Crain's Cleveland Business

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$2.00/APRIL 16 - 22, 2012

Permits for drilling down going up State busy as interest in shale deposits, their ‘wet gas’ at fever pitch

By DAN SHINGLER dshingler@crain.com

The nice thing about the oil and gas business is that it announces both its presence and its future activity, thanks to a process that requires a state permit for all new wells.

Even nicer, for Ohio at least, is that permitting activity indicates a

busy year ahead as drillers begin ramping up their request to sink horizontal fracking wells in the state’s Utica shale region, while moving in new drilling rigs to act on approved permits.

It’s all because drillers are flocking to the Utica shale and its so-called “wet gas,” which includes not just natural gas but also butane, ethane

and other liquids valuable as ingredients in petrochemicals.

“This year, in the Utica shale, we are going to drill approximately 150 wells, and the majority of those will be in the wet gas window,” said Matt Sheppard, senior director of corporate development for Oklahomabased Chesapeake Energy Corp.

Nearly all of the shale under the

Prices rise at industrial firms with fear easing

16

See PRICES Page 20

Mild temps force some businesses to adjust The sun’s been out more than usual in Northeast Ohio, and nurseries, golf courses and other companies have had to adapt. PAGE 3 ALSO: ■ Case Western Reserve University researchers move closer to a clinical trial for their Alzheimer’s drug. PAGE 3

See PERMITS Page 21

PUTTING FACES WITH NAMES Former art institute director David Deming expands his sculpting presence here, nationally

By GINGER CHRIST gchrist@crain.com

The Distribution and Storage Group of Chart Industries Inc. is going boldly where it hasn’t gone in four years. Starting May 1, the maker of equipment for the production and storage of hydrocarbon and industrial gases plans to raise the base prices of its products by as much as 5% — its first such increase since 2008.

Eric Burkland, president of the Ohio Manufacturers’ Association, said manufacturing “is rocking and rolling” right now. However, manufacturers as a whole aren’t raising prices regularly for their products, partly out of fear they’ll jeopardize the sales gains they’ve achieved in a recovering economy.

But that situation may be changing, if local companies such as Chart Industries are any indication.

Ned Hill, dean of the Levin College of Urban Affairs at Cleveland State University, said the telltale sign of sustained improvement in the manufacturing sector will be if enacted price increases stick.

“Within the manufacturing sector itself, companies have had their prices at the absolute floor just to keep some volume going through their plants. Margins have been squeezed now for close to three years,” Dr. Hill said. “We’ve seen in the past as the economy started to recover some scattered attempts to increase

eastern half of Ohio is the Utica shale, and it contains the “wet gas” that Chesapeake and other drillers seek.

They are already filing their paperwork to get it too, which is resulting in the Ohio Department of Natural Resources issuing more permits for the miledeep fracking wells that are proving successful at extracting natural gas, oil and other liquids from Ohio’s shale deposits.

INSIDE

By JOEL HAMMOND jmhammond@crain.com

Y

ou probably know the name, but perhaps not the face. Or more accurately, the faces.

In these parts, David Deming is best known as president of the Cleveland Institute of Art, his alma mater, a role he held for 12 years before retiring in 2010.

But sculpting is his passion, and he’s developed a reputation as one of the nation’s best. And despite an already-robust presence in Northeast Ohio, his work is about to gain even more local exposure.

Mr. Deming, whose pieces appear See FACES Page 20

MARC GOLUB

Sculptor David Deming’s bronze version of Ricky Williams — pictured at right — now is on display at Darrell K. Royal-Texas Memorial Stadium in Austin, Texas.

Mr. Deming still has the clay version of Ricky at his Lakewood studio.

ON THE WEB: Watch as David Deming describes the process of creating a 1,200-pound bronze Ricky Williams. www.CrainsCleveland.com/Ricky

0

NEWSPAPER

74470 83781

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SPECIAL SECTION

GAME ON! When the Horseshoe Casino Cleveland opens, what can we expect? ■ Page 15

Entire contents © 2012

by Crain Communications Inc. Vol. 33, No. 16

20120416-NEWS--2-NAT-CCI-CL_--

4/12/2012

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APRIL 16 - 22, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Next up for CWRU docs’ Alzheimer’s drug: trials

INSIGHT

Marketing agencies find power in numbers Recent mergers reflect growing movement to ‘integrated’ formula

Tests show that bexarotene can reverse similar disease in mice

By CHUCK SODER csoder@crain.com

By JOEL HAMMOND jmhammond@crain.com

It’s not so special to be special any more, at least when it comes to Cleveland’s marketing business.

Recent mergers and one highprofile closing among Cleveland’s top marketing agencies show that integration is the way of the present, and may very well be a part of the future, too.

Marcus Thomas, a 120-employee firm in Warrensville Heights, merged with 17-employee DigiKnow, a digital marketing specialist, last October. In February, Cleveland-based AdCom Group merged with Warehouse District neighbor and public relations specialist LandauPR, which employs 17.

Meanwhile, Liggett Stashower, one of Cleveland’s best-known marketing companies, filed for Chapter 7 bankruptcy liquidation in February.

Members of those companies and other industry observers say the recent activity is a result of a push away from specialty companies, which gained prominence a decade ago. The end result, in the words of King Hill, formerly president at DigiKnow and now a senior vice president and digital strategist at Marcus Thomas, is a more “holistic” approach; in other words, more resources at a single firm to better deliver on clients’ needs.

“There’s knowing the technology and knowing how people use it, which we (knew),” Mr. Hill said. “But there’s also the need to know something about branding and other aspects, and having the capacity and the depth of skills to do that was something we were lacking.”

DigiKnow specialized in web development and digital marketing products. Its employees now are dispatched more widely within Marcus Thomas

3

MCKINLEY WILEY

Gale’s Garden Center manager Tom Krupa says the nursery has had to adjust to mild temperatures in various ways, including hiring seasonal workers earlier.

WEATHER’S A PLEASURE Customers arrive earlier at area’s warmth-dependent businesses

By GINGER CHRIST gchrist@crain.com

I

n his 36 years in the nursery business, Tom Krupa never has seen a March — or a winter — like the ones just past.

But Mr. Krupa, manager at Gale’s Garden Center in Willoughby Hills, isn’t complaining.

“This is wonderful. This is fabulous,” Mr. Krupa said. “I wish we could have

See MARKETING Page 11

every March like this.”

At his store, mild temperatures brought customers in two weeks earlier than usual looking to buy lawn fertilizer, grass seed, and trees and shrubs, giving the store an unexpected advance on the spring season.

In his opinion, the store’s 15% to 20% jump in sales from a typical March was “all weather, weather, weather.”

Gale’s also had to begin hiring its

Bexarotene works like a charm in mice, but can it reverse Alzheimer’s in humans?

Gary Landreth and Paige Cramer aim to find out: The two researchers and their employer, Case Western Reserve University, have founded a company called ReXceptor Inc., which is working to figure out whether the cancer drug has potential to become an Alzheimer’s drug.

They’re in the process of raising money to finance a phase I clinical trial designed to show how the drug affects healthy people. If that small study goes well, larger studies testing the drug in Alzheimer’s patients will follow.

There’s no guarantee the drug will make it through clinical trials, Dr. Landreth said, noting that many drugs that work well in mice fail in humans.

But it does work really, really well in mice.

After four years of testing bexarotene on hundreds of mice that Landreth were genetically engineered to develop a condition similar to Alzheimer’s, Drs. Landreth and Cramer have found the drug almost immediately triggers their bodies to ramp up production of a key protein called apolipoprotein E, or ApoE. That protein helps the brain get rid of beta-amyloid protein fragments, which build up in the brains of Cramer Alzheimer’s patients, who can’t produce enough ApoE. “If you had more of these garbage disposal units … things should get faster and you should get smarter,” Dr. Landreth said.

And that’s what happened in the mice. The level of soluble beta-amyloid in their brains dropped 25% 24 hours after they received the drug, and the level of betaamyloid plaques in their brains fell by 75% after three days.

Plus, the mice over time started showing improved brain function. They built nests again. They more easily found their way through mazes. They even got their sense of smell back.

After Dr. Cramer ran the first test four years ago, Dr. Landreth didn’t believe the results.

“I thought she’d screwed up,” he said.

See WEATHER Page 14

THE WEEK IN QUOTES “Within the manufacturing sector itself, companies have had their prices at the absolute floor just to keep some volume going through their plants.”

“The driving force behind all of this was to provide a home base for when our alumni come back and to get prospective students here and keep them downtown.”

— Ned Hill, dean of the Levin College of Urban Affairs at Cleveland State University. Page One

— Gene Finn, vice president for advancement at Kent State University. Page 7

“If you’re the only game in town, you’ve got a better ability to draw people from that market. ...You can be ... a mediocre property and still do well.”

— Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. Page 15

“When you start seeing all those people walking around on the street, you can see boutique retailers who can make it that couldn’t when cars zoomed by.”

— Matt Cullen, president and chief operating officer of Horseshoe Casino Cleveland partner Rock Gaming LLC. Page 17

See DRUG Page 20

REGULAR FEATURES Big Issue ....................4 Best of the Blogs.......23 Classified..................22 Editorial......................4 From the Publisher......4 Going Places ............13 Personal View .............5 Reporters’ Notebook .23 Tax Liens ..................12 The Week .................23 What’s New ...............23

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

APRIL 16 - 22, 2012

PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Big money

N

ature abhors a vacuum. So, apparently, do casino operators, who eagerly are lining up to fill the geographic voids in Ohio where full-service casinos will not be operating.

Franklin County Common Pleas Court Judge Timothy Horton can stop them. Our hope is that he does, although a peculiar yet powerful array of forces is telling him he should not.

Ohio voters in November 2009 gave their nod of approval to full-service casinos in Cleveland, Cincinnati, Columbus and Toledo. For the procasino interests, led by Cleveland Cavaliers majority owner Dan Gilbert and Penn National Gaming Inc., it was a case of good timing. They made the persuasive case during a recession-battered economy that the casinos held the prospects of good-paying construction jobs while they were built, and goodpaying service jobs once the casinos were open.

Now, like a salesman who has managed to get his foot in the door, gaming interests want to fling the entryway wide open by installing thousands of video lottery terminals — aka slot machines — at Ohio’s seven horse race tracks. And the state, hungry for its cut of revenue from the slots, is trying to help them seal the deal — a situation that has put Ohio Attorney General Mike DeWine, a social conservative, in an interesting position.

As the state’s legal advocate, Mr. DeWine is seeking to dismiss a lawsuit by the Ohio Roundtable that challenges the Ohio Lottery Commission’s right to license the operation of the video lottery terminals, or VLTs, at the race tracks. The roundtable is a conservative public policy group that contends in its lawsuit that Ohio voters did not envision authorizing slots-type gambling when they OK’d the establishment of the Ohio Lottery nearly 40 years ago.

Despite the Roundtable’s lawsuit, which is in Judge Horton’s court, gambling interests are working on alliances that would allow them to cash in on the opportunity to reap big money from the video slots.

For example, Hard Rock International, owner of the Hard Rock restaurant, hotel and casino chain, said two weeks ago that it’s planning a $275 million “gaming and entertainment facility” at Northfield Park race track in Northfield. Hard Rock said it has formed a partnership with Brock Milstein, owner of the harness track, to develop the project, provided there’s what it called “a successful resolution” of the VLT lawsuit.

Other gaming interests also are jockeying for position to set up “racinos,” as the combined race tracks and slot parlors are called, in locations away from the full-service casinos. Penn National, for one, plans to move its Beulah Park race track from Grove City, near Columbus, to Austintown, which is near Youngstown, and its Raceway Park from Toledo to Dayton.

Voters didn’t authorize this proliferation of gaming when they said yes to the four casinos, which likely will produce diminished economic benefits for their respective cities if racinos are allowed to pop up across Ohio. Judge Horton should give voters the chance to have their say on the expansion of the lottery to include VLTs by finding in favor of the Ohio Roundtable in its lawsuit.

FROM THE PUBLISHER

Hop on those who abuse tax breaks

G

Center issued a report analyzing how ov. John Kasich, who doesn’t states use tax incentives and whether need to be reminded to speak they are effective tools for economic up, should pay close attention development. Overall, the conclusion to the latest study of the use of wasn’t good, as the researchers detertax incentives as an economic developmined that “no state ensures that policyment tool and recall a promise he’s makers rely on good evidence about made to his citizens. whether these investments deliver a Gov. Kasich, who surely cannot be put strong return.” into any predictable political The Pew folks credited mold (witness his support of BRIAN Ohio for starting to scrutinize Mayor Jackson’s school reform TUCKER whether these deductions, plan), surprised people when exemptions, tax credits and the he vowed that his JobsOhio team like are the best and most costwould examine tax breaks given effective way to rev up the state to companies to make certain economy, but urged the state to that the businesses actually credig deeper and determine if the ate the jobs they promise. investment was worth the If they didn’t, the governor price. said, he’d claw back the money, Ohio finished sort of in the and that was music to my ears. middle of the study, which did credit Tax packages make me crazy because it state officials for improving the tracking seems that communities and states are of money spent on incentives. The Kasich simply giving away money they can’t administration and JobsOhio officials afford. But nobody knows how to stop it say that will get better in the future, and because no state wants to be the first to they should be encouraged to monitor turn away a business that’s dangling and challenge these giveaways; I look hundreds of good-paying jobs as a prize. forward to the first time state officials So last week, the respected Pew Research

actually take back Ohio’s money from a business that fails to deliver the promised new jobs. **** WITH OBAMACARE front and center in the public debate, it will be interesting to hear what the panelists say at our General Counsel summit this week at LaCentre in Westlake. It seems that the scramble is on at every business to get ready for the Affordable Care Act, even though the law’s very future is in the hands of the Supreme Court.

And speaking of the high court, we decided in a recent poll on Crains Cleveland.com to ask our visitors what they thought the justices should do in their ruling, which is expected in June.

The majority (57.4%) said the court should throw out the law entirely, and 29.6% said the law should be kept in its entirety. The remaining 13% said the court should force Congress to modify the law.

Visit our website, vote in the current poll, and you’ll be able to see the results of a lot of fascinating polls over the past few weeks. I’ll bet you’ll be surprised at some of the opinions expressed.

■

THE BIG ISSUE Would you bet that Cleveland’s casino will have a more positive or more negative impact on the city and its people?

