Crain's Cleveland Business

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CONTRIBUTED PHOTOS

Look cool?

It’s by design A Westlake company has found its niche by producing translucent, backlit stone, wood and glass features for the lush lobbies of corporate buildings.

GPI Design’s work can be found in the lobby of the Cleveland Public Library, and all over the world.

STORY, PAGES 12-13

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ON THE WEB: For a photo gallery of GPI’s work, log on to: www.crainscleveland.com/GPI

TOP: The Owner’s Box Sports Bar in the Omni Hotel at the Dallas Convention Center features a glowing floor covered by newspaper pages. LEFT: The Grand Hyatt in San Francisco has illuminated walls along the path of the hotel’s escalators.

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Entire contents © 2013

by Crain Communications Inc. Vol. 34, No. 25

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$2.00/JUNE 24 - 30, 2013

I Can believes in big dreams Schools network is set to extend outside Cleveland, and maybe state

By TIMOTHY MAGAW tmagaw@crain.com

CONTRIBUTED PHOTOS

Look cool?

It’s by design A Westlake company has found its niche by producing translucent, backlit stone, wood and glass features for the lush lobbies of corporate buildings.

GPI Design’s work can be found in the lobby of the Cleveland Public Library, and all over the world.

STORY, PAGES 12-13

ON THE WEB: For a photo gallery of GPI’s work, log on to: www.crainscleveland.com/GPI

TOP: The Owner’s Box Sports Bar in the Omni Hotel at the Dallas Convention Center features a glowing floor covered by newspaper pages. LEFT: The Grand Hyatt in San Francisco has illuminated walls along the path of the hotel’s escalators.

Given its strong enrollment and solid student outcomes, the charter school network hatched by Marshall Emerson III and Jason Stragand in 2010 has performed well, by all accounts. But rather than sit idly and watch their four schools mature, the duo is spreading their I Can Schools brand outside Cleveland.

This fall, I Can Schools plans to open schools in Maple Heights, Akron and Canton — an ambitious proposition that Mr. Emer-

son, a former fifth-grade teacher and current I Can Schools’ chief executive, admits causes him to lose sleep at night.

Emerson Still, Messrs.

Emerson and Stragand have big ideas for their enterprise, dreams that eventually could propel the I Can Schools network beyond Ohio and into urban strongholds such as Detroit and Chicago, which, like Cleveland, have stomached public school closures and are thirsty for other educational options.

“We know where the need is,” Mr. Emerson said, “and we know I Can Schools’ programs can fill those gaps.”

See DREAMS Page 22

Out-of-state banks buying roots in area Institutions entering NE Ohio market at a swift rate in the last 10 months

By MICHELLE PARK mpark@crain.com

With plenty of cash in their coffers and loan demand not exactly what they might like it to be, a number of regional banks are chasing growth by hanging their shingles in Northeast Ohio.

In the last 10 months, at least four out-of-market institutions have entered, or have announced they will enter, this region.

Two — Buffalo-based First Niagara Financial Group and S&T Bank of Indiana, Pa. — are introducing themselves via loan pro-

INSIDE: Urban Partnership Bank exits market. Page 23 duction offices they’ve staffed with veteran lenders from this region.

First Niagara hired Phil Rice, a former National City Rice Bank executive vice president, in late September and in the fourth quarter added two more senior bankers to its Independence office. S&T, which first opened in September in Fairlawn with three lenders, added a fourth last week.

There also is F.N.B. Corp. of Hermitage, Pa., which in February announced its planned acquisition of PVF Capital Corp. — the parent of Park View Federal Savings — and is

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TECHNOLOGY

SMALL BUSINESS

NEW ORDER

Kaman’s Art Shoppes is putting a happy face on caricatures and other art ■ Pages 15-19 PLUS: ADVISER ■ TAX TIPS ■ COLLABORATIVE SPACES ■ & MORE

Entire contents © 2013

by Crain Communications Inc. Vol. 34, No. 25

The Union Club is serving up a batch of new high-tech gadgets ■ Page 3

See BANKS Page 23

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BLACK AND WHITE AND READ ALL OVER

COMING NEXT WEEK When it’s time for a new type of duty How are veterans being integrated into the Northeast Ohio work force? Crain’s will look at that issue and much more, including a look at how military skills can be transferred into civilian positions, in next week’s Military Veterans and Business section

REGULAR FEATURES Big Issue .....................10 Classified ....................23 Editorial ......................10 From the Publisher ......10

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Cleveland is a top-five market for daily print newspaper readership, according to research firm Scarborough. Nearly 50% of adults here claim to read a newspaper every day, compared with a 35.7% average nationwide. The Great Lakes and Northeast are the regions most attached to dailies, while readership percentages are lowest in the South and Southwest. Scarborough says the number of daily print newspaper readers in the United States is down nearly 20% since 2001. Here are the best and worst markets: Best markets Adults who read a daily print newspaper Pittsburgh 51% Albany, N.Y. 49% Hartford/New Haven, Conn.

49% Cleveland 48% Toledo 47% Worst markets Adults who read a daily print newspaper Atlanta 23% Houston 24% San Antonio 24% Las Vegas 26% Bakersfield, Calif.

26% Source: Scarborough data in Advertising Age

Vegetarians, please avert your eyes.

Starts August 21st.

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CRAIN’S CLEVELAND BUSINESS

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Massive hotel leaves room for critics INSIDE: Publisher Brian Tucker advises those in charge of the design of the convention center hotel to not build another box downtown. Page 10

But most Northeast Ohio operators seem to favor building 600-plus-room project next to downtown convention center

By STAN BULLARD sbullard@crain.com

Most operators of hotels in downtown Cleveland say they support construction of a hotel with

600 to 700 rooms next to the new Global Center for Health Innovation and Cleveland Convention Center, though a few aren’t without their concerns.

The big unknowns are how many

larger meetings the new convention center can win to feed the monster hotel, and how many nights, when the convention center is dark, that the big hotel would feast on customers of other hotels

to satisfy its huge appetite for guests.

Consider how Robert Voelker answers the question of whether he would invest in a convention cen-

ter hotel in downtown Cleveland.

“There’s no question we need more rooms in Cleveland to support a convention center,” said Mr. Voelker, a former manager of the Renaissance Cleveland Hotel who now owns Twinsburg-based Gateway Hospitality Management and multiple hotels.

See HOTEL Page 21

INSIGHT

Accounts rising at healthy amounts More employees are joining plans to save up cash for health care

By MICHELLE PARK mpark@crain.com

HEATHER CAMPBELL

Workers at the Union Club use iPads to take orders at the new outside dining area.

JOIN THE CLUB! 140-year-old institution changes image with new gadgets

By TIMOTHY MAGAW tmagaw@crain.com

T

hough often viewed as a vestige of Cleveland’s Old Guard, the Union Club is making a concerted effort to freshen its image by infusing a healthy dose of high-end technology into the 140-year-old private club, all in hopes of remaining relevant to the modern business profes-

sional.

The 85,000-square-foot private club, which serves as a hub for the city’s movers and shakers, hasn’t shed its terra-cotta cornices or warm woodworking for the metallic sheen of an Apple store.

However, deep inside the 36-inch walls of the hulking sandstone structure at 1211 Euclid Ave. reside a cornucopia of high-tech goodies that Claudio

As the number of enrollees in high-deductible health care plans climbs, and with them, the amount of cash stashed into health savings accounts, more financial institutions are offering the accounts and are innovating to snag more of the market.

The flow of money into health savings accounts, or HSAs, shows no sign of slowing as a rising number of employers — faced with climbing insurance premiums — open the accounts as companions to high-deductible plans for their employees.

HSAs serve as a tax-exempt nest egg for employees. They allow an employee and his or her employer to put away a limited amount of money each year, tax-free, for the employee to use for qualified medical expenses in the future. The balances in the accounts carry over year to year, and the accounts belong to the employees regardless of employment.

See ACCOUNTS Page 8

See CLUB Page 4

THE WEEK IN QUOTES “As much as we say we don’t want to grow for a year and let our schools mature, it’s hard.

We’re incredibly passionate, and it’s really hard for us to stop, knowing that other cities are really hungry for a quality education.”

Jason Stragand, chief academic officer, I Can Schools. Page One

“Every single time, every single sketch, you’re going to get a reaction.”

Kathy Hogan, director of operations and planning, Kaman’s Art Shoppes Inc. Page 15

“We had to have discussions early on about using the kitchen and break rooms to eat because the first person with onions on their sandwich really didn’t go over very well.”

Anne St. Peter, founder, Global Prairie. Page 16

“I would assume it (the ad costs) will vary greatly by the size of the local market and the size of your local telecast. … If you’re in a market in which the games are not watched as frequently on TV, the space becomes that less valuable.”

Eric Wright, president and executive director of research, Joyce Julius & Associates of Ann Arbor, Mich. Page 5

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CRAIN’S CLEVELAND BUSINESS

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Another round of layoffs strikes The Plain Dealer

Newmark Grubb Knight Frank is pleased to welcome Mace Security International to Midtown.

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com

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Another round of layoffs is hitting The Plain Dealer, though its newsroom has been spared for now.

A message posted on the SaveThePlainDealer Facebook page Wednesday night, June 19, said Plain Dealer employees in advertising, marketing, pre-press, finance, building services and information technology were told to go home and wait for a phone call that would let them know if their jobs were cut.

Employees in the newsroom will go through similar cuts at a later date, the message said.

According to a statement issued last Thursday by Plain Dealer Publishing Co. president and publisher Terry Egger, the layoffs are a result of a redesign of the company’s operations and a realignment of its work force.

This round of layoffs comes as The Plain Dealer prepares for a reduced home delivery schedule and an increased focus on online news.

Starting Aug. 5, the paper will be delivered on Wednesday, Friday and Sunday, with a smaller paper also delivered on Saturday.

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others enacted at newspapers that are part of New York-based Advance Publications. Last Thursday, the latest of these reorganizations was announced, as The Oregonian shared plans for its reduced home delivery schedule and coming layoffs.

Mr. Egger’s statement said the company’s redesign of its operations was necessary to ensure its future and that the company was excited to share news about its products and its future as plans are finalized in coming weeks.

“These are difficult decisions, but are necessary,” the statement read.

The statement did not say which departments had been affected, and it noted that the company will “go through a similar process later this summer.”

Management told staff members in December that the newsroom staff would be decreased by about a third, or an estimated 58 employees.

Union head unhappy Harlan Spector, Plain Dealer reporter and Northeast Ohio News-

paper Guild unit chair, said the newsroom layoffs are expected to come before the change in home delivery. Mr. Spector said the company had not shared how many employees were laid off this week.

The guild does not represent the affected departments.

Mr. Spector described a sense of disenchantment among staff and called the cuts “extreme and unnecessary.”

“We’re bracing for our own cuts,” he said. “And it’s been a stressful time in the newsroom.”

Mr. Spector said employees were nervous about the cuts, as they have been during layoffs in the past, but he expressed surprise that there are a number of employees who have told him they’re ready to move on.

“They don’t believe in what the company is doing,” he said.

Mr. Spector also criticized the way Advance Publications was handling the switch to digital journalism, saying other newspaper chains were experimenting with paywalls rather than using a clickdriven model. He said he thinks the change won’t properly support the community that depends on the paper.

■

Club: Goal of adding 140 members in a year could be exceeded in July continued from PAGE 3

SALT • SALT • SALT

ON THE WEB Story from:

Caviglia, the club’s general manager, suggests could help shed the perception it hasn’t changed the way it does business in more than a century.

“The way people do business today, it’s much faster,” Mr. Caviglia said. “They have to communicate quickly and have to have access to so much more. You have to have the technology that provides that for them.”

Over the last two and a half years, the Union Club has pumped roughly $200,000 into its IT infrastructure with further investments on the way.

Upgrades include high-speed wireless Internet connection, video conferencing capabilities, an overhauled website with a new member portal, widescreen video projectors and gizmos that allow members to print directly from their iPads or iPhones.

The club even has offered virtual wine tastings, during which private groups video conference with wine experts in, for instance, California’s Napa Valley from the comfort of a private room at the Union Club.

Plus, within the last few weeks, the Union Club began offering outside dining — not a technological innovation in of itself, though its servers are armed with iPads that allow orders to be made immediately available for processing in the kitchen.

And keeping in line with the needs of the modern business pro-

fessional — think software companies with employees who do business in denim, not couture — the club dress on the patio isn’t nearly as strict as that of the main dining room.

“Any preconceived ideas of the Union Club, they’ve been squashed,” said Sally Weinberg, the club’s marketing, membership and program director.

On the up and up Mr. Caviglia said private clubs nationwide have had a difficult time in recent years maintaining membership and infusing new blood into their organizations, a trend that gained momentum when the recession hit. Still, Mr. Caviglia said the Union Club’s finances and membership roll are healthy.

At current, the club boasts 972 members — a healthy number, according to Ms. Weinberg. As part of its 140-year anniversary, the club launched an aggressive campaign last summer to bring in 140 new members, a goal the club expects to meet and exceed by July. Traditionally, the club enrolls about 45 members over a 12-month period.

“We are standing stronger than ever,” Ms. Weinberg said.

In addition, the club concluded in March one of its strongest fiscal years in its history. While Mr. Caviglia wouldn’t disclose revenue figures, he said the club’s finances

were buoyed by strong membership gains and increased facility rentals. Both increases, he said, were in part fueled by the club’s investments in technology.

The Union Club doesn’t have a full-time tech guru on staff, though its membership base has its share of tech giants from the region’s business community — a brain trust the club taps regularly for inspiration and advice. For instance, Joe LaMantia, managing partner of the supply chain software firm e-Ventus Corp. of Cleveland, chairs the club’s technology committee and was instrumental in bringing many of technological innovations to the club.

“Technology isn’t an afterthought and isn’t a luxury for our younger members,” Mr. LaMantia said. “It’s an expectation.”

Officials at the Union Club, however, insist the club hasn’t abandoned its traditions or alienated older members with the glitz and glam of iPads. The club even has offered educational events to expose older members to smart phone and tablet technology. It’s all in the spirit of remaining relevant. ”We’re right in the heart of Cleveland, and we’re grateful for where we were and where we’ve come to as a club,” Mr. Caviglia said. “Some places have shut down, but we’re still here and strong. We survived the Great Depression, the Great Recession and we’re all grateful for that.”

■

Volume 34, Number 25 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2013 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. REPRINT INFORMATION: 800-290-5460 Ext. 136

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CRAIN’S CLEVELAND BUSINESS

5

New NBA ad spaces could be a boon for Cavaliers The Cleveland Cavaliers — whether it’s by drafting Nerlens Noel, Ben McLemore, Alex Len or Otto Porter, or by using their bevy of picks to acquire an established player via trade — should look much different in 2013-14.

