiting area for Bus Rapid Transit� — in the style of the Health Line on the East Side — on Lorain adjacent to the Breen Center parking lot on the iconic St. Ignatius High School campus. Another possibility is a Red Line stop at Fulton Road. “The easier it is to connect from Ohio City to downtown and other parts of the region, the better the opportunity for growth,� Mr. Cimperman said. Physical and infrastructure connections are important to the neighborhood, but so are those among businesses and nonprofits. Natalie Leek-Nelson, president and CEO of crisis nursery Providence House, is heading an effort to foster more collaboration among nonprofits based in Ohio City. In January, she said, several Ohio City nonprofits began a program to reduce their costs by jointly purchasing office supplies. Next up could be joint buys of informational technology services and equipment as well as janitorial and sanitation supplies. “I think we’re just starting to see
what can be accomplished with a more collaborative approach,� Ms. Leek-Nelson said.
At play Mr. Wobser is aware of the importance not just of economic development and infrastructure issues, but also what might be thought of as the “softer sideâ€? of life in the neighborhood — parks, festivals, sports leagues for children and the like. “These are the kinds of things that make a big difference in how people perceive the place they live,â€? he said. The park — the most visible and heavily used public space within the Market District — is getting a $1.5 million makeover from the city. The renovation incorporates design ideas from Cleveland Public Art and ParkWorks, and it will double the amount of programmable space in the park. Separately, RTA is investing $80,000 to replace outdated bus shelters in the park with more modern facilities. To make the neighborhood more appealing to young families, Mr. Wobser envisions the creation of youth sports leagues in, say, baseball and soccer. Ohio City families currently look to nearby suburbs for those amenities, he said. Mr. Cimperman, for one, thinks of the neighborhood as “a potential giant that’s just woken up. “But we can’t lose sight of how much work has to be done,â€? he said. â–
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Rents: Rising rates have yet to create construction boom continued from PAGE 3
said. “In the 10 years that I have done this, it’s the strongest that I have seen the market in terms of a little bit of a price increase. It’s still a price-sensitive market.” However, the ability to push rents upward is uneven. “Some owners will not experience this,” Mr. Barron said. “In areas with higher income or higher occupancy, owners can raise rents a little more than in lower-income or lower-occupancy areas. In a working class or low-income area, a $10- to $20-a-month rent increase will cause someone to move next door to get a lower rent.” David Niederst, CEO of NM Residential in Fairview Park, said in properties he owns in Parma that
rent for upwards of $400 monthly, he could not ask for an increase without risking losing tenants. “People are still sensitive to rents,” Mr. Niederst said.
Some take utility route Instead of hiking rents in its family-owned portfolio of more than 6,000 apartments, NM in January implemented a program to charge tenants for their sewer and water bills. That change means tenants may pay as much as $20 monthly for those utilities, which helped the company as much as a rent hike. “Raise rents and you have to advertise a larger rent number,” Mr. Niederst said in explaining the decision to go with a sewer and
water charge. “You’re not advertising $625 a month. It’s better at $595.” Marcus & Millichap statistics also show the Cleveland multifamily market recovered quickly from the 2008 recession — which wasn’t the case in commercial and industrial markets — and apartment rents recovered faster than in prior downturns here. For instance, the prior high effective rent was $705 in 2008. It plunged almost 4% in 2009 to $679 monthly. The spike in apartment occupancies and the attendant increase in rents have resulted in part from the children of baby boomers graduating from college — the socalled “echo” boom — at a time when owning a house as an invest-
ment is widely mistrusted in the wake of the housing bust. Moreover, foreclosures and the difficulty in qualifying for new home loans under stricter credit requirements are keeping some people in apartments who otherwise would gravitate to buying houses.
Good times here to stay? A question that will bedevil regional multifamily property owners will be how long the good times last. Relaxed mortgage lending criteria may take the edge off current occupancies, though not to the degree that freewheeling residential lending that created the housing bust made owners suffer.
