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$2.00/SEPTEMBER 5 - 11, 2011
BEFORE
AFTER
Direct investing plan scuttled by JobsOhio leaders Strategy of taking equity stakes in growing companies gives way to focus on doing loans By JAY MILLER jmiller@crain.com
JOEL HAMMOND PHOTOS
The 320-home, $110 million project at Battery Park on Cleveland’s near West Side has benefited from the city of Cleveland’s residential tax abatement program.
As residential tax abatements’ stock rises, officials seek renewal City stakeholders view policy as key incentive for homebuyers By JAY MILLER jmiller@crain.com
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fragile housing market has scotched any plans to trim back residential tax abatement when Cleveland City Council takes up the policy’s renewal this fall. That wasn’t the case in 2007, when the policy last was renewed. Then, Mayor Frank Jackson sought unsuccessfully to cut back the number of years taxes would be abated for
INSIDE Come together
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Led by Michael Pope (pictured), 30 home product retailers and home improvement specialists have come together in Middleburg Heights to provide a one-stop shop for homeowners. Learn about the unique partnership and its members by reading Jay Miller’s story on Page 11.
some new housing construction. The current authorization sunsets in June 2012, and City Council plans to discuss renewal soon and to pass the legislation before the end of the year. The Jackson administration now acknowledges tax abatement’s importance to rebuilding the city’s housing stock. “Our assumption is every home that’s built (in Cleveland) gets tax abatement, because it’s such a great See TAX Page 9
Gov. John Kasich’s new job creation nonprofit, JobsOhio, remains a work in progress. That was clear last week when Mark Kvamme, the transplanted Silicon Valley entrepreneur who is the governor’s economic development point man, revealed a key change in its strategy to spur business development in Ohio. Mr. Kvamme said during a meeting with Crain’s editors and reporters that the organization was setting aside a highly touted plan to use JobsOhio money to invest directly in growing businesses to keep them in the state; instead, he said, the group will rely chiefly on the loans and tax credits the state long has used to encourage business growth in Ohio. “We decided we’re not going to do investments,” said Mr. Kvamme, who is JobsOhio’s chief investment officer. “What we will be doing is loans, very similar to what (the Department of Development) has done in the past, to create a recurring revenue source” as businesses repay their debts. He also alluded to the legal difficulties that could arise in creating an investment vehicle that would allow
“(JobsOhio wants to) open the eyes of venture capitalists to the world-class companies being created here.” – Mark Kvamme, chief investment officer, JobsOhio state money — the liquor profits that will fund JobsOhio — to be used for equity investing. Mr. Kasich initially had planned to have JobsOhio provide companies with equity, which is sometimes more attractive than loans to small, growing businesses. An equity position would give the state the chance to share in the success of the businesses it helped fund, which in turn would allow it to use its investment gains to expand JobsOhio’s economic development kitty. Mr. Kvamme said he believes JobsOhio can find others who will make the equity investments some young See DIRECT Page 5
$5M gift to CWRU will help fund innovation initiative Invacare execs’ donation will provide space to develop products, technology By TIMOTHY MAGAW tmagaw@crain.com
Invacare Corp.’s A. Malachi Mixon III and Joseph B. Richey II know a bit about rubbing elbows with other driven individuals to get a business venture off the ground, so the pair has invested $5 million in Case Western Reserve University’s entrepreneurship and innovation programs. Their gift will help anchor the creation of the Richey-Mixon Building,
which will house the university’s “think box” programs — a collection of initiatives at CWRU designed to encourage students to develop new products and technologies with the ultimate goal of spawning new businesses. The project could involve renovating an existing building or constructing a new structure. Plans for what exactly the building might contain still are being hashed out. However, both Messrs. Mixon and Richey said the idea is to create
work space for students and, perhaps, other business professionals to tinker with new ideas. “That’s how new companies are created,” said Mr. Mixon, Invacare’s chairman and former CEO. “There are very few perfect people who have every attribute known to man. Certain people have skills that others don’t. When you get people together, you can usually make a go of it.” That type of mingling of the minds is what helped Invacare get
Mixon
Richey
off the ground when Messrs. Mixon and Richey leveraged the buyout of Invacare in 1979 from Johnson & Johnson and transformed the Elyria See GIFT Page 22
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SPECIAL SECTION
Crain’s again identifies and profiles companies and individuals who are championing sustainability ■ Page E-1 ■
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 36