Crain's Cleveland Business, September 11, 2023

A CHANCE TO RESHAPE DOWNTOWN

Pulte prepares a Del Webb encore

By Stan Bullard

PulteGroup has lifted the curtain on the long-awaited second act for its famed Del Webb senior community in Northeast Ohio.

Under terms of a just-approved consent decree in Lorain County Court of Common Pleas, it has secured approval

from Columbia Township trustees for 600 units on the site of the former Hickory Nut Golf Course in Columbia Township in Lorain County. e plan preserves 172 acres, much of it wooded, as green space.

Upon completion, it will be a $260 million project.

17

By Kim Palmer

After nearly 50 years, the future of the Cuyahoga County Justice Center — the sprawling, nearly seven-acre city block punctuated by a 25-story “brutalist” concrete tower — is un-

certain. But o cials see this as an opportunity.

In early August, the county and the local o ce of CBRE issued a request for proposal (RFP) soliciting plans from developers to

See DOWNTOWN on Page 15

Overwhelming response to housing gap nancing

By Michelle Jarboe

When the city of Cleveland solicited proposals this year for housing projects in need of gap nancing, developers responded in droves.

O cials received 91 applications, for a combined ask of $165 million in grants and loans.

at’s more than three times the amount the city had set aside — most of it from an infusion of fed-

AKRON

Backers say new plans already are being developed to keep the city’s downtown moving forward.

PAGE 2

SPORTS BUSINESS

Expanded program offers Browns fans eld seats with ‘incomparable’ views — for a price.

PAGE 12

eral cash meant to heal economic wounds created or intensi ed by the pandemic.

e applications show the deep need for dollars to get modestly priced housing projects o the ground, in the face of rising interest rates, volatile construction costs and labor shortfalls. Across Ohio, developers and policymakers are wrestling with a

See FINANCING on Page 16

Big changes could be coming to the nearly 50-year-old Justice Center complex; county of cials see this as an opportunity

A reworking of the nearly seven-acre Justice Center could mean big changes for downtown Cleveland. A relocation of the courts and other of ces at the Justice Center would open up the property for redevelopment.

The rst of ve single-family homes is partially nished at the Allen Estates in Cleveland’s Hough neighborhood. | MICHELLE JARBOE See PULTE on Page

Downtown Akron is working on its next comeback

By Dan Shingler

Like nearly every city center in the nation that once relied on o ce workers for its economy, downtown Akron is having a moment that even its staunchest backers concede is a challenge to overcome.

But backers say new plans already are being developed to keep downtown moving forward and to take advantage of the people, assets and resources Akron has relied on in the recent past to re ne and execute those plans.

Downtown needs to leverage its arts and cultural assets, redouble its e orts to develop more residential units and build up its hospitality sector downtown, said Suzie Graham, president and CEO of the Downtown Akron Partnership (DAP).

What’s more, she said, it needs to do all that in a way that increases equity and enables people from all parts of the Akron community to participate in developing downtown into a place that welcomes and bene ts everyone.

“One of our strengths downtown is the presence of so many sectors to improve things for all Akronites,” Graham said. “ ey say it takes a village to raise children. . . .It takes a village to have a highly functional downtown as well.”

DAP is updating its strategy for redeveloping downtown and growing the economy of the city’s central business district. It unveiled its last strategy in 2018, before the pandemic and when downtown still had plenty of o ce workers supporting restaurants and other businesses every day.

Since then, the world has changed. Many downtown o ce workers are still working from home at least part of the time, depriving local restaurants and other businesses of much-needed revenue and threatening the value of major downtown buildings — a string of which are now up for sale on Main Street in the heart of downtown.

Local real estate investor Gino Faciana, co-CEO at Pleasant Valley Corp. and NAI Pleasant Valley real estate in Medina, said he was nearly brought to tears when he recently toured ve major buildings that are up for sale, nding them nearly devoid of people.

A potential investor himself, Faciana said he didn’t nd buildings in decrepit condition; they were mostly in need of people and a purpose. He thinks there are values to be found for investors with capital and staying power.

“ ere’s not a whole lot of value now, and I think if the price make sense to them (the owner), they will sell. Because it’s a long road back for o ce,” Faciana said.

O cially, about 11,500 people work downtown, Graham said, though it’s nearly impossible to tell how many of them come in on a given day or how many are downtown ve days a week. at number is down about 6,000 from the number of people who worked downtown before the pandemic, Graham said, when most o ce workers came in daily.

“We notice it most in 9-to-5, Mon-

day-to-Friday foot tra c,” Graham said, in outlining her strategy for addressing the need for more o ce workers downtown.

“Our e orts need to prioritize attraction and expansion of businesses who value the ability to make a di erence in the community,” she said. “Life sciences, architecture, design, legal, engineering and sustainability businesses are all strong industries that can enjoy co-location, shared amenities, co-working and access to amenities like the Towpath, excellent public spaces, museums and the library as daily teamand culture-building opportunities.”

Such opportunities, Graham said, “appeal to every level of worker from remote to hybrid to in-o ce employees.”

But while Graham is optimistic that many downtown o ce workers will return — and she thinks they will as more knowledge-sector and health care jobs are created — she and her team are not waiting for that to happen before working to advance downtown development.

DAP has hired Harvard-educated consultant Liz Ogbu of San Francisco to help update its plans and strategies for downtown. Ogbu also is working for the city of Akron and is expected to give the city a report and recommendations for what it should do with more than 30 vacant acres just west of Main Street, where the former Innerbelt highway was.

Graham said DAP already has identi ed some opportunities and challenges that need to be addressed.

Her biggest might be getting a hotel built near Akron’s main convention venue, the John S. Knight Center on East Mill Street about a block from Main.

“Our visitor economy is coming back strong. Stronger than it was, and we have a great opportunity to secure a mid- to upscale hotel near

our convention center,” Graham said. “ at would support our tremendous arts and culture hub that we have downtown.”

Graham and others think a hotel near the Knight Center — one with a major brand and perhaps 150 or more rooms — would support the convention center and other downtown businesses and even help other hotels by creating enough downtown rooms to draw more events and visitors.

nearly 100 apartments remain “full with a wait list.”

Meanwhile, Graham said the occupancy rate for downtown apartments generally is about 90%, with the number of residents on the rise.

About 2,200 live downtown now, DAP reports, up from about 1,800 in 2019.

“ is area is ripe for more redevelopment with early estimates pointing to room for 1,200 additional market-rate units,” Graham

higher rents to pay for expensive conversions, they say.