DEBBIE FELLER

RANDY MCGHEE

BRIAN BLOOM

STUART GARSON

Madison

Willoughby

Rocky River

Moreland Hills

It will be awesome. Anything that brings people downtown will be a good thing. A lot of people don’t know about all the restaurants and the number of people living in downtown Cleveland now.

I think it will be good. Dan Gilbert can’t keep all the money to himself. There will be the money he pays for taxes and what people pay for entertainment that will put money into the system.

I think it’s going to be pretty good. It’s going to attract a lot more people to Cleveland and could become an economic engine for the city. ... I do have concerns about gambling and the bad habits it brings.

I think it will have a positive effect. Now we’ve got to get the convention business. It will help sell the convention center because it will give people one more thing to do while they are here.

➤➤ Watch more of these responses by visiting the Multimedia section at www.CrainsCleveland.com.

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APRIL 16 - 22, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

PERSONAL VIEW

Cleveland must be better at attracting immigrants

By RICHARD HERMAN and ROBERTO TORRES

T

he mayor of Baltimore recently announced plans to attract 10,000 new families to her city in the next 10 years. Mayor Stephanie RawlingsBlake told members of Baltimore’s Latino community that they are critical to this new initiative to reverse population decline and grow the economy.

Philadelphia Mayor Michael Nutter has waged a similar repopulation strategy, aggressively targeting immigrants, and with profound effect.

Mr. Herman is a Cleveland immigration lawyer and a former board member of Global Cleveland. Mr. Torres is a former economic development director for the city of Canton and is president of T & R Group LLC, a consulting firm that specializes in Latino and international business development.

Thanks to newly arrived cultures, Philadelphia added population last decade for the first time in 60 years.

The strategy of attracting immigrants to repopulate and revitalize a city is not new. Former Cleveland Mayor Jane Campbell once vowed to push the city’s population back over 500,000, in part, by welcoming immigrant families and immigrant entrepreneurs. Most of the civic leadership ignored her idea, and

Cleveland’s population plummeted to 397,000 by 2010, the secondlargest decline of any major American city not hit by a hurricane.

In the recent past, Cleveland Mayor Frank Jackson and Cuyahoga County Executive Ed FitzGerald have expressed support for welcoming immigrants, but they apparently have delegated that task to Global Cleveland, which does not seem to be doing the job.

Global Cleveland recently opened its offices on Euclid Avenue near Public Square to much fanfare.

Those of us who worked for years to create an international welcome center are so far unimpressed.

Instead of throwing out a welcome mat to immigrants and refugees and branding Cleveland an immigrant-friendly city, the staff at the Welcome Hub talk about attracting “newcomers” and “boomerangers,” especially those who can work in the region’s medical and biotechnology fields.

We need everyone we can get, See VIEW Page 6

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

APRIL 16 - 22, 2012

Local execs back Romney, Mandel Obama ignored as early contributions from area’s top leaders go to GOP candidates, committees

By TIMOTHY MAGAW tmagaw@crain.com

Though it’s early in the 2012 election cycle, the top executives of Northeast Ohio’s public companies appear to be lining up behind the Republican Party’s standard-bearers, at least with their checkbooks.

According to Crain’s research of Federal Election Commission filings, the top executives at Northeast Ohio’s public companies contributed a combined $38,250 to the campaign of Josh Mandel, the Republican state treasurer who wants to unseat Democratic U.S. Sen. Sherrod Brown.

Sen. Brown’s campaign brought in $23,000 from local executives.

The same pool of executives contributed $20,051 to former Massachusetts Gov. Mitt Romney, the presumptive Republican presidential nominee. As of last week, none had contributed to President Barack Obama’s campaign.

“The pattern doesn’t surprise me,” said John Green, a campaign finance expert and director of the Ray C. Bliss Institute of Applied Politics at the University of Akron. “(Former) Gov. Romney has good connections with the business community.”

Crain’s research looked at donations to presidential and Ohio senatorial candidates, major political parties and their respective congressional and senatorial campaign committees.

The three largest donors — Eaton Corp. chairman and CEO Alexander

“Sandy” Cutler, FirstEnergy Corp. president and CEO Anthony Alexander and Timken Co. president and CEO James Griffith — all declined through their company spokespeople to comment on their donations.

FirstEnergy’s Mr. Alexander contributed $2,500 to Sen. Brown, $30,800 to the Republican National Committee, $20,000 to the National Republican Senatorial Committee and $5,000 to the National Republican Congressional Committee.

Eaton’s Mr. Cutler contributed $2,500 to Mr. Romney, $5,000 to Mr. Mandel, $20,800 to the Republican National Committee, $30,400 to the National Republican Senatorial Committee and $1,500 to the Ohio Republican Party.

Timken’s Mr. Griffith contributed $2,500 to Mr. Mandel, $30,800 to the National Republican Congressional Committee and $9,200 to the Ohio Republican Party.

■

Bizdom Cleveland accelerator chooses first startup class Dan Gilbert’s entrerelationshipON THE WEB Story from preneurship accelerabased online www.CrainsCleveland.com. tor, Bizdom Cleveland, giving; BOOM, has announced its first class of six which uses social media to help startups that it will help launch. residential property managers Bizdom invests up to $25,000 in communicate with and retain tenants; each of the businesses. After three InStoreFinance, which helps retailers months, they will be given the opporwith an in-store, consumer credit tunity to pitch to other investors. program for hard-to-finance cusThey are BigRiver, which helps tomers; Urban Matrix, which provides nonprofits raise money through indoor, digital “billboards” to retailers;

SafeCare, which helps health care facilities with background checks of job candidates; and On Demand Interpretation Services, which provides qualified interpreters who speak 170 languages for remote teleconferencing for courts and other judicial programs.

Mr. Gilbert, majority owner of the Cleveland Cavaliers, started the program in Detroit in 2007.

View: Group losing immigrant focus continued from PAGE 5

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certainly, but focusing on a highly educated few is not the answer. This timid approach does little to attract the kinds of numbers Cleveland needs just to sustain itself, let alone repopulate and soar.

Contrast that effort with what is happening in Dayton and Detroit, where civic initiatives invite a new generation of immigrants to buy and renovate abandoned homes, build neighborhoods, launch businesses and join the mosaic.

Global Detroit was, in fact, developed in part by Clevelanders who couldn’t find support in Cleveland.

The Detroit initiative, led by Steve Tobocman, former majority leader of the Michigan House of Representatives, has sparked widespread interest in the power of immigrants.

Detroit Mayor Dave Bing plans to launch soon an Office of Immigrant Affairs. The Republican governor of Michigan, Rick Snyder, now likes to refer to himself as the “most pro-immigrant governor in the country.” He recently launched a statewide initiative, Global Michigan.

Dayton Mayor Gary Leitzell likes to go on national television and say that he looks at immigrants and sees a path to a more entrepreneurial, global and diverse future. He is fond of quoting studies saying that immigrants are twice as likely to start a business as native-born Americans.

Curiously, Global Cleveland’s leaders rarely use the “I” word to describe their plans and programs.

This omission is shocking. Global Cleveland grew out of a grassroots movement to revitalize Cleveland by welcoming immigrants and refugees.

The founders were inspired by the Welcoming Center for New Pennsylvanians, which helped revive Philadelphia, and a 2010 plan crafted by the Jewish Federation of Cleveland that is bluntly titled, “Cleveland Needs More Immigrants: Why and How to Welcome More Foreign-Born Residents.”

Now we are at an inflection point.

We hope Global Cleveland can recapture the community-driven conversation focused on creating an immigrant-friendly city. To do this, it will need an urban revitalization strategy, as well as an appeal to Latinos, the most powerful demographic force in America today.

We should welcome all immigrants, even those who don’t have advanced degrees. Most of our ancestors arrived in America with only grit and determination. Many of them started businesses and raised children who accomplished great things. We should keep this in mind, as we prepare to demolish thousands of abandoned but inhabitable homes that could house Cleveland’s new immigrant families and taxpayers, but instead seem slated to become urban farms.

■

WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business, 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 e-mail: mdodosh@crain.com

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Universities turn eye toward hospitality with hotel plans Kent, Akron, CSU see facilities as way to increase revenues

ation generated about $1.1 million in gross revenue over the university’s last fiscal year, which ended June 30.

Also, the added rooms would allow the university’s hotel to franchise with a major hotel operator, such as a Hilton or Marriott. The prospect of teaming up with a national brand would bring in more customers and heighten the hotel’s profile, Mr. Curtis said.

“What that does is get you into their national and even international reservation systems, which is a big item,” he said. “It also gets you into their points systems, which is another big item.”

By TIMOTHY MAGAW tmagaw@crain.com

Northeast Ohio’s public universities are checking into the hotel business.

While each hotel differs in size and scope, Cleveland State University, the University of Akron and Kent State University all have invested in their own projects. Such moves, university officials said, are intended to inject more revenue into their coffers and to help them serve the thousands of visitors funneling through their campuses each year.

“The driving force behind all of this was to provide a home base for when our alumni come back and to get prospective students here and keep them downtown,” said Gene Finn, Kent State’s vice president for advancement and executive director of the university’s foundation. The latter is financing a $15.4 million, 95room hotel and conference center in downtown Kent.

The prospect of universities building their own hotels or acquiring ones near campus — as the University of Akron did in 2007 — is by no means a new phenomenon. Miami University in Oxford has operated since the early 1980s the Marcum conference center and hotel, which brings in more than

The boutique approach CRAIN’S FILE PHOTO

The University of Akron is considering turning some student housing at the Quaker Square complex back into hotel rooms. Seen here in 2005, the Quaker Square hotel had carried the Crowne Plaza brand. $2 million in revenue each year.

Still, Mark Woodworth, president of Atlanta-based PKF Hospitality Research, said there “definitely seems to be over the last few years an elevated level of interest for colleges and universities to have their own facility on or near campus.”

UA ups the ante The University of Akron rattled Northeast Ohio’s hospitality arena when it bought for $22.7 million the towering Quaker Square complex in downtown Akron’s central business district on South Broadway Street.

At present, 65 rooms in the iconic

grain silos are devoted to hotel space, with 135 others reserved for student housing.

But with a $35 million, 520-bed residence hall expected to open this fall, University of Akron officials are “seriously exploring” the idea of converting some of the student rooms in Quaker Square back to hotel space, said Ted Curtis, the school’s vice president for capital planning and facilities.

Mr. Curtis said the university may increase the number of hotel rooms to about 100 or 110 — a move that would generate more revenue for the school. The 65-room hotel oper-

Slated to open in spring 2013, Kent State’s boutique hotel at the intersection of Haymaker Parkway and Depeyster Street in Kent would be the only hotel within walking distance of the university. As such, Mr. Finn said Kent State’s foundation chose not to franchise with a hotel operator because it would “cut significantly” in the hotel’s revenues.

“We wanted to make sure the branding was closely tied to the university, and it said ‘Kent State is why the hotel exists,’” Mr. Finn said.

Aside from serving the university’s guests, Mr. Finn said Kent State’s hotel also is expected to be a learning space for students, particularly for students enrolled in its hospitality management degree program.

Likewise, Mr. Finn expects the 300-seat conference center to be a

revenue generator because two corporations — Davey Tree Expert Co. of Kent and Ametek Technical & Industrial Products Co. of Berwyn, Pa. — will have offices housed at the Fairmount Properties development across the street.

“We’ll be marketing this much wider than just the university,” Mr. Finn said. “This is a 300-seat capacity ballroom and conference center. It should be a pretty user-friendly space.”

Rather than build a new hotel like Kent State, Cleveland State is exploring the idea of hiring a developer to sublease the roughly 100-year-old Mather Mansion it owns on Euclid Avenue and convert it into a boutique hotel at a cost of about $10 million, according to Jack Boyle, Cleveland State’s retired vice president for finance who is steering the project.

Mr. Boyle said the structure, which was acquired by Cleveland State in the late 1960s, could house 25 to 30 hotel rooms. If an addition was added, as some developers have proposed, it could house 50 to 60 rooms. Mr. Boyle expects the university will pick a developer by May, and a hotel could be open within the next two years if all goes according to plan.

“We feel this is the most efficient way to turn it into a useful project that benefits us from the standpoint that someone else would be paying for this, and it’d be an amenity important to the university,” he said. “Having a guest location for visiting scholars and speakers and parents is something that we see as a positive.”

■

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Teachers union makes nice, but has reform reservations Union leader Quolke says he’ll support city plan, remains upset about GCP’s presence

By JAY MILLER jmiller@crain.com

David Quolke has traveled a long way in recent weeks in his relationship with Cleveland Mayor Frank Jackson and Eric Gordon, CEO of the Cleveland Metropolitan School District. However, the president of the Cleveland Teachers Union hasn’t been thrilled about the journey he’s shared with the Greater Cleveland Partnership.

Two months ago, Mr. Quolke wrote in his blog to the union’s members that the Cleveland school reform plan that Mayor Jackson and Mr. Gordon presented to him Feb. 6 “is not a plan to educate children in Cleveland; rather this is a plan to blame unions and fire teachers.”

By last Thursday, though, as he stood with the two men at Cleveland City Hall to announce the warring sides had reached a compromise on

the reform plan, he was more conciliatory. He agreed to support the plan and lobby state legislators for its passage, even though, he said, “This agreement is far from perfect.”

Earlier in the week, Mr. Quolke said he expected his Quolke rift with the mayor would be healed.

“We’re two strong-willed individuals,” he said. “I look out in my mind for what’s best for my members and Cleveland’s kids, and I think the mayor has the same attitude.”

With the teachers union leader throwing in with his former adversaries across the bargaining table, the legislation needed to implement the reform plan could wind its way successfully through the General Assembly this spring and summer.

But Mr. Quolke isn’t embracing the local business community so quickly.

No ‘Kumbaya’ moment yet Even after the April 12 news conference at City Hall, Mr. Quolke sounded reluctant about working in Columbus alongside lobbyists from the Greater Cleveland Partnership, the regional chamber of commerce

group that helped draft the plan.

“No, I don’t think this is where we do ‘Kumbaya’ and go down (to Columbus) together,” he said when asked his view of GCP. “Kumbaya” is a refrain from a traditional African folk song that became popular in the 1960s as a peace movement anthem.