It’s also likely astute observers will notice a different view of two prominent areas at Quicken Loans Arena, where the team plays.

Next season, the NBA will test an advertising program in which the 30 teams will sell ads on the floor in front of team benches and atop the backboards.

The courtside ads will be decals that will be placed in the high-profile areas in front of each team’s bench — a spot that used to be dedicated to promoting team brands.

Last season, the Cavs used the spaces to tout their website and team Twitter account.

The backboard ads are spots that are highly visible when television networks show aerial views of the arena.

An NBA team executive told Sports Business Journal, a trade magazine, that the ads — which likely would be sold in a package deal in which an advertiser would promote its products in both spaces — could fetch anywhere from $500,000 to $2 million per team annually, depending on the market.

Just how the new advertising plan may manifest itself at The Q has yet to be determined.

“We’re still in the evaluation phase,” Cavs senior vice president of communications Tad Carper said. “We’re looking at the opportunity now and seeing how it would fit in our courtside partner mix. We’ve been on the aggressive side of finding new and creative ways for our partners to fit in that space.”

Primo location Eric Wright, president and executive director of research for Joyce Julius & Associates, an Ann Arbor, Mich., firm that measures and analyzes all types of media, said he doesn’t have any firm numbers for the value of the ads the NBA will unveil next season because the market has yet to be established.

But Mr. Wright agrees with the belief that the ads could fetch seven figures per team in a package deal.

“I would definitely concur that it is a pretty prime location,” he said.

“I think it will be interesting to see the type of logo used in this. I think that will have a whole lot to do with how often you see it on TV. That space on the floor is subject to being blocked by players from time to time, and the type of logo that is used will determine how it’s recognized during the game.”

The Cavs were one of a few teams in the league last season that reconfigured their scorer’s table to allow for more courtside signage. Mr. Carper said the team rotated 15 partners in that space in 2012-13, and the latest development only would add to the team’s sponsorship opportunities.

Mr. Carper said the courtside and backboard spaces could be a chance for the Cavs to lure a new advertising partner or expand on a relationship with one of the franchise’s current advertisers.

“We’ll see how it shakes out, but it’s exciting,” Mr. Carper said. “It’s definitely valuable space.”

Small but mighty Mr. Wright said he believes the value of any new sponsorship agreement will depend on the size of the market and, more importantly, how many local residents watch the games on television.

The 2013 estimate by audience measurement firm Nielsen of local TV markets ranked the Cleveland market 18th in the nation with almost 1.5 million homes with TVs, which places the Cavaliers in the lower half of the 30-team NBA in terms of TV market size.

However, on the plus side, Cavs games on Fox Sports Ohio had an average of 43,000 households per game tune in last season, according to an industry source. The source said the Cavs’ local viewership ranked seventh in the league.

That level of viewership would seem to bode well for the team’s chances of securing a lucrative deal for the two ad locations, according to Mr. Wright.

“I would assume it (the ad costs) will vary greatly by the size of the local market and the size of your local telecast,” Mr. Wright said. “If you’re in a market in which the games are not watched as frequently on TV, the space becomes that less valuable.”

Chris Granger, the NBA’s executive vice president of team marketing and business operations, expects the cost of the ads to vary by team, but sees the spots as another way for the league to drive up revenues.

“As you can see from the locations on television, it gets tremendous exposure during the broadcast,” Mr. Granger said.

“I think the market will tell us what it’s worth ultimately,” he said.

“The markets that enjoy more television ratings would gain more exposure for those locations. It would make sense that we would see a variance in how much our partners are willing to pay for this.”

There is one catch in any such arrangement: The NBA controls the ad inventory for national broadcasts and playoff games. Thus, the ads that adorn the scorer’s table, along with the spaces in front of the team’s benches and atop the backboards, will feature national sponsors in those instances.

CONTRIBUTED PHOTO

Last season, the Cleveland Cavaliers used the space in front of the team benches at Quicken Loans Arena to promote their website and team Twitter account. The team can now begin selling the spots to advertisers.

The NEO

By KEVIN KLEPS kkleps@crain.com

Dealmaker

This fall, Crain’s Cleveland Business will publish a special editorial feature dedicated to the people and forces driving the region’s dealmaking.

Are uniforms next?

Mr. Granger said next season is considered a trial period for the new ad spaces.

Another advertising possibility that is expected to be more lucrative — selling small patches on player jerseys — is still in the discussion phase and won’t happen in the 2013-14 season.

“We’re still talking about it and evaluating what the right way to do that would be, should we decide to do it at all,” Mr. Granger said. “Is the exposure and the value from that incremental to our business? I think teams are supportive of it. We just want to make sure we do it the right way.”

The Cavaliers also were among the more innovative teams in the NBA last season when it came to selling spots in the area at which the players spend most of their time.

The Cavs were one of about 15 teams that sold ads on their basket stanchions last season.

Mr. Carper said Moen, FirstEnergy, Verizon and Time Warner rotated as the sponsors for the padded area of the basket support, and State Farm bought the space for the arm that extends to the backboard.

■

Issue date: September 2 Ad close: August 22 For advertising information, contact Nicole Mastrangelo at 216-771-5158 or nmastrangelo@crain.com

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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.

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JUNE 24 - 30, 2013

Guarantee Product Specialties Inc. 9401 Carr Ave., Cleveland ID: 45-0673710 Date filed: May 9, 2013 Type: Employer’s withholding Amount: $31,738 Andy Chevrolet Co. Sims Car Mall 5180 Mayfield Road, Lyndhurst ID: 34-1896322 Date filed: May 21, 2013 Type: Employer’s withholding Amount: $31,665 Lakewood Phoenix Inc. Phoenix Coffee 15118 Detroit Ave., Lakewood ID: 34-1792124 Date filed: May 9, 2013 Type: Employer’s withholding, corporate income Amount: $31,474 21st Century Computers Inc. 3 Summit Park Drive, Independence ID: 80-0644332 Date filed: May 1, 2013 Type: Employer’s withholding, unemployment Amount: $26,742 Virtrex Professional Services Inc. 3 Summit Park, Suite 605, Independence ID: 35-2436723 Date filed: May 1, 2013 Type: Employer’s withholding Amount: $25,374 Kimmichs Growing Trends Inc. 22218 Lorain Road, Fairview Park ID: 34-1302387 Date filed: May 21, 2013 Type: Employer’s withholding Amount: $21,403 Apple Child Care Inc. 3827 Bunker Road, North Royalton ID: 34-1489009 Date filed: May 1, 2013 Type: Employer’s withholding Amount: $21,295

Agresta Landscaping Inc. 11424 W. 130 St., Strongsville ID: 34-1674865 Date filed: May 2, 2013 Type: Employer’s withholding Amount: $19,083 Crossroads REO Inc. 17149 Southpark Center, Strongsville ID: 13-4324891 Date filed: May 9, 2013 Type: Employer’s annual federal tax return Amount: $18,395 PC Coach & Associates LLC P.O. Box 44600, Cleveland ID: 51-0496247 Date filed: May 21, 2013 Type: Employer’s withholding, unemployment, corporate income Amount: $16,715 Harold Pollock Co. LPA 5900 Harper Road, Suite 107, Solon ID: 34-1530164 Date filed: May 8, 2013 Type: Employer’s withholding Amount: $14,712 Thorne Inc. 2249 Payne Ave., Cleveland ID: 34-1651644 Date filed: May 8, 2013 Type: Employer’s withholding, unemployment Amount: $12,303 Kellys Towing Service Inc. 17701 Pennsylvania Ave., Maple Heights ID: 34-1784024 Date filed: May 1, 2013 Type: Unemployment Amount: $11,119 Arirang Garden Inc. 5131 Mayfield Road, Mayfield Heights ID: 34-1871892 Date filed: May 9, 2013 Type: Unemployment, failure to file complete return Amount: $10,262 Bar West Corp. Red Lantern 17446 Lorain Ave., Cleveland ID: 34-1279547 Date filed: May 1, 2013 Type: Employer’s withholding Amount: $10,102 S & S Heating Cooling & Sheet Metal Inc. 10012 Akins Road, North Royalton ID: 34-1660484

Date filed: May 9, 2013 Type: Employer’s withholding, corporate income Amount: $9,029 Paul F Smith Jr., DDS Inc. 20119 Farnsleigh Rd., Shaker Heights ID: 34-1337892 Date filed: May 2, 2013 Type: Employer’s withholding Amount: $8,764 Learning Land Day Care Center Inc. 1440 S. Green Road, South Euclid ID: 04-3721168 Date filed: May 1, 2013 Type: Employer’s withholding Amount: $8,533 ESP Electrical Contractors Inc. 5055 W. 5th St., Brooklyn Heights ID: 20-2738058 Date filed: May 1, 2013 Type: Employer’s withholding Amount: $8,323 Scimone Enterprises Inc. Creative Awards & Impressions 26405 Broadway Ave., Oakwood Village ID: 34-1627419 Date filed: May 21, 2013 Type: Employer’s withholding Amount: $8,284 Three B Manufacturing LLC 13005 York Delta Dr., North Royalton ID: 20-3541565 Date filed: May 9, 2013 Type: Employer’s withholding Amount: $7,940 2182 Brecksville Ltd. 8918 Brecksville Road, Brecksville ID: 26-4607557 Date filed: May 1, 2013 Type: Employer’s withholding Amount: $7,783 City Limits Ltd. 2903 Brookpark Road, Parma ID: 04-3628654 Date filed: May 2, 2013 Type: Employer’s withholding, unemployment Amount: $6,686 Loparo LLC 7135 Kleber Court, Independence ID: 11-3763312 Date filed: May 1, 2013 Type: Employer’s withholding Amount: $5,850 Galindo Inc. Supermercado Rico 3456 W. 117 St., Cleveland ID: 34-1623495 Date filed: May 21, 2013 Type: Unemployment Amount: $5,838

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A J Rocco Co. 816 Huron Road E., Cleveland ID: 34-1944297 Date filed: July 1, 2010 Date released: May 30, 2013 Type: Employer’s withholding Amount: $11,575 Avon Drive In Laundry & Dry Cleaning Co. 1830 Superior Ave., E., Cleveland ID: 34-0866085 Date filed: Oct. 7, 2011 Date released: May 1, 2013 Type: Employer’s withholding Amount: $11,892 Beth-El African Methodist Episcopal Zion Church, Beth-El AME Zion Church 1428 E. 110 St., Cleveland ID: 20-3930827 Date filed: Nov. 1, 2012 Date released: May 1, 2013 Type: Employer’s withholding, unemployment Amount: $8,652

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COMS Interactive gets $21 million backing from company in Boston Young Hudson software firm will pay off some investors, many of whom are local

By CHUCK SODER csoder@crain.com

A young Hudson software company has received a $21 million investment from Summit Partners of Boston.

The company, COMS Interactive, will use some of the money to add staff and tailor its software — which is popular among nursing homes — for other long-term care providers.

COMS also will pay off some of its existing investors, many of whom are local, said CEO Edward Tromczynski.

Summit Partners now owns a minority stake in COMS, which makes software Tromczynski designed to help long-term care providers manage patients with multiple medical conditions.

The private equity firm brings more than cash to the table: Summit Partners has a lot of expertise related to both the software industry and the long-term care market because it regularly invests in those sectors, Mr. Tromczynski said. They’re “practically a strategic investor,” he said.

“If we didn’t have them invest in the company, these are guys you’d want on your board anyway,” he added.

COMS is just five years old, but it has grown quickly. The company has about 850 customers under contract today, up from about 300 in November 2011.

The company employs about 40 people, and that number should rise to about 60 by the end of the year, Mr. Tromczynski said. About 25 of COMS’ employees work in Northeast Ohio, he said.

In conjunction with the new investment, five of the company’s 40 investors cashed in their shares for what Mr. Tromczynski described as “fabulous” returns. Several others sold some of their shares, he said.

Among the local investors who will retain some stake in the company are Zapis Capital of Westlake, Portal Capital of Beachwood, Carleton McKenna & Co. of Cleveland and Next Sparc, an investment vehicle owned by Len Pagon, who founded Brulant Inc., an interactive marketing firm that in 2008 was sold to Rosetta of Princeton, N.J. Carleton McKenna, an investment banking firm, was the first company to invest in COMS and “could not be more pleased with the achievements of the COMS team,” according to a written statement from managing partner Paul Carleton.

“COMS represents a stellar opportunity for everyone associated with this growing organization,” Mr. Carleton stated.

The company’s Daylight IQ software lets nursing home staff build detailed medical profiles of each resident, documenting their diseases, vital signs and treatments the staff has provided. It also sends staff members alerts when it sees a pattern that might be indicative of a problem.

The web-based software has prevented patients from dying early, Mr.

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Tromczynski said. The premature mortality rate among COMS customers is less than half the national average, he said, citing benchmarks set by the Centers for Medicare and Medicaid Services.

Plus, Daylight IQ users have an average 30-day hospital readmission rate of 12.7%, he said. The national average was 18.4% in 2012, according to CMS.

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Mark deLaar, a managing director with Summit, will join the COMS board of directors. In a press release, he stated that the company “represents an outstanding opportunity in the health care technology field.”

■

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JUNE 24 - 30, 2013

Accounts: Number of HSAs grew 22% between 2011 and 2012 continued from PAGE 3

Introduced in early 2004, health savings accounts posted record contributions and withdrawals in 2012, according to Devenir, a Minneapolis wealth management firm.

As of last Dec. 31, the total number of HSAs stood at nearly 8.2 million with estimated assets of $15.5

billion; those figures represented year-over-year increases of almost 22% for accounts and 27% for assets from levels of Dec. 31, 2011, according to Devenir’s 2012 HSA Research Report.

Double-digit growth appears to be the norm.

The balances of HSAs at Cleve-

land-based KeyBank as of May 2013 were up 24% over year-end 2012, and that was after they grew 40% in 2012 over 2011, according to a spokeswoman. The number of accounts climbed 9% from year-end 2012 to May and 25% in 2012 over 2011.

Across its footprint, Minneapolis-based U.S. Bank counted 38%

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more HSAs as of Dec. 31, 2012, than it did at Dec. 31, 2011, and the year before, it posted 25% growth in the accounts.

Likewise, Fifth Third Bank has posted more than 20% growth year over year in recent years, both in terms of accounts opened and balances, said Mark Robich, director of business development for the HSA line of business.