“ e developers are often trying to gure out how to make that work,” Graham said. “ ere’s complicated nancing that goes into this, and one of the things we need to look at is how do we get this done? . . .It is a delicate dance but one we’re willing to step into.”

Conversions, strategy

For the most part, though, Graham is on the same page as Taylor, Faciana and other developers and downtown advocates.

“ e hotel needs to be additive to the existing hotels,” said Gregg Mervis, president and CEO of the Akron/Summit Convention & Visitors Bureau. “ ere is general consensus on the need for a downtown convention center-a liated hotel. . . .It would give us the ability to attract new events at the convention center from groups we don’t have now.”

It’s not just a pipe dream of Graham and DAP, he said.

“We are in a very serious point of the conversations in terms of making this come to fruition,” Mervis said. “ ere are speci c developers (in discussions) but I’m not in a position where I can tell you who that is yet.”

Don’t forget residential

Graham said downtown also needs a lot more apartments. ere has been no shortage of demand for existing units, she said, an observation echoed by developers.

Don Taylor, CEO of Welty Building Co. and a driving force behind Akron’s recent $40 million-plus residential Bowery District, said his

said. “At 5,000 residents, we will see a signi cant positive impact to retail viability and diversi cation, but we will start work on a dense, excellent retail experience at the core of downtown as an important experience to develop right away.”

Rents can be expensive, though. Market-rate apartments downtown go for between $900 and $2,800 a month, Graham said.

She’d like to see more a ordable housing to make downtown more diverse and to attract more young people. Often, the south side of downtown, where rents tend to be lower and residents younger, has more activity and foot tra c than do other parts where rents are higher.

“We have an opportunity to attract more young people with rents just at or slightly under $1K/ month,” Graham said.

at’s a challenge, though, because converting o ce buildings to apartments is expensive, whether those apartments are nished out with granite and stone or cheaper surfaces. Developers tend to go for the former so as to bring in

Like Taylor and Faciana, she thinks the city needs a strategy to prioritize what Class A o ce space it needs to keep for existing and future businesses — though Graham would like to see o ce workers clustered in one or more parts of downtown where they would feel a sense of community and have critical mass.

Graham and the developers also agree on the need to convert more Class B and Class C o ce buildings into new apartments.

Faciana said he’s not considering joining Welty as a downtown investor. But he wants to see a strategy developed rst and then thinks it will take multiple entities to execute that strategy.

Converting major o ce buildings is just too expensive for one developer to do at scale, he said.

“ ere’s got to be a meeting of the minds to come up with a master plan that everyone agrees on, then nd two or three major developers and get everyone working together,” Faciana said. “I’ve never done a partnership with anyone, but this could be my rst time. . . . is is big money, where, if you get a building for $2 million, you’re putting $40 million or more into it.”

Largely empty of ce buildings are creating a challenge for Akron and other cities, but Akron has plans to keep its downtown growing with continued development.

“Our efforts need to prioritize attraction and expansion of businesses who value the ability to make a difference in the community.”

Suzie Graham, president and CEO of the Downtown Akron Partnership

DAN SHINGLER

Cleveland Harbor lighthouse set to sell for $425,000

By Jack Grieve

A 113-year old lighthouse in Cleveland Harbor will soon have a new owner.

Bidding closed on the Cleveland Harbor West Pierhead Light late Wednesday night, Sept. 6, after 24 hours had passed with no new offers. The historic lighthouse is slated to sell for $425,000, pending a review and approval of the bidder.

The buyer’s identity is not yet publicly available, but the bidder appears to have been looking at the property since the auction opened more than a month ago. Starting at $25,000, “Bidder #01” made the first offer Aug. 1 and placed 22 subsequent bids before ultimately beating out the nine other interested buyers.

The U.S. General Services Administration, which oversees the auction process, is still reviewing the sale but “most likely will be awarding it” to the lead bidder early next week, an agency official told Crain’s.

The lighthouse, accessible only by boat, is less than a mile off the coast of downtown and sits at the entrance to the Cleveland Harbor. The four-story structure spans about 1,800 square feet.

Historical records from the U.S. Department of the Interior describe the West Pierhead property as one of two Lake Erie lighthouses that combined for a total construction cost of $45,000 when funds were appropriated in 1908.

“The conical tower, painted white, features windows with segmental architraves and an entrance vestibule with threepart entablature,” the 1979 DOI inventory report reads. “There

is a basement, gallery on the first floor, and living quarters on the second, third and fourth floors (no longer occupied).”

The lighthouse is designated as a landmark by the city of Cleveland and is on the National Register of Historic Places.

“Buyers want to own a lighthouse because these properties are unique and part of America’s iconic maritime history,” a GSA spokesperson said in an email. “Others see them as marvels from a bygone era built to endure weather and time.”

No public utilities are known to be available on the property, according to the auction listing. The lighthouse still plays host to some active aids for navigation

and tools for weather detection, which will remain the property of the U.S. government even after the sale.

Under the National Historic Lighthouse Preservation Act of 2000, GSA is able to sell properties such as the West Pierhead lighthouse to private buyers if no government or nonprofit entities are interested in acquiring them.

“The U.S. Coast Guard no longer has a need for lighthouses due to modern navigation, and funds to maintain lighthouses can better be allocated to other mission needs,” the spokesperson added.

Proceeds from the auction go to the U.S. Coast Guard.

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Digital assets and blockchain are Ohio’s path to an innovative economy

In recent years, the world has witnessed a remarkable transformation of our digital capabilities.

Among the innovative technologies leading this charge, digital assets and the blockchain technologies stand out as game-changers with the potential to revolutionize industries and economies. Ohio, now being referred to as the “Silicon Heartland” of the U.S., has a golden opportunity to position itself as a frontrunner in this tech-driven future.

Post-Labor Day RTO, again

Your work commute last week might have been a little busier than you remember. Lunchtime lines at a favorite takeout restaurant or food truck seem a little longer. Maybe you found yourself face-to-face again with a colleague whose name you de nitely remember from all those Zooms.

Congratulations! You made it through the rst week of what has become a new corporate tradition: pushing for a post-Labor Day return to the o ce.

We saw it only a little in pandemic-marred 2020, and more in 2021 and 2022. But 2023 is shaping up as the big test of whether companies can gure out the right balance of in-o ce vs. remote work that satis es productivity requirements in what’s becoming a more challenging economic environment while at the same time balancing workers’ new expectations for exibility.

e stakes are high, within companies, throughout key sectors of the economy, and in the downtowns stacked with skyscrapers that remain emptier than anyone would like.