Last Monday, April 9, during an interview with Crain’s, Mr. Quolke clearly was displeased that GCP, and not the teachers union, was the party at the table helping Mayor Jackson and Mr. Gordon craft what is called the Cleveland Transformation Plan.

“I think (GCP’s) role has been counterproductive,” Mr. Quolke said. “I think it’s added to the divisiveness that we’ve seen, as opposed to pulling people together.

“It added fuel to the fire of this anti-teacher sentiment that we’ve seen grow,” said Mr. Quolke, who was elected president of the 6,000member union in 2008. Mr. Quolke had been a teacher of visually impaired students at several district schools.

GCP president Joe Roman defended

Congratulations to ACG Cleveland 2012 ACG Large Chapter of the Year ACG (Association for Corporate Growth) is pleased to recognize ACG Cleveland as its 2012 Large Chapter of the Year. ACG is a global organization with 14,000 members in 56 chapters, including 500 in

Mr. Quolke was adamant that the teachers weren’t going to tear up their existing contract and start fresh. He acknowledged that the existing, 304-page contract is cumbersome, but argued that it is a reflection of a lack of trust that has existed between the union and the district for decades.

“To me the really fresh start isn’t the physical ripping up of a contract and getting down to one page,” he said. “To me, ‘fresh start’ is, as a city, how do we move forward in this process of collaboration?”

Mayor Jackson agreed to forgo the Fresh Start provision.

the process.

“To bring the teachers union in at the beginning, I don’t think there would be an agreement,” he said after the Thursday press conference. “I think you needed a starting point that put a package together that addresses quality (education) as the driving force in the package, and that would have been harder to do in a bigger group.”

Asked if he thought the business community and the teachers union can work together to get the legislation passed, Mr. Roman said, “I hope so.”

Fresh Start a nonstarter

Ready to roll

Mayor Jackson considers passage of the enabling state legislation as critical to his plan to ask Cleveland voters in November for an increased tax levy to dig the district out of a looming $65 million budget deficit.

Without that levy, the mayor believes the school district will be thrown into state receivership. The legislation and the reform plan it supports are designed in part to show voters that the district has a plan to improve the quality of education in the district and to get out of the academic doldrums.

The reform plan would allow the district more leeway in how it evaluates and assigns teachers, moving away from seniority as the key factor in those decisions. The plan also adopts what is called a “portfolio approach” to school management, giving principals greater responsibility over budgeting and hiring.

In addition, it opens the door to sharing property tax money with new, high-quality, privately run charter schools.

None of those provisions were greeted warmly by the teachers union, and both sides have compromised on several key points.

Mr. Quolke still questions the wisdom of allowing charter schools to use the district’s property tax revenue. But the most onerous section of the plan to the teachers union was called “Fresh Start,” a provision that would have started the next round of teacher contract negotiations in 2013 with a blank sheet of paper.

Mr. Quolke also was critical of one of the plan’s elements, the Cleveland Transformation Alliance, which gives the private sector a key role in evaluating those charter schools that seek financial support from the district’s tax levy.

Mayor Jackson and Mr. Gordon have described the alliance as a public-private watchdog over charter schools. GCP’s Mr. Roman said it is “a place where the business community and others can directly engage” with the school district.

That section eventually was accepted by the teachers, modified only slightly to make the work of the alliance more publicly transparent.

With a united front, substitute legislation to clear the way for the reform plan will be introduced in the General Assembly. It will replace placeholding legislation introduced April 4 by state Sens. Nina Turner of Cleveland and Peggy Lehner of Kettering.

Companion legislation was introduced at the same time in the Ohio House by Reps. Sandra Williams of Cleveland and Ron Amstutz of Wooster. Democrats Turner and Williams and Republican Amstutz were at Cleveland City Hall last Thursday to lend their support to the compromise legislation.

Mr. Quolke acknowledged last week that he expects to work in Columbus alongside business lobbyists to pass the legislation.

“I think going forward they can play a big role,” he said.

■

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9

Natural gas price drop sparks BHP St. Louis travel firm buys Hudson company’s Twinsburg event planner electricity-producing systems draw interest

By DAN SHINGLER dshingler@crain.com

David Blair doesn’t pretend he saw the collapse of natural gas prices coming, but the phenomenon sure isn’t hurting his sales pitch these days.

“We are certainly in a position to benefit from that,” Mr. Blair says with the subtle smile of an engineer bemused by an attractive equation.

Mr. Blair’s company, Hudson-based BHP Energy, designs and installs systems that use jet engines powered by natural gas to make electricity, while at the same time providing additional heating or cooling for a factory, office, data center or other building.

Mr. Blair formed the company in 2002 and uses generation equipment made by Capstone Turbine Corp. of California. When BHP started, it was a period of cheap natural gas — like today, it was selling for less than $3 per thousand cubic feet (MCF) — but its price was more volatile and it quickly went back up to more than $6 per MCF in 2003.

But BHP has not sold its systems so much on price, as on performance.

They are used by manufacturers, call centers, computer installations and even museums that must have reliable, full-time power, Mr. Blair said.

Usually, they are used as backup systems that quickly go to work providing electricity in the event of a power outage, he said.

BHP has installed the systems at the Toledo Museum of Art, the University of Toledo, Syracuse University and at Dominion East Ohio’s administrative offices and call center on East 55th Street in Cleveland.

The systems can be as small as a single jet engine producing 35 kilowatts of electricity, to larger systems that use multiple engines to put out as much as a megawatt of power, Mr. Blair said.

Even the biggest units fit into a structure designed to be the same size as a

shipping container, he said, making them somewhat portable and fairly easy to install even in a small footprint.

Mr. Blair has not been marketing the systems primarily because of the low cost of gas — that’s just been a recent bonus, he said. The real selling point is that the systems are reliable and efficient. While generating electricity, the systems also can produce hot or cold air using heat exchangers, which adds to their efficiency and can be important to installations with large computer systems that require cool environments, he said.

“We can cut the energy a call center uses by 50%,” Mr. Blair said.

Nonstop action But lately, at least, some customers have been using the systems to capitalize on the low price of natural gas.

That includes Dominion East Ohio, which runs its jet engines full time to produce electricity for its operations on East 55th Street. A single, one-megawatt unit provides power for a 120,000square-foot building that houses more than 200 employees, said Dominion’s facility supervisor, Joe Staff.

“Our operation is the corporate side of the gas business and we have several functions where we can’t lose power, and we have a call center and we can’t drop calls,” said Mr. Staff.

With gas prices so low, Dominion has been using the system not as a backup, but as its main power supply, with the regular electric grid now serving as the backup, Mr. Staff said. The jet engines have been running nonstop almost since they were installed last July, with no problems to date, he added.

That’s good news for BHP, as well as its parent, Toledo-based GEM Inc., a construction company that purchased BHP in 2009 because it wanted to integrate the systems with some of its existing clients and with new construction projects, said GEM president Hussien Shousher.

A good idea, now better Both GEM and BHP are private companies and neither discloses its sales. But with only about 15 employees BHP is only a tiny part of GEM,

Ganley Auto relocates HQ employees to Brecksville

By STAN BULLARD sbullard@crain.com

Ganley Auto Group has moved its headquarters to a building it bought in Brecksville from its longtime Lakewood home, which now is destined to become a Family Dollar store.

Joseph S. Fornal, Ganley chief financial officer, said the auto chain moved 25 employees, most from its former Lakewood location, to the new office at 8748 Brecksville Road.

Among the reasons for the move is that Ganley wanted a more central location, the Ganley family lives in Brecksville, and the business would occupy less space than in its former Lakewood location. The Lakewood headquarters, Ganley’s business home since the late 1970s, was at two dealerships the company had closed in 2009. Ganley operates 28 auto franchises in northern Ohio.

Relationships also fostered this real estate deal. When Rachel Torchia,

owner of Gateway Title & Associates of Brecksville, went to MercedesBenz of Akron to see about a new car, longtime acquaintance Ken Ganley, president of Ganley Auto Group, said she also had something he wanted — her building.

Mrs. Torchia said she has reached a point in life where she wanted to shed the real estate, so she sold the property, which her husband will continue to manage. Gateway Title will remain a tenant in the building, she said.

Ganley, through Ganley Real Estate Co., paid $900,000 March 30 for the Brecksville building. It sold its former headquarters building and adjoining land at 13215 Detroit Ave. to Lakewood-FDBTS LLC the same day for $550,000, according to Cuyahoga County land records.

Dru Siley, Lakewood planning and development director, said the city has approved plans for construction of a Family Dollar store on the site. ■

which has between 800 and 1,000 employees, depending on the project on which it is working. But BHP is an important part, Mr. Shousher said, and it allows GEM to bring a new product to clients who often didn’t know it existed.

“Over 50% of the customers that we show the technology to, and that’s both engineers and end users, are unaware of the technology,” he said. “We fit a certain size space — there are very big systems for distributed energy, but the small to medium tier is untapped and unknown.”

Now, GEM and BHP might have some momentum. Mr. Blair said it’s becoming easier to sell the systems now that a few are up and running and he can use them for demonstrations.

And as natural gas prices continue to drop, the proposition of using the systems for full-time electricity, as Dominion does, makes them even more appealing, he said.

The system BHP installed at Dominion was its first one-megawatt system, but it’s already working on another at the University of Toledo and hopes to secure more, similarsize deals this year. Low gas prices only can help, Mr. Blair said.

“It started out as a good idea,” he said, “but now it’s an even better idea.” ■

By GINGER CHRIST gchrist@crain.com

When Jeff Price joined Twinsburgbased Experient Inc. two years ago as CEO, the event industry executive was charged with repairing a struggling company and readying it for a sale.

Now, his job is done.

Experient, an integrated event planner, was sold April 3 to another large company in the business, St. Louis-based Maritz Travel, for an undisclosed sum.

Under terms of the sale, Experient will become a subsidiary of Maritz, which will assume the company’s 540 employees. There were no layoffs as a result of the deal, and most of Experient’s leadership will remain in Twinsburg.

“This is just a great strategic alliance between two really powerful brands,” said Mr. Price, who has left Experient and is looking for his next business opportunity. “It remains to be seen how meteoric the growth will be.”

While Experient focuses on events for associations and governmental agencies, Maritz’s wheel-

house is in the corporate market.

Together, the two companies will garner a greater share of the market.

“This is a growth play, a growth strategy. This is not about efficiencies or taking costs out,” said David Peckinpaugh, president of the 823employee Maritz and a Cleveland native.

Maritz over the last two years has experienced double-digit percentage sales growth, fueled by the recovery of the economy, Mr. Peckinpaugh said.

Mr. Peckinpaugh worked at Experient (then known as Conferon Global Services) for eight years, first as executive vice president of sales and marketing and then as chief marketing officer. He said the combined power of the two brands will give Maritz the leverage needed to more aggressively move into the global market, which he sees as one of the company’s key opportunities for growth.

Maritz plans to invest in each of the divisions of the company and grow each market.

“This is a huge statement for the industry,” Mr. Peckinpaugh said. ■

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Biochemical specialist sold to Mo. firm 2 Rockside-area office New owner planning buildings in foreclosure investment in Research Organics’ Cuyahoga Heights operation

By CHUCK SODER csoder@crain.com

Rob Sternfeld is assured that his father’s legacy will live on.

He and his brother Fred on March 30 sold Research Organics Inc. of Cuyahoga Heights to Sigma-Aldrich Corp. of St. Louis.

Sigma-Aldrich plans to invest in Research Organics’ 12-building campus at 4353 E. 49th St., said Rob Sternfeld, president and CEO of Research Organics, which makes high-purity biochemicals.

“They’re committed to this site and putting money into it,” he said.

Gilles Cottier, an executive vice president at Sigma-Aldrich, confirmed that the company plans to invest in the site this year, though he declined to go into detail.

Research Organics will join SAFC, the custom manufacturing and services business unit of Sigma-Aldrich,

a public company that has about 9,000 employees and posted $2.5 billion in sales last year. Rob Sternfeld will transition out of his role over the next six months, helping prepare someone else to run the operations in Cuyahoga Heights.

Rob Sternfield said he and his brother, who worked for Research Organics until 2001, weren’t looking to sell the business until SigmaAldrich expressed interest in buying it.

The combination makes a lot of sense, he said. For one, the SAFC unit of Sigma-Aldrich already is one of Research Organics’ biggest customers.

Though Sigma-Aldrich does make some of the same products, the public company wants more manufacturing capacity, Mr. Sternfeld said.

Sigma-Aldrich also likes Research Organics’ focus on quality control, he said. Research Organics is certified to the ISO9001:2008 standard and works to meet other quality standards set by the U.S. Food & Drug Administration and the International Pharmaceutical Excipients Council.

“If there was one company on the planet that made sense to buy us, this was the one,” he said.

Mr. Cottier, of Sigma-Aldrich, agreed that the acquired company’s quality systems and its manufacturing

capacity were appealing.

A legacy lives on

Research Organics should benefit from Sigma-Aldrich’s global sales infrastructure, Mr. Cottier said, noting that most of the Cuyahoga Heights company’s sales come from North America.

“We are the channel; we are the access to markets outside North America,” he said.

Marvin Sternfeld founded the company in 1953 to produce chemicals for researchers. Research Organics, which until 1966 was called Cleveland Chemical Laboratories, now employs 79 people in Cuyahoga Heights. Today its biggest customers are companies that make biopharmaceuticals, diagnostic reagents and cell culture media.

Most of its revenue comes from the sale of buffers that control pH levels in media containing biological materials, though it also makes amino acid derivatives and other biochemicals.

Rob Sternfeld said he expects business at the site to “go through the roof” given the synergies between the two companies and SigmaAldrich’s resources.

“My father’s legacy will live on at the site,” he said.

■

s &

Tuesday, April 24

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s The InterContinental Hotel

Limited demand hurts market in south suburbs

By STAN BULLARD sbullard@crain.com

The slow, upward spiral of office vacancy in the southern suburbs has helped land two office buildings — the 4141 Rockside Building and 6161 Oaktree Building — in Cuyahoga County Court of Common Pleas in a foreclosure action.

Owned by a limited liability company led by real estate owner and broker Donald King of Beachwood, the buildings are the subject of a foreclosure lawsuit filed by U.S. Bank as trustee and C-III Asset Management LLC as special servicer of the mortgage on the properties. The lawsuit seeks to obtain the buildings to recoup a 2007 loan of $10 million that was sold in the mortgage securities market.