In years past, Mr. Robich said, his dedicated HSA team would be the ones making the approach to interest employers in adding the accounts to their menu of health plan options.

“Now, we’re seeing calls come in,” Mr. Robich said. “The customers are bringing it up.

“The last few years, it’s begun to explode, especially this last year,” he added. “A lot of employers were waiting on what was going to happen with the Affordable Care Act. Now that that ruling has occurred, folks are jumping into the high-deductible space in a big way.”

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One reason the growth over the last year has been so “incredible” is a surge in larger employers opting to go the high-deductible route, according to Bill Ware, senior product manager for corporate payment services-health care for U.S. Bank.

“Larger employers who can really move the needle are making this switch,” Mr. Ware said.

In the earlier years, small employers drove the growth, he noted.

Many local bankers and insurers expect Obamacare changes that take effect next Jan. 1 to drive further growth in HSAs; in particular, they cite a change that compels employers with more than 50 employees to offer health insurance to fulltime workers or pay a penalty.

Given the perceived opportunity, some banks that have been in the HSA business are injecting a healthy dose of innovation into their HSA offerings while others are entering the space.

“It certainly has increased substantially — the number of banks that are offering it,” said Gary Sutter, employee benefits manager for Ohio Bankers Benefits Trust, the arm of the Ohio Bankers League that provides health insurance plans to members.

U.S. Bank in 2012 rolled out a program that enables account holders to upload through a mobile device expense receipts for the use of their HSAs. (The dollars in them must be used for qualified medical expenses to avoid taxation and an IRS penalty).

More is planned by U.S. Bank in the third quarter of this year, too, including the launch of a redesigned consumer portal to help customers track their different types of medical expenditures and plan for coming years, Mr. Ware said.

“We do it because it’s a differentiator,” he said. “Most HSA administrators have a debit card and a good website. But (these) are clear differentiators.”

Relationship business Although many banks charge fees for HSAs unless certain balances and thresholds are met, the accounts are no cash cow for them.

It’s the relationships they’re after.

“It gives us a chance to introduce ourselves to a company that maybe we otherwise wouldn’t meet — and do some of their overall business

THE REPORT SAYS ...

A look at some notable findings from Devenir’s 2012 HSA Research Report: ■ The total number of health savings accounts rose to more than 8.2 million, with assets totaling $15.5 billion, an increase of more than 22% for accounts and an increase of 27% in assets for the period from Dec. 31, 2011, to Dec. 31, 2012.

■ In that same span, the average account balance grew to $1,879 from $1,807, a 4% increase.

■ Total contributions to HSA accounts are estimated to have reached $13.2 billion in 2012, with account-holders retaining about 23% of those contributions.

■ Source: Devenir; View the report at tinyurl.com/lq3dp35. banking,” said Allen S. Lencioni Sr., president and CEO of Geauga Savings Bank in Newbury.

The smaller institution began offering health savings accounts in 2012 at the request of local insurance broker Michael Bentley of The Brooks & Stafford Co., who wanted a small bank HSA offering for his small business clients.

Since then, Geauga Savings has opened 30 health savings accounts totaling nearly $90,000 for sole proprietorships and small companies, Mr. Lencioni said.

“I don’t think there’s going to be a lot of (banks that) don’t have them soon,” he said. “It’s a product that there’s an apparent demand for. As a community bank, you tend to look at what the bigger guys are doing, see if it’s working for them and see if it’ll work for you.”

Mr. Lencioni’s aim of deepening the banking relationships that begin with HSAs is shared by his larger competitors.

“Certainly, this is a new opportunity to not only provide them (employers) with another financial product, but also engage their employees,” U.S. Bank’s Mr. Ware said.

Chasing ‘pots of gold’ As the popularity of HSAs soars, many banks selling them are drinking the Kool-Aid: Beginning next year, KeyBank will offer only a highdeductible health plan for its employees — something U.S. Bank already does.

As balances grow, so, too, will the competition for their investment, predicts Mary Grant, KeyBank product manager for consumer banking who oversees HSAs. People will want a return on the money they’ve been accumulating and more providers will flock to meet that demand, she said Ms. Grant likens it to the way individual retirement accounts started out as a niche product decades ago, and “now they are huge and you have everyone and their brother fighting to take your IRA.” “My guess is that it’s going to take a while because balances don’t grow as fast in an HSA as they do in an IRA, but over time, these HSAs are going to be pots of gold for people,” Ms. Grant said. “It’s going to be, ‘Where’s your HSA money? Where do you have yours invested?’ ” The Ohio Bankers League’s Mr. Sutter agreed.

“Certainly, as those grow, the banks are going to realize that if they don’t provide some kind of opportunity for the individual to have investments — outside of just checking account interest — they’re going to lose them to other financial institutions,” he said.

■

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JUNE 24 - 30, 2013

PUBLISHER/EDITORIAL DIRECTOR:

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

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

Scott Suttell (ssuttell@crain.com)

OPINION

Hole-y cow

I

magine for a minute that you’re trying to sell your home. It’s a nice place, very livable with an abundance of amenities and available at a reasonable price relative to others on the market. It even sits near a great body of water that anyone who occupies the home can enjoy anytime they want. But there’s a problem — a big problem.

The driveway is badly in need of repair. Decades of use, the elements and the extreme changes in temperature in Northeast Ohio have taken a toll on the pavement, which is uneven and littered with massive potholes. It disgusts people already in the neighborhood, and it’s a turn-off for any prospective buyer you might hope to interest in moving into your place.

Now, stop imagining and start thinking of the roads around Cleveland and its suburbs. Too many of them, particularly in the city, are in miserable shape. And while their condition may seem like little more than an annoyance to anyone who lives here, they have a negative effect on keeping and particularly attracting businesses to the Cleveland area.

During his tenure as Cleveland’s mayor, Frank Jackson has managed to balance the city’s budget without an income tax increase — a notable accomplishment considering the devastation to tax receipts caused by the deep recession and the so-so recovery. However, the budget-balancing act in Cleveland and many other cities has been pulled off in part by not keeping up with road maintenance.

The terrible shape of so many roadways is another Cleveland joke, but it isn’t a laughing matter.

Roads aren’t just used by neighborhood residents to get around to the supermarket, the doctor’s office or to visit friends. They also are the primary means of conducting commerce in a community.

Businesses rely on them, whether they’re shipping or receiving goods or making service calls. Employees depend on them, too, as they commute to and from their places of work.

People who run companies, big and small, determine where they locate their operations based on a variety of factors, ease of transportation among them. Businesses that already are here may be willing to put up with lousy roads — to a point. But Cleveland and surrounding communities that hope to attract employers also are competing with exurbs and more modern cities such as Columbus and Indianapolis. It doesn’t help the locals’ cause when some streets look like scenes from a war zone.

People who live and work in a community have a right to expect the delivery of certain basic services.

At the top of that list are good police and fire service and dependable trash collection, followed closely by decent street and road maintenance.

Like the home at the start of this piece, Cleveland has a lot going for it. But like the driveway at the start of the piece, too many city streets that serve as arteries used by commuters and businesses don’t help sell that home. Amid all the public investment that is made in Cuyahoga County, the basic one of road maintenance shouldn’t be neglected any longer.

FROM THE PUBLISHER

Don’t build another box downtown itarian structure that will be part of our e have said it before on this skyline for decades to come, especially page, but it bears repeating: because it will be surrounded The folks driving by the graceful, neo-classical the deal for the new BRIAN buildings that were part of convention center hotel need to TUCKER Daniel Burnham’s Group Plan. demand that the building be The budget must be respectmore than a box. ed, and I don’t want to suggest It is nothing less than a transoverspending to create an iconformative deal for Cleveland, ic design. But please don’t put and County Executive Ed another lifeless rectangular box Fitzgerald and Mayor Frank in our skyline.

Jackson should be applauded ***** for their cooperation and willWe asked visitors to crainingness to pull together for the Grand scleveland.com in a recent poll question Plan of redoing Public Square, building about this proposed $360 million Grand the new hotel, a lakefront parking garage Plan, and nearly 65% picked the stateand the pedestrian connector to North ment, “It’s great; can’t wait to see it.”

Coast Harbor.

Fortunately, only 8% said the money A 650- to 700-room convention center should be spent in the neighborhoods hotel will create hundreds of new hospiinstead. tality jobs, something that is a critical reThe poll, which has a fresh question placement to the once-common factory each week, is an interesting feature on jobs that seemed part of every neighborour home page. Once you’ve cast your hood in the city. And the city and counvote, you can see the results of the voting at that time. ty want this hotel open by 2016, which is The question last week asked visitors quite a fast track for a project of this size. their reaction to news of the government But we don’t need another bland, util-

W

collecting call data from the major cell phone providers. Nearly 60% said either that “it’s needed to keep us safe” or “I’m ambivalent; we share everything these days anyway.”

Regarding the Horseshoe Casino Cleveland, which recently celebrated its first anniversary, nearly 80% of the voters said it had had either a “major” or “minor” positive impact on downtown.

On the revelation that the IRS, through its unit in Cincinnati, had targeted conservative-sounding groups for special tax scrutiny, 53% said it was a “major abuse of government power,” while 13% said they were “OK with it.” The rest — 34% — said that it was wrong to target groups, “but all political groups should receive closer scrutiny” as to whether they met the criteria for tax-exempt status.

But perhaps the most one-sided poll in recent weeks? It was about Cedar Point’s new Gatekeeper roller coaster, and nearly 79% said they planned to ride the monster. Who says the crowd reading a business newspaper’s website is stuffy?

■

THE BIG ISSUE As Cleveland and its neighborhoods reinvigorate themselves, do you find yourself wanting to shop, play and dine more inside the city?

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“Absolutely, I do. … You feel like this city is coming alive, actually. It’s not just the same old, you know, you got to go to Detroit to gamble, got to go a little bit further out to eat a decent meal. I kind of think it’s good for the city.”

“I go to Ohio State. But I do want to move back to Cleveland after I finish school, so I’m really excited that we’re trying to liven things up in the city.”

“Yes, yes I do. … Cleveland is a great place to live and if you have those things right here in the city of Cleveland, you wouldn’t need to go any other place.”

“I think so. I think the only thing that keeps people away is construction and parking fees. But once those seasons end, I think it’s going to be a lot better. There’s a lot more things to do down here than there was in the past.”

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JUNE 24 - 30, 2013

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CONTRIBUTED PHOTO

Doug Katz is the chef and owner of Fire Food and Drink, Katz Club Diner and Katz Club.

Fire followers are enjoying Katz’s new restaurant, too Lounge and diner in Cleveland Heights augments chef’s eateries and catering biz (A few moments with Doug Katz, chef and owner of Fire Food and Drink, Katz Club Diner and Katz Club, and chef and partner in Provenance at the Cleveland Museum of Art.)

D

oug Katz has to extract himself for a free moment amid the throngs of patrons who have a first date with the new Katz Club Diner. Many of his customers are longtime supporters of Mr. Katz’s Fire Food and Drink in Shaker Heights and greet him on a first-name basis as they flow through the door of the 1949 O’Mahony diner car at 1975 Lee Road in Cleveland Heights.

“I’ve been through about 15 incarnations of this space. I’m really impressed,” says one patron. “I remember when this was a used car lot.”

“Wow, a bar for grown-ups,” says another, as he walks into the Katz Club cocktail lounge, located opposite the northern diner car. “Too bad I don’t drink. Maybe I’ll need to start.”

The lounge and diner — which Mr. Katz references as a town center where neighbors connect over scratch food — augment the chef’s eclectic duo of East side eateries and a catering arm.

Crain’s sat down with Mr. Katz to discuss his operation’s growth.

Q: What is the inspiration behind the diner and bar? We serve classic diner breakfast, lunch and dinner using as many local ingredients as possible. Some of my specialties include chicken a la king and waffle, meatloaf sandwich and homemade Ho-Hos. I always wanted

ON THE WEB Read Kathy Ames Carr’s What’s Cooking blog at: www.crainscleveland.com

KATHYAMESCARR

WHAT’S COOKING to build Water next to Fire, which would’ve served cocktails. The Katz Club is my Water. I’m hoping to build my business clientele, who can book this lounge for board meetings or celebrations.

Q: How are you incorporating the diner into your catering business? The kitchen here is huge; it’s about 3,000 square feet, which will allow us to build our catering business. Three years ago, Catering by Fire was probably 5% of sales. Now it’s closer to 30%. Here we have an online ordering system, where customers can take pastries, coffee, sandwiches and soups to go. That business may start out about 10% to 15% of sales here, but it could be 80% as time goes on.

Q: How has the menu at Fire, Food and Drink evolved since it opened in 2001? I’m much more interested in buying local. It’s what fulfills me and connects me to the community. We have about 50 local suppliers now. My first one wasn’t even food — it was a firewood supplier.

Q: How do you compliment your Provenance menu at the Cleveland Museum of Art with museum exhibits? Our menu is always changing according to the exhibitions.

Right now, we’re featuring British cuisine. In July, it will be Indian, and Asian in the fall.

Q: So what’s next? I’m planning a trip to Morocco. As for another restaurant? I think I have enough to keep me busy for a while. I could see selling my products for retail, whether it’s a great donut or my jam pop tarts. I already sell my Dr. Katz’s pickles.

Tasty tidbits Food truck enthusiasts have posted a petition on change.org asking the city of Akron to allow the mobile eateries to operate there.

Johnny Schulze of Wadsworth’s Zydeco Bistro, who last week tweeted a link to the petition, tried to enter the downtown Akron market three years ago. He encountered resistance from city officials, so he moved on to fringe suburbs that include his home base, Copley and Medina. He spends most of his time peddling his cajun/creole fare around Cleveland, which in 2011 passed legislation that permits food trucks to operate in designated zones.

“A lot of food trucks are interested in going to Akron,” Mr. Schulze told Crain’s. ***** Foodies, step up to the plate.

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JUNE 24 - 30, 2013

They light up lobbies all over the world GPI Design survived the crash of the housing market and is now flourishing after switching its focus to building entrances

By LAURA STRAUB clbintern@crain.com

Thomas Lawrence and his company, GPI Design, neared bankruptcy following the housing market crash, as interest in the expensive exotic stone it used to create countertops and flooring was simply no

longer a priority for residential builders. Its contracts in development hotbeds, such as Las Vegas, dwindled from stone orders in the thousands to the hundreds, and ultimately fewer than 50.

But Mr. Lawrence was not ready to throw in the towel. He transferred his attention to bringing

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ON THE WEB For a photo gallery of some of GPI Design’s work, go to: www.Crains Cleveland.com/gpi. translucent, backlit stone, wood and glass features to the lush lobbies of corporate buildings and found his niche.

