$2.00/DECEMBER 17 - 23, 2012
Last of Duke portfolio may be sold Sources say N.Y. firm in talks for REIT’s 11 NE Ohio office sites By STAN BULLARD email@example.com
Duke Realty Corp.’s long goodbye from Northeast Ohio soon may become a final farewell. The Indianapolis-based real estate owner and manager is in talks to sell its last 11 suburban office buildings here to Och-Ziff Real Estate, the
property affiliate of big hedge fund firm Och-Ziff Capital Management of New York. Och-Ziff Capital is an institutional alternative asset manager with more than $30 billion in investments under management. Two sources said Och-Ziff and an operating partner are pursuing the purchase of the group of properties on and near Rockside Road in Inde-
pendence and Seven Hills, perhaps in hopes of a year-end close of the purchase. The sources asked not to be identified because they are not authorized to speak for the parties involved. The properties are blue-chip office buildings that total 1 million square feet. They include the three Park Place buildings in Indepen-
dence that Duke itself constructed, as well as office buildings such as Corporate Place I on Rockside Woods Boulevard that it acquired to enter the Cleveland market in 1996. If the deal is concluded, Duke would complete the departure from Northeast Ohio that it began in 2005. It sold its substantial industrial portfolio in 2005, its portfolio of nine office buildings in the eastern suburbs in 2007, and three office buildings in
INSIDE ‘Mompreneur’ ranks are growing More mothers — such as Cindy Perry of Avon Lake, who launched Pello last January — realize they can start a business and be a parent. PAGE 3 PLUS: ■ East Cleveland-based GE Lighting finds room for LEDs in the industrial market. PAGE 3
See DUKE Page 18
Fiscal cliff impacting charitable gift giving Donors gauge effects of potential tax changes; groups push for clarity By MICHELLE PARK firstname.lastname@example.org
This December, the month when many charities raise the bulk of their donations, uncertainty about the tax climate in 2013 is driving some donors to increase their gifts — because at least they know how their income and gifts will be taxed this year — while others are outright delaying gifts until more clarity is had. Lawmakers are working to resolve the so-called fiscal cliff, and they’re weighing whether the charitable deduction should be limited, plus other options that would diminish the tax breaks one can reap for giving to nonprofits. Charities aren’t taking it lightly. United Way of Greater Cleveland on its website asks people to write members of Congress and urge them to preserve the charitable deduction, not “reform taxes on the backs of the poor.” And the Cleveland Foundation hosted two presentations about charitable giving strategies in uncertain economic times, one in midNovember for about 80 professional
See CHARITIES Page 17
A vision of what a new Cuyahoga County headquarters could look like at the south end of the former Ameritrust complex on East Ninth Street.
Ameritrust deal won’t be market panacea Empty office space already absent from vacancy rates, which industry observers use to judge metros’ real estate health
By STAN BULLARD and JAY MILLER email@example.com, firstname.lastname@example.org
The proposal by developer Geis Cos. to buy the former Ameritrust complex for a mixed-use project that would include a new headquarters for Cuyahoga County should do downtown Cleveland a lot of good by injecting life into the intersection of East Ninth Street and Euclid Avenue, real estate types agree. However, the potential deal’s
ANALYSIS impact on the office market, statistically speaking, would be nil at best — and could have negative implications for Cleveland due to the tendency of outsiders to gauge the health of a metropolitan real estate market by its vacancy rates. Under its plan, Geis would turn the 29-story Ameritrust Tower into 210 apartments, would renovate the See OFFICE Page 4
2012NEWSMAKERS Profiles of the individuals who made the biggest headlines over the last year ■ Pages 11-16
Entire contents © 2012 by Crain Communications Inc. Vol. 33, No. 49
CRAIN’S CLEVELAND BUSINESS
NOT SO FAST
COMING NEXT WEEK
The U.S. labor force has grown considerably more slowly since 2000 than it did in the previous five decades, and that trend is not expected to change any time soon, according to projections from the U.S. Bureau of Labor Statistics. Even though the size of the population will grow, “its annual growth rate is projected to slow in the coming decades,” BLS says. The decline in the growth rate of the U.S population is due to a variety of factors, such as the aging of the baby boomers, declining fertility rates and a reduction of the growth in immigration.
2012 Crain’s Book of Lists Our annual compilation of research includes lists published throughout the year, along with four new lists that have yet to appear in these pages. Plus, our Health Care, Executive Search and Staffing and Bioscience directories.
Annual population and labor force growth rates by decade, 1950-2010, and projected for 2010-2050
REGULAR FEATURES Big Issue ........................9 Classified .....................18 Editorial .........................8 Going Places ..................6
DECEMBER 17 - 23, 2012
Letter.............................9 Personal View.................8 Reporters’ Notebook.....19 What’s New...................19
Labor force growth
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DECEMBER 17 - 23, 2012
CRAIN’S CLEVELAND BUSINESS
Industrial focus boosts lineup at GE Lighting LED manufacturer sought market entry as demand emerged By CHUCK SODER firstname.lastname@example.org
GE Lighting wants to start lighting up factories and warehouses with LEDs. The company’s fast-growing LED business dove into the industrial market on Nov. 26, when GE Lighting agreed to buy Albeo Technologies Inc. of Boulder, Colo., for an undisclosed price. The deal immediately will fill a gap in the product lineup and customer base of GE Lighting, which is based at Nela Park in East
Cleveland. The General Electric Co. unit previously did not own an LED product designed to provide general lighting for high-bay industrial buildings. Albeo specializes in the segment, marketing itself as a provider of “industrial strength LED lighting.” Albeo will help GE Lighting capitalize on the industrial market’s growing demand for products that use light-emitting diodes, which are more efficient — though more expensive — than most other lighting products. The GE unit started looking for a
producer of industrial LED lighting to buy after noticing that demand among industrial customers was “emerging faster than we thought it would,” said Maryrose Sylvester, CEO of GE Lighting. Factories and warehouses are looking for ways to cut their energy bills, which tend to be a big part of their operating costs, Ms. Sylvester said last week during a news conference in Boulder. Plus, they tend to be large customers that buy more products, Ms. Sylvester said.
See LIGHTING Page 18
THE WEEK IN QUOTES
MOMS MAKING THEIR OWN WAY
“The old construction paradigm ... was to put a 20-year-old next to a 50-year-old and you teach them. There has not been that opportunity for the younger workers.”
Ranks of ‘mompreneurs’ grow with realization that they can both work and be a parent By GINGER CHRIST email@example.com
— Jeff Riddell, chairman of the Ohio Ready Mixed Concrete Association. Page 7
“Congress should have productivity standards. If I was as unproductive as those guys are, I would lose my job.” — From a response in The Big Issue. Page 8
“Cleveland has become a national leader in the school reform conversation. … It’s being watched by both critics and supporters alike.” — Terry Ryan, vice president for Ohio programs and policy, Thomas B. Fordham Institute. Page 12
GE Lighting CEO Maryrose Sylvester
MARC GOLUB PHOTOS
Cindy Perry, owner of Pello, which helps babies like the one at right — a neighbor of Ms. Perry’s, Willa — get more comfortable.
A 2011 scare with melanoma convinced Cindy Perry to finally turn a hobby into a career. Ms. Perry, an Avon Lake mother of two, last January launched a business from her home selling “pellos” — baby floor pillows she initially designed for her own children. The pellos essentially are 33inch round pillows with depressed centers that can be used for newborns lying down or for babies learning to sit or crawl. Now, nearly a year after its debut, Ms. Perry contracts with a local manufacturer — Western Reserve Sewing Co. in Cleveland — to make the pellos, and she said her product is sold at 37 boutiques in 17 states. She already has an intern and is about to take on her first employee. Ms. Perry is among a growing number of mom entrepreneurs, or “mompreneurs,” who are See MOMS Page 5
As economy improves, manufacturers want fair fight vs. China Call for currency revaluation due to disadvantage in buying raw material By GINGER CHRIST firstname.lastname@example.org
Randy Solganik, owner of City Plating in Cleveland, wants a level playing field against China. Mr. Solganik, whose company puts zinc plating on steel parts used in the automotive industry, is one voice among many local manufacturers calling for China to revalue
its currency. “Definitely, Northeast Ohio would benefit from any type of move to help China revalue their currency,” he said. “Because of the manufacturing base that’s in Northeast Ohio ... it’s a Northeast Ohio issue.” China’s currency, which is known as the yuan or renminbi, is “significantly undervalued,” according to the U.S. Department of the Trea-
sury’s Semi-Annual Report to Congress on International Economic and Exchange Rate Policies. The Nov. 27 report stated that “further appreciation of the RMB against the dollar and other major currencies is warranted,” yet to the chagrin of many manufacturers, it did not go as far as to label China a currency manipulator. “I think we can compete on a
level playing field, but the playing field right now is tilted,” Mr. Solganik said. “As a business person, you want to be able to compete against people. You don’t want governments stepping in supporting particular industries, especially to your detriment.” While the valuation of China’s currency long has been a thorn in the side of manufacturers, the issue again is becoming prominent as companies look for ways to grow business post-recession.
“When the economy improves, you’re going to see more and more of a negative impact,” said William Gaskin, president of the Precision Metalforming Association, a trade association for metalworking companies in Independence. Mr. Gaskin said prices of raw materials in the United States likely will rise as the global economy recovers. Yet he doubts the price of those same materials will appreciate in the same way in China. See FIGHT Page 10
CRAIN’S CLEVELAND BUSINESS
DECEMBER 17 - 23, 2012
Office: Deal would enliven key corner continued from PAGE 1
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1010 Euclid Building — also known as the Swetland Building — to more residential and retail space, and would demolish two buildings on the complex’s Prospect Avenue side to make way for the county headquarters. The steps would slice a total of 800,000 square feet of office space from the market. However, that loss wouldn’t do anything to vacancy rates. That’s because office market surveys by brokerage firms have turned a blind eye to the complex, either because it was not in use or wasn’t marketed. The complex has been empty since 1996. “It will be better if it’s gone, but statistically speaking, it’s a nonfactor,” said Alec Pacella, a vice president in investment sales with the NAI Daus brokerage firm who cut his real estate teeth as a property market researcher. Robert Redmond, a managing director for the Mohr Partners brokerage’s Cleveland office, agreed. “The Ameritrust complex has not been in our statistics for about 15 years,” Mr. Redmond said. “But I’ll be glad to see the whole mess resolved.” The former Cuyahoga County commissioners acquired the Ameritrust complex in 2005 with the idea of the property becoming a centralized county headquarters. That plan came to naught because of escalating costs and financing constraints due to the county building a new juvenile justice center. But the new county charter government formed in 2011 again has taken up the issue of finding a new headquarters. If Cuyahoga County Executive Edward FitzGerald, a county review team and real estate consultant CBRE Group Inc. had opted to lease headquarters space in an existing office
Receiver’s Sale Cleveland Jet Center Bids being accepted for a Receiver’s sale of the Cleveland Jet Center, located at the Cuyahoga County Airport. The Cleveland Jet Center is a sub-tenant in an ofﬁce building and freestanding airplane hangar at 26380 Curtiss Wright Parkway, Richmond Heights, Ohio 44143. Sale is subject to Court approval, where is, as is, without warranty or representations.
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building, the impact on the downtown office market’s 20% vacancy rate would have been dramatic. Two existing buildings were among the finalists in the county’s headquarters search. Inland American Real Estate Corp. of Chicago offered to lease 271,455 square feet at its 45 Erieview Building, which also faces East Ninth Street. Miami-based Optima Ventures offered 265,212 square feet at the 925 Euclid Building, the landmark structure formerly known as the Huntington Building. The proposed, 222,000-squarefoot building Geis would construct to accommodate the county would require demolition of 190,000 square feet of obsolete office space that hasn’t factored into calculations of vacancy in the downtown market. That’s because commercial brokerage surveys cover what brokers and developers care about most: moneymaking office space.
The vacancy issue Mr. Redmond likened the impact of the county going into a new, buildto-suit structure to a company new to downtown searching for space in the city and deciding not to lease here. “It’s a missed opportunity in terms of the market,” said Mr. Redmond, a student of the Northeast Ohio and national office markets. The larger impact of the county’s potential move is that many national brokerages and consultants publish office vacancy statistics to gauge the health of markets. Companies use the data to guide investment decisions and evaluate the attractiveness of a metropolitan or downtown area. For instance, the Marcus & Millichap investment brokerage estimates downtown Cleveland vacancy by year end at 20.7%, compared with
17% among metropolitan areas on an average basis. Detroit has the highest vacancy rate, at 26%, and New York City the lowest, 10%. Thanks to the recession’s lingering effects on the office market, stellar markets such as Austin and Atlanta have high vacancies as well, 19% and 20%, respectively. Besides sending a positive signal to prospective tenants, lower occupancies also enable rents to rise, increasing the chance for landlords to profit and produce more valuable properties.
An eye on revitalization Mr. FitzGerald said the Geis proposal was the strongest in terms of impact on downtown and efficiency of the building for the county. “We know there are landlords who would have liked us to fill their building,” he said. “This is a proposal that does reduce excess office space in downtown, and it does it in a way that’s $180 million addition to economic development in downtown Cleveland and helps revitalize Euclid Avenue.” The $180 million figure refers to the total investment Geis plans in the complex. Ryan Jeffers, a first vice president at CBRE who was part of the team that aided the county in its search, said it is “pretty clear is that a massive chunk of space is going to be put into development, go on the tax rolls and be removed from the vacant defunct inventory.” Mr. Redmond acknowledged that the Geis plan would enliven one of the dead zones of Euclid Avenue. Many office brokers also see the project as a plus because the Geis plan would strengthen downtown as a residential district, which aids the office market. ■
Legislators push to save tax benefits in retirement plans By DARLA MERCADO Investment News
Retirement industry groups have rallied around a proposal championed by Sen. Richard Blumenthal, D-Conn., and Sen. Johnny Isakson, R-Ga., to protect the tax incentives of saving in retirement plans. The so-called “sense of the Congress” resolution stressed that not only do tax incentives for saving in plans help encourage plan sponsors to maintain the plans and push participants to contribute, but they also have increased the number of people who are covered by a retirement plan. As the attention turns to reducing the federal deficit and cutting tax expenditures, retirement plans once again have come under scrutiny. A proposal in 2010 by Alan Simpson and Erskine Bowles, co-chairmen of the National Commission on Fiscal Responsibility and Reform, tackled expenditures tied to retirement savings, capping tax-preferred con-
tributions to the lower of $20,000 or 20% of income. Sens. Blumenthal and Isakson said $4.7 trillion is held in 401(k), 403(b), 457 and other defined-contribution plans, while another $2.3 trillion is in private defined-benefit plans. Individual retirement accounts hold nearly $5 trillion, with much of that amount coming from rollovers from workplace retirement plans. The accounts have been a boon for lower- to middle-income earners, as more than 70% of workers making between $30,000 and $50,000 annually are contributing to their own retirement when they have a savings plan at work, according to the proposal. Three years ago, 79% of federal tax incentives for defined contribution plans were attributable to taxpayers with less than $150,000 in adjusted gross income. ■ Darla Mercado is a reporter with Investment News, a sister publication of Crain’s Cleveland Business.