The buildings, both more than 20 years old, take their names from their addresses at 6161 Oak Tree Blvd. in Independence and 4141 Rockside Road in Seven Hills.

Both four-story buildings secure the same mortgage but fare differently in the market. The 6161 Oaktree Building has a vacancy rate of about 6%, while the 4141 Rockside Building has a 27% vacancy rate, according to CoStar, an online realty data provider.

According to the lawsuit, filed March 16, the building owner has failed to make payments on the properties since Jan. 1, 2011. The case was assigned to Judge Janet Burnside.

Mr. King said his investor group wants to restructure the loan because high vacancies have pushed down

rents and values in the Rockside office market. He declined to discuss the foreclosure in more detail.

Mike Geller, a spokesman for C-III Asset Management, an Irving, Texas, firm that serves as a special servicer on distressed loans, declined comment.

Bob Nosal, managing director of Grubb & Ellis Co.’s Cleveland office, said he knows the buildings well — he has brokered their sale for one party or another three times — and believes their problem stems from the same malaise that afflicts the Rockside Road office market: There’s limited demand for offices.

“If I were a speculative buyer, I would say they are worth half what they used to be,” Mr. Nosal said.

Statistics from Grubb & Ellis show office vacancy in the south suburbs reached 23.9% at the end of 2011, up a bit from 23.5% a year earlier but much higher than the 18.7% vacancy rate at the end of 2008, when the recession was kicking into gear. Grubb & Ellis reports there is 1.2 million square feet of empty space along the office corridor surrounding Interstate 77, compared with nearly 900,000 square feet in 2008.

Despite the latest figures, Vernon Blaze, financial coordinator for the city of Independence, said he sees several recent leases in Independence as reason to be optimistic.

“Independence’s central location in Northeast Ohio, at two interstates, along with its very low commercial property tax rate, is still a dynamite combination that is hard to beat,” Mr. Blaze said.

■

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

11

Marketing: Smaller firms can make it Benjamin Rose sells old continued from PAGE 3

to implement DigiKnow’s expertise on the larger firm’s client teams.

Landau founder Howard Landau, too, acknowledged that before his company merged with Adcom, Landau could not deliver on certain requests from clients that were outside its communications focus.

Now, clients of each company can access Landau’s PR specialty and Adcom’s broader list of capabilities, such as web and app development, among other things.

“The challenge for companies is to be consistent in how they communicate,” said Mr. Landau, who noted that both Landau and Adcom were healthy companies that simply saw benefits to joining forces.

“Businesses can’t have two personalities,” he said. “It used to be easier; it’s much more difficult today.”

Stuck in a pigeon hole Liggett, which employed 40 as recently as last June, according to Crain’s research, filed for bankruptcy after a bizarre two-week saga in which managing partner David Moore first said the company was reorganizing around a “core team” despite widespread rumors it had closed. Its debts in its Feb. 3 bankruptcy filing totaled $2.7 million; assets were valued at $1.42 million.

Liggett shuttered due to a number of factors, according to a former employee at the well-known branding specialist.

The former employee, who requested anonymity, said Liggett was unwilling to lay off staff members when the economy tanked, even though its move three years ago to a new, $2.2 million headquarters in Cleveland’s Theater District increased the company’s debt. Clients also struggled with constant Liggett employee turnover on their accounts, the former employee said.

Yet perhaps the biggest factor in Liggett’s demise, the former employee said, was the company’s sole focus on brand building. The company “pigeon-holed itself” into that niche, the former employee said. “(Mr. Moore) was so high on the building brands thing; we had to look beyond that,” the former employee said. “We had a lot of tal-

ented people who had experience in other industries. We needed to get new business in other industries.”

The pendulum swings It remains to be seen, though, just how integrated the local marketing business becomes.

Sharon Toerek, president of the Cleveland chapter of the American Advertising Federation who advises many marketing and communications firms through her work as a partner at Independence law firm Licata & Toerek, said she hasn’t seen this much volatility in the industry in quite some time.

“The pendulum is swinging, and clients want to work with one shop (that is) integrated within its own four walls,” Ms. Toerek said. “Those companies have to be a nerve center with their clients.”

Landau and DigiKnow each were smaller companies that merged with larger companies; should we expect, then, that the area’s little guys all will explore possible mergers?

Not necessarily.

PR 20/20 president Paul Roetzer founded the Cleveland company in 2005 with a hybrid, or integrated, approach. Since then, he’s grown the company to 10 employees and published a book detailing his plan: “The Marketing Agency Blueprint,” a “handbook” for building hybrid firms.

“Just being a web firm or a (search engine optimization) firm or a PR firm won’t do it,” he said. “You have to look across these siloed disciplines.”

‘One throat to choke’ Mr. Roetzer maintains that his company, despite employing fewer people than big companies, is capable of achieving success in any area a client demands — and can respond if those clients need to adapt quickly.

“Big agencies struggle to make dramatic shifts in the way they operate or how their business models are structured,” Mr. Roetzer said.

“Agencies that are smaller, or emerging firms, are better equipped.

We change our direction quarterly if necessary.”

Cleveland-based thunder::tech, too, has achieved the integrated model while remaining relatively

HQ, starts on new one

“Just being a web firm or a (search engine optimization) firm won’t do it. You have to look across those siloed disciplines.”

By TIMOTHY MAGAW tmagaw@crain.com

– Paul Roetzer, CEO, PR 20/20 small, said president Jason Therrien.

Mr. Therrien said a variety of pressures on small firms and client convenience have led to some of the recent activity.

“There are budgetary pressures, and time and resource pressures,” said Mr. Therrien, whose company employs about 30. “Clients, too, don’t have time to deal with 10 different agencies.”

Mr. Therrien said thunder::tech has invested in talent in different kinds of skill sets to avoid such pitfalls in client relations.

“We had a client a few years back tell us they liked our model, because there was ‘one throat to choke,’” Mr. Therrien said. “We liked that. They told us that if there’s a problem, ‘We know who to go to.’ There’s a move to that you’re seeing in the industry today.”

■

The Benjamin Rose Institute on Aging has broken ground on a $7.5 million, 31,000-square-foot headquarters in Cleveland, which the group’s president and CEO, Richard Browdie, said will allow the agency devoted to senior issues room for growth.

Benjamin Rose last week also finalized a deal to sell for $17.4 million its 144,000-square-foot Kethley House on Fairhill Road in Cleveland to Kindred Healthcare Inc. of Louisville, Ky. Kethley House is the group’s current headquarters and site of its former nursing home that closed in early 2006.

“The proceeds of the sale will liquidate our existing debt,” Mr. Browdie said. “We don’t have $17 million burning a hole in our pocket, but it should allow us to liquidate our debt and pay for most of, but not all, of the new building.”

Since Benjamin Rose’s nursing home closed, Kindred has leased the space and operated its own acute-

care hospital there. Kindred did not respond to requests for comment about what it will do with its additional space.

Mr. Browdie said Benjamin Rose, which offers an array of home care and other services for low-income seniors, is poised for growth in the coming years given the push at the federal and state levels to better coordinate care in hopes of keeping people out of costly health care settings, such as nursing homes.

“Right now we see ourselves as having an opportunity because we have a very long track record and high competency in coordinating multiple aspects of care,” Mr. Browdie said. “Care coordination is the buzzword these days. As it happens, it’s part of our DNA.” Mr. Browdie said the new space also offers the organization the opportunity to expand its research operations.

Benjamin Rose retained Herman Gibans Fodor Inc. of Cleveland as its architect and Albert M. Higley Co. of Cleveland as general contractor for the project.

■

THERE WERE 66 RELATED COMPANIES IN 32 STATES. THERE WERE MORE THAN 120 EQUITY PARTNERS. THERE WERE PURCHASE AGREEMENTS, AND EMPLOYMENT AGREEMENTS AND MANUFACTURING AGREEMENTS. MORE THAN 800 SEPARATE AGREEMENTS IN ALL. AND THE DEAL REQUIRED UNANIMOUS CONSENT. SO HOW DID WE COMPLETE A $400 MILLION PRIVATE EQUITY TRANSACTION FOR A NATIONAL WINDOW COMPANY IN JUST 140 DAYS?

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CRAIN’S CLEVELAND BUSINESS

TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.

LIENS FILED IEC Technologies Corp.

19111 Detroit Road, Suite 300, Rocky River ID: 31-1606584 Date filed: Feb. 22, 2012 Type: Employer’s withholding Amount: $330,591 IEC Technologies Corp.

19111 Detroit Road, Suite 300, Rocky River ID: 31-1606584 Date filed: Feb. 22, 2012 Type: Employer’s withholding, unemployment Amount: $232,378 Solutions 8102 Bainbridge Road, Chagrin Falls ID: 34-1727132 Date filed: Feb. 9, 2012

Type: Employer’s withholding, failure to file complete return Amount: $150,899 Affordable Supply Center Inc. 720 E. 152nd St., Cleveland ID: 20-3513654 Date filed: Feb. 14, 2012 Type: Employer’s withholding Amount: $137,303 Inner City Development and Personal Growth Foundation 6816 Superior Ave., Cleveland ID: 04-3774516 Date filed: Feb. 22, 2012 Type: Employer’s withholding Amount: $92,083 Flannerys Pub of Cleveland Ltd. 323 Prospect Ave. E., Cleveland ID: 34-1837261 Date filed: Feb. 2, 2012 Type: Employer’s withholding, partnership income, failure to file complete return Amount: $91,407 La Veer Partners Inc., La Veer Childcare & Enrichment Ctr. 38679 Country Meadow Way, North Ridgeville ID: 75-3251077 Date filed: Feb. 9, 2012 Type: Employer’s withholding,

WWW.CRAINSCLEVELAND.COM

APRIL 16 - 22, 2012

unemployment, corporate income Amount: $76,275

Type: Employer’s withholding Amount: $25,974

Type: Employer’s withholding Amount: $10,344

Dimpledough LLC 4807 Rockside Road, Suite 370, Independence ID: 20-4599233 Date filed: Feb. 2, 2012 Type: Employer’s withholding Amount: $54,673

Construction North LLC 31100 Pinetree Road, Suite 201, Pepper Pike ID: 35-2317096 Date filed: Feb. 22, 2011 Type: Employer’s withholding, employer’s annual federal tax return Amount: $25,240

Berry Insulation Co. 1600 E. 25th St., Cleveland ID: 36-4628732 Date filed: Feb. 9, 2012 Type: Employer’s withholding Amount: $10,193

MSB Holdings LLC 24481 Detroit Road, Westlake ID: 20-0897380 Date filed: Feb. 7, 2012 Type: Employer’s withholding Amount: $50,306 Paul F. Smith Jr. DDS Inc. 20119 Farnsleigh Road, Suite 207, Shaker Heights ID: 34-1337892 Date filed: Feb. 7, 2012 Type: Failure to file complete return Amount: $48,161 Minotas Inc. 734 Alpha Drive, Unit B, Highland Heights ID: 04-3734800 Date filed: Feb. 2, 2011 Type: Employer’s withholding, unemployment, corporate income Amount: $37,549 Tree of Hope Enrichment Center Ltd. 17877 Saint Clair Ave., Cleveland ID: 56-2330695 Date filed: Feb. 22, 2011

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Strebely Enterprises Inc. Mariannes Homestyle Bakery 5670 Dunham Road, Maple Heights ID: 34-1875983 Date filed: Feb. 2, 2012 Type: Employer’s withholding Amount: $16,933

CM Conrad Inc. 29691 Lorain Road, North Olmsted ID: 26-1947799 Date filed: Feb. 7, 2012 Type: Employer’s withholding, unemployment Amount: $5,411

LIENS RELEASED Canvas Specialty Mfg Co. 4045 Saint Clair Ave., Cleveland ID: 34-0890218 Date filed: Nov. 16, 2011 Date released: Feb. 7, 2012 Type: Employer’s withholding Amount: $24,050

Freds Autobody Inc. 7172 Northfield Road, Walton Hills ID: 34-1829838 Date filed: Feb. 7, 2012 Type: Employer’s withholding Amount: $16,185 Kyron Plating Corp.

1336 W. 114th St., Cleveland ID: 34-0960138 Date filed: Feb. 14, 2012 Type: Employer’s withholding Amount: $17,985 Westfall Legal Services Co. LPA 75 Public Square, Cleveland ID: 20-2368829 Date filed: Feb. 16, 2012 Type: Employer’s withholding Amount: $12,512 Terra Serra LLC Café Ah-Roma 38 W. Bridge St., Berea ID: 34-1943631 Date filed: Feb. 7, 2012 Type: Employer’s withholding Amount: $11,254

Ohio Family Realty Inc. 26747 Brookpark Ext., North Olmsted ID: 42-1552978 Date filed: Feb. 9, 2007 Date released: Feb. 22, 2012 Type: Employer’s withholding Amount: $11,260 Varrsity Constructors LLC 23209 Miles Road, Suite 2A, Cleveland ID: 20-5305272 Date filed: Nov. 18, 2011 Date released: Feb. 14, 2012 Type: Employer’s withholding Amount: $6,134 Watsons Funeral Home Inc. 10913 Superior Ave., Cleveland ID: 34-0755005 Date filed: July 7, 2010 Date released: Feb. 7, 2012 Type: Employer’s withholding Amount: $31,762

Lakeside Building Services Inc. P.O. Box 470433, Broadview Heights ID: 51-0585756 Date filed: Feb. 22, 2012

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CRAIN’S CLEVELAND BUSINESS

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GOING PLACES JOB CHANGES ARCHITECTURE PERSPECTUS ARCHITECTURE: Eric Lahrmer to project director; Jennifer Gibson to interior designer.

TDA ARCHITECTURE: Scott Clifford to project manager.

interactive designer; Derek Bryan to marketing manager; Aaron Lucas and Steve Pfeiffer to account executives; PJ Filipowicz to creative director; Marisa Dalessandro to senior marketing manager.

NONPROFIT

Lahrmer

Gibson

West

Danielle Szabo to community sales associate.

FREE MEDICAL CLINIC OF GREATER CLEVELAND: Dr. Regina Savage to dental director.

PENSKE AUTOMOTIVE GROUP: John Barner to general manager, Audi Willoughby; Mike Burns to general manager and Todd Hartmann to new car sales manager, Toyota of Bedford; Steve Sanders to new car sales manager, Honda of Mentor.

