Crain's Cleveland Business

VOL. 40, NO. 7

FEBRUARY 18 - 24, 2019

Source Lunch

Akron

John Corlett, The Center for Community Solutions

Metro RTA readies long-awaited service revamp. Page 16

Page 19

CLEVELAND BUSINESS

The List Largest philanthropic gifts of 2018 Page 15 AIRLINES

Flexjet lawsuit targets pilots org

FOCUS

THE BUSINESS OF BEER

Firms say they were harassed by group

By Jay Miller jmiller@crain.com @millerjh

Two related Richmond Heightsbased aircraft management firms, their executives and pilots have sued a group of pilots from a competitor’s labor organization claiming harassment and defamation during a vote to decertify the union that represented pilots of the two local firms, Flexjet LLC and Flight Options LLC. The lawsuit, filed by the two companies and a group of employees in

“They took a very aggressive approach with some of our employees.”

— Bob Sullivan, Flexjet’s chief administrative officer Smaller craft breweries such as Platform Beer Co. (its Ohio City taproom is shown) are embracing trendy product innovation. (Ken Blaze for Crain’s)

Local brewers step out of their comfort zone

By Jeremy Nobile jnobile@crain.com @JeremyNobile

While hard seltzers bubbled into the increasingly competitive beer market a couple years ago, it wasn’t until last summer that they hit Sibling Revelry Brewery’s radar.

A couple months later, Sibling brewmaster Pete Velez pivoted and rolled out hard seltzers of his own with inaugural batches made in the company’s smaller pilot brewery.

The sugar-plum variety is still being sold at its Westlake taproom, but Velez wants to refine the recipe before scaling up production and possibly canning some.

Hard seltzer wasn’t even part of the craft beer world’s vernacular just a few years ago. It was more something you’d order at a cocktail bar, like a gin and tonic or a vodka and soda, and not the malt- or sugar-based products sold in cans today.

So for a classically trained brewmaster like Velez, despite hard seltzers being easy enough to make thanks to

Entire contents © 2019 by Crain Communications Inc.

a comparatively low list of ingredients, they simply weren’t top of mind.

But as consumer tastes shifted, 2018 became a banner year for boozy, fizzy waters.

Sales of hard seltzers grew nearly 169% in 2018, becoming a $487.7 million market. Hard seltzers comprised 1.3% of all sales in the combined beer and cider segments last year, according to market research firm Nielsen.

That’s after representing just 0.4% of it the year prior, with $181.4 million in sales.

SEE BREWERS, PAGE 14

MORE IN FOCUS

The secret to Platform’s rapid growth Page 10 Q&A with Lock 15 head brewer Joe Karpinski Page 12 Hot brew spots Page 12

Cuyahoga County Common Pleas Court, claims that the NetJets Association of Shared Aircraft Pilots (NJASAP) and several individuals associated with NJASAP sent “hundreds upon hundreds of anonymous, threatening, harassing, defamatory and insulting postcards” to the homes of company managers and employees who spoke up in support of the May 2018 union decertification vote that led to the pilots severing their connection to the Teamsters Union.

“They took a very aggressive approach with some of our employees,” said Bob Sullivan, Flexjet’s chief administrative officer. Decertification, he said, “felt like the right thing to do and it still feels like the right thing to do.”

SEE FLEXJET, PAGE 17

SPORTS BUSINESS

City banking on All-Star ‘Velocity’ Initiative would fund hosting of major sports events. Page 6

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Construction labor woes wearing on NEO

By Stan Bullard sbullard@crain.com @CrainRltyWriter

Ripples from a tightening supply of workers in the building trades are starting to surface in Northeast Ohio’s construction market.

Doug Price, CEO of Willoughby-based apartment and office owner K&D Group, said he considers the labor shortage in the building business part of the region’s construction scene.

“Contractors are clearly pressed,” Price said. “They’re having more trouble meeting deadlines.”

Gary Naim, president of Broadview Heights-based Petros Homes, said the builder now calculates it takes five months to finish a new home, while in the past it could turn the property in four. He has a oneword answer for the change: labor.

However, for the most part, construction contractors are planning their jobs more carefully and looking for hiked efforts to attract younger workers to replace a graying workforce the next few years.

Gareth Vaughan, president and CEO of Cleveland-based Albert M. Higley Co., said that at the moment builders are getting pulled in two ways at once on the labor front.

“We have increased demand because of a building boom in Cleveland,” Vaughan said, “and we’re seeing diminished interest from the next generation of workers.” Vaughan said he believes that as a union contractor, his firm is seeing less impact from the changing labor outlook than its nonunion, and lower-paying, competitors.

AM Higley’s approach for now is to quiz subcontractors looking to work on its jobs about labor supply more than in the past. It also hopes to be an employer of choice to keep trades people coming back to its jobs.

Construction workers restored the Halle Building’s exterior last summer as part of the addition of apartments to part of the old Cleveland department store. (Stan Bullard)

At Fairlawn-based Welty Building Co., Chris Burns, chief operating officer, said the first item in the company’s “daily huddle” about that day’s work in the field includes an evaluation of the outlook for workers on the job. A decade ago, that was not an item of discussion.

Burns said Welty is responding to the concern by using lean production methods such as having suppliers drop off supplies on wheels so they can be easily moved around and let the trades focus on their work more than moving materials around a job site.

“In the past, if you were not financially liable for a staffing problem,” Burns recalled, “You could say, get 10

guys out here to fix your problem.

Now (subcontractors) will not have the resources. You can only yell at somebody so much.”

On one job, Burns recalled, the painting crews on a job were being delayed because a drywall contractor’s crews were not finishing installations in time for drywall (which requires taping and sealing) to dry before it could be painted. “We used a national vendor to help them bring in supplemental labor,” he said. The issues, he said, tend to crop up in different trades at different times.

Ken Simonson, chief economist for the Washington, D.C.-based trade group Associated General Contractors,

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said examples of labor shortages or rising costs scuttling projects are few.

“The industry is not crying wolf about concerns over labor, but it is finding ways to get around it,” Simonson said, noting he queries contractors about how they are handling labor issues. He said he has seen data showing that, nationally, the number of openings in construction exceeded new hires.

“That’s something I have not seen before,” Simonson said in a phone interview last Wednesday, Feb. 13. “But I am mystified how the industry is handling this problem.”

Several contractors point out there is more overtime available to meet

production requirements.

However, David J. Wondolowski, president of the Cleveland Building Trades Council, a consortium of 27 different unions, said he knows how contractors are getting the work done.

“When construction is strong, nonunion construction workers will go with the union,” Wondolowski said.

“Why work at a $10- or $12-an-hour job when you can make $30 or $40 an hour? You’re ahead even if you are on an apprenticeship pay schedule.”

Workers who went into nonconstruction jobs during the downturn may also come back, he said.

Wondolowski estimates the council’s unions have almost 12,000 members after gaining 1,000 new members last year. The council serves Ashtabula, Cuyahoga, Lake and Geauga counties. However, he also said that apprenticeship programs are starting without full student rosters — a sign of the challenge the business faces recruiting workers from younger groups.

He said the trades will be able to handle the strong construction outlook of the next two years. After that, the construction boom may ebb.

There’s one solution to the problem of what Wondolowski termed the “alleged” worker shortage.

“Pay more,” he said.

Welty’s Burns said even if firms recruit more workers there will be a problem finding the passion for the building business of times past.

“It’s not your first choice,” Burns said. “Your attitude is different.”

It is truly an unexpected situation if worker availability concerns grow.

A surfeit of building workers in a downturn is generally the concern in the region.

“During the downturn,” Burns said, “I remember there were 5,000 electrical workers sitting on the bench in Pittsburgh. Those days are definitely gone.”

Growth by Design Team NEO, in partnership with Crain Content Studio-Cleveland, will be highlighting through a series of custom reports beginning this month the efforts taking place regionally to build and sustain a vibrant economy.

The first in the series, which will appear in the Feb. 25 issue of Crain’s Cleveland Business, will touch on:

To learn more about how you can become a part of the MetroHealth Transformation,

» Importance of competing as a region » Building a Vibrant Economy » How state, local + regional partners work together Installments will appear in print the last Monday of each month through October.

All content also will be available at www.CrainsCleveland.com/TeamNEO.

please call Kate Brown at (216) 778-7509.

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CRAIN’S CLEVELAND BUSINESS

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Magnet CEO Ethan Karp said he finds it “striking” that so few Northeast Ohio manacturers are using “so little” of the technologies that are becoming more of the norm in the industry. (Bloomberg)

Survey: Manufacturers are behind times in tech

By Rachel Abbey McCafferty

Survey says ...

rmccafferty@crain.com @ramccafferty

Northeast Ohio manufacturers had some interesting responses to a Magnet question about technologies:

A new survey from Magnet found that local manufacturers weren’t exactly embracing new technologies like the Internet of Things or additive manufacturing.

But Northeast Ohio is home to America Makes, the National Additive Manufacturing Innovation Institute in Youngstown, and the IoT Collaborative, a joint effort led by Case Western Reserve and Cleveland State universities. Team NEO, a Cleveland-based business development organization, along with other partners, has created an additive manufacturing roadmap and one for the industrial Internet of Things, identifying opportunities for the region in both areas.

So how do those survey results square up with a region that’s trying to establish itself as a hub for both additive manufacturing and the Internet of Things?

There’s a big difference between the creation of a technology and the adoption of it, said Ethan Karp, CEO and president of Magnet, the Manufacturing Advocacy and Growth Network in Cleveland.

He knows the research being done by large corporations and higher education institutions can help brand the region as a spot for startups in the 3D printing and IoT spaces. But his focus is on helping the region’s manufacturers find ways to use IoT and other technologies on their shop floors.

“The reality is, the huge economic benefit for our community comes through the mass adoption of these things with our high concentration of manufacturers,” Karp said.

There were about 380 respondents to the broad survey conducted in partnership between Magnet and The Corporate University, Kent State University at Stark. Most respondents were small or midsize manufacturers in the 18-county Northeast Ohio region. Respondents did not answer every question, which ranged from how companies were innovating to what was hurting their growth.

One of the questions asked how a variety of technologies were affecting

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62% said basic 3D printing operations weren’t impacting their business 79% said advanced 3D printing operations weren’t having an impact.

85% said they weren’t being affected by collaborative robots.

54% said smart or connected machines weren’t having an impact.

the respondents’ businesses.

For most, the answer was that they weren’t impacting their business or being used at all. For basic 3D printing operations like prototyping, about 62% of respondents said it wasn’t impacting their business. That rose to about 79% for advanced 3D printing operations like tooling. Almost 85% of respondents said they weren’t being affected by collaborative robots, and about 54% said smart or connected machines weren’t having an impact.

“I think it’s striking that so few use so little of these technologies,” Karp said.

But he’s not necessarily surprised.

There’s been a push for the adoption of additive manufacturing, but the impact can vary business to business.

Additive manufacturing can be “revolutionary” to some businesses, like those that make customized products, he said. But for others, the benefits of 3D printing are incremental, Karp said.

On the Internet of Things side, people don’t always understand what it is. It’s a “nebulous” idea that encompasses a lot of different technologies, he said.

There’s a reason Team NEO put a focus on additive manufacturing and the industrial Internet of Things, said Jay Foran, senior vice president of industry and innovation at Team NEO. They’re emerging technologies without widespread adoption, but with a lot of potential impact.

He doesn’t think the region is “precipitously lower” in adoption rates than other regions of the country. He sees an opportunity to establish Northeast Ohio as a good place to

start this work, amid the collaboration and research already happening.

“So there’s a lot of momentum,” Foran said. “And, you know, what we’re talking about is an opportunity to gain traction.”

Karp said one of the hurdles is that people think of adopting these technologies as big jobs.

“These are pie-in-the-sky-type ideas. And that is very intimidating,” he said. “So there’s a psychological effect of that going on with a number of people, whereas, the reality is — and that’s why we’re creating a demonstration and simulation space — the reality is, you can start doing this step-wise. Of course, it sometimes takes investment, but it’s not like you have to do it all at once, and there are bite-sized chunks.”

Karp said he thinks there are a number of manufacturers who don’t realize that gradual approach is an option. And some shops just aren’t ready to take that step of adding IoT technologies or additive manufacturing to their operations.

The Manufacturing Technology Experience lab that Magnet will open in the next month will give manufacturers the chance to see and try out different technologies that they could apply in their own plants. IoT isn’t like lean, Karp said. With lean, there was a philosophy companies could apply to any environment. The technologies in the Internet of Things will require a much more personalized approach.

Small companies don’t always have the capacity to take on innovation and research and development on their own, said Iryna V. Lendel, research associate professor and director of the Center for Economic Development at Cleveland State.

They need outside help to see how new technologies could help them save money or be more efficient.

The Internet of Things Collaborative wants to be part of that support system. The group met recently and discussed how it could help small and medium-sized manufacturers implement this technology and close that adoption gap, Lendel said.

Lendel said it’s important to create a regional ecosystem to support those companies, so they know where to go to find the information and resources they need.

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Firms shell out millions for Forest City apartments

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Two huge apartment companies have entered the Northeast Ohio marketplace by shelling out millions for two properties shed by Forest City Realty Trust as it was merged into Toronto-based Brookfield Asset Management.

GoldOller Real Estate Investments of Philadelphia on Jan. 14 acquired The Hamptons, a 633-unit apartment complex in Beachwood, through Hamptons Apartments Owner LLC, according to Cuyahoga County land records.

Town Management of Chicago, through Deer Run 5th LLC, on Jan. 9 purchased the 562-suite Deer Run Apartments in Twinsburg, Portage County land records show.

Neither deal discloses a purchase price, as the buyers bought the Forest City-led limited liability corporations owning the complexes.

However, they’re clearly multimillion-dollar deals.

Cuyahoga County online records show that GoldOller received a $75 million mortgage through Berkadia

Commercial Mortgage LLC of Ambler Pa. LLC for The Hamptons. Its market value for property taxes is set at $42 million.

No mortgage for Deer Run could be located in Portage County records — institutional investors sometimes pay in cash or use a credit line until obtaining a mortgage later — but the property has a market value for tax purposes of $8 million.

Both firms have large-scale operations.

GoldOller manages 40,000 suites around the country, while Town has a portfolio of 4,000 suites, according to their websites.

Forest City had marketed the properties since last July through Marcus & Millichap, but their final ownership status was unknown as Forest City was bought Dec. 7, 2018, by the Toronto-based real estate empire for $11.4 billion, including assumed debt.