The other factor will be how much building lenders will allow apartment developers to do. Modest rents relative to other markets make typical Northeast Ohio apartment construction top out at a few hundred units a year. Mr. Barron said, based on recent chats with developers, he counts 1,000 more units under development. However, he thinks it would be several years before occupancies slip. Ralph McGreevy, executive vice president of the Northeast Ohio Apartment Association, said owners have little choice but to hike rents when the market allows it. “It’s incumbent on them to make money when they can,” he said. “The time of high vacancy will come back at some point.” ■
Heights: Company’s finances healthier LeanDog: Growth follows
acceptance of agile practice
continued from PAGE 1
typical Cedar Fair style, investing millions in new rides and attractions at its parks. “As a company, because we have such high repeat visitation, you sometimes get a little less focused on reminding people to come back,” Mr. Ouimet said. “We think it’s important to remind people of the great day they have here.”
continued from PAGE 3
Making the pitch for 2012 The 2012 season comes on the heels of two record years for the amusement park giant, which in 2011 brought in 23.4 million guests across its 17 parks, up 2.6%, from the company’s record attendance of 22.8 million in 2010. “All indications now are positive we should be able to do a third record year,” Mr. Ouimet said. “Three record years in a row don’t happen very often. I remind my board of that, but they certainly remind me that we have the great parks to do it.” To keep those numbers from softening, the company is launching in its parks’ websites a new e-commerce platform, which will allow customers for the first time to bundle ticket purchases with parking passes and food offerings. Moreover, the company is offering a premium “fast lane” ticketing option — something it tested successfully last year at its Kings Island amusement park near Cincinnati — that lets customers pay extra to bypass long lines on popular rides. “It all rolls up into what we call a dynamic pricing practice,” Mr. Ouimet said. “Let’s understand who our consumers are, what benefits or features they want and be able to offer them the whole spectrum on a pricing curve.” “Fast lane” ticketing is by no means a new concept, as it’s employed by Cedar Fair competitors such as Six Flags, Anheuser-Busch Parks and Mr. Ouimet’s former employer, Walt Disney Co. Scott Hamann, an analyst at KeyBanc Capital Markets in Cleveland, said Cedar Fair’s dynamic pricing strategy is just one of the fresh ideas Mr. Ouimet has brought to Cedar Fair from his days at Disney. The company’s former management, Mr. Hamann noted, hadn’t seized on the opportunity to capitalize on incremental revenue that could be generated through initiatives like “fast lane” ticketing. “Matt brings a lot of energy,” Mr. Hamann said “There’s a whole lot of opportunity out there, and I think he’s
The Millennium Force at Cedar Point PHOTO PROVIDED
the right guy to take this company from a great level to an even better place over the next couple of years.”
Continued investment James Hardiman, an analyst at Longbow Research in Independence, said Cedar Fair has cleaned up its finances over the last few years. The company was saddled with debt after its 2006 acquisition of Paramount Parks, which included Kings Island, for $1.2 billion right before the credit crisis hit. “Having now emerged from those balance sheet issues, they’re able to refocus their attention in driving sales growth and ultimately earnings growth,” Mr. Hardiman said. Another way Cedar Fair plans to grow is by investing $90 million across its 17 parks for the 2012 season. The company’s largest investment is on the Leviathan, a $27 million, 306-foot-tall steel roller coaster at Canada’s Wonderland in Toronto. While Cedar Point isn’t getting quite the prize this year, the company is investing $1 million in a new animatronic dinosaur exhibit that will be nestled near the Millennium Force coaster. Also, the company is investing several million dollars in a new latenight light show at Cedar Point dubbed “Luminosity,” which Mr. Ouimet described as a “giant dance party” with fireworks. Part of the thinking behind the “Luminosity” show is to keep guests in the park longer and ultimately bring more families — not just
teenagers — into the park, according to Dennis Speigel, president of International Theme Park Services Inc., a Cincinnati-based amusement park management and consulting firm. “Cedar Fair for years has been consumed with putting in roller coasters, but now they’re looking at the industry and their parks in a way that’s going to increase in-park spending and the length of stay by the guests,” Mr. Speigel said. Despite a lack of new coasters in recent years at Cedar Fair’s anchor institution, Cedar Point, Mr. Ouimet said the company plans to continue to reinvest in the park because that’s what his customers expect. Over time, Mr. Ouimet expects rides that have reached the end of their useful lives to be removed and replaced with new attractions. Also, he expects Cedar Point to start to encourage customers to spend more time at the park’s surrounding beaches, which the company owns. “We have plenty of room to expand, but we have to be creative about it,” he noted. Despite all the talk about keeping attendance and profitability up, Mr. Ouimet reminds his employees that people frequent the company’s parks for one reason: They’re fun. “We deliver an engaging product that people look forward to all year round,” Mr. Ouimet said. “Sometimes we get caught up in the business side of things, and we have to remember to have a little fun along the way.” ■
