Issuu

Pinpoint app targets communications. PAGE 16

Marketing firm is on the move. PAGE 6

CRAINSCLEVELAND.COM I FEBRUARY 3, 2020

FINANCE

40 years of progress

Eight Newsmakers have had considerable impact on Northeast Ohio BY ELIZABETH MCINTYRE

Crain’s Cleveland Business is celebrating its 40th anniversary this year and, as part of our commemoration, we will be honoring eight Newsmakers who have had a lasting impact on our region since Crain’s first published on March 31, 1980. These are the people, events and institutions that not only made headlines but, more importantly, made a difference in shaping the evolving economic narrative of Northeast Ohio. Today, Crain’s proudly announces the Newsmakers — two for each decade we’ve been in existence — who will be recognized and take part in a panel discussion on March 25 at the Crain’s Newsmaker Awards ceremony at Rocket Mortgage FieldHouse. The 2020 Newsmaker Award honorees, commemorating Crain’s 40th anniversary, are as follows:

 FOR THE 1980S: The campaign to land the Rock & Roll Hall of Fame K. Michael Benz, who is credited with giving life to the idea of bringing the Rock Hall to Cleveland, will speak about that effort at the Newsmaker event. Benz in 1985 was executive vice president of the Greater Cleveland Growth Associa-

Benz

tion, a regional economic development organization, when he hatched the concept that Cleveland was meant to be “the one and only” home of the Rock Hall. He later went on to become executive director of the Rock & Roll Hall of Fame before leading the United Way of Greater Cleveland for 17 years.

The influence of community development organizations and neighborhood development in Cleveland The decade and beyond saw the creation of Cleveland Housing Network; Neighborhood Progress Inc., which eventually became Cleveland Neighborhood Progress; investment in the Gordon Square Arcade; and construction of Lexington Village, Beacon Place and Mill Creek. These efforts demonstrated that through housing and economic development programs, neighborhood quality can improve. We’ll learn more about how these organizations have worked to shape Cleveland neighborhoods.

DAVID KORDALSKI/CRAIN’S CLEVELAND BUSINESS

NEWSPAPER

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Organizations reach out to outsourced CIOs. PAGE 12 New tax law touches like-kind exchanges. PAGE 13 Cleveland-based startup Mezu spurs card use. PAGE 14

 FOR THE 1990S: The formation and completion of the Gateway project It’s hard to imagine the corner of Carnegie and Ontario without Progressive Field and its nextdoor neighbor, Rocket Mortgage Field- Chema House, as well as the surrounding hotels, shops and restaurants. In 1990, though, the planned Gateway arena for the Cleveland Cavaliers and ballpark for the Cleveland Indians barely eked out a narrow win at the ballot box for the construction of the sports complexes. Voters approved a sin tax on alcohol and tobacco to fund the project. Tom Chema, who was appointed in 1990 as executive director of the Gateway Economic Development Corp. and was responsible for overseeing the public/private partnership that led to the financing and construction of Progressive Field and Rocket See NEWSMAKERS on Page 17

Smaller banks could drive 2020 M&A BY JEREMY NOBILE

Bank M&A in the Northeast Ohio market is likely to involve smaller banks, particularly more community-oriented institutions near or under $10 billion in assets that are looking for scale, cost efficiencies and fee-generating businesses that could support revenue in what is projected to be a down year for earnings. For one thing, there are simply a greater number of them in the industry. The region’s larger players face similar pressures, of course, but those may be more likely to stay on the sidelines when it comes to buying another bank. Some super-regionals could be attractive to national companies, though: Word on the street is that Cleveland’s KeyCorp ($145 billion in assets) was courted by some potential buyers as CEO Beth Mooney contemplated retirement, a move that she announced last September and will take place in May. One of those was reportedly the largest bank in Ohio by deposits, Minneapolis-based U.S. Bancorp ($495 billion). Both Key and U.S. Bancorp would neither confirm nor deny such conversations, saying they don’t comment on market rumors. Of course, it’s a toss-up as to what actually plays out. There are fewer than 5,000 U.S. banking companies in the country today, and the industry has historically consolidated at a pace of 4% to 5% each year, said Fred Cummings, president of Elizabeth Park Capital Management. That means 95% of the industry each year doesn’t participate in a combination. Cummings pointed out that bank profitability in 2019 was near a 20year high, thanks in large part to a lighter regulatory burden and beneficial tax codes. Yet, the S&P 500’s banking industry gained 31.5% last year, while the wider S&P 500 as a whole returned 40.6%. Charlie Crowley, managing director with investment bank Boenning & Scattergood, said he sees the current climate for banks as generally stable. That means, for the bulk of the industry, there won’t be any dire need to sell — at least not yet. However, while fundamentals have been in generally good shape at the start of 2020, there will be more margin pressures this year due to the Federal Reserve trimming interest rates three times in 2019. See BANK M&A on Page 17

1/31/2020 2:47:35 PM

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GOVERNMENT

Port grows despite steel tariffs halting European imports BY KIM PALMER

The Cleveland-Cuyahoga County Port Authority (Port of Cleveland) saw a nearly 10% increase in business, both imports and exports, in 2019 despite a dramatic slowdown in trans-Atlantic imports, specifically specialized steel out of the European Union (EU). “Our European, cross-Atlantic imports were down approximately 35%, and our primary import from Europe is steel,” said Jade Davis, vice president of external affairs for the Port of Cleveland. “A portion of that is due to tariffs and those related business decisions, and some to a general manufacturing slowdown.” In the summer of 2018, the U.S. government imposed a 25% tariff on steel coming from the EU. Designed to boost the nation’s long-declining manufacturing sector, those tariffs have actually been linked to employment reductions by U.S. steel manufacturers. According to a Federal Reserve report, “Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” manufacturers’ selling prices “were stable (in 2019), except in the case of steel producers, whose prices fell because of softening demand for steel.” That has resulted in manufacturers cutting temporary workers and reducing hours for permanent employees. The manufacturing and, for Northeast Ohio specifically, steel manufac-

turing industries were intended to be no longer travel through the Port of among the main beneficiaries of tar- Cleveland are being shipped into the iffs, with the goal of increasing do- U.S. is not completely clear, Gutheil mestic production after decades of said. Sluggish demand in the regiondecline due in part to foreign coun- al automotive industry could mean tries subsidizing steel exports and there is less need for steel from outside Northeast Ohio, or it’s possible dumping steel into U.S. markets. Locally and throughout the country, companies have been able to find enthe tariffs have had the opposite out- tirely new steel suppliers that aren’t come, resulting from retaliatory tariffs subject to the tariffs. “We do know there has been imdriving up raw material and component costs that disrupted American ported steel that would typically companies’ complicated global supply come into U.S. ports from places like Europe that has been diverted to chains. “This is not just a Port of Cleve- “IN A MATTER OF MONTHS, MANUFACTURERS land issue. It is HAVE SHIFTED BOTH SOURCING AND other ports on the Great Lakes, oth- PRODUCTION TO DIFFERENT GEOGRAPHIES, er ports around SEEKING TARIFF-FRIENDLY COMBINATIONS.” the country are experiencing the — Deloitte vice chairman Paul Wellener same issues,” said David Gutheil, chief commercial offi- Canada,” Gutheil said. “It is then procer for the Port of Cleveland, of the cessed in Canada, and that business is trucked across the U.S.-Canada decrease in foreign steel imports. Business executives at the port re- border.” Steel producers have reported that acted to the potential for tariffs leading to an import deficit by pivoting to some customers negotiated conbarge business from Canada, a coun- tracts well ahead of the new year in try that to some extent was protected an effort to lock in lower prices, while by the North American Free Trade others said their customers are holdAgreement. (That agreement now ing less inventory and buying on an has been replaced by the United as-needed basis to better control costs, according to the Federal ReStates-Mexico-Canada Agreement.) Although steel manufactured in serve Bank of Cleveland’s Fourth DisCanada has different end users from trict Beige Book, a summary of curEU steel, it has offered a way to diver- rent economic conditions. The tariffs have reduced imports sify the port’s overall business. How or even if the EU imports that from the targeted countries. U.S. im-

ports from China, for instance, were down 12.7% in the first eight months of 2019 compared with the like period in 2018, according to Deloitte’s 2020 Manufacturing Industry Outlook. Fourth-quarter GDP numbers show similar declines, but some economists question whether that is good for the nation’s economy. “The trade balance is going to shrink, but when we look at final demand for goods and services in the U.S., we are seeing a contraction in domestic markets, we are seeing less final sales,” said Mark Sniderman, executive in residence at the Weatherhead School of Management at Case Western Reserve University and a former researcher at the Federal Reserve Bank of Cleveland. Fewer imports from tariff-targeted countries does not mean that U.S. production has increased to fill the gap, though, as imports from Mexico and Vietnam were up 5.9% and 37.4%, respectively. “In a matter of months, manufacturers have shifted both sourcing and production to different geographies, seeking tariff-friendly combinations,” concluded Deloitte vice chairman Paul Wellener, the report’s author. Another unintended consequence of imposing tariffs on multiple countries simultaneously could be fewer goods produced in the U.S. for export. “It may be that we put a tariff on a raw material or a component with the thought it will be produced in the U.S., but it turns out that those raw

materials will be used to make goods in some other country and then that will be imported in the U.S.,” Sniderman said. The long-term effects of these tariffs could differ from what’s been seen so far — if, for instance, U.S. manufacturing manages to expand substantially as firms fully adjust and create new supply chains to avoid import tariffs. But overall optimism within the manufacturing sector has dropped, from more than 90% in 2018 to less than 70% in 2019, Wellener wrote. Regionally, polling by Northeast Ohio manufacturing organization MAGNET found that 66% of respondents said recent tariffs imposed by the U.S. had negatively affected their companies. The current labor and trade uncertainties within global manufacturing may also lead companies looking to increase productivity to cut overall costs. “Looking at business cycles, when we see periods of softness, that is when we see plant closures and that is when we see companies employing new technologies like automation,” Sniderman said. “CEOs would say to me all the time that when they are running at full capacity there is no time, but when things are soft and markets weak, that is when they make a lot of changes.” Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive

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Ohio lawmakers, local activist, however, are hoping all pro teams in state extend protective mesh to foul poles BY KEVIN KLEPS