SERVICE

NORTH COAST COMMUNITY HOMES: Jan Schrag to director of marketing.

DIRECT CONSULTING ASSOCIATES: Brian Horowitz to project manager, health care IT practice.

SAINT LUKE’S FOUNDATION: Heather Torok to senior program officer, urban health and well-being.

EMPLOYEE BENEFITS INTERNATIONAL: David N. Leszcz to principal.

EDUCATION

REAL ESTATE

BALDWIN-WALLACE COLLEGE: Michael C. Nock to director, Blackstone LaunchPad program.

KELLER WILLIAMS REALTY:

AUTOMOTIVE

GREAT LAKES INTEGRATED: David Eckhardt to chief financial officer; Kostika Radivoj to executive vice president, sales; Robert Schultz to

Steele

Jones

Torok

executive vice president, operations.

PRICE FOR PROFIT: Brad Steven to partner.

RGH ENTERPRISES INC.: Steve Eisenberg to vice president, general counsel.

TALENTWISE: Hollie Zelenka to regional sales manager, Ohio.

Szabo

Leszcz

Eisenberg

AWARDS NATIONAL DIVERSITY COUNCIL, OHIO: Ruth Ramos Clifford (Compass Consulting Services LLC) received a 2012 Ohio Multicultural Leadership Award.

TECHNOLOGY

VOCATIONAL GUIDANCE SERVICES: victor gelb received the Herbert E. Strawbridge Lifetime Achievement Award.

THE KARCHER GROUP: Roberto Capotosto to account manager; David Brown to account coordinator.

Send information for Going Places to dhillyer@crain.com.

KENT STATE UNIVERSITY: John L. West to Trustees Research Professor.

FINANCE FIRSTMERIT CORP.: Gerald A. Buck to vice president, commercial real estate banking, Erie Shores region.

FINANCIAL SERVICE CM WEALTH ADVISORS: Cynthia G. Koury to partner.

You were expecting brisket, maybe?

DMS MANAGEMENT SOLUTIONS: Paul A. Becker to accounting manager.

MANUFACTURING BETTCHER INDUSTRIES INC.: Edward Alan Steele to director of engineering.

LIBRA INDUSTRIES: Phil Jones to director of manufacturing.

MARKETING FLEISHMAN-HILLARD INC.: Stephen Lee to senior vice president, corporate communications group leader.

HENNES PAYNTER COMMUNICATIONS: Howard Fencl to vice president.

QUEZ MEDIA: Shannon Colon to

ON THE WEB

Story from www.CrainsCleveland.com.

Ohio Legacy stock will stay on Nasdaq Ohio Legacy Corp., the North Canton-based parent company of Premier Bank & Trust, has learned that its stock will remain listed on The Nasdaq Stock Market since the company has regained compliance with the required minimum bid price of $1 per share.

In a filing with the Securities and Exchange Commission, Ohio Legacy revealed that it received the notice from the Nasdaq on April 2. The notice cited the company's closing bid price of more than $1 for the last 10 consecutive business days — March 19 to March 30.

The company received notice on March 8 that its stock had failed to maintain the required price and that it had a period of 180 days to regain compliance.

Ohio Legacy's stock price was $1.08 last Thursday, April 12.

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APRIL 16 - 22, 2012

Weather: Sluggish demand for wintry products hurts some continued from PAGE 3

seasonal work force three weeks earlier than normal. The garden center ups its base staff of 12 to 15 workers to 50 employees during the summer.

Northeast Ohio had one of the warmest winters on record, with temperatures climbing as high as 83 degrees in March. Such unseasonable weather created waves — good and bad — at area businesses such as Gale’s.

At the Cleveland Metroparks, which operates 16 reservations, eight golf courses and the Cleveland Metroparks Zoo, higher temperatures in March filled the parks with sunbathers, picnickers and dog walkers.

And in early April, people started reserving picnic shelters, which regularly don’t rent until mid-May, for mid-April, said Jane Christyson, director of marketing for Cleveland Metroparks.

Meanwhile, the Metroparks’ biggest revenue drivers — the zoo and golf courses — are bringing in sizable increases in income. The zoo’s revenue so far this year is up 27% compared to the like period in 2011, and golf courses are ahead of budget. Ms. Christyson said the ear-

“We were expecting Armageddon according to the weather service, and what we got was spring in March.� – Jacqueline Mayo, communications director, Cleveland Hopkins International Airport ly business on the links and at the zoo likely won’t detract from future revenue because visitors usually go to those places multiple times a year. “We haven’t put any seasonals on,� she said of adding summer employees. “We’re just trying to deal with basically the startup of the summer season two to three weeks before normal.�

Hot times for cold treats Matt Thornicroft, assistant marketing and communications manager of Cleveland-based Pierre’s Ice Cream Co., called the company’s first-quarter sales “very pleasing. “We’ve noticed an increase that would be more typical of late spring volume in early spring,� Mr. Thornicroft said, though he refused to divulge sales figures.

Pierre’s strong quarter also can be attributed partly to the company’s new lactose-free ice cream flavors, which it unveiled at the first of the year. The ice cream opens the

I research.

I fulďŹ ll.

company to a new pool of lactoseintolerant consumers.

At Cleveland Hopkins International Airport, the unseasonable weather meant fewer headaches and greater cost savings. Because the weather was milder than in winters past, airlines had fewer cancellations and delays. The airport also didn’t need to run its snow plows as often, nor did it need to use as many chemicals to clear runways and ready planes. “We were expecting Armageddon according to the weather service, and what we got was spring in March,� said Jacqueline Mayo, the airport’s communications director.

The warm weather did cause a few problems, though, in the form of high winds, which took some of the smaller, regional jets with turbo propellers out of service.

The flip side At Cargill, which operates a rock salt mine near the mouth of the Cuyahoga River, reduced demand

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PHOTO PROVIDED

Unseasonably warm weather this year has spurred higher sales at Pierre’s Ice Cream Co., keeping its Cleveland plant, seen above, busy. for road salt chipped away at the company’s production. It cut back at all three of its mines — in Cleveland, where the company employs 200 people, Lansing, N.Y., and Avery Island, La. In addition to reducing employees’ hours at the three mines, Cargill also laid off 10% to 20% of its employees in New York and Louisiana. “Some days, while people were working, we weren’t bringing up salt. We would do a lot of maintenance projects,� said spokesman Mark Klein. “We tried to fill the time that way.�

Cargill stretches its production process throughout the year, ensuring its salt supply is ready before winter weather hits. During the winter, crews typically mine six days per week; Cargill reduced that figure this past winter, though Mr. Klein wouldn’t disclose specifics. “If you take a long-term view of the business and the long-term relations you have with customers, you try to balance things out. When you have a year of low demand, you still are going to have customers next winter and you need to be able

to serve them,� Mr. Klein said.

The Little River Pet Resort in Columbia Station, meanwhile, was rolling in business this winter.

Tim Tringhese, the resort’s owner, said the lack of severe storms kept pet owners from canceling their travel plans, resulting in more sustained business. And sunnier weather led people to travel more, upping the numbers of dogs being boarded. “Our day care business in particular was significantly busier this winter since pet owners want to take advantage of sunny days and get their dogs out playing for the day,� Mr. Tringhese said.

The resort’s overall sales through March were up 15% compared to the like period in 2011, while the day care program’s sales doubled from the previous year.

The mild winter also allowed Little River to make faster progress on its expansion, Mr. Tringhese said. The resort, which acquired two more acres, is adding 25 guest rooms and four play yards. The outdoor work wasn’t expected to be finished until March or April, but was wrapped up by January. â–

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GAME ON! We’re a month away from the scheduled opening of the Horseshoe Casino Cleveland.

Just what can we expect when it’s up and running?

To gauge effects on local economy, we may need to wait Enthusiasm seemingly abounds downtown, but how big a boost Horseshoe brings remains anyone’s guess

By JAY MILLER jmiller@crain.com

W

ith interesting food and a front door less than 500 feet from the Horseshoe Casino Cleveland, the odds are good that Pura Vida, a year-old restaurant, will benefit from the opening of the new gambling hall.

Brandt Evans isn’t expecting thousands of customers to flock to his eatery.

“But if I just get 20 (customers) a night from the casino, I’ll be happy,” said the owner of the 100-seat bistro at 170 Public Square in the former May Co. department store building.

Mr. Evans, a chef trained at The Culinary Institute of America, believes his style of presentation — he calls the menu’s roster of appetizer-size portions an “urban picnic” theme — will appeal to casino-goers who may want just a quick break from the slot machines and gaming tables.

“You can come in and get some appetizers, a couple cocktails and go off and go gambling,” Mr. Evans said. “(And) vice versa: If you want

a late-night bite, the same situation.”

And he thinks his 2:30 a.m. liquor license could keep the kitchen humming into the wee hours as casino employees knock off work and look for a place to wind down.

Winners, too, because of the Cleveland casino’s opening are likely to be the 1,600 employees who keep the 2,100 slot machines and 93 gaming tables running smoothly.

Beyond those jobs and Mr. Evans’ visceral enthusiasm, however, predicting the economic impact of the new casino is pretty much a crapshoot.

“For me, a casino is like any other business” that opens, said casino researcher Douglas Walker.

“A casino is usually positive on employment and wages” immediately, he said.

After that, said Dr. Walker, an associate professor of economics at the College of Charleston (S.C.), his research on the impact of gambling on a community’s economy is inconclusive.

In a chapter in the forthcoming See ECONOMY Page 16

JANET CENTURY

Brandt Evans’ Pura Vida is located just across from the Horseshoe Casino Cleveland, which is expected to open May 14 pending final approval from the Ohio Casino Control Commission.

Cleveland offers latest case study in urban casinos City-center gambling locations have different characteristics, challenges

By MICHELLE PARK mpark@crain.com

B

uild a casino in the heart of downtown, and they will come. But who and at what cost?

We’ll know soon enough.

With the opening of the Horseshoe Casino Cleveland mere weeks away, this region soon will be able to gauge for itself the positives and negatives of putting a casino right smack dab in the middle of a city.

This breed of facility is called an urban casino, and Detroit and New Orleans are among a handful

of cities in the United States that have been there and done that.

More are likely to follow.

There is a trend toward more urban casinos, or those built into city centers, in the United States, said Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

A law legalizing casinos was signed in late 2011 in Massachusetts, where the cities of Boston and Springfield have been identified as potential casino sites, and there’s been a big push for urban casinos in Miami and New York City, too, said Mr. Eadington, a

professor of economics who has studied the gaming industry since the early 1970s.

“If (urban casinos) are successful, which I think they will be, there will be a copycat effect,” he said.

Mr. Eadington wagers that the casinos in Ohio, specifically those opening in Cleveland and Columbus, will enjoy more success than some others.

“Both Cleveland and Columbus are a long way from competing casinos … whereas Cincinnati already has casinos that service that market, and Toledo is roughly 60 miles from Detroit,” he said. “If you’re the only game in town,

you’ve got a better ability to draw people from that market, you’ve got pricing power. You can be, frankly, a mediocre property and still do well.”

Of course, urban casinos pose some unique challenges, Mr. Eadington said. Among them are parking issues, land assimilation and safety considerations.

Cleveland casino operators haven’t quantified the difference in cost they incurred by developing Horseshoe Cleveland in the downtown Higbee Building instead of somewhere else. However, Matt Cullen, president and chief operating officer of Rock Gaming LLC, which has partnered with Caesars Entertainment Corp. to develop and See URBAN Page 18

INSIDE ■ BEING THE BOSS: We catch up with general manager Marcus Glover to gauge the casino’s readiness for opening. PAGE 16 ■ WHAT’S NEXT?: Real estate insiders are betting that the casino will shake up development and retail leasing in downtown Cleveland.

PAGE 17

Horseshoe Casino Cincinnati ■ OHIO’S OTHER PLAYERS: Sizing up the other three casinos in Ohio, in Toledo, Columbus and Cincinnati.

PAGES 18-19

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Economy: Casino has neighbors in mind THEINTERVIEW continued from PAGE 15

book, “Oxford Handbook on the Economics of Gambling,” Dr. Walker writes that his several studies of gambling since 1998 “suggest that there is a short-term positive impact of casino gambling on economic growth, but that the effect dies out in the longer term.”

Uncertain jackpot A new casino, Dr. Walker theorizes, draws money from lotteries and other existing gambling operations and pulls entertainment dollars from other activities, blunting any real economic growth.

Dr. Walker is even skeptical of the value of the tax revenue that flows from a casino into state and local government treasuries because “casino expenditures come at the expense of noncasino expenditures to such a large extent that, despite the high tax rates applied to casino revenue, the reductions in noncasino spending lead to declines in sales tax revenues that are even larger.”

However, Dr. Walker’s argument doesn’t consider the value of shifting back to Cleveland the spending that goes to out-of-state regional casinos, such as those in Pennsylvania and West Virginia.

A study commissioned by the Greater Cleveland Partnership — the city’s chamber of commerce group — when it spearheaded an unsuccessful attempt in 2005 to bring casino gambling to Ohio estimated that neighboring states’ casinos siphoned $925.5 million from the pockets of Ohioans, which translated into $367.3 million in lost tax revenue.

According to the GCP study, which was conducted by Strategic Partner Management Consulting

of Clarkston, Mich., Cleveland and Cincinnati were “two of the top feeder markets in the country for casino customers” in 2002 and 2003.

A Horseshoe Casino Cleveland fact sheet estimates that gambling there will generate $100 million in annual gaming tax revenue that will go to local government and school districts. The casino operator estimates the city of Cleveland will get $29.7 million; Cuyahoga County, $18.7 million; and county school districts, $22.5 million.

Outside connections Like Dr. Walker, David Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas, isn’t sold on the broader economic benefits of casinos.

“Basically, (casinos) would generate revenues and create jobs,” he said. “Are they going to spark more development? Possibly, possibly not, depending on whether people are going to patronize businesses outside the casino.”

Unlike most casino operations in the United States, the Cleveland casino is in the center of the city and its owners have made a commitment to connect to the businesses outside its doors.

Rock Ohio Caesars LLC, the joint venture of Cleveland Cavaliers majority owner Dan Gilbert and Caesars Entertainment Corp. that is building the Horseshoe Casino, has not taken the self-contained, city-within-a-city approach that characterizes most casinos.