Bloomberg, citing estimates from the Newmark Group Inc. brokerage, reports that about $1.2 trillion — yep, “trillion,” with a T — of debt on U.S. commercial real estate is “potentially troubled” because it’s highly leveraged and property values are falling. e biggest component of that: o ces, “accounting for more than half of the $626 billion of at-risk debt that’s set to mature by the end of 2025,” Bloomberg reports. Accordingly, property analytics rm Green Street reports that o ce values have tumbled 31% from a peak in March 2022.

e numbers reinforce what’s obvious if you work or live in a downtown, whether it’s Cleveland, Akron or virtually any city in America: o ces are nowhere near back.

Prominent developer Stu Lichter of California-based Industrial Realty Group, who controls more than 100 million square feet of real estate nationwide and is particularly active in the Akron and Canton markets, recently told Crain’s reporter Dan Shingler that the Akron o ce market is a “disaster,” outside of some still-strong Class A properties. No shade to Akron. It’s tough everywhere.

Workplace sensor provider XY Sense, which in August tracked nearly 25,000 unique work areas in nine regions of the world, including the United States, found that 36% of cubicles and desks are never occupied. And among the

workpoints that are used, 29% were occupied for three hours or less on any given day.

e security company Kastle, which tracks key-card swipes, found that o ces in the 10 largest U.S. metros were 47.3% full for the week that ended Aug. 31. at percentage has bounced from the mid-40s to the low 50s for the past couple of years.

e implications are big for downtown, as real estate values increasingly are on the line, and banks with heavy exposure to commercial real estate face real risks.

is is a workplace challenge that developed in the toughest of times, and it will take some patience on the part of companies, workers and downtown interests to come up with common-sense solutions that help push up o ce-occupancy gures.

is isn’t a case of right vs. wrong. Workers have real reasons to favor exibility in their personal schedules. And who, in a perfect world, really would want to make the time investment of a work commute?

Employers, rightly, nd value in having their people work in the o ce, which helps to build team camaraderie, bolsters productivity and o ers mentorship to younger workers. Tight conditions in the labor market in the last couple of years have given employees leverage, but those conditions are starting to change.

Ultimately, it will be up to each employer to nd what works best for them. We hope, though, that they see their way to crafting policies that increasingly draw people back into their o ces and start to help cities repopulate their downtowns with worktime foot tra c.

City leaders can get creative, too. One example, from Ohio, is Columbus, which has a program called LunchBucks that, every Tuesday and Wednesday, distributes $10 lunch vouchers to be used that day. It’s limited to 200 vouchers per week — there’s only so far you can go with a free lunch — but it’s a program worth emulating.

Also critical for downtowns: making people feel safe. Pandemic-era spikes in crime are a vicious cycle. Cleveland is having a reckoning and is taking steps to make workers and residents feel safer. More cameras and security personnel will help, though the process will take time. Livelier downtowns are safer and more fun. Steps to bring people back to the o ce bene t us all.

Digital assets have captured the attention of investors and enthusiasts worldwide. Beyond their role as an alternative investment asset, they offer several bene ts that can signicantly impact Ohio’s economy.

a Northeast Ohio company that provides Infrastructure as a Service to advanced data processing companies.

First, embracing digital assets can attract a new wave of investors and businesses to the state. e decentralized nature of digital assets provides transparency and eliminates the need for intermediaries, making transactions faster and more e cient. is can be particularly appealing to entrepreneurs looking to set up shop in a business-friendly environment.

Moreover, integrating blockchain technology into various sectors can streamline operations and enhance security. e blockchain’s decentralized and immutable ledger system ensures a tamper-resistant record of transactions, mitigating the risk of fraud and ensuring data integrity. Industries like supply chain management, health care, real estate and nance can signicantly bene t from blockchain implementation, leading to increased e ciency and reduced costs.

Embracing digital assets and blockchain technology is an imperative step toward Ohio becoming a leading force in the digital age, and we are already on that path.

MidwestCon, the recent blockchain and technology conference in Cincinnati, is a testament to the state’s commitment to embracing this industry. By hosting such events, Ohio showcases its willingness to adapt and its eagerness to become a hub for innovation and technological advancement.

However, for Ohio to truly thrive in the digital asset and blockchain economy, it needs robust support from its state and federal representatives. Initiatives like favorable regulatory frameworks, tax incentives, and investment in research and development are critical to fostering an environment conducive to the growth of these technologies.

RICH WILLIA MS FOR CRAIN’S CLEVELAND BUSINESS

Max Serezhin is CEO of Standard Power,

Embracing digital assets and blockchain technology is an imperative step toward Ohio becoming a leading force in the digital age, and we are already on that path.

Brace yourselves, Cleveland: e AI revolution has arrived

One of history’s greatest technological revolutions is upon us, and it’s already reshaping important parts of our economy, society and personal lives.

Recent advances in arti cial intelligence over just the past few years have been staggering. Every day, AI systems carry on conversations, drive cars, diagnose diseases and generate art and music. As AI continues to meet and surpass human capabilities across a broad spectrum of elds, the pace of change will be blinding, and we’ve seen only the tip of the iceberg.

e AI revolution is being driven by large language models that power AI chatbots and assistants such as OpenAI’s ChatGPT, Google Bard and Anthropic’s Claude. ese models put powerful capabilities in the hands of anyone with a device and internet connection. Even for those who use these tools regularly, it’s hard to appreciate just how exponential the change is and will continue to be for the foreseeable future.

Employers are struggling to develop coherent AI policies. Tens of millions of jobs are at risk. And, most schools and parents are unprepared for a school year where every fourth-grader with a Chromebook has access to tools that can ace the SAT and write college-level papers.

Todd Federman is managing director of North Coast Ventures.

ability to have greater impact in their personal and professional lives. To avoid being left behind, citizens must try to gain AI literacy and stay informed on how these emerging tools can improve their lives.

For organizations, early adopters will be able to accelerate growth, develop better products and services and reduce costs. Laggards will be at a massive disadvantage.

e gaps between those who successfully learn and adapt to this new reality and those who do not will be signi cant.

e bottom line is that AI will be the most disruptive technology of our lifetimes, and the developments we’ve seen so far are just a small preview of what’s to come. e winners of the future will be the individuals, businesses and regions that embrace AI rst and deepest.