The massive, well-maintained, high-occupancy properties were constructed in phases between the 1980s and 1990s. They reflect the period when Forest City was the most prolific apartment and real estate developer in the region, which propelled it to national stature. They were also finished before the company exclusively

turned its attention to out-of-town markets offering better returns.

Ralph McGreevy, executive vice president of the Northern Ohio Apartment Association, said the trade group based in Cleveland has not had contact with the new owners.

While the sale to outsiders was part of the end of the largest local real estate concern, McGreevy said the influx of two large apartment ownership firms to the region will be a good thing. He said they likely bring new ways of doing things and will increase the region’s visibility. “This also shows that Cleveland is no longer a place where the apartments are traded back and forth by a handful of local families,� McGreevy said.

Michael Barron, a senior managing director at Marcus & Millichap’s Independence office, was part of the team that marketed the properties.

Barron told Crain’s Cleveland Business last July that the size of the apartment communities augured for a sizable out-of-town buyer for all or each of the properties.

Barron declined comment Friday, Feb. 15, on the deal. Neither GoldOller nor Town returned two emails and two phone calls each by last Thursday, Feb. 14.

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Adviser: Brian P. Nally

Tips for navigating the changing landscape of noncompete agreements in adviser recruiting The “protocol for broker-dealer recruiting” was adopted in 2004 by Merrill Lynch, UBS PaineWebber and Smith Barney, and quickly developed into an almost industrywide agreement among firms, with more than 1,800 current signatories.

The protocol was designed to ease the legal burdens behind an adviser moving firms by spelling out the steps one could follow to communicate with clients, take certain client information, move business to new firms and avoid being sued in the process.

There has been a recent shift away from the protocol, with three of the largest investment firms pulling out since late 2017. Morgan Stanley, UBS and Citibank have all withdrawn from the protocol, which means advisers with those firms may no longer rely on the provisions of the protocol that permit advisers to take certain client data and solicit clients when transitioning from one protocol firm to another.

Advisers looking to leave these firms, as well as any other nonsignatory to the protocol, will now be faced with an increased litigation risk.

Lawsuits arising out of these issues typically start with the filing of a lawsuit in federal or state court and involve a request by the former firm that the adviser be temporarily

Nally is a shareholder in the Cleveland office of Reminger Co. L.P.A.

Courts are often presented with evidence showing what the advisors did leading up to their departure, whether they downloaded client information, whether they emailed client information to themselves or others, and whether they made any attempts to solicit clients. In the modern age of technology, much of this activity can be easily traced.

stopped from speaking with any clients or taking any client information. Courts are often presented with evidence showing what the advisers did leading up to their departure, whether they downloaded client information, whether they emailed client information to themselves or others, and whether they made any attempts to solicit clients.

In the modern age of technology, much of this activity can be easily traced through analysis of computer systems and other forms of information technology. And for cases with FINRA broker-dealers, there will likely be a companion FINRA arbitration matter to decide the issues.

The timing of these changes is interesting for a few reasons.

First, the percentage of revenue generated from commissions — the traditional source of revenue for broker-dealers — has decreased in recent years as the percentage of fee-based revenue has increased.

With this trend toward fee-based or advisory business, there is a potential incentive for broker-dealers to create structural impediments to advisers looking to take their business to a small registered investment adviser (RIA).

Second, the independent broker-dealer model has continued to grow in popularity in recent years, with independent broker-dealers

seeing a compound annual growth rate in assets of 11%, nearly double that of wirehouses, according to recent research from industry consultant Cerulli Associates.

Some of the better-known independent broker-dealers — most of which, notably, are signatories to the protocol — are part of a group that has traditionally relied on recruiting efforts to attract high-producing advisers to drive growth. This growth model is at odds with the traditional wirehouse model or bank broker-dealer model, which often relies on name recognition and talent retention.

The timing of Morgan Stanley, UBS and Citibank withdrawing from the protocol is also interesting because it comes at a time when the investment industry is hyperfocused on putting clients’ best interests first.

Starting with the Dodd-Frank Act, then the Department of Labor’s fiduciary rule, and now with the Securities and Exchange Commission’s proposed regulation best interest (Reg. BI), the industry has been grappling with how to best define rules that require all professionals — whether classified as a registered representative providing advice for a commission or as an advisory providing advisory services for a fee — to place their client’s in-

terests ahead of the firm’s and the adviser’s.

This “client-first” mantra is hard to reconcile with firms withdrawing from the protocol and creating legal hurdles that make it harder for clients to communicate with their advisers or follow them to new firms.

With the changing landscape surrounding adviser recruitment, it's more important than ever for advisers to understand the following: 1. Do I have written agreements with my firm (e.g., employment agreements, rep agreements, production agreements, etc.)?

2. Do my agreements contain confidentiality provisions, restrictions on client solicitation, restrictions on competition or other restrictions that define what may or may not be done with documents and/or information upon my departure from the firm?

3. Is my current firm/potential new firm a signatory to the protocol?

Change is inevitable and advisers will undoubtedly change firms throughout their careers. Engaging experienced counsel is vital to understanding how to properly navigate those changes and minimize risk and uncertainty.

Contact Crain’s for your highlighted listing and to reserve your place on the list.

ISSUE DATE: April 29 AD CLOSE: March 8 CONTACT: Lisa Rudy • lrudy@crain.com

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CRAIN’S CLEVELAND BUSINESS

Group kicks off all-star fundraising drive

By Kevin Kleps kkleps@crain.com @KevinKleps

On Jan. 17, Destination Cleveland and the Greater Cleveland Sports Commission hosted representatives from about 40 companies in Northeast Ohio.

The event, held in the St. Clair Ballroom at Key Tower, was a kickoff of sorts for an eight-figure fundraising effort that is wide in scope and is bringing together leaders from top companies, as well as Cleveland’s three major professional sports teams.

The initiative, termed “Velocity,” will fund the costs associated with hosting the 2019 MLB and 2022 NBA All-Star festivities, plus the 2024 NCAA Women’s Final Four and the NFL draft. Cleveland has yet to land the latter, but the city is so optimistic about its chances that it’s including the NFL showcase in the fundraising effort, said David Gilbert, the president and CEO of Destination Cleveland and the sports commission.

Gilbert is projecting that the four events will cost $14.5 million to host.

Of that total, the Velocity group is hopeful that about $6.2 million will come from the state, via a newly passed law that increases the amount of financial incentives that are available to communities that compete for major sporting events.

Destination Cleveland will contribute about $1.8 million to the initiative, via money that the convention and visitors bureau’s board of trustees has set aside for the big-time events. Another $1 million is being classified as value-in-kind — the donation of facilities and services.

That leaves $5.5 million, which Gilbert and his fundraising team hope will come from the region’s corporations and foundations. The group already has raised more than $2 million from local companies, and donations during the kickoff event last month surpassed seven figures.

“There were people raising their hands and saying, ‘We’ll step up,’ ” said Ancora chairman and CEO Fred DiSanto, who is one of three local executives chairing the fundraising effort.

DiSanto is being assisted by Trina Evans, an executive vice president and chief of staff at KeyCorp, and Robert Klonk, CEO of Oswald Companies. The owners of the Browns, Cavs and Indians are honorary chairs, DiSanto said, and Gilbert’s “phenomenal” staffers at Destination Cleveland and the sports commission are heavily involved.

“We still have a long way to go to finalize everything, but we feel really good about where we are,” Gilbert said.

‘It’s a win-win’ The MLB All-Star Game will be played at Progressive Field on July 9 and will be the culmination of five days of festivities that are projected to have an economic impact of $65 million.

During a span of fewer than six weeks last fall, it was announced that the Midsummer Classic would be joined on Cleveland’s busy sports calendar by the NBA All-Star Game and the Women’s Final Four. The star-studded NBA gala has an estimated impact of $100 million, and the Women’s Final Four is expected to bring in $20 million to $25 million.

Both events will be held at Quicken Loans Arena, at which a $185 million renovation will be completed prior to the tipoff of the 2019-20 NBA season.

Studies on the economic impact of

P006_CL_20190218.indd 6

Cleveland’s star-packed 1997 included the MLB All-Star Game, which was played at Jacobs Field. (Todd Warshaw/Getty Images)

DiSanto

Gilbert

A major platform

With stars such as Michael Jordan in the 1997 NBA All-Star Game, many media members were focused on Cleveland. (Kimberly Barth/Getty Images)

recent NFL drafts in Philadelphia (2017) and Dallas (2018) have estimated that the three-day event — dubbed Cleveland’s Super Bowl prior to the arrival of Baker Mayfield — generated $94.7 million and $125.2 million, respectively. Cleveland was a finalist to host the draft in 2019 or ’20, but was bypassed in favor of Nashville and Las Vegas.

Still, Gilbert and the Browns believe the city will be selected to host the draft — hopefully as soon as 2021.

“They play it pretty close to the vest,” Gilbert said of the NFL. “We certainly had some encouraging words that we’re under consideration for a future year.”

If Cleveland also lands the draft, it will have been selected to host four of the sports events that are right near the top of the region’s wish list, Gilbert said. (Without a dome at FirstEnergy Stadium, Cleveland can’t be considered for two of the others — the Super

Bowl and the men’s Final Four.)

The quartet would combine to have an economic impact that is estimated at $285 million or more. The impact, the Velocity group points out, would be about 20 times the amount that the four events are expected to cost.

By comparison, the region raised $65.7 million to host the 2016 Republican National Convention, which studies pegged as having an economic impact that ranged from $142.2 million (a more conservative Cleveland State University study) to $188.4 million (an analysis by Tourism Economics).

“The more we can do of these types of events — put them on and put them on properly — it’s a win-win,” said DiSanto, whose firm has made a sizable contribution to the fundraising effort. “The tax dollars we’ll realize are huge. And everyone benefits. It’s not just the hotels and restaurants.

Donations to the region’s all-star efforts can be spread over four years.

If Cleveland isn’t selected to host the NFL draft by then, the corporation or foundation will have its commitment reduced by 25%.

Combining the four events into one fundraising initiative is easier, and more pragmatic, than going the piecemeal route, Gilbert and DiSanto said.

“Let’s just get it all done in one fell swoop if we can,” the Ancora chairman and CEO said.

Gilbert said he hopes the “vast majority” of the $5.5 million will have been raised by the time the MLB AllStar festivities come to town.

Another reason for the wide-ranging approach is the community programming that is part of such events.

Gilbert is viewing the major events as “a unique opportunity to add a five-year layer of community programming” — some of which will be held during years there aren’t all-star events.

Diversity and inclusion in sports will be a major focus, Gilbert said.

A notable recent example is Major League Baseball and Cleveland Indians Charities combining to donate $2.5 million toward $3.1 million in improvements to fields at Luke Easter Park and Brookside Park in Cleveland.

“It’s such a rare opportunity to

have the platform of these major events. It provides an opportunity,” Gilbert said.

DiSanto said the fundraising group isn’t going to “turn down a dollar,” but donations of at least six figures are crucial because of the lofty $5.5 million goal.

“But if someone said they’d be willing to give us $25,000, I’d say, ‘God bless you. We really appreciate it,’ ” DiSanto said.

Organizations that make donations of at least six figures will be considered VIPs, which Gilbert said guarantees the group tickets to the all-star events. But, he stressed, any eager buyer could do the same on the secondary market.

“This isn’t a way to get good tickets,” Gilbert said. “It’s about supporting an initiative that is bringing hundreds of millions of dollars and huge national attention to Cleveland.”

The Browns, Cavs and Indians — who don’t turn a profit when such events are held at the facilities in which they play, multiple sources have told Crain’s — have helped the Velocity group identify corporate sponsors who might be willing to support such an effort.

“We are excited about what this will mean to our community,” said Nic Barlage, the Cavs’ president of business operations.

There’s also a word-of-mouth benefit to hosting such events — something that has been noticeable for the region following the likes of the RNC, the NCAA Division I Wrestling Championships and the National Senior Games.

“When we put on events,” DiSanto said, “you never hear anyone say, ‘Oh my God, Cleveland, Northeast Ohio, what a dump.’ What they say is, ‘What a great place. You guys put on a great event.’ Cleveland has a lot to offer.

You need people to champion that.”

2/14/19 3:57 PM

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

Demand Ohio’s officials protect jobs, innovation

By John Waddell

Editorial

Open up Even more than usual, there’s a notable lack of leadership these days coming from Cleveland City Hall.

This is due, in part, to the frequent absence of Mayor Frank Jackson. Both Cleveland.com and Scene recently have chronicled how Jackson, normally the steadiest of hands in guiding city government, has been away from the job for large chunks of time since about the middle of last year. Cleveland.com noted that the fourth-term mayor “is frequently away from City Hall because he has essentially become the primary caregiver to his wife,” Edwina, who is battling a serious illness.

Jackson is notoriously private; that aspect of his personality can be refreshing in an era of oversharing, but it also can lead to a preference for concealing important details. He has said little, even to insiders, about the situation. And certainly, caring for a sick loved one is a time-consuming and emotionally draining task. But it’s time for Jackson to provide to his constituents a fuller account of his ability to do the job, because at this point, Cleveland has a part-time mayor, and the city needs more than that. Jackson is not even a year-and-a-half into the fourth term voters gave him in November 2017, and they deserve to know if the mayor can devote to the job the time and energy it demands.

The situation also underscores Jackson’s failure to groom new generations of leadership for the city. There are some competent, dedicated people at City Hall, but in Jackson’s absence, there’s no clear authority figure to help keep the administration running smoothly.

Too often, the city feels as if it’s operating on auto-pilot.

We got a glimpse of that last week in the administration’s odd handling of a major reversal in the dropff policy at Cleveland Hopkins International Airport.

The policy had been debated by Cleveland City Council for months and took effect Jan. 1. It banned private-care services and rideshare drivers — taxis, limousines, Uber and Lyft — from dropping off and picking up passengers at Hopkins’ terminal curb. (Only passengers dropped off or picked up by family

or friends could have curbside service on arrival or departure.)

But then, over last weekend, the administration did an aboutface and reversed the policy, announcing the shift to Cleveland. com but not letting anyone on council know what was coming.

Maybe this was just bureaucratic oversight. Or communication incompetence. The policy had been controversial anyway, so the reversal might be for the better. But this is an example of an administration that looks detached and not fully engaged with the details of governing.

Jackson, perhaps sensing the need to project greater authority in the job, last week sent out an email that began this way: I am the CEO of a major municipal corporation with a budget of more than $1.8 billion and over 8,100 employees whose primary purpose is to deliver services and facilitate economic growth. As a representative of the citizens of Cleveland, I oversee an executive staff, cabinet and relationships with a 17-member city council, public, private and philanthropic leaders and other stakeholders.