All 30 Major League Baseball teams will have extended netting in place by the start of the 2020 season. Dina Simpson doesn’t think the majority of the clubs are doing enough. The protective netting, which every big-league team extended to at least the end of the dugouts prior to 2018, is as essential as ever, with bigger and stronger players facing faster pitching and rocketing foul balls into the stands at speeds of more than 100 mph. The Indians on Wednesday, Jan. 29, announced that they will extend the netting at Progressive Field to cover Section 174 along the left-field line and Section 128 in right field. The measure will cover an additional 14 sections — seven on each side — but won’t go all the way to the foul poles. That, according to Crain’s research, will be the norm in MLB. Simpson and some Ohio lawmakers are hoping for more, however. Simpson, a Chardon resident, is permanently blind in her right eye after being struck by a line drive at a Lake County Captains game in 2017. She has since become an advocate of netting that extends to the foul poles, and she found a willing listener in State Rep. John Patterson. On Jan. 23, Patterson, a Democrat from Jefferson, and State Rep. Rick Perales, a Republican from Beavercreek, introduced House Bill 479, which, if enacted, would mandate protective netting to the foul poles at the eight major and minor league ballparks in Ohio. Simpson said she’s “disappointed” the Indians aren’t taking that step and “would never want a person to assume” he or she is safe from line drives because they’re seated in a section that doesn’t have protective netting. The Tribe and the Cincinnati Reds, who are also extending the netting at Great American Ball Park to the “elbows” (the areas at which the seating curves as it approaches the left- and right-field corners), are citing structural issues for not bringing the nets all the way to the foul poles. Different ballpark configurations are why MLB isn’t mandating that netting extend to the foul poles. MLB commissioner Rob Manfred also said in December that data show the risk of getting hit by a foul ball is reduced outside the elbow areas, where the stands “angle away from the field of play.” Analysis by individual clubs and websites such as FiveThirtyEight have shown similar results. Simpson and other proponents of pole-topole netting counter that it only takes one exception for potentially disastrous results. Patterson told Crain’s that Ohio’s proposed bill is “a very logical, straightforward” step to ensure the safety of as many fans as possible. He cited stronger players, increased velocity on balls hit into the stands and distracted fans as “three factors that intersect for a very dangerous proposition.” But the state’s measure, which has yet to get a hearing, could and likely

Where they stand A look at the protective netting plans for baseball’s 30 clubs. Bold indicates that the measure is already in place.  Netting to the foul poles (six teams): Atlanta, Baltimore, Chicago White Sox, Kansas City, Oakland, San Francisco  Netting to the elbows (17): Boston, Chicago Cubs, Cincinnati, Cleveland, Detroit, Houston, L.A. Angels, L.A. Dodgers, Miami, Milwaukee, Minnesota, N.Y. Mets, N.Y. Yankees, Philadelphia, San Diego, Texas, Washington  Plans not yet announced (seven): Arizona, Colorado, Pittsburgh, Seattle, St. Louis, Tampa Bay, Toronto SOURCE: CRAIN’S RESEARCH; PUBLISHED REPORTS

Simpson

Patterson

will change in the coming months, leaving possible wiggle room for clubs such as the Indians and Reds that cite structural issues for not extending the netting to the foul poles. And even if the current measure does become law, the teams would have until April 1, 2021, to meet the state’s standards. “We would certainly want to look at alternative options that would still offer increased safety standards,” Alex Sawatzki, a legislative aide for Patterson, said of the clubs that prefer not to go the foul poles because of their ballpark configurations.

Out of harm’s way A few of the state’s six minor league teams are expected to have netting that meets the state’s current proposal by the start of the 2020 season. The Dayton Dragons, a Class A affiliate of the Reds, already have netting that reaches the foul poles at the newly named Day Air Ballpark. The Columbus Clippers, the Tribe’s Triple-A affiliate, are in the process of extending the netting at Huntington Park to the foul poles. “We do not want fans to be in harm’s way, and this seems like the next logical step for most teams to take,” Clippers president and GM Ken Schacke said. The Akron RubberDucks, meanwhile, are expected to announce their netting plans soon. A source told Crain’s that the Indians’ Class AA affiliate will have netting that reaches the poles in left and right field. Plans are less certain for Ohio’s three other minor league teams. The Captains, a Tribe Class A affiliate, and Eastlake officials were scheduled to discuss netting plans late last week, Captains GM Jen Yorko told Crain’s. The Toledo Mud Hens, a Triple-A affiliate of the Detroit Tigers, have

netting that only extends to the halfway point of the dugouts, making Fifth Third Field the most perilous of the eight professional ballparks from a netting standpoint. The Mud Hens, though, will announce their netting plans “in the upcoming weeks,” a club source told Crain’s. That leaves the Mahoning Valley Scrappers, whose future is even more uncertain than the status of HB 479. The Scrappers, a Single-A member of the Tribe’s farm system, are one of 42 minor league clubs that could be eliminated by MLB prior to the first pitch of the 2021 campaign. “We’re in a little bit different situation than other teams,” Scrappers GM Jordan Taylor said of the club’s ability to finalize a netting plan in the coming months. Still, the Scrappers intend “to be fully compliant with what comes down the pipeline,” Taylor added. That’s only if Mahoning Valley has a team in 2021. Taylor said the club is operating as if that will be the case, but the decision will be made by baseball, which is receiving significant heat from the likes of Ohio Gov. Mike DeWine over the proposed elimination of 26% of its 160 minor league teams.

Elbows are most common Crain’s research shows that, of the 23 MLB teams that have announced their plans for extended netting or have already extended the protective mesh well past the dugouts, six will have netting that goes to the foul poles. The Indians and Reds are two of the 17 clubs scheduled to have netting that extends to the elbows. (Seven clubs have yet to announce netting specifics for 2020.) The height of the netting at Progressive Field will be raised from 23 feet to 33 feet, and the canopy will be removed. The latter is a nice development for fans who grew frustrated with foul balls that got hung up in the netting and never fell to the seats below, a Tribe source said. The Indians, as is the case any time netting is expanded, have received some blowback from fans who say the mesh obstructs the view, but a rash of recent fan injuries in MLB outweighs any of the complaints. Unlike some ballparks, the expanded netting at Progressive Field won’t be lowered to allow for greater fan interaction before the game. The club said the holes in the nets are large enough for players to pass signed items through the openings. After her injury, Simpson started a private Facebook group for fans who have been injured by foul balls at professional baseball games. She said she’s interacted with three people who suffered serious injuries at Progressive Field between 2011 and ’16, and wishes baseball had acted sooner. “These organizations have dragged their feet long enough when it comes to truly protecting their fans,” she said. “I’m really hoping for the day when people can go to a ballgame and not have to worry about leaving with a life-altering injury, as I did.” Kevin Kleps: kkleps@crain.com, (216) 771-5256, @KevinKleps

4 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 3, 2020

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REAL ESTATE

New realty investor group surfaces BY STAN BULLARD

With its $5 million acquisition of the four-floor Signature Health Building in Beachwood, Realife Real Estate Group of Independence has completed a six-property, $33 million buying spree in Greater Cleveland in the past 14 months. And insiders expect that more multimillion-dollar deals are in the works. The company, led by Israel-born Yaron Kankelder, surfaced in December 2018 with the purchase of the former headquarters of Stark Enterprises downtown. The five-floor office building is at 1350 West Third St. — a site that puts the investor group on the northwest corner of the 15-acre Superblock west of Public Square that’s considered a likely contender for a new Sherwin-Williams Co. headquarters building. The tiny parcel is the only part of the sea of parking lots not owned by the Warrensville Heights-based Weston Inc. real estate empire. A fiscal dispute has just flared between 1350 W. 6th St. LLC, the company Kankelder used to buy the now-empty downtown office building, and Stark. Last Monday, Jan. 27, in Cuyahoga Court of Common Pleas, Stark secured a judgment for $1.67 million against the Kankelder group, saying the borrower failed to make an $11,000 monthly payment due in January. Stark had provided a

loan for $1.6 million to the group when it bought the building. Such a practice is called “holding the paper” in real estate circles. Neither party would comment on the judgment, but the dispute signals how the dated property could be a wart in the picture if Sherwin-Williams chooses the rest of the site as part of its new headquarters. The paint and coatings titan has been silent about specifics since announcing its search for a site for new offices and a new, larger research center that would consolidate multiple research locations. John G. Morikis, Sherwin-Williams chairman and CEO, said on a Jan. 30 conference call with securities analysts and investors that the company would announce the outcome of its search soon. Meantime, Realife added the latest multimillion-dollar asset to its eclectic portfolio by buying the nearly full Signature Health office building on Chagrin Boulevard in Beachwood from Orchard’s Way Realty Reorganization Ltd., which is led by real estate broker-investor James Breen. Kankelder declined a request for an interview or to respond to email questions broadly about his company’s growing portfolio, writing, “We’re not interested in publicity.” However, he wrote in an email that “the property at 24200 Chagrin Blvd. was an attractive investment because it’s a good building in a good location

with a strong major tenant.” Kankelder said in the email that he has been involved in real estate since 2009 and founded Realife in 2014. The company has investments in Jacksonville, Fla., as well as Northeast Ohio. “We see Cleveland as an attractive market for investment in real estate — there’s opportunities for investment and asset values are stable,” Kankelder wrote. “We evaluate each property and investment independently and lots of factors go into our analysis of each property.” Kankelder declined to disclose the firm’s total portfolio. However, Cuyahoga County land records and mortgages show a range of deals:  The largest, for $17 million on Nov. 26, 2019, was the acquisition of the 82-unit Battery Lofts, 1250 W. 75th St., a five-story apartment building in the Detroit-Shoreway neighborhood developed in 2018 by an affiliate of Vintage Development group led by Adelbert “Chip” Marous.  The next-largest deal was for MetroCenter, a five-story office building at 6500 Rockside Road in Independence. Realife on Oct. 16, 2019, paid $5.5 million for the property. Insiders say Realife has established an office in the structure. Tax bills for the most recent deal, for the Signature Health Building, are directed to that building.

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DECISIONS

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REAL ESTATE

Western Reserve complex lands major marketing firm Adcom will occupy two floors in the landmark, and its CEO has acquired a stake in the structure BY STAN BULLARD

Joe Kubic, the CEO and principal owner of Adcom, liked plans to rejuvenate the landmark Western Reserve building complex in downtown Cleveland so much that he not only leased two floors for the firm, but he acquired a stake in the structure. The integrated marketing agency will take two floors of Western Reserve, 1448 W. Ninth St., as it moves a block west from its current home at the Johnson Block Building, 1370 W. Sixth St. The firm’s 121 staffers, who range from graphic designers and writers to digital marketing experts, will be on the structure’s fifth and sixth floors in a suite that encompasses both the original building, which dates from 1891, and an annex constructed in 1990. “We’re a bit jammed here,” Kubic said. “We like Johnson Block and the Kassouf family (who own it) and probably could have expanded here, but we needed more space. We want to go through the recalibration of our business and reorganization that goes with planning a move. This will allow us to add synergy and energy to

BEACHWOOD

From Page 5

In a $3.3 million deal on Nov. 1, 2019, a Kankelder-led group bought a neighborhood shopping center at 26614 Lorain Road in North Olmsted. The strip center houses four tenants, among them a First Federal Lakewood branch and a Malley’s Chocolates store.

our business.” Adcom has been at Johnson Block since 2005, when it moved there from the Flats with 45 staffers. It’s grown to about 33,000 square feet from 16,000 and will occupy even more space, 38,000 square feet, at Western Reserve. Its business changed along the way as digital marketing and analytics were joined to traditional public relations and ad placement practices. “Now, everyone we hire is digitally savvy, where they used to be the occasional individual,” Kubic said. “I say that we’re a combination of art and science, from the creative side to analytics and consulting, to help companies identify and communicate their message.” The space will incorporate new podcast and photography studios and even a “makerspace” with 3D printers and other equipment to create prototypes of client displays. The new space will be composed of about 30% enclosed offices, because Kubic believes an open office is not conducive to productivity. Sections of the new suites with long lines of windows overlooking the Cleveland Flats will become, on  The home of popular Tremont restaurant Parallax and the four suites of apartments above it at 2175 W. 11th St. were sold in a deal on Aug. 12, 2019. No sale price was recorded. However, Realife, through Mind Consultants LLC, took out a mortgage for $880,000 for the 1900-vintage structure. Realife differs from other investor groups in acquiring an array of property types rather than focusing on a

Expect More.