Paul Roetzer is CEO of the Marketing AI Institute.

e Cleveland metropolitan area is the 20th-largest in the country. In short order, most individuals, businesses and institutions will be impacted by this new reality, which presents both vast opportunities and risks.

At the individual level, there is no escaping the impact of AI. It will change how we work, travel, shop, get health care and interact with technology. Early adopters will develop “superpowers” and an

To avoid being left behind, Cleveland must act decisively and with urgency. e public and private sectors have a unique opportunity to join together to invest in education and training to develop an AIready workforce. Resources can be allocated to upskilling employees whose jobs will be transformed by automation. Policies can promote innovation while reducing bias and protecting privacy. Individuals can seek to gain basic AI literacy and understand how these tools stand to improve their lives.

e AI revolution is well underway and will only continue to accelerate. ere is no turning it back. Despite signi cant risks, the even greater possibilities of AI require that we, as a community, confront this new reality head-on. With vision, investment and leadership, Cleveland can seize this pivotal moment to secure its future as a thriving hub of technology innovation.

At the individual level, there is no escaping the impact of AI. It will change how we work, travel, shop, get health care and interact with technology.

New CEO for TravelCenters of America takes the reins of a refreshed business

By Jeremy Nobile

TravelCenters of America will play a critical role in BP’s ongoing pivot from a business historically focused on oil and gas into an “integrated energy company,” said Debi Bo a, who o cially took over Sept. 1 as TravelCenters’ new CEO.

BP has publicly shared plans to invest $1 billion in EV charging capabilities across the U.S. by 2030, fostering expansion of its BP Pulse eet and public charging network from some 22,000 charge points globally to 100,000.

But BP needs to expand its own service infrastructure to accommodate all those. at’s where the existing network of more than 280 locations that comprise the footprint of Westlake-based TravelCenters — operator and franchisor of the TA, Petro Stopping Centers and TA Express travel center brands — comes into play.

Other than its namesake stations, BP brands include Amoco, ornton’s and ampm. But that network is rather disconnected.

“When you overlay TA’s footprint, it’s all along the main corridors in 44 states across the U.S., and it’s all on-highway,” Bo a said. “As we think about the changing needs of eet customers and consumers here in the U.S. over the decades to come, linking that on-highway and o -highway network and being able to provide the mobility needs and convenience access that people need, that is what we see as the linchpin.”

An estimated 25% of TA locations will be out tted with EV charging in the “coming years,” Bo a said, with gaps to be lled in through 2030.

Bo a is a BP veteran who most recently was president of the company’s retail operating organization. In 2021 she was named president of ornton’s after BP’s acquisition of that business. Prior to that, she was managing director of BP New Zealand.

Bo a said there are no plans to reduce employees at TA or shrink the company footprint — the kind of synergistic moves often seen in the wake of a corporate buyout.

Rather, the plan is to support further growth and improvement of the TA infrastructure as it integrates with BP.

But as she o cially succeeds outgoing CEO Jonathan Pertchik, Bo a said her near-term goal is to “listen and understand” as she learns more about the TA business model.

“I am looking forward to continuing to listen and learn from the TA team, as their contributions to the business are highly valued,”

Bo a said. “We are focused on ensuring we have the right supports in place so we can continue delivering the best service to our guests.”

“Debi brings a wealth of experience in the retail convenience space with a proven ability to integrate businesses while driving growth,” said Greg Franks, senior vice president, mobility and convenience Americas, BP, who was named chairman of TA following the BP deal. “TA has a national footprint that provides fuel and services for both professional drivers and passenger car guests while on the road. is network will be critical as we adapt to meet customers’ evolving needs for electric vehicles, biofuels and hydrogen. Debi is a trusted leader, and I look forward to her leading TA into the future as part of BP.”

BP completed its $1.3 billion ($86 per share) acquisition of TA in May. e deal has been framed by BP as providing a “turbo boost” to its growing convenience and mobility business in America.

For TA, the transaction e ectively caps o a turnaround led by Pertchik, who was recruited as the company’s lead executive by its board of directors in December 2019 for the express purpose of improving the struggling business.

Pertchik had previously managed companies owned by a variety of private-equity groups. Immediately prior to TA, he was CEO of Intown Suites, an extended-stay hotel chain in the U.S. Pertchik is credited with doubling EBITDA (earnings before interest, taxes, depreciation and amortization)

over nearly ve years at that company through cost-control and growth initiatives.

At TA, Pertchik deployed similar tactics, which led to the company getting on BP’s radar.

TA’s revenues in 2019 were static, dropping about 2% from 2018 to $6.1 billion, though the company posted net income that year of $33.5 million versus a net loss of $120 million the year prior.

A few months after Pertchik stepped into the CEO post, the COVID outbreak struck.

While fueling stations were deemed essential businesses, personal travel nosedived, and sitdown restaurants were closed. Although TA was serving the logistics industry, a signi cant portion of its business was hammered. By midyear 2020, Pertchik said, TA gas volumes had dropped by 45%, diesel was down 25%, and revenue from its sit-down restaurants tanked by 90%.

For full-year 2020, the company reported $4.8 billion in revenue and a net loss of $14.9 million.

But a turnaround was already in motion. Adjusted EBITDA that year improved by 36%.

ere were a variety of issues at TA that Pertchik aimed to tackle as he came on board: expenses rising faster than revenues; a lack of centralized purchasing; aging restaurant concepts; inconsistent merchandising.

“ ere was a deep cultural challenge that we had,” Pertchik said regarding the reshaping of how TA operated, adding that “we realized we needed to institutionalize the concept of change.”

Changes that unfolded from there touched all facets of the business.

Menu choices at TA restaurants were cut in half, trimming costs in food waste and labor.

Around $30 million to $40 million in IT investments helped cut back network down time and fostered the adoption of AI, which is being used to support some diesel pricing — and TA has “something like 20-plus use cases where we could apply AI going forward,” Pertchik said, though the company declined to elaborate on those.

Centralized purchasing was employed to help save money on goods that were being bought by separate stores.

About $100 million was invested in site refreshes that Pertchik said improved guest experiences.

e company also “turned on its franchise machine,” he said, resulting in the opening of 31 new locations since 2019, with another 10 or so in line to open by the end of this year.

e company simultaneously acquired other franchise locations to bring them under its control, deploying about $110 million in capital on those endeavors.

