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$1.50/MAY 30 - JUNE 5, 2011
Liquor profit plan: Worth a shot?
NOTICE TO READERS Crain’s Cleveland Business will resume publication on June 6. Visit CrainsCleveland.com daily for the latest business news in Northeast Ohio.
Kasich’s strategy to lease proceeds for JobsOhio entails large debt obligation By JAY MILLER jmiller@crain.com
High risk, high reward. That’s how one public finance professional describes Gov. John Kasich’s strategy to use profits from liquor sales to boost Ohio as a place for new businesses to start and
existing businesses to grow. The reward is jobs, investment and new tax revenues for the state. The risk is that the plan could saddle JobsOhio, the nonprofit the governor is working to create, with $1 billion in debt. That debt will have first call, ahead of any economic development investments,
Kasich
Kvamme
on the state-run liquor operation’s profits, which JobsOhio is buying from the state. The governor’s proposal has
JobsOhio paying the state $1.2 billion to lease Ohio’s liquor profits for 25 years. JobsOhio would issue bonds to pay off the state upfront. The debt service on those bonds is expected to be $40 million annually, or a total of $1 billion. Mark Kvamme, the governor’s director of job creation and economic development guru, said he believes the upside of JobsOhio outweighs what he sees as modest downside risk. See LIQUOR Page 24
Bankruptcy filings ebb in NE Ohio
JUICES ARE FLOWING
Those still ailing seek less costly alternatives
Northeast Ohio companies power up to capitalize on smart grid technologies
By MICHELLE PARK mpark@crain.com
By CHUCK SODER csoder@crain.com
Bankruptcies are down — but don’t get too excited. Yes, when compared to year-ago numbers, bankruptcy filings have dropped in Cleveland and Akron in seven of the past eight months. From January to April, total filings, which include consumer and commercial bankruptcies, are down 10% in Cleveland and 20% in Akron INSIDE: Bankcompared to the ruptcy filings in like period last Cleveland and year. Akron have At face value, dropped over the the trend appears last year. Page 4 to be a welcome signal of economic recovery. But from the vantage point of those who work in bankruptcy circles, recovery isn’t the sole — or even main — reason for the decline. Attorneys and advisers say a key factor in the decrease in bankruptcy filings is because more people and businesses are favoring methods cheaper than bankruptcy to reorganize their finances. “Banks and companies are trying to avoid the costs of bankruptcy, and so they’re working harder to resolve these issues without bankruptcy,” said Larry Goddard, president of The
T
he extra 10-cent charge that FirstEnergy Corp.’s residential customers just started seeing on their bills is only the beginning. The money that the charge generates is a miniscule piece of what utilities are expected to spend over the next decade or so as they transform the nation’s electric grid into a much smarter machine. Several Northeast Ohio companies see big opportunities to capitalize on demand for “smart grid” technologies, which are projected to give utilities more control over how power flows through the grid while also giving consumers more control over how they use it. See POWER Page 8
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INVE$TINGGUIDE2011 Financial losses teach investors a lesson in awareness, involvement ■ Page I-1 PLUS: ESTATE PLANS ■ SUPERSTAR 10 ■ & MORE
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 22