To keep you updated, in the next few weeks I am launching regular briefings that provide information and insight on the work we are doing at City Hall as well as other issues that impact our city.

It then offered nine bullet points summarizing “some of the things we are doing,” including the $65 million Neighborhood Transformation Initiative and implementation of the Safe Smart CLE initiative, which combines LEDs with smart surveillance camera technology.

The final paragraph included this sentence: “As Mayor, for the last 13 years I have focused on doing the work.”

Of that, we have no doubt. Jackson has been a diligent public servant. He has kept Cleveland on a stable fiscal course over a long time, through difficult economic times. But we need to know that he’s up for that commitment going forward and encourage him to be frank in these just-announced briefings.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS P008_CL_20190218.indd 8

Managing Editor:

Scott Suttell (ssuttell@crain.com)

Contact Crain’s:

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Read Crain’s online: crainscleveland.com

For as long as I can remember, the United States has led the world in developing life-saving medical imaging technologies. It’s not hyperbole that the innovations made in diagnostic imaging have saved lives and greatly enhanced the ability of the U.S. to identify and treat dangerous illnesses. These advancements have not only improved the quality of care for countless Americans, but also for millions around the globe whose health care systems rely on U.S. medical imaging innovations.

Along with improving the lives of patients, the medical imaging industry also provides thousands of Americans with high-paying jobs. Nationally, an estimated 60,000 jobs are directly created by the imaging device industry, which typically pays salaries that are Waddell roughly 80% higher than the national average. Ohio has benefited as one of the most productive states in the country for medical device innovation and manufacturing.

All of this progress is threatened by an ill-conceived 2.3% excise tax on medical devices, a policy enacted by Congress in 2010. Although the tax is currently suspended, it is scheduled to take effect again in January 2020, creating a potentially crippling burden for an industry which creates jobs and saves lives. From MRIs to CT scans, X-rays to ultrasounds, many of our most essential medical imaging services will be negatively affected by this burdensome tax. If Ohio’s residents and economy are to continue benefiting from the medical imaging sector, we must demand that Congress eliminate this onerous tax permanently.

Last Congress, in a rare show of bipartisanship, 283 House representatives successfully voted to repeal the medical device tax — including 11 members of the Ohio delegation. As we know, however, things have recently changed in Washington, and, while it was encouraging to see our representatives championing the cause of Ohio’s medical technology sector, more remains to be done.

Failure to vote on the repeal bill that passed the House means that we’re back to square one — and the clock is winding down.

Failure of Congress to act this year means that Ohio and the nation can expect severe economic and innovative stagnation within the medical imaging industry as the 2020 reimplementation deadline looms. Already, companies are adjusting their planning and budgets in anticipation of the tax.

To better understand the damage this tax could do, look no further than the years the medical device tax was actually in effect. According to a study by the American Action Forum, between 2013-2015, nearly 28,800 high-paying jobs were lost as a direct result of the tax. Further, based on their projections, the expected tax revenue fell short by nearly $700 billion in 2015.

Perhaps most troubling of all, research suggests the excise tax could reduce spending on innovation by as much as $2 billion annually. In other words, potentially life-saving advancements in medical technology would be stifled if this tax is reinstated.

This empirical evidence, married to plain common sense, tells us that the medical device excise tax is bad for the U.S. and even worse for medical device companies located in Ohio that co-collaborate with renowned medical institutions. The tax will drive up health care costs and stifle innovation and investment. As a state with a thriving diagnostic imaging industry, we cannot allow our progress to be hamstrung by a job-killing tax policy. Congress must oppose any tax that hurts patients and threatens America’s role as the world’s leading innovator in medical device technology.

Waddell is senior vice president of sales and marketing for Hitachi Healthcare Americas in Twinsburg.

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.

2/14/19 4:06 PM

CRAIN’S CLEVELAND BUSINESS

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PA G E 9

Connected Gourmet & Baskets by Maury Teaming up in Cleveland to bring you a Basket or a Box of fabulous gourmet treats for the holidays!

This year celebrate Cleveland’s culturally diverse & fancy food scene.

Personal View

Closing nuclear plants would harm economy, environment

By Scott Pullins

Bad government decisions are crippling Ohio’s most important and reliable energy source, jeopardizing thousands of jobs and the quality of our air along the way.

In recent years, nuclear energy has been placed at a competitive disadvantage by outrageous corporate welfare handouts lavished on other energy producers.

Excessive regulation by the federal government is preventing construction and renovation of nuclear power plants. Over the past decade, plans for more than 30 new nuclear reactors have been scrapped. To make matters worse, the federal government began pouring tax dollars into subsidies for unproven and unrealistic solar and wind proj- Pullins ects. During President Obama’s tenure in office, the federal government spent more than $300 billion on handouts to green energy schemes — many of which never got off the ground.

The government’s cold shoulder toward nuclear is particularly problematic here in the Buckeye State.

Nuclear energy is responsible for 90% of Ohio’s carbon-free energy. The state’s two nuclear power stations — Davis-Besse and Perry — produce enough electricity each year to power 1.7 million homes.

Ohio’s nuclear power plants contribute half a billion dollars to the state’s economy annually, according to the Brattle Group, an economic research firm. The plants also generate more than $30 million in tax revenue for state and local governments that goes to fund essential services such as law enforcement and first responders.

Further, the Brattle Group estimates that having low-cost nuclear energy in the state’s electric mix reduces power bills for Ohio’s electric customers by $400 million a year, leaving more money in the pockets of hard-working Ohioans.

Perhaps most importantly, 4,300 Ohio families rely on jobs supported by the state’s nuclear power industry. Those jobs would be lost if government policies force the state’s nuclear power stations to close.

The plants that would replace Ohio’s two nuclear plants if they close in the next two years would not come close to replacing the number of jobs that we

would lose.

According to the Energy Information Administration, a nuclear plant with 838-megawatt capacity employs about 600 people, while a natural gas plant with 627-megawatt capacity employs fewer than 5% of that: 22 employees. Once a gas plant has been built, the bulk of the jobs they produce disappear as construction workers move on.

If we allow Perry and Davis-Besse to close, we’d be replacing hundreds of high-paying, high-skilled jobs with something that equates to a small fraction of that amount. Or even worse, that energy may be imported from outside of Ohio and other states would see the benefit of our failed policy approach.

That being said, the importance of saving these plants is not just about jobs and the economy. Nuclear power also allows Ohioans to breathe a little easier — literally.

While electricity generated from natural gas may be better than coal-burning power plants, it is still much worse than nuclear energy. Natural gas is lauded for emitting about half of the carbon dioxide as coal, but nuclear power produces no carbon dioxide emissions at all, and no air pollution whatsoever. The only byproduct of nuclear power is water vapor.

Clearly, nuclear energy is dramatically cleaner than fossil fuel-burning power plants and provides many more jobs. And despite receiving billions of dollars in subsidies, renewables are not close to matching the scale of nuclear energy. In fact, only 1.7% of Ohio’s electricity is generated from hydroelectric, solar and wind power combined.

Despite the undeniable economic benefits of nuclear energy in Ohio, unreasonable regulations and unfair subsidies have pushed the state’s two nuclear power stations to the brink of closing.

If these plants close, electric bills for average households are expected to increase as well. Ohio residents can’t afford to pay more money and lose thousands of jobs.

Federal and state lawmakers must stop only rewarding the forms of energy that do more harm than good.

Ohio’s economic future depends on it.

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Pullins is an Ohio attorney, consultant and political writer.

He is the founder of the Ohio Taxpayers Association.

Web Talk Headwinds for Akron-Canton Airport I travel a lot for work and pleasure, and I live in Green. I am forced to choose Cleveland ... due to the high cost of flights out of CAK. They are always $100 more, and sometimes much more, $200-$300.

I cannot justify “wasting” money for convenience.

If fares were reasonable, I would never fly out of Cleveland.

For instance, a flight to Charlotte on American is around $400 most days at CAK, but I can grab it out of Cleveland for around $250. This just doesn’t make any sense to me. — Tanya Did CAK ask any actual travelers about its changes, or were decisions based on some random focus groups? The airport dumped the economy lot, flight prices were HIGHER than the abysmal CLE, and the construction and circuitous entry/exit path cause this traveler to make other choices.

The only things needed at the gates were charging stations and more (and larger) seating. No one wants or expects to spend much time sitting

P009_CL_20190218.indd 9

around at the gate. If people must, you have other problems. — Charlie Blanda CAK should create a shuttle-type service from two or three parking locations in the Cleveland area, like at I-77 and Rockside Road. Shuttle the passengers back and forth a number of times a day from these Cleveland locations and CAK for a discounted fare.

After a trial period, determine if it was financially successful.

If yes, continue the program. If no, then discontinue.

It would seem a year of this service would be needed to build up a potential following. ...

Siphoning off some passengers from the poorly managed and operated Hopkins airport is a distinct possibility. — James D

Reversal of Hopkins dropoff policy The change should never have been made in the first place. Let's keep finding ways to inconvenience airport users who have to fight deadlines as it is.

The CLE airport is subpar. For this reason, I will fly CAK 10 times out of 10. — Melvin Gaines

2/14/19 1:58 PM

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CRAIN’S CLEVELAND BUSINESS

Focus

BUSINESS OF BEER

Platform Beer Co. forges ahead Alex Weiss, left, Vincent Olivares and Tammy Weiss have drinks during happy hour at Platform Beer Co.’s inaugural Ohio City taproom that opened in July 2014.

Ohio City brewer is one of the fastest-growing in the country

By Jeremy Nobile jnobile@crain.com @JeremyNobile

I

n less than five years, Ohio City’s Platform Beer Co. has evolved from a modest, community-focused side project to one of the most growth-hungry craft breweries in the entire country.

While many breweries tend to focus most of their energy on distribution channels and a tight beer portfolio, Platform co-owners Paul Benner, 36, and Justin Carson, 37, have embraced a slightly different business model, one focused on taprooms, variety and hyper-localization.

That approach is apparently working. Company revenue jumped 30% in 2018 and is already trending 40% ahead of this time last year.

The brewery now has unique tasting rooms and production capabilities in the state’s biggest metros, from Cleveland to Columbus to Cincinnati.

It just debuted a facility in The Queen City. Come April, it will open its latest operation, the sour beer-centric Phunkenship, near its main Cleveland production facility.

And this summer, it will open yet another taproom, this time in Pittsburgh, its first physical presence outside of Ohio.

With five locations already open or slated to open in as many years, and loose plans to roll out another three to five in the same time frame, it may

P010_P11_CL_20190218.indd 10

Platform’s colorful canned beers, ciders and seltzers are distributed throughout Ohio and six other states today.

Co-owner Paul Benner talks about Platform’s upcoming Phunkenship sour beer facility in a barrel-aging space.

The building was once home to several pre-Prohibition breweries. The taproom there is slated to open in April.

not be long before Platform takes over this part of the Midwest. After all, there are no plans to stop — at least not until the market dictates it.

“Justin and I, I think we are pretty aggressive people, but we’re also very realistic people,” said Benner.

“Everything we’ve done from a growth standpoint has not been speculative. It’s always been, ‘OK, we can’t meet demand, so we need to grow.’ ” With a record 7,000-odd breweries operating in 2018 — the most since before Prohibition — and overall beer sales holding flat, competition for market share has never been greater.

But Platform seems to have figured out how to carve its way into a crowded field.

Homebrewing inspiration Inspired by homebrewers, who are known to thrive on experimentation, dabbling in strange ingredients and unique styles, Platform’s intent was to offer a rich selection of beers on draft in an open, relaxed setting similar to the breweries in Colorado that Benner had come to love.

“Homebrewers are known for taking chances and used to get a bad rap for using weirdo ingredients,” he said. “Fast-forward to 2018: That’s what’s popular. Some of our most popular beers today used ingredients I didn’t imagine would be in beers five years ago.”

He points to Platform’s line of lac-

tose-infused, slushie-style sours as an example of that.

“We wanted to create a place where you could come in and try a variety of styles, and we’re not going to push one beer down your throat because that’s how we like to drink,” Benner said. “What’s fresh? What’s new? What have I not tried? That’s my favorite beer all the time.”

Platform has more than 600 beers in the geosocial beer app Untappd.

The brewery typically has 30 beers on tap in Cleveland alone and a portfolio of about seven beers pushed into stores. Just two are year-round, with the others rotating roughly every 45 days, a vastly different approach from breweries that focus on a supplying more core beers than seasonals.

But where some critics may argue that turnover like that makes it difficult for consumers to latch on to a brand, Carson feels their approach is an asset when it comes to standing out from competitors, particularly outside of the Buckeye State (notably, Platform self-distributes across Ohio).

“Wholesalers are crowded right now, but we can say we have any-

2/14/19 3:03 PM

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CRAIN’S CLEVELAND BUSINESS

BUSINESS OF BEER

Minimum Delivery: 1 Pallet

Co-owners Paul Benner, left, and Justin Carson, founder of JC BeerTech.

Carson pitched the idea of them teaming up on a brewery shortly after Benner opened The Cleveland Brew Shop in 2012.

thing from a kettle sour that rotates every 45 days to a New England-style IPA that rotates every 45 days to a seltzer,” Carson said. “When we look at a wholesaler in New York City or Indianapolis, they look through their book and say these products are interesting because they can’t get them from other breweries.”

Constant growth As Platform hit capacity at every juncture, it expanded each time.

With just a tiny three-barrel system to start, Platform built out its Lorain Avenue space in 2015 before expanding to its current main production facility in Cleveland the next year.

That’s where they crank out beer at greater levels each year and supply other markets. In addition, they have smaller brewhouses producing beers locally at each site.

Production in the latter half of 2014 was just 97 barrels with that initial system. That grew to 1,000 barrels in 2015; 9,000 barrels in 2016; and 20,000 barrels in 2017 — the year that landed Platform on the Brewers Association’s list of the fastest-growing breweries in the country. The company produced nearly 30,000 barrels in 2018 and is eyeing 40,000 barrels this year.

P010_P11_CL_20190218.indd 11

‘It’s fun as hell’ A similarly unique concept is being applied at Phunkenship. That operation is being built on Sackett Avenue in a building that once housed pre-Prohibition Cleveland breweries including Kress Weisse Brewing Co., Standard Brewing Co. and Excelsior Brewing Co., according to Carons. The old building stretches a few stories high where brewing equipment enabled gravity to draw beer before modern pumps were around.

That’s where Carson and Benner will be running a 30-barrel coolship in a cedar-lined room allowing for open-air fermentation that will inoc-

ulate beers with wild yeast to create some unique sours styles.