Ultimately, though, cost control and disciplined decision-making is what laid the foundation for the business’ turnaround, Pertchik said.

“Most of what we did I would say was not making capital investments,” he said. “Most of the value created was simply making sure we had the right people in the right seats in the bus with the right support and the right organizational structure that gave the team the freedom to make great choices.”

According to company lings, TA and BP representatives had been in discussions about commercial relationship opportunities back in spring 2021. But over time, those conversations shifted to talks of an acquisition, which occurred as TA dramatically improved.

In 2022, TA reported annual revenues of $10.8 billion (an annual increase of 48%) and net income of $164 million (an annual increase of 182%).

As part of his departure, Pertchik is to receive an amount equal in cash to his annual base salary and annual bonus paid in 2022 plus a pro rata portion of his estimated bonus for 2023, according to company lings.

TA o cials declined to say what Pertchik’s total exit package is, and his 2022 is salary is not immediately clear, as the company this spring did not le a traditional proxy statement — which lists executive compensation from the year prior — because of the BP acquisition.

However, Pertchik’s base salary the past couple of years was $300,000, and he received a bonus of $2.1 million in 2021, according to public lings. His total compensation in 2021 was approximately $7.3 million, which included about $4.9 million in stock.

Part of BP’s strategy with the TA deal is to have other services and amenities for guests to spend money on while their vehicles recharge. at’s what TA locations already provide with o erings like showers, laundry, truck service, food, electronics and other merchandise.

Re ecting on the evolution BP is undergoing as it shifts its focus from fossil fuels to renewable energy, Pertchik said he believes the company is “going to be one of the winners” in the industry.

“I’m excited to see this unfold from an armchair perspective as I look ahead,” he said. “I’m betting on BP and now TA within BP in terms of really being the leader of the future in how energy is consumed and how people get their energy.”

Pertchik

BP completed its acquisition of Westlake-based TravelCenters of America in May. Debi Boffa, a BP veteran, has succeeded Jonathan Pertchik as TravelCenters’ CEO. | TRAVELCENTERS OF AMERICA

Boffa

Riverside plans move to top oor of Key Tower

By Stan Bullard

Private-equity rm e Riverside Co. has leased Key Tower’s 57th oor in downtown Cleveland and will move early next year into the tallest o ce perch between New York and Chicago.

e global investment rm will leave Terminal Tower, the rm’s home since its 1988 inception, where its latest o ce is on the 28th and 29th oor connected by its own stairwell, for the other side of Public Square, where it will occupy one oor rather than two.

Stewart Kohl, the Cleveland coCEO of the rm with headquarters here and in New York City, said the new space will be designed with exibility to house the rm for years to come.

“ is will be a destination that will attract our colleagues and clients,” Kohl said, “with spectacular views and an environment for the future.” Typical for today’s ofce moves, the rm will trim its footprint 3,000 square feet, to 13,800 square feet from 16,800. e interior stairwell in the current space helps but is not as ecient as being all on one oor, he said.

Kohl spoke expansively of his love for the rm’s Terminal Tower location. Riverside has moved a half-dozen times as it grew through the years but always remained in the landmark building. e new space, he said, will be designed by Cleveland architect John Williams to re ect the rm’s culture.

Graham Hearns, managing di-

rector and Riverside chief of sta , said the amenities Key Tower offers — such as on-site restaurants, a tness center and even a barber — made Key the favorite site among its sta , which was consulted regularly about the location. e private-equity rm also has a close relationship with KeyCorp, which invests in its funds and provides it with banking services.

“It sounds old-fashioned,” Kohl said, “but we have long-term relationships and invest for the long haul, through good times and bad. It’s good to have relationships facilitated by contacts such as on elevators.”

Riverside, Hearns said, was also impressed by the attention it received from Millennia Cos., which owns Key Tower, as well as Millennia founder and CEO Frank Sinito and Doug Miller, president of Millennia Commercial Group, which manages the tower.

“We did a substantial search throughout the Cleveland area,” he said, but decided to remain downtown because of ease of access for its employees and sta ers as well as outside professional rms for law, accounting and other services.

ere will be fewer private o ces but more spaces for collaboration in the new space, Hearns said, adding, “We believe the hybrid ofce is here to say.” Junior associates bene t from working near each other as they learn the business, he said.

Hearns said the rm also believes the o ce plays vital func-

tions in maintaining the rm’s culture.

“A lot of Riversiders travel often due to the nature of our business,” Hearns said, “and want to check in with colleagues regularly when they can on personal matters as well as business,” though they might not require a permanently assigned desk.

Miller said the Riverside lease

and others have put the 1.3 million-square-foot building at 95% occupancy.

“ e only thing above Riverside (at Key Tower) is the cap of the building,” Miller said. “ e space was vacated by a law rm several years ago. We looked for the right tenant that could use that space, and that is Riverside.”

Chandler Converse, a CBRE

Group senior vice president, said he is excited about Riverside’s planned move to Key Tower.

“ ey are the type of tenants that will take advantage of the amenities the building has to offer,” Converse said. “And it’s a blue-chip tenant for the building as well. Clearly the building pursued them.” He noted that Sinito and Millennia have done a great job repositioning Key Tower and upgrading the attached Cleveland Marriott Downtown hotel with new interiors and tenant services.

A Millennia brochure on Key Tower said the owner has spent $20 million updating the properties.

“ ere is a lot of energy in that building now. In the o ce market today, which is challenging, it’s a building like Key Tower that will shine,” Converse said. He and Steve Voinovich, a CBRE rst vice president, represented Riverside in the transaction.

JLL handles o ce leasing for the building. Robert Roe, a JLL managing director, said in a text that the Riverside deal underlines Key Tower’s status as an outstanding headquarters location.

However, Key Tower’s gain is Terminal Tower’s loss.

Doug Price, CEO of K&D Group, which owns Terminal Tower, said Riverside sought something new to o er its employees.

“What can you do?” Price asked. “ ey’ve let us know what they’re doing. We’ve located someone who wants the two oors Riverside occupies, but we can’t identify them yet.”

COSTAR GROUP INC.

Key Tower

JLL names Jon Vanderplough leader of Cleveland of ce

By Stan Bullard

Jones Lang LaSalle Inc. of Chicago has chosen one of its Northeast Ohio producers to head its Cleveland o ce.

Jon Vanderplough has worked on corporate assignments for the brokerage rm and often spent much of his time working on deals outside Northeast Ohio, and he has deep roots in Cleveland real estate.