from the Cleveland-Cuyahoga County Port Authority. Now the two men — working through a joint venture called No. 225 LLC, named for the barge’s identification number — are renovating the 120-year-old old boat, which housed Hornblower’s Barge & Grill until 2006. The city of Cleveland gave the holding company a $180,000 grant and a $95,000 loan to help pay for the purchase and the renovations, which Mr. Stahl said should cost about $600,000 total. When finished, the barge will have 4,500 square feet of open office space, a third-floor bar, showers for employees who run or ride bicycles to work, and a deck with docks for those who would rather come to work by boat. The environment is intended to spark creativity and remind employees that they need not heed the status quo, Mr. Stahl said. “Why do I have to work in a cubicle? Why do I have to wear a tie?” he said. LeanDog and Arras Keathley will split the office space, Mr. Stahl said. Plus, LeanDog plans to keep the 4,000 square feet it leases on the second floor of the terminal at Burke Lakefront Airport and pick up another 1,000 square feet on the terminal’s first floor.
An agile touch LeanDog’s sales hit $5.3 million in 2011, more than double the $2.4 million in sales in 2010, Mr. Stahl said. The company so far has reinvested all of its profits, he said. The company, founded in 2008, attracts customers almost exclusively by word-of-mouth. A few of the company’s executives build visibility for LeanDog by speaking about agile software development methods at various conferences. Almost all of the company’s customers come through contacts made at conferences, client referrals and personal relationships. Many of those customers turn to LeanDog for both coaching in agile practices and software development, which has helped drive sales growth, Mr. Stahl said. The company also benefits from a growing acceptance of agile software development practices. The concept, first described in a manifesto written by software developers
at a Utah ski lodge in 2001, is meant to help developers communicate better, build software faster and adapt to change. LeanDog helped MRI Software LLC implement agile practices last year. The Highland Hills-based real estate software maker knew it wanted to embrace agile methods but sought out LeanDog to help them make the transition, said Adam Wallace, vice president of product development at MRI. Now instead of working in cubicles, MRI software development teams work together in larger open areas. The teams decide together how they will divvy up project work, a task that had been handled by managers. MRI developers also are testing pieces of code sooner and more often, helping them catch errors as fast as possible. Because of those changes and others, MRI consistently has been able to deliver new software products and updates on time, which previously had been a big challenge for the company, Mr. Wallace said. Plus, the number of software defects reported by customers has dropped since MRI made the conversion, which would have been tough without LeanDog, he said.
Workers scratch an itch The company tries to foster an entrepreneurial culture in Northeast Ohio, Mr. Stahl said. LeanDog has helped organize events for local software developers, including Cleveland GiveCamp, a two-day event where dozens of programmers get together to build free software for area nonprofits. And three weeks ago it started offering to develop software for startups in exchange for equity or convertible debt. LeanDog encourages its employees to start their own companies, too, even if it means they can only work part time, Mr. Stahl said. “Everybody has this entrepreneurial itch,” he said. One of LeanDog’s next goals is to open an office in another state, which should help the company find customers and talent in another region, Mr. Stahl said. If things go as planned, the new office will float, he added. “If it’s up to me … we’re going to find another boat,” he said. ■
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Insurers: Insiders say industry has a perception problem continued from PAGE 1
viable career path to college and high school students. At one point, Mr. Hazen said five universities in Ohio offered degrees in insurance studies. All were disbanded due to a lack of student interest. But because of the anticipated work force shortage, Mr. Hazen approached Kent State about offering an undergraduate program in the field. The program, which is still under development, could launch as soon as next fall at the Salem campus in Columbiana County and eventually expand throughout the Kent State system. “We just think everybody is going to win at this if we can graduate students with a four-year degree in insurance because the jobs are out there for them, which is not necessarily the case with other graduates,�
said Mr. Hazen, who also is past president of the Independent Insurance Agents of Ohio, which provided $20,000 in seed money to jumpstart the program.