The switch to commercial design has paid off handsomely. In five years, GPI Design went from doing $200,000 a year in sales in 2008 to a projected $6.2 million this year, according to Mr. Lawrence.

Lobbies are important because they lead people in and set the tone for the building, he said.

“We create something that can stand for life in what can be a hard, cold lobby space,” said the company’s founder and director.

The eight-employee company in Westlake takes its translucent masterpieces from conception to installation with an array of technologies developed in-house. They maintain a worldwide presence through their 13 international sourcing agents and offices in Hong Kong, Dubai and London.

Mr. Lawrence’s portfolio is stacked with impressive projects, which are scattered across the country and even show up in the Middle East.

One project was commissioned by Cirque de Soleil, the eclectic circus troupe. GPI Design created limestone-clad walls set behind the statues of the Richard MacDonald fine art gallery, which sits outside the “O” Theater at the Bellagio, the luxury hotel in Las Vegas where Cirque de Soleil performs its aquatic show “O.” This project garnered recognition from stone trade publications for the thinness of the limestone veneers.

The veneers are attached to aluminum honeycomb — a custom innovation developed by GPI Design — giving the panels strength without weight.

See LIGHT Page 13

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CONTRIBUTED PHOTO

The Cleveland Public Library’s curved, backlit reception desks — the work of GPI Design — are placed throughout the library. The project is the only large one locally for GPI.

So, what’s next at GPI Design?

Thomas Lawrence is looking to move GPI Design beyond the lobby and into medical settings with his company’s most recent innovation, its LED artificial sunlight product.

The new light technology is designed to benefit Lawrence the circadian rhythms of hospital and long-term care patients who receive little to no exposure to the natural light cycle of a day.

“Our argument is that it allows those individuals to remain more conscious of when to wake up and when to go to sleep,” Mr. Lawrence said.

He recalled a Mayo Clinic study as inspiration for the project. The study found patients on the southfacing side of a given facility demonstrated faster healing rates, in all probability because of that side’s exposure to natural light cycles.

GPI Design’s LED artificial sunlight product mimics the sun over the course of a day. The panel is made to look like a window, with an

outside scene placed in front of the LED panel. Underneath, the top and bottom of the panel create warm light while the sides create cooler hues.

The settings of each light section are sent through a decoder and recreate a sunlight cycle down to the Kelvin measurement for any given day in any given city, Mr. Lawrence said.

“You can push a button and it knows you are in Cleveland,” he said. The product then can determine the time of the sunrise.

The entire product is light and easy to hang, which makes it ideal for health care facilities, Mr. Lawrence said. It also has the benefit of a natural appearance.

The use of LED artificial sunlight has the potential to regulate sleep patterns and stimulate cognitive and learning capabilities in those exposed.

“We hope it provides benefits,” Mr. Lawrence said.

— Laura Straub

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13

Light: GPI’s project at National Cancer Institute has earned much recognition continued from PAGE 12

The size of the panels and their light weight enabled workers to finish encasing 13,000 square feet of wall space in just 10 days.

A future cast in stone Mr. Lawrence’s first encounter with exotic stone occurred when Indian company Aakit approached him and his first company, GripCo, with a request to distribute Indian exotic stone — specifically, delicate but exquisite onyx — in America.

Soon after beginning work with Aakit, Mr. Lawrence parted from GripCo and used the money from his share of the business to start GPI Design. “I immersed myself in exotic stone,� Mr. Lawrence said. “The more I learned, the more I got a reputation for being where to go if you need exotic stone.�

The versatility of Mr. Lawrence’s work in different mediums is found at the entranceway of The Owner’s Box Sports Bar in the Omni Hotel at the Dallas Convention Center.

Designers for The Owner’s Box envisioned a glowing floor covered with newspaper pages glorifying shining moments in Texas sports.

GPI Design entered the project to find the right type of glass for the job.

The glass needed to be strong, clear and slip-resistant, but initially no product fit the bill. GPI had the answer with a custom glass solution that not only was slip-resistant, but also prevented refraction of the vinyl print underneath.

To further improve the appearance of the vinyl tabloid news pages, GPI Design used LED lighting panels placed directly underneath the glass to prevent the obstruction of any structural support systems for the flooring. With the light source directly below the images and glass, the entire floor glowed without shadows or cool spots.

A shadow-less completed product had not always been the end result of GPI Design’s projects, Mr. Lawrence acknowledged. “For five years I supplied exotic translucent stone, but it never

“I want to bring design back to Cleveland as much as anyone. I wish there was more work here in Cleveland.� – Thomas Lawrence, founder, GPI Design, which has had only one big local project, the Cleveland Public Library looked right,� he said. Bulky steel supports and bad lighting setups by outside installation teams often took away from the natural beauty of the product. At times there was so much steel, wiring and pipes that the finished product did not even match the artist’s rendering. “It got chopped up by everyone else,� Mr. Lawrence said.

After growing frustrated with the final appearance of the stone or glass in his projects, Mr. Lawrence developed a process that enabled GPI Design to take a project from design to completion, all while bearing in mind how installation will affect the final presentation.

Besides working with stone and glass, GPI Design has experience working with 3form-brand products, specifically plastic resin. At the Grand Hyatt in San Francisco, the company illuminated the walls that lead guests from floor to floor along the path of the hotel’s escalators.

The illustrious resin contrasts with the dark wood panels to create a striking image.

panels of Pacific Northwest redwood that are four-tenths of a millimeter deep.

The vavona burl pattern that repeats down the corridor of the cancer institute ironically is formed in the cancerous portion of the tree, Mr. Lawrence said.

The GPI Design team sheathed the fragile panels of wood in glass panels developed at its design studio at 30400 Detroit Road. It applied LED lighting panels to the back so that the whole configuration could be attached to a support structure, once again without shadows and with minimal seams.

The finished piece generated applause in the architectural community. “It’s a marquee project in our portfolio,� Mr. Lawrence said. “It’s one of one.�

Industry professionals agreed, and the project was recognized by a slew of associations, including status as a finalist for a Lighten Up LED Lighting Design Award and a nominee for a Washington Building Congress Craftsman Award.

John Rappoport, project engi-

CONTRIBUTED PHOTO

GPI Design installed its glass-laminated wood product, Flicche, in the lobby of the National Cancer Institute in Rockville, Md. The Westlake company’s work on the project has been nominated for numerous awards. neer at James G. Davis Construction, which oversaw the lobby work at the National Cancer Institute, was equally impressed. “GPI’s expertise was instrumental in delivering the designers’ vision,� Mr. Rappoport said. “The GPI team was knowledgeable, professional and detail-oriented; but most of all, they cared about the product and took great pride in their craft.�

Though GPI Design’s work shows up around Washington, D.C., and

in distant places such as Abu Dhabi and Bahrain, its only big project locally is at the Cleveland Public Library. Whenever patrons approach the curved, backlit reception desks placed throughout the library they are seeing Mr. Lawrence’s work.

Unfortunately, architecture has slowed significantly in Cleveland, according to Mr. Lawrence. “I want to bring design back to Cleveland as much as anyone,â€? Mr. Lawrence said. “I wish there was more work here in Cleveland.â€? â–

Presented by:

Supported by:

Marquee project Most recently, GPI Design preformed the first installation of its exclusive glass-laminated wood product, Flicche, in the lobby of the National Cancer Institute in Rockville, Md. This project was the first of its kind and challenged architects, lighting specialists and the design team at GPI. “It took us years to land it,� Mr. Lawrence said. “And it took us a year to create and build.�

The wooden veneers lining the 20,000 square feet of wall space in the entranceway of the cancer institute are made of extremely thin

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GOING PLACES JOB CHANGES ARCHITECTURE MOODY NOLAN: Erica Drogan to senior project assistant; Matt Ross to associate; Jodi van der Wiel to senior associate.

McNutt

DISTRIBUTION

Vanden Broeck

Sovacool

Onesti

Bibet-Kalinyak

Winkler

GARICK: Rick Malone to key account manager.

BOARDS

CT CONSULTANTS INC.: Robert L. McNutt to senior project manager.

PROFESSIONAL SERVICE INDUSTRIES INC.: Manuel Zea to project manager.

Beseth III

FINANCE

HEALTH CARE

LEGAL

LAKE NATIONAL BANK: Neil Kowalski to branch manager, Midland; Tom Glavin to IT manager.

AKRON GENERAL: Margaret Sovacool to director, Quality Improvement and Patient Safety.

BROUSE MCDOWELL: Isabelle Bibet-Kalinyak and Barry A. Winkler to associates.

LAURA ADELMAN DMD: Trista Onesti, D.D.S., to pediatric dentist.

BUCKINGHAM, DOOLITTLE & BURROUGHS LLP: John Swansinger to partner.

INSURANCE

HURTUK & DAROFF CO. LLP: Lauren May to associate.

MIDWEST INVESTMENT MANAGEMENT LLC: Peter A. Vanden Broeck to managing director.

WELLS FARGO ADVISORS: Jeremy Baynes to associate vice president, investments.

Ostrowski

BRUNSWICK COS.: Stacey Cardinale to commercial account executive; Kelley Wisor to surety bond account executive.

Traub

Geiger

JACKSON LEWIS LLP: Stephen R. Beiting to associate.

MCMAHON DEGULIS LLP: Kevin P. Roberts to associate.

Long

Moviel

MEYERS, ROMAN, FRIEDBERG & LEWIS: R. Russell O’Rourke to partner and chair, Construction Law Group.

TAFT STETTINIUS & HOLLISTER LLP: H. William Beseth III to associate.

TUCKER ELLIS LLP: Thomas Ostrowski to partner.

WESTON HURD LLP: Randall M. Traub to partner.

MANUFACTURING RPM INTERNATIONAL INC.: Neil Jamieson to director, global tax planning.

MARKETING COSO MEDIA: Kayla Householder to marketing specialist.

INSIVIA: Rick Scheeser to account manager; Matt Benedetti to emarketing specialist; Chad O’Malley and Justin Gebura to senior graphic designers; Ryan Thompson to senior developer.

NONPROFIT CITYMUSIC CLEVELAND CHAMBER ORCHESTRA: Avner Dorman to music director.

GREATER CLEVELAND HABITAT FOR HUMANITY: Jennifer Geiger to marketing and communications director; Peter Grossetti to development director.

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NORTHEASTERN EDUCATIONAL TELEVISION OF OHIO INC.: David Hunter (Brouse McDowell) to chair; Brian DePoy to vice chair; Mark Auburn to Hunter secretary.

RAINBOW BABIES & CHILDREN’S FOUNDATION: Dinah Kolesar to president; Jill G. Clark to presIdentelect; Pamela G. Noble to vice president/secretary; Terri A. Kennedy to vice president/treasurer; Robin L. Baum to vice president, development; Michelle L. Snyder to vice president, advocacy; Harriet L. Fader to vice president, trustee; Deborah A. Crawford, Stacey L. Hanna, Manisha Ahuja Sethi and Julie Clemo Tutkovics to vice presidents; Beth N. Curtiss to immediate past president.

UCP OF GREATER CLEVELAND: Jeffrey D. Minnick to treasurer.

AWARDS AMERICAN ASSOCIATION OF HIP AND KNEE SURGEONS: Dr. William Stanfield (Center for Orthopedics) to fellow.

PRESIDENTS’ COUNCIL FOUNDATION: Tameka Taylor (Compass Consulting Services LLC) received the John Bustamante Emerging Entrepreneur of the Year Award.

SERVICE

ROSE-MARY CENTER: Gene Killeen (Tucker Ellis LLP) received the 2013 Angel Award.

FREEDONIA GROUP: Kenneth Long to manager, Capital Goods unit.

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

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INSIDE

17 TAX TIPS: IRS HAS AN OPTION THAT CAN BE A TIME-SAVER.

15

SMALL BUSINESS IN BRIEF ■ GET YOUR GOOGLY EYES: Cleveland-based Creativity for Kids has shipped more than 15,000 Creativity Cans to 300 stores in the United States, Canada and Mexico. The can, which is distributed free, is a small container filled with simple, colorful materials such as pipe cleaners, googly eyes and yarn with the aim to encourage imagination and invention. Creativity Cans are available in Northeast Ohio at Playmatters stores in Cleveland, Mentor, Pepper Pike and Solon. Children can share their creations online at www.creativitycan.com; each time one is uploaded, Creativity for Kids will donate to the LilySarahGraceFund, a nonprofit that aims to empower elementary school teachers to use arts and creativity in teaching. Submissions also will be eligible to win Creativity for Kids products.

■ SPRUCING THINGS UP: Spruce, a clothing and accessories store locally owned by Dudley Humphrey and Jody Herzog, has opened at Legacy Village.

The store specializes in active lifestyle clothing, carrying such brands as Patagonia, Lole, Carve Designs, LA Made Tees and Hippy Tree. In addition to clothing and accessories, Spruce also will sell and specialize in paddle-boards.

SHARON SCHNALL PHOTOS

Ben Kaman, vice president, and his parents, Rich, center, and Tricia, are shown in front of Kaman’s Art Shoppes Inc. in Bainbridge Township. Rich, the company’s executive vice president, and Tricia Kaman, president, are co-founders and co-owners.

CRAFTING HAPPY FACES Kaman’s art is all over the country, and amusement is the company’s specialty

■ A NEW SHOPPING EXPERIENCE: Arhaus Furniture, a Cleveland-based home furnishings retailer, has collaborated with California-based Synapse Group to make available its annual catalogs on all digital channels and devices via Synapse’s Syndeca Platform. Customers can view the company’s catalog — produced multiple times each year and including anywhere from 50 to more than 200 pages — on any PC, tablet or smart phone web browser and iPad, iPhone and Facebook applications. The Arhaus digital catalogs can be found at tinyurl.com/lwl7og7; on the iTunes App Store in the catalog section; and on Facebook at www.facebook.com/arhaus.

By SHARON SCHNALL clbfreelancer@crain.com

C

hances are you’ve had an encounter with Kaman’s Art Shoppes Inc. — not at its corporate headquarters, which is located in a quiet industrial park in Bainbridge Township, but at an amusement park or zoo where the company owns and operates art and craft concession stands.

INSIDE: Kaman family has a succession plan in place. Page 19 This year, 1,500 seasonal Kaman’s employees will serve guests at 500 concession locations within 42 parks; another 600 work year-round at Florida and California parks, said Rich Kaman, 63, executive vice president, co-founder and co-owner.