He lls a vacancy that languished for more than two years.

e local o ce was led for that period by JC Pelusi, the Pittsburgh-based market leader for JLL’s heartland region, which in-

cludes much of the Midwest except Chicago.

What took so long to ll the role?

“We talked on and o about it for a year or two, before I could talk him into it,” Pelusi said.

e rm conducted an extensive search with internal and external candidates before naming Vanderplough, a managing director at JLL, to the additional job. Both were interviewed on a Teams video call.

“Jon is absolutely the right person for this job, and he was excited to undertake it,” Pelusi said. “He has existing clients in place and that won’t change. His experience

and knowledge of (JLL) make him the perfect choice. It’s very constructive to have a local leader because we are always recruiting and Jon has experience to provide leadership for areas beyond brokerage as in property management.”

Vanderplough emphasized the importance of being able to help clients negotiate the changes in the real estate market after the pandemic.

“ ey are asking more complex questions than in the past. JLL has always been a thought leader, and I’ve done a lot of complex work for clients,” Vanderplough said. “I had a lot of close friends here, and the future’s bright.”

Vanderplough has been with JLL since 2013. He previously worked for Allegro Realty Advisors of Cleveland.

JLL has a sta of 11 real estate agents and a total sta , including property managers and building managers and others, of about 120 in the Cleveland area. Pelusi said the veteran local sta made it easier for him to oversee operations the past few years.

JLL has a player-coach approach in brokerage, with local executives continuing to operate their own practices while heading the o ce. By contrast, for example, Andrew Coleman, CBRE’s Cleveland market leader appointed earlier this year, is transitioning from brokerage assignments to full-time management.

Vanderplough has a top-drawer client list, including Bendix, RE Warner, AML RightSource and Progressive Corp. He has worked on corporate headquarters assignments as well as industrial assignments, both in the U.S. and abroad.

Real estate brokerage typically attracts sales reps, accountants, builders and lawyers. Vanderplough had a unique entry to the business.

He was in graduate school after obtaining a degree in archaeology from the College of Wooster when he got a job working on an assignment helping the Ohio Department of Transportation gather information of sites with historically signi cant backgrounds.

“ at was at the beginning of GPS,” Vanderplough said, and he gained expertise in the eld as it went from paper documents to personal computers. He then worked in real estate research.

Pelusi said realty agents increasingly are getting their stake in brokerage research departments because it gives them experience with market data and terminology that will be valuable later.

Having player-coaches is also similar.

“We think it keeps our executives tuned in to the market,” Pelusi said.

Jon Vanderplough, who now heads JLL’s Cleveland of ce, has been with the company since 2013.

Shaker Heights shares lessons from detracking journey

By Rachel Abbey McCafferty

Shaker Heights Schools have been grappling with for decades, superintendent David Glasner said, with how to give students a challenging, rigorous education and how to ensure its classrooms are diverse and racially integrated.

Detracking its classes, an approach the district took on in 2020, is an e ort to address both.

In a tracked system, students are placed into di erent course levels, with some in more advanced or accelerated programs than others. In Shaker Heights, Glasner said, those tracks often closely followed racial divides, leading to segregated classrooms with white students in the more enriched classes.

Students can often technically move between tracks, but it’s not common. Glasner said in Shaker Heights, students rarely switched tracks once they were placed in them by fth grade. So those early decisions had a big impact on their future.

Now, Shaker Heights has moved every student into the more accelerated option, in subjects where that option had existed, like math or English. For example, in the tracked system, Shaker Heights eighth-graders could take Algebra I or a grade-level math course in the eighth grade. Now, they all take Algebra I.

“ at’s really the goal, to ensure that all students are accessing that higher-level, enriched, advanced course pathway,” Glasner said. is approach of bringing everyone to the highest possible course level, though, does bring challenges. And the COVID-19 pandemic compounded those.

Early in the pandemic, Shaker Heights looked to group students in cohorts that stayed together during the day, Glasner said. But the segregated nature of the district’s tracked system meant that following those tracked courses for an entire day would have led to, essentially, a fully segregated district, he said.

Before COVID, the district had been looking into solutions to better integrate its classrooms and move away from a tracked system, but without the pandemic, it would have likely taken a more incremental, grade-bygrade transition. COVID made it more of an immediate necessity, and Shaker Heights did away with tracking all at once in fall 2020.

Despite good intentions, that approach was a di cult one. Miata Hunter, who was a principal in the district when detracking began, said Shaker Heights could have done more to support and prepare teachers for the change.

“ e decision to delevel or detrack our classes was one that we thought very, very hard about,” Hunter said. “I do believe that the pandemic sped that process up. And I think that all involved — teachers, administrators, you

know, everybody, parents — would have totally loved it to have been something that was rolled out in a di erent way. For sure. So, I want to acknowledge that.”

While the decision to detrack classes meant that all students were moved into the most advanced options for classes like math, the goal wasn’t to just “accelerate” students, she said; it was about giving them all “access” to the district’s existing options.

For example, Shaker Heights is an International Baccalaureate district, she said, but it was dicult to take advantage of that program if students didn’t take Algebra I in eighth grade, instead of ninth.

Glasner said it’s too early to de nitively attribute any signs of success to the district’s detracking e orts, but he pointed to some recent positive results Shaker Heights has seen. One notable measure is that more than 50% of Black students in the district met the graduation requirement for algebra in eighth grade last spring, he said. Before detracking, most of the district’s Black students didn’t have the opportunity to even take algebra in eighth grade. Additionally, more and more students have been taking and earning credit for AP classes.

ere have been more anecdotal positives and negatives to the change, as well. Eighth-grade Algebra I general education teacher Jenna Peltz said it’s been di cult for students who struggle in the detracked classrooms, and it hurts their mental health. But it’s been encouraging for students to have peer role models in the classroom.

e district has also been working to o er educators more professional learning and other supports to help them adapt to detracking. It’s adjusted the curriculum to better t a detracked

approach. Part of that approach is to have more than one adult in a classroom when possible. Before, students would often be pulled out of classes for intervention or enrichment services. e goal now is to integrate that in the classroom.

Peltz, alongside intervention specialist Katrina Holmes, is a good example of that approach, as they teach three out of ve classes together. Holmes said that when the district began detracking classes,

there was concern about whether the curriculum would reach all students, from those who struggled with the work to those who were more advanced. To address that, Holmes and Peltz focus on di erentiation in their classes, helping meet students where they are.