The 0.6-acre site will also feature indoor and outdoor bocce courts, shuffleboard and a small farm where produce grown on-site will be used in sour beers, which will occupy most of the 12 taps being installed there.

And that doesn’t even get into the Pittsburgh facility, which will have its own mini production facility, taproom and canning line.

“All our spaces, while they’re retail segments, are also R&D arms for Platform,” Benner said. “We aren’t dependent on these places to push out beer that’s going to be sold in the market.

Our production facility can handle that. So we let our brewers be creative and innovative in these spaces.”

As far as R&D goes, Carson said Platform has already invested close to $1 million in its testing lab.

“We understand we have to put the best-quality product out as possible and we’ve invested a tremendous amount of money into protecting our investment,” Benner said.

As far as whether a giant variety of beers is the right business model, Benner and Carson are confident their approach has been a key to their success.

“We’ll put out stuff that’s not for everybody, but that’s a consequence of having a really diverse portfolio,” Benner said. “We think anyone can find something in our portfolio they’ll like, though.”

Like any business, there are risks to growing at the rate Platform is.

“Platform is growing very rapidly, and it’s hard to grow at that rate at their size,” said Brewers Association chief economist Bart Watson, referring to fast-growing breweries in general. “There’s always risk if you expand and can’t defend the territory because then that’s paper growth that can’t be backed up.”

But Benner and Carson, who steer their moves with data and are staking their claim in each market with a taproom-focused business model, dismiss any notions that they’re growing too big too fast.

“There are a lot of different ways to do this business. This is just the model Justin and I are going for,” Benner said.

“This is what we feel is the best route and, to this point, we are very happy with where we’ve gone. We believe in the approach we’ve taken, the people we have and the procedures in place. I think we can accomplish anything.”

Nonetheless, he acknowledges that Platform has been on quite a ride.

“We made 200 unique beers last year and canned 80 of them. That’s an absurd way to make beer, it really is,” Benner said. “But it’s also fun as hell.”

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About 100 people now work for Platform, which doesn’t include staff joining the other facilities opening this year.

In 2016, with demand solid, Carson and Benner reinvested as much as possible into growing their footprint with taprooms.

That strategy was partly inspired by a Brewers Association statistic showing that consumers are 70% more likely to buy a beer at the store when they’ve been to the brewery. That path was also prompted by the firm’s focus on variety, which translates to different identities at those locations.

So Platform opened a taproom in Columbus in late 2016. That was followed

by LOCOBA — a creative acronym derived from “local coffee barrels” — which opened in Cincinnati’s Over-theRhine district earlier this month (the first location Platform has leased).

Each new location has some kind of unique twist and beers unique to that market.

The Columbus operation features a partnership with the Blockfort art gallery, where local artists not only get to show their work, but some have had it featured on cans.

The LOCOBA concept is seemingly one of a kind. It’s a coffee shop by day that offers some healthy food options (other Platform locations don’t include kitchens, so that alone is special) and at night transitions into a beer-and-cocktail bar with space for barrel aging.

The facility incorporates whiskey barrels from Watershed Distillery in special ways. An imperial stout is aged in the barrels as well as unroasted coffee beans that get infused with the beer and spirit flavors in the same way. At LOCOBA, consumers can try the spirit, the coffees, the barrel-aged beers and even buy the coffee beans to take home.

“A lot of times, we get people who asked what we were smoking when we came up with that,” Carson laughed.

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F E B R U A RY 18 - 2 4 , 2 019 |

CRAIN’S CLEVELAND BUSINESS

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Q&A: Joe Karpinski Head brewer, Lock 15

Akron’s Lock 15 opened its combined taproom and restaurant last August, making it one of the newest entrants to Ohio’s booming craft beer sector. While the early months can be tumultuous for any new business, Lock 15 has enjoyed steady traffic and a positive reception in the Rubber City and is already working on supplying its beers elsewhere throughout Northeast Ohio. Crain’s sat down with Lock 15 head brewer and co-owner Joe Karpinski to talk about the brewery’s inception, its business model and the approach to running a craft brewery in an increasingly crowded market. — Jeremy Nobile How did you end up running a craft brewery?

I was in IT, managing servers in health care. I was actually quite jaded with it for some time. But I’ve been homebrewing since 2006. It was probably in 2009 when I started thinking about brewing professionally. Around 2011-12 I worked up a business plan for a tasting room that didn’t happen, then the Lock 15 opportunity came up. By January 2015, I was working on that 100%.

What about brewing appeals to you?

I love a good beer and I like to make very specific styles I can’t find elsewhere that cater to my tastes, like a really good Hefeweizen. But kind of like a chef, seeing people enjoy

what I make is awesome. Getting input and feedback is really gratifying.

You don't get too much of that when you’re keeping servers running.

So what beer is your personal favorite?

Weihenstephaner Hefeweissbier from Weihenstephan (a state-owned Bavarian brewer that bills itself as the world's oldest brewery).

How did the Lock 15 opportunity come about?

It goes back several years ago to a Christmas party where my cousin — Colin Cook, my business partner, who was living in New York or Philly at the time — tried one of my Christmas ales. He said he wanted to move back to Akron and open a

brewpub together. He has 20 years in the restaurant industry, working his way up through the kitchen to management, bringing experience I didn’t have to the table.

Few breweries seem to go for a restaurant from the get-go. Why did you feel a restaurant was necessary?

At the time Colin and I started

NEO breweries by the numbers

By Jeremy Nobile

Northeast U.S. craft brewing heat map

B

By M

jnobile@crain.com @JeremyNobile

A recent analysis by Brewers Association chief economist Bart Watson confirms what this region’s brewers and imbibers have been noticing for years: The Northeast is exploding with craft breweries.

But whether that pace can be sustained in increasingly crowded markets is anyone’s guess.

Using BA data on brewery openings, Watson created a map which shows that the bulk of new breweries opening in the United States in recent years have clustered around population centers, in particular those in Michigan, New York, Pennsylvania, Virginia and Ohio. Those areas are seeing new breweries open at rates outpacing the rest of the country.

For Ohio, and the Cleveland market in particular, data show that 2017 was the hottest year for new breweries entering the fray. That’s also the first full year of Northeast Ohio brewery data to be analyzed by Crain’s for its annual Book of Lists. Of the breweries on that list, 78% had opened since 2010.

Although the epicenter of that activity shifted a bit east from Ohio — a year that saw a nationwide ratio of openings to closings of 4:1 — the Buckeye State is still very much in the thick of the craft brewery boom.

So what does that mean for this market?

Like most economic data, these need to be taken with a grain of salt.

What it may mean is that Ohio probably won’t see the same number of new breweries spring up it has in recent years, Watson said. It also sug-

talk brew expl time nee a re rant and criti side to th

clbf

In 2015, new brewery openings in the northeast were hottest on the east coast and lower Michigan.

By 2017, things began to warm up considerably in Northeast Ohio’s new brewing scene.

gests that opening activity may level off in general for the eastern part of the United States overall.

It’s impossible to say whether the craft beer market is at its saturation point — something Watson is constantly evaluating as the market becomes more populated. According to the Brewers Association, there were more than 4,100 breweries in operation in 1873. America surpassed that level between 2014 and 2015 and has since grown to 6,372 breweries as of 2017 (cumulative BA data on 2018 are not yet available).

Meanwhile, Ohio now has 297 craft breweries operating (specifically, that's the number of A1c beer manufacturing licenses held today), according to the Ohio Craft Brewers Association. In 2018, Ohio saw 55 new breweries open while just 10 closed.

And there are at least another 52 breweries in the planning stages as of February, according to the OCBA. Watson emphasizes that it’s difficult to say if or when a market could reach a true saturation point for a variety of reasons. It’s why he prefers to talk about market maturation rather than saturation.

“I think all markets may have more

opportunities going forward,” he said.

“But it could be harder to enter the market (in these areas) or you might have to do it in a more complex way.”

Even as the market grows more crowded, closings may increase, but that’s the natural evolution of the industry. Watson said the BA anticipates logging about 250 total closures in 2018, which is still fewer than 4% of all breweries doing business that year. For local breweries focusing on particular neighborhoods, Watson’s big-picture economic data may not be as relevant.

But for those with regional growth aspirations, the density of competition in nearby markets could be increasingly important. That goes for established companies like Great Lakes Brewing Co., which has been slowly pushing products into new markets, as well as for Cincinnati’s Rhinegeist Brewery or Ohio City's Platform Beer Co., one of the country’s fastest-growing breweries.

“It’s hard to grow at the rate (Platform is) growing at their size,” Watson said. “They’re the ones who need to think about these broader geographies more. But you’ll see some beat the odds grow on territories they expand in to.”

2/14/19 2:00 PM

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CRAIN’S CLEVELAND BUSINESS

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Brew system: seven-barrel brewhouse with two seven-barrel fermenters and two 16-barrel fermenters Employees: 20-25 Capacity: About 120 in-house between bar/restaurant; 100 more on the patio Startup costs: About $1.6 million Beer portfolio: includes about 20 kinds made since opening with 12 currently available Most popular beers today: 1913 Pilsner, followed by Instigator IPA

Head brewer Joe Karpinski at the Lock 15 Brewing Co. facility in Akron.

(Contributed photo)

talking, there were only a few brewpubs in Akron. That number exploded four- or five-fold by the time we opened. But we knew we needed to distinguish ourselves and a restaurant — not just any restaurant, but one with an eclectic menu and not just pub fare — could be critical to that. We want the food side to be an awesome complement to the beer side we have going on.

Did that investment have a big impact on your startup costs?

There was a point when we financially didn’t know if we could pull it off, but we tied up a few loose ends and made it happen. We were contemplating just starting with a brewery, but that’s not what we wanted to do. We thought it was crucial to have the restaurant from the time we opened.

What’s the story with your brand name and concept?

Before we even settled on the name, I was already a canal history buff. So I thought it was cool to take all this and make it our brand. Our name refers to the Ohio and Erie Canal, and we are physically located at Lock No. 15. All our beer names have to do with Akron and local history. Like with the 1913 Pilsner, 1913 refers to the year the canal system got flooded by a massive storm on Easter Sunday and they used dynamite to blow up the locks to drain Akron out.

And you landed a famous cartoonist for your artwork, right?

One day me and Colin and our graphic designer were deciding on designs — we had names, but no designs — when suddenly Colin changed, like a light bulb went off.

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PA G E 13

BUSINESS OF BEER

The Lock 15 file Official opening: August 2018

F E B R U A RY 18 - 2 4 , 2 019

He wanted to do a spin on "Drunk History" and knew just who to ask: Chuck Ayers (illustrator of the “Crankshaft” comic strip). Colin and one of Chuck’s daughters went to high school together and Chuck is a family friend. When we went to him, he was excited about it. He’s been doing our beer labels ever since.

What were the biggest challenges you faced with getting up and running?

The earliest struggle was just getting the capital and an operating agreement together, but we ended up finding a group of folks to fund us.

Later on, the biggest challenge became physically setting up the brewhouse. Having no experience in a production brewery facility, I essentially did the research and directed the contractors on what I thought was the best way to set things up. My dad, the head of the construction management program at Kent State University, helped, as did my assistant brewers and some others in the area.

Any unforeseen issues creep up?

Well, the company we went to for equipment ended up falling apart. We were using Systech Stainless for tanks (a short-lived Canton company that saw an investigation launched against it for alleged misdealings, such as failing to deliver equipment it was paid to provide) because we wanted to use a local company. The equipment we got came from a company in China, so they were basically just the middleman to get that to us. But it was delayed, putting us back by almost a

full year from when we originally wanted to open. On the first delay, we thought it was a supply issue. That’s understandable. But on the second one, we went to them because we needed to know what was going on.

They said they were going bankrupt and they couldn’t give us our money back, but they could give us a few tanks. We were out about $30,000 and tried to pursue getting our money back. Fortunately for us, we were able to get through it.

As far as the market goes, is the sheer volume of competition any cause for concern for a new brewery/restaurant like yours?

I’m not worried about it because I know I make good beers that people enjoy that they’ll keep coming back to. I also go on the concept of staying true to the style. A lot of people make crazy wild beers, but that’s not the way I want to go.

That’s one reason I think we’ll be good in the long run. The other is our awesome restaurant. We are packed several nights a week — all day Friday and Saturday we’re usually booked. I know we’re only six months old, but right now is usually the slow time for restaurants and we’re having no problem there. We also probably have 20-25 accounts with restaurants and bars selling our beers and I’m not getting any bad feedback. I’ve heard of some places close down recently in Akron/ Canton. I’m not sure that means there’s a bubble. Maybe it’s because of competition, maybe their beers weren’t as good. For us, I don’t think any of that will be a problem.

Beermakers brew a mix of employee perks

By Mark Oprea clbfreelancer@crain.com

Once their Boss Dog Brewing Co. hit its first anniversary, owners Josh and Jason Sweet decided it was time for expansion. With kegs selling at their 5,700-square-foot, 10-barrel brewhouse on Lee Road in Cleveland Heights, the brothers opted this year to move things along, buying a $150,000 canning line (installed in their 3,000-square-foot basement) and finishing off a remodeled patio.

As the Heights natives know, more hops production means more than just employees scrub-cleaning the barrels. It means thinking like a larger company.

“Our big hope is to be a big production facility one day,” Josh Sweet said, "and we grow to point to where, well, we can start having it to where some employees are vested into the company. I’m talking more full-time, more dedicated people. And full benefits.”

A homebrewer for decades, Sweet is no stranger to Cleveland’s behemoth of craft brews, Great Lakes Brewing Co. That brewery marked its its 30th anniversary last May by implementing an Employee Stock Ownership Plan (with its own pilsner for pairing). A solid retirement plan for all of GLBC’s 250 workers — from bartenders to cellarmen — the ESOP has been adding a percentage of employee salaries into new, pension-like accounts since the beginning of this year.

The idea, Sweet says, is “something we might be interested in one day.”

With only 7,000 businesses across the United States having ESOPs, it’s

P012_013_CL_20190218.indd 13

Great Lakes Brewing Co. celebrated their 30th anniversary by implementing an Employee Stock Ownership Plan — and an ESOP Lager to commemorate the move. (Contributed photo)

safe to say that craft breweries aren’t veteran users of the model. Most craft companies employ fewer than 50 workers, which an organized reinvestment program wouldn’t equally support. Larger corporations, like GLBC or Deschutes Brewery in Oregon or Boston's Harpoon Brewery, are sizable enough to wave in the stock-buying model.