Now in its 43rd season, the company offers a portfolio of more than 20 products, including caricatures, face painting, pastel portraiture, antique photographic portraits, handcut silhouettes, hair wrapping and body art, such as air-brushed, henna

■ LET THE GAMES BEGIN: Rob and Kristy Pietruszka of Strongsville have purchased an i9 Sports franchise and plan to re-launch the youth sports program this fall. The program promotes same-day practices and games, one day a week; no fundraising or mandatory volunteering; a parental pledge of sportsmanship; and an emphasis on fun and safety. Based in the Tampa area, i9 Sports is a youth sports franchise company that offers leagues, camps and clinics for boys and girls ages 3 to 14 in team sports such as flag football, soccer, basketball and baseball. Local registration for the fall seasons of flag football and instructional soccer are open through July 26 and can be completed at www.i9sports.com. All games will be played on Sundays at Darice Fields in Strongsville.

Kaman’s creates caricatures such as these at amusement parks, zoos and other art and craft stands across the country. and glitter tattoos.

“Kaman’s Art Shoppes are in very visible locations; they’re in front of the guests at all times,” said Tim Boals, corporate vice president of resale at Sandusky-based Cedar Fair

Entertainment Co., parent of the Cedar Point and Kings Island amusement parks. Mr. Boals is responsible for its merchandise and games division, which includes concessionaires.

See HAPPY Page 19

■ GRAND OPENINGS: To submit information about a new business opened within the past six months, send the following information for publication to Crain’s Cleveland Business sections editor Amy Ann Stoessel at astoessel @crain.com: business name; address; city and ZIP; website address; brief description of the business; business phone number; business fax number; and business email.

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16 CRAIN’S CLEVELAND BUSINESS

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he Tank is a cozy, carvedout area in the office of Brecksville startup Movable where teamwork, brainstorming and big ideas are birthed and nurtured.

The space itself is relatively low tech, equipped with a transparent white board on the wall, a few chairs and a couch. But what happens there is reflective of the company’s high-octane, all-hands-in culture.

“A lot of our space is set up as working, brainstorming, collaborative space. As a young startup, we are moving so fast that the benefit of having a space like this is the awareness of what’s going on at all times,” said Dana De Santis, head of marketing for Movable, which makes the MOVband, a wristband activity monitor that when worn records all movement throughout the day.

With 11 full-time and four parttime employees, Ms. De Santis said the company is “not yet at the size where we are siloed by departments.”

“All of our employees have to be involved in almost every big project, so this space allows us to do that,” she said.

The concept of collaborative workspaces has been fully embraced by a number of Northeast Ohio companies, from tech-based startups such as Movable to integrated marketing firms such as Global Prairie and longstanding agencies such as the Cleveland Sight Center.

The idea is that open spaces — even at the smallest of companies — allow for the sharing of knowledge among employees, promoting creativity, camaraderie, increased performance and growth.

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Scott Ashley, who specializes in workplace strategy at Vocon, a Cleveland architecture and interior design firm, said a collaboration space can be as simple as a table and three chairs or as elaborate as a Cisco telepresence environment designed for conferencing with colleagues in Tokyo.

“Based on the type of work people do, collaboration can happen in a number of different ways,” said Mr. Ashley, whose firm advocates that companies develop flexible spaces that support both focused, heads-down individual contributors as well as collaborating teams.

“It’s really been pushed by our more knowledge-based economy.

Working in teams becomes more and more important and space needs to support that behavior,” he said.

The nearly $10 million renovation to the Sight Center’s office space on East 101st Street more than anything else changed the culture of the 107-year-old agency.

CONTRIBUTED PHOTO

Global Prairie, an integrated marketing communications firm with an office in Cleveland, has had collaborative workspaces since its founding in 2008.

Instead of individual offices and segregation of departments, now most of the organization’s 100 employees are situated on the second floor and found in one of three large work stations.

“We wanted to bring out a sense of teamwork and make it much easier to talk about clients,” said Steve Friedman, the center’s executive director, about the year-long project led by Tom Galvin and Vocon.

“It has done what we wanted it to do,” Mr. Friedman said. “Employee morale is sky high. There is no doubt that our staff is happier and more productive because of this.”

Fears about noise and lack of privacy have not been an issue, Mr. Friedman said.

“These are quiet places; we are very impressed with that. It’s not a newsroom,” he said. “We have private offices if somebody needs to talk to a client or have a private conversation.”

Also on the second floor at the Sight Center is the Hub, a spacious, centralized social area for eating, hanging out and informal meetings.

“We are interacting with each other and supporting each other in ways that didn’t exist before the renovation,” Mr. Friedman said.

“The building has done as much as anything else to break that sense of multiple departments to one team serving clients.”

Flat and transparent At Global Prairie, an integrated marketing communications firm with an office in Cleveland, creating an open and collaborative workspace has been part of the core philosophy since its founding in 2008.

“The whole environment is orchestrated to elect a sense of pride, to engender creativity, to hopefully propel innovation,” said Anne St. Peter, founder of the firm.

“We believe that all of that will result in increased performance and rapid growth, and it has.”

Douglas Bell, also a Global Prairie founder, said another goal of the space was to create a flat, nonhierarchical structure in which everyone works together for the greater good rather than striving for the corner office.

With a mix of rooms and workspaces, teams at Global Prairie are encouraged to work in different spots. There are open, benching systems, stand-up desk areas and closed spaces that team members can grab or reserve for quiet time and one-on-one conversations.

“The team decides what location is right for their respective activity,” Ms. St. Peter said. “We believe to our core that a workspace helps foster culture, and we wanted to build a very transparent and very collaborative culture. The benefits that we’ve found ultimately are improved psyche of our team and increased performance from a bottom-line perspective.”

These spaces don’t come without challenges. There are plenty of opportunities for distractions and disruptions. Good design and smart practices can combat those, Vocon’s Mr. Ashley said.

“If my work station is next to an open huddle area, and I’m having a conference call and I’m sitting next to a very heated discussion, it can be distracting,” he said. “We are very careful with how we plan those casual meeting spaces and what their adjacencies are.”

Headphones are a must in a collaborative workspace, said Ms. St. Peter. Adjusting to these new work spaces requires communication and feedback to create cultural norms.

“We had to have discussions early on about using the kitchen and break rooms to eat because the first person with onions on their sandwich really didn’t go over very well,” she said. “What it does is facilitate real awareness of your colleagues and their needs.

What I find is our team is much more sensitive to the needs of one another because they are working shoulder to shoulder every day.” ■

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New IRS option can simplify deduction calculations Method could be significant time-saver for small business owners with home offices

A

lthough the U.S. economy is showing signs of improvement, many individuals who lost their jobs over the past few years have turned to operating their own small businesses, often ones that can be operated out of their homes.

These taxpayers often seek to deduct expenses relating to maintaining the business in their home.

While this still can be a fairly complicated issue, the IRS announced earlier this year that it is making available a simplified option that owners of home-based businesses can use to figure their deductions for the business use of their homes.

While this “safe harbor” is optional, many business owners who use a home office will find this to be a significant time-saver. The IRS estimates that it will reduce the paperwork and record-keeping burden on small businesses by an estimated 1.6 million hours annually. The IRS’s estimate of the time it takes to complete forms is usually low.

The IRS usually is not generous in allowing deductions relating to a taxpayer’s use of his or her own home. The normal rule is that no deduction is allowed for expenses related to a dwelling unit that is used as a residence by the taxpayer during the taxable year.

A deduction is allowed, however, for expenses that are allocable to a portion of the dwelling that is exclusively used on a regular basis as the taxpayer’s principal place of business or for meeting with clients or customers in the normal course of business.

A deduction is generally not allowed for an employee who uses a home office to get work done outside of normal work hours.

Use of a home for the purpose of storing certain inventory, providing day care and other specific uses are also permitted.

The home can be either owned or leased.

Even if a home qualifies for the deduction, taking the allowable deduction is not easy from an administrative standpoint.

At present, a taxpayer seeking to take a home office deduction is generally required to fill out a 43line form (Form 8829), often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers taking the current allowable deduction also must comply with additional rules relating to recordkeeping and substantiation of the deductible expenses.

The new option recently announced by the IRS provides eligible taxpayers an easier path to claiming the home office deduction, which may be claimed by completing a significantly simplified form.

The new optional deduction is calculated by multiplying the square footage of the space qualifying as a home office by $5. The allowable deduction under the safe harbor is capped at $1,500 per year, based on $5 per square foot up to 300 square feet.

The taxpayer can make the deter-

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TAX TIPS mination of whether to use the safe harbor on a year-by-year basis. The election to use the safe

harbor is made simply by calculating the allowing deduction using the method described above.

Home office expenses can only be taken to the extent that the business produces income.

Taxpayers using the old method could carry the disallowed portion of the expenses forward to future years. Taxpayers using the new safe harbor method cannot carry forward any unused deduction.

If a taxpayer currently has a carryover of an expense from a year where the actual expenses were deducted, this carryover is not allowed in a year in which the taxpayer uses the safe harbor calculation.

The carryover amount can be used in any subsequent year in which the taxpayer reverts to the old method.

Homeowners using the new option cannot deduct actual expenses related to the qualified business use of the home for a year in which the safe harbor is used, including depreciation.

They can, however, claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions as they would normally. These deductions need not be allocated between personal and business use, as is required under the regular method. Business expenses unre-

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lated to the home, such as advertising, supplies and wages paid to employees, are still fully deductible.

The new safe harbor does not change the basic requirements for taking a home office deduction.

It is still the rule that a home office must be used regularly and exclusively for business, and the limit is still capped at the amount of income derived from the particular business. The safe harbor will still be a time-saver for most taxpayers who are able to claim this deduction.

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18 CRAIN’S CLEVELAND BUSINESS

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JUNE 24 - 30, 2013

Employers are feeling the heat of feds’ health care audits

T

he Patient Protection and Affordable Care Act, also known as Obamacare or health care reform, is not just increasing the numbers of those with health care coverage.

It is the impetus for a growing and concerted campaign by the federal government, through the U.S. Department of Labor, to audit employers of all sizes on a virtual alphabet soup of federal government regulations.

This past year, the Department of Labor, through its Employee Benefits Security Administration (EBSA), updated its protocols to audit employers based on certain health care reform provisions already in effect, including a federal law that prohibits employers from denying coverage or assessing higher premiums based on genetic predispositions.

In addition, employers are under scrutiny as to whether their wellness programs pass muster under federal law.

Since that time, increasing numbers of employers, of all sizes, types and shapes, have been going to their mail, only to find that the EBSA has written them a letter, advising they are being audited and investigated for their health plan.

JAMESSCHUSTER

ADVISER For small and midsize employers, that is just the beginning of the surprise.

Today (and, at least for the time being), the vast majority of small and midsize employers are fully insured, meaning that they buy coverage for their employees directly from an HMO or insurance carrier. Most fully insured employers assume that whatever their broker, HMO or health insurance carrier has done is everything they would need to be compliant with federal law.

However, these employers are finding something quite different.

What is more, health care reform may entice many small and medium-size fully insured employers to think about becoming self-insured. Those that do only will be subject to further additional Department of Labor audit top-

ics, not to mention a full-blown series of federal health information privacy and security requirements.

Under federal law, including under health care reform, the Employee Retirement Income Security Act (ERISA) and otherwise, employers providing health benefits coverage to their employees are subject to and must comply with a long list of federal requirements that specifically apply to them and for which brokers, HMOs and health insurance issuers do not purport to or otherwise cover the bases.

Consequently, what employers have been finding is what the federal government has found.

If selected as the recipient of one of the federal government’s health benefits audit letters, employers can expect — seven out of 10 times, if not more — to be found failing to comply with federal law.

In part, this is the reason the government estimates it will “achieve” in excess of $1.17 billion in “total monetary results” through its 2013 enforcement efforts.

Notwithstanding the federal government’s increased federal audit oversight of employers in respect to their health plans, employers don’t need to know rocket science to be able to address an

Crain’s is Cleveland Business

audit situation.

Rather, government statistics reveal what, in many ways, is common sense — those employers that are most likely to survive an audit are those that have proactively addressed the areas posing the greatest potential risk for fines and penalties.

On matters of health care reform, the federal government has made the issue of grandfathering an audit priority. Under health care reform, if an employer health plan is grandfathered, it is not required to comply with certain federal provisions that would apply but for its grandfathered status.

For example, a grandfathered plan is able to place certain limits on choice of primary care provider or impose cost-sharing for preventive services, whereas other plans cannot.

Generally, an employer health plan is grandfathered under health care reform if the plan existed on March 23, 2010, (when health care reform first became law); has continued to exist since that time; for which there has been no material changes to participant cost-sharing or benefits; and for which period notice has been given to participants of the health plan’s grandfathered status.

Through its audits, the federal government seeks to check whether employers claiming grandfathered status for their health plans can legitimately do so.

HMOs and health insurance issuers typically will help their fully insured employers address a health plan’s grandfathered status because the issue directly impacts them and the benefits they offer.

So, too, for the same reasons, will HMOs and health insurance issuers typically address another employer health plan audit priority: the extent

to which employers extend dependent coverage to the age of 26.

However, not understood — or misunderstood — by employers is that the contracts, certificates of coverage or policies they may have with or receive from HMOs, health insurers or others typically do not satisfy federal plan document and summary plan description requirements.

Federal plan document and summary plan description requirements encompass specific language provisions on specific topics and imposes specific timing requirements.

They apply to small, as well as midsize and large employers. For each day a health plan participant is not provided a timely summary plan description, the Labor Department is authorized to impose a civil penalty of up to $110 per day per such participant.

Failure to timely file, let alone at all, Form 5500s is another substantial area of exposure to employers.

Under federal law, employers with 100 or more health plan participants must file an annual report on their health plan, using DOL Form 5500.

Many fully insured employers do not know or think that this requirement applies to them.

As a result, these fully insured employers expose themselves in the event of an audit. Federal fines for noncompliance can come from two directions — the Department of Labor, of up to $1,100 per day (no limit); or the IRS, of up to $15,000.00; or both.

■ James Schuster is a principal at McCarthy, Lebit, Crystal & Liffman Co. in Cleveland. Mr. Schuster focuses the majority of his practice on regulatory health care, technology and intellectual property law.

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20130624-NEWS--19-NAT-CCI-CL_--

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CRAIN’S CLEVELAND BUSINESS 19

Happy: Summers at Cedar Point proved to be valuable training continued from PAGE 15

Kaman’s operates concession locations at 13 Cedar Fair properties in the United States and Canada, Mr. Boals said. The company also can be found at Legoland California Resort of Carlsbad, Calif.; several Six Flags and SeaWorld parks; the San Diego Zoo; and Disneyland in Anaheim, Calif.