Mr. Jacobs’ wrong move However, a dearth in academic offerings isn’t the only reason young folks aren’t flocking toward insurance careers. Britton-Gallagher & Associates CEO Lee Stacey said professional development programs are somewhat rare in the insurance industry compared with other specialties in the financial sector. Banks, Mr. Stacey noted, for years have employed such programs to cultivate their work forces for long careers. “I think this is one of the single largest concerns as an industry we face,� Mr. Stacey said. “All of our
financial service competitors have had this down pat for years.� David Jacobs, president and chief operations officer of the Cleveland-based insurance brokerage firm Oswald Cos., admits one of the “bigger mistakes� he made was to cut at the peak of the recession the company’s professional associates program, a two-year training program for recent college graduates. “We didn’t budget for training as we should have,� said Mr. Jacobs, whose company also is helping develop Kent’s curriculum. “We need to get that program back and rolling.�
We’re cool, too While boosting educational programs could draw additional young people into the profession, the industry faces a larger hurdle in getting them to enroll in such pro-
Investor: Shareholders help capital levels continued from PAGE 3
in doing so. Aging shareholder demographics is a common issue for Ohio’s community banks, which average more than 100 years old, said Robert L. Palmer, president and CEO of the Community Bankers Association of Ohio. One challenge is that successor generations that inherit stock in community banks often aren’t interested in retaining it. Some are second- and third-generation shareholders who live nowhere near the banks, said Mr. Palmer, whose group represents the state’s 223 community banks. Mr. McKeon has seen the problem firsthand.
“They don’t have a loyalty to this bank,� said Mr. McKeon, whose bank counts about 550 shareholders. “They don’t have a history with this bank. (Stock is) an item they inherited. We go from somebody who is very loyal to this bank to, ‘How do I dump this stuff?’� For Western Reserve, which is nearly 14 years old, the average person who was attracted to investing in the bank when it opened is nearing or at retirement age and may want to liquidate his or her holdings, Mr. McKeon said. “We recognize that these people are aging and one way or the other will be exiting from our stock ownership,� he said. “So what we want
to have is a high demand of people who want to buy the stock, waiting if that happens, so (a sale) doesn’t drop the price dramatically. “Is it paramount or critical to us? No,� Mr. McKeon added. “Are we trying to do something about it? Yes.� The need to reinvent a bank’s shareholder base is continual, but the need to raise capital, potentially through new shareholders, is important today because regulators are requiring increased capital levels following the financial crisis of 2008, said Edward E. Schmidt, president and CEO of CAMELS Consulting Group LLC in Westerville, which works with community banks on capital and shareholder issues.
Crain
grams. An important piece of that effort is overcoming how millennials — those under 30 years old — perceive the insurance industry. “This is not the sexiest industry in the world, and that makes it a challenge,� Oswald’s Mr. Jacobs said. “We need to go back and fundamentally explain what the industry does offer.� According to a recent survey by the Assurex Global, a Columbus-based network of independent insurance and benefits brokers, only 24% of millennials surveyed have positive feelings about the insurance industry, compared with 43% of baby boomers with a favorable impression. “The bottom line is we help people,� Huntington’s Mr. Hazen said. “This is the approach we have to take to the young people we would like to market to. We really do good
works and are an important part of the economy.â€? The Ohio Insurance Institute, a Columbus-based trade association, is one group that has tasked itself with tackling the perception issue, according to Mitch Wilson, the group’s vice president of public information and education. The group over the last year has been putting together a marketing campaign, which would include a large online presence, to explain to young people the range of career options available in the industry. The website, Mr. Wilson said, is expected to showcase YouTube videos of young people with a variety of careers in the industry. “Our industry as a whole needs to do a better job of saying, ‘Here is the excitement. Look what you can do in this career,’â€? Mr. Wilson said. â–
Renewing a bank’s shareholder base also creates greater growth opportunities, Mr. Schmidt said, noting, “The best customer of the bank is a shareholder.� Those banks that don’t refresh their aging shareholder groups can end up merger and acquisition candidates, Mr. Schmidt said.