But what about benefits to workers in smaller breweries?

In “What Brewers Earn: A Report on the State of Compensation in the Brewing Industry,” a survey of 397 brewers across the country conducted by Beervana, brewmaster Jeff Alworth found that the majority of brewhouses and pubs were lacking in perks. Of those surveyed, only 46%

offered health insurance, and 45% offered no benefits at all. As for ESOPs, only 2% had any kind of stock options.

“I like to say we’re taking the low, slow approach,” said Jay Demagall, owner of Forest City Brewery in Ohio City, who then laughed. “Or should I say, we’re growing at a nice, healthy pace.”

With only a dozen employees, just two of them full-time, Demagall said that after under three years of business he doesn’t have any pressing urge for big-corp perks. Forest City has no “big-time investors,” no outof-house distribution, no bottling line in the works. Employing mostly part-timers, Demagall said he believes contemplating 401(k)s and

ESOPs is almost the antithesis to his model.

“As a small brewery? I don’t see the benefit,” he said. “We’re a small business that tries to simply put out good beer.”

Benefit-wise, though, the average Cleveland brewer is in decent hands, depending on who you ask. If you’re under the tutelage of Andy Tveekrem, brewmaster at Market Garden Brewery and Nano Brew Cleveland, you’ll most likely have weeks-long Micromatic or Brewing Science courses paid for you, along with trips to hops suppliers and malt houses. At GLBC, besides a flashy retirement plan, you’ll get a nice 401(k), tuition paid at its Hop College and an all-expenses-paid voyage to Europe after 25

years on the job. And those are only some of the perks.

According to Great Lakes CEO Bill Boor, shiny benefit packages aren’t just to draw in and retain better talent. After working with GLBC's founders, brothers Pat and Dan Conway, on the ESOP, Boor says any experienced brewery can position itself as a trailblazer by following progressive business trends. In fact, he cites worker inclusion as one source of GLBC’s king-of-the-hill status in Cleveland.

“I can tell you right now, I’ve had conversations with bartenders who are curious,” Boor said. “They have ideas about how we structure our brewery. This? I really like to think it’s always been a part of our culture.”

When told that Boss Dog was looking at GLBC as a model for treating workers, Boor said, “Well, I just wish more breweries thought this way.”

As for the Sweets, currently shopping around for a production facility into which they can expand, they’re just hopeful for the benefits of growth. As they climb above 35 employees, Josh said, they’ll take more workers on West Coast trips to hops fields, along with “more events, more conferences, more education.”

Some brewers speculated about potential saturation as employee benefits grow more appealing in Cleveland just as demand for fine brewing talent overcomes the supply of those qualified. Sweet took the optimistic view that all growth is good growth.

“We’re not all enemies here,” he said. “Not all of us are battling corporate structures. I mean, our original goal was just to brew beer. But hey, if we get to a certain point?”

2/14/19 2:01 PM

PA G E 14

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F E B R U A RY 18 - 2 4 , 2 019 |

CRAIN’S CLEVELAND BUSINESS

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Gifts over $2 million

csoder@crain.com @ChuckSoder

In 2018, local nonprofits raised more funding than in any year since we started compiling our Philanthropic Gifts list in 2012. Here’s a look at the last five years:

Local nonprofits raised a ton of money last year, judging by our list ranking the largest philanthropic gifts of 2018.

The full digital version of the list includes 91 gifts (and gift commitments) that are each worth at least $1.5 million. In total, they’re worth more than $427.5 million.

Both totals easily best the totals from last year’s list of 2017 gifts. It included 76 gifts worth a total of $337.9 million. And 2017 was a big year, judging by past lists.

Before 2017, we only collected gifts worth $2 million or more. By that measure, local nonprofits set a record for number of gifts received in 2017.

Then in 2018 they broke that record — and the 2015 dollar total record, bringing in 72 gifts totaling $396.6 million.

Granted, even when you only look

2018: 72 gifts totaling $396.6 million 2017: 60 gifts totaling $310.7 million 2016: 31 gifts totaling $170.3 million 2015: 49 gifts totaling $311.6 million 2014: 55 gifts totaling $241.9 million

at gifts of $2 million or more, the numbers on this list vary considerably year to year. For one, if a large organization has a major fundraising campaign, that could drive numbers up. And if a big organization decides not to submit gifts to Crain’s, that could drive numbers down.

Thankfully, most of the heavy-hitter fundraisers in town did submit gifts for the list.

As per usual, the list prominently features Case Western Reserve University (20 gifts worth $117.9 million,

if you count a $23 million gift made through the Case Alumni Association) and the Cleveland Clinic (16 gifts worth $90.8 million, two of which are shared gifts with Case Western). The Clinic also claims the No. 1 gift on the list: research funding from Ron and Terri Weinberg.

But we can’t claim that the list is complete. For instance, we know that two longtime MetroHealth physicians, Alfred Connors Jr. and Mildred Lam, gave the health system the biggest individual gift in its history in 2018. But MetroHealth would not reveal the total.

And the list doesn’t include gifts that hospitals receive from their own dedicated foundations (for instance, University Hospitals received a few large gifts through its foundations in 2018 — in addition to five on the list).

St. Martin de Porres High School has never been on the list before, but it shows up three times this year. Neither has the founder of Amazon. Jeff and MacKenzie Bezos’ Day 1 Families Fund made two gifts, to Eden Inc. and FrontLine.

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While that’s not a huge chunk of the $37.9 billion market for beers, ciders 4:18 PM and flavored malt beverages, it’s compelling growth in a sector where sales of beer itself are flat, down by 0.2% in 2018, per Nielsen.

And in an industry with a record number of craft breweries jockeying for market share, those shifting consumer trends are impossible to ignore.

“Consumer tastes change and, as a business, you want to satisfy as many customers as possible,” Velez said.

“So that’s what I think us and other brewers want to do. We still make IPAs, the pale ales, red ales. But at the end of the day, we’re competing for the same consumers. And if the consumer says they want to buy these things, we have to figure out how to fill that need.”

Hard seltzers stand out for their surging popularity, but they’re just one of several emerging and increasingly popular nontraditional beer products, which include alcoholic kombucha and even nonalcoholic and gluten-free beers.

From the beer business perspective, this is the logical path for growth-hungry brewers to take, particularly those with aspirations for regional expansion.

“Beer just isn’t growing,” said Benj Steinman, publisher of Beer Marketer’s Insights. “The biggest brands are declining. So in efforts to find growth, people are finding other areas to nibble.”

That’s what’s spurring trendy product innovation from Big Beer — such as Heineken recently launching its nonalcoholic Heineken 0.0 beer, or Anheuser-Busch InBev, which did the same with Budweiser Prohibition Brew — on down to smaller craft breweries like Sibling and Platform Beer Co. One of the most popular hard seltzers on the market today, Truly Spiked, came out of the industry’s largest craft brewer, Boston Beer Co. (the parent company of Samuel Adams).

“There are shifting tastes that the beer industry is struggling to grapple with,” Steinman said, “and craft beer is dealing with that.”

Nontraditional products like Sibling Revelry’s Olly Olly Gluten Free Pale Ale could help attract a wider range of consumers.

(Sibling Revelry FaceBook page)

Why tastes are changing is its own story, but one driving factor is a generally more health-conscious society.

Nielsen, in a 2019 Beer Industry Summit report, noted that 52% of beer drinkers (almost two-thirds of 21- to 34-year-olds, so younger people in particular) say they want to drink less, while 25% of beer consumers say they choose drinks with wellness in mind more than they did a year earlier.

As far as the anti-beer movement, Steinman pointed to the “Dry January” campaign, something started by the Alcohol Change U.K. charity that has gained some traction in the U.S. Consumers of that mindset, who are either avoiding beer itself or opting for healthier alternatives, are increasingly drawn to seltzers for their clean appearance, short ingredient list and calories comparable to lighter beers.

At the taproom, offerings like hard seltzer or other nontraditional products could also help attract consumers breweries might not typically draw. That approach to inclusivity is something the Ohio Craft Brewers Association (OCBA) promotes. Offering something different at the taps, like Sibling, is a way to connect with another segment of the market.

That’s all the more important for small breweries, which typically thrive in a taproom model versus one

focused on distribution, where margins are tighter.

“When you focus on getting the community involved, getting them to come to the taproom, creating innovative products — whether that’s beer or cider or seltzer — you make them regulars as opposed to trying to compete with hundreds of breweries for shelf space at grocery stores, which is proving to be harder than it was five years ago with increased competition,” said OCBA spokesman Justin Hemminger.

Not everyone is joining the parade just yet, though.

Some brewing purists may resist trends for nonalcoholic beer or hard seltzer. They’re the folks who may grimace at the hazy IPA trend, which some beer-makers aren’t fond of because brewers are taught to value clarity, so serving something cloudy is an abdication of that principle.

“We never steer away from coming out with something crazy or unique from everyone else,” said Saucy Brew Works marketing manager Tom Bogomolny. “But we don’t jump on bandwagons and follow trends. We try to start new trends here.”

Others may be constrained by what they can offer today. Great Lakes Brewing Co. for example, is at capacity in its current facilities and feels pressure to produce enough volume of its most popular beers, which limits its ability and enthusiasm for a pivot to something different.

“With our current portfolio priorities and production limitations, we’re not presently in a position to expand beyond craft beer,” said Great Lakes spokeswoman Marissa DeSantis.

“Still, we always keep a watchful eye on market trends. Even if broadening our offerings beyond beer is not something we choose to do, we need to consider what consumers are looking for and what’s best for our brand.”

Others, though, see a compelling market opportunity, even if that means finding a way to step outside their comfort zone.

“I think there’s a lot of people who’ll say they’re never doing that, like making a seltzer,” Velez said. “But if the market demands it, you’re leaving money on the table.”

2/14/19 4:15 PM

CRAIN’S CLEVELAND BUSINESS

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F E B R U A RY 18 - 2 4 , 2 019

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PA G E 15

THE LIST

Largest Philanthropic Gifts of 2018 Ranked by gift amount THIS YEAR RECIPIENT

DONOR

GIFT 2018 GIFT AMOUNT (1) DATE

WHAT WILL THIS GIFT SUPPORT?

CONNECTION TO RECIPIENT

DEVELOPMENT CONTACT

1

Cleveland Clinic

Ron and Terri Weinberg

$30,000,000

Jan. 1

Research priorities

Trustee family

Lara Kalafatis (216) 445-8695

2

Case Alumni Foundation

Anonymous

$23,209,303

January

Case Western Reserve University's College of Arts & Sciences

Alumnus

Stephen Zinram (216) 231-4567

3

Case Western Reserve University

Anonymous

$20,000,000

March

Endowed professorships in medicine and engineering

Graduate

Lawrence Gibson (216) 368-4352

4

Case Western Reserve University

Veale Foundation

$15,000,000

September

Veale Institute for Innovation & Entrepreneurship

Philanthropic foundation of a graduate

Lawrence Gibson (216) 368-4352

5

Cleveland Clinic

Anonymous

$14,500,000

Oct. 31

Regional priorities

Grateful patient

Lara Kalafatis (216) 445-8695

Akron Children's Hospital

Richard and Barbara Altman, Louis and Christine Altman, Jane and Michael Zoldan

$10,000,000

March 16

Akron Children's Health Center in North Canton

Supporters

John LaGuardia (330) 543-8994

6

Cleveland Clinic

Boykin family

$10,000,000

March 7

Taussig Cancer Center

Grateful patient

Lara Kalafatis (216) 445-8695

6

John Carroll University

Boler Family Foundation

$10,000,000

May 15

Transforming the university’s Boler School into the John M. and Mary Jo Boler College of Business

Graduate, former board member (John Boler)

Doreen Riley (216) 397-1990

6

Rock & Roll Hall of Fame

KeyBank Foundation

$10,000,000

April 11

CLE VIP program allowing Cleveland residents to visit the Rock Hall for free

Community partner

Caprice Bragg (216) 515-8404

6

University Hospitals

Anonymous

$10,000,000

Sept. 12

NA

Friend

Sherri Bishop (216) 983-2200

6

University Hospitals

Anonymous

$10,000,000

Dec. 28

University Hospitals Orthopedics

Friend

Sherri Bishop (216) 983-2200

12

University Hospitals

American Heart Association, Paul Allen Frontiers Group

$9,600,000

November

Research on brain health and cognitive impairment

NA

Sherri Bishop (216) 983-2200

13

Cleveland Foundation

Charles E. Adams Trust

$9,510,324

Jan. 23

A named fund for unrestricted purposes

Donor

Kaye Ridolfi (216) 861-3810

14

Case Western Reserve University

Roe Green

$8,000,000

June

Phase II of the Maltz Performing Arts Center at The Temple-Tifereth Israel

Friend

Lawrence Gibson (216) 368-4352

Case Western Reserve University, Cleveland Clinic

Anonymous

$8,000,000

Feb. 15

Health Education Campus

Graduate

Lawrence Gibson (216) 368-4352 Lara Kalafatis (216) 445-8695

16

Community Foundation of the Mahoning Valley

Estate of Diana R. Arnett

$7,571,359

September

Grantmaking, generally for the arts, the poor and underprivileged, and educational institutions

Former Mahoning Valley resident

Shari Harrell (330) 743-5555

17

Northeast Ohio Medical University Foundation

Peg's Foundation

$7,500,000

May 24

Department of psychiatry, community-based mental health

Longtime partner and funder

Daniel Blain (330) 325-6261

18

Cleveland Foundation

Sally K. Ebling Trust

$7,234,049

April 30

A named fund for education programs

Donor

Kaye Ridolfi (216) 861-3810

19

The Musical Arts Association (The Cleveland Orchestra)

Estate of Dorothy Humel Hovorka

$6,986,387 (2)

Dec. 26 (2)

Endowment

Former trustee

Emily Kilduff (216) 231-7522

20

Case Western Reserve University

Anonymous

$6,900,000

November

Scholarships in the School of Medicine and Coulter Translational Research Partnership

Graduate

Lawrence Gibson (216) 368-4352

21

Cleveland Foundation

Jennie B. Adams Trust

$6,858,782

Jan. 23

A named fund for unrestricted purposes

Donor

Kaye Ridolfi (216) 861-3810

22

Kent State University

John Robert Elliot

$6,425,000

June 4

Kent State University Fund

Graduate

Steve Sokany (330) 672-6002

Hiram College

Dean Scarborough and Janice Bini

$6,000,000

May 9

Academic redesign efforts and campus improvements

Graduate, chairman of board of trustees (Dean Scarborough)

Jennifer Schuller (330) 569-5839

23

Oberlin College

Anonymous

$6,000,000

July 27

Scholarships

Graduate

Kassy Wyman (440) 775-5677

25

Cleveland Clinic

Anonymous

$5,500,000

June 28

CEO Transformation Fund

Trustee family

Lara Kalafatis (216) 445-8695

26

Case Western Reserve University

Kevin John Kranzusch

$5,000,000

April

Professorship and chair position for the Department of Computing, Data and Artificial Intelligence

Graduate

Lawrence Gibson (216) 368-4352

26

Case Western Reserve University

Marian K. and Michael R. Shaughnessy

$5,000,000

May

Creation of Marian K. Shaughnessy Nurse Leadership Academy at the school of nursing

Graduate (Marian Shaughnessy)

Lawrence Gibson (216) 368-4352

26

Kent State University

Aramark Services Inc.