Volume 33, Number 49 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the third week of May and fourth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
DECEMBER 17 - 23, 2012
CRAINâ€™S CLEVELAND BUSINESS
Moms: Recession spurs a jump in two-income families continued from PAGE 3
starting their own business while running a family. These are women who cradle a phone in one hand, a baby in another and make sales calls while packing lunches. â€œIt was a big decision because, of course, we started with our personal funds,â€? Ms. Perry said of starting her business with the help of her husband, Andrew Perry, an attorney who helped her secure a patent and line up an accountant. â€œIt was a decision, but it wasnâ€™t really a long discussion.â€? For 10 years prior to opening the business, called Pello, Ms. Perry had sold the pillows to family and friends, even providing pellos to a number of Cleveland Indians players starting families. She knew there was a market but just had to take the leap. While surviving melanoma spurred Ms. Perry to get a patent, other moms move to action for a combination of reasons â€” to supplement the family income, for empowerment or to serve as a role model for their children, local moms say. â€œItâ€™s such a great example for my daughters,â€? said Tricia Price, co-owner of Reflect Who I Am. Itâ€™s a business that produces girlsâ€™ T-shirts with positive messages in reverse print, so that the wearer can read them when they appear in a mirror. â€œYou donâ€™t have to just be a mom,â€? said Ms. Price, who operates from her home in Hudson. â€œYou donâ€™t have to just work. You can do both.â€? And it seems many women are coming to the same conclusion.
Balancing act The number of moms launching businesses â€” from website-based companies to consulting firms â€” is growing, said Traci Bisson, founder of The Mom Entrepreneur Support Group, a national online community. â€œItâ€™s definitely increasing,â€? Ms. Bisson said. She attributes the rise in mom entrepreneurs in part to the recession, which forced many women to start contributing to household income. And, by starting their own businesses, moms still can generate income, while remaining in the home with their children. Mom entrepreneurs face a differ-
ent set of challenges than other new small business owners, the moms say. While trying to launch a new venture, theyâ€™re also juggling the responsibility of raising children. â€œThe key thing is really to surround yourself with a team,â€? Ms. Bisson said. â€œWe all say weâ€™d like to try to do it all. It really is unrealistic if youâ€™re going to keep yourself sane and your business moving forward.â€? Carrie Crawford, who this year started Comfy Cradle, a company selling a pillow that wraps around a parentâ€™s arm for use while holding or feeding a baby, opted to contract out services as her business grew. She now has the Comfy Cradles made by RS Sewing in Canton; the packaging is created by Design Interface in Westlake. â€œItâ€™s hard to balance the family and work and being a mom and being a wife. Itâ€™s been a struggle trying to balance it all,â€? said Ms. Crawford, a mother of two from Reminderville in Summit County.
Home team Mobile technology has been a big factor in helping Ms. Price and Marci Hower, co-owners of Reflect Who I Am, launch their business. When the business began last July, Ms. Hower was on her way to Montana for vacation. Using computers and smart phones, the two women could communicate as though they both were in Northeast Ohio. The business truly becomes a family affair, Ms. Hower said. â€œBoth of our families are huge advocates. The kids have actually helped us with projects weâ€™re doing and photo shoots,â€? she said. Her three sons even have been the force behind the companyâ€™s plans to launch a boysâ€™ line of T-shirts. â€œThe boys are not ones to hold back on their ideas,â€? she said. â€œThey are directing the concepts.â€? In Ms. Perryâ€™s case, her two sons, ages 8 and 11, put stickers on Pello packages before the products are mailed to customers. â€œItâ€™s been a very good learning experience for the kids,â€? said Ms. Perry, who likes that her sons see her not only tackling her dream, but also dealing with budgets, contracts and production orders. â–
hile the oval office is quite ornate and the wine room is for Mom and Dad, much of the Chagrin Falls home of Azim and Caren Nakhooda was built with their children in mind. Mr. Nakhooda, managing principal and CEO of Cedar Brook Financial Partners in Pepper Pike, lives with his family in a home that features an indoor grill, unusual energyefficient technology and a nook accessible only by ladder. Feast your eyes also upon a kitchen where the stove isnâ€™t the only thing that packs heat. Take the tour now: www.crains cleveland.com/housecalls.
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STEPHEN HERRON PHOTOS
CRAIN’S CLEVELAND BUSINESS
DECEMBER 17 - 23, 2012
Metro still awaiting Medicaid waiver
Expansion would cover about 30,000 county residents who wouldn’t typically fit in program
By TIMOTHY MAGAW firstname.lastname@example.org
The MetroHealth System still is waiting on federal and state regulators to sign off on a complicated legal maneuver that has the potential to extend Medicaid coverage to as many as 30,000 people in Cuyahoga County who otherwise couldn’t pay for their health care. Previously, MetroHealth officials said the so-called “waiver” likely would be approved in November, and the health system subsidized by Cuyahoga County could begin enrolling patients at the start of December. However, state and federal regulators are waiting for MetroHealth to get its back-end operations ready to handle the administrative burden of such a complex program and to train its staff on how to screen patients for the program’s eligibility. “I wish I could predict a date when we would be ready to go because I’d be very popular around here, but we’re still plugging forward on this,”
said John Corlett, MetroHealth’s vice president for government relations and community affairs and former director of the state Medicaid program. “Everything with Medicaid is very complicated,” Mr. Corlett said. If approved, the move would expand Medicaid coverage in Cuyahoga County to those who don’t meet the typical guidelines for coverage. Children or the disabled normally are covered under Medicaid. The waiver would extend coverage to county residents ages 19 to 64 who are uninsured, not eligible for regular Medicaid and have an income at or below 133% of the federal poverty level. Because MetroHealth is a public entity, it could use its $36 million county subsidy to draw about $64 million in additional federal matching funds to finance the Medicaid expansion. Expecting an influx of newly insured patients, MetroHealth this year finished tweaking its primary care operations at its satellite clinics
and is doing the same for its specialty service lines, according to Phyllis Marino, the health system’s vice president for marketing and communications. Some of those changes included freeing up physicians from administrative duties and shifting scheduling models to accommodate more patients. In October, Cook County in Illinois started enrolling individuals in a similar program — albeit on a larger scale. The Cook County program immediately would extend coverage to 115,000 individuals who wouldn’t be eligible for Medicaid until it was expanded in 2014 as part of President Barack Obama’s health care overhaul. Unlike Illinois, Ohio has waffled on whether it would buy into Obamacare’s Medicaid expansion, which the U.S. Supreme Court ruling said states could sidestep. However, Mr. Corlett said the state’s decision to proceed on the Medicaid expansion would have no bearing on the waiver. “One of the things that’s attractive to (the Centers for Medicare & Medicaid Services) and the state about this waiver is that it’s as much about care coordination as it is about the coverage,” he said. “How can we improve care?” ■
JOB CHANGES C.C. HODGSON ARCHITECTURAL GROUP: Mark Duluk to senior design architect; George Gatta to design architect/project director.
BEACON MARSHALL COS.: Daniel Pillar to director of marketing.
EDUCATION CLEVELAND INSTITUTE OF MUSIC: HaeSun Paik to piano faculty. NORTHEAST OHIO MEDICAL UNIVERSITY: Sergio A. Garcia to chief of staff; Barbara A. Tobias to director of human resources.
ENGINEERING MANNIK & SMITH GROUP INC.: Thomas M. Adams to senior roadway engineer; Steve Tomsic to senior bridge engineer. TECHNICAL ASSURANCE INC.: Dan Jackson to senior roof consultant; Jackie Spencer to database administrator; Matt Walder and Adam McHale to field technicians, roofs; Garrett Moeller to director of spatial solutions; Carrie Ann Tripodo to contracts administrator; Bob Maslanka to field technician.
FINANCE CHARTER ONE/RBS CITIZENS: Cheri Henson Smith to senior vice president and manager, CRA administration team. LAKE NATIONAL BANK: Amy Cossick to business development officer.
FINANCIAL SERVICE FAIRPORT ASSET MANAGEMENT: Lindsay Suster to client service representative. SS&G: Ross Vozar to associate director; Chad Leikin to associate. SS&G HEALTHCARE: Patricia Baker to billing specialist. WARFIELD & CO. CPAS LTD.: Edwin Repphun to tax consultant; Barbara Benden to paraprofessional; Richard Leach to manager.
GOVERNMENT MEDINA COUNTY: Anne Murphy to director of community relations, Auditor’s Office.
HEALTH CARE KAISER PERMANENTE OHIO: Dr. Nabil Chehade to president and executive medical director, Ohio Permanente Medical Group. SURGICAL THEATER LLC: Peter R. Brumbergs to chief financial officer.
Rusnak to logistics manager; Mike Alley Jr. to logistics coordinator. WALLOVER OIL CO.: Patrick G. Nygaard to regional sales manager, Northeast Ohio.
MARKETING QUEZ MEDIA MARKETING: Jae Sean Davis to administrative coordinator; Holly Mathews to graphic desginer; Tyler Thornton to marketing manager, web.
NONPROFIT CLEVELAND ORCHESTRA: Mark Williams to director of artistic planning. ELIZA JENNINGS SENIOR CARE NETWORK: Chuck Viers to director of marketing.
OSWALD COS.: Barbara Belovich to consultant.
CLEVELAND MEDICAL MART & CONVENTION CENTER: Mike Mangan to chief engineer; Ron Willner to director, event services.
PNC FAIRFAX CONNECTION: Collette Appolito to executive director.
BENESCH: David C. Weiner to attorney, litigation practice group.
MANSOUR, GAVIN, GERLACK & MANOS CO. LPA: Andrew C. Geronimo and Justin J. Eddy to associates.
DIRECT RECRUITERS INC.: Jonah Weiss to lead recruiter, plastics and flexible packaging practice area.
PLEVIN & GALLUCCI CO. LPA: David R. Grant to chair, product liability.
WALTER & HAVERFIELD LLP: Tyler S. Bobes to partner, real estate law group.
MANUFACTURING MIDWEST MATERIALS: Kerrie A.
FIRSTENERGY NUCLEAR OPERATING CO.: Peter P. Sena III to president and chief nuclear officer; Sam Belcher to senior vice president, operations and COO.
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DECEMBER 17 - 23, 2012
CRAINâ€™S CLEVELAND BUSINESS
UH docâ€™s software LCCC students to pore over concrete program will give gives hospitals ammo New construction industry for smarter decisions new specialists, could Data make surgeries, processes more effective By CHUCK SODER firstname.lastname@example.org
Because of Dr. Conor Delaneyâ€™s software, it was clear that the division of colorectal surgery at University Hospitals was onto something. In September 2011, the division started using a new anesthetic during operations. With the help of the software, the group noticed that patients receiving it were recovering more quickly and leaving the hospital 30% sooner, going home on nothing but Tylenol. So, the division decided to use the anesthetic during all surgeries. Now UH aims to market to other hospitals the software that helped it make that decision. The hospital system last month licensed the right to market the software to a UH spinout called Socrates Analytics Inc. The software is designed to help hospitals analyze various data. For instance, it can tell how many operations a surgeon conducted over the course of a month, how long each surgery took, what equipment was used, the cost of the equipment, how long the patients tended to stay and how much they were charged. Or, it could be used to analyze why some patients cost more to treat than others with the same condition. Or why some donâ€™t respond as well to treatment that works for their peers. Analyzing that data without special software is â€œpretty much impossible,â€? said Dr. Delaney, who is chief of the division of colorectal surgery at UH Case Medical Center. In addition to providing care to patients, Dr. Delaney for about 12 years has been studying how to make surgery more efficient and effective. However, gathering the data was tedious because it was contained in several different databases. At UH, information on what patients are charged is in one. Data on how much the hospital spent providing the care are in another. Details from operating rooms are in a third and discharge codes are in a fourth. â€œIt was extremely labor-intensive to get all the information,â€? he said. So, in 2007, Dr. Delaney applied for and won a $100,000 grant from the Ohio Savings Foundation that allowed him to have an early version of the software developed. He got another $250,000 from the Cleveland Foundation in 2010, in addition to significant financial support from UH that allowed him to develop the current version, which pulls the data from each database, standardizes them and can present them in different formats for people in different positions. Socrates Analytics in late November won a $100,000 grant from the Innovation Fund at Lorain County Community College; it will use that money to finance installation and development expenses related to installing the software at its first two non-UH hospitals.
Beyond UH walls Though some administrators and
â€œThe macro market trends are very favorable for analytics solutions.â€? â€“ Nancy Fabozzi, principal analyst focusing on health care IT, Frost & Sullivan departments at UH were using the system already, the team behind Socrates Analytics started promoting it throughout the hospital system just two months ago. Several projects using the system are under way, said Dr. Delaney, who added that it helped another department determine that it wasnâ€™t being reimbursed for the use of expensive instruments. Dr. Delaney is the companyâ€™s chairman, but it is run by an interim team from Reach Ventures LLC, a Chagrin Falls company that aims to help launch several businesses that analyze digital information. Socrates Analyticsâ€™ interim CEO, Kendall Wouters, is head of Reach Ventures, which could receive equity in the company if it hits certain milestones. Socrates Analytics plans to hire a permanent management team by the end of March. The company plans to market the software to small and midsize hospitals, because many donâ€™t have analytics software and canâ€™t afford some of the more expensive products on the market. Socrates Analytics has yet to determine how much the product will cost, but Mr. Wouters said it will be affordable for a 200-bed hospital with â€œrazor thin margins.â€?