holders, are asked to add names of prospective shareholders to their banks’ respective databases. Those individuals are contacted promptly by the respective bank’s market maker, which buys and resells the banks’ stock as a type of middleman. Cortland’s efforts to improve shareholder relations also have involved investor relations forums, after which several people have become shareholders, Mr. Gasior said. Attorneys, accountants and commercial loan customers were among those invited. Mr. Palmer of the Community Bankers Association said the actions of these banks to pump new shareholder blood into their institutions are not unusual. “Community banks are realizing now more than ever that they need to have and strengthen that local awareness so they can continue to reinvest those dollars locally and have an informed shareholder base,â€? Mr. Palmer said. â–
Drumming up interest Both Mr. McKeon and Jim Gasior, president and CEO of Cortland Savings, have hired CAMELS Consulting to guide their stock awareness campaigns and to build systems that track who wants to buy and who wants to sell their banks’ stock. Though Western Reserve and Cortland are public companies, their stock issues are relatively illiquid because they’re traded on the over-the-counter market. To keep their stock prices up, these banks must build demand for their stock. The staffs of Western Reserve and Cortland, which has 1,600 share-
Communications has a new home
in Chicago.
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Ed McKeon from Western Reserve Bank in Medina
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Erieview: Struggles’ effect on NineTwelve District still unknown continued from PAGE 1
detail those factors. Mr. Minshall said the Galleria, which originally was built as a shopping center but struggled as a retail venue, was not included in the U.S. Bank loan because the lender would mortgage only the office tower and garage. “The irony is that the most difficult part of the project — (the) Galleria — is fixed,� Mr. Minshall said. That’s because the two-story mall is 90% leased after recent deals with the Lizardville restaurant and the YMCA of Cleveland for a new downtown fitness center. Over the years, Mr. Minshall has made progress adding tenants to the office building, only to see other tenants disappear. At its acquisition in late 2002, the 700,000-square-foot skyscraper had a vacancy rate of 40%; today, it’s 24%. Except for a short-lived upswing, the downtown office market essentially lost ground over the last decade. Grubb & Ellis Co. statistics show downtown had a 22% vacancy rate at the end of 2011, compared to 20% when Mr. Minshall’s group bought the building.
Shed no tears The lawsuit by U.S. Bank estimates it now is owed nearly $58 million, including late fees, interest payments and default interest payments dating from March 15. The bank said it wants to collect $13,000 daily in interest and default interest until the property is foreclosed and sold. The case is assigned to Judge Kathleen Ann Sutula. Mr. Minshall takes the strife in stride. “I’m not going to cry about it,� he said. “It’s just a series of traumatic incidents that come with ownership. The YMCA will produce a lot of benefits for tenants of Galleria and incentive for people to lease in the tower.� Mr. Minshall’s tiny troupe made Galleria an event and party center to generate more revenue from the venue and to fill the gap created by problematic downtown retail in Cleveland and other Midwest cities. It became a place for artwork, galleries and community events from fundraisers to weddings. Today, it’s also home to the offices of the Cleveland Metropolitan Bar Association and a large branch of Dollar Bank. Mr. Minshall, son of the late longtime U.S. Rep. William Minshall, was undertaking a challenge when he and his investor group shelled out $30 million on Dec. 31, 2002, to buy from insurer Cigna Corp. the complex that developer Richard E. Jacobs Group had turned over to its lender. Ten years later, that challenge