Joe Kubic, the CEO and principal owner of Adcom, is shown in the agency’s future offices in the Western Reserve building on West Ninth Street. | STAN BULLARD

one floor, the company’s cafeteria and meeting space to entertain clients, and on another an open area for staffers to work alone or in groups. The new office layout by Richardson Design and Mark Fremont Architects of Cleveland will pay homage to the bridges visible from the windows.

That will be accomplished with a modern industrial design combining elements of perforated metal and blackened steel as well as lots of wood. Huge glass partitions left by the prior tenant are being retained for the new space, Kubic said. He added that Adcom reserved an

single type, such as office buildings or retail, although many also have multifamily properties in their portfolios. The firm also is buying in both the suburbs and the city, which sets it apart from many pure-play investor groups. Kankelder already is wellknown among brokers for commercial investment properties. Those sources, who asked not to be identified because they have or hope to do

deals with Realife, said he raises funds for investments in Israel and Moscow. The Realife Facebook page, much of it in Hebrew, shows Kankelder at an apparent investor conference at a hotel in Moscow and a video features him standing at locations in Tremont. Realife apparently became involved in real estate here through flipping houses. One video shows a work clothes-clad Kankelder discussing a typical Cleveland property as an investment. Breen said in an interview that Kankelder has a “good eye for value.” He added that he sold the Beachwood property to fund a trust for his three children and noted he had done well with the deal. Land records show the Breen-led group paid $1.7 million for the building in 1991. In a pending Cuyahoga County

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interest in whatever restaurant goes into about 2,500 square feet of space on the building’s first floor. “We’re not as interested in leasing to a restaurant to make lots of money as ensuring it’s good food and an appropriate setting for our clients to pass on the way in,” he said. Rico Pietro, a partner in Western Reserve and a principal at the Cushman & Wakefield Cresco real estate brokerage, which represents the property, confirmed that Kubic personally took a meaningful stake in the ownership group led by real estate developer Fred Geis. “We had to look at it long and hard, but it started with (Kubic) being a nice guy and getting excited about what we are trying to do in changing the sleepy Western Reserve Building to a home for creative and technology companies,” Pietro said. “He also liked the idea of having Spaces by Regus (a co-working space) on the second floor and part of the first floor. He liked having the energy that comes with all the startup companies that will bring.” See ADCOM on Page 17

foreclosure case filed by the lender on his IMG Center office building at 1360 East Ninth St. downtown, Breen’s attorneys have submitted documents saying he has a buyer for the 16-floor building. Breen said Kankelder’s Realife is not the prospective buyer. Court documents were redacted, so the proposed suitor for the structure is not identified in the public record. Rico Pietro, a principal of the Cushman & Wakefield Cresco real estate brokerage, handled Breen’s sale of the Signature Health building to Kankelder. He said he counts Kankelder among a handful of younger real estate investors and developers who are starting to make their mark on Cleveland. Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter

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6 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 3, 2020

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FROM THE EDITOR

RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

How we selected our anniversary Newsmakers

EDITORIAL

Yes to Issue 33 C

uyahoga County government has not done much to earn your trust in the way it spends tax dollars. We understand the skepticism that arises for many voters when the county asks for a tax increase, as it is doing on the March 17 ballot with a 4.7-mill health and human services levy to replace a 3.9-mill tax, an increase that would raise an additional $35 million per year. There should be no doubt, though, about the needs that exist in this community, and the lifeline provided to our most vulnerable citizens by the services that HHS levies make possible. Two factors — a promise of strengthening of those services aimed at groups including infants and children, the elderly, people COUNTY OFFICIALS with disabilities and those in NOTED THAT THE NEED need of mental health serFOR ADDITIONAL HEALTH vices, plus a renewed commitment to demonstrating AND HUMAN SERVICES the efficiency of how the money is spent — lead us to DOLLARS IS DRIVEN BY encourage a “yes” vote on ISSUES INCLUDING the upcoming levy. not cheap. The meaPROTRACTED POVERTY, sureIt’sthat’s going to voters, THE OPIOID EPIDEMIC, Issue 33, would cost property owners an additional $41 DEMOGRAPHIC per $100,000 in home valuaCHALLENGES AND LESS- tion. This tax is one of two fund health and human THAN-NEEDED FEDERAL that services in the county. The other, a 4.8-mill levy passed AND STATE SUPPORT. in 2016, will expire in 2024. County officials, in a recent meeting with Crain’s, noted that the need for additional health and human services dollars is driven by issues including protracted poverty, the opioid epidemic, demographic challenges and less-than-needed federal and state support. Cleveland remains one of the poorest big cities in America, and nearly 20% of county residents live in poverty. On the demographic front, longer lifespans and stagnant population growth mean the county now has more residents over the age of 60 than below the age of 20.

Of the $35 million that would be raised, nearly $17 million, or about 49%, would go toward services for infants and children. The next-largest category, mental health and addiction services, would see spending of $7.6 million, or 22% of the additional dollars raised. County officials were encouragingly specific in how levy money would be spent, and in how they will use statistical metrics to demonstrate improvement arising from new programs. The respected Center for Community Solutions will provide performance benchmarking research. The Greater Cleveland Partnership, which has supported the past two county HHS levies, last week threw its support behind this one — with some conditions. GCP last fall said it would raise the bar for support of levy increases, a move that was driven by an analysis that showed Northeast Ohio residents “face a disproportionate tax burden when compared to our peer cities.” Support for the March levy is illustrative of that bar-raising, as GCP said last week that it “vowed to convene with county officials to further examine HHS levy-related finances and agreed-upon measurements and metrics to help gauge progress going forward.” The regional chamber of commerce and the county also agreed to create a task force to pursue “potential structural reforms” of the local tax system. “Officials are committed to evaluating and pursuing reforms that may improve the overall efficiency of our local tax system to offer improved services and remain competitive with peer cities,” GCP said. Cuyahoga County Executive Armond Budish pledged that county officials “are committed to working to ensure a health and human services tax increase is avoidable in 2024,” when the second levy expires. That’s a worthwhile goal and it underscores the need to be extraordinarily responsible with dollars from the new levy, provided it wins voter support. We trust that both GCP and county officials take their responsibilities seriously. Forming a task force often sounds like — and often is — a way to kick a problem down the road. All county residents will be better served if this is a serious effort to achieve the difficult balance of paying for (and improving) the vital services needed by many citizens while ensuring that the economy remains on a growth trajectory that creates better job opportunities for as many people as possible.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com

How do you boil down 40 years into just eight people, events or organizations? Let me tell you, it’s not easy. In preparation for Crain’s 40th anniversary in 2020, our staff spent the past few months poring over back issues, identifying the top stories we have covered during our 40 years, with the goal of honoring two major developments — Elizabeth whether they be events, institutions or McINTYRE people — for each decade. On the cover of today’s issue, we introduce you to the eight Newsmakers we will recognize at our Newsmaker Awards event on March 25 at Rocket Mortgage FieldHouse. We hope you can join us for the celebration and panel discussion with the movers and shakers who have been in the headlines yesterday and today. Some of our choices were no-brainers: The creation of the Rock & Roll Hall of Fame, Gateway, the landing of the Republican National Convention in 2016. Others, though, were much more difficult. How do you look at a decade like the 1980s, which saw the formation of Nautica in the Flats, the openings of the Galleria at Erieview HOW DO YOU LOOK AT and North Coast Harbor, the construction of the Standard A DECADE LIKE THE Oil Building on Public Square, 1980S, WHICH SAW and the impact of the George Voinovich mayoral administra- THE FORMATION OF tion post-default? And let’s not NAUTICA IN THE forget the soul-sucking Browns defeats of that decade which FLATS, THE OPENINGS created countless heartbreaks: OF THE GALLERIA AT Red Right 88, The Drive, The ERIEVIEW AND Fumble. In the 1990s, you’ll also find NORTH COAST plenty of newsworthy events that did not make the cut for HARBOR, THE our 40th-anniversary NewsCONSTRUCTION OF makers. Mike White’s tenure as mayor was transformative, THE STANDARD OIL but the work of Fred Nance BUILDING ON PUBLIC represents the most impactful for the city in our minds. BP SQUARE, AND THE America’s departure in 1998 hurt for many years, but that IMPACT OF THE development today no longer GEORGE VOINOVICH resonates as it once did. We eventually narrowed our MAYORAL list to a dozen or so events that ADMINISTRATION contended as top newsmakers. Ultimately, our decisions came POST-DEFAULT? down to who or what was in the news that still resonates today, especially in moving our economy forward. Once we applied that litmus test, some news events began to emerge and others receded. For example, we struggled with the legacy of real estate developers Richard and David Jacobs. The brothers were at the epicenter of news in Crain’s first two decades and did much to transform downtown Cleveland in the 1980s and 1990s. But, true to Richard Jacobs’ wishes, he shed his real estate company’s assets well before his death in 2009. I hope I have shone a bit of light on how we came up with the eight Newsmakers we will recognize on March 25. The panel discussion will include some incredible institutional knowledge and, while we will look back at past decades, they will surely also illuminate Cleveland today and its hopes for tomorrow. We hope you can join the celebration.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