Plenty of company Socrates Analytics will have a lot of competition, said Wes Rishel, a vice president and distinguished analyst covering health care at Gartner Inc., a technology research services firm based in Stamford, Conn. Mr. Rishel was not familiar with the startup, but he noted that many companies sell software designed to analyze operational data from different databases. The software would stand out more if it was altered to analyze claims data in a way that would help hospitals identify high-risk patients and manage their care. â€œThatâ€™s the leading edge,â€? he said. Socrates Analytics plans to create a web-based version of its software, which could be important as demand for â€œcloudâ€? analytics software is rising, said Nancy Fabozzi, a principal analyst who focuses on health care information technology for consulting and business research firm Frost & Sullivan of Mountain View, Calif. Ms. Fabozzi said many companies sell analytics software to hospitals big and small, but she added that a growing number of hospitals want it. â€œThe macro market trends are very favorable for analytics solutions,â€? she said. â–
advance technology By GINGER CHRIST email@example.com
Lorain County Community College next year will launch a program aimed at filling a need in the construction industry. The Concrete Technology program, which will be offered in partnership with Rhodes State College in Lima, will allow students in Lorain to earn an associate of applied science degree with a major in concrete technology from Rhodes State. The program will start in the spring semester. Students in the program will become civil engineering technicians, skilled in testing concrete and how different chemicals can be manipulated to advance the product, said Jeff Riddell, chairman of the Ohio Ready Mixed Concrete Association and president of Consumers Builders Supply, a ready mix concrete company in Lorain.
LCCC opted to start the program at Mr. Riddellâ€™s urging. He said the program could lay the groundwork for innovations in the concrete business moving forward. Like many trades, the concrete business suffers from a lack of new talent coming into the work force. Because there are few concrete technology training programs â€” the program at Rhodes State is one of the few in the country, college officials maintain â€” companies are left without workers to replace retiring baby boomers, Mr. Riddell said. â€œThe old construction paradigm from 20 years ago was to put a 20year-old next to a 50-year-old and you teach them,â€? Mr. Riddell said. â€œThere has not been that opportunity for the younger workers to work side by side with the older workers because thereâ€™s been insufficient work.â€? The concrete industry in 2011 increased its production for the first time in six years, according to a report released in October by the National Ready Mixed Concrete Association. â€œWeâ€™re expecting that it will grow fast enough to provide opportunities when you add in the retirement
factor,â€? Mr. Riddell said. The LCCC program will target existing workers as well as college students, who will sit in via video conference on classes taught by Erik Robey, chairman of Rhodes Stateâ€™s Civil Engineering Technology program. â€œWeâ€™re able now to put more of these students out in different areas,â€? Mr. Robey said. â€œThatâ€™s the beauty of what weâ€™re doing. The geographies and the demographics are coming together. Weâ€™ll be able to better find students to match these jobs.â€? The partnership with LCCC is a beta test for future partnerships with other educational institutions, which possibly will take place in a year or two, Mr. Robey said. â€œI think the future certainly is open to being able to possibly do this in other places,â€? he said. Kelly Zelesnik, dean of LCCCâ€™s Engineering Technologies division, said thereâ€™s little overhead involved in launching the program because LCCC already is equipped with videoconferencing technology at the Lorain Learning Center at St. Josephâ€™s Community Center in Lorain. In addition, Rhodes State is lending lab equipment to LCCC. â–
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CRAIN’S CLEVELAND BUSINESS
DECEMBER 17 - 23, 2012
Brian D. Tucker (firstname.lastname@example.org) EDITOR:
Mark Dodosh (email@example.com) MANAGING EDITOR:
Scott Suttell (firstname.lastname@example.org)
he former Cuyahoga County commissioners made a bad deal when they bought the Ameritrust complex back in 2005. County Executive Ed FitzGerald’s recommendation that the county sell the property to respected developer Geis Cos. represents a splendid opportunity to turn that real estate lemon into lemonade. On its face, the proposed deal is a bitter drink for taxpayers to swallow. The county commissioners paid $21.8 million for the complex with the idea of transforming it into a centralized county headquarters. However, that initial price more than doubled after the county spent millions removing asbestos from the property and buying an adjacent parking garage. Under its offer, Geis would pay $27 million for the complex — well below the county’s total outlay for a property the commissioners never put to use because it became a financial sinkhole. However, considering the state of the real estate market after the last recession and the large amount of office space sitting vacant in downtown Cleveland, it’s a decent price. It’s $8.5 million more than anyone else offered in the bidding competition the county set up to unload the property. There are two sweeteners in the lemonade Mr. FitzGerald hopes County Council will buy as that body considers whether to approve the Geis proposal. One is reviving a property at a key intersection in the city’s downtown that has sat empty for 16 years. The other is the trigger that Geis’ plans could be for other development along a bedraggled segment of the Euclid Avenue corridor. Geis is no slouch at real estate development, and though it largely is known for its work in the suburbs, it also has shown an increased interest in urban projects. Its Hemingway Development division earned its stripes in Cleveland with its MidTown Tech Park, a groundbreaking, two-building complex on Euclid that showed there is an appetite for office and lab space in the city’s Midtown neighborhood. Now Geis is ready to try its hand at a far bigger project with its planned investment of $180 million in the Ameritrust complex. Geis would raze two buildings and construct in their place a new, eightstory county administration building. It also has proposed turning the 29-story office tower into upscale apartments and restoring for retail or another public use the grand Ameritrust rotunda, plus renovating the adjacent Swetland Building as offices and/or apartments. The life that the Geis proposal could bring to East Ninth and Euclid through the presence of 750 county employees and potentially hundreds of new downtown residents could serve as a spark for much-needed redevelopment on Euclid between East Ninth and East 13th streets. It is a stretch of Cleveland’s Main Street that continues to languish despite revival on each side of it. The proposal before County Council would let the county put what Mr. FitzGerald correctly has called “the Ameritrust fiasco” behind it. We urge its speedy approval in the new year.
FROM THE PUBLISHER
Another call for more collaboration
nese, including currency manipulation his page regularly chides lawand duty evasion.” He said keeping makers for their unwillingness to duties on Chinese imports was “critical compromise or work together to to ensuring that the steel pipe industry in forge solutions to the problems Ohio remains intact.” we voters face. The letter was signed by, among other Not so last week, when our two U.S. senators, Democrats Carl Levin of senators, Rob Portman and Sherrod Michigan and Al Franken of Minnesota Brown, joined a group of their colleagues as well as Republicans Richard in a denunciation of Chinese Shelby and Jeff Sessions of activities that hurt Northeast BRIAN Alabama. Ohio workers. In a letter, the TUCKER Sen. Portman, also a Repubgroup asked the Commerce lican, said the Ohio jobs were Department to maintain anticritical at a time of weak ecodumping duties and other pronomic growth and stubborn visions that stop Chinese steel unemployment. “American mantube makers from deploying ufactured goods must be on a unfair competitive practices in level playing field with their the American market. global competitors, and I urge Tubular steel products made the Commerce Department to here for use in oil exploration — protect these workers in Northeast Ohio especially in the shale plays — come and across the country,” he said. from V&M Star in Youngstown, Warren’s The letter criticized Chinese tubular Wheatland Tube, JMC Steel in Brooksteel makers with evading or circumfield, and U.S. Steel in Lorain. venting American trade protection orders, Sen. Brown reminded officials in the and called on Commerce officials to Commerce Department that oilfield work more closely with U.S. Customs tubular steel means hundreds of jobs in and Border Protection officials to stop our region “that are vulnerable to unfair any schemes to avoid existing U.S. trade trade practices carried out by the Chi-
orders. Sens. Brown and Portman and their colleagues should be applauded for their coming together in a singular fashion. Now if they could just get their colleagues to act in the same way on the broader fiscal problems we’ve managed to bring on ourselves. **** IT WAS ENTERTAINING, as always, to read and listen to the reaction as this year’s Rock and Roll Hall of Fame inductees were announced. Retiring Rock Hall CEO Terry Stewart joked in an interview that now that Canadian rockers Rush were in, he could turn on his email again. It’s a testament to the power of the Rock Hall as a centerpiece of the music world that devoted fans are so emotional about their favorites. I understand. My wife was a big disco fan (as well as rock and roll, country, etc.) and she loves the Donna Summer choice. I still vividly recall Rush in its first Cleveland appearance at the old Agora. We’re both happy, but to the fans of other bands — like the devotees of our pro sports teams — well, there’s always next year. ■
Avoid judiciary in trimming fed spending By DENNIS TEREZ
ur federal government is like a three-legged bar stool. The kind a friendly drunk would use to belly up to the bar. And at the bar, he can’t control his wild spending habits, buying drinks for everyone — even paying IOUs when he runs out of cash. Let’s take a look at the stool. Imagine its three legs are like the three branches of our federal government: the executive, the legislature and the judiciary. By the way, if you didn’t know those were the names of the three branches of our government, don’t feel too bad. Well, actually you should feel rotten about that, since those three branches are the very genius of our Founding Fathers. What I
Mr. Terez is a federal public defender for the Northern District of Ohio. mean is that you have a lot of company if you didn’t know those three branches. More Americans can name The Three Stooges than the three branches of our government — by a wide margin. Now, let’s take a look at our friendly drunk’s household budget. In his sober moments, he earns $40,000 a year. On one of his wild vacations he drank away, he spent $4,000 (10% of his salary) on a jalopy that got him to his favorite vacation spot; $400 on two nights at a fancy hotel for him and his wife (1% of his salary); $40 for a dinner for him and his wife (0.1% of his salary); and $4 tipping the valet who parks his jalopy (0.01% of his salary).
After he sobers up, our friend takes stock of his vacation binge. He totals up $4,444 plus the dollars he drank away. If we told him to straighten up and fly right, we probably wouldn’t point to the $40 he spent at the restaurant or the $4 on his valet parking. We might instead say to him that he blew too much dough on his liquid refreshment, his hotel room and his jalopy. Congress is our friendly drunk who is sobering up. Problem is, in analyzing where its spending habits fell off the tracks, it is looking at the cost of the dinner and the valet parking instead of the costs that really mean something. And it is doing so by weakening the bar stool — our federal government — by weakening one of its three legs. See VIEW Page 9
DECEMBER 17 - 23, 2012
CRAIN’S CLEVELAND BUSINESS
THE BIG ISSUE Are you concerned about the U.S. going over the ‘fiscal cliff’ at year’s end if President Obama and Congress can’t hash out an agreement on how to reduce the deficit?
I’ve heard some talk there isn’t a real crisis on Dec. 31, and they have a few extra weeks. … Do I want them to go past Dec. 31? Definitely not, but they’re politicians.
I hope they’ll figure something out. Am I concerned? Yes. From what I understand about it, everyone’s taxes would go up, and particularly those folks in the middle class aren’t in a position to withstand any additional expenses.
I sure hope they find an agreement because I don’t know what my taxes are going to look like next year.
I am. Congress should have productivity standards. If I was as unproductive as those guys are, I would lose my job.
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NASA Glenn plan focuses on core areas By CHUCK SODER firstname.lastname@example.org
NASA Glenn Research Center aims to narrow its focus. The Cleveland center has put together a reorganization plan that, if approved by NASA headquarters, would move some employees into different departments and different buildings in an effort to help the center focus on its four core areas of expertise: power, propulsion, communications and advanced materials. The plan would allow NASA Glenn to put more resources toward work
Shale mag drills into hot topic ■ Great job on the new Crain’s Shale publication! It captures the eastern Ohio business revolution story very well and contributes to the excitement the oil and gas activity is causing for our part of the world. As a longtime reader of Crain’s, I am not surprised that your organization gave a strong start to covering the news of this welcome new industry for Ohio. We needed it very much to keep our state in the forefront of the economic recovery that is really happening. I am a former chief executive officer of the Cleveland Area Board of Realtors and a vice president of public affairs and administration of the Ohio Association of Realtors. The oil and gas story signals a bright future for Ohio real estate. Thomas E. LaRochelle CEO Stark County Association of Realtors
WRITE TO US Send your letters to: Mark Dodosh, editor, Crain’s Cleveland Business e-mail: email@example.com
in those four areas while also freeing up time to focus on winning business from private companies, according to outgoing center director Ramon Lugo III and deputy director Jim Free. Mr. Free will step into Mr. Lugo’s position at the end of the year. Today, employees with expertise in one area sometimes work in different departments, which makes it harder to collaborate, they said during a wide-ranging discussion last week with a group of reporters. Mr. Free said he doesn’t think the reorganization will have an impact on the size of NASA Glenn’s work
force, which consists of more than 3,000 government employees and contractors. However, focusing on the center’s core strengths should help it endure anticipated budget cuts because it will be able to compete more effectively for work, both from NASA and private companies, Mr. Lugo said. NASA Glenn over the years has to some degree diluted its abilities by trying to work in too many different areas, Mr. Lugo said. The reorganization, if approved, would help the center rebuild a critical mass of expertise in its four main focus areas. ■
View: Target bulk of spending continued from PAGE 8
In the latest budget discussions in this supercharged post-election season, some in Congress want to reduce the budget of our judiciary. If no action is taken, our federal judiciary’s budget will be reduced in the New Year by roughly $600 million. Let there be no mistake — that’s a heck of a lot of money. But if you love this country and you think the genius of our Founding Fathers was indeed that, then you have to make sure you spend enough cash to keep that genius running. The entire judiciary’s budget — I mean the whole thing, from the person who empties the waste baskets at our gorgeous Carl B. Stokes U.S. Courthouse to Chief Justice John Roberts’ salary — is under $8 billion. That’s a heck of a lot of money. But in terms of our entire federal budget, it doesn’t even amount to 0.2%. That’s right — not even one measly percentage point. Heck, not even a half of a measly percentage point. And Congress now wants to reduce that further by slightly more than a half-billion dollars. That means that despite 83 vacancies in our federal court system, we are telling our federal courts — that important third leg of our bar stool — they may need to fire people and cut budgets even further.
The impacts are very real for all of us. Court officials across the country predict, for example, the temporary suspension of federal civil jury trials, the furloughing of federal court and probation employees, and a reduction in federal court security officers. If you’re not a litigant in federal court, lucky you. But your employer or others on whom you depend might be. And regardless, justice delayed is justice denied. The furloughing of employees who supervise ex-offenders when they come out of prison affects all of our communities. And I have never heard anyone suggest our courthouses are so safe we should reduce security in them. Oh, and for those who live in the western part of the state, sequestration will likely translate into further delays in the construction of the much-needed Toledo federal courthouse in your community. Spending on our third branch of government is like our fellow’s expenditure on dinner and the valet parking. Congress should be looking at the 99.8% of the federal budget rather than dithering with the 0.2% that represents the entire funding of one-third of our government. Take away the third leg of the bar stool, and our friendly drunk quickly finds himself on the floor. I don’t want to see our government fail. ■
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DECEMBER 17 - 23, 2012
TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.