While a tangible product is provided by Kaman’s — portraits, tattoos, leather goods, wooden signs, initial rings, for example — employees also deliver one-on-one attention and rapport, creating art “live� before the customer and the ubiquitous curious onlookers. “Customer experience is being sold, not just a final product,� said Ben Kaman, vice president and son of co-founders Rich and Tricia Kaman.

A work in progress In 1971, the year the company was established, gross sales were $12,000; last year’s gross sales were $36 million, Rich Kaman said. The company pays a percentage to a park account, and it is responsible for all operational costs of the concession stands, he said.

Customer service, along with an emphasis on training and quality control, originated and continue today with the company’s president, Mrs. Kaman, 62, herself a veteran of six summers (19651970) as a portrait and silhouette artist at Cedar Point of Sandusky.

A graduate of the Cooper School of Art in Cleveland, she has been painting fine art portrait and figurative paintings since 1974. She founded in 1988 Tricia Kaman Studio/Gallery, located in Cleveland’s Little Italy neighborhood.

Being an artist and painter is what she always wanted and why each summer, when she and her parents visited Cedar Point, she gravitated toward the artist stands.

At age 15, Mrs. Kaman started working at Cedar Point for concessionaire owners Ruth and Dick Price. “I felt I was a stronger artist from that many hours of drawing and looking,� she said. “Your skill level goes up; your discipline goes up; the length of time you can sustain your focus goes up.�

She had assumed her time at the park would end with her November 1970 marriage and a move from Sandusky to Bedford Heights.

Not so. Gaspar Lococo, one of three then-new co-owners of Geauga Lake Amusement Park of Aurora and Bainbridge Township, contacted Mr. and Mrs. Price about setting up similar concession operations at their park. Mrs. Kaman’s former employers and mentors were not interested, she recalls.

But, the Prices did suggest Mrs. Kaman.

She was flush with $750 cash from wedding gifts that was subsequently invested in the new business; her first concession stand was constructed by Rich Kaman and his uncle.

That first year, 1971, she provided the bulk of direct customer hours; five others rounded out the artistic team. For the next 11 years, she continued to provide the majority of those hours.

Beyond carpentry, Rich Kaman managed payroll, orders, sales reports and taxes, Mrs. Kaman said.

Before joining Kaman’s Art Shoppes full-time in 1986, he worked as a production manager with Technicare Corp. of Solon, a then-manufacturer of CT scanners and other medical diagnostic imaging technology.

Rich Kaman, too, had worked summers (1965-1969) at Cedar Point, but at a salt water taffy concession stand; he completed his education at the United Electronics Institute of Cuyahoga Falls.

Personnel touch Employee training, Ben Kaman said, is what separates this family business from other competitors.

Offsite training lasts three to four days for new hires. Ongoing, onsite training takes place through senior staff mentoring, critiques and demonstrations. “They also have the guests,� said Kathy Hogan, director of operations and planning. “Every single time, every single sketch, you’re going to get a reaction.�

New seasonal employees are recruited continually, although the majority are hired between February and this month. Employee re-

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ferrals, high school and university art departments, employment fairs and Craigslist.com are key resources.

Forty-two managers are based full-time and year-round at the parks and are supported by 80 to 100 assistant managers; half of the latter also are full-time, year-round, Rich Kaman said. Most of these employees started as seasonal artists and craft employees.

In addition, seven regional managers along with the Kamans routinely travel to meet with each park’s management contact, and to inspect concession stands operations.

Another 25 full- and part-time employees are based at the company’s Geauga County headquarters.

Park account oversight, graphics, concessions fabrication, direct customer online ordering services and artist bookings for special events nationwide also are handled here. “The thing that impresses me every day, the people in the company are good people,â€? Ms. Hogan said. “You have these good encounters every day in the course of doing business. It’s really that strong and predominant.â€? â–

Couple is actively preparing for future of their business continue to be the artistic In addition to managing director on a more limited their business, the Kaman basis,� she said. family also has been busy Succession planning was drawing up plans for the fusuggested by their accounture. According to Rich Katant, Rich Kaman said. The man, the company is in the company is working with eighth year of a 10-year professional business consuccession plan. That plan sultant Cecil Bergen of ultimately has Rich Kaman Ben Kaman Bergen Consulting of Copretiring from day-to-day opley to guide the succession. Planerations and son Ben Kaman taking ning has not only been formally outover those operational duties. lined but also communicated to Ben Kaman, 35, started with the Kaman’s staff and park executives. company at age 16 as a SeaWorld “Rich and Tricia meet frequently of Ohio park artist. As he was movto address succession,� said Kathy ing into positions of greater responHogan, Kaman’s director of operasibility with the company, he also tions and planning. “They let us earned an undergraduate degree in know they’re on track.� architecture and master’s degree in Succession updates, she said, business administration, the latter are provided “in the normal course from Kent State University. of business.�

Rich Kaman said he will continue “Rich and Tricia are very open,� with the company, “taking on a lessshe said. They’re very comfortable er role.� For her part, Tricia Kaman, when they are approached about Ben’s mom, said she has not made what to expect. It’s that openness a retirement announcement. that puts everyone at ease.� “I have been stepping back, bit by bit; but since it is my vocation, I will — Sharon Schnall

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 24 - 30, 2013

HIGHEST PAID NON-CEOS RANKED BY 2012 COMPENSATION

Name Company Rank Title

Total compensation 2012 % 2011 change

Salary

Bonus

Stock awards

Option awards

Nonequity incentive plan

Change to pension value

Company net Company net income income % All other 2012 change from compensation (millions) 2011

1

Richard H. Fearon/Eaton Corp. vice chairman, chief financial and planning officer

$6,416,668 $5,067,285

26.6

$703,566

$0

$584,325

$622,692

$647,034

$971,389

$2,887,662

$1,217.0

-9.9

2

Thomas S. Gross/Eaton Corp. vice chairman; COO, Electrical Sector

$6,132,153 $5,079,430

20.7

$690,555

$0

$584,325

$622,692

$635,066

$1,140,796

$2,458,719

$1,217.0

-9.9

3

Craig Arnold/Eaton Corp. vice chairman; COO, Industrial Sector

$6,106,068 $5,107,649

19.5

$705,405

$0

$584,325

$622,692

$619,240

$868,063

$2,706,343

$1,217.0

-9.9

4

Mark T. Clark/FirstEnergy Corp. executive vice president, finance and strategy

$5,612,910 $6,688,321

(16.1)

$724,423

$0

$2,182,987

$0

$460,223

$2,237,253

$8,025

$770.0

-13.0

5

Lee C. Banks/Parker Hannifin Corp. executive vice president, operating officer

$4,975,342 $4,125,590

20.6

$650,000

$0

$873,122

$602,162

$881,645

$1,772,968

$195,445

$1,034.7

-6.7

6

Darren R. Wells/Goodyear Tire & Rubber Co. executive vice president, CFO

$4,824,833 $4,774,222

1.1

$555,000

$0

$185,136

$529,646

$2,674,733

$846,993

$33,325

$212.0

-38.2

7

Thomas L. Williams/Parker Hannifin Corp. executive vice president, operating officer

$4,747,609 $4,399,826

7.9

$650,000

$0

$873,122

$602,162

$881,645

$1,535,690

$204,990

$1,034.7

-6.7

8

Arthur de Bok/Goodyear Tire & Rubber Co. president, Europe, Middle East and Africa Tire

$4,518,647 $5,386,953

(16.1)

$570,000

$0

$195,367

$558,897

$2,246,797

$922,728

$24,858

$212.0

-38.2

9

Glenn A. Eisenberg/The Timken Co. executive vice president, finance and administration

$4,391,642 $5,174,959

(15.1)

$638,840

$0

$0

$582,624

$1,348,005

$1,689,000

$133,173

$495.5

9.1

10

John G. Morikis/Sherwin-Williams Co. president, COO

$4,346,299 $3,359,013

29.4

$797,370

$0

$1,232,622

$1,023,632

$1,072,000

$0

$220,675

$631.0

42.8

11

Leila L. Vespoli/FirstEnergy Corp. executive vice president, general counsel

$4,339,594 $5,545,153

(21.7)

$658,558

$0

$1,438,699

$0

$403,684

$1,809,466

$29,186

$770.0

-13.0

12

Christopher A. Coughlin/The Timken Co. group president

$3,941,710 $3,055,347

29.0

$464,020

$0

$939,000

$528,192

$756,000

$1,202,000

$52,498

$495.5

9.1

13

Charles E. Jones Jr./FirstEnergy Corp. president, FirstEnergy Utilities

$3,868,345 $4,799,833

(19.4)

$587,308

$0

$1,362,340

$0

$273,298

$1,635,983

$9,416

$770.0

-13.0

14

Christopher M. Gorman/KeyCorp president, Key Corporate Bank

$3,815,860 $3,682,124

3.6

$600,000

$0

$874,999

$759,744

$1,500,000

$29,957

$51,160

$858.0

-6.7

15

Robert P. Barker/Parker Hannifin Corp. executive vice president, operating officer

$3,792,068 $3,229,785

17.4

$577,100

$0

$633,425

$436,598

$719,588

$1,371,945

$53,413

$1,034.7

-6.7

16

Jon P. Marten/Parker Hannifin Corp.

CFO, executive vice president, finance and administration

$3,665,352 $3,082,765

18.9

$488,925

$0

$633,425

$436,598

$676,401

$1,277,421

$152,582

$1,034.7

-6.7

17

David L. Bialosky/Goodyear Tire & Rubber Co. senior vice president, general counsel, secretary

$3,665,211 $3,280,310

11.7

$533,333

$0

$146,475

$419,025

$2,141,601

$398,517

$26,260

$212.0

-38.2

18

Jeffrey M. Weiss/American Greetings Corp. president, COO

$3,623,090 $2,404,361

50.7

$772,622

$0

$1,968,013

$0

$654,417

$189,930

$38,108

($7.9)

NM

19

Mark M. McGuire/Eaton Corp. executive vice president, general counsel

$3,586,563 $2,809,483

27.7

$529,272

$0

$321,440

$342,410

$309,751

$502,953

$1,580,737

$1,217.0

-9.9

20

Richard G. Kyle/The Timken Co. group president

$3,451,551 NA

NA

$464,020

$0

$1,184,860

$528,192

$702,000

$479,000

$93,479

$495.5

9.1

21

Ronald A. Rice/RPM International Inc. president, COO

$3,323,390 $5,831,910

(43.0)

$650,000

$0

$1,185,685

$496,000

$800,000

$95,597

$96,108

$115.8

-43.1

22

Robert L. Benson/Nacco Industries Inc. president, CEO, North American Coal

$3,238,672 $1,258,141

157.4

$536,000

$0

$0

$0

$2,263,139

$269,912

$169,621

$108.7

-32.9

23

Gregory L. Smith/Goodyear Tire & Rubber Co. senior vice president, global operations

$3,192,225 NA

NA

$525,000

$0

$155,431

$444,671

$1,866,980

$165,295

$34,848

$212.0

-38.2

24

Sean P. Hennessy/Sherwin-Williams Co. senior vice president, finance; CFO

$3,185,104 $2,468,811

29.0

$601,388

$0

$844,943

$693,428

$809,000

$0

$236,345

$631.0

42.8

25

Robert G. O'Brien/Forest City Enterprises Inc. executive vice president, CFO

$3,161,111 $3,943,808

(19.8)

$550,000

$0

$1,365,905

$366,661

$800,000

$9,170

$69,375

$36.4

NM

26

Vincent C. Byrd/The J.M. Smucker Co. president, COO

$3,149,544 $2,742,967

14.8

$600,000

$12,000

$1,117,800

$0

$315,000

$1,077,764

$26,980

$518.0

15.0

27

James H. Lash/FirstEnergy Corp. president, FirstEnergy Generation

$2,965,825 NA

NA

$532,253

$0

$1,038,658

$0

$298,114

$1,086,325

$10,475

$770.0

-13.0

28

Benjamin J. Mondics/Applied Industrial Technologies Inc. president, COO

$2,861,625 $2,446,375

17.0

$464,000

$0

$454,456

$155,799

$302,202

$1,429,159

$56,010

$118.0

15.6

29

David M. LeBlanc/Lincoln Electric Holdings Inc. senior vice president; president, Lincoln Electric International

$2,646,009 $2,177,821

21.5

$368,000

$0

$183,016

$188,852

$649,556

$452,250

$804,335

$257.4

18.5

30

Brian C. Domeck/Progressive Corp. vice president, CFO

$2,470,255 $2,289,738

7.9

$458,846

$0

$1,357,024

$0

$642,385

$0

$12,000

$902.3

-11.1

31

William R. Koehler/KeyCorp president, Key Community Bank

$2,429,944 NA

NA

$523,077

$93,500

$499,995

$434,138

$775,000

$17,186

$87,048

$858.0

-6.7

32

John Leary/TransDigm Group Inc. executive vice president

$2,382,453 $899,057

165.0

$288,333

$225,000

$0

$1,765,855

$0

$0

$103,265

$334.0

36.6

33

Robert M. Patterson/PolyOne Corp. executive vice president, COO

$2,350,317 $2,062,062

14.0

$513,461

$0

$318,498

$338,997

$1,071,941

$0

$107,419

$71.9

-58.3

34

Steven J. Oberfeld/Sherwin-Williams Co. senior vice president, corporate planning and development

$2,332,038 $2,043,418

14.1

$548,850

$0

$556,668

$495,306

$590,000

$0

$141,214

$631.0

42.8

35

Robert J. Davisson/Sherwin-Williams Co. president, Paint Stores Group

$2,317,259 $2,068,619

12.0

$452,992

$0

$556,668

$495,306

$494,000

$0

$318,293

$631.0

42.8

36

John P. Sauerland/Progressive Corp.

Personal Lines Group president

$2,299,142 $2,172,539

5.8

$439,615

$0

$1,232,065

$0

$615,462

$0

$12,000

$902.3

-11.1

36

Susan Patricia Griffith/Progressive Corp.