8 | CRAIN’S CLEVELAND BUSINESS | February 3, 2020

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OPINION

PERSONAL VIEW

AMISH ROOFERS Installed Better to Last Longer SIMON2579

Building a regional economy will benefit all in Northeast Ohio BY BILL KOEHLER

For decades, there has been a call for the Northeast Ohio economy to reinvent itself, whether by shedding its industrial past, embracing the tech boom or pursuing the film industry. Some see the answer in diversifying our industry base, improving education, providing workforce mobility solutions or building better infrastructure. Creating strong and lasting economic growth in Northeast Ohio that benefits businesses, communities and individuals requires two things: a shared understanding of how local communities benefit from a strong regional economy, and strong alignment between local, regional and state economic development strategies toward impactful results. To create economic vitality, we first need to believe that the sum of the region is greater than the individual parts. The 18 counties of Northeast Ohio have more economic potential and opportunities to attract investment as a region than any of our local communities alone. Northeast Ohio’s regional economy draws its strength not simply from Cleveland, Akron, Canton and Youngstown, but also from the unique assets of communities in Erie County, Ashtabula County, Tuscarawas County and everywhere in between. How strong are we as a region? Together, our 18 counties represent 40% of Ohio’s economy and make up the 15th-largest market in the United States. Our $238 billion economy is driven by a workforce of two million people, a robust manufacturing supply chain and 25 colleges and universities. And we rely on one another. Forty-two percent of our residents live in one county and work in another. We know that there are barriers to economic growth, both locally and regionally. As the designated JobsOhio network partner and the only business development organization working across all 18 Northeast Ohio counties, Team NEO works to remove these barriers. We develop data-driven insights about regional economic performance, the talent gap, technology adoption and real estate. We work in partnership with higher education, communities, philanthropy and nonprofit organizations to develop regional solutions that address local business challenges. Combined, this work helps companies capitalize on opportunities to grow. Strengthening Stark is an example of this approach. In 2017, leaders from Stark County’s public sector, private sector and the philanthropic community created Strengthening Stark, a countywide economic devel-

opment plan that leveraged resources from their entire community, including the capabilities and insights of Team NEO. Today, the Stark Economic Development Board reports that, compared to the years preceding this effort, the number of jobs created in Stark County has tripled and twice as many companies are leveraging the collective reKoehler is CEO sources available regionally and of Team NEO. statewide through JobsOhio. Last year, a similar effort, Elevate Greater Akron, launched in Summit County and is on track to produce positive results. There is no doubt in my mind that this collaborative approach can succeed in Lorain, Cleveland and Youngstown as well. The fact is, regional economic development strategies work. Since 2015, Team NEO, collectively with JobsOhio and local partners, helped nearly 400 companies on projects that will generate well over 28,000 jobs, representing payroll of $1.4 billion and $6.4 million in capital investments across 18 counties. But the question remains: How can we attract even more investment to Northeast Ohio? The answer lies in greater strategic alignment and civic engagement across the region. Team NEO is creating strategic alignment, leveraging our relationships, expertise and access to JobsOhio resources to help companies grow and communities thrive. We are adding staff to increase outreach to businesses in the region, both those at risk of leaving Northeast Ohio and those looking to grow. We’re increasing our capacity to build a robust inventory of shovel-ready, competitive sites that meet the needs of companies looking to expand and/or locate here. We’re continuing to convene higher education and business leaders to develop a talent pipeline more responsive to business demand. Finally, we’re strengthening our ability to coordinate economic development strategies with local governments and economic development partners. As Team NEO continues to invest in a strong economic future for all in Northeast Ohio, we will look to bring more companies, communities and partners to the table to work with us. And here’s the first thing I’ll ask: Focus on the value of building a regional economy — not in place of supporting local economies but because we want to grow local economies for all the 4.3 million people who live in Northeast Ohio.

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more than expected (15.81%), back tax penalties (14.49%) and being in a higher tax bracket than initially thought (9.66%). Divorce also represents 9.33% of all Ohio tax debt cases.

Tax season is never fun, at least until the refund gets delivered, and the repercussions of not getting your finances in order for tax filing are too severe to take this time of year lightly. The main consequence of not getting your taxes done correctly, or at all, is tax debt, which has become akin to Garnishment or worse a sleeping giant in the United States economy. Everyone’s favorite federal government agency, the Brown is a If you have fallen into tax debt Internal Revenue Service (IRS), projects that the federal research analyst and the issue goes unresolved, the tax debt, or the difference between taxes owed and paid, for LendEDU. IRS will begin sending you notices. is $381 billion. The tax debt on a state-by-state level is The consequences become quite estimated to be around $146 billion. Combine these two serious if these notices go unanfigures and the total outstanding tax debt in this country swered. is a considerable $527 billion. First, the IRS will place you in automated collection, While this debt figure isn’t as much as the largest issuing federal tax liens and levying your bank accounts classes of consumer debt in the U.S., like that from mort- and wages. And if you’re still in tax debt when it’s time to gages, student loans or credit cards, it’s enough to war- receive your tax refund, the government can garnish rant some alarm. Moreover, the tax that as well and apply it to the outdebt hole figures to get deeper as debt. THE AVERAGE TAX DEBT IN standing our economy evolves. Interest and penalties charged by “The Internal Revenue Service re- OHIO IS $16,012, WHICH the IRS will also be added to your ported that at the end of fiscal year tax debt balance. Both of these can 2018 there were 13.1 million delin- RANKS THE BUCKEYE STATE quickly compound your tax debt quent taxpayer accounts. This is a 15TH WHEN RANKING ALL and make an already steep financial staggering amount,” said Wade hole even steeper. Schlosser, CEO of media company STATES AND THE NATION’S Keep in mind that during this enSolvable, “and given the rapid ex- CAPITAL FROM LOWEST tire process, you may be simultanepansion of the gig economy, like ously dealing with visits from reveride-share drivers, freelancers or AVERAGE TAX DEBT TO nue officers or representatives from other 1099 contractors, we expect HIGHEST. a debt collection agency hired by this delinquent number will grow.” the IRS. Analyzing over 75,000 unique Finally, if your tax debt is subcases of tax debt, LendEDU pubstantial enough and has remained lished a report featuring state-byunresolved, the government can state tax debt figures and the most place you under an international common reasons consumers fall travel ban. into tax debt. Compared to other states, Ohio’s Finding your solution tax debt situation is not dire, but the numbers are nevertheless signifiIf you find yourself heading tocant enough to remind residents to ward tax debt, the best pre-emptive get their taxes done on time and measure you can take is filing a recorrectly. quest for an extension with the IRS that will give you until Oct. 15 to get your finances in order to fully meet Ohio’s tax debt your tax obligations. But if you’re already in tax debt Based on the robust tax debt data and owe less than $50,000, you can analyzed by LendEDU, the nationfirst request a payment plan that wide average tax debt is $16,849; 21 breaks your tax debt into monthly states, including Ohio, have an averpayments that will completely erase age tax debt figure below the nationyour tax debt within three years. al average, while 29 states and If the suggested payment plan Washington, D.C., have a tax debt won’t pay off your tax debt within number above $16,849. three years, the next step is to see The average tax debt in Ohio is whether you qualify for an offer in $16,012, which ranks the Buckeye compromise. This is a program State 15th when ranking all states run by the IRS that reduces your and the nation’s capital from low- COMPARATIVELY, OHIO’S tax liability based on your expensest average tax debt to highest. es, income, assets and amount Comparatively, Ohio’s average tax AVERAGE TAX DEBT IS NOT owed. debt is not as much as the nation- AS MUCH AS THE If none of the aforementioned are wide student loan debt average of applicable to you, requesting a “cur$28,565, but just about equal to NATIONWIDE STUDENT rently not collectible” status is anthe $16,061 in credit card debt LOAN DEBT AVERAGE OF other option. This means that the held by the average American IRS will neither collect your taxes household. Ohio’s average tax $28,565, BUT JUST ABOUT owed, nor seize your assets or indebt actually runs contrary to re- EQUAL TO THE $16,061 IN come. However, your debt will still gional trends that include Midcollect interest and penalties, plus west states typically having tax CREDIT CARD DEBT HELD the IRS can still take your tax refund. debt figures on the higher end of BY THE AVERAGE And finally, if you have a spouse the spectrum. or former spouse who improperly In terms of why Ohioans are fall- AMERICAN HOUSEHOLD. filed a joint tax return without your ing into tax debt, the most common reason is because of unfiled taxes, which represents knowledge, you may be relieved of your tax debt entirely 16.36% of all tax debt cases in the state. Nationwide, through “innocent spouse” relief. Tax season is here, and being prepared for it is the Ohio has the fourth-highest percentage of tax debt cases best way to avoid it or resolve any debt issues that may due to unfiled taxes. Other main causes of tax debt in Ohio include owing arise as quickly as possible.

10 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 3, 2020

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PAGE 14

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FINANCE

Cleveland-based startup Mezu uses games, rewards promos to spur card use.

Expertise for hire

In a complex market environment, organizations reach out to outsourced chief investment officer managers BBY DOUGLAS J. GUTH

Cleveland financial consulting firm Clearstead Advisors LLC rebranded in 2018 to focus on its outsourced chief investment officer (OCIO) practice, a need that gained traction earlier in the decade as organizations recovered from the global financial crisis. “We had clients who wanted to change investments or move funds, but had to gain board approval,” said Mike Shebak, Clearstead’s head of institutional consulting. “Companies wanted to mitigate fiduciary risk by delegating that decision-making authority to us.” Through its OCIO service, Clearstead handles day-to-day supervision of investment portfolios, collaborating with clients — mostly small to midsize retirement funds, endowments, hospitals and higher education institutions — on best-practice financial strategies.

“COMPANIES WANTED TO MITIGATE FIDUCIARY RISK BY DELEGATING THAT DECISION-MAKING AUTHORITY TO US.”

Clearstead and similar entities providing OCIO management make some or all of the decisions on how to allocate an institution’s equities, bonds, commodities and other assets. These actions are taken on a discretionary basis following an investment approach agreed upon with the client. “We’ll get together with an organization to review results, talk strategy and get an understanding on what’s important to them when considering the investment of their funds,” Shebak said.

No longer a niche The OCIO sector has ballooned over the last decade, transitioning from a niche program utilized by

companies with frozen benefit pension plans to a variety of asset owners staring down a volatile market environment. According to data from asset management research firm Cerulli Associates, U.S. OCIO assets will increase by $671 billion over the next five years. Banks, brokerages, pension actuaries and asset management firms all provide OCIO services. Richard Veres, president of Highland Consulting Associates in Westlake, said that while most organizations have some degree of financial proficiency, smaller entities will seek outside investment solutions to better concentrate on their institutional objectives. See EXPERTISE on Page 14

——Mike Shebak, Clearstead’s head of institutional consulting 12 | CRAIN’S CLEVELAND BUSINESS | February 3, 2020

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ADVISER

TAX TIPS

SBRA enhances bankruptcy protection for small businesses

How new tax law touches like-kind exchanges

BY BOB KRACHT

Until recently, small-business owners in financial distress found it difficult, if not impossible, to seek bankruptcy protection. The ability to seek relief from adverse creditor action and successfully reorganize their businesses was hampered by the costly and onerous requirements that characterized a traditional reorganization under Chapter 11 of the Bankruptcy Code. Due in large part to the relatively small size of their business operations and annual income, small-business owners could not afford the costs associated with a Chapter 11 bankruptcy reorganization case. Those same owners likewise had secured and unsecured debts that were at a level that disqualified them from seeking relief under Chapter 13 of the Bankruptcy Code, leaving them with few options to save their businesses. The Small Business Reorganization Act of 2019 (SBRA) was enacted to address this dilemma. Signed into law by President Donald Trump in August 2019 as a subchapter to Chapter 11, the new act takes effect this month, providing welcome relief for thousands of small businesses that may have otherwise had to close their doors as a result of overwhelming debt. The SBRA is intended to provide a framework to streamline the reorganization of a small business, thereby expediting the reorganization process, reducing associated costs and removing traditional barriers that could limit a company’s ability to successfully emerge from bankruptcy. A small-business debtor is defined under the SBRA as a small business with aggregate noncontingent liquidated secured and unsecured debts in an amount not more than $2,725,625. Businesses with debts in excess of this threshold do not qualify for the new procedures. Under the SBRA, the small-business debtor has an opportunity to propose a plan of reorganization and operate in an environment that is less restrictive and less costly than under a traditional