Rock Ohio Caesars has planned only a modest food court, which includes a Corky and Lenny’s delicatessen and Michael Symon’s B Spot burger joint. And though the company has bought the 205-room Ritz-Carlton Hotel that, like the casi-

no, is attached to Tower City Center, it expects many out-of-towners will choose from among downtown’s existing and planned hotels.

A different beast David Gilbert, president of Positively Cleveland, the area’s convention and visitors’ bureau, is not yet hearing about big expansion plans from the hospitality industry operators. Rather, he said, they are taking a wait-and-see attitude.

“I think it’s hard to know exactly what to expect,” Mr. Gilbert said.

“In a lot of ways this is exciting but unchartered territory; it’s different from a new museum opening or a short-term event.”

He is somewhat optimistic because of Rock Ohio’s strategy. He said the casino is developing a program that will reward casino high rollers with vouchers for meals at downtown restaurants and complimentary rooms at nearby hotels.

Mr. Gilbert also cites the burst of hotel development and redevelopment that he believes has been spurred by the casino and the Cleveland Medical Mart and Convention Center that is under construction downtown.

He ticked off five hotel projects that currently are under way — the renovation of the former Crowne Plaza Hotel Cleveland City Centre, across from Public Auditorium; the conversion of the Schofield Building at East Ninth Street and Euclid Avenue; the under-construction Aloft Hotel that is part of the Flats East Bank project; and even the Tudor Arms and Courtyard hotels at University Circle.

“You can tie the casino and medical mart and convention center to that large amount of private investment,” he said.

■

MARCUS G. GLOVER General manager Horseshoe Casino Cleveland Q What needs to happen before the May opening? Do you have a countdown?

A I’m reminded every day of what our opening time frame is. I don’t need a countdown. Most of the physical elements are put in place.

What’s going on inside now is what we call “punch list items.” Some things are being repaired, others fine-tuned. We’re developing internal controls and training our team to comply with the minimum controls set by the Ohio Casino Control Commission.

Q Will people know, upon walking inside the casino, that it’s a former department store?

A There are quite a few elements that remain. Those who are intimately familiar with the Higbee Building, they’ll notice the elements that remain, the crown molding work, the load-bearing columns we’ve restored to their original, opulent state.

Q What population will the Cleveland casino work to appeal to most?

A We like to view our operation and entertainment experience as appealing to all demographics above 21. At the end of the day, we are trying to drive as much traffic to downtown as we can. We do feel we’ll be able to drive some national business. We will use the city of Cleveland as our anchor. Instead of sending direct mail pieces telling people to come to Horseshoe Cleveland, we’ll tell them to come to Cleveland, visit the Rock and Roll Hall of Fame, see your favorite play at PlayhouseSquare, and oh, by the way, Horseshoe Cleveland sits two blocks away. Our model has always been about connectivity and leveraging the city’s assets.

Q Do you have plans to combat any negative social impact, namely problem gambling?

A Sure. I would be remiss if I dismissed that problem gambling is a challenge. It affects 1% of the gaming population, but we take it very seriously. When we see people who engage in compulsive gaming behavior, we engage them. This is part of who we are. (Caesars has), on each property we operate, roughly 20 or so responsible gambling ambassadors trained to identify those who exhibit compulsive gaming behaviors. Our operation is an entertainment experience, and

Bring morale up.

About thirty stories.

FILE PHOTO/JASON MILLER

we want our guests to view it just as that.

Q What type of general manager do you aim to be?

A I have a couple things that I try to impart to my team. I think you’ve got to have the utmost integrity in anything you do. Communication is key. I think trust, accountability and collective responsibility are all important. Having some sense of empathy and caring is important.

This is a very people-intensive business. I’ve always told our team members, opening up our doors is like inviting someone to our home.

This is what I do for a living, but to see so many people excited to see this asset come online is very humbling.

Q Do you gamble? If so, what’s your favorite gambling experience?

A This is my form of business. I frequent casinos to check out the competition. I cannot play at any Caesars casinos. But my game of preference is craps. I love the number of decisions.

Q What’s going to make Cleveland’s casino different?

A The city of Cleveland itself, which already has world-class assets. I think adding a casino operation strengthens that profile. We are doing a casino very differently from many places. Both Cleveland and Cincinnati are building them downtown to generate economic development and to leverage the great aspects each city has to offer.

Building a casino in a historic building, in a former department store, is unrivaled in any location in this country.

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Changes ahead for already-remade downtown real estate

By STAN BULLARD sbullard@crain.com

S

ome bets are being placed now. Others may not be made for years. Regardless, the opening of the Horseshoe Casino Cleveland promises to shake up real estate development and retail leasing in downtown Cleveland in a way not seen for a long time.

Even for someone with the perspective of Ari Maron, a developer who for a dozen years has lived and breathed the rebuilding of lower Euclid Avenue as a neighborhood, the additional buzz created by the casino is striking.

“The energy and the excitement about downtown the last few months have been palpable,” said Mr. Maron, a partner in familyowned MRN Ltd., which created the East Fourth Street Neighborhood on that street and lower Euclid.

“We are seeing increasing interest in both retail leasing and residential leasing,” Mr. Maron said.

Property owners, brokers and downtown development experts see two stages to the casino’s impact on the city. First is the immediate change in the streetscape that should transform Ontario Street and lower Prospect Avenue and may help invigorate adjoining Tower City Center.

The second stage will be when the new Cleveland Medical Mart and Convention Center opens next year. That property is expected to bring more convention visitors , a

market Cleveland essentially has not tapped for years.

The combined impact of the casino and convention center could include new hotels from the Flats East Bank project on the Cuyahoga River to Euclid and East Ninth Street.

Walk this way Tom Yablonsky, executive vice president of the Downtown Cleveland Alliance and executive director of the Historic Gateway and Warehouse District neighborhood development groups, expects to see the casino help create a “seamless pedestrian experience” on Prospect from East Fourth Street to Ontario and north on Ontario to Public Square because of real estate development activity along those routes.

Mr. Yablonsky also believes there will be a continued transformation of Euclid Avenue from Public Square east to Cleveland State University as a hospitality, entertainment and residential corridor.

A big opportunity on Prospect, Mr. Yablonsky said, will be the reuse of a block of five buildings — four of them empty — on the south side of Prospect between East Fourth and East Second streets.

One of those structures — a longvacant building at 310 Prospect — and an adjoining 16-space parking lot next door has attracted the interest of two prospective developers, according to Rico Pietro, a principal of the Cresco real estate brokerage who has a listing to sell the properties for LR Development

Co. of Los Angeles.

Mr. Pietro said LR is deciding whether to sell those properties separately from others in its Cleveland portfolio that he is marketing; those properties include more than 600 parking spaces nearby at a parking lot and parking deck at 413-611 Huron Road.

The parking lots, which serve arena and ballpark traffic, also are expected to benefit from the advent of the casino. Mr. Pietro said a total of five prospective owners are looking at the entire portfolio; two are local and the rest are out of town.

He said most of the prospective buyers, who hail from Canada to both coasts, are drawn by both the casino and other projects in downtown’s $2 billion building boom.

Ring-a-ding-ding The mix of prospective retailers is also different from what downtown has attracted in recent years, said Richard Sheehan, a vice president for investment services and retail at Grubb & Ellis Co.’s Cleveland office. National retailers are in the hunt for space downtown thanks to the casino as well as the convention center, Mr. Sheehan said.

Empty storefronts are available on the Prospect side of the old May Co., 200 Euclid Ave., and at 2025 Ontario, both owned by Morgan Reed Group of Miami Beach.

Morgan Reed continues to study whether to create apartments or a hotel on empty upper floors of the May Co. building after the Cleve-

land City Planning Commission this year rejected its idea for using four floors as a parking garage. However, a Morgan Reed executive who spoke on grounds he not be identified said street-level storefronts on Prospect are another story.

“We have a number of interested parties,” the executive said, although Morgan Reed has not concluded any leases so far. Noting that the neighborhood lacks a number of retail services, he said interest is mainly from convenience and food-store operators.

Matt Howells, owner of the Park Building on the corner of Ontario and Euclid and the adjoining Southworth Building on Ontario, said he is negotiating with a couple “grab-and-go” restaurants with perhaps 10 seats each for two storefronts on Ontario and hopes to land a “very cool infill” retailer for a tiny, 700-square-foot storefront.

“The phone has been ringing off the hook” with inquiries about the retail component of the multimillion-dollar condo and apartment complex on Public Square, he said.

He expects to conclude leases soon, although many prospects want to wait until after the casino opens.

‘Deeper than the casino’ Matt Cullen, president and chief operating officer of Horseshoe Casino Cleveland partner Rock Gaming LLC, said he hopes Cleveland benefits from what the casino is sure to bring: millions of people who will give it a new sense of vitality.

“When you start seeing all those people walking around on the street, you can see boutique retailers who can make it that couldn’t when cars zoomed by,” Mr. Cullen said.

Although Tower City Center owner Forest City Enterprises Inc. has said it expects to benefit from the start of casino gaming, the company did not comment for this story. Forest City leased space in its Higbee Building for the casino, sold its Ritz-Carlton Hotel to the casino’s operators, and sold the casino owners acreage on Huron Road south of Tower City for construction of a new casino.

Mr. Cullen said he and partner Dan Gilbert do not believe they need to own nearby properties if their owners are taking steps the two men believe are good. However, one area Mr. Gilbert and his partners might pursue is adding apartments downtown. With a 96% occupancy rate downtown creating a shortage of places for casino workers to live, he sees apartments “as opportunity” for developers.

Some, like Steve Calabrese, an appraiser and developer who has owned downtown properties for decades, see the opening of the casino as just the first shot in a resurgence of downtown.

“This is far deeper than the casino,” Mr. Calabrese said. “A number of things are coming together in unison that will make this different from past periods when the Warehouse District or the Flats or Gateway were developing separately.” ■

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Urban: New Orleans, Detroit casinos fit well continued from PAGE 15

operate the casinos in Cleveland and Cincinnati, noted, “Obviously, we paid a premium in order to do that.”

The limitations would have been fewer had the operators built from the ground up rather than renovating a former department store, agreed Marcus G. Glover, general manager of Horseshoe Cleveland.

“We feel it will add a very unique aspect to this casino experience,” Mr. Glover said. “Just as much as there were complexities to it, there were benefits to it.”

Already in the game The reports out of New Orleans and Detroit regarding those cities’ urban casinos are largely positive.

The city of Detroit pulls in about $175 million a year in tax revenues from its three casinos. And in New Orleans, Harrah’s New Orleans is expected to generate roughly $30 million for the city in taxes in 2012 alone, according to Cynthia Connick, who’s been involved with the casino since its inception.

Initially, New Orleans’ downtown casino operator had hurdles to clear — namely, bankruptcy after it encountered financing struggles during construction.

Over the years, however, the casino has drawn tourists and locals back to downtown, said Ms. Connick, executive director of Rivergate Development Corp., an agency the city created to develop a defunct convention center site into the casino. Nationwide marketing by the casino and the loyalty perks it uses to give people an incentive to

come to New Orleans also are big pluses, she said.

“It was a new industry, so there was a lot of trepidation about how it would fit into New Orleans,” Ms. Connick recalled. “There were some concerns related to an increase in crime, to the fact that the casino would detract from local businesses, both hotels and restaurants. I can tell you that none of those things have come true.”

Crime has not increased, she said, noting that statistics are reviewed periodically, though less frequently now that the casino has been operating for 14 years. In addition, the casino partners with local restaurants and hotels, “so those industries have not suffered at all.”

Harrah’s New Orleans also is a terrific corporate citizen, she noted, citing the community service its employees do and how casino executives serve on various boards throughout the community.

More wouldn’t be merrier Marvin W. Beatty, spokesman for Greektown Casino-Hotel in Detroit, said his property has strengthened Detroit in many of the same ways.

“From our vantage point, we’ve been nothing but positive for the city,” said Mr. Beatty, vice president of community and public affairs.

“We’ve hired people. We’ve paid taxes. We’ve built infrastructure.”

The Greektown casino opened in November 2000, around the same time all three of Detroit’s privately developed casinos opened.

Though he has no shortage of

OHIO’SOTHER PLAYERS Horseshoe Casino Cincinnati Expected open date: Spring 2013

T RENDERING PROVIDED

Gamblers’ problems can worsen One of the biggest problems that can be created by urban casinos — or gambling itself — is when people spend down their savings and destroy their wealth, noted Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. That’s a less tangible, harderto-measure consequence.

What is known, however, is that casinos tend not to increase an area’s number of problem gamblers so much as they increase the severity of the problem some people already have, noted Keith Whyte, executive director of The National Council on Problem Gambling in Washington, D.C. The impact of urban casinos isn’t materially different from that of destination casinos, he noted. reasons why the casino has been good for Detroit, Mr. Beatty noted that he opposes an effort to put on a statewide ballot a proposal to build eight more casinos in Michigan,

“Those people with existing problems may be able to get into a lot deeper debt, may be able to gamble at much higher stakes much more frequently … because that is now much more available, so proximity does matter,” Mr. Whyte said.

Mr. Whyte did say, however, that the prevalence of people gambling to make money rather than gambling for fun is probably higher at urban casinos.

Horseshoe Casino Cleveland’s people are trained to identify problem gamers, and the referendum that allowed the casinos also allocates tax dollars to provide resources for them, said Matt Cullen, president and chief operating officer of Rock Gaming LLC. — Michelle Park where more than 20 already operate.

The math, he said, speaks for itself: The annual revenue created by casinos in Michigan has not changed materially as more casinos have opened. To expand the number, the pool of people being drawn upon and the frequency with which people go to casinos would need to change, and he doubts either will.

“I think the reality of it is you will end up moving money from one pocket to the other,” Mr. Beatty said.

Attempts to reach municipal leaders in both New Orleans and Detroit by Crain’s deadline were unsuccessful.

Win, lose or draw?

One of the main differences between urban casinos and destination casinos is the people they draw.

A Las Vegas casino “exports” goods and services produced to tourists who come from out of market, the University of Nevada, Reno’s Mr. Eadington said. Ohio’s casinos, meanwhile, likely will be frequented most by locals who live within a 30- to 40-mile radius.