$5,000,000

June 20

Comprehensive campaign

Corporate partner

Steve Sokany (330) 672-6002

26

University Hospitals

Angela and James Habrick

$5,000,000

Dec. 27

UH Harrington Heart & Vascular Institute

Friends

Sherri Bishop (216) 983-2200

30

Stark Community Foundation

Anonymous

$4,700,000

June 8

Endowment fund to support the donor’s charitable passions

Foundation donor

Bridgette Neisel (330) 454-7992

31

Fund for Our Economic Future

The George Gund Foundation

$4,000,000

Nov. 8

Operating and project costs

Member of philanthropic collaborative

Sara McCarthy (216) 456-9806

32

Case Western Reserve University

Charles H. Phipps

$3,750,000

February

Endowed deanship at school of engineering

Graduate

Lawrence Gibson (216) 368-4352

33

The Musical Arts Association (The Cleveland Orchestra)

Anonymous

$3,700,000

Sept. 6

Various programs

Trustee

Emily Kilduff (216) 231-7522

34

Cleveland Foundation

Margaret Patch Trust

$3,568,036

Dec. 10

Fund to support various fields of interest

Donor

Kaye Ridolfi (216) 861-3810

6

14

23

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

Download all 91 gifts in Excel or PDF format. Become a Data Member: CrainsCleveland.com/data Donations to religious organizations are not included. Information is from gift recipients, philanthropic organizations and Crain's research. Send feedback to Chuck Soder: csoder@crain.com.

(1) Gift dollar figures in some cases include commitments to make future donations. (2) Includes multiple gifts from estate received in 2018; the largest gift was received on Dec. 26.

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CRAIN’S CLEVELAND BUSINESS

AKRON

Testa’s Hudson project could hinge on vote

By Dan Shingler dshingler@crain.com @DanShingler

After more than two years of meetings and making changes residents requested, developer Joel Testa said he hopes to soon break ground on the Downtown Phase II development on the west side of Hudson’s North Main Street.

Whether he can do that this year, or even at all, might depend on a May 7 advisory election in which Hudson residents will be asked whether the city should continue with the project.

“There are a few people who are unhappy who are being vocal, and we’re hoping that those who are happy are as equally vocal and come out,” Testa said. “Because our understanding is the overwhelming part of the community understands the need for this from an economic development standpoint for the longevity of Hudson.”

Testa, whose company is based in Cuyahoga Falls, said he’s already learned a lot from community members and has made quite a few changes.

“It’s had about a 60% reduction from what we originally envisioned in density, and it’s shifted much more toward residential and away from commercial and retail,” he said.

In the proposed plan, there are no longer any apartments in the project.

Some residents in home ownership-oriented Hudson didn’t want them, so the 144 units initially planned were pared down to 90, then 30 and then removed, according to a city informational site on the project.

The 60-room hotel Testa initially had proposed is gone, too. Planned office space was reduced, as well. Plans for about 18,000 square feet of flexible office space were removed, but the pro-

This rendering shows the latest proposed plans, including townhomes and office space, for downtown Hudson’s Phase II project. (Contributed)

posed project still includes more than 130,000 square feet of new office space.

Plans call for less retail as well, though exactly how much is to be determined, Testa said.

What the new plan has more of is housing. Proposed townhomes increased from 44 to about 75. The latest proposal also includes a residential neighborhood, which Testa described as a “pocket neighborhood” where 10 to 15 houses would surround a park setting.

In total, the proposed project has gone from 560,000 square feet to about 400,000 square feet. Its projected cost has decreased from $125 million-$150 million to about $80 million.

Most of that money would come from Testa and his companies, but the city would put up about $15 million, Hudson communications manager Jody Roberts said. The city already has spent money to move a bus garage, salt-storage building and other facilities to make room for the development, she added.

She and Testa both said they hope voters sign off on the reconfigured

project. As an advisory election, the vote is nonbinding, but if residents vote against the project, it will send a clear signal to city council and likely kill it, Roberts said.

“There really isn’t a Plan B right now. The concern is we’ve invested about $10 million in moving those buildings ... and that money was going to be recovered with a TIF (tax increment financing) through the project,” Roberts said.

A “no” vote will put the city in a tough spot, and residents might ultimately lose control over the land, she added.

“I know that council would be looking to recoup that money, and one option would be to sell that property to a developer,” Roberts said.

“If they sold the land to a developer, the developer could put in whatever they want and the city would no longer have control over what goes in there,” she continued. “But by the same token, this is valuable land in the middle of downtown. To leave it vacant, owned by the city and tax-exempt doesn’t make any sense.”

She said she was not yet aware of

how the city would be able to sell the land if that were the case, including whether it would pick a buyer based on their plans, or whether it would put the property up for bid.

She was careful to note, however, that city council has not determined if it would sell the land. If it does, any potential buyer would still face limits, but not as great as those involved in working with a city-owned property.

“We would still have zoning laws, but they could theoretically build something bigger than what we’re planning, based on our current zoning,” Roberts said.

She said the city needs many of the things in the current Phase II proposal, including housing for older residents and new Class A commercial office space that she said is in short supply in dowtown Hudson.

On those points, Matthew Beesley, a Hudson resident since 1991 and principal at Cushman & Wakefield/ Cresco Real Estate in Independence, agrees.

There’s office space in Hudson, he said, but not much new stuff, especially downtown.

“A lot depends on your definition of Class A and Class B, but for newly constructed office space on speculative basis, there’s a negligible amount in Hudson,” Beesley said.

Based on how 2004’s Phase I of Hudson’s downtown development has fared, he said there’s demand for office space, but he sees the highest demand for housing.

“I have a beautiful home in Hudson, but my kids are grown. If I want to stay in Hudson, I don’t have many low-maintenance options to consider now. … The townhomes provide an alternative and, again, with walkability and access to all the shops. So, I think they will do very well,” Beesley said.

In talking about the project, he repeatedly cited Phase I, known as First & Main, which revamped downtown. It’s a model worth following up on, he said.

“Phase I leased up beyond my expectations in terms of timing and price.

It did quite well, and it has remained largely leased. And the difference between Phase I and your typical suburban projects that define the balance of the Hudson market is the walkability to shops and restaurants right outside your front door,” Beesley said.

Roberts said of First & Main, “That is 100% occupied as far as the offices go.”

She was unsure about retail vacancies at First & Main, but said they’ve been minimal, with spaces refilling quickly. She also noted the new development would not compete with existing retailers, because only about 10% of its space would be for mixeduse, and that would primarily be for service-oriented businesses.

The prices are higher downtown, Beesley noted. But downtown is likely to attract high-growth companies that are not so focused on the cost of their space and possibly more concerned about attracting young and technically trained talent, both Beesley and Roberts said.

Testa said those are the things he’s considered all along, part of an overall plan to keep Hudson vibrant by attracting young talent and new companies while retaining existing residents.

If he’s frustrated by more than two years and 50 meetings with city council, planning and zoning officials, and residents, he’s not letting on. If he has to, he might try to buy the land, he said. But he’s hoping to succeed with the current plan and possibly more revisions.

As for making changes to his projects, that’s just par for the course, he said.

Metro RTA readies long-awaited service revamp

By Judy Stringer clbfreelancer@crain.com

If one were to use a transit analogy to describe the current iteration of Akron Metro Regional Transit Authority’s Driving Metro Forward initiative, it would be closer to a local route than express service.

Launched in 2015 and initially conceived as a two-year overhaul of Akron’s bus system, the initiative now will take a longer, more tempered approach, leaders said. The first phase of the redesign is expected to launch in the fall, two years after the original reboot target date. And, they say, it will take years to roll out the full slate of changes, which ultimately aim to optimize service in the high-density core network and integrate creative transportation solutions — ranging from circulars to possible partnerships with Uber and Lyft — in places where buses are used less often.

“We are really pushing hard on this question of ‘Where does a traditional bus service work?’ ” said Metro RTA executive director Dawn Distler, “and in other places that don’t have the density or the need for that level of public transit, ‘What are the mobility options that we can provide for them?’ ” An Akron native and one-time Metro RTA bus driver and administrator, Distler assumed agency leadership in September, about nine

P016_CL_20190218.indd 16

months after former executive director Richard Enty was fired. Enty’s exit was preceded by more than six months of investigations into complaints about his behavior and leadership.

“When I got here, I won’t say we stopped (Driving Metro Forward), but we did put the brakes on a little bit, slowed it down to look at where we were, what we were trying to accomplish,” said Distler, who previously worked in Tennessee for 14 years, most recently as Knoxville Area Transit director.

“The way I see it, the group here was sort of hemmed into a box. They were given certain parameters, and I don’t manage that way,” Distler said.

“I said, ‘Let’s just throw the box away completely and tell me what you want to do with the system. Tell me what people are asking for.’ ” Fortunately, the agency had more than 500 written comments and some 700 face-to-face rider interactions collected over several years to guide it on what users want, according to Valerie Shea, Metro RTA director of planning and development. A significant portion of that feedback involves increasing the span (i.e., hours of operation) and frequency (number of trips) along “high-ridership” routes, she said.

Thus, the first phase of proposed changes — which Shea said will be released to the public next month — will

focus on improving the usability of high-ridership routes with longer service hours and shorter wait times.

Shea declined to provide specific details on which routes will be affected ahead of the March announcement.

However, some of the transit’s most productive lines include No. 1, West Market Street to Montrose; No. 2, East Market and South Arlington streets to Interstate Park; No. 3, Copley Road to I-77; and No. 10, Howard Street and State Road to Portage Crossing.

“If there is a high-frequency corridor that we have right now, that ridership is high for a reason, because there are people and jobs along it,” Shea said. “So what we are looking at is how can we strengthen those even more and increase the service there to meet our goals.”

Riders will not see a fare increase when the fall service upgrades go into effect. Distler said Metro RTA’s board recently approved the reallocation of $1 million to help cover the cost of the expanded service. Annually, it spends about one-third of its $55 million budget on capital investments, but Metro RTA was able to secure enough grants to transfer a small portion of funds earmarked for capital outlay to its operating budget.

Once the first phase is underway and that “box is checked off,” Shea said, the agency will begin to define the scope for the second step. While she thinks it’s too early to say what problem areas will be

addressed first, future changes will aim to relieve two pain points.

The first is route duplication, where buses coming from different neighborhoods converge to run near or on the same street to and from the main terminal, the Robert K. Pfaff Transit Center, in downtown Akron.

Shea said one of the long-term goals is to create as many outlying connections as possible between buses on the newly energized high-frequency routes and those that run less often to neighborhoods and communities outside the core service area. Instead of most transfers funneling through the downtown hub, riders would save time by connecting at other points along the core network.

A harder nut to crack is service to suburban areas, such as Twinsburg or Green, which are far from the main terminal but chock-full of job opportunities. Those trips can take up to an hour or more, Distler said, making public transportation an inconvenient option at best. She said the agency is open to a number of solutions, which may include shuttle services that run more frequently or are routed between targeted neighborhoods and job locations, or are timed to periods of higher demand.

Another scenario in some remote business parks is where riders can call shuttles for pickup. Distler said there may even be some cases where Metro RTA collaborates with ride-share

companies Uber and Lyft to help residents get to work in destinations that fall outside the structured bus routes. “(The solution) is going to be different for jobs in Twinsburg than it is for Richfield or Stow,” Shea said. “We are working very closely with the county on identifying where those job-dense areas are and doing some sort of focused outreach to the businesses and chambers to see what makes the most sense for each location — depending on how many businesses there are, for example, or how many shifts there are, or where employees are coming from.”

Twinsburg economic development director Larry Finch said communities such as his would welcome any change that makes public transportation more user-friendly. He said a fraction of employees at Amazon, FedEx and Cardinal Health, to name a few, rely on the Metro RTA busing, which is limited in stop locations as well as frequency. Many times, Finch said, the workers have to walk a long way to and from bus stops after lengthy commutes.

Distler envisions a day when problems like that are avoided altogether.

Along with the current service reboot, she said she is reaching out to county and community leaders so that her team has a seat at the table when companies propose relocations and projects. Public transportation should not be an afterthought, she said.

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To place your listing, contact Katie Rozek at 313-446-0485 or email krozek@crain.com www.craincleveland.com/classifieds BUSINESS FOR SALE

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LEGAL NOTICE Flexjet accepted delivery of its first Gulfstream G650 at its operations control center at the Cuyahoga County Airport in Richmond Heights in 2017. (Jason Miller/AP Images for Flexjet)

FLEXJET

and people can purchase time on private jets.

CONTINUED FROM PAGE 1 At the time of the merger, the The postcards were crude and, in Teamsters represome cases, profane. Said one printsented Flight Opable expression, addressed to an extions pilots, while ecutive’s home: “Do You Believe the Flexjet pilots were Drivel You Spew?” Another was a sinnonunion.

The gle word in white letters on a black Ricci Teamsters won background: “Dumbass.”

Sulllivan emphasized that the the right to represent both pilot Teamsters were not involved in the groups, after a December 2015 elecpostcard campaign, only the inde- tion, by a vote of 330-314. An arbitrapendent pilots organization. NetJets tor from the National Mediation Inc., based in Columbus, is the in- Board then put together a collective dustry leader with as much as a 60% bargaining agreement in 2017 that share of market, according to several sought to resolve conflicts between sources. The combined Flexjet and the two pilot groups over the seniority Flight Options is No. 2, with perhaps list, which helps determine pilot pay, perks, job security and other issues.

30% of the market.