Chapter 11 reorganization — and still retain control of the business. In this regard, the SBRA:  Provides that the debtor may propose and confirm a plan of re- Kracht is chair o r g a n i z a t i o n of the creditor without provid- and debtor ing for payment rights group at of unsecured Cleveland-based creditors’ claims McCarthy, Lebit, in full and with- Crystal & out being re- Liffman. quired to contribute new value into the plan; Makes the debtor eligible for a discharge after completion of payments under a plan of a three- to five-year duration with the exception of nondischargeable debts or debts where the last payment due is after expiration of the three- to five-year period under the plan;  Does not require the appointment of a committee of unsecured creditors or equity holders as required in typical Chapter 11 cases; Provides the debtor with the sole right to file a plan of reorganization for an initial 90-day period that may be extended by the court based on circumstances “for which the debtor should not justly be held accountable;”  Protects pre-petition claims held by a debtor’s attorney so that they are not disqualified from representing the debtor in a proceeding under the SBRA. More specifically, the debtor’s attorney will not be qualified from representing the debtor in an SBRA proceeding as long as the attorney’s claim does not exceed $10,000.

BY JONATHAN CICCOTELLI

What it means

The concept of like-kind exchanges originated almost a century ago, but the tax-deferred structure we know today was created in 1954. Section 1031 of the U.S. Tax Code allows taxpayers to exchange property for similar property without incurring a tax bill. Until recently, Section 1031 allowed for both real and personal property like-kind exchanges, but when Congress passed the Tax Cuts and Jobs Act (TCJA) in December 2017, it removed the personal property allowance, making only real property eligible for tax-deferred treatment.

Two years ago, the TCJA restricted like-kind exchanges to real property, and taxpayers selling both Other options real and personal property in one transaction were at Allocating sales prices to a loss. When taxpayers sell different types of property real estate and personal Ciccotelli is vice can be costly and time conproperty — like selling an president in the suming, so many taxpayers office building outfitted Tax Services remove personal property with cubicles and desks — Group at from the equation altogether. they can only defer capital Meaden & Selling personal propergains attributed to the sale Moore. ty: Taxpayers always have of real property. The capithe option to sell their pertal gain attributed to personal property separately sonal property is currently taxable. from their real property. Doing so may be time-consuming, but there will be no question about how to allocate the Cost segregation sales price to each asset, and the invesTo receive the benefits under Sec- tor can save money on an appraisal. tion 1031 when selling real and per-  Abandoning personal property: sonal property in one transaction, tax- Before taxpayers sell their property, payers must allocate sales proceeds they can mark the personal property between the different property catego- within it as “abandoned” and record ries: land, building and personal prop- an ordinary loss for the assets’ reerty. One way to do this is to commis- maining book value. Voluntarily abandoning property will be a simsion a cost segregation study. Cost segregation studies can be ple accounting entry. If assets have performed by tax professionals, attor- associated debt, the entry and tax neys and qualified appraisers. The recognition will be a bit more diffiprofessionals will look at the property cult and investors should discuss deed, blueprints, construction history their plans with a tax professional. and asset listings, and will inspect the  Donating personal property to physical property. They will base their charity: Taxpayers can donate their allocations on comparable sales, unwanted property to charity. Nonbook value, governmental surveys, cash charitable contributions are estimates or some combination of deductible, but assets valued above these factors. This allocation will be $5,000 and vehicles will need to be subjective and that’s OK. In fact, the appraised. Real estate professionals have real/personal property split may be different for the buyer than the seller. been using 1031 exchanges for deMany sellers allocate little money to cades. They are reliable methods for personal property when their land deferring capital gains tax and can and buildings are the true drivers of increase investors’ purchasing powtheir sales. Taxpayers will simply need er for their next investments.

Like-kind exchanges Like-kind exchanges are strategies taxpayers use to defer capital gains tax on sales of investment property. Using this strategy, taxpayers can defer paying tax on capital gains recognized from the sale of investment property if they purchase replacement property that is of “like-kind.” (A portion of the gain may be taxable initially if the new property exceeds the value of old property, or if non-like-kind property — called “boot” — is exchanged.) In real estate, the definition of “like-kind” is broad: The property must be of “the same nature or character” but can be of different grades or qualities. This means real estate investors can exchange an apartment building for two single-family rental homes, a duplex for a restaurant space, or a piece of farmland for a land slated for development. Only when the replacement property is sold will the original gain be taxable.

As a result of the new act, the number of bankruptcy filings by small businesses is expected to rise, with an expectation that more distressed small businesses will be able to keep operating rather than be forced out of business. This is good for our entire economy since small businesses represent the lifeblood of our economic growth.

to be prepared to corroborate their conclusions. If audited, the IRS will want to know their methodology.

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FOCUS | FINANCE

Play to pay

EXPERTISE

From Page 12

Games and other incentives boost use of Mezu’s debit card app BBY JUDY STRINGER

Mezu CEO Yuval Brisker isn’t ready to disclose how many people have downloaded his company’s 2-year-old payment app. Nor will he divulge the number of active users or what kind of returns Mezu is seeing from a 6-month-old digital debit card partnership with Mastercard Inc. But Brisker does confirm that a pair of recent promotions have been effective at enticing the company’s peer-to-peer (P2P) customers to use the app — more specifically, the MezuCard — for retail purchases, and to spend more when doing so. Each day in December, the Cleveland-based startup randomly selected and repaid five customers for up to $200 in purchases they made through the app, whether they paid another individual or made a retail transaction. Mezu followed that “payback” campaign with a January “cashback” promotion that provided users with a 20% cash-balance reward on the app for MezuCard purchases (up to $50) made at select merchants, including Amazon and Walmart. The card enables users to spend their Mezu funds anywhere Mastercard is accepted online or through digital wallets like Apple Pay. According to Brisker, app users increased their card usage by about 136% — or nearly 2.5 times more — when incentives were offered versus non-incentive time periods. Users also spent about 73% more on the company’s debit card when promos were in play. “They definitely increased people’s use of the card pretty significantly,” he said of the programs. “Obviously, people like money, so if you give them different ways of redeeming cash and applying it to other purchases, then it absolutely increases the usage of the card.” Mezu is a privacy-centric payment app launched in June 2017 by Brisker, a TOA Technologies co-founder, and his partner Pedro Silva. Unlike Venmo or Cash App, Mezu users don’t have to disclose any personal information, such as emails or phone numbers, when sending and receiving money. Brisker said that unique positioning is helping the company to “build critical mass” (i.e., more users) but not necessarily by replacing legacy payment apps. “We’re not going around to people saying, ‘You have to drop those other apps,’ ” he said. “What we’re saying is, ‘If you’re looking for a way to protect your privacy and if you’re looking for a way to make sure that there’s a respect for your data or your data’s not being used against you in any way, you can make a choice to use Mezu rather than to use one of the other apps.’ ” In addition to the payback promos, the company offers refer-a-friend bonuses and the Mezu Money Time game, in which users can compete to win money by being the first to input a code after an in-app broadcast. A major goal of the latest incentive programs, Brisker said, is to show existing Mezu users that it’s more than “just a P2P payment app, to split dinner with friends or pay your rent. “Obviously, we’ve been focused on bringing in new users for some time,” he added, “but now are focusing on getting people to know the variety of ways that you can use the app to pay for different things.” Convincing P2P payers to use the MezuCard as well is a particularly important objective. The company currently doesn’t charge any user fees, but it does reap an undisclosed percentage of the merchant fees that Mastercard collects on MezuCard transactions. “Basically, they pay us every time the card is used, so that is one of the sources of revenue that we do have,” Brisker said. Yet beyond building up that income stream, Brisker and his team hope customers will become more regular patrons once they’re familiar with Mezu’s additional features and functions.

“Unless they have real size and scale, most organizations are outsourcing the CIO function,” noted Veres. “It might be a nonprofit with an endowment or a power company with nuclear decommissioning assets. They’re going to have some internal expertise, but they will also use an outside service to help them.” Fisher-Titus Medical Center, a health system serving 70,000 residents in greater Huron County, partnered with Clearstead in 2012, fol- Veres lowing years of farming out its CIO work to another firm. CFO Scott Endsley said the granular financial knowledge inherent to the job led Fisher-Titus to hire an outside specialist. “Where our organization was, we needed a partner that lived and breathed this work every day,” said Ends- Endsley ley. “Clearstead is helping us stay aligned with our investment portfolio. If we need money out of a fund, they can get those dollars transferred the same day. It’s nice to know we have someone responsible who can meet these needs if they come up.”

Speedy delivery

“OBVIOUSLY, PEOPLE LIKE MONEY, SO IF YOU GIVE THEM DIFFERENT WAYS OF REDEEMING CASH AND APPLYING IT TO OTHER PURCHASES, THEN IT ABSOLUTELY INCREASES THE USAGE OF THE CARD.”

“It’s not just enough to download the app, register and use it once,” he said. “We want them to create a habit of paying with it,” which in itself is a key to the app’s continued adoption. Mezu users can pay anyone — even people or businesses that don’t have the app. While the receiver will have to download the app at some point to redeem the payment, they don’t need it at the time of the transaction. This allows users “to sort of infect others with the app,” Brisker noted.

In general, firms turning to external experts may not have the resources to manage a portfolio internally, or lack the necessary speed to react to an ever-changing economy, observed Shebak. Considering organizations delegate decision-making discretion through the OCIO function, firms like Clearstead are able to make day-of determinations based on fluctuations within the market. “If we were not OCIO — or rather, we had a nondiscretionary client relationship — and identified something that required action, we’d either have to wait until the next client board meeting to make a formal recommendation and gain approval, or assemble the board and ask for their approval,” Shebak said. “The OCIO model allows us flexibility to take advantage of market changes and alleviate administrative burden for the board.” Veres pointed to the growing trend of companies outsourcing any role where they feel they’re inefficient. “You’ll see functions like technical services or phone banks getting outsourced,” he said. “This type of outsourcing has always been applied at various levels of an organization.” Shebak said he understands that even in periods of economic uncertainty, outsourcing the CIO position is not for everyone. Clearstead has conferred with some boards that were more concerned with participating in every aspect of their portfolio than delegating assets to an adviser. Organizations must determine if a prospective OCIO has the scale to leverage a multitude of investment competencies, if it can allocate assets across a range of risks and whether it has a history of generating returns and meeting client expectations. Fees are an obvious talking point as well. Whatever conclusion a particular organization reaches, outsourcing is here to stay, said Shebak, who added that he believes OCIO growth will pace market complexity and increasing geopolitical uncertainty. “The big decision for committees is how engaged in the process they want to be,” he said. “Some want to be informed, others just want the job to get done.” Endsley of Fisher-Titus expects his midsize health system to continue to rely on professionals in the field. “As a smaller organization, we wear a lot of hats compared to a Cleveland Clinic that already has a specialized financial unit,” he said. “We don’t have the bandwidth to handle those things internally. Investments being what they are, it makes sense to partner with someone who can provide that expertise.”