remains, according to one tenant representation broker who spoke on grounds he not be identified. “Look what’s happening over there,� the tenant rep said of the area surrounding the building. “There’s an empty condo building in foreclosure (Avenue Tower) across the street. Eaton Corp. will vacate the upper floors of Eaton Center for the suburbs later this year. Cliffs (Natural Resources) is leaving Superior for 200 Public Square.�
Positives among the negative Yet according to Michael Deemer, vice president for business development at the nonprofit development group Downtown Cleveland Alliance, the foreclosure at Tower at Erieview does not jeopardize efforts to transform the city’s former financial district into the mixed-use NineTwelve District. “There is uncertainty at Erieview, but remember that NineTwelve was formed because of concerns by stakeholders and property owners about the future of East Ninth and 12th streets,â€? Mr. Deemer said. NineTwelve District initiatives just now are gaining momentum, he said. Al Wiant, a founder of what became NineTwelve and vice president for strategic investment at PlayhouseSquare Real Estate Services, also pooh-poohs the broader significance of U.S. Bank’s action. He said Mr. Minshall has lacked funds to compete for tenants with other, better-heeled building owners. “NineTwelve is all about opportunity, and Erieview is another one,â€? Mr. Wiant said. If the building is recapitalized, it would benefit from elements NineTwelve has in the works, from banners to new sidewalk planters. Mr. Wiant said. The building enjoys some of the best views in downtown, he said, and might be considered for mixed use with the addition of apartments. Robert Redmond, a broker at the Cleveland office of Mohr Partners, was part of the team at a previous employer that sold Mr. Minshall the properties, and he does not count out the self-made real estate investor. “I think they will work something outâ€? Mr. Redmond said. “Cooler heads will prevail. If the lender takes it back, who will buy it?â€? Office and retail broker David Wagner, a co-managing director of Chartwell Group, which has offices in the Tower at Erieview and represents its office and Galleria space, mourned the timing of the foreclosure. “There are more positive things happening here than in a long time,â€? Mr. Wagner said. “We’ve got lots of proposals out. I feel as good about this asset as I ever have.â€? â–
STAN BULLARD
The Tower at Erieview is the subject of a foreclosure lawsuit filed by U.S. Bank. Included in the suit are the tower and a parking garage, though the well-known Galleria, in the foreground, is not a part of the suit.
(/7 ! ,/#!, 3500,9 #(!). 7),, '2/7 9/52 02/&)43 Manufacturers can gain a critical competitive edge with one simple solution: local supply-chain sources. Join Crain’s and manufacturing advocacy groups WIRE-net and MAGNET as we discuss ways to identify low-cost, high-quality logistics sources right here in Northeast Ohio.
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THEWEEK MARCH 26 - APRIL 1 The big story: The Cleveland Foundation’s board of directors approved $16.2 million in grants that will support initiatives in the region ranging from sustainable energy research to the transformation of Cleveland’s struggling public schools. Of particular note, the board signed off on a $700,000 grant to support the implementation of the School Transformation Plan pushed by Cleveland Mayor Frank Jackson and Cleveland schools CEO Eric Gordon to overhaul the underperforming school district. Earlier this month, the George Gund Foundation also committed $700,000 to the plan, elements of which require the approval of state lawmakers.