LIENS FILED M A & K Enterprises Inc. 700 Turney Road, Bedford ID: 34-1097195 Date filed: Oct. 23, 2012 Type: Employer’s withholding, unemployment Amount: $17,049 R. Heard Painting Inc. 25021 Forbes Road, Oakwood Village ID: 34-1808763 Date filed: Oct. 9, 2012 Type: Employer’s withholding, failure
to file complete return, corporate income Amount: $16,658 Records Central Inc. 4700 Lakeside Ave., Cleveland ID: 34-1035430 Date filed: Oct. 19, 2012 Type: Employer’s withholding Amount: $15,827 Architectural Products Development Inc. 6605 Clark Ave., Cleveland ID: 34-1790635 Date filed: Oct. 23, 2012 Type: Employer’s withholding Amount: $13,593 Nott-One Inc. Nottingham Auto Body 19425 Saint Clair Ave., Cleveland ID: 34-1577544 Date filed: Oct. 9, 2012 Type: Employer’s withholding, unemployment Amount: $11,767 Imperial Glass & Door Co.
6517 Bessemer Ave., Cleveland ID: 34-0858987 Date filed: Oct. 19, 2012 Type: Employer’s withholding Amount: $9,782 York Gym Inc. 7389 State Road, Parma ID: 34-1714634 Date filed: Oct. 9, 2012 Type: Employer’s withholding, unemployment, failure to file complete return, corporate income Amount: $8,326 Scimone Enterprises Inc. Creative Awards & Impressions 26405 Broadway Ave., Oakwood Village ID: 34-1627419 Date filed: Oct. 23, 2012 Type: Employer’s withholding Amount: $7,710 C & C Investors Inc. 4411 Clark Ave., Cleveland ID: 34-1655137 Date filed: Oct. 19, 2012 Type: Failure to file complete return Amount: $6,445
Fight: ‘Reshoring’ so far only a trickle continued from PAGE 3
“When you start talking about
metal parts, metal should be priced pretty consistently around the world if it’s the same material,” Mr. Gaskin said. Yet in the past, that hasn’t been the case. Steve Schler, founder of ProMoldGauer, a Tallmadge-based maker of molds and dies for the plastics and rubber industry, has been outbid by Chinese competitors dating back to 2002. He even lost a roughly $250,000 project, for which his company did the design and development, to a company in China that offered to build the project for less than ProMold’s material costs. “If the Chinese are buying steel from the world market, we should be paying the same price,” Mr. Schler said. Mr. Schler is encouraged by signs that the Chinese are raising their labor rates and increasing the value of their currency. In its Nov. 27 report, the U.S. Treasury said the renminbi since June 2010 has appreciated by 9.3% — or by 12.6% factoring in inflation. “The trend is in the right direction right now, but there’s a long way to go,” Mr. Schler said. “So keeping the pressure on is definitely warranted. … They still have a huge advantage.”
Shared pain Mr. Solganik of City Plating would like to see a greater trend toward reshoring, or bringing manufacturing located overseas back to the United States. He said it will happen if China doesn’t offer what he considers to be unfair advantages to manufacturers operating there. Because Mr. Solganik’s business deals with heavy parts, its customer reach only extends to neighboring and nearby states due to the expense of shipping items. So, if its customers’ business disappears to China, City Plating feels the effects, too. “We’re really dependent on local supply chain,” Mr. Solganik said. “So, if it’s cheaper to manufacture overseas, that directly affects the metal finishing business.” He recalled one large customer for which City Plating provided tin plating services moved its entire
manufacturing operation to China and consequently reduced its volume of business with City Plating by 98%. He would not identify the customer. However, the reshoring Mr. Solganik wants to see isn’t a trend yet. Instead, it’s more of a “trickle,” according to John Colm, executive director of WIRE-Net, a Clevelandbased manufacturing advocacy group. “It’s good news, believe me,” Mr. Colm said. “I think Cleveland is well positioned to benefit from the reshoring trend, but we have a long way to go.”
Applying the pressure Mr. Colm said he thinks it’s up to manufacturers to continue to advocate for strong trade policies, including confronting China about its currency valuation. “The currency issue is just one of a host of issues, but it is by far the most significant,” he said. For that reason, the Precision Metalforming Association and the National Tooling and Machining Association, with which WIRE-Net works, on Nov. 29 issued a statement decrying the U.S. Treasury’s failure to cite China as a currency manipulator. Labeling China a currency manipulator would lead to a lengthy investigation by the World Trade Organization, with a direct impact in the United States that wouldn’t be felt for potentially six years, Mr. Gaskin of the Precision Metalforming Association estimated. And that delay is why manufacturing associations are continuing to push the U.S. government to take a strong stand against China, so that when the U.S. economy recovers, manufacturers won’t be at a disadvantage, he said. U.S. Sen. Sherrod Brown, D-Avon, agrees. “While China flouts trade laws, the U.S. Treasury Department continues to give China a free pass when it comes to its currency manipulation,” Sen. Brown said in an email. “Meanwhile, American manufacturers are paying the price. Addressing China’s currency manipulation is critical to our economic recovery and for job gains.” ■
2012NEWSMAKERS 2012 was both a year of firsts and a year of change. We welcomed the state’s first casino, and steps were taken to improve the city’s schools as well as the direction of the convention center and medical mart and our beloved Browns. And that’s just the beginning. Behind each of the region’s big stories, of course, are people who are helping to drive that news. In this section, we take a look back at some of those whose work helped shape the past year’s headlines in Northeast Ohio.
JIMBENNETT Cleveland Medical Mart & Convention Center By JAY MILLER email@example.com
im Bennett, who has put a new, more reassuring face on the convention center and medical mart under construction on Cleveland’s Mall, has been playing a role in the city’s revitalization for more than 20 years. Indeed, in 1989, as he reflected on the old Terminal Tower concourse that was being transformed into Tower City Center and the new sports palaces that were on the horizon at what would become Gateway, Mr. Bennett told Fortune magazine, “You need big symbols of physical progress. They are momentum-building and pridebuilding. You can’t move a city without physical splashes.” Since April, Mr. Bennett has been guiding the city’s latest physical symbol of progress as senior vice president of MMPI Inc., the developer and operator of the tradeshow complex. A Youngstown native, Mr. Bennett came to Cleveland in 1982 with the McKinsey & Co. consulting firm, where he specialized in health care management. He later served as a senior executive vice president of KeyCorp and then went on his own as a management consultant with Bennett Group LLC.
In his nine months with MMPI, the 69-year-old Mr. Bennett has reshaped the $465 million project, moving the emphasis to the 235,000-square-foot convention center under the Mall and reimagining the four-story medical mart at Ontario Street and St. Clair Avenue. Most importantly, as the year is ending, MMPI had leases in hand for more than half the leasable space in the building and the number of conventions booked had risen from 27 at the start of the year to 59 by Dec. 10, with 31 proposals being considered. Those 59 conventions are estimated to book 97,000 hotel room nights and give the regional economy a $100 million boost, said Dave Johnson, the complex’s director of public relations and marketing. Among the conventions booked are the Ohio Music Educators Association, which will bring 9,000 attendees a year in 2015, 2017 and 2019. The new business and marketing plan, Mr. Bennett believes, is a key to the turnaround. Instead of trying to sell medical supply vendors on leasing their own showrooms, Mr. Bennett listened to health care industry leaders on a new advisory panel and shifted the marketing to emphasize thematic areas where vendors can collaborate with each other to create, say, an operating room of the future or state-of-the-art patient exam rooms. His vision also includes showrooms where early stage medical products companies — from local companies to foreign startups — could show off their developing products. In May, he said he was talking to trade representatives from China and Israel, who expressed interest in the idea. The shift has brought in several
THE ROSTER ■ JIM BENNETT, Cleveland Medical Mart & Convention Center ■ DAN GILBERT, Horseshoe Casino Cleveland, Bizdom ■ ERIC GORDON/FRANK JACKSON, Cleveland Metropolitan School District PAGE 12 ■ THE HARRINGTON FAMILY, University Hospitals PAGE 12 ■ JIMMY HASLAM, Cleveland Browns PAGE 12 ■ MARCY KAPTUR, U.S. House of Representatives PAGE 14 ■ AUBREY MCCLENDON, Chesapeake Energy PAGE 15 ■ BARBARA SNYDER, Case Western Reserve University PAGE 15 ■ TERRY STEWART, Rock and Roll Hall of Fame and Museum PAGE 16 ■ ZEV WEISS, American Greetings PAGE 16
TRACKING BENNETT’S 2012 ■ April 19: MMPI announces the appointment of Jim Bennett as senior vice president for the Cleveland Medical Mart and Convention Center. ■ May 21: Crain’s reports that Mr. Bennett has been soliciting the thoughts of community and medical industry leaders on a new strategy for the complex, and what he was hearing was that “medical mart” no longer describes what will go on inside the building. ■ Oct. 11: The developer of a competing medical mart plan in Nashville said it would end its effort to develop its 1 million-square-foot complex. Mr. Bennett offered his condolences, but suggested the
key tenants, including GE Healthcare, Johnson Controls and Phillips Healthcare. It hasn’t hurt that the project itself has moved along — on budget — with little controversy. MMPI was even able to announce earlier this year that the buildings would be ready for occupancy two months ahead of the planned September 2013 opening.
What he said ■ Oct. 29, Crain’s: “When you have a plan and a strategy, people respond better. … There is much greater willingness to commit.”
What others are saying ■ Baiju Shah, CEO, Biomotiv LLC and a member of the medical mart advisory board: “Jim Bennett’s presence gives all who have been involved with this initia-
mammoth project overshot the market. ■ Oct. 23: Mr. Bennett told Cuyahoga County Council that the health care community in Northeast Ohio would like to see the building called something other than the “Medical Mart,” to better reflect its new focus. It might be called the “Health Innovation Center,” he said. ■ Oct. 31: County Executive Ed FitzGerald announces the signing of two major medical mart tenants — GE Healthcare and the Cleveland Clinic. Mr. Bennett says his company now has signed leases from 25 tenants for 50,000 of the 95,000 leasable square feet in the medical mart building.
tive great confidence in its successful launch next year. He has demonstrated expertise in convening, listening and collaborating with national industry leaders who have in the process become anchor tenants for this initiative.” ■ Jeffrey Applebaum, Thompson Hine LLP attorney and Cuyahoga County’s construction adviser on the project: “By the first of (2012), construction of the facility was in great shape, but it was time to review the business and marketing plan of the medical mart concept. That was addressed by the advisory committee impaneled by Ed FitzGerald and the hiring of Jim Bennett in April. Since that time, with Jim’s leadership on the medical mart side, tremendous progress had been made in developing the business concept and developing the marketing plan.”
Horseshoe Casino Cleveland, Bizdom By STAN BULLARD firstname.lastname@example.org
s well as his tweets to prod better performance, Cavaliers players should also take a cue from owner Dan Gilbert’s business behavior. Mr. Gilbert just keeps shooting. However, in this risk-taker’s case, the shots are multimilliondollar business ventures that may help transform downtown Cleveland and his hometown of Detroit. More are on the way. Next year, Mr. Gilbert’s Rock Gaming and partner Caesars Entertainment Corp. in Rock Ohio Caesars already are investing $150 million to open a racino at Thistledown Race Track in North Randall and build a $400 million casino in Cincinnati. That’s quite an encore after investing $350 million into readying the Higbee Building to serve as Ohio’s first gaming palace this year at Horseshoe Casino Cleveland. Insiders expect the founder and chairman of Quicken Loans Inc., which has a major downtown presence, to undertake more projects in Cleveland in the future. Mr. Gilbert continues to vow to build a larger casino on Huron Road near Higbee’s and the Q. The project that promises to be one of downtown’s biggest See GILBERT Page 12
CRAIN’S CLEVELAND BUSINESS
Mr. Gordon also early this month presented a 33-page document, “The Cleveland Plan: Four-Year Implementation Strategy,” which outlined plans for the school district overhaul. A final version, following community input, is expected to be presented to the board for adoption in mid- to late-January.
Cleveland Metropolitan School District By AMY ANN STOESSEL email@example.com
ayor Frank Jackson and Cleveland Metropolitan Schools CEO Eric Gordon this year seemed to do the impossible. After introducing a radical school transformation plan early in the year, they successfully set the foundation for and pushed through a staggering four-year, 15-mill levy in a school district plagued with foreclosures and high poverty levels. Messrs. Jackson’s and Gordon’s efforts to redirect the course of the 40,000-student urban school district are considered transformational in educational circles nationwide. In addition to eliminating seniority as the sole criterion for determining teacher layoffs, the plan called for a “portfolio approach” to school management, which would give school principals greater responsibility over budgeting and hiring. It also allowed for some charter schools to receive money from the district’s levy for their programs. Indeed, the transformation plan was so dramatic it required lawmaker approval since it required changes to Ohio law that only would apply in Cleveland. Gov. John Kasich — a vocal supporter of the plan — in July signed it into law after legislative approval, a step that Mayor Jackson considered critical to passing the levy that is expected to generate up to $77 million more a year for the district.
GILBERT continued from PAGE 11
building projects after workers finish the Medical Mart and Cleveland Convention Center and Ernst & Young Tower. Horseshoe Casino Cleveland already gave the city a big boost with a plethora of visitors and the addition of thousands of jobs. To ready the casino, Mr. Gilbert bought downtown Cleveland real estate as if playing Monopoly. With the purchases of the RitzCarlton hotel and the 250 Huron building below it, he entered the city’s hotel and office business sectors. A $10 million update is planned for the Ritz. The casino is one of the reasons first-floor retail is on the upswing downtown. In the meantime, he’s bought numerous properties in downtown Detroit. Mr. Gilbert also is adding other sports teams and associated ventures here. He is aiding job and wealth creation here through the Cleveland office of Bizdom, a startup business investment and coaching effort that has graduated three classes. Mr. Gilbert is also known as a giver. He underscored that by making the pledge this year to leave half his fortune to philanthropy, a move that puts him in company with business icon Warren Buffett. A big test for Mr. Gilbert’s
DECEMBER 17 - 23, 2012
What they said
TRACKING GORDON, JACKSON THROUGH 2012 ■ Feb. 6: Mayor Frank Jackson presents to the teachers union and other officials his plan for transforming Cleveland’s schools. ■ April 12: David Quolke, president of the Cleveland Teachers Union, announces along with Messrs. Jackson and Gordon during a meeting at Cleveland City Hall that the union had agreed to support the plan, which helped in getting legislative approval. Still, Mr. Quolke was quoted as saying, “This agreement is far from perfect.” ■ July 2: Gov. John Kasich signs into law a bill allowing for Cleveland schools’ transformation plan to move forward. Legislative approval was needed since the plan
proposed changes to Ohio law that would only apply to Cleveland. It was approved — after debate and some compromise — by the state Senate, 27-4, and House, 78-16. ■ July 18: A 15-mill levy is proposed for the November ballot. It is estimated to cost the owner of an average-priced Cleveland home — $64,000 — $294 more a year in taxes. ■ Nov. 6: Voters approve by a margin of 57% to 43% the four-year levy. It is expected to bring in up to $77 million more a year for the district, which has an operating budget of $670 million — and a $65 million deficit.