——Mezu CEO Yuval Brisker

Contact Judy Stringer: clbfreelancer@crain.com

Contact Douglas J. Guth: clbfreelancer@crain.com

Mezu CEO Yuval Brisker, above, and partner Pedro Silva launched the privacy-centric payment app in June 2017. Aggressive incentive programs have increased card usage. | CONTRIBUTED In addition to payback promos, the company offers refer-afriend bonuses and the Mezu Money Time game, in which users can compete to win money by being the first to input a code after an in-app broadcast. | MEZU.COM

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Building on our commitment to strengthen Ohio At Bank of America, our success depends on the success of the communities we serve. That’s why we continue to use our expertise and resources to address issues that matter most to people. We’re working to drive economic and social progress and helping our clients and employees achieve their financial goals. This year begins with solid momentum and financial results, enabling us to continue investing in the communities we serve — profit and progress working together to make a difference. I am Jeneen Marziani, Ohio Market President. My team and I are here to listen to your business and personal needs, so we can help you get things done. That is why we are always asking: What would you like the power to do? ® Let me know at: jeneen.marziani@bofa.com

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AKRON TECHNOLOGY

Pinpoint aims to revolutionize contractor communications

New app keeps professionals and homeowners in touch via real-time monitoring, messaging BY DAN SHINGLER

Nick Began thinks he has the next big thing in the home-service industry: a tool for better communication between customers and their contractors. The longtime granite countertop fabricator and installer has developed a mobile app called Pinpoint that he said will connect homeowners and their service providers in a meaningful way. Some who’ve seen and used the product say they believe him, including one of the investors in Began’s company, Pinpoint Technology. “They have a lot of opportunity ahead of them and asked us to jump in, and we did,” said Marling Engle. “That thing’s getting ready to take off.” Engle is founder and CEO of Akron’s Metisentry software development firm and its holding company formed late last year, the SaaS Factory. After hearing Pinpoint’s concept and business plan, Engle said he and his team helped Began develop the app, and he’s now an investor in Pinpoint as well. Began works partly from Metisentry’s offices downtown. So far, Pinpoint is only available to a select few contractors who are members of an industry trade group called Rockheads. They currently get it for free and serve as Began’s testing

group. Rockheads is an entity Began formed in 2015, the year before he sold his Bedford Heights countertop business, Stoneworks. Rockheads now counts Began about 100 contractors among its members, who turn to it for best practices, service standards and group purchasing efforts. Began said he knows a thing or two about the challenges faced by contractors and their customers. He recalled running nearly 100 crews — who were constantly on the road doing measurements, installation and sales work — from four Stoneworks locations. “It was so difficult to get blue-collared workers to engage the homeowners. … It was our biggest frustration in the company,” Began said. “Then, when I remodeled my own house with contractors, I realized it was a universal problem. … It’s a mess everywhere.” The app is a bit like what Amazon uses to let customers know when its deliveries are coming. It shows a homeowner exactly where their con-

tractor is, how many stops there are before the contractor gets to them, and the estimated arrival time. But Pinpoint takes it much further, Began noted. Once a contractor logs an activity or departure, the system automatically texts his remaining customers for the day and updates arrival-time information, even if the homeowner hasn’t downloaded the Pinpoint app. Pinpoint also prompts a contractor or crew to notify customers when a job is finished and allows contractors to alert customers if they are running late. Contractors can also check that the customer has what they might need, such as a paved driveway or a door opening wide enough to accept a delivery. Improved customer service is Began’s main selling point, he said, but he also touts Pinpoint as a management tool. Companies get instant feedback from customers about the crews they send out and can monitor their entire workforce in real time. “If I’m a granite company or other contractor, I’ve got a full dashboard,” he said. “I can see every location where my drivers are, and I can see every communication between the homeowner and the service provider. So, if Mrs. Jones says, ‘I was there at 12:30 and your guy wasn’t there,’ I

might see that no, she actually said she’d be home at 12:45 and that’s when my guy got there.” One local Rockheads member who has been using Pinpoint since last fall said he’s already seeing positive results. “A lot of our business is meeting homeowners on site to either measure or to meet them to install their countertops,” said Chip Gleine, owner of Crafted Surface & Stone in Bedford Heights. Crafted Surface is a former Stoneworks location once owned by Began, so the two know each other well, which is one reason Gleine became a test user for the system. “With Pinpoint, it drastically reduced our phone calls,” Gleine said. Gleine said the system works well and is simple, easy to use and quick. Like Began, he thinks it’s going to help improve his customer service and hopefully his bottom line. “I honestly think it’s going to be a good sales tool for us, too. Because we can know where our guys are at all times and, now, so can our customers,” Gleine said. As for Engle, he said he invested because he sees Pinpoint as a product that provides a defined market with new and needed tools that are perfectly delivered via an online app. He

added that Pinpoint is easily scalable. In December, Pinpoint unveiled its latest version of the app, which includes new features such as one that shows homeowners a photo of the contractor they should expect. In February, Began will begin offering the product to service providers across the country on a subscription basis for about $30 per month per user. Each crew at a subscribing company represents a user, he explained. He’ll start by expanding within Rockheads. But the golden goose Began wants to catch is the big-box arena, where companies such as Home Depot and Lowe’s employ thousands of contractor crews to deliver and install appliances, flooring, cabinets and all sorts of other home-improvement items. Began said that while he can’t name the company, he’s close to a deal with one such business. That’s why Engle thinks Pinpoint is ready to take off. “We’re close,” Began said of the potential deal. “The big-box stores — the Menards, the Home Depots and Lowe’s — they know how important this is. They look at their customer services metrics daily. Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

Join Crain’s journalists and local real estate experts for a morning discussion on the history and current state of downtown Cleveland development.

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16 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 3, 2020

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CRAIN’S CLEVELAND BUSINESS

BANK M&A

S E P T E M B E R 3 - 9 , 2 018

PA G E 17

From Page 1

NEWSMAKERS

From Page 1

The growth of the Cleveland Clinic, both physically and fiscally

The weakening loan demand being felt across the industry, including in the Federal Reserve’s Cleveland district, means banks may make fewer loans this year while simultaneously collecting less from those they do make. Bank M&A, therefore, could be fueled by a desire for synergies as cost-cutting becomes a higher priority in a flattening growth environment.

Mortgage FieldHouse, will discuss the behind-the-scenes story of Gateway. He is currently the founder and chairman of a consulting firm known as the Gateway Group.

The health care landscape has changed drastically since Crain’s first published in 1980. No health system in Northeast Ohio better reflects that transformation than the Clinic. Since the start of the 2000s, the health system has expanded its footprint in Ohio and beyond, to now include locations in Florida, Abu Dhabi and, soon, London. The Clinic has also more than doubled its operating revenue, from $3 billion in the early 2000s to $8.9 billion in 2018. We’ll examine the Clinic’s growth in Northeast Ohio and beyond.

The pivotal role of Fred Nance

Larger banks Some of the market’s super-regionals, such as KeyBank, Fifth Third Bank ($171 billion in assets) and Huntington Bank ($109 billion in assets), are unlikely to pursue bank deals. If buying, what could be of more interest for those groups are additive nonbank acquisitions, particularly those that bring in new business lines — such as what Key did with Laurel Road, a student loan refinancing business that builds on the bank’s digital lending capabilities — or fee-generating revenues, like what comes with wealth management services. Citizens Bank ($165 billion in assets) is an example of that strategy, having completed acquisitions in the prior two years of M&A advisory businesses Western Reserve Partners (of Cleveland) and Bowstring Advisors (of Florida), which beefed up its fee income and give it a lively revenue stream as it eyes a slower growth market. “Our capital allocation priorities are organic balance sheet growth, fee-generating nonbank acquisitions, paying a strong dividend and share repurchases,” said Fifth Third Bank CEO Greg Carmichael in a Jan. 22 earnings call. “Bank acquisitions are not a priority.” Huntington, Key and Fifth Third each completed significant bank acquisitions in recent years: Huntington bought Akron’s FirstMerit Bank, Key bought First Niagara Bank of New York and Fifth Third bought MB Financial of Chicago. Those integrations can take time to play out, usually pre-empting the desire for another deal at conservative banks until the prior one is completely digested. The naming of Chris Gorman as Key’s new CEO also points to the bank’s interest in organic growth and expense management. The same could be said of PNC Bank ($410 billion) CEO William Demchak, according to earnings commentary. Larger banks, if they’re interested in deals, may pull the trigger on something this year because of the catalyst that is the presidential election. “I do think we will see more M&A activity, given the possible risk of a change in the regulatory environment if Dems win the election,” said Peter Winter, an analyst with Wedbush Securities who covers several Midwest banks. Because of how long it takes a bank deal to come together, though, a large

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From Page 6

Spaces will occupy about 30,000 square feet this summer at Western Reserve, and Adcom will take the building to almost 90% occupancy. When the Geis-led group bought the building in 2017, it was about 40% occupied. “There’ve been a lot of sleepless nights over this,” Pietro said, “but we’ve

United Community Financial Corp., the parent company of Home Savings Bank (whose Youngstown headquarters are pictured), is merging with First Defiance Financial Corp. | SHAWN WOOD

bank wanting a deal with another large bank may need to be working on that now, or very soon, to get something done by the end of the year. Joseph Ficalora, CEO of New York Community Bank ($53.6 billion in assets), which operates Ohio Savings Bank in this market, recently told investors that while he doesn’t feel any sense of urgency to complete a deal before the presidential election, the company is “actively” in discussions with targets. The bank got its footing in Ohio with the purchase of the failing AmTrust Bank in 2009. “Over the course of our entire public life, we’ve made it very clear that we have the ability and have the desire to grow by acquisition and create value for shareholders,” Ficalora told investors. “So there is going to be a transaction on the horizon that will be exactly in line with the kinds of things that we’ve done in the past.” “NYCB, they will go anywhere,” Winter said. “It would make sense for someone like them, if there is an opportunity to do an acquisition in Ohio, that they would pursue it.”