“You’re going to be cannibalizing other businesses,” he suggested. “It sucks up a lot of money that would go elsewhere in the community.”

That said, there also will be those who come to town, and those who would have gone elsewhere who now may choose local entertainment.

That phenomenon has some of the economic benefit that tourism would have, he said.

Ultimately, the impact of the casino in Cleveland will be judged by the city’s own success, Horseshoe Cleveland’s Mr. Cullen said.

“We think we can be a part of a transformation within the city of Cleveland,” he said.

■

he $400 million Horseshoe Casino Cincinnati is a partnership between Dan Gilbert’s Rock Gaming LLC and Caesars Entertainment Corp., the same group developing Cleveland’s Horseshoe Casino.

The Las Vegas-style Cincinnati casino will be a 354,000-squarefoot, two-story property on 20 acres in the city’s Over-the-Rhine district.

About 100,000 square feet will house 2,300 slot machines, 73 table games and a 31-table World Series of Poker room. There will be a high-limits gaming area and a VIP players’ lounge.

A 33,000-square-foot second level will have multipurpose and

Hollywood Casino Columbus Expected open date: Fourth quarter 2012

T

he $400 million Hollywood Casino Columbus will have 3,000 slot machines, 70 table games, a 30-table poker room and two restaurants — an Epic Buffet and a Final Cut Steakhouse — as well as a sports bar, lounge and entertainment venue.

Originally planned for downtown, the location for the casino was moved to a 123-acre site west of the city that previously was home to a Delphi auto parts plant. The Hollywood Casino Columbus will be 300,000 square feet, including the parking garage; the casino floor is about 130,000 square feet.

Penn National Gaming Inc., the developer of both the Columbus and Toledo casinos, has carried its Hollywood brand through both locations. Ohio spokesman Bob Tenenbaum said visitors can expect to see an art deco, 1930s Hollywood design.

With ties to several major Hollywood studios, Penn National will cover its casino walls with enlarged movie posters from classic and current movies. Movie trailers will play on large multimedia screens throughout the casino, while the sports bar area will show a variety

Hollywood Casino Toledo Expected open date: Week of May 28

T

he Hollywood Casino Toledo will have 2,000 slot machines and 60 table games, plus a 20-table poker room.

The $300 million, 290,000square-foot casino and parking garage is owned and operated by Penn National Gaming Inc., and the same art deco, 1930s Hollywood motif that’s being used in the company’s Columbus location will be carried out at the northwest Ohio site.

The casino will include modern touches, including a $10 million multimedia system flashing movie trailers and scenes from classic films, and the sports bar will feature sporting event coverage.

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“It’s a relatively new concept that all Penn National casinos will carry,” said Mr. Tenenbaum, adding that Penn National has remodeled several older casinos to bring them in line with the Hollywood theme. “These are primarily entertainment facilities, and everyone relates to the movies. It’s a very high-end rendition of something people are familiar with and enjoy.”

Hollywood Casino Columbus has an agreement with three central Ohio colleges and the Central Ohio Workforce Investment

Corp. to train about 1,200 of its anticipated 2,000 employees.

Columbus State Community College will offer culinary training for food service operations; Hondros College will train prospective table-game dealers; and Central Ohio Technical College will train for a variety of nongaming positions, including technicians, casino cage employees, safety personnel and first responders.

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“Almost everything about the casino says Hollywood. It’s very

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APRIL 16 - 22, 2012

Faces: From clay to bronze, process is long continued from PAGE 1

all over the country and locally at Cleveland Browns headquarters in Berea, University Hospitals’ new Ahuja Medical Center in Beachwood and at University Circle, soon will have his latest work — a sculpture of former Plain Dealer rock critic Jane Scott — unveiled at the Rock and Roll Hall of Fame and Museum in downtown Cleveland.

The sculpture originally was set to be installed at the museum for the Rock Hall’s celebration of the April 14 induction ceremonies in Cleveland, but instead will go in around the Fourth of July, Mr. Deming said. Most recently, he completed an 8-foot sculpture of former University of Texas running back Ricky Williams, which was unveiled April 1 in Austin, Texas, at the school’s annual spring football game.

Mr. Deming, a 1967 graduate of CIA, said he figured out pretty quickly that sculpting was his forte: In an early class at the school, still harboring thoughts of a career as a portrait painter, he discovered there wasn’t enough depth in that genre. How? He was poking holes in the paper.

“Painting wasn’t physical enough, I found out,” he said. He later earned a master’s of fine arts from Cranbrook Academy of Art in Bloomfield Hills, Mich.

Prior to re-joining CIA in 1998, Mr. Deming was a professor, sculptor and administrator at the University of Texas for 26 years, completing busts of such figures as Southwest Airlines’ then-CEO Herb Kelleher, former Texas congressman and Lyndon Baines Johnson confidant Jake Pickle, and former president George H.W. Bush.

But Mr. Deming struggled to win commissioned work for full figures, because he didn’t have any to his name. So, about eight to 10 years ago, he created a larger-than-lifesize figure of Patrick Parker, Parker Hannifin Corp.’s former CEO. Then, the work followed.

Dreading the dreadlocks There’s his re-creation of the late U.S. Rep. Stephanie Tubbs Jones, who sits on a bench outside the Western Reserve Historical Society.

continued from PAGE 1

David Deming’s sculpture work includes the late Stephanie Tubbs Jones, who sits outside the Western Reserve Historical Society in University Circle, and late Cleveland Browns owner Al Lerner, who stands guard at team headquarters in Berea.

PHOTOS PROVIDED

And the late Al Lerner, who owned the Browns, watches over the team’s Berea headquarters. Those sculptures are in addition to busts that include University Hospitals benefactor Monte Ahuja and his wife, Usha; Norma and Al Lerner; and James Pender, former CEO of insurance brokerage Oswald Cos. All that led to Mr. Deming’s most recent work, the sculpture of Mr. Williams, the enigmatic and marijuana-loving former University of Texas player and No. 1 overall pick in the 1999 NFL draft. The creative process took about nine months, with the modeling lasting about three months and the bronze casting — done by Studio Foundry, located on Cleveland’s near East Side — lasting five to six months. That’s atypical, as Mr. Deming said the Jane Scott work took only about four months total.

Mr. Deming starts with a small model of what he wants a sculpture to look like. In Mr. Williams’ case, he then formed the frame of the full-size figure with angle iron and packed that frame with oil-based clay; challenges included Mr. Williams’ dreadlocks and his signature visor on his helmet.

“You know how these college rivalries are,” he said. “You can’t have

anything sticking off the sculpture that opposing fans can rip off, so the dreadlocks were difficult.”

Studio Foundry cast the work in bronze, and Mr. Deming drove the full-size Ricky to Austin by pulling a 16-foot trailer behind his GMC Denali. Ricky weighs 1,200 to 1,500 pounds with a bronze base, Mr. Deming estimated, and he now sits in the same corner of Darrell K. Royal-Texas Memorial Stadium as a statue of Earl Campbell, another former Texas running back and the school’s other Heisman Trophy winner.

Jim Baker, formerly associate athletic director for events at Texas and now athletic director at the University of Texas at Arlington, sat on a committee of three in charge of picking the sculptor. He said Mr. Deming’s past work and his ties to Texas were big factors in commissioning him.

Mr. Baker said the school did not make it easy on Mr. Deming, but Texas was happy with the result.

Mr. Deming also produced a threefoot version of the statue to give to the lead donor for the main sculpture now inside the stadium.

His work goes to the dogs In addition to his Jane Scott piece,

Mr. Deming next April will take a full-size piece to the University of Texas, of major track and field donor Mike Myers. He also sculpted the Hall of Fame plaques embedded in the exterior walls of Cleveland Browns Stadium.

But busts and sculptures aren’t Mr. Deming’s only specialties. His studio at the old Lake Erie Screw factory on Athens Avenue in Lakewood — where Mr. Deming grew up, attended high school and now has been for two years since retiring from CIA — overflows with abstract welds of random tools and of unique dog pieces. He got started on the latter while in Texas, when the Texas Fine Art Association asked for something themed to the subject of time for a fundraiser.

His work quickly resembled a dog — an oxygen tank for the head and plumbing parts for the toes, with random metals welded into shape — so he finished it, thinking he’d find another idea for a timethemed piece later.

Instead, he gave the association the dog, which sold for $5,000.

Now, pieces in his “encounter” series, of dogs playing or fighting (depending upon how you view dog interactions), typically sell for $15,000.

■

Drug: Alzheimer’s sufferers clamor for treatment continued from PAGE 3

Other scientists have been impressed by the research, published in February in the online version of the journal Science. Among them is Dr. Michael Rafii, associate medical director of the Alzheimer’s Disease Cooperative Study, a group based in La Jolla, Calif., that works to advance research related to the disease.

Dr. Rafii described the results as “startling.” Though other drugs have shown the ability to remove beta-amyloid from the brains of mice, Dr. Rafii said he knows of no drugs that have done so as rapidly as bexarotene.

The research also is important because it represents “a different pathway to target in the treatment of Alzheimer’s,” Dr. Rafii said.

Whereas bexarotene uses ApoE to remove beta-amyloid, other drugs being tested use either antibodies to bind with the protein fragments or molecules that block the enzymes that produce them.

Still, the drug needs to be proven

Prices: For now, a way to cover costs

in humans, Dr. Rafii said.

Not only are humans and mice physically much different, but the mouse version of Alzheimer’s is different than the human version, he said. For one, the mice, bred to have a rare dominant gene that causes Alzheimer’s in humans, don’t suffer permanent neural damage, but humans with Alzheimer’s eventually do.

Words of warning Dr. Bill Thies, chief medical and scientific officer for the Chicagobased Alzheimer’s Association, voiced similar cautions, noting that several researchers have created treatments that worked in mice but failed in Alzheimer’s patients.

Still, Dr. Thies lauded the study.

Drs. Landreth and Cramer are off to a good start, he added, given that the drug already has been approved by the U.S. Food & Drug Administration for treating skin cancer. The rarely prescribed drug is sold under the brand name Targretin by pharmaceutical firm Eisai Co. of Japan.

The company’s patent on the drug expires this year.

“It’s got a history. We know something about its safety,” he said.

The research has caught the attention of families affected by Alzheimer’s.

Dr. Landreth said he has received hundreds of emails and phone calls from people clamoring to receive the drug. He instead directs them to the Alzheimer’s Association, which pairs patients with clinical trials testing various Alzheimer’s treatments.

There’s a huge amount of desperation among the estimated 5.4 million U.S. residents that have Alzheimer’s, Dr. Landreth said. Existing drugs just treat symptoms while the condition grows worse, he said. Multiple drugs that could reverse the condition are in clinical trials, but none have received FDA approval.

Even though bexarotene is on the market, Dr. Landreth strongly recommends doctors avoid prescribing it for off-label use. For instance, he noted that no one knows what

happens to a person’s brain if you remove beta-amyloid so quickly.

Needed: Lots of money If a phase I clinical trial was to start today, it still would take five to seven years before ReXceptor could finish testing the drug in Alzheimer’s patients and win FDA approval to start selling bexarotene for use in treating Alzheimer’s, said Michael Haag, a technology transfer official at CWRU who is serving as ReXceptor’s CEO. And there’s no telling whether the drug will make it through clinical trials or whether the company will attract the “hundreds of millions of dollars” that will be needed to complete all of them, Mr. Haag said.

“We are going to be in need of a strategic partner with that kind of money,” he said.

However, the team wants to build ReXceptor in the Cleveland area, Dr. Landreth said.

“We’re committed to staying in Northeast Ohio,” he said.

■

prices; then they’re rolled back.”

Dr. Hill said a scattered number of price increases doesn’t signify a trend necessarily, but always is a good sign.

The automotive supply chain is one area in which he has seen promise.

As sales have risen, manufacturers started aggressively pricing goods.

“Particularly, the OEMs (original equipment manufacturers) are treating their suppliers a bit better,” Dr. Hill said. “They’re not trying to bankrupt the supply chain.”

Among those suppliers is Akronbased Goodyear Tire & Rubber Co., which this month increased prices 6% in its U.S. replacement consumer tire business, which supplies tires to dealers.

Last November, Goodyear upped the price of its commercial truck tires by 10% in order to offset rising raw material costs, which in 2011 climbed 30% compared to the previous year.

A greener bottom line Chart Industries’ Distribution and Storage Group will raise prices next month by 5% on its atmospheric and CO2 bulk tanks, and by 3% to 5% on its packaged gas transportable products and MicroBulk vessels.

Kenneth Webster, vice president, chief accounting officer and controller of Chart Industries, said the price hikes are tied to rising freight costs, fuel prices and material costs that have eaten at the company’s bottom line.

“This year it’s more of a factor of covering costs. I think longer term it should be a positive for us. As long as demand is maintained, I would say I’ll be fairly optimistic,” said Mr. Webster of price increases sticking.

Chart Industries is benefiting from increased demand for its products because of the hydraulic fracturing, or fracking, activity in the oil and gas industry. But even Cleveland-based paint maker Sherwin-Williams Co., which operates in the beleaguered housing sector, has raised prices, and apparently also has benefited.

Last week, Sherwin-Williams Co. announced that it was raising its estimate of the sales and earnings it expects to report for the first quarter largely because of an approximately 20% increase in sales within its Paint Stores Group. Sherwin-Williams said the increase was due to higher sales volume and price increases.

Mike Conway, director of corporate communications and investor relations for Sherwin-Williams, declined to comment on the extent of the company’s price increases in advance of its investor conference call scheduled for this Thursday, April 19.

Exception to the rule Of course, not every manufacturer has had to hold off on raising prices.

Cleveland-based Pipe Line Development Co., which makes pipeline repair and maintenance fittings, escaped the prize freezes with which many manufacturers have had to deal.

Marketing manager Kim Smith said the 98-employee Pipe Line was able to raise prices during the recession because of the firm’s overseas sales, which account for 70% of its business, and growth in the oil industry.

“The dollar is weak and oil prices are high,” Ms. Smith said.

Pipe Line’s sales have grown about 8.6% per year, which officials plan to exceed in 2012, Ms. Smith said.

■

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Permits: New business follows gas continued from PAGE 1

The department issued 179 permits for horizontal fracking wells in the Utica shale from Jan. 1, 2009, to March 31 of this year, though the majority of the permitting activity has occurred in recent months.