Of course, such change rarely comes without controversy. The 6,000-member Cleveland teachers’ union initially pushed back against the plan, expressing disappointment that the Greater Cleveland Partnership had been involved in its creation while its members had not. Eventually, though, the union offered its support, which helped in gaining the reform plan’s approval in Columbus. Since the November passage of
Issue 107, school leaders have wasted no time. Steps already have been taken to restore in 2013 a full school day for kindergarten through eighth grades; increase exposure to art, music and physical education in as many schools as possible; and add reading, mathematics and science intervention where determined. According to a district news release, $6.8 million in tax dollars will be used to replace the lost instructional time.
gaming concern is how it handles the quest to demolish the Stanley Block Building on Ontario Street. When the casino did not gain complete control of the building, it tore down its neighbors and built around it. A messy end that leaves preservationists wounded would be a big negative among many pluses Mr. Gilbert and his team have scored here. Local media outlets often reflect on Mr. Gilbert’s popularity in town, which so far has survived poor Cavs performance in the post-LeBron James era. That said, media already see the passion of new Browns owner Jimmy Haslam as fresh competition for Mr. Gilbert in the hearts of Clevelanders. It will give Mr. Gilbert a run for his money.
TRACKING GILBERT’S 2012 ■ April 26: Cleveland Cavaliers end 2011-12 season with a win-loss record of 21-45 as they fall to the Chicago Bulls. Sports commentators again call the Cavs “lowly.” ■ May 14: Horseshoe Casino Cleveland opens in the Higbee Building downtown, which sports a $350 million update to the building and in gaming devices. Ohio’s first casino employs 1,600 people. Customers line up in droves outside its two entrances, which lasts for weeks. ■ June 6: Plans are unveiled for a racino at Thistledown Racetrack in North Randall, adding 1,500 video lottery terminals, a 60-seat restaurant and other improvements. Look
■ Mayor Jackson, March 12, Crain’s: “… In order for us to have any chance or likelihood of passing a levy, we have to demonstrate to the public they will get a different outcome than they are getting now and that there is accountability for what they pay for.” ■ Mr. Gordon, July 16, Crain’s: “It really is about having a plan in place that voters can depend on for different ways of getting better results with their tax dollars.”
What others are saying ■ Terry Ryan, vice president for Ohio programs and policy, Thomas B. Fordham Institute: “Cleveland has become a national leader in the school reform conversation. … It’s being watched by both critics and supporters alike.” ■ Ronn Richard, CEO, The Cleveland Foundation: “Cleveland is fortunate to have such a visionary mayor and schools CEO. They crafted a nationally significant education plan, spearheaded the passage of groundbreaking state legislation needed to implement the plan, and rallied the community to support the district’s first levy in 16 years to execute the plan. The Cleveland Foundation is proud to support them every step of the way. We believe their efforts will lead to a remarkable transformation of our city’s school system, which will open up magnificent new opportunities for our children.”
HARRINGTON FAMILY University Hospitals’ Harrington Project for Discovery & Development By CHUCK SODER firstname.lastname@example.org
t makes it easier to attract money from big donors when you can put their names in huge letters on the side of a building. University Hospitals didn’t have that advantage. Fortunately, the hospital system already had a close relationship with the Harrington family of Hudson, which spent the last two decades turning Edgepark Medical Supplies in Twinsburg from a struggling pharmacy into a big distributor of medical supplies. Last February, UH announced the creation of The Harrington Project for Discovery & Development, an ambitious effort that aims to change the way new drugs are developed and commercialized. The Harrington family — husband and wife Ron G. and Nancy Harrington, their daughter, Jill, their son, Ron M., and his wife, Lydia — helped launch the effort with a $50 million donation. University Hospitals is contributing $100 million, and it aims to raise another $100 million. Had it not been for the Harringtons, the project still might be an idea sitting on the shelf, said Dr. Achilles Demetriou, chief operating officer at UH. “I don’t think we could have pulled it off,” Dr. Demetriou said. Today, the project is well under way. The $50 million went entirely toward financing the project’s non-
JIMMYHASLAM for a spring 2013 opening. ■ Aug. 16: Bizdom, a startup business accelerator created in Detroit and brought to Cleveland by Dan Gilbert unveils a half-floor office at his 250 Huron Road building that provides co-working space for entrepreneurs invited to its three-month training program. ■ Nov. 14: Horseshoe Casino Cleveland announces 2.6 million guest visits in first six months. The venture said it is responsible for 26,000 room nights at downtown hotels and its rewards program generated more than $500,000 in meals at participating downtown restaurants.
What he said
What others are saying
wish we had 10 more like him.”
■ Oct. 30, USA Today: “Looking back now, that probably was not the most brilliant thing I’ve ever done in my life,” referring to his promise to fans in 2010 that the spurned Cavs would win an NBA title before LeBron James won it with the Miami Heat. The King got his ring last spring. ■ May 13, Las Vegas Review Journal: “There is community pride and Cleveland pride in being the state’s first casino. … Cleveland needs a great win. This city has hardworking, great people here. They’ve had the rug pulled out from under them so many times.”
■ Robert Simons, professor, coordinator, graduate certificate program in real estate, finance and development, Levin College of Urban Affairs, Cleveland State University: “From our perspective, Dan Gilbert has a huge impact on Cleveland. Through all of his enterprises and the jobs he has created from the casino and new sports teams he’s brought to the market, he probably has as much economic impact on downtown as Cleveland State University. Not only does he have a lot of employees here, he’s added them here through new ventures, so they are gold jobs rather than silver ones. I
■ William West, partner, Ostendorf-Morris Co.; chairman, Downtown Cleveland Improvement Corp.; executive board member, Downtown Cleveland Alliance: “People in town have gotten tired. You get a new guy in town with new ideas and he does things. He likes to win. It’s amazing to me what he is doing here as well as in Detroit. He’s a first-class operator, from the casino in Higbee to the new parking garage and leased parking lots. He’s kept his word to downtown restaurant operators in terms of not competing with them, and through rewards sending business their way.”
Cleveland Browns By JOEL HAMMOND email@example.com
n July 27, the Cleveland Browns were a day away from a training camp in which they had plenty of questions to answer, including whether rookie running back Trent Richardson and quarterback Brandon Weeden could meet lofty expectations. One question they weren’t expecting, though, was whether they’d have a new owner. That day, the team confirmed that Randy Lerner was in discussions to sell the team to Jimmy Haslam III, then the CEO of Knoxville, Tenn.-based Pilot Corp., which operates travel centers nationwide, and a minority owner of the Pittsburgh Steelers. A week later, Mr. Haslam was signed, sealed and delivered for $1 billion, and introduced to Cleveland media at team headquarters in Berea. Since, Mr. Haslam has given the Browns a much-needed jolt of energy, even if the on-field product isn’t appreciably improved. He’s said publicly that a new naming rights sponsor for Cleveland Browns Stadium would be in place for the 2013 season, a deal that likely will bring the team multiple millions of dollars per season.
DECEMBER 17 - 23, 2012
CRAIN’S CLEVELAND BUSINESS
TRACKING THE HARRINGTONS’ 2012 ■ Feb. 27: University Hospitals announces the creation of the Harrington Project for Discovery & Development, as well as the $50 million donation from the Harrington family. ■ Sept. 1: Baiju Shah leaves his longtime role as president of BioEnteprise Corp., a Cleveland nonprofit that assists health care companies in profit arm, The Harrington Discovery Institute, which two weeks ago gave 10 $200,000 grants to physician-scientists trying to develop new drugs at a time when pharmaceutical companies are scaling back early stage research and development efforts. In addition to the grants, the institute also aims to connect recipients with industry experts, investors, access to laboratories, grant writing services and other resources to help ensure their discoveries become products as quickly as possible. The project also has a for-profit arm, BioMotiv LLC, a Shaker Heights company that is scouring laboratories worldwide in a quest to license promising technologies and develop them to the point where investors or drug companies are willing to commercialize them. The Harringtons invested in that part, too: The family and UH have invested a total of $21 million in BioMotiv. Ron G. Harrington is the company’s chairman. He and his wife bought Edgepark in 1990, and soon after their children joined the company. The family in 2007 sold a majority stake in Edgepark’s parent company to The Jordan Co., a New York private equity firm, for an undisclosed amount. A year later, the Harringtons donated more than $22 million to what now is called
the region, to become BioMotiv’s CEO. ■ Sept. 5: BioMotiv announces it has raised $21 million in equity financing from both UH and the Harrington family. ■ Dec. 5: The Harrington Discovery Institute awards its first 10 grants. Among the recipients is Dr. Sanford Markowitz of Case Western Reserve University. the University Hospitals Harrington Heart & Vascular Institute. In 2010, the parent company, HGI Holdings Inc., was sold again, this time to private equity firms Clayton Dubilier & Rice and GS Capital Partners, which is owned by Goldman Sachs. The purchase price was roughly $850 million, according to a report from Dow Jones LBO Wire. At the time, the company employed about 800 people.
What they said ■ Ronald G. Harrington, in a statement released in February by University Hospitals: “We’d like to assure physician-scientists that their discoveries are carried further along to completion. Secondly, we would like to create in the Cleveland business community an investment into the health care arena. And last, but not least, is to save lives.”
What others are saying ■ Dr. Achilles Demetriou, chief operating officer, University Hospitals: “It’s easier to give money for buildings or an institute because you can see it. Here, they’re supporting a concept.” ■ Baiju Shah, CEO, BioMotiv LLC: “They’re just incredible individuals that have given so much both in the development of their company … and their contributions back to the community.”
The Harrington family, from right: Ron and Nancy with daughter, Jill (middle), and son and daughter-inlaw, Ron and Lydia PHOTO PROVIDED
CRAIN’S TOP WEB STORIES OF 2012 A look at the top stories featured on www.CrainsCleveland.com this year, with URLs for you to relive the top news: ■ March 5: “WKYC-TV names coanchor for 6 p.m. and 11 p.m. newscasts.” http://tinyurl.com/akhz7d8 ■ Jan. 4: “Report: WKYC morning news anchor Mark Nolan to leave station.” http://tinyurl.com/bepz4ba ■ Aug. 2: Safeguard Properties to acquire Bank of America’s field service operations.” http://tinyurl.com/bz9r2xq NEWSCOM
Browns owner Jimmy Haslam (left) chats with general manager Tom Heckert at a preseason game. Mr. Heckert’s future is one of the major decisions Mr. Haslam faces. He’s met with some of the league’s most successful owners, including New England’s Bob Kraft, the New York Giants’ John Mara and others to learn best practices. He told Cleveland City Council in September — a week after stepping down from his CEO post at Pilot in order to focus more time on the Browns — that “everything is on the table” in terms of improvements or changes to be made at Cleveland Browns Stadium to turn it into a year-round venue. In a meeting with Crain’s on Halloween, Mr. Haslam said he’d look to markets outside Cleveland,
most notably Columbus, to reconnect with fans and perhaps even engage the business community as Browns partners. He’s even paired with his wife’s media company, RIVR Media, on a Travel Channel show, “NFL Road Tested: The Cleveland Browns,” that will explore how the team travels and will expand the team’s brand. The show began Dec. 4. A self-described football man — his father, Jim, who founded Pilot, played at Tennessee, where the family remains involved in fundraising efforts — Mr. Haslam See HASLAM Page 16
■ June 25: “United execs laud efforts to back local hub.” http://tinyurl.com/bz868nj
says Tony Grossi crossed the line with Randy Lerner tweet. http://tinyurl.com/b9h3lfh
■ June 4: “Scott Wolstein named CEO of Starwood Retail Properties.” http://tinyurl.com/b53gc77
■ Jan. 26: Potbelly sandwich shop to set up shop in downtown Cleveland http://tinyurl.com/a3r9hwr
■ Jan. 26: PD managing editor
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■ June 25: “Longtime radio exec plans launch of new Cleveland rock station.” http://tinyurl.com/a8zrtt4 ■ March 7: “Former Cleveland Browns beat writer Tony Grossi leaves The Plain Dealer.” http://tinyurl.com/afcsopb ■ Jan. 13: “Winking Lizard owner to open Lizardville Bar in Cleveland’s Galleria.” http://tinyurl.com/avo3qxv ■ Feb. 13: “Baldwin-Wallace College names new president, reveals pending name change.” http://tinyurl.com/artfxgs ■ June 8: “The Taylor Cos. announces plans to go out of business after nearly 200 years.” http://tinyurl.com/ajpwkd6
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DECEMBER 17 - 23, 2012
MARCYKAPTUR United States House of Representatives By SCOTT SUTTELL firstname.lastname@example.org
ortheast Ohio’s congressional delegation will lose three familiar faces in 2013 — U.S. Reps. Dennis Kucinich, Steve LaTourette and Betty Sutton — but through the magic of redistricting, it gains the veteran voice of longtime Rep. Marcy Kaptur of Toledo. Rep. Kaptur, 66, has been a member of the House of Representatives since 1982. But her road to a 16th term in Congress was altered dramatically by the redistricting process, which forced her to face off with liberal icon Rep. Kucinich in a Democratic primary in the redrawn 9th District. The district runs from the West Side of Cleveland through Lorain, Erie and Ottawa counties into eastern Lucas County and parts of Toledo. The primary was a tough fight, and she won it handily, taking about 56% of the vote. This fall’s general election against Republican Samuel Wurzelbacher — “Joe the Plumber,” of 2008 fame — was a rout, as Rep. Kaptur garnered 70% of the vote.