Smaller banks Many smaller and community banks are still run by aging baby boomers, noted Crowley, some of whom may view a combination as a good succession plan for the business. After all, the industry is challenged with drawing in young people, particularly at community banks, which can create additional succession issues. There is still some interest among banks on Ohio’s borders to get more market penetration here as well, Crowley said, like those in western Pennsylvania or eastern Indiana. One of those might be Warren, Pa.based Northwest Bank ($10.5 billion in assets), which told Crain’s last fall that it was vetting deals in Ohio, Indiana and northern Kentucky. A retiring CEO was a factor at Maple Leaf Financial, the holding company of Geauga Savings Bank, which was bought by Canfield’s Farmers National Banc Corp. ($2.7 billion in assets) last year. Geauga CEO Jim Kleinfelter announced he would reshown downtown Cleveland will accept refreshed offices rather than the conventional wisdom that every older office building has to go residential.” With several floors being renovated for new tenants and building updates underway, Pietro said he feels the building is part of the growing energy along the river from the Flats East Bank to nascent plans for major projects on Scranton Peninsula. Kubic said he sized up 40 buildings

tire Jan. 31. Farmers CEO Kevin Helmick said the company has strived to demonstrate it’s a good buyer, so it might be top of mind when other firms go on the market. That company has rolled up a couple of community banks and wealth management outfits in the past five years, and Helmick said the bank is open to more. He also noted he is projecting flat to slightly negative earnings growth in 2020, underscoring a concern that could fuel some M&A. Also last year, United Community Financial Corp., the Youngstown parent company of Home Savings Bank, announced a merger of equals with First Defiance Financial Corp., the Defiance-based parent company of First Federal Bank of the Midwest. The combined bank will have about $6.1 billion in assets. Home Savings CEO Gary Small, who is serving as president of the combined entity’s bank and holding company, will move up to the CEO role at both levels in 2021. He’ll succeed Don Hileman at that time; Hileman will become chairman. Small said the organization could be in the market for another deal by the end of this year. The only challenge may be identifying good targets open to a sale. Combinations of smaller banks, similar to the Farmers and First Defiance deals, could be more common in 2020, said Patricia Oliver, a banking consultant with Tucker Ellis. “I have always advised my clients that on the M&A front, they need to have both an offensive and a defensive strategy in place. When the market shifts as a result of mergers, you need to reassess where you are,” Oliver said. “In this case, I would think the smaller banks may need to focus on smaller or similarly sized community banks to gain market share and position themselves either to go on a buying spree to become a regional bank or at least increase their asset size to the point where one of the smaller regionals would consider them to be an attractive target.” Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile before settling on Western Reserve, including suburban locations he ruled out. “With our new location, we are at the junction of downtown and the Flats and just across the bridge from Ohio City,” Kubic said. “I decided this allowed us to stay where we belong: in the heart of the city.” Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter

Fred Nance is a consummate Cleveland negotiator and dealmaker and, in the 1990s, was the city of Cleveland’s goto outside lawyer. Nance Nance played a pivotal role in three of the major stories of the decade: the return of the Cleveland Browns’ name, history, colors and records after Art Modell moved the team to Baltimore; ending the Cleveland schools federal desegregation order; and the expansion of Cleveland Hopkins International Airport. Nance, the global managing partner for Squire Patton Boggs, will share his story at the Newsmaker event.

``FOR THE 2000S: The rise of economic development organizations, including the Greater Cleveland Partnership, Team NEO and the Fund for Our Economic Future In 2003, Northeast Ohio business and civic leaders launched Team NEO with a goal of economic development through regional cooperation. The next year, the Greater Cleveland Growth Association, Cleveland Tomorrow and the Greater Cleveland Roundtable merged under the banner of the Greater Cleveland Partnership. And the Fund for Our Economic Future was formed as more than 50 corporations and philanthropic organizations pooled money and expertise toward a goal of improving the regional economy. The three organizations remain at the forefront of Northeast Ohio’s economic development efforts today. We’ll learn about their historical impact and how they hope to shape Cleveland’s economic future.

``FOR THE 2010S: David Gilbert and the 2016 Republican National Convention David Gilbert, head of Destination Cleveland and the Greater Cleveland Sports Commission, did triple duty leading up to Gilbert and during the 2016 Republican National Convention, serving as the president and CEO of the Cleveland 2016 Host Committee. Northeast Ohio was lauded as a terrific host, and Gilbert said afterward that a “switch has finally flipped and Clevelanders are believing in their own town.” He’ll explain how it all came together and efforts to keep the momentum going.

KeyCorp. and its expansion through the 2010s Under the leadership of chairman and CEO Beth Mooney — who became the first female leader of a major American bank when she was appointed in May 2011 — Key grew from about $87 billion in assets at the start of the decade to more than $146 billion by the end of it. In 2016, KeyCorp made the largest deal in its history with the $4.1 billion purchase of First Niagara Financial Group in Buffalo, N.Y. We’ll talk about the bank’s expansion and what that has meant for Northeast Ohio.

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PEOPLE ON THE MOVE To place your listing, visit www.crainscleveland.com/peopleon-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com. ACCOUNTING

ARCHITECTURE

Meaden & Moore

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We are pleased to announce the election of Alison Martanovic to Senior Manager. Alison has been with Meaden & Moore since graduating from John Carroll University in 2009. In this role, Alison assists in the planning of engagements, supervising staff, reviewing financial statements and working with clients and the accounting staff to find solutions to problem areas. Alison works with closely-held, entrepreneurial companies, serving a wide variety of industries.

RDL Architects is pleased to announce Eileen Nacht, AIA, LEED AP, EDAC as Director of the Senior Living practice. Bringing over 25 years of experience managing multi-million-dollar projects nationally, as Director Eileen will be governing the studio’s dedicated team of architects, planners and designers and managing budgets, operations and work production. Eileen will continue a supporting role in business development, accepting speaking engagements and industry conference participation.

HEALTH CARE

LAW

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NOMS Healthcare

Meyers, Roman, Friedberg & Lewis

Western Reserve Land Conservancy

Meyers Roman is pleased to welcome Partner Lisa Arlyn Lowe to our Business & Corporate practice group. Lisa has over 35 years of experience representing individuals and businesses in the financial services and real estate industries. A strong advocate for community development, Lisa has an extensive background with the formation, grant and tax credit applications and certification of de novo and non-depository community development financial institutions. She assists in all areas of lending, commercial real estate transactions, and public sector financing and development. Licensed to practice law in New York, Illinois, Colorado and Ohio, Lisa has been named a Super Lawyer every year since 2015.

Steven Berk has joined Western Reserve Land Conservancy, the largest local land trust in Ohio, as Director of Public Policy. Berk will be working to enhance the Land Conservancy’s mission through public policy and collaboration with federal, state and local leaders as well as lobbying groups and coalitions. He holds a bachelor’s degree in cell and molecular biology from Washington and Jefferson College and a master’s in public health from George Washington University.

Dr. Bradley Hillard, DO, began his career in Family Medicine in Twinsburg, Ohio, in 1998. He came to NOMS Healthcare from several progressively responsible roles at a large Cleveland-based healthcare system from 2001-to-2019. Ultimately, he served as the Chief Medical Officer for Population Health, overseeing one of the largest Accountable Care Organizations in the country and a Clinical Integration Network of over 6000 licensed medical providers. In January, Brad joined NOMS as the Chief Clinical Transformation Officer. He enjoys spending time with his wife, Dr. Erin Hillard, who also joined NOMS Healthcare in 2020 as a member of the Family Medicine Team.

LAW Spangenberg Shibley & Liber

BOARDS Youth Opportunities Unlimited ACCOUNTING Meaden & Moore Meaden & Moore recently announced the election of Luda Arkhipov to Senior Manager. Luda serves in the Assurance Services Group in our Cleveland office and has over 12 years’ experience advising clients in a variety of industries including; construction, biotech, manufacturing, and distribution. Her responsibilities include planning of engagements, preparing financial statements, and working with clients and the accounting staff to find solutions to problem areas.

Greg Ferrazza, SVP - Commercial Banking Team Leader, First National Bank, and Amanda Petrak, Corporate Initiatives and Community Relations, Ferrazza KeyBank, were appointed to the Executive Committee of Youth Opportunities Unlimited (Y.O.U.) Board of Directors. Amanda Petrak is Vice Chair of the Y.O.U. Board, and Ferrazza is Chair of the Program Committee. Youth Opportunities Unlimited is a nonprofit workforce development Petrak organization that serves teens and youth adults ages 14-24 living in economically distressed areas in Northeast Ohio. COLLEGES Cleveland Institute of Art

ADVERTISING & MARKETING thunder::tech thunder::tech is proud to welcome Cassie Widlak as an Account Manager. Cassie brings nine years of experience to the marketing agency with strong strategic and management skills. Her skill is bolstered by her creative background in film and television, working with brands like Nike, Kia and Palmolive. Cassie is excited to use her expertise and passion to elevate client marketing strategies, accelerating brands and sales above and beyond expectations.

Charise Reid has joined the Cleveland Institute of Art as Vice President for Human Resources, where she will help ensure a creative and satisfying culture for the workforce of our premier college of art and design. A lifelong Clevelander, Charise most recently was human resources director at ideastream public media. She is a mentor with College Now and a member of the Society of Human Resources Management and the Collaboration for Nonprofit HR Professionals.

18 | CRAIN’S CLEVELAND BUSINESS | February 3, 2020

We are proud to announce that Jeremy Tor has been named a Partner at Spangenberg Shibley & Liber. Jeremy has been with the firm since 2014 and has obtained substantial verdicts and settlements for his clients in Medical Malpractice, Personal Injury and Civil Rights cases. We are Excited to welcome Jeremy as the firm’s newest partner and look forward to his continued commitment to providing our clients with the highest quality legal representation. LAW Weltman, Weinberg & Reis Co., LPA Weltman, Weinberg & Reis Co., LPA (Weltman), a full-service creditors’ rights law firm, is pleased to announce Andrew C. Voorhees as its newest shareholder. Andrew has been with the firm as an associate attorney for 15 years. He practices in commercial collections, primarily handling commercial litigation, agency collections, arbitration, defense and appellate matters. He earned his J.D. from The University of Akron School of Law.

LAW Weltman, Weinberg & Reis Co., LPA Weltman, Weinberg & Reis Co., LPA (Weltman), a firm specializing in creditors’ rights, announces shareholder Benjamin N. Hoen as the new business unit leader for the Real Estate Default Group. Based out of the firm’s Cleveland office, Ben has been with the firm for 21 years. His focus areas include foreclosure alternatives, foreclosure and eviction, and real estate litigation and defense. He earned his J.D. from Cleveland State University ClevelandMarshall College of Law.

LAW Meyers, Roman, Friedberg & Lewis Meyers Roman is pleased to welcome Alan G. Ross, Of Counsel, to the firm. Serving as President of his former firm from 1991-2018, Alan focuses his practice on Labor & Employment Law, representing corporate clients before the National Labor Relations Board (NLRB) and in unfair labor practice proceedings. He is actively involved in counseling clients on strategies to deal with union organizing and collective bargaining negotiations across a number of industries including construction, manufacturing, beer & wine, and nursing homes. He began his legal practice in 1975 as a field attorney with the NLRB, and from 1978-2017, he served as General Counsel for the Northern Ohio Chapter of Associated Builders & Contractors, Inc. and the ABC of Ohio.