Claims Group president

$2,299,142 $2,172,581

5.8

$439,615

$0

$1,232,065

$0

$615,462

$0

$12,000

$902.3

-11.1

38

Steven Oakland/The J.M. Smucker Co. president, International, Foodservice and Natural Foods

$2,260,856 $1,827,903

23.7

$475,000

$9,500

$735,000

$0

$254,800

$765,507

$21,049

$518.0

15.0

39

Mark O. Eisele/Applied Industrial Technologies Inc. vice president, CFO, treasurer

$2,220,125 $1,834,028

21.1

$438,000

$0

$331,728

$104,153

$263,326

$1,037,615

$45,303

$118.0

15.6

40

John J. Keane/Nordson Corp. senior vice president

$2,215,879 $1,973,270

12.3

$345,000

$0

$383,910

$276,522

$362,612

$538,204

$309,631

$228.5

6.4

41

Vincent K. Petrella/Lincoln Electric Holdings Inc. senior vice president, CFO, treasurer

$2,214,320 $2,215,986

(0.1)

$409,000

$0

$256,319

$264,424

$815,120

$435,306

$34,151

$257.4

18.5

Source: Company proxy statements. 2012 net income and net income % change provided by S&P Capital IQ, www.spcapitaliq.com. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. The Book of Lists and enhanced versions of most lists, with more companies, are available to purchase at www.crainscleveland.com.

RESEARCHED BY Deborah W. Hillyer

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JUNE 24 - 30, 2013

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21

Hotel: FitzGerald says hotel should come before parking garage continued from PAGE 3

“My concern is that you have Pittsburgh, Indianapolis and a new Hilton in Columbus to compete against,” he said. “Can we really bring in conventions to compete with Indianapolis and Columbus? I wouldn’t do it myself.”

Mr. Voelker speaks from recent experience, as Gateway managed but did not own the Hilton Garden Inn Cleveland when the downtown property went to a lender’s special servicer after a sheriff’s sale last October.

“The more demand you have, the more that rate can be,” Mr. Voelker said. “We could never get the rate where it needs to be at the (Hilton Garden Inn.) It’s not as terrible as in other cities, but with an old, obsolete convention center, the demand was not there.”

Likewise, developer Ned Weingart, who is pursuing a $50 million plan to convert the former Cleveland Athletic Club, 1118 Euclid Ave., into a Crowne Plaza Hotel, said, “If I had my druthers, I wouldn’t want them to build it. They are going to build it, and we have to contend with it.”

However, Mr. Weingart remains committed to pursuing his group’s plan because he is confident it will benefit from business associated with the city’s theater district and other attractions. He said the challenge for the city is to grow its visitor market.

“Another 650 rooms is all right,” Mr. Weingart said. “We need large groups to have a spillover effect.

We’ll have to offer some pretty competitive rates, but it’s not going to discourage us.”

The more, the merrier While not everyone is thrilled about the prospects of a convention center hotel, many hotel operators express no reservations about it.

Alex Cavazos, Marriott Downtown Cleveland’s director of room operations, said he is excited about plans for the hotel, which would be built at Ontario Street and Lakeside Avenue on the site of the current Cuyahoga County administration building.

“I’m sure we lose conventions because we don’t have enough rooms to attract them,” said Mr. Cavazos, whose hotel looks down on the new convention complex. “We need that (large) hotel to attract the bigger

“I’m sure we lose conventions because we don’t have enough rooms to attract them.”

777 St. Clair Ave. into a 481-room Westin. Ms. Lesic said, “If done properly, a new hotel adjacent to the convention center could actually help the Westin.”

– Alex Cavazos, director of room operations, Marriott Downtown Cleveland

Finding the sweet spot

conventions to the city. If anything, we are behind the times because we don’t have a convention center hotel with more than 500 rooms.”

Tim Meyer, general manager of the Hyatt Regency Cleveland at The Arcade, put it simply.

“The gains far outweigh the negatives,” Mr. Meyer said. “We should not be shortsighted and look at the days the convention center is not occupied. The overall demand in the market will outweigh any losses from when the convention center is not busy.”

In one respect, Cuyahoga County already has tested the market of private developers for a convention center hotel. The county administration building adjacent to the convention center was offered for sale by the county in a portfolio of 13 buildings it wants to shed as it consolidates operations in a central headquarters.

In a June 13 interview, County Executive Ed FitzGerald said the only private proposal for the site that the county’s broker, CBRE Group Inc., received was from Optima Ventures of Miami, Fla., to build a parking garage that perhaps would accommodate a hotel later.

“It’s always, ‘parking now, project later.’ I wasn’t confident that the city would get the hotel it needs,” Mr. FitzGerald said. “A parking garage is not the highest and best use of this property.”

Chaim Schochet, a principal of Optima, said through spokeswoman Nancy Lesic that the company’s proposal technically was for a parking garage in a first phase with the ability to build something atop it. Whether it would have been a hotel, office building or residential property would have been dictated by the market later, Ms. Lesic said.

Optima, which owns four downtown office buildings, also is a partner with Sage Hospitality of Denver, Colo., in a $70 million renovation of the former Crowne Plaza Hotel at

Another hotelier placing new money on prospects for a reinvigorated downtown market with a new convention center is Drury Hotels of St. Louis, which plans to transform the Cleveland Metropolitan School District’s administration building, 1308 E. Sixth St., into a Drury Plaza Hotel.

Herb Wedemeier, general counsel of Drury Southwest Inc., said with the new convention center in Cleveland, “You need the hotel rooms; you simply do, to get the conventions. What the right number of rooms is, I can’t say.”

However, Mr. Wedemeier downplayed the impact of the added hotel competition.

“We have 130 hotels in 20 states.

We face issues like that all the time.

We see this as a good opportunity and are very excited about Cleveland.” Mr. Wedemeier said, “It’s challenging to renovate a building to a hotel, but it’s not our first rodeo.”

Jim Bennett, senior vice presi-

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quest for higher rates — and Positively Cleveland’s experience selling the city to conventions shaped the convention center hotel discussion.

“Since we’ve been in the marketplace selling the convention center, it has become clear that there were groups wanting to come to Cleveland but the one thing we were missing was the right hotel package,” Mr. Gilbert said.

“It’s not a case of not being willing to come to Cleveland without a convention center hotel,” he said.

“It is a question of not looking at Cleveland without an attached convention center hotel.”

Where Cleveland might need to put conventioneers into five or six hotels, the majority of its competitor cities, Mr. Gilbert said, can put them in two or three.

George Iannacone, general manager of the Doubletree by Hilton Downtown/Lakeside, said he is happy to participate in another renaissance in downtown Cleveland.

“We’ve come a long way,” he said, and with a new convention center and a convention center hotel as tools, Mr. Iannacone is confident Mr. Gilbert’s Positively Cleveland “understands our needs and can lead us into a new era.”

■

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dent of convention center operator MMPI Inc., said his staff was doing “high fives all around” when it learned of the convention center hotel plan. He noted most hotels will commit no more than 40% of their rooms to a convention, so the city now is limited to conventions offering 1,500 room nights at the peak of a convention. Adding the convention center hotel allows the market to commit 2,200 rooms.

“There is a 33% increase in the size of convention we can bring to Cleveland. There are all kinds of meetings in that sweet spot. Most of the increase is also from out-oftowners,” Mr. Bennett said. “All the cities we compete with have attached convention center hotels.”

Mr. Bennett said several hotel companies that he declined to identify have toured the meeting hall since the county and city unveiled plans to recruit a private operator to build and manage a convention center hotel that the public would finance.

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I Can Schools founders Jason Stragand, left, and Marshall Emerson III plan to open schools in Maple Heights, Akron and Canton this fall.

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continued from PAGE 1

On the local front, Mr. Stragand sees the possibility of opening single-gender schools, perhaps a school catering toward the performing arts or even a boarding school. I Can Schools officials say when they see a need related to education, their first inclination is to move in and set up shop while promising not to compromise the integrity of their existing schools.

Both Messrs. Emerson and Stragand were part of the team that launched the successful Entrepreneurship Preparatory School, or E Prep, in Cleveland, now a part of the nine-school Breakthrough Schools network. They launched their own enterprise so they could rear schools in their own vision and at their own feverish pace. “It’s hard for us to slow down,� said Mr. Stragand, I Can Schools’ chief academic officer. “As much as we say we don’t want to grow for a year and let our schools mature, it’s hard. We’re incredibly passionate, and it’s really hard for us to stop, knowing that other cities are really hungry for a quality education.�

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I Can Schools’ new outpost in Akron — Akron Preparatory School — will occupy nearly 48,000 square feet in the former Goodyear Tire & Rubber Co. headquarters on East Market Street on the city’s East Side. The school signed on as the first tenant of the complex, which Industrial Realty Group LLC is redeveloping. IRG also led the development of Goodyear’s new, $160 million headquarters that officially opened in May. I Can also is setting up Canton

College Preparatory School at St. Benedict Church on 3rd Street on the southeast side of Canton. Ohio College Preparatory School, I Can’s new school in Maple Heights and its first in a suburban setting, will be located near the Southgate USA retail complex on Southgate Park Boulevard.

While he’s confident enrollment will be strong at the new schools when they open this fall, Mr. Emerson said the charter school environment has become a slightly more difficult sell in recent years given the influx of new charters flooding the market and because of the negative press surrounding some charter management organizations. “It’s created a lot of noise for us,�

Mr. Emerson said. “But we are really good at telling our story to families.�

When Messrs. Emerson and Stragand launched E Prep in 2006, the school was a relatively easy sell given that the model was so radically different than anything parents had seen before. Still, the two men say their track record over the last three years has been their best sales pitch.

Both are quick to note that their students are among the best performing on statewide assessments and all of their students perform at or above grade level after three years in the I Can Schools network.

Plus, all their students who graduated from eighth grade went on to a college preparatory high school.

Mr. Stragand said the schools through regular assessments are able to identify students who are falling behind and place them into after-school tutoring and Saturday school to ensure they’re ready to move on to the next grade the following year.

“Marshall and I are not opening schools to just say we are opening more schools,� Mr. Stragand said. “We’re doing it to make an impact on urban education.�

Breakthrough pauses Breakthrough Schools, which works closely with the Cleveland Metropolitan School District and is perhaps Cleveland’s best-known charter management organization, hasn’t set its sights beyond Cleveland, though it could be only a matter of time.

John Zitzner, the outspoken charter school advocate who steers the fundraising arm for the organization, said Breakthrough will explore the possibility during its strategic planning process this summer. “I couldn’t say today that we’re definitely going to go outside of Cleveland, but everything is up for discussion,� Mr. Zitzner said. “Our current plans are to stay in Cleveland, but if there’s opportunity elsewhere and a community wants us, it all comes down to whether the proper facilities and funding are available to make that happen.�

Mr. Zitzner, meanwhile, has never been an opponent of bringing other charter organizations into the fold. He, for one, encouraged Mr. Emerson to pursue his I Can Schools venture. He’s also looking to bring together high-performing charters in the Cleveland area to collaborate on best practices. “We’re reaching out to get some of the other high-performing charters to come in and collaborate with us in the district to be a city that thrives with a variety of schools,�

Mr. Zitzner said. â–

Jones Day eliminates 65 jobs in its technology department Jones Day, the venerable law firm that employs the largest number of attorneys in Northeast Ohio, said it has eliminated 65 positions in its technology department.

Forty-five of those job cuts are in Cleveland, and 20 are throughout the firm's footprint, said Chris Kelly, partner-in-charge of the Cleveland office. Approximately 200 technolo-

ON THE WEB Story from www.crainscleveland.com gy positions remain. Most of the law firm's back-office support staff is in Cleveland, Mr. Kelly said.

The employees received notice of the job eliminations this morning and have been offered severance pay and outplacement services. No

attorney positions were cut.

After “an intensive analysis� of the Jones Day's technology support function, its executives decided a reorganized technology function would improve the effectiveness and the cost of its services to clients, the firm said in a news release. — Michelle Park

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Banks: Search firm is fielding questions on out-of-town groups continued from PAGE 1

expected to close the deal in the third quarter, and Talmer Bancorp Inc. of Troy, Mich., which in January completed its acquisition of First Place Bank in Warren from its bankrupt parent company.

The businesses and professional service providers domiciled in Northeast Ohio have spelled opportunity for bankers for a long time, said Mr. Rice, Ohio market executive for First Niagara.

“What’s a little different this time is the market is attracting the smaller regional banks, when it used to be more the larger national banks,” he said. “It seems now that the smaller banks are willing to do this.

“All banks are looking for loans,” Mr. Rice continued. “They need more business, so they’re coming here to hopefully grow their banks.”

Metropolitan areas promise better chances of loan growth for banks, many of which don’t like sitting on huge stockpiles of cash and investments with yields that are meager in this low interest rate environment, observed Charlie Crowley, a managing director in the Beachwood office of Boenning & Scattergood, a Philadelphia-based investment banking firm.

Quality loans remain too hard to find, so many are seeking “bigger ponds to fish in,” said Mr. Crowley, who said similar expansion by outof-market banks is happening in markets such as Columbus and Pittsburgh.

“Our view is that a number of banks around the region are back on their feet and are looking to grow, and would opportunistically consider either an acquisition or (hiring) lenders in this market if they were available,” he said.

Opportunity knocks S&T’s office in Fairlawn is its first

ShoreBank successor to exit market While some banks see opportunity in a region to which other bankers are flocking, one Chicago-based institution sees the inward migration as less reason to be here.

Urban Partnership Bank, which acquired most of the assets and deposits of the failed ShoreBank in 2010, announced last week it will close its lone location in the Glenville neighborhood of Cleveland on Sept.

27. Urban Partnership is a community development bank which has as its mission serving underbanked and underserved urban areas.

“There’s a lot of institutions active in extending credit in the Cleveland community,” spokesman Brian J. Berg said. “It’s not underserved for loans.”

Urban Partnership counts roughly loan production office, period, and was initiated after a bank executive who hails from Northeast Ohio approached the institution.

“The size of our bank is kind of unique for that market,” said Dave Antolik, chief lending officer for S&T, a bank with $4.5 billion in assets and branches serving 11 counties in western Pennsylvania.

“You either have small community banks or you have very large regional banks, so we think we’re in a unique position to serve the lower middle market, particularly with business lending,” Mr. Antolik said.

The banking business has not done a good job developing talent, so acquiring existing executives is an increasingly popular strategy, Mr. Antolik said. Plus, bankers with market knowledge also help to mitigate risk, he noted.

The strategy of hiring bankers

285 loan and deposit customers of its second-floor office at 540 E. 105th St., Mr. Berg said. Prior to the decision to close the branch, the bank had been searching for a ground-floor location more suitable to a retail operation.

The branch employs five, two of whom telecommute and will remain with Urban Partnership Bank. Mr. Berg said he wasn’t aware of plans for the three retail employees.

The bank now “will reallocate its resources to its 12 other branches and underserved urban communities in Illinois and Michigan,” according to a press release. New and existing customers can access their accounts by banking online at www.upbnk.com.