Republicans were effective, in the partisan sense, in redrawing the state’s congressional districts. Although the overall vote in congressional races was about 50-50, Rep. Kaptur will be one of just four Democrats in the state’s congressional delegation, compared with 12 members of the GOP. Rep. Kaptur, a Toledo native and the longest-serving woman in the House, brings lots of insider knowledge of Washington to her new district. Most importantly for Northeast Ohio, perhaps, she’s the most senior Democrat on the House Appropriations Committee, which makes government spending decisions. Rep. LaTourette was on that committee, too, so Rep. Kaptur’s work there takes on greater importance to making sure Ohio doesn’t lose congressional clout. She’s also a member of three important House subcommittees: Defense, Agriculture, and Transportation/Housing and Urban Development. However, House Democratic leaders earlier this month chose Rep. Nita Lowey, D-N.Y., over Rep. Kaptur for the position of ranking
Marcy Kaptur will be one of just four Democrats remaining in the state’s congressional delegation. member on the Appropriations Committee. Although Rep. Kaptur had seniority on the panel, “her past independence from leadership and stance on abortion rights were
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seen as factors in the race,” according to TheHill.com. Rep. Kaptur ran against Rep. Nancy Pelosi of California to be minority leader in 2002. And, according to the National Abortion Rights Action League, Rep. Lowey has a 100% ranking on abortionrelated issues, while Rep. Kaptur is ranked as a “mixed-choice,” at 70%. (Rep. Kaptur was a holdout, for a while, on the 2010 health care reform bill because of concern about abortion language that eventually was resolved.) She is something of an economic populist and opposed, for example, the North American Free Trade Agreement. Rep. Kaptur “has long argued for the need for political reform, calling on her own party to grow less dependent on fundraising and to better listen to the working class,” according to a Washington Post profile from earlier this year. A member of the Congressional Progressive Caucus, Rep. Kaptur has described herself as part of the “non-money wing of our Democratic caucus.”
What she said ■ Oct. 26, 9th District congres-
sional debate: “All you have to do is drive over to General Motors’ transmission plant, if you go to the Chrysler Jeep plant, you will see that all former hires have been brought back on, and in fact they are hiring off the street. The recovery of the automotive industry has been astounding.”
What others are saying ■ David B. Cohen, professor of political science and fellow of the Ray C. Bliss Institute of Applied Politics at the University of Akron: “Marcy Kaptur has really earned the respect of people in both parties. She’s a workhorse and a policy wonk. And maybe most importantly, given the political situation today, she’s a more independent spirit in Congress.” ■ Chris Redfern, chairman, Ohio Democratic Party: “There are auto suppliers all throughout the lakefront who would have been devastated without the work of Marcy Kaptur and others to rescue the auto industry. … Clevelanders will find her to be accessible and hard-working and completely committed to constituent service.”
TRACKING KAPTUR’S 2012 ■ March 6: In a matchup of House heavyweights, U.S. Rep. Marcy Kaptur of Toledo easily defeated fellow Rep. Dennis Kucinich of Cleveland in the Democratic primary race to represent the new 9th District. The gerrymandered district runs from the West Side of Cleveland through Lorain, Erie and Ottawa counties into eastern Lucas County and parts of Toledo. Rep. Kaptur won about 56% of the vote. ■ Nov. 6: Rep. Kaptur won more than 70% of the vote to defeat her
Republican opponent, Samuel Wurzelbacher — you know him as “Joe the Plumber” — with more than 171,000 votes cast in the 9th. ■ Dec. 4: The House Democratic caucus passed over Rep. Kaptur, the most senior member of the House Appropriations Committee, for ranking Democrat on the influential panel. U.S. Rep. Nita Lowey of New York outpolled Rep. Kaptur in a closed-door meeting of the Democratic caucus’ Policy and Steering Committee.
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DECEMBER 17 - 23, 2012
■ January 2012: Chesapeake Energy, with Mr. McClendon as chairman and CEO, announces it is selling a 25% interest in its Utica shale holdings to France-based Total SA for $2.3 billion. Chesapeake had previously announced it spent $1.3 billion acquiring all of its Utica leases up to that point. ■ April 2012: Reuters reports that Mr. McClendon had been using his own personal stake in Chesapeake’s oil and gas wells to secure more than $1 billion in loans for himself, presenting what some said
By DAN SHINGLER email@example.com
eckless risk addict or the genius and driving force behind the shale gas boom sweeping Ohio and the
giant controls 70% of all shale gas leases in the state. Many industry observers give Mr. McClendon and his company credit for getting the shale boom going in the U.S., as well as for bringing the Utica to prominence when his company became known for spending more than $1 billion on leases in the play in 2011 and 2012. Mr. McClendon, however, remains a highly controversial figure. He was blamed for pushing down the price of Chesapeake’s stock in 2008, when margin calls forced him to sell more than 30 million shares of the company’s stock, which dropped nearly 40% in price that same week. He also sold the company maps from his personal collection and had to buy them back for $12 million when share-
holders complained in 2011. Such issues prompted Chesapeake’s board to announce that Mr. McClendon would be replaced as chairman, and he stepped down from the board in June. No sooner had he left the board room that new media reports surfaced claiming that he used company employees for his own personal projects and that he did the same with the company’s private aircraft. To put it mildly, it was a rough year, PRwise, for Mr. McClendon. For the most part, the controversies have subsided, but not before they got the attention of billionaire activist investor Carl Icahn, who disclosed last summer that he had amassed a 7.6% stake in Chesapeake — and who upped that stake to about 9% of the company’s stock in November. Mr. Icahn was
reportedly instrumental in getting Mr. McClendon removed from the board, but so far he has not asked for further changes after recently disclosing his larger stake. In the meantime, Mr. McClendon has adopted a low profile — particularly for a man used to the limelight, whether it’s on the cover of a national business magazine or prowling the sidelines of an Oklahoma City Thunder NBA game. (He owns approximately 20% of the team.) But even his critics, for the most part, give him credit with having the business nerve necessary to jump-start shale gas drilling in the U.S. — and for being among the first to recognize the potential of Ohio’s Utica shale and bring it to national prominence.
What he said ■ November conference call with securities analysts: “I think our Utica wet gas acreage is between 300,000 and 400,000 acres out of
was a conflict of interest. ■ May 2012: Spurred in part by activist investor Carl Icahn’s request, Chesapeake’s board of directors announces that Mr. McClendon will step down as chairman. ■ November 2012: Chesapeake reports a $2 billion loss, caused by the writedown of the value of its oil and gas reserves as prices for natural gas fell, but the company and Mr. McClendon say they are still confident that the Utica play will live up to its expectations as a major source of production. our 1 million plus acres there. So we’re thrilled with the Utica. … If you’re in that (wet gas) corridor, which stretches from Columbiana down through Carroll and Harrison (counties) and maybe a little further south from there, you have results that are as good as any from any play in the country.”
What others are saying ■ Billionaire activist investor Carl Icahn, in an open letter to Chesapeake’s board in May: “We recently had dinner with Aubrey McClendon to suggest a manner by which that credibility gap might be filled. The company has publicly identified several actions including reduced spending and asset sales which will relieve some of the funding gap, yet the board still seems to miss the point. We believe that a management team and a business plan without strong oversight and accountability is doomed to fail.”
TRACKING SNYDER’S 2012
Case Western Reserve University By GINGER CHRIST firstname.lastname@example.org
ince taking the helm of Case Western Reserve University in July 2007, Barbara Snyder has pushed the university to new levels of fundraising, development and student interest. Not only that, she also has become a wellrespected voice and face for CWRU in the education community. The former Ohio State University executive vice president and provost has led the university’s climb back to operating with a surplus — something with which it struggled in the early 2000s — and has propelled the university’s fundraising efforts. In her first year as president, Ms. Snyder led the university in June 2008 to adopt its first strategic plan, the University Plan, in nearly 20 years. Under that plan, the university committed to increase outside investments in research, involve alumni and enroll students of higher quality. Now, more than four years later, the university is achieving all of those goals and is on track to continue that success. In October 2011, CWRU launched a $1 billion capital campaign, which, as of Nov. 30, had raised $774 million. And the university in fiscal years 2011 and 2012 broke fundraising records, raising $126.5 million and $134.5 million
TRACKING MCCLENDON’S 2012
U.S.? Chesapeake Energy CEO Aubrey McClendon might be both. And, while he may not be from Northeast Ohio, evidence of his firm’s impact can be found all over the region these days. Mr. McClendon is known for starting his career as an oil and gas land man, signing up landowners to mineral rights leases with energy companies eager to drill in places like Oklahoma and Texas in the early 1980s. Some say that’s his main gift — and that Chesapeake Energy, which he founded in 1982, is still today as much a mineral rights trader as it is an oil and gas driller. Chesapeake does indeed still make millions of dollars, if not billions, in buying and reselling interests in mineral rights, including in Ohio where it sold a portion of its holdings for about $2.3 billion earlier this year at a large profit. But, along the way, Chesapeake also became the second-biggest natural gas driller in the U.S. — not to mention the biggest player, by far, in Ohio’s Utica shale play, where by some estimates the Oklahoma City-based
CRAIN’S CLEVELAND BUSINESS
FILE PHOTO/ MARC GOLUB
respectively. CWRU also in 2012 was awarded the largest grant ever received in Northeast Ohio. The $64.5 million grant, known as the Clinical and Translational Science Award, recognized the university’s five-year collaboration with area medical facilities to take medical discoveries from the laboratory to the patient. Under Ms. Snyder’s lead, CWRU has started a concerted effort to improve the university’s facilities, including both its student center and its medical school. The $50 million student center, for which ground was broken in May, was aided by a $20 million donation by The Veale Foundation and the $50 million medical school was buoyed
by $10 million grants from the Cleveland Foundation and the Mt. Sinai Health Care Foundation. In addition to that, the number of students interested in the school has doubled since Ms. Snyder assumed the role of president. The university in 2012 received 14,800 applications and, since Ms. Snyder became president, has climbed five places in U.S. News and World Report’s annual ranking of colleges and universities, coming in at No. 37 on this year’s list.
What she said ■ June 1, Crain’s Cleveland Business: “We continue to be humbled and honored by the generosity of our graduates and
other supporters. These individuals and organizations recognize the remarkable work of our faculty and students, and have made investments that will allow even greater advances in the years to come.”
What others are saying ■ Jim Petro, chancellor of the Ohio Board of Regents: “As president of Case Western Reserve University, Barbara has had a tremendous impact on the university and the surrounding community. She has a dynamic vision of where she wants this university to be, and is taking the steps to get it there, as evidenced by the plans for the new medical school. As a
■ May 30: CWRU broke ground on a $50 million 82,000-square-foot student center, the Tinkham Veale II University Center. ■ June 1: CWRU for the second consecutive year breaks its fundraising record, raising $134.5 million, which is $8 million more than was raised the previous fiscal year. ■ Aug. 10: CWRU receives a $64.6 million grant — the Clinical and Translational Science Award — from the National Institutes of Health to advance medical breakthroughs. ■ Sept. 12: CWRU for the third straight year surpasses its record number of applicants, receiving applications from 14,800 prospective students. ■ Sept. 24: The Cleveland Foundation and the Mt. Sinai Health Care Foundation each committed $10 million — the largest grants either foundation has made to date — to CWRU for a new $50 million, 160,000-square-foot medical school. graduate of the law school at Case Western, I am especially proud of all Barbara has accomplished and I look forward to seeing where her leadership will take the university in the years ahead.” ■ C. Todd Jones, president of the Association of Independent Colleges and Universities of Ohio: “She’s recognized as a significant leader in higher education in Ohio. And it’s more than just because Case is one of the largest and most academically elite campuses in our state. It goes beyond that. It’s also, in a sense, personal presence.”
CRAIN’S CLEVELAND BUSINESS
TERRYSTEWART Rock and Roll Hall of Fame and Museum By TIMOTHY MAGAW email@example.com
erry Stewart might not dominate a stage like Bruce Springsteen or walk with Mick Jagger’s swagger, but the departing CEO of the Rock and Roll Hall of Fame & Museum knows rock music. Perhaps more importantly, he knows how to run a museum — as he’s done since 1999 — that pays homage to the celebrated art form. And 2012 was a banner year for the Rock Hall, and much of the success could be chalked up to Mr. Stewart’s leadership. In 2012, the Rock Hall unveiled $6.9 million worth of enhancements, which were the most dramatic upgrades since the museum opened along Cleveland’s lakefront in 1995. Among the many upgrades were improved way-finding throughout the exhibits and new interactive displays. The upgrades were completed just in time for the 2012 induction ceremonies, which were held in Cleveland’s Public Hall and brought star power of the likes of Red Hot Chili Peppers, Guns N’ Roses, Donovan and others to Cleveland. Since 2009, the inductions have been shared between New York City and Cleveland, with Cleveland hosting the festivities every three years. Moreover, under Mr. Stewart’s watch, the Rock Hall achieved consistent profitability and closed a $35 million capital campaign, which allowed for the museum’s renovations and the establishment of its new library and archives, which also opened this year.
HASLAM continued from PAGE 13
has shown an intimate knowledge of the game and a willingness to talk X’s and O’s with the media. One thing he hasn’t addressed is the future of second-year coach Pat Shurmur and general manager Tom Heckert, whose roles have been constantly analyzed since Mr. Haslam took over. Both men were hired by former team president Mike Holmgren, who Mr. Haslam announced on Oct. 16 would retire from the team. At that same news conference, from Chicago, where he was unanimously approved as Browns owner, Mr. Haslam said Joe Banner, a longtime Philadelphia Eagles executive, would be taking over the CEO role. Messrs. Haslam and Banner have said evaluations of all personnel will take place at the end of the season, and Browns fans are anxiously awaiting decisions and whether the team will go through yet another overhaul.