NONPROFITS Cleveland Foundation The Cleveland Foundation is pleased to announce the promotion of Ginger F. Mlakar to General Counsel & Senior Director, Donor Relations. Ginger has received the Cleveland Metropolitan Bar Association’s Women in Law Making a Difference and President’s Awards, and she has been named among the Best Lawyers in America and Top 50 Female Ohio Super Lawyers by Law and Politics magazine. Ginger is a graduate of The Ohio State University Moritz College of Law.

NONPROFITS Western Reserve Land Conservancy Bob Owen - general counsel at Western Reserve Land Conservancy, Ohio’s largest land trust - will serve on the Members Committee of Terrafirma, a nonprofit national captive insurance group that supports land trusts in defense and enforcement of conserved land. Owen represents the Great Lakes Region - Ohio, Illinois, Indiana, Michigan, Minnesota and Wisconsin - and is one of only a few northeast Ohio representatives to serve on this national committee. REAL ESTATE Anchor Cleveland Mr. Ben McMillon joins the commercial real estate firm Anchor Cleveland as the Vice President. Ben is a 30 year plus veteran of the commercial real estate industry. His experience stems from being the Regional Director of Leasing and then later the Director of Leasing at The Richard E. Jacobs Group for a combined 28 years. He was also the First Vice President at Colliers International for the past several years. Ben specializes in leasing new developments, existing properties, as well as challenged centers. His expertise is in site selection, financial analysis and projections, LOI negotiations, and managing the lease negotiation process.

TECHNOLOGY OEC Chris Chapman has been named Chief Financial Officer for OEConnection (OEC). In this role, he has executive leadership responsibility for the company’s global finance, accounting and BIS functions. Chapman brings more than 20 years of experience as a senior financial leader, including an extensive background in global finance and treasury operations, investor relations, and M&A. He holds an MBA in International Business and a bachelor’s degree in Finance from The University of Akron.

CRAIN’S CLEVELAND LOOK BACK | 1988

Akron’s famous college was based on industrial heritage

If you’re a sucker for stories that rank cities based on economic activity, you’re probably not used to seeing Akron or most other Northeast Ohio cities at the top of those lists. But there is one important ranking where Akron leads all other Ohio cities, and it’s in an industry where Ohio leads all other states, too: polymers, which make up all sorts of items we simply think of as plastic, rubber or other familiar materials. That didn’t happen by accident, but was the result of decades of effort fueled by necessity and forwardthinking academics. — Dan Shingler

``THE HISTORY Until World War II, natural rubber was the only game in town for largescale manufacturing. But by 1940, sources of the stuff in Southeast Asia were drying up under Japanese control. Knowing it could not fight a war without rubber, the U.S. government was alarmed. Fortunately for the nation, Akron’s academics had not been sitting idle while their city became the rubber capital of the world. Researchers at the University of Akron, which was the first to teach students rubber chemistry in 1909, were asked to solve the problem with their peers in local industry. They did, with polymer science. The U.S. production of what was known as “synthetic rubber” climbed from 231 tons for all of 1941 to 70,000 tons a month by the war’s end, thanks to the work done in Akron. After the war, some in Akron thought there was tremendous value in the engineering and science they’d just invented, including researchers at the University of Akron. They were right. The university expanded its efforts and opened the Institute of Rubber Research in 1956, then expanded that to become the Institute of Polymer Science in 1964, followed by creation of the Akron Polymer Engineering Center in 1983, later renamed the Institute of Polymer Engineering. Finally, in 1988, the university created its College of Polymer Science and Polymer Engineering, with Dr. Frank N. Kelley as its inaugural dean, securing itself as a leader in the field ever since. In 1991, UA opened the Goodyear Polymer Center to house the polymer colleges — a 146,000-square-foot, 12-story glass structure that still dominates much of the campus today.

crainscleveland.com

``IN THEIR OWN WORDS

Publisher/editor Elizabeth McIntyre (216) 771-5358 or emcintyre@crain.com Group publisher Mary Kramer (313) 446-0399 or mkramer@crain.com Managing editor Scott Suttell (216) 771-5227 or ssuttell@crain.com Sections editor Michael von Glahn (216) 771-5359 or mvonglahn@crain.com Creative director David Kordalski (216) 771-5169 or dkordalski@crain.com Web editor Damon Sims (216) 771-5279 or dasims@crain.com Associate editor/Akron Sue Walton (330) 802-4615 or swalton@crain.com Assistant editor Kevin Kleps (216) 771-5256 or kkleps@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Editorial researcher William Lucey (216) 771-5243 or wlucey@crain.com Cartoonist Rich Williams

“My first thought is: ‘Is (the polymer college) important?’ And the answer is: ‘Duh!’ They are a huge asset for our industry.” ——Bruce Fawcett, executive director of PolymerOhio

“I wouldn’t know a polymer if I met one walking down the street, but I certainly recognize its potential for this area.” —Dr. — William Muse, University of Akron president, 1984-92, Los Angeles Times

REPORTERS

Stan Bullard, senior reporter, Real estate/ construction. (216) 771-5228 or sbullard@crain.com Jay Miller, Government. (216) 771-5362 or jmiller@crain.com Rachel Abbey McCafferty, Manufacturing/energy/ education. (216) 771-5379 or rmccafferty@crain.com Jeremy Nobile, Finance/legal/beer/cannabis. (216) 771-5255 or jnobile@crain.com Kim Palmer, Government. (216) 771-5384 or kpalmer@crain.com Dan Shingler, Energy/steel/auto/Akron. (216) 771-5290 or dshingler@crain.com Lydia Coutré, Health care/nonprofits. (216) 771-5479 or lcoutre@crain.com ADVERTISING

A Firestone rubber worker makes tires with early synthetic rubber at the company in Akron in the early 1940s. | CLEVELAND MEMORY PROJECT, CLEVELAND STATE UNIVERSITY

``WHY IT MATTERS TODAY Akron has cemented its place in history with regard to polymers, but not its future. There is still plenty at stake. Ohio still ranks first in the nation in polymers, with an industry that sees more than $6 billion in annual sales, according to state statistics. In that big pond, Akron is the big fish, and Summit County has nearly twice as many jobs in the polymer sector as any other Ohio county, thanks to its county seat. But Akron’s role in the industry is not something that can be taken for granted. Recent events are challenging its university’s standing in the industry, and possibly the city’s as well. The University of Akron, like many others, has seen its enrollment dwindle in recent years, presenting financial challenges that have affected the entire school. That includes its polymer colleges, which have lost some very high-profile researchers and faculty in recent

years, causing some to doubt whether Akron can retain its mantle as one of the world’s best polymer schools. This isn’t happening at a time when polymers are becoming unimportant, either. As cars and other vehicles are lightweighted and more and more advanced materials are needed for medical devices and other high-tech developments, polymers may be more important than ever. On top of that, about 200 companies in and around Akron rely on polymer science and engineering to some degree to keep their roughly 6,000 employees busy. Polymers are also still a leading driver of new startups in and around Akron, and economic developers want to see more of them. So far, industry continues to look to Akron for polymer expertise, as exemplified by Bridgestone opening a new $100 million technical center in town in 2012. Time will tell if Akron can keep its place at the top of the polymer world, though.

The Goodyear Polymer Center at the University of Akron is a leading research facility for polymer science and engineering around the world. | AKRONSTOCK

“We’ve got the research, we’ve got the commercialization and we’ve got the success to indicate that we are that (polymer) capital. … I don’t think there’s anywhere else an entrepreneur or a company can go to get the A-Z support they need in the polymer space than right here in Akron, Ohio.”

CUSTOMER SERVICE

——Mark Krohn, Akron private equity investor, WKSU Radio

Customer service and subscriptions: (877) 824-9373 or customerservice@crainscleveland.com Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com

“What we have going for us is a history in this business. ... We were the first place in the world to teach rubber science.” ——Sam DeShazior, Akron deputy mayor of economic development, Cleveland.com

THE WEEK POWER PLAY: As FirstEnergy Corp. anticipates exiting the power generation business via the reorganization of its bankrupt FirstEnergy Solutions subsidiary, the company said it wants to get into the energy brokerage business. The company filed a notice with the Public Utilities Commission of Ohio that seeks to establish its Suvon LLC subsidiary as an energy broker not only in FirstEnergy’s traditional geographic territories in Northeast Ohio, but statewide. It would operate under the name FirstEnergy Advisors. Assuming the PUCO approves, the company hopes to begin brokering electricity to customers as early as Feb. 16.

Andrew Berry, shown with Browns owner Jimmy Haslam in 2018, is returning to the organization as general manager. | NICK CAMMETT/DIAMOND IMAGES

LETTER OF THE LAW: Akron-based GOJO Industries responded to the Food and Drug Administration after the FDA is-

sued a warning letter saying the company needs to stop making claims that its Purell hand sanitizers help elimi-

that the claims have been made on GOJO’s website, purell.com and across social media. GOJO said it has taken “immediate action to respond” to the FDA’s warning and noted that regulators are talking only about marketing, and not the safety and quality of its Purell products, or its manufacturing processes.

nate viruses such as the flu, norovirus and Ebola. The FDA sent the company a warning letter dated Jan. 17 stating

Local sales manager Megan Norman, (216) 771-5182 or mnorman@crain.com Events manager Erin Bechler, (216) 771-5388 or ebechler@crain.com Integrated marketing manager Michelle Sustar, (216) 771-5371 or msustar@crain.com Managing editor custom/special projects Amy Ann Stoessel (216) 771-5155 or astoessel@crain.com Associate publisher Lisa Rudy Director of advertising sales Scott Carlson Senior account executive John Petty Account executives Laura Kulber Mintz, Loren Breen People on the Move manager Debora Stein, (917) 226-5470, dstein@crain.com Pre-press and digital production Craig L. Mackey Office coordinator Karen Friedman Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich

BACK IN TOWN: The Cleveland Browns hired Andrew Berry as executive vice president and general manager. At 32, Berry becomes the youngest GM in NFL history. He also joins Chris Grier of the Miami Dolphins as the lone black GMs in the 32-team league. Berry was the Browns’ vice president of player personnel for three seasons, 2016 to 2018, before leaving to become the Philadelphia Eagles’ VP of football operations in February 2019.

Crain’s Cleveland Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice chairman Mary Kay Crain President KC Crain Senior executive VP Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr., Founder (1885-1973) Mrs. G.D. Crain Jr., Chairman (1911-1996) Editorial & Business Offices 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 (216) 522-1383 Volume 41, Number 4 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for the first issue in January, July and September, the last issue in May and the fourth issue in November, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2020 by Crain Communications Inc. Periodicals postage paid at Cleveland, OH, 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, MI 48207-2912. 1 (877) 824-9373. Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, MI, 48207-9911, or email to customerservice@crainscleveland.com, or call (877) 824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax (313) 446-6777.

February 3, 2020 | CRAIN’S CLEVELAND BUSINESS | 19

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