His new Kentucky home?: Cleveland State University provost and senior vice president for academic affairs Geoffrey Mearns is a finalist for the president’s job at Northern Kentucky University, that school announced. Mr. Mearns, who took on his current roles at CSU in August 2010, joins Frostburg (Md.) State University president Jonathan C. Gibralter and Ferris State University president David L. Eisler as finalists at Northern Kentucky. Mr. Mearns previ- Mearns ously was dean of Cleveland-Marshall College of Law for more than four years. He also taught at Case Western Reserve University School of Law. With a name like Guilin Seamild …: J.M. Smucker Co. acquired a non-controlling minority interest in Guilin Seamild Biologic Technology Development Co., a privately owned maker of oat products headquartered in Guilin in the Guangxi province of China, for about $35 million. Smucker said Seamild’s product portfolio mainly consists of oatmeal sold under the Seamild brand and is sold in retail channels throughout China. Seamild operates two manufacturing plants, both in southern China, and it’s building a plant in northern China.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Kasich’s energy policy isn’t a waste to Echogen
Give them credit for trying something new
■ Mark Terzola is a fan of Gov. John Kasich’s proposed energy policy. Of course, he’s a bit biased. Mr. Terzola is chief operating officer of Echogen Power Systems Inc., an Akron company developing a system designed to create electricity using waste heat from power plants and factories. The governor has done the company a big favor: One of the 10 “pillars” of his new policy would encourage the adoption of technologies that capture and reuse waste heat. Among other things, Gov. Kasich wants the Ohio Legislature to classify waste heat technologies as a renewable energy source. That would encourage utilities and other large producers of waste heat to adopt the technology; state law says utilities must get 25% of the power they sell in Ohio from “advanced” sources by 2025. Half that power must come from “renewable” sources. Today, the law considers waste heat advanced, but not renewable. The change, if adopted, could mean a big opportunity for Echogen, because Ohio’s many power plants and factories produce “a bounty of waste heat,” Mr. Terzola said. He also hopes the governor’s endorsement helps push other states to follow suit. “This may turn into something that gets some national momentum,” he said. — Chuck Soder
■ He’d done it for one credit union; why not do it for more? Bryce A. Roth, marketing coordinator for VacationLand Federal Credit Union in Sandusky, is well-aware that his business needs to attract younger members, and he sees social media sites as a prime place to do it. That’s why he and VacationLand CEO Kevin J. Ralofsky founded Chatter Yak!, a credit union service organization that specializes in social media. Chatter Yak! is providing a steady new revenue stream for VacationLand. Since its July start, the strategic marketing service organization has been hired by 10 credit unions, most outside of Ohio, and has a few clients in the pipeline, said Mr. Roth, Chatter Yak!’s only employee. The organization has seen early demand for its Yak Boot Camp, through which Mr. Roth teaches clients how to handle social media themselves, and its Yak! Tracker, a software that enables businesses to run contests on Facebook while retrieving information about those who participate. Since it began using Yak! Tracker and hosting contests, Glass City Federal Credit Union outside Toledo nearly has doubled its Facebook “likes” to more than 500, said Sarah Ritenour, marketing coordinator. Following its first Facebook contest, she said
WHAT’S NEW
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
Cleveland’s cheap, and that’s a good thing
All downhill from here: FirstEnergy Corp. agreed to be the new title sponsor for The AllAmerican Soap Box Derby in Akron. The Akronbased electric company entered into a threeyear sponsorship agreement with the Soap Box Derby. Financial details were not disclosed. FirstEnergy has been a longtime supporter of the Akron event, providing financial assistance and sponsoring several cars for area racers over the years.
The missing link:
OEConnection LLC in Richfield, a provider of online systems to provide car dealers and collision repair shops with replacement parts, was chosen by Volkswagen of America Inc. to support the automaker’s ongoing collision programs. OEConnection will conduct field visits to thousands of collision repair centers and hundreds of Volkswagen dealers throughout the United States to promote the VW Genuine Advantage Parts Program. OEConnection said its field consultants will educate and train Volkswagen dealers and their wholesale body shop accounts on CollisionLink, the company’s online parts ordering and fulfillment system.
Man about town: Performance materials supplier Ferro Corp. named Jeffrey L. Rutherford, an executive at Park-Ohio Holdings Corp., as vice president and chief financial officer. He starts the job today, April 2. Mr. Rutherford, 51, will report to James F. Kirsch, Ferro’s chairman, president and CEO. He had been vice president and CFO at Park-Ohio, a provider of international supply chain logistics services and a diversified manufacturer of highly engineered products, since July 2008.