ODNR issued 90 horizontal well permits between Jan. 1 and March 31 of this year, its records show — and observers say the number for April could be even larger than the 37 permits issued in March, the last full month for which figures were available. The number of horizontal drilling permits issued by the state has gone up each month this year, with 23 issued in January and 30 in February.

But permits only tell part of the story, according to ODNR’s state geologist, Larry Wickstrom.

“What you really need to watch is the number of rigs in the state,” said Mr. Wickstrom, who spoke to Crain’s after addressing a crowd of several hundred people at a sold-out shale gas conference in Cambridge, Ohio, last Wednesday, April 11.

of Commerce and Convention & Visitors Bureau, told the Cambridge audience last week that working on shale gas-related issues is now her full-time job, and it’s bringing new business opportunities to the county.

Every day, multiple people walk into her office in Carrollton seeking property, office space, employees or some other resource needed by drillers and their suppliers, she said.

Carrollton’s restaurants are busy, hotels are booked and drillers are paving roads to gain their own access to rural sites. Many former one-lane dirt roads are now freshly paved twolane roads, she said.

“We would have never been able to upgrade those roads ourselves,” she said.

Spreading the wealth Other areas soon will feel that same boost, predict people such as Mr. Wickstrom and Chesapeake’s Mr. Sheppard.

Chesapeake, for one, will continue to move resources to Ohio from other states, Mr. Sheppard said.

Mr. Wickstrom also notes that while natural gas prices continue to fall, the price of oil is holding at about $100 a barrel or more — and that price is driving production to Ohio.

And don’t forget about plain old crude oil, said Mr. Wickstrom, who estimates there are 5 billion barrels of crude oil that can be recovered from Ohio’s shale. That number, he said, reflects a recovery rate of about 5% —

LAUREN RAFFERTY

meaning that 5% of the oil in the shale will be extracted — though Mr. Wickstrom noted that some drillers predict they’ll recover far more than that.

“About the most we can say about

a volumetric approach like this is it’s a guess, and we know we’re wrong,’” Mr. Wickstrom said. “But I’d rather be low and be wrong” than to guess too high, he said.

■

Dig those rigs Mr. Wickstrom said with so much demand for rigs across the United States, each one is valuable — and any time they spend sitting idle is money lost for the energy companies that own them. Each rig can put in place a horizontally fracked well in about three weeks, he said — and there are 21 rigs in the state so far.

Eight of those rigs belong to the largest driller in the state, Chesapeake, and it will move more here this year, said company spokesman Pete Kenworthy. The company intends to have 20 rigs up and running in Ohio by the end of this year, he said.

If math isn’t your thing, 20 rigs, each producing a new well every three weeks, equates to about 15 new wells being drilled in Ohio each month, or a pace of about 180 new wells a year.

But that’s just one company, and observers say when all the drillers active in Ohio are considered, the pace of drilling will be much higher.

Mr. Wickstrom estimates 200 horizontal wells will be drilled in Ohio this year alone, and the pace will increase to about 1,000 new wells per year by the end of 2014, he said.

Each well has an economic impact — they cost between $3 million and $6 million apiece to drill, require cement pads that take between five and 15 acres of space apiece, and take in 5 million to 6 million gallons of water during the drilling process, according to various industry studies.

They also use dozens of vendors and suppliers, from water trucking companies to landscapers, studies show, helping to multiply their impact.

Carrollton is hopping That impact already is felt in places such as Carroll County, which Mr. Wickstrom said is a hotbed of activity so far because its gas is rich in liquids.

Amy Rutledge, executive director of the Carroll County Chamber

Volume 33, Number 16 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012

by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373.

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THEINSIDER

THEWEEK APRIL 9 - 15 Schools, teachers agree to agree: Cleveland Mayor Frank Jackson and David Quolke, president of the Cleveland Teachers Union, reached an agreement on a plan to reform the Cleveland Metropolitan School District. The reform effort, called the Cleveland Transformation Plan, would give the district greater flexibility to close underperforming schools and to partner with charter schools. It also would give school principals greater responsibility over budgeting and hiring. A key to the accord was the mayor’s decision to abandon his call for tearing up the existing contract with the teachers’ union in order to give the union and the district a so-called “fresh start” on their relationship. The mayor said agreement on eight other key elements of the plan eliminated the need for tearing up the existing contract. For more on Mr. Quolke, see Page 8.

New items on the menu: Country music star Toby Keith’s namesake bar and grill headlines five new restaurants that developers of the Flats East Bank project announced have committed to taking space at the mixed-use project in Cleveland’s Flats. Other eateries that plan to join Toby Keith’s I Love This Bar & Grill are Ken Stewart’s, part of the Ken Stewart’s family of upscale restaurants; restaurateur Fabio Salerno’s Lago, which offers Italian food at four Clevelandarea locations; Flip Side, a high-end burger concept with operations at First & Main in Hudson and Easton in Columbus; and Dos Tequilas, a Mexican restaurant.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Guess he knows which way the wind is blowing

how to meet the U.S.’s energy needs. — Dan Shingler

■ The 500 or so people at the Ohio Shale Energy conference in Cambridge last Wednesday might have noticed that one of the discussion leaders was Ed Weston, the man who built the Clevelandbased Great Lakes Wind Network into an organization of more than 1,000 U.S. companies in the wind energy field.

At a conference touting the advantages of shale Weston gas?

You bet, said Mr. Weston, who was quick to say that his presence did not mean he’s lost enthusiasm for wind energy. He still believes in it, but he also thinks natural gas is likely to serve as an energy bridge that helps get the nation away from its dirtiest source of energy, coal, to eventually using wind, solar and other forms of renewable power. Natural gas burns cleaner than coal, but like any fossil fuel still releases carbon and other pollutants into the atmosphere when it’s burned.

But there’s another reason Mr. Weston said he supports natural gas — because doing so serves the members of his wind network.

“We did some research and found that most of them are already in the oil and gas industry,” Mr. Weston said.

He didn’t mention that as the price of natural gas drops, it’s crowding out wind in both local and national conversations about

MAI spreads the wealth in its updated offices

WHAT’S NEW

BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.

Get ready for more housing pain this year

Sticking close to home:

Plastics resins supplier A. Schulman Inc. plans to move its headquarters to a new location in Fairlawn two miles from its current home. The new building, which will anchor the new Fairlawn Corporate Park, will be 34,000 square feet and will house 130 employees. A. Schulman also will move employees from its Akron Product Technology Center to the new building and to its Akron manufacturing operations, and says it plans to sell the technology center and its current headquarters building. The latter will be bought by Landridge Development of Fairlawn, from which A. Schulman will lease its new headquarters.

Welcome to Akron: University Park Alliance, a nonprofit development corporation in Akron, has signed an agreement with Equity Inc. of Columbus for the real estate developer to construct and manage the first two buildings of a planned mixed-use development at East Market and Forge streets in Akron. The partners did not put a cost on the two structures, which will be Equity’s first projects in Akron. University Park Alliance said Equity plans to start construction this spring on a two-story, 25,000-square-foot building that will house Child Guidance & Family Solutions of Akron. Also planned is a 75,000square-foot commercial building.

Capital keeps coming: Radisphere National Radiology Group Inc. has raised another $5 million in equity financing, capping a $15 million investment round. Three investors contributed to the round, according to documents Radisphere filed with the Securities and Exchange Commission. The company, which has its largest office in Beachwood, provides remote and on-site radiology services to community hospitals.

■ More than $1 million of renovations have equipped the downtown Cleveland offices of MAI Wealth Advisors with a café, a trading room and … a living room.

Yes, the wealth management firm turned a conference room into a living room, complete with “nice cushy chairs and a couch” — an effort to provide a casual, relaxed atmosphere for clients, said Rick Buoncore, MAI managing partner.

Finishing touches are under way, and an open house is planned for the summer at the offices, located on the 11th and 12th floors of the IMG Building on East Ninth Street.

The firm’s predecessor office was opened in the building about 50 years ago, and this is the first major renovation, Mr. Buoncore said.

The café is a large room with an island where people can eat and the firm can conduct its monthly town hall meetings.

The trading room is an interactive space with four large television screens on the wall where MAI executives can host webinars and can hold demonstrations, such as on portfolio hedging, for clients.

“It’s a lot easier seeing it and hearing it, versus looking over someone’s shoulder at their desk,” Mr. Buoncore said.

The $1.3 million project wasn’t only for the benefit of the firm’s clients and employees, but for the city, too, he said, noting how the

THE COMPANY: Diversified Fall Protection, Westlake THE PRODUCT: Loading Dock Rolling Safety Gate The company recently unveiled an improved loading dock safety gate that complements its existing line of fall protection products.

The OSHA-compliant rolling safety gate protects workers from loading dock falls and is available in six-, eight- and 10-foot stock widths, according to Diversified Fall Protection.

“The average loading dock poses a fourfoot fall hazard, which is enough to cause serious injury or death to pedestrians and fork lift operators,” says company president Jeff Schneid.

The barrier system’s pivoting design uses a rolling wheel that provides total accessibility to the dock’s overhead door and truck opening, according to the company. When not in use, the safety gate “is easily rolled back to the locked and protected position.”

The pivot-and-roll feature “eliminates lifting and removing heavy sections of portable guard rail, keeping loading docks gated and OSHAcompliant when not in use,” the company says.

A floor-based, pin lock feature also reduces tripping hazards posed by other mobile dock safety gates currently on the market, according to the company.

■ A Reuters story, reported largely from Northeast Ohio, served as a warning for anyone who thought the strengthening economy was going to bring an end to the housing slump.

Rather, the news service said, “a painful Part Two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.”

Mark Seifert, executive director of Empowering and Strengthening Ohio’s People, a counseling group with 10 offices in Ohio, told Reuters, “We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010.”

He added, “Last year was an anomaly, and not in a good way.” In 2011, the “robo-signing” scandal, in which foreclosure documents were signed without being properly reviewed, prompted banks to hold back on new foreclosures pending a settlement.

Numbers available so far this year back up those statements. For instance, mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28% in January.

Although foreclosure starts were well below the same period in 2010, those begun by Deutsche Bank were up 47% from last year, while those of Wells Fargo rose 68%.

Still caught up in the crisis is Daniel Burns, 52, a Garfield Heights resident who in December 2010 lost his job as a long-haul truck driver and manager. To cover his

firm committed to downtown for another 11 years in its renewed lease. That lease affords the firm about 5,000 more square feet, bringing its total to 25,000. —Michelle Park

This video gets to the heart of the matter ■ A five-minute video could help save lives — or at least that’s what MetroHealth pulmonologist Daryl Thornton has discovered.

Dr. Thornton, also an assistant professor in the Center for Reducing Health Disparities at Case Western Reserve University, dispatched a team of researchers to area Bureau of Motor Vehicles offices and armed them with iPods loaded with a video encouraging people to become organ donors.

Turns out, the simple trick worked, as 84% of those who watched the video became organ donors compared to 72% of those who didn’t watch the video, according to his research published this month in the Annals of Internal Medicine, a medical journal. The results were more dramatic among the African-American community, as 76% of those who watched the video became organ donors compared with 54% of those who didn’t.

“As far as effective interventions go, it’s cheap, it’s brief and it’s potent,” Dr. Thornton said. “There shouldn’t be much resistance to implementing it on a large scale.”

Dr. Thornton said his next step is working with the state of Ohio to make the videos a regular part of BMV operations. — Timothy Magaw

mortgage, Mr. Burns received a grant from a government fund using money repaid from the 2008 bank bailout. However, Reuters said, the grant is due to expire in early 2013.

Mr. Burns told Reuters flatly, “If things don’t pick up, I will be out on the street.”

Organizational fiends of the world unite in Cleveland ■ Clevelanders are among the most organized people in the country when it comes to detail-oriented tasks such as maintaining financial records and filing taxes on time, according to a Forbes.com post based on a new ranking by doxo, an e-payment website and “digital filing cabinet.”

Steve Shivers, co-founder and CEO of doxo, told Forbes.com the timing of when people file their taxes suggests “who’s got their junk drawers in order.”

The firm “looked at several metrics of organization to compile the first annual list of the Most Organized Cities, just in time for tax season,” the website reported.

“Each city’s numbers were tallied and the Metros awarded a ranking on the dOI, the ‘doxo Organizational Index.’”

The firm ranked large U.S. cities based on a number of key organization factors broken down by what doxo called “Primary” and “Secondary” factors. Primary factors include recycling rates, individual income tax filing timeliness and junk mail cancellations. An example of a secondary factor is concentration of members of the National Association of Professional Organizers.

By this measure, Cleveland is the country’s 13th-most-organized city, ahead of Denver and behind Pittsburgh. (Isn’t that always the case?) No. 1 was Boston, followed by Raleigh, N.C., and Miami.

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THE 2012 JAGUAR XJ DAYDREAM VS DAY TRIP

EXPERIENCE THE POWER OF LIGHT.

We believe that doing something is better than thinking about it. Whether you want to go to the most luxurious location or the most remote, Land Rover is perfectly designed to take you wherever your imagination leads.

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Weight is the enemy of performance. So the 2012 Jaguar XJL employs a 100% aluminum body.

To that we add an abundance of luxury and distinction. The result is a flagship sedan that is uncommonly quick and surprisingly agile. It’s a rare achievement. For some. But not for us.

2012 XJL $81,575 Lease for $899 x 36 months with $3,000 down, plus bank, doc and license fees and local taxes. Š2011 Jaguar Land Rover North America, LLC

LAND ROVER SOLON LAND ROVER SOLON

2012 Range Rover Sport. $799 x39 mths. $999 down plus 1st payment and fees for a total of $2,899.

6137 KRUSE DR., SOLON

MSRP $63,145. With Tier 1 credit through

1-866-210-6707/www.landroversolon.com www.landroversolon.com LAND ROVER SOLON

USBank.Offer expires 4/30/12

www.landroversolon.com THE RANGE ROVER • RANGE ROVER SPORT LAND ROVER LR2 • LAND ROVER LR4

6137 KRUSE DR., SOLON (440) 542-0601 www.jaguarcleveland.com

CLEVELAND

* 36 month lease/10,000 miles per year. $4,159 total due at delivery cash or trade. With tier 1 credit thru Jaguar Financial Services. Good til 4/30/12

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6135 Kruse Dr. • Solon • (440) 542-0600 • www.DavisAutomotive.com