Management of the now-combined The suit asks for more than $125,000 in damages. The lawsuit firms balked at the agreement since it was filed in October but was stalled wanted to reshape its operations and fleet of aircraft into by an action by the NJASAP to have the “Red Label is 30% separate tiers and pilot salaries. It suit dismissed. (of our business), raise considered the union The impetus beagreement a roadhind the decertifica- but we expect it block. A key innovation was the purtion of the combined chase of Flexjet, to grow. Ninetycompany was a tier which was created one percent of called Red Label by and owned by the Candadian aircraft our pilots want to Flexjet, the top of the line. Red Label would maker Bombardier participate.” offer ownership parInc., by Directional ticipants the compaAviation Capital, — Bob Sullivan, Flexjet’s ny’s newest aircraft which already chief administrative officer and offered pilots an owned Flight Options. Directional Aviation is the par- opportunity for premium pay and ent of aircraft rebuilder Nextant greater flexibility in when and where Aerospace, aircraft maintenance firm they worked.

The company could not make Constant Aviation and several other aviation-related businesses created planned changes in pay or working conditions during the period of labor by chairman Kenn Ricci.

Directional Aviation paid Bomba- negotiations.

The Red Label program and mandier $195 million for Flexjet in 2013.

Both Flexjet and Flight Options man- agement’s plans for improvements in age what the air service industry calls pay and benefits for all pilots pushed fractional ownership aircraft, where, the aviators to seek to decertify their like vacation time shares, businesses union. The postcard mailings oc-

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MEETING AND EVENT PLANNER LIST: Conference Centers

curred during a 28-day voting period that ended May 31. The pilots voted 318-220 to decertify the union.

In a statement following the vote, Ricci praised the pilots.

“While this underscores the dissatisfaction our pilots felt with the union, it is more importantly a testament to the trust our pilots have in this company and our leadership team, and a rejection of the tactics of fear and intimidation that the Teamsters used during this vote,” said Ricci.

An email sent Tuesday, Feb. 12 to Coley George, vice president of industry affairs with NJASAP, was not returned at press time.

“Everything was stifled by the negotiations,” Sullivan told Crain’s, adding that all employees got an immediate $1,000 bonus when the decertification was official. “Once the relationship (between management and pilots) was direct, we were able to do the right thing and that (the bonus) was one of the things we did right away.”

The starting salary, plus bonus, of pilots is now nearly $100,000, Sullivan said. Some, in particular those in the Red Label program, are able to make more than double that.

“Red Label is 30% (of our business), but we expect it to grow,” said Sullivan. “Ninety-one percent of our pilots want to participate.”

The rise in salaries is at least partly a response to a rising demand for pilots worldwide, as both the private jet market and the commercial airlines have finally recovered from the economic downturn of a decade ago.

“Right now, the sun is shining for the pilots because pilots are in demand,” said Doug Gollan, who operates a website, Private Jet Card Comparisons, that follows the private jet industry. “They are seeing both their monetary rewards and benefits associated with scheduling and the work environment getting markedly better.”

UNITED STATES BANKRUPTCY COURT, NORTHERN DISTRICT OF OHIO, EASTERN DIVISION ) Chapter 11, Case No. 18-50757 (AMK) In re: FIRSTENERGY SOLUTIONS CORP., et al.,1 ) (Jointly Administered) ) Hon. Judge Alan M. Koschik Debtors.

NOTICE OF DISCLOSURE STATEMENT HEARING PLEASE TAKE NOTICE OF THE FOLLOWING: 1. On February 11, 2019, the above-captioned debtors and debtors in possession (collectively, the “Debtors”) filed the Disclosure Statement for the Joint Plan of Reorganization of FirstEnergy Solutions Corp., et. al., Pursuant to Chapter 11 of the Bankruptcy Code (as may be amended, modified or supplemented, the “Disclosure Statement”) [Docket No. 2119] with the United States Bankruptcy Court for the Northern District of Ohio (the “Court”). The Debtors submitted the Disclosure Statement pursuant to section 1125 of the Bankruptcy Code for use in the solicitation of votes on the Joint Plan of Reorganization of FirstEnergy Solutions Corp., et. al., Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 2120] (as modified, amended or supplemented from time to time, the “Plan”).2 The Debtors reserve the right to amend, supplement, or modify such documents prior to the Disclosure Statement Hearing (as defined below).

2. A hearing is scheduled before the Honorable Alan M. Koschik, United States Bankruptcy Judge for the Northern District of Ohio, for 10:00 a.m. (prevailing Eastern Time) on March 19, 2019 (the “Disclosure Statement Hearing”) at the John F. Seiberling Federal Building and U.S. Courthouse, 455 U.S. Courthouse, 2 South Main Street, Akron, Ohio 44308, to consider the entry of an order approving, among other things, (i) the Disclosure Statement as containing “adequate information” pursuant to section 1125 of the Bankruptcy Code; (ii) procedures for soliciting, receiving and tabulating votes on the Plan and for filing objections to the Plan: (iii) the form of ballots, notices, and certain other documents to be distributed in connection with the solicitation of the Plan; (iv) the deadlines contained in the solicitation and confirmation procedures: and (v) the procedures for notice of the confirmation hearing and filing objections to confirmation of the Plan.

PLEASE BE ADVISED THAT THE DISCLOSURE STATEMENT HEARING MAY BE CONTINUED FROM TIME TO TIME BY THE COURT OR THE DEBTORS WITHOUT FURTHER NOTICE OTHER THAN BY SUCH ADJOURNMENT BEING ANNOUNCED IN OPEN COURT OR BY A NOTICE OF ADJOURNMENT FILED WITH THE COURT. 3. Copies of the Disclosure Statement and Plan may be obtained (i) from Prime Clerk LLC (a) at www.primeclerk.com/ FES, (b) upon request by mail to FirstEnergy Solutions Corp. Ballot Processing, c/o Prime Clerk LLC, 830 Third Avenue, 3rd Floor, New York, NY 10022, or (c) upon request by calling the FES restructuring hotline at (855) 934-8766 or (ii) for a fee via PACER at https://ecf.ohnb.uscourts.gov/ (a PACER login and password are required to access documents on the Court’s website and can be obtained through the PACER Service Center at www.pacer.psc.uscourts.gov). A copy of the Disclosure Statement and the Plan is also on file with the Office of the Clerk of Court, United States Bankruptcy Court for the Northern District of Ohio, John F. Seiberling Federal Building and U.S. Courthouse, 2 South Main Street, Akron, Ohio 44308 and may be examined by any party in interest during normal business hours.

4. EQUITY ELECTION RECORD DATE. Holders of certain classes of Claims against FirstEnergy Solutions Corp., FirstEnergy Generation, LLC, FirstEnergy Nuclear Generation, LLC, and FirstEnergy Nuclear Operating Company, as applicable, may be eligible to elect to receive equity in the Reorganized Debtors, rather than Cash, in satisfaction of their Claims (an “Equity Election”) under the Plan. The date of record for purposes of making an Equity Election was January 23, 2019, or such later date as agreed by the Debtors with the consent of the Requisite Supporting Parties and the Committee (each as defined in the Plan (such date, the “Equity Election Record Date”). All Holders of General Unsecured Claims wishing to make an Equity Election with respect to eligible Claims will be required to certify on their ballots to accept or reject the Plan, or by such other method acceptable to the Debtors with the consent of the Requisite Supporting Parties (as defined in the Restructuring Support Agreement (the “RSA”)) and the Committee, that they were (i) the beneficial holder of such Claims as of the applicable Equity Election Record Date and have not sold, transferred, or provided a participation in such Claims, or directly or implicitly agreed to do so following the Equity Election Record Date or (ii) are otherwise a party to the RSA and the beneficial holder of such Claims and such Claims were subject to the RSA as of the applicable Equity Election Record Date.

Notwithstanding the foregoing, no Holder of a General Unsecured Claim shall be prohibited from selling its General Unsecured Claim at any time after the Equity Election Record Date, provided that the transferee of any such General Unsecured Claim will not be eligible to receive an equity distribution unless such Claim is subject to the RSA. 5. SETTLEMENT, RELEASE, INJUNCTION AND RELATED PROVISIONS. The Plan contains certain release, injunction, and exculpation provisions, including third party releases, which are subject to approval by the Court and may be found at Article VIII of the Plan and Article V.I of the Disclosure Statement.

ARTICLE VIII OF THE PLAN CONTAINS RELEASE, INJUNCTION AND EXCULPATION PROVISIONS, INCLUDING THIRD PARTY RELEASES IN ARTICLES VIII.E AND VIII.F. THUS, YOU SHOULD REVIEW AND CONSIDER THE PLAN CAREFULLY BECAUSE YOUR RIGHTS MIGHT BE AFFECTED THEREUNDER WITH RESPECT TO THE DEBTOR PARTIES’ AND OTHER RELEASED PARTIES’THIRD PARTY RELEASES. 6. THIRD PARTY RELEASES. The Third Party Releases under the Plan comprise (i) the FE Non-Debtor Parties’ Third Party Releases and (ii) the Debtor Released Parties’and Other Released Parties’Third Party Releases.

All Holders are bound by the FE Non-Debtor Parties’ Third Party Releases and do not have the option to opt out of the FE Non-Debtor Parties’ Third-Party Releases.

Any Holder of a Claim that (i) votes to accept the Plan, (ii) is deemed to have accepted the Plan, (iii) is entitled to vote, but fails to vote to accept or reject the Plan, or (iv) rejects the Plan but does not elect to opt out of the Debtor Released Parties’ and Other Released Parties’ Third Party Releases, shall be deemed to have granted the Debtor Released Parties’ and Other Released Parties’ Third Party Releases.

Holders may elect to opt out of the Debtor Released Parties’ and Other Released Parties’ Third Party Releases contained in Article VIII.F of the Plan only if they check the box on their Ballots and vote to reject the Plan.

7. Responses and objections, if any, to the approval of the Disclosure Statement or any of the other relief sought by the Debtors in connection with approval of the Disclosure Statement, must be filed together with proof of service, with the Clerk of Court, United States Bankruptcy Court for the Northern District of Ohio, Eastern Division, John F. Seiberling Federal Building and U.S. Courthouse, 455 U.S. Courthouse, 2 South Main Street, Akron, Ohio 44308 and served so that they are received by the following parties: (i) counsel for the Debtors; (ii) the Office of the United States Trustee; and (iii) all other parties in interest that have filed a notice of appearance in accordance with Rule 2002 of the Federal Rules of Bankruptcy Procedure (the“Bankruptcy Rules”) in the Debtors’chapter 11 cases on or before on or before 4:00 p.m. (prevailing Eastern Time) on March 12, 2019.

8. IF ANY OBJECTION TO THE DISCLOSURE STATEMENT IS NOT FILED AND SERVED STRICTLY AS PRESCRIBED HEREIN, THE OBJECTING PARTY MAY BE BARRED FROM OBJECTING TO THE ADEQUACY OF THE DISCLOSURE STATEMENT AND MAY NOT BE HEARD AT THE HEARING. 9. Upon approval of the Disclosure Statement by the Court, holders of Claims against the Debtors who are entitled to vote on the Plan will receive a copy of the Disclosure Statement, the Plan, and various documents related thereto, unless otherwise ordered by the Court.

If you have any questions related to this notice, please call the Debtors’ restructuring hotline at (855) 934-8766 or email fesballots@primeclerk.com.

Please note that Prime Clerk LLC is not authorized to provide, and will not provide, legal advice.

1 The Debtors in these chapter 11 cases (the “Chapter 11 Cases”), along with the last four digits of each Debtor’s federal tax identification number, are: FE Aircraft Leasing Corp. (9245), case no. 18-50759; FirstEnergy Generation, LLC (0561), case no.

18-50762; FirstEnergy Generation Mansfield Unit 1 Corp. (5914), case no. 18-50763; FirstEnergy Nuclear Generation, LLC (6394), case no. 18-50760; FirstEnergy Nuclear Operating Company (1483), case no. 18-50761; FirstEnergy Solutions Corp. (0186); and Norton Energy Storage L.L.C.(6928), case no.18-50764. The Debtors’address is:341 White Pond Dr., Akron, OH 44320.

2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan or Disclosure Statement, as the context so requires.

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ThenDesign Architecture (TDA)

Executive Caterers

Meaden & Moore is pleased

Meaden & Moore is pleased

Insivia, a leading growth

Bringing a well-rounded set

Melissa Marik returns to

to announce the election of

to announce the election of

consulting firms, is pleased

of technical skills, a passion

Executive Caterers as COO.

Brittany Seibel to Senior

Hillary Kastelic to Senior

to announce that Dave Crain

for building strong

She has been very active in

Manager. Ms. Seibel has

Manager. Ms. Kastelic serves

has joined the company as

relationships in the design

the Cleveland business

been with the firm since

in the Assurance Services

Vice President of Client

and architectural

community and currently sits

2011 and serves in the

Group and has over 10 years

Services reporting to CEO

communities including

on the boards of Sales and

Assurance Services Group.

of experience. Her

Andy Halko. Crain has made

serving as a member of IIDA,

Marketing Executives of

Her background includes working with a

background includes working with a

a career of enabling authentic, valuable

as well as a fresh exuberance, Sarah

Cleveland, Mayfield Chamber of

diversified client base of manufacturing,

diversified client base of service,

connections and joins Insivia with over 20

Slaughterbeck is the most recent

Commerce and the marketing committee

service, and construction companies, as

manufacturing, communications, as well

years’experience in Strategic Planning,

professional to join ThenDesign

of Hospice of the Western Reserve.

well as employee benefit plans. All while

as employee benefit plans. Her approach

Account Management, and Service

Architecture as an Interior Designer. Sarah

Executive Caterers is Northeast Ohio’s

providing an exceptional client

to serving clients has been instrumental in

Delivery. “Dave is a strategic leadership

is fortunate to live on Cleveland’s West

largest catering & event company

experience.

the success of our Company.

hire for Insivia as we focus on delivery

Side as she enjoys golfing, visiting the

including Landerhaven, Cleveland Public

excellence to scale our business

zoo, and walking with her husband on the

Auditorium and the English Oak Room at

nationally,” says Halko.

beaches of Lake Erie.

Tower City.

ENGINEERING & CONSULTING

OHM Advisors Russ Critelli, PE, PMP, joins architecture, engineering and planning firm OHM Advisors.

He is a Principal and manager of the firm’s Cleveland office, tasked with leading office operations and driving its future growth. His 30-year engineering consulting experience spans the public and private sectors with an expertise in large transportation projects.

Russ is also a Certified Project Management Professional and an active leader at the local and state levels of several industry organizations.

