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20111205-NEWS--1-NAT-CCI-CL_-- 12/2/2011 4:37 PM Page 1 $2.00/DECEMBER 5 - 11, 2011 In construction, boom and bust Some find work plentiful on local projects; others look elsewhere By STAN BULLARD As steel thrusts skyward at construction megaprojects in downtown Cleveland such as the Medical Mart and Convention Center and Ernst & Young Tower, ironworkers are coming here for jobs from Los Angeles, Las Vegas and Buffalo. That’s because, for the first time Oil, gas reps warn Ohio to limit taxes on industry Revenue forecast rosy; future worries drillers since 2006, there is more work than the 892 members of Ironworkers Local 17 can handle, said Timothy McCarthy, business manager of the union local that serves Northeast Ohio. Meanwhile, headed out of town for work is Pride One Construction Inc. of Medina, which plans to provide construction management services for the conversion of a 12- unit apartment building to a condominium hotel in San Lorenzo, Calif. “I’m doing it to keep the guys busy,” vice president Doug Leohr said in explaining Pride One’s cross-country stretch. Welcome to the two sides of Northeast Ohio’s construction market. Multimillion-dollar projects in downtown Cleveland have several construction trades experiencing a boom time along with the cadre of national and local subcontractors that employ those workers. Yet other contractors are searching for work, with some hitting the road to find it. The push from the megaprojects is giving the building business in the Cleveland area a much-needed boost, but the picture is incomplete. The state’s October jobs report shows regional employment is languishing INSIDE Akron General does well in wellness The health system is partnering with a nearby developer to replicate its successful health and wellness centers. PAGE 5 ALSO INSIDE: ■ Downtown Cleveland’s Embassy Suites hotel is in foreclosure. PAGE 4 ■ Electronic recycling is big business for Cleveland company. PAGE 9 See CONSTRUCTION Page 7 TROUBLE IN MLB TALENT SEARCH Big bonuses for top young players have been the ammo of choice for small-market baseball teams. New rules eliminate that weapon from the arsenal. By JOEL HAMMOND By DAN SHINGLER L ong removed from the glory days of the mid- and late ’90s, the Cleveland Indians in recent years have made building their farm system the heart of their strategy for building a successful franchise. Major League Baseball’s new collective bargaining agreement, though, stands to make the strategy — also employed by other small-market ANALYSIS teams — a lot tougher to pull off. The new deal, introduced before Thanksgiving, will penalize teams that spend more on draft choices than MLB-recommended bonus allocations that vary based on records from the prior year. They’ll be dinged in the wallet, but most importantly for the Indians and others, they’ll also lose draft picks. Because small-market teams traditionally Ohio’s burgeoning oil and gas business should add tons of money to state and local tax coffers in the coming years. But industry representatives caution public officials not to squeeze the golden goose too hard with taxes unless the state wants to risk seeing investment in their business go elsewhere. “If you do that, you’ll see capital start to drift away,” said Jerry James, president of Artex Oil Co. in Marietta and current president of the Ohio Oil and Gas Association. The association recently analyzed how drilling and exploration in the Utica shale beds, which lie beneath the eastern half of Ohio, will impact the state in taxes. It estimates the industry likely will generate $1.05 billion in additional annual tax revenue by 2015. That money would come in the form of commercial activity taxes, income taxes and sales taxes — paid by companies in related industries, too — as well as so-called “severance taxes” collected specifically on oil and gas taken from the state. See INDIANS Page 8 WATCH YOUR WALLET Major League Baseball now will penalize teams for spending over draft bonus allocations, at times severely. The details: ■ Up to 5% over the recommendation: 75% tax ■ Between 5.1% and 10% over: 75% tax and a loss of a firstround pick ■ Between 10.1% and 15%: 100% tax and the loss of first- and second-round picks ■ Over 15%: 100% and the loss of two first-round picks 49 See TAXES Page 20 0 NEWSPAPER 74470 01032 6 SPECIAL SECTION LEGAL AFFAIRS Take a tour of a Cleveland law firm’s new digs, at the former East Ohio Gas building ■ Page 13 PLUS: MANAGING PARTNERS’ EXPANDING ROLES ■ & MORE Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 49

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