— Michelle Park who know Northeast Ohio is not lost on First Niagara, a bank with $37 billion in assets. All three of its lenders here are former National City bankers.

“We have prior history with a lot of the people we’re talking with,” Mr. Rice said of his team. “We’re not starting from square one.”

At least one executive who has worked for decades in banking recruitment says he’s fielding more phone calls.

“For me, it’s typically banks that are already established (that are calling), or individuals that have fielded calls from out-of-state banks,” said Bill Marshall, vice president of executive search for Dise & Co., a Shaker Heights executive search firm.

“They’re calling me to say, ‘Hey Bill, what do you know? Have you heard of XYZ Bank?’

“It’s on an upswing right now,”

Mr. Marshall added. “I think our region has certainly raised some eyebrows from out-of-state banking institutions.”

One reason for that interest is the fall of National City Bank, said Bill Mahnic, associate professor in the department of banking and finance at Case Western Reserve University’s Weatherhead School of Management.

“The demise of National City Bank really has still left an opening in the Cleveland market for both deposit share and loan share,” said Mr. Mahnic, a 22-year veteran of National City, which was acquired in a fire sale in late 2008 by Pittsburgh-based PNC Financial Services Group. “That makes it an attractive market for other banks to try to grab business.”

Mr. Crowley suspects F.N.B. and Talmer — the two regional banks that have acquired, or are in the process of acquiring, banks in Northeast Ohio — aren’t likely done building their presence in this market.

“Typically, once a bank like that is on the ground, they will be open to other fill-in opportunities, should they arise,” he said.

For its part, S&T executives noted that their bank leads with commercial lending before opening branches in a given place. Could branches be opened here?

“That’s certainly a possibility,” Mr. Antolik said. “We’re a bank that wants to grow. We need to grow in order to remain competitive.”

Speaking of competition …

The substitution of one bank’s name for another doesn’t necessarily produce more competition, Mr. Crowley said. But when a larger bank such as F.N.B. ($12 billion in assets) buys a smaller bank such as Park View Federal Savings ($760

million in assets), its lending capabilities and interests may change, Mr. Crowley noted.

And, in the case of First Place, which was “badly wounded” by loan problems and had been shrinking assets, its acquisition by a bigger, healthier bank likely will lead to a net increase in terms of credit extension, Mr. Crowley said.

Similarly, loan production offices opened by new players are net additions, he noted — all of which spells increased competition.

“It’s a good time to be a quality company in need of financing,” Mr. Crowley said.

One local banker who asked not to be identified noted that increased competition in a region that is “overbanked to begin with” will result in a loosening of terms and very competitive pricing.

Another local lender didn’t hesitate to point out what the new names in town can’t offer that his institution does.

“Are they competition? You’re darn right they are,” said Bill Valerian, president and CEO of Liberty Bank NA in Beachwood. “But they’re not local. What we sell is local decision-making and local ownership. That’s a community bank.”

Mr. Valerian, whose bank is a smaller, commercial lender, expects to see more banks move in on his territory as bank stock prices continue to improve, making shares better currency for use in acquisitions. So, too, does Mr. Mahnic from Case Western Reserve.

“Banks have a herd mentality,” Mr. Mahnic said. “Banks feel very, very comfortable doing something that others have already done. Success attracts more competition. If those banks that have opened up offices are here a year from now and they’re growing … you’re going to get more competition.”

■

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THEINSIDER

THEWEEK JUNE 17 - 23 The

big

story:

University Hospitals announced plans to explore a deal that would roll EMH Healthcare in Elyria, an organization with about $250 million in annual operating revenue, into its growing enterprise. As part of the arrangement, EMH would become University Hospitals’ flagship hospital in Lorain County. Negotiations are expected to last several months, with a final agreement anticipated by year’s end.

Feds file more charges: The federal government is charging William Montague, former director of the Louis Stokes VA Medical Center in Cleveland, with accepting bribes and kickbacks from convicted electrical contractor and developer Michael Forlani and others. In exchange, according to a 51-page indictment, Mr. Montague helped Forlani and companies he controlled win work to construct a new building at the Cleveland VA center and to develop a former VA property in Brecksville.

Ben Venue blues: More than 400 jobs will disappear from Bedford later this year, when Ben Venue Laboratories stops some of its manufacturing operations there. The maker of injectable drugs plans to stop production at one plant and will shut down a sterile filling operation at another plant, the oldest of its four in Bedford. The moves will leave about 800 jobs at Ben Venue, a company that came under U.S. Food and Drug Administration scrutiny a couple years ago due to quality control issues at its operations.

Dead, not alive: The Bon Jovi concert scheduled for July 14 at FirstEnergy Stadium won’t “kick off” the Cleveland Browns’ season after all.

The concert — announced amid much fanfare by the Browns in late May and billed as a “Fans Kickoff” event — was canceled, though it isn’t clear which party initiated the action. In a twosentence statement, the team didn’t give a reason for the cancellation and only said, “For refund information, ticket holders should return to their original point of purchase.” Representatives for the band weren’t talking.

Eye (and wallet) for design: Kent State University has received a $5 million gift from alumnus John Elliot and his wife, Fonda, through their family’s foundation to create the Elliot Studios for Design at a new, $40 million building planned for the school’s College of Architecture and Environmental Design. The gift — the single largest ever to the college — also will fund endowments for the Elliot Program for Healthcare Design, the Elliot Scholars and the Elliot Professorship in Healthcare Design.

She can relate: Cleveland Clinic’s chief government relations officer, Oliver C. “Pudge” Henkel Jr., is retiring after seven years with the health system, and the top lobbyist from Abbott Laboratories — a worldwide pharmaceuticals and medical products firm — is poised to fill his role. Kristen D.W. Morris, who has served as Abbott’s divisional vice president of federal government affairs since 2007, will join the Clinic July 8 and assume the title of chief government and community relations officer.

So what else was new?:

Saint-Gobain Aerospace in Ravenna said it has signed a longterm contract with Bell Helicopter of Fort Worth, Texas, to supply nose radomes for the new Bell 525 Relentless helicopter program. The company did not disclose the value of the contract for the radomes, a weatherproof housing for radar antennas. … BlueBridge Networks of Cleveland has invested $6 million to build a data center in Grand Rapids, Mich., and to upgrade connections among its existing operations in Ohio. The goal is to provide better “cloud computing” services, managing partner Kevin Goodman said.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

An entrepreneur walks into a bar …

■ If you didn’t have a nametag, you didn’t get in.

Tech entrepreneurs from all over poured into Ohio City’s Market Garden Brewery last Thursday, June 20, for the first of what probably will be many TechPint events.

About 175 people attended, but “we could’ve had 300,” said event organizer Paul McAvinchey. However, the backroom of the restaurant couldn’t hold more people.

The event seems to have struck a nerve in the entrepreneurial community, according to several attendees. It skewed young, but attracted both established tech entrepreneurs and others just getting started.

Greg Svitak — who has helped organize events such as Cleveland Startup Weekend and Cleveland GiveCamp, which both involved getting IT entrepreneurs together to turn ideas into products in a short period of time — said the event could do a lot to get local entrepreneurs to collaborate.

“The big thing to make startups work is you need a community. A community of like-minded people,” said Mr. Svitak, who also runs Idea Innovations, a software development company.

Not everything went as planned. Not only were some people who didn’t register for the $12 event turned away, but many attendees couldn’t hear the speakers … so they kept talking.

No big deal, said Mr. McAvinchey, who also is product innovation manager at MedCity Media of Cleveland, a digital media company covering the health care industry.

WHAT’S NEW

“We’re going to learn a lot from this,” he said. — Chuck Soder

lanterns, visit www.krylon.com.

— Rachel Abbey McCafferty

DIY guy will be busy down in Burton

Toehold in Lakewood could become foothold

■ Krylon, a Cleveland-based spray paint maker and Sherwin-Williams Co. brand, is planning an interactive, online event to promote its newest product, ColorMaster, with DIY Network host Jeff Devlin this Friday and Saturday, June 28 and 29.

Rather than release the paint in a traditional campaign, Krylon Devlin wanted to engage potential customers, said brand manager Katherine Merkle. During the “Krylon ColorMaster Challenge,” Mr. Devlin, host of “I Hate My Bath,” will take on 24 home improvement projects of varying degrees of difficulty in 24 hours.

“This was a great way really to get people involved with the product,” Ms. Merkle said.

Mr. Devlin will set up shop at a residential location in the Geauga County town of Burton for two, 12-hour sessions, said Amber Zent, management supervisor and social media strategist at local marketing firm Marcus Thomas LLC. The event will be live-streamed and live-tweeted, with the help of on-site home improvement and craft bloggers. At the end of the program, all the projects will be donated to a local chapter of Habitat for Humanity to be sold in its “ReStore.”

To see what projects Mr. Devlin will be painting, from a dog house to cheese grater

■ The University of Akron appears to be making inroads near Cleveland, with its first physical outpost in the Cuyahoga County — a roughly 11,000-square-foot space that opened last year on Detroit Avenue in Lakewood — slated for further growth in the coming academic year.

“If the University of Akron is going to grow, it needs to go outside of Summit County and in a big way,” said Suzanne Metelko, director of University of Akron Lakewood. “Cuyahoga County is the place to go.”

The number of credit hours taken by students out of the university’s Lakewood outpost is expected to increase 70% over last fall’s numbers, according to Ms. Metelko.

University officials attribute the growth to an aggressive marketing campaign and strong partnerships with community and corporate interests. Oh, and Zippy — the university’s fearless kangaroo mascot — made an appearance last year in Lakewood’s July 4 parade.

Ms. Metelko said the Lakewood outpost also forged a partnership last year with Lakewood High School that allows students to earn college credit before earning their high school diplomas — a program that could lead students to pursue degrees at the university’s main campus in Akron.

The university offers courses in nursing, social work, organizational supervision and business at the Lakewood location.

— Timothy Magaw

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

Everything old is new again

COMPANY: Mary Yoder’s Amish Kitchen, Middlefield OCCASION: Its 25th anniversary For a quarter century, Mary Yoder’s has turned out old-fashioned Amish home cooking such as slow-cooked roast beef, mashed potatoes, fresh salads and homemade bread — not to mention peanut butter and apple butter, pies, apple dumplings and Amish wedding cake.

On Saturday, June 29, Mary Yoder’s celebrates the anniversary by offering customers a small gift and a free piece of cake with their lunch or dinner. There also will be a drawing for an Amish-made quilt, and Barbara Yoder Hall’s book “Born Amish” will be available at a discount.

Mary Yoder’s opened in 1988 in downtown Middlefield and moved to its present location, 14743 North State Street, in July 1990.

Three families were the main influences in the development of Mary Yoder’s: Larry and Donna Kannal were the financial supporters; Ed and Barbara Hall were the managers; and Lester, Sarah and Kathryn Hostetler were responsible for bringing their baking and home cooking expertise to the restaurant. (Barbara Hall was killed in an automobile accident shortly after Mary Yoder’s opened.)

The restaurant has been named in honor of Mary Yoder, Barbara Yoder Hall’s mother.

Mr. and Mrs. Kannal, Mr. Hall and Sarah Hostetler will be at the restaurant June 29 to celebrate the anniversary.

For information, visit: www.MaryYodersAmishKitchen.com.

■ Alcoa Inc.’s Cleveland Works forging plant on Harvard Avenue finds that old stuff works just fine.

The plant was the focal point of a Wall Street Journal story that says manufacturers “often choose to make do with equipment that is decades old, instead of rushing to buy the latest technology.” Essentially, they have determined “it can make more economic sense to renovate old machinery than risk investing in something entirely new — especially in a slow-growing market like the U.S.” The Journal reported that as part of reparations exacted after World War II, U.S. authorities confiscated a metal-forging press made in Germany during the 1930s. The 62foot-tall machine “was taken apart, shipped across the Atlantic and reassembled” at Alcoa’s Cleveland plant.

“More than 60 years later, Alcoa is still using that press to squeeze hot aluminum alloys into dies for aircraft wheels and brakes,” according to the newspaper.

While computerized controls have been added and many parts updated, the basic iron structure and other original parts remain.

“It was very well-designed by the Germans,” Eric Roegner, a senior Alcoa executive whose duties include overseeing the plant, told The Journal.

Buy the way ■ Bloomberg profiled junior trader-turnedauthor Turney Duff, a Cleveland native who has written a buzzed-about new memoir called “The Buy Side.”

Mr. Duff’s 308-page account of the highs and lows of life on Wall Street “provides a timely window into practices that have been a focus of federal prosecutors,” Bloomberg said. “His spectacular fall is also

perplexing, as he initially comes off as smart, albeit green.”

On his website, Mr. Duff noted that he was born in Cleveland in 1969, “which explains the tattoo of Chief Wahoo, the Indian’s mascot, on my ankle.” He graduated from Ohio University with a degree in journalism but pursued finance after failing to land an interview at newspapers or magazines.

We’re flexible ■ Thanks to the magic of Hollywood, parts of downtown Cleveland looked quite a bit like Washington, D.C., in May and June, as our town stood in for the nation’s capital for “Captain America: The Winter Soldier.”

The Washington Post noted, for instance, that brown D.C. Metro pylons “are part of the Hollywood fakery” that enables Cleveland to pass for Washington.

“Cleveland’s not necessarily a Midwest town,” Ivan Schwarz, president of the Greater Cleveland Film Commission, told The Post. “We have much more of an East Coast architecture. … Really, there’s nothing you can’t do here at the end of the day except for mountains and desert.”

Why didn’t the film shoot in D.C.?

Too much bureaucracy, according to Mr. Schwarz. Also, Washington can’t be as flexible as Cleveland, given post-Sept. 11, 2001, security-related issues.

Given that Cleveland stood in for New York in “The Avengers,” The Post asked Mr. Schwarz if Clevelanders “ever feel sad that Hollywood seems interested in their city mainly for its ability to look like other cities.”

His response: “I get that question all the time. For me, our mission is about economic development.

It’s about driving dollars here and creating jobs for people who would otherwise leave. … I’d rather show that we can be everything to everyone than be limited to just a Cleveland location.”

20130624-NEWS--27-NAT-CCI-CL_--

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11:14 AM

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RONALD MCDONALD HOUSE

Many Hearts... One Home...

Expansion Opening 2013!

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Today, we thank you for helping us meet the needs of those in crisis. Your continued commitment to the families who desperately need our services is crucial to both the House and our community partners.

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20130624-NEWS--28-NAT-CCI-CL_--

6/20/2013

11:30 AM

Page 1

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