Peltz said that might mean the entire classroom gets the same lesson on one day; the second day learning the concept, some students may be taking a deeper dive

while others are doing some remedial work. And those groups of students change based on the needs that day.

Another approach Glasner highlighted was having instructional coaches, like former principal Hunter, embedded throughout the district to o er “real-time support” to teachers.

Hunter has been with the district as an educator for almost 20 years, serving as a teacher, an assistant principal, a principal and, now, an instructional coach at the middle school, supporting teachers in their goals. At this point in the detracking transition, her school plans to have year-long professional learning opportunities to support teachers, using content-speci c examples. ere are e orts to have formal discussions with teachers about di erentiation as an educational approach, giving them tools to support students with di erent needs in the same classroom.

But Hunter doesn’t regret that the district started detracking when it did. She didn’t want to keep just having the conversation, pushing the change further into the future.

“Because the children don’t have time,” she said. “Right? ey don’t have time. Ten-year-olds are only 10 for a year and then, we don’t want to look up and they’re 20 years old and they didn’t have the opportunity to have these options we would have liked them to have, or to have the experiences in a classroom, a heterogeneous classroom, because we were still trying to gure out how to do that.”

Shaker Heights detracked its classrooms in recent years. | GUS CHAN/SHAKER HEIGHTS SCHOOLS

Expanded eld seats offer Browns fans

‘incomparable’ views — for a price

By Joe Scalzo

Midway through the Cleveland Browns’ 13-3 win over the Baltimore Ravens on Dec. 17, 2022, Browns tight end David Njoku — a Marvel superhero who spends more time shirtless than Matthew McConaughey — caught a simple swing pass, hurdled Ravens Pro Bowl cornerback Marlon Humphrey and landed out of bounds inside the 5-yard line.

Njoku faked a spike, then continued jogging toward a row of eld seats near the end zone tunnel, where a Browns fan named Tony D’Amico had two thoughts.

“Either he was going to stop or I was going to take a blow,” D’Amico said, laughing. “He doesn’t look human in person.”

D’Amico knows better than most. e founder and managing partner of Fidato Wealth LLC in Middleburg Heights, D’Amico was part of the inaugural group of Browns Field Seat Members, owning four of the 68 available ground-level seats last season.

e Browns have expanded that program this year, o ering 460 ground-level seats across the stadium. ose tickets come with VIP parking and access to unlimited food and drink at one of the three premium clubs inside the stadium.

“It’s an unbelievable experience, really,” said D’Amico, who upgraded to seats closer to the middle of the eld for this season. “When you rst get there, you pull right into the stadium. ey have valet parking. You’re seeing players and ownership walk in. en you walk to your seats or the club room through an elevator, and you miss the busyness outside the stadium.”

e Browns sold last year’s eld seats allotment in a month, then added 24 more seats on the northeast and northwest sides. e team wasn’t planning to expand the program stadium-wide in 2023 but pivoted after seeing the fan response, said Eric Clouse,

chief commercial o cer for Haslam Sports Group.

“We started asking, ‘What else can we do? How else can we maximize our space?’” Clouse said. e biggest question was, if they expanded across the stadium, would fans on the sidelines be able to see the eld?

e end-zone stadium walls are 6 feet tall, which works ne for those eld seats since there aren’t any players standing along the boundary. But 6-foot walls wouldn’t work for the sidelines, where guys like Njoku (6-foot-4, 250 pounds) or right tackle Dawand Jones (6-8, 375) roam.

“ ere was a little bit of a group fear,” Clouse said. “But those walls actually measured 8 feet. We were like, ‘We can do something here.’”

Other NFL teams o er versions of eld seats, particularly if it’s a new or renovated stadium, but they’re usually eld-level suites. What makes the Browns’ seats unique is that you don’t have to have a party of 12 to 16 people.

“If you just need two or four seats and you don’t need to entertain at that level, we can still nd an opportunity for you,” Clouse said.

e Browns’ leather, padded eld seats measure 25 inches across — about four inches wider than the plastic seats in the stands — and are built on a decking system that comes with a 4-foot padded wall, just in case someone like Nick Chubb runs out of sideline space.

e deck not only allows fans to see the eld, but it also contains a walkway where they can access the back of the house, either to use the restroom or visit one of the Browns’ climate-controlled clubs, which come with unlimited food and beverage. Fans on the north or south sides of the stadium have access to the new Servpro Field Club, while the west side fans go to the Draft Room and the east side fans go to the Kardiac Club.

“ eir hospitality is unreal,” D’Amico said. “It’s a great experi-

ence, a great group of people.”

Of course, that access isn’t cheap. To put it in Mastercard terms:

◗ The season-ticket price for a prime eld seat (between the 25-yard lines): $15,000.

Field sideline (between the 5 and 25): $13,500.

Field corner: $12,500.

◗ Field end zone: $10,500. Making memories with your teenage son: Priceless.

“For my family members, it really is priceless,” D’Amico said. “My son is 14, which means we’ve only got four more summers before he goes o to college. I’m going to try to make the most of it.”

D’Amico also used the tickets to reward key partners and members of his sta .

“It allows you to take care of people,” he said. “Just to see their enjoyment and to have fun with the people you work with, it’s great.”

e Browns sold through 2023’s season tickets before the rst preseason game but held back about 30 of those seats for single-game ticket sales. ey’ve sold about 75% of those single seats before the season opener and have a waiting list for the season tickets.

“We want people to be able to test it and get a feel for it,” Clouse said. “We know we’re not going to renew at a 100% rate, but we hope we create an experience that’s good enough that most fans will want to come back.”

For D’Amico, renewing was a no-brainer. Like every Browns fan, he’s felt the sky tumbling down. He’s one of the few to feel the earth move under his feet.

“I had season tickets with the Cavs when LeBron was here and I’ve had tickets to the Guardians, but if you compare that to what I experienced at Browns Stadium, it’s incomparable,” D’Amico said. “You can literally feel the ground shake if a play is coming our way. “It’s a really indescribable experience.”

The Browns have expanded their eld seats program in 2023, offering fans sideline access for the rst time. CLEVELAND BROWNS

Postponement of EY Tower auction points to negotiations

By Michelle Jarboe

A foreclosure auction involving the Ernst & Young Tower at the Flats East Bank has been delayed, a move that points to behind-the-scenes negotiations between the Wolstein family and a lender on the high-pro le downtown property.

e sale, originally set for Sept. 7, is now scheduled for Sept. 28 on the steps of a courthouse in New York. Brett Rosenberg, a senior managing director at brokerage JLL who is marketing the auction, con rmed the scheduling change.

e postponement indicates that the Wolstein family hasn’t given up on keeping the 18-story o ce tower in the wake of developer Scott Wolstein’s death. Wolstein, who was 69, died in May 2022 after a short battle with aggressive cancer.