THE COMPANY: OurPet’s Co., Fairport Harbor THE PRODUCTS: New Play-NSqueak toys Your domestic cat is confined to the house all day, but he (or she) shouldn’t have to abandon his (or her) wild side. That’s the philosophy behind the Play-NSqueak brand of OurPet’s Co. At the recent Global Pet Expo in Orlando, Fla., the company unveiled four new toys designed to help cats maintain their instincts as natural hunters — in a safe way. With no natural prey, indoor cats express their hunting instincts by chasing imaginary prey. The new toys include the Zoom Mouse (randomly moves around the floor); the Running Mouse (a mouse on the go); the Wobble Mouse (it teeter-totters); and the Shakin’ Mouse (pull the tail and it shakes). All Play-N-Squeak toys feature an electronic sound module that produces “an amazingly realistic mouse ‘squeak’ that cats love,” OurPet’s says. The company says the squeak “is produced at the same frequency and level as a real field mouse.” The Play-N-Squeak toys aim for mental and physical stimulation to keep cats “alert, agile and healthy,” according to OurPet’s. For information, visit www.OurPets.com.
■ Business owners looking for inexpensive places to operate should consider Cincinnati and Cleveland, according to a new study by KPMG. “Cincinnati’s low costs for facility leasing, transportation and property taxes contributed significantly to its ranking as the leastcostly location to do business in the United States” among the country’s 27 largest metro areas studied by KPMG, an audit, tax and financial advisory firm. Atlanta was the second most costcompetitive location in the large-cities category, followed by Orlando, Tampa and Dallas-Fort Worth, which ranked third, fourth and fifth, respectively. Other locations that performed well were Baltimore, St. Louis and Cleveland, the KPMG study found. The study showed Cincinnati had a cost index of 95.9, representing business costs 4.1% below the U.S. national baseline of 100. Cleveland came in at 97.1.
On Facebook, companies show their true character ■ The chief marketing officer of Progressive Corp. was quoted in a Wall Street Journal story about companies’ efforts to use Facebook to get consumers to bond with corporate characters. StubHub is using the giant social media site to try to get you interested in a talking
the credit union gained 10 new members and eight Visa card customers.— Michelle Park
The TiE that binds two contest winners ■ From Réka Barabás’ point of view, two winners are better than one. This year two startups won TiE Ohio’s annual TiEQuest Ohio competition. iGuiders Inc. of Beachwood won in the category for more established startups, and Real Time Imaging Technologies LLC of Brecksville won in the emerging entrepreneur category. Thirty-eight startups applied. TiE Ohio needed to divide the competition into two categories, said Ms. Barabás, executive director of the organization, which supports entrepreneurship. The group will send iGuiders on to compete for $150,000 in prizes at TiEQuest Global in Toronto. In the past, TiE Ohio often picked companies that were too young to compete well, but iGuiders should be more competitive, Ms. Barabás said. The company has developed software designed to make it easier to navigate websites and already has raised more than $1.5 million from investors. The TiE Ohio prize package is a better fit for Real Time Imaging, which is developing a system designed to give dentists more visibility during surgeries. The package consists of $5,000 (which the winners will split), free office space in a local business incubator, legal services and other business assistance. — Chuck Soder
tree called the “Ticket Oak.” Hormel Foods Corp. has a little cartoon knight named Sir Can A-Lot who’s a major Facebook presence. Diageo last May launched an ad campaign for its Captain Morgan rum that starred a live-action Captain character, also a Facebook denizen. Progressive chief marketing officer Jeff Chaney told The Journal that consumers on Facebook are more likely to bond with a character than a traditional company Facebook page. “Consumers are less likely to have a conversation with a logo or a PR guy on social media,” Mr. Charney said. Since 2008, Progressive’s TV ads have centered on perky sales clerk Flo. She now has 3.5 million fans on Facebook, where she posts comments about new Progressive products. The Journal noted that characters also offer “a softer way to sell a product, which is important on social media where executives fear that blatant selling or promotion can turn people off.”
Guess we should be on the lookout for lost phones ■ Clevelanders work harder at hanging on to their cell phone. A new report from mobile security firm Lookout Labs, based on data from 15 million users who downloaded the company’s app that locates lost devices, found Cleveland is one of the markets with the highest percentages of people who lose their phones. RedOrbit.com noted that the study estimates Americans “lost roughly $30 billion worth of mobile phones last year.” Philadelphians lose their phones most frequently, followed by residents of Seattle, Oakland, Long Beach, Newark, Detroit, Cleveland, Baltimore, New York and Boston.
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