ENGINEERING & CONSULTING

OHM Advisors

NON-PROFIT

ENGINEERING & CONSULTING LAW

OHM Advisors Community advancement

Schneider Smeltz Spieth Bell LLP

firm OHM Advisors

Rock & Roll Hall of Fame The Rock & Roll Hall of Fame welcomes Dionne Broadus

announces the promotion of

Schneider Smeltz Spieth Bell

to the role of Vice President

David Krock, PE, to

LLP announces that Aanchal

of Development & External

Managing Director of Ohio.

Sharma has been made a

Relations. Broadus has over

Dave will oversee operations

Partner of the firm. Ms.

17 years of experience in

for the Cleveland, Columbus

Sharma joined SSSB in 2016

fundraising, stewardship,

and Akron offices of the architecture,

and practices in the areas of

corporate partnerships & board

engineering and planning firm. An

Litigation and Real Estate.

engagement. She comes to the Rock Hall

integral firm leader, he brings over 25

She is frequently recognized for excellent

from CWRU’s Mandel School, where she

years of engineering consulting to

client service and her commitment to the

was the Chief Development & External

Northeast Ohio area public and private

ongoing professional development of the

Affairs Officer. Broadus held leadership

clients with an expert focus on

firm’s newest Associates. She is an active

roles at NYC’s tourism board, the High

infrastructure, economic development,

member of the Cleveland Metropolitan

Line, BET Networks & the Essence Music

and funding. He was recently appointed

Bar Association, Commercial Real Estate

Festival. She has a JD from Penn Law

to ACEC Ohio’s Board of Trustees.

Women, Asian American and South Asian

School.

Bar Associations.

LAW

LAW

STAFFING & SERVICES

of Akron for community advancement firm OHM Advisors. A 35-year professional consulting engineer and surveyor across the public and private sectors, Tom was most recently a Senior Project Manager for the firm focusing on municipal design projects for Akron area communities. A talented big-picture thinker and relationship builder, Tom will be responsible for growth objectives in the area and management of office operations in his new role.

ENGINEERING & CONSULTING

Rock & Roll Hall of Fame The Rock & Roll Hall of Fame welcomes Dawn Wayt to the role of Vice President of Marketing & Sales. Bringing over 20 years of marketing leadership to the Museum, she will optimize the Rock Hall’s digital and physical customer experience. Dawn has held leadership positions with notable organizations including American Express, Artful Home, American Greetings, and Arborwear. Wayt received her M.B.A. from the University of Cincinnati.

STAFFING & SERVICES Direct Recruiters, Inc. Direct Recruiters, Inc. is

Thomas Tucker, PE, PS, has been promoted to Manager

NON-PROFIT

pleased to announce that

Schneider Smeltz Spieth Bell LLP

Weston Hurd LLP

Direct Recruiters, Inc.

Nicholas M. Vento is the

Cornelius J. (Corky)

Direct Recruiters, Inc. is

named Partner at Direct

newest Attorney to join the

O’Sullivan joins Weston

pleased to announce that

Recruiters, Inc. For over 14

Litigation practice group at

Hurd as a Partner after

Cherie Shepard has been

years, Jason has built lasting

Schneider Smeltz Spieth Bell

spending nearly 15 years as

named Partner at Direct

relationships with professionals in the

LLP. Mr. Vento focuses his

a Senior Litigation Attorney

Recruiters, Inc. She began at

Packaging, Processing & Material

practice in the areas of

with CNA. Corky represents

DRI over 10 years ago and

Handling industries. As Practice Leader,

Business/Commercial

architects, engineers,

currently directs the

he is committed to partnering with top

Litigation, Labor and Employment

accountants, realtors and other

Packaging, Processing & Material

organizations to fill executive and

Litigation, and Estate and Probate

professionals in large loss matters and has

Handling teams. Cherie is known for her

professional positions. In 2016, Jason was

Litigation. He received his J.D. from

tried over 40 cases as the first chair

ability to quickly comprehend clients’

named DRI’s Recruiter of the Year, a

Cleveland-Marshall College of Law, where

attorney. His practice areas cover

unique needs and identify top talent in

prestigious award for the top producer in

he served as the Symposium Editor for

catastrophic claims, general commercial

her industry. She demonstrates

the company.

Cleveland-Marshall’s Journal of Law and

liability, wrongful death, construction

exceptional leadership qualities and

Health. Nick earned a B.S.B.A. in Finance

defect, real estate, professional liability,

serves as a positive role model for women

from The Ohio State University.

long term care, trucking and UM/UIM

in business, founding the Direct

litigation.

Companies’women’s group.

Jason Herbert has been

STAFFING & SERVICES

Direct Recruiters, Inc. Greenland Engineering Tommy Yokum recently joined Greenland Engineering. An FAA certified drone pilot, member of the American Society of Landscape Architects and Council of Landscape Architectural Registration Boards, he brings a well-suited blend of

Direct Recruiters, Inc. is

For more information regarding advertising in

Crain’s Cleveland People On The Move

talents, including landscape architecture, land planning, and project management skills to the team. Outside of work, Tommy enjoys kayaking and is an avid fisherman.

P018_CL_20190218.indd 18

pleased to announce that Norm Volsky has been named Partner. Norm joined DRI first as an intern in 2011.

As Practice Leader of Digital Health, his main objective is to complete each search successfully while providing a positive experience for both clients and candidates. He consistently leads by example and is an

email Debora Stein at dstein@crain.com

excellent mentor to newer team members. Norm’s exceptional communication and leadership skills will serve him in his role as Partner at DRI.

2/13/19 9:44 AM

CRAIN’S CLEVELAND BUSINESS

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F E B R U A RY 18 - 2 4 , 2 019

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PA G E 19

SOURCE LUNCH

John Corlett President and executive director, The Center for Community Solutions From his teenage years going door to door for Richard Nixon to campaigning for Jimmy Carter as a young adult to studying political science and women’s studies at Ohio University, John Corlett has always been interested in politics and government. ¶ Today, he leads The Center for Community Solutions, a local nonpartisan think tank focused on health, social and economic issues. Now president and executive director of the center, Corlett also worked as a senior fellow there in the early 2000s. Between his two stints at the center, Corlett was the state Medicaid director and then worked at MetroHealth as vice president of government relations and community affairs. ¶ The 17-person team at The Center for Community Solutions works under the tagline “Research. Analysis. Action.” Corlett said this is key to all that they do, calling the center a “think tank with muddy boots.” ¶ “We’re not afraid to get down in the muck of how policy and government works, and that’s kind of our sweet spot,” he said. — Lydia Coutré

The Corlett file to?

Ohio?

Any secret skills?

He makes an excellent cassoulet.

Favorite book He just finished reading “Automating Inequality,” by Virginia Eubanks.

Hobbies Cooking, New York Times crossword puzzles and exploring his Detroit Shoreway neighborhood

Lunch spot Number One Pho 3120 Superior Ave., Cleveland 216-781-1176

The meal Egg noodle soup with wonton and roast pork (Mi Hoanh Thanh Xa Xiu) and hot tea; sweet-and-sour soup (Canh Chua Rau Cai) and bubble tea

The vibe Number One Pho offers authentic Vietnamese cuisine in a cozy atmosphere. Even on one of the coldest days of the year, the restaurant was buzzing with people enjoying lunch.

The bill $34.08 with tip

You’ve been at Community Solutions at two different points in its history. How has its work changed over time and how has it stayed the same?

I think the one way it’s changed, at least in my sense, is that we are a lot more entrepreneurial and that we do a lot more consulting work for government, for private organizations, for foundations. So we have done some pretty significant work. Like we’re doing work right now for Akron Children’s Hospital; we did work for the Rape Crisis Center; we did work for Cuyahoga County, the City of Cleveland. So that’s become a bigger part of our work than I think when I was there the last time.

Is that something you really spearheaded?

I think we’d had a little bit of regional creep. Like, we kept seeing our area as larger and larger. I’m very Cleveland-centric. I live in Cleveland and stuff, so this is where our resources were created, so we owe our work to Cleveland and Cuyahoga County. I think we got a little more geographically focused. And I think the other piece that we did, especially this last year, that’s been a big help to us, is sort of expanding our communications presence. If people don’t know what you do, you don’t attract — it’s a way to attract business and attract interest.

What are your big policy focuses or your priorities this year?

I think this year we’re gonna do work around maternal health. You know, we appreciate all the interest (in) infant health, infant mortality ... but we think there’s some issues around

maternal mortality and maternal health in Ohio that we want to bring focus to. One of the areas that we worked on in the last budget and made some progress, but not enough, is in the behavioral health field around what we call multisystem youth. These are youth that are typically involved in lots of different systems. They might be in child welfare, in juvenile court, you add in their school system and the health care system — these are kids with really profound behavioral health issues that there just isn’t enough resources around that. So that’ll be something that sort of crosses, you know, Medicaid and Child and Family Services and other state agencies.

We think there’s, with the (Gov. Mike) DeWine administration, there’s openness to this stuff. We were kind of stuck with the (John) Kasich administration. I think we have a better opportunity now with the DeWine administration to make progress in that area.

We’re also focused around older adults, particularly around senior nutrition. We were concerned about the rising rate of hunger among older adults that we’re seeing, and so we think there are some policy changes there that we might be able to affect that wouldn’t cost the state additional money but would just bring federal money in more efficiently. We also want to see what the governor proposes, too. Medicaid could be a whole list of its own.

In your policy work and beyond, what would you consider your major accomplishments in your four years at the helm?

I think the role that we played in protecting Medicaid expansion, you

know, and the work that we did around preventing the repeal of the ACA (Affordable Care Act). We started on that work the day after the election, when (President Donald) Trump was elected. I mean, I think the original thought was that the ACA would be repealed by the end of the first month — and that didn’t happen. And I think that we played a part in that, other people played a part in that. ... I think the other thing is we have a good team.

We have good people, and we’re super productive. We now generate new material every week. When I first got there, we didn’t do that. We weren’t generating new material. So since we are in the business of ideas, we have to keep generating ideas and new work.

We’ve also, I think, tried to revitalize our connection with our core constituency groups, which are sort of the neighborhood community centers, neighborhood health centers, the local health and human service agencies — we’ve strengthened our relationships there.

What keeps you passionate about and engaged in the work that you do?

I think, for me, it’s like justice. It’s like making sure people get treated fairly. It seems like right now that more flows to the top than to the bottom, and so a lot of what we’re trying to do is create opportunity for people that are more toward the bottom of the economic ladder. So whether that’s making sure they have health care coverage or a place to live or their kids have good schools or all those things are important to us.

CLEVELAND BUSINESS 700 W. St. Clair Ave., Suite 310 Cleveland, OH 44113-1230 Phone: (216) 522-1383 www.crainscleveland.com Twitter: @CrainsCleveland Publisher/editor Elizabeth McIntyre Group publisher Mary Kramer Managing editor Scott Suttell Sections editor Michael von Glahn Creative director David Kordalski Web editor Damon Sims Associate editor/Akron Sue Walton Assistant editor Kevin Kleps Senior reporter Stan Bullard, Real estate/construction Reporters Jay Miller, Government Dan Shingler, Energy/steel/auto/Akron Rachel McCafferty, Manufacturing/ energy/education Jeremy Nobile, Finance Lydia Coutré, Health care/nonprofits Senior data editor Chuck Soder Cartoonist Rich Williams Events manager Ashley Ramsey Marketing coordinator Megan Lemke Integrated marketing manager Michelle Sustar Managing editor custom/special projects Amy Ann Stoessel Associate publisher/ Director of advertising sales Lisa Rudy Senior account executive Dawn Donegan Account executives Laura Kulber Mintz, Loren Breen Office coordinator Denise Donaldson Pre-press and digital production Craig L. Mackey Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich 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 CFO Robert Recchia G.D. Crain Jr., Founder (1885-1973) Mrs. G.D. Crain Jr., Chairman (1911-1996) Reprints: Laura Picariello, 732-723-0569 or lpicariello@crain.com Customer service and subscriptions: 877-824-9373 Volume 40, Number 7 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for the last week of December, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230.

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THE WEEK Come back

hance patient experience and to empower clinical excellence.

“I want to see our region succeed, and having a robust, community-focused health system is essential to that,” said Summa president and CEO Dr. Cliff Deveny.

Essential investments include a new patient tower on Summa’s Akron Campus, significant renovations and improvements at its Barberton campus, establishing endowed clinical chairs and more.

Destination Cleveland kicked off a campaign to get former Clevelanders to think about moving back to live and work. The “Come Back to CLE” pilot campaign will target Chicago and run through April. It will include digital advertising, public transit advertising and social media — with the Twitter hashtag #comebacktoCLE — all tied to a targeted landing page to reach former Clevelanders.

The campaign will be part of a planned, larger talent attraction strategy.

Edging to $15

On the money Summa Health is looking to raise $75 million. A campaign dubbed “Caring for You… Then, Now, Always” has two key priorities: to en-

P019_CL_20190218.indd 19

Summa Health is hoping supporters of its campaign will “drive the next generation of innovative care in Northeast Ohio.” (File photo)

Facilities workers with Service Employees International Union Local 1 ratified a new union contract with the Musical Arts Association, the nonprofit that runs the Cleveland Orchestra, that guarantees wage increases for all employees each year

and leads to every worker making at least $15.10 per hour as of Jan. 1, 2021.

Twenty workers — including building engineers, groundskeepers, hall staff, door staff and cleaning staff — approved the contract by “an overwhelming margin,” SEIU said.

New leader J.P. Nauseef will be the next president and chief investment officer of JobsOhio.

He starts in March and will replace John Minor, who led JobsOhio since 2012. Minor will be a senior adviser to the JobsOhio board until his departure on March 29 Nauseef, a former U.S. Air Force officer, is co-founder and chair of Krush Media Group, a data monetization and digital advertising company.

2/15/19 11:26 AM

NOMINATION PROGRAMS OPEN FOR CRAIN’S 2019

EIGHT OVER

80

Do you know an 80-something who has seemingly tossed the word “retirement” from his or her vocabulary and continues to make an impact in Northeast Ohio’s business, civic and philanthropic circles?

NOMINATION DEADLINE: March 4 | ISSUE DATE: April 29

Crain’s Cleveland Business will single out 20 up-and-coming professionals who haven’t turned 30 yet. While their names might not be top of mind and they likely haven’t made their first million yet, there’s no denying these young professionals are making a mark on Northeast Ohio.

NOMINATION DEADLINE: MARCH 11 | ISSUE DATE: JUNE 24

WOMEN OT E OF N 2019

Crain's Cleveland Business honors the dedication and achievements of Northeast Ohio's top female business leaders who enrich our region with their professional talents and unique perspectives.

NOMINATION DEADLINE: APRIL 1 | ISSUE DATE: JULY 15

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2/14/19 12:42 PM