What he said ■ Aug. 3, CrainsCleveland.com: “We have one mission and one mission only: to bring winning football back to Cleveland.” ■ Nov. 5, Crain’s: “We’re selling
TRACKING STEWART’S 2012 ■ Jan. 17: The Rock Hall’s library and archives is opened to the public. The archives, which are located at Cuyahoga Community College's Metropolitan Campus, house more than 200 collections, including the personal papers of performers, journalists, critics, historians and more. ■ April 4: The Rock Hall unveiled its “walk of fame” — a series of plaques embedded in the sidewalk throughout the city that showcases the names of Rock Hall inductees. ■ April 14: The Rock and Roll Hall of Fame holds its 27th induction ceremony at Cleveland Public Hall. Inductees included the Red Hot Chili Peppers, the Beastie Boys, Guns N’ Roses, Faces, Donovan and others. Mr. Stewart’s legacy likely will be felt at the Rock Hall for years to come, as he courted his successor, Greg Harris, to the museum as vice president of development and government relations after the latter had served 10 years with the National Baseball Hall of Fame. Mr. Harris made a point during his introduction to say he would carry on Mr. Stewart’s work with the staff he had built during his tenure. Mr. Stewart, who prior to running the museum was a top executive at Marvel Entertainment Group, hasn’t been explicit about his plans beyond life at the Rock Hall. He hinted in an interview with Crain’s after he announced his retirement that he may write a book. Others in the community have suggested he and his massive record collection may be involved in a new music club on Waterloo Road in Cleveland’s Collinwood neighborhood as part of local restaurateur Alan Glazen’s plans to transform the entertainment district into an indie-rock mecca of sorts.
What he said ■ In an interview with Crain’s
■ May 11: Terry Stewart announces he would retire from his role at the Rock Hall, noting in an interview that he was “retiring from the Rock Hall — not retiring from work or life.” He joined the Rock Hall in 1999. ■ Dec 3: The Rock Hall introduced Greg Harris, the organization’s current vice president of development and government relations, as its next president and CEO. Mr. Stewart courted Mr. Harris to join the Rock Hall staff after the latter had served 10 years with the National Baseball Hall of Fame. He rebuffed the initial offer, but Mr. Stewart came calling a few years later, and Mr. Harris ultimately decided to move to Cleveland in 2008. upon his May 11 announcement he would be step down from his duties at the Rock and Roll Hall of Fame & Museum: “The Cleveland we came to and have lived in for 14 years is going to be different than the Cleveland coming next. We’re in the middle of this great renaissance. We’re thankful to have been here, live here and be able to see the next stage as it involves.”
What others are saying ■ Frank Jackson, mayor of the city of Cleveland: “He was very good for the museum itself and very good for the city as a whole. Plus, he knows it. He’s a walking encyclopedia for rock and roll. He has a passion for it, and he can break it down so people can understand it.” ■ Cindy Barber, co-owner of the Beachland Ballroom: “Whatever comes next for Terry, it will be significant for Cleveland and the music scene in general. He loves music and goes to a lot of shows. A lot of people appreciate his honest love of music and look forward to what Terry gets himself involved in next.”
TRACKING HASLAM’S 2012 ■ June: Cleveland Browns spokesman Neal Gulkis emphatically denies a report from Philadelphia that the Browns could be for sale. ■ July 27: Browns confirm that Randy Lerner is in discussions with Jimmy Haslam III, a Pittsburgh Steelers minority owner and CEO of Pilot Corp., to sell the team. ■ Aug. 3: The deal is official, for $1 billion, and Mr. Haslam is introduced to the media at team headquarters in Berea. That day, Mr. Haslam says “it’s a marketing world” when asked about potential business opportunities, including a naming rights deal for Cleveland Browns the Browns, and it’s not just in Cleveland. … This is a big state, with a lot of people and a lot of successful businesses, and we need to get them more involved with the Browns.”
What others are saying ■ Cleveland City Councilman Joe Cimperman: “His background is farther south (Tennessee), but he’s one of us. I thought (Cleveland Cavaliers owner Dan Gilbert) was a once-in-a-century guy, but struck gold with the two of them. They bought into the franchise,
Stadium. ■ Sept. 19: Mr. Haslam meets a caucus of Cleveland City Council members and tells them that “everything is on the table” when it comes to stadium improvements and making the venue a year-round option for events. ■ Oct. 16: NFL owners unanimously approve Mr. Haslam’s purchase of the Browns at a meeting in Chicago. ■ Oct. 31: In a wide-ranging interview with Crain’s, Mr. Haslam talks of his desire to push into Columbus to re-engage with fans and perhaps lure new business partners to Cleveland. but they also bought into the DNA of Cleveland.” ■ Joe Roman, Greater Cleveland Partnership: “It’s pretty obvious, but he’s taking a 24/7 approach to the Cleveland Browns. That means not only on the field and off the field in terms of how the Browns are viewed, but how the Browns could be catalytic in some other things. “His enthusiasm is contagious. He’s hitting the town at a time when other things are really working well, and that additional shot in the arm for the town has been amazing.”
DECEMBER 17 - 23, 2012
ZEVWEISS American Greetings Corp. By MICHELLE PARK firstname.lastname@example.org
hile it’s not known yet whether a special committee will accept an offer from the Weiss family and related parties to take American Greetings Corp. private, the family’s proposal makes it clear that company leadership believes it has a plan that will better serve the company. News of the offer from descendants of the company’s founder to buy up all of the stock they don’t already own came in September in a letter from the family, including CEO Zev Weiss, to the greeting card company’s board of directors. Since then, the board has set up a special committee to consider the go-private offer, and the Weisses have revealed in another letter that they have financing commitments totaling $742 million to make the deal a go. That letter revealed that some big names — among them, KeyBank, PNC Bank and Bank of America — are behind the Weisses, noted Scott Fine, a professor of banking and finance at Case Western Reserve University Weatherhead School of Management. “Some very prominent financial institutions are committing a lot of money to the long-term vision that the Weisses have,” he said. “What we (the public) don’t see are the details of the plan that will keep this company a vital, vibrant part of our landscape for another hundred years.” Mr. Fine says he’s surprised American Greetings hasn’t gone private already, considering its biggest competitor — Hallmark Cards Inc. — is private and its stock isn’t heavily traded. The company faces strategic challenges, he said, and those challenges require longterm solutions, not the short-term things the public markets might want. The go-private offer makes it all the more likely that one of Northeast Ohio’s hallmark companies — pun intended — is likely to stay put, Mr. Fine added. If a strategic buyer based somewhere else was proposing to buy American Greetings, the risk of the company’s operations being moved elsewhere would be greater, he added. Already, though, Northeast Ohio had reason to believe the company wasn’t going anywhere: After a search for a new headquarters site, the company in 2011 committed to staying in Northeast Ohio in a move to Crocker Park in Westlake. However, the company recently delayed that project in light of the go-private offering. In another multimillion-dollar move in 2012, American Greetings in May acquired all of the senior secured debt and then in June acquired certain assets of Clinton Cards and related brands, including about 400 stores. Those moves were an effort to protect American Greetings’ interests since Clinton Cards PLC — one of American Greetings’ largest customers — had been struggling.
TRACKING WEISS’ 2012 ■ May 21: American Greetings unveils first designs for its $150 million to $200 million headquarters project in Westlake, revealing renderings of a 655,000-square-foot building wrapping a third-floor square courtyard. At the time, construction was projected to begin in early 2013 and be complete by mid-2014. ■ Sept. 25: The Weiss family, including Zev Weiss, CEO, and Jeffrey Weiss, president and chief operating officer, reveals in a letter to the American Greetings board that they want to buy all of the company’s outstanding shares that they don’t already own at $17.18 apiece and take the company private. ■ Oct. 22: The board of American Greetings forms a special committee of independent directors to consider, among other things, the go-private proposal by the Weiss family and related parties. ■ Nov. 28: American Greetings announces that it is delaying its headquarters project at Crocker Park in Westlake in light of the proposed go-private offer from the Weiss family. The company reassured in a news release that it still intends to develop its new world headquarters at the site and said the delay will be short and have no material adverse impact on the company. American Greetings noted in public filings that it expects to not recoup millions of dollars in unsecured accounts receivables based on information about Clinton Cards’ ongoing administration, a procedure similar to Chapter 11 bankruptcy.
What he said ■ May 21, prepared statement after the company unveiled plans for a new Westlake headquarters (the project later was delayed): “Crocker Park is a vibrant retail center, with a variety of stores in step with the latest trends and appealing to a wide range of consumers. This will create an energy and synergy that will inspire our ability to create products that meet the needs of our consumers and retailers.” ■ Sept. 25, go-private offer to the American Greetings board of directors, written along with his brother, Jeffrey Weiss, the company’s president and chief operating officer: “Since its founding over a century ago, the descendants of Jacob Sapirstein, and now the Weiss family, have guided American Greetings, including after it became a publicly traded company in 1958. After careful consideration, we have concluded that the best course of action is for American Greetings to return to its roots. ... We believe that $17.18 per share is a compelling price and that American Greetings public shareholders will find this proposal attractive.”
What others are saying ■ Scott Fine, professor of banking and finance, Case Western Reserve University Weatherhead School of Management: “It takes courage for the Weiss family, which doesn’t need to do this, to put their money where their mouth is. They are not only continuing to own the company, they’re adding all this financial risk. There’s going to be a boatload of debt.”
DECEMBER 17 - 23, 2012
CRAIN’S CLEVELAND BUSINESS
Charities: Uncertainty surrounding tax deduction may spur giving continued from PAGE 1
advisers and one on Dec. 5 for roughly 50 donors. Standing at the front of the room during both presentations was Steve Gariepy, who co-chairs the estate planning group at Hahn Loeser & Parks LLP, a Cleveland-based law firm. Mr. Gariepy said a majority of his clients are exploring options for accelerating into 2012 the charitable giving they might do in future years. One client who normally gives $100,000 is doing five times that amount this year to take advantage of the tax climate he knows exists today, Mr. Gariepy said. “That’s a way of taking advantage of the certainty of the 2012 deduction versus taking the risk of a limited 2013, 2014 deduction,” he said. “There are changes in the offing that could impact and reduce the tax benefit of making large charitable gifts next year.”
of mid-December had seen the number of new accounts year-todate rise at least 40% from the like period last year, estimated Laura Malone, director of gift planning. “December’s always crazy for us anyway,” Ms. Malone said. “I think there is going to be a higher element of crazy. We’re still getting calls now with families that are trying to do stuff with illiquid assets. Those assets are not that easy to transfer to a donor-advised fund. “(Donors) feel pressure to act,” she added. “They feel they have to do something, but they’re not really sure what the true result is going to be if they don’t do anything.” Certified financial planner Mr. Hurst anticipates a flurry of giving
in the last week of the year if Congress takes action that provides a clear tax liability picture.
Gifts with benefits While tax breaks are not the only reason people give to philanthropy, Ms. Malone noted they are “often the icing on the cake.” Without the incentive to give, charities fear people will give less. “Some people — not all people — do take into account the tax benefits of the gift, and the larger the tax benefit, the more they will give,” Mr. Gariepy said. “What you see on the horizon is that if larger gifts are no longer fully deductible, people will take that into consideration and perhaps give less.”
A query to various charities around town reveals that some — the Cleveland Foodbank, for one — are on pace to raise this year about what they did last year from individual donors. Others, however, have raised more money. Among them are College Now Greater Cleveland and the Cleveland Clinic, which reported that its year-to-date donations as of mid-December were up in the range of 12% to 15% from the like period in 2011. Nelson Wittenmyer, vice chairman of the Clinic’s Philanthropy Institute, isn’t convinced the increase has much, if anything, to do with tax uncertainty. When it comes to medical charitable causes, tax benefits are less of a motivator for
donors, who often give out of intense gratitude for medical care they or someone they know received, he said. Year-to-date giving for the Cleveland Foundation was up through Dec. 12 over the like period in 2011, though Ms. Ridolfi said she couldn’t disclose how much until the foundation’s year-end close. Like many in the nonprofit sector, Ms. Ridolfi said she hopes lawmakers will leave the charitable deduction as is. “The charitable deduction is important to how we will do business in the future,” Ms. Ridolfi said. As government support to many people decreases, she said, “I think the need for services that nonprofits provide will only increase.” ■
Stuck in neutral While Mr. Gariepy’s clients either are continuing to give as they usually have or are giving more, other advisers say they see donors at a standstill. “A lot of clients are kind of hamstrung,” said Jess Hurst, president and partner at the Millennial Group, an Akron wealth advisory firm. “A number of them have delayed or not given when they normally would have just because they don’t know what to do at this point in time.” The wait-and-see attitude couldn’t come at a worse time, said Mr. Hurst, who also sits on the board of two Akron nonprofits, OPEN M, a faithbased ministry that delivers food and health care through free clinics to the needy, and Weathervane Playhouse. “We’ve kind of got a perfect storm out there from a charitable standpoint,” he said. “Our clients who are donors to charities are sitting out there with a lot of uncertainty, which leads to inaction, and you’ve got charities who are trying to support and help people in need who have substantial needs at this time of year. The combination of those two has created a really bad scenario for some nonprofits in the area.”
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‘A higher element of crazy’ Many donors deciding to give more this year to dodge the uncertainty of next year are doing it through donor-advised funds, Mr. Gariepy said. Donors who set up such funds take the charitable deduction this year, but distribute their funds in amounts they choose to charities they choose into the future. True to the trend Mr. Gariepy describes, interest in such funds is up at two local organizations that administer them. Since the November election, the Cleveland Foundation is fielding a greater number of calls from advisers and donors asking about opening new donor-advised funds or adding money to existing ones, said Kaye Ridolfi, the foundation’s senior vice president for advancement. Ms. Ridolfi said she isn’t aware of a lot of people giving way more or way less, but she does hear them debating their timing. “The question is, should I do it in December, or should I wait until next year?” she said. The American Endowment Foundation, a Hudson public charity that administers donor-advised funds totaling about $275 million for roughly 1,600 families nationwide, as
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DECEMBER 17 - 23, 2012
Duke: Firm stems vacancy tide at Rockside properties continued from PAGE 1
North Olmsted a year ago. The office buildings on and near Rockside languished as the real estate boom of early last decade went bust and the 2008 Great Recession hit home. The last prospective deal for the buildings on Rockside fell through in 2007 and Duke called a timeout on the sales effort in 2008 when a different buyer lost its financing. However, in recent months, multiple prospective buyers have reviewed the properties, insiders say. Originally, Duke sought to redeploy capital to areas with stronger economies and higher rents. However, as the real estate credit crunch took hold and leverage became a
dirty word to stock analysts and investors, the real estate investment trust began selling properties to reduce leverage and consolidate into core markets. Today, Duke is pursuing a goal of reducing its suburban office holdings to 25% of its portfolio from the current 30% and concentrating on industrial and medical office buildings and build-to-suit opportunities. In a Nov. 1 conference call with investors, Duke executives suggested they would conclude a major property sale by the end of this year.
A bit of foreshadowing According to a Seeking Alpha transcript of the conference call, Dennis Oklak, Duke chairman and
CEO, said disposition activity had been relatively slow the first nine months of the year, but that “you will see overall disposition activity pick up by the end of the year.” Last December, Duke sold to Blackstone Real Estate Partners, an affiliate of the Blackstone Group private equity firm in New York, 79 suburban office buildings — or nearly 10 million square feet of office space — for $1 billion. Tom West, director of office services at the Cresco real estate brokerage in Independence, said high vacancy in the 20% range has continued in the Rockside Road office corridor, but the Duke properties gained traction this past year. For example, Duke in October filled
Lighting: LED demand growing globally continued from PAGE 3
“This acquisition was all about growth … and getting to big customers faster,” she said. Revenue from GE Lighting’s LED business already is growing about 50% to 70% annually, Ms. Sylvester said. Today it accounts for about 25% of GE Lighting’s sales, up from 15% a year ago, she said. That figure should jump to 35% next year, she added. The unit does not release its sales figures.
A switch at the switch Today, most of GE Lighting’s LED sales come from products used
to light streets, parking lots and retail stores. Although the company offers LED bulbs to replace the incandescent bulbs most people use in their homes, they have yet to be widely adopted because of what Ms. Sylvester described as “a price point challenge.” Even though the LED bulbs use less electricity and are expected to come down in price, they remain many times more expensive than incandescents. The popularity of commercial and industrial LED lighting products has slowed sales growth related to GE Lighting’s fluorescent and high-intensity discharge lighting
products, Ms. Sylvester said. Sales of those products soon should start to shrink as LEDs replace them, she noted. “The market’s moving very quickly,” she said. Between 60% and 70% of GE Lighting’s product development budget goes toward LED products, up from about 20% four years ago, said Steve Briggs, general manager of global product management for GE Lighting. The overall size of the budget has grown, too. The company has added about 200 people to its global engineering team since 2009, through internal growth and acqui-
most of an empty building on Rock Run in Seven Hills with a 50,000square-foot lease to Cambridge Group, a unit of Sedgwick Claims Management Services. No information on the pricing of the Rockside Road properties was available. However, Ryan Moore, an office investment sales specialist at the Independence office of the Marcus & Millichap Investments brokerage, said the portfolio is likely to be sold at a discounted price. Word of a looming sale comes as a bit of a surprise. In what appeared to be a sign it would remain in the market longer, Duke shifted the leasing and property management assignment for the portfolio to Jones Lang LaSalle’s Cleveland office
from CBRE Group. Tom Fox, a Jones Lang senior vice president who heads its Cleveland agency business, and David Browning, managing director of CBRE’s Cleveland office, both declined comment on Duke’s potential sale of the properties. Jim Clark, a Columbus-based Duke senior vice president who oversees Cleveland operations, declined comment. In an email, Mr. Clark said, “As a publicly held company, Duke Realty cannot discuss any development, leases, acquisitions, or dispositions that may or may not be pending.” Och-Ziff did not return two phone calls and an email by Crain’s deadline last Friday, Dec. 14. ■
sition, according to a company spokesman. Of the 700 people who work at Nela Park, about 100 are engineers. “We’ve practically doubled the size of our engineering team,” Mr. Briggs said.
ures, the 2012 sales total would more than double the $5.5 billion sold in 2010. In the industrial market, sales of LED lighting products grew by 17% worldwide in 2012 versus 2011, but the market climbed by 70% in North America, she said. Demand has been driven partly by incentives that utilities in some regions are giving to encourage companies to use less energy, Ms. Bhandarkar said. “It’s really taking off,” she said. Ms. Bhandarkar added that GE Lighting found a solid company in Albeo, which has 65 employees and also makes LED fixtures for nonindustrial businesses. “They have been really good at producing quality products,” she said. ■
World of growth Demand for LEDs is on the rise, especially among industrial customers, said Vrinda Bhandarkar, director of research related to LEDs at Strategies Unlimited, a marketing research and consulting firm in Mountain View, Calif. Worldwide sales of LED lighting products are expected to hit $12.3 billion for 2012, up 26% from $9.8 billion in 2011, according to Ms. Bhandarkar’s research. By her fig-
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DECEMBER 17 - 23, 2012
CRAIN’S CLEVELAND BUSINESS
THEWEEK DECEMBER 10 - 16 The big story:
Cuyahoga County Executive Ed FitzGerald recommended to County Council that the county sell for $27 million the Ameritrust complex in downtown Cleveland to developer Geis Cos., which in turn would build an eight-story county administration building at the corner of East Ninth Street and Prospect Avenue. In total, Geis is proposing an investment of $180 million in the complex, which would include high-end apartments in the vacant Ameritrust Tower. The former county commissioners bought it in 2005, spending $40 million on the purchase and environmental cleanup of the former bank buildings. (See story, Page One.)
Campaign money: University Hospitals secured a $32.5 million gift from the Rainbow Babies & Children’s Foundation, which has allowed the health system to reach its $1 billion fundraising goal a year earlier than expected. As a result, University Hospitals is raising the goal of its “Discover the Difference” fundraising campaign to $1.5 billion. The gift from the Rainbow Foundation, an independent organization formed in 1887 as an advocate for UH Rainbow Babies & Children’s Hospital, was made in honor of the children’s hospital’s 125th anniversary. A different route: The Ohio Turnpike will not be privatized, but it will become the vehicle for raising at least $1 billion for highway improvements, largely in northern Ohio. The money will come from existing turnpike toll revenue, which is sufficient to cover existing turnpike debt and new debt of at least $1 billion. Gov. John Kasich said this new financing arrangement will allow projects such as the Cleveland Inner Belt and the Kasich revamping of Cleveland’s West Shoreway to move ahead at a faster pace. That means the second Innerbelt Bridge might open before 2016. Bidding starts at …: The Cleveland Metropolitan School District plans to auction off its headquarters building at 1380 E. Sixth St. The “open outcry” auction is set for noon on March 7, 2013, at the Sheraton Cleveland Airport Hotel. The building sits across the street from the new Cleveland convention center rising on the city’s Mall, and has been viewed as a potential site of a hotel, apartments or a mixed-use property. Breaking the ice: The Lake Erie Energy Development Corp., a nonprofit helping organize the project, won a $4 million federal grant that will be used to pay engineering, site design and other costs the project’s developers will incur prior to construction. LEEDCo’s private partners committed another $1 million to the project as well. Winning this grant will give LEEDCo the chance to compete for as much as $46.7 million more in financing that could be used to pay for construction of the “Icebreaker” project, which will consist of five to nine wind turbines located seven miles off the coast of Cleveland. On the move: Architecture firm Westlake Reed Leskosky architecture firm announced plans to move to the Hanna Building, 1422 Euclid Ave. in downtown Cleveland, from its current offices at 925 Euclid, better known as the former Huntington Building. The architectural and engineering firm said it will occupy the third floor of the Hanna, which is owned by the real estate affiliate of the PlayhouseSquare Foundation. … Willis North America, a unit of insurance broker Willis Group Holdings, is relocating its Cleveland office to 1001 Lakeside Ave., Suite 1600, from 200 Public Square. Willis said the move is part of its strategy “to continue to elevate its presence in the state and drive growth in this key market.”
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
Mr. Egre engineers a Grammy nomination ■ What do Bruce Springsteen, Taylor Swift and Bruce Egre — a music instructor at Case Western Reserve University and the Cleveland Institute of Music — have in common? Grammy nominations. After 25 years working as an audio engineer, Mr. Egre last week learned he earned a Grammy nod for the best engineered classical album for his work on the Brentano String Quartet’s Beethoven: The Late String Quartets, Op. 127 & 131. The work also is featured in the film “A Late Quartet,” starring Christopher Walken and Philip Seymour Hoffman. “My wife was in another room and the iPad was sitting next to her, and all of a sudden she says, ‘Why are all these people sending you messages saying congratulations?’ I had no idea what she was talking about,” Mr. Egre said in The Daily, a Case Western Reserve University newsletter. “Then it hit me what happened.” Northeast Ohio’s own Black Keys scored five Grammy nominations for their work on “El Camino,” the duo’s seventh studio album. The LP is up for album of the year and best rock album, while their song “Lonely Boy” is nominated for record of the year, best rock performance and best
rock song. Grammy winners will be announced Feb. 10. — Timothy Magaw
The price isn’t right, and probably won’t be ■ ’Tis the season for holiday sales, and one prominent industry in Northeast Ohio still is struggling to tackle the ever-present dilemma of maintaining price integrity. After I wrote a story in the Dec. 10 edition of Crain’s on issues facing golf course owners — including declines in per-round revenues due constant discounting of greens fees — Jonathan Palmer of Mallard Creek Golf Club in Columbia Station called to offer his easy solution: Stop discounting. “Discounting rates and selling to third parties is the death of public golf. It trains your customer to look for the lowest rate,” Mr. Palmer said of sites through which club owners can sell off-peak tee times for substantially less than normal. (You can read all of Mr. Palmer’s comments on a subsequent Crain’s SportsBiz blog at http://tinyurl.com/bpr2cjt.) But Chuck Bennell, president of Tam O’Shanter Golf Course in Canton, said discounting isn’t going anywhere. “Discounting is always a contentious issue, but it’s part of the marketing mix for all sorts of businesses,” Mr. Bennell said when told of Mr. Palmer’s comments. “Everyone wants ‘the other guys’ to stop discounting so ‘we’ are not forced to discount.” — Joel Hammond
Beyond the coasts
The maker of performance exhaust systems for motorcycles, ATVs and cars says the Road Legends Phantom Pipe II “provides a truly unprecedented look with a neighborhood-friendly sound.” It’s an updated version of the original Phantom Pipe for Softails and the Baffled FLH Phantom Pipe, and it comes at a substantial price: MSRP $1,390. The Phantom Pipe II is available in a baffled, black ceramic version, and it includes a 2-inch removable and rebuildable core “that’s tough sounding and even better performing,” SuperTrapp says. A four-piece, stylized chrome-plated heat shield comes pre-installed, and a turned-up claw end tip “features a domino dot-engraved decorative billet end cap that makes a bold statement without the drag pipe sound arrival,” according to the company. The Phantom Pipe II features a 2-inch primary pipe and a 3.5-inch diameter collector. It’s designed by well-known bike builder Paul Yaffe. For information, visit www.SuperTrapp.com. Send information about new products to managing editor Scott Suttell at ssuttell@ crain.com.
■ There was a fair amount of credit given last week to Lake Erie Energy Development Co. when it secured about $4 million in federal money to develop a wind energy farm off the Lake Erie shoreline. But the West Side manufacturing advocacy group WIRE-Net had a pretty good week on the alternative energy front, too. WIRE-Net, which is also the parent of the GLWN wind energy supply chain network, got word that it was one of seven entities nationwide tapped by the U.S. Department of Energy to help spur domestic manufacturing’s role in the offshore wind energy business. WIRE-Net said it expects to receive between $250,000 and $350,000 from the Energy Department to help fulfill that role, with the exact amount to be decided as the scope of the project is determined. WIRE-Net will work with entities in the U.S. Manufacturing Extension Partnership, including the Cleveland-based manufacturing support organization Magnet, and others across the country to identify manufacturers and service providers that can supply the offshore wind energy sector. WIRE-Net and the six other organizations selected by the Energy Department will compete next year as the government whittles the number of organizations working on the effort to three, said WIRE-Net president John Colm. “We’ve made the first round of the playoffs,” Mr. Colm said. — Dan Shingler
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
THE COMPANY: SuperTrapp Industries Inc., Cleveland THE PRODUCT: Road Legends Phantom Pipe II
A favorable wind blows WIRE-Net’s way
■ John Dearborn, president of JumpStart Inc., used a Huffington Post column to talk up the Midwest as an emerging “entrepreneurial hotspot.” This fall, he noted, “entrepreneurs and investors from all over the country” gathered in downtown Cleveland for the National Association of Seed and Venture Funds annual conference, during which AOL founder and Startup America chairman Steve Case said a “broader entrepreneurial ecosystem” with many hubs of innovation is possible. The Midwest, Mr. Dearborn wrote, “is working hard to make Case’s vision a reality sooner rather than later.” He noted that a recent JumpStart entrepreneur expo “drew 117 startups and more than 1,000 people to an afternoon-long showcase of transformative technologies.” Several trends have emerged to explain why entrepreneurship is “no longer solely the domain of the coasts,” Mr. Dearborn wrote. Among them: ■ Communities are developing their own homegrown resources. With cheap rent and plentiful real estate, the Midwest “is a good place to form an accelerator or an incubator,” he wrote. ■ There’s a growing angel influence. In Ohio especially, “angel funds continue to be a major force: Two of the biggest angel funds in the U.S. (as measured by member size), Ohio TechAngel Funds and North Coast Angel Fund, are located there.” ■ Venture capitalists are entertaining deals that aren’t on the coasts. For instance, from 2007 to 2011, 67% of the nearly $1 billion raised by Northeast Ohio startups
came from investors based outside of Ohio.
Chronicling presidents’ pay ■ The Chronicle of Higher Education did the heavy lifting of compiling compensation data for nearly 500 presidents of private, nonprofit colleges in the United States, and the numbers, as you’d expect, are eyecatching. In 2010, the most recent year available, the best-paid president was Bob Kerry of The New School in New York City, with total compensation of $3.05 million. His base pay, though, was a relatively modest $602,539. The data included 24 presidents of private colleges in Ohio. Tops in pay among those leaders was Barbara Snyder of Case Western Reserve University, with total compensation in 2010 of just over $730,000. That ranked 68th nationwide among the private school presidents. Marvin Krislov, president of Oberlin College, was No. 6 in Ohio, with total compensation of $462,058 in 2010. That put him at No. 192 nationwide. No. 15 in Ohio was Richard Durst of Baldwin Wallace University, at $330,441.
One is too many ■ Unfortunately, the city of Cleveland landed on a list from TheAtlanticCities.com of cities with the highest rates of gun-related deaths. Cleveland was ninth on the list, with 25.2 gun deaths per 100,000 residents in 2011. New Orleans was the worst, at 69.1 gun deaths per 100,000 people, followed by Detroit, at 41.4. For the entire Cleveland metro area, the rate was 10.9 guns deaths per 100,000 residents. That was the lowest metro rate for the 10 cities on the list.