He left behind a complicated estate that is still working its way through Cuyahoga County Probate Court and an un nished legacy project on downtown Cleveland’s riverfront. e Ernst & Young Tower is the linchpin for that 23-acre project, which also includes a hotel, apartments and a slew of restaurants and entertainment venues.

e upcoming auction, a Uniform Commercial Code foreclosure initiated by New York-based lender Axonic Capital LLC, is not an outright sale of the building. Instead, the collateral up for grabs is the ownership interests in the limited-liability company that owns the tower.

If the sale happens, Axonic or another bidder could step into the Wolstein family’s shoes, taking control of the property and responsibility for payments on the $75 million rst mortgage. Axonic is a mezzanine, or secondary, lender that provided a $25 million loan to the Wolsteins as part of a re nancing in 2018.

An attorney for Axonic declined to comment on the situation. rough a lawyer, so did a representative for the Wolstein family o ce in Moreland Hills. Wolstein’s nonagenarian mother, Iris, and her team at Heritage Development Co. are handling talks about the tower’s future.

Court records show that lenders on the tower view Wolstein’s death as a triggering event, one that set o defaults and prompted calls for repayment. In New York Supreme Court, a trial court, Axonic also is pursuing full repayment from Iris Wolstein under a loan guarantee. She and her son both pledged to take responsibility for debt on the tower if the deal soured.

Last week, Axonic and Iris Wolstein’s attorneys agreed to delay brie ng on the lender’s motion for summary judgment in the New York case — another

sign that a resolution might be in the works.

It’s not unusual for Uniform Commercial Code foreclosure auctions to get delayed — or canceled, if the parties can reach a compromise. And in a tough o ce market, where landlords are dealing with the fallout from remote work, sagging real estate values and higher borrowing costs, lenders don’t necessarily want to become owners of properties in need of repositioning.

e Ernst & Young Tower, at 950

Main Ave., is losing its namesake tenant later this year. e professional services rm, which goes by the name EY, is leaving for a smaller space at the North Point o ce complex at East Ninth Street and Lakeside Avenue.

Real estate brokerage CBRE is marketing more than 106,000 square feet for lease at the roughly 480,000-square-foot building in the Flats, along with naming rights to the tower.

As a Class A property, completed

in 2013, the building isn’t a candidate for a residential conversion like many older, lower-rent addresses in the central business district. But documents led in the New York court case show that lenders’ claims, litigation and uncertainty about who ultimately will own the property are making it tougher to land new tenants.

“Mission critical is to preserve the collateral value and ensure that the management and operations of the building is maintained at Class A standards,” a consultant at the Henley Group, an advisory rm working with the Wolstein family, wrote in a letter included in the court records.

e downtown Cleveland o ce market “is extremely challenged,” the consultant noted, “with relevant competing o ce buildings . . . in various stages of distress (or) special servicing. It is our objective to avoid the stigma that these ‘other’ properties are enduring with the assistance and cooperation of the lender(s).”

Axonic already owns one piece of the Flats East Bank. In January, the lender took control of the nearby Flats at East Bank apartment building by entering the sole bid at another Uniform Commercial Code foreclosure auction.

In that case, the Wolstein family tried to avert the auction by putting the property, with 240 apartments and ground- oor retail, up for sale. But no buyer was willing to pay enough to wipe out more than $96 million in debt on the property — an $80.7 million rst mortgage and a $15.9 million mezzanine loan from Axonic.

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The Ernst & Young Tower at the Flats East Bank project in downtown Cleveland | COSTAR GROUP INC.

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acquire and potentially redevelop the site. Referred to as the “County Block” and described by Cuyahoga County Executive Chris Ronayne as “the center of everything,” the site is bound by Lakeside Avenue, Ontario Street, West 3rd Street and St. Clair Avenue.

“It is an integral neighborhood nexus because it sits at the intersection of the convention district, Warehouse District, the lakefront and Public Square,” Ronayne said.

of options’

e RFP is part of a complete re-evaluation of the property that holds the county’s jail — set to move to a new location when and if the County Council approves the purchase of a property in Gar eld Heights — and includes 1.17 million square feet of o ce space now used by the county’s prosecutors, courts and sheri department.

e adjacent seven-story Courthouse Square also is part of the RFP. e building, a 1918 national landmark, sits on 1.18 acres, is connected to a 106-car surface parking lot and houses more county o ces.

Ryan Je ers, the CBRE real estate consultant working with the county, refers to the RFP as a “solicitation of options” from the market for ways to redevelop the site that’s competitive with market options

based on requirements developed over years with various justice stakeholders and consultants.

Ronayne’s administration also looks at it as part of a larger re-envisioning of how best to modernize the delivery of justice.

“ e Justice Center and the entire justice system of Cuyahoga County would very much bene t from an upgraded modern facility that would address some physical issues they have, but also the way that they administer and deliver this critical service to the community,” Je ers said.

e move is similar to what former County Executive Ed Fitzgerald did about a decade ago, resulting in the selling of a dozen underused county properties and the exchange of the Ameritrust Tower for the building of the new county administration headquarters at East Ninth St.

One of the slate of options in the RFP is for developers to propose a relocation plan for the courts housed in the downtown Justice Center tower. is would mean nding or building space for approximately 1,700 sta that also can accommodate between 1,200 and 1,800 daily court visitors, requiring an estimated 900,000 square feet.

“ ere are admittedly only so many locations that a consolidated courthouse can e ectively sit in the central business district of Cleveland. But what we expect, and would like to see, is a handful of relocation options in downtown — probably one to three existing

buildings and also a couple of new construction options,” Je ers said.

A number of factors in the current real estate environment — high interest rates, rising costs of construction materials, labor shortages — as well as higher ofce vacancies in existing buildings opens up more options for the court’s relocation, Je ers said.

“ ere’s been a number of buildings in town that have been seeing higher vacancy if not full vacancy,” he said. “And I think that’s going to present this really interesting dynamic of options where you may have existing property owners that put an asset out there that wasn’t even on our radar.”

A relocation of the courts and other o ces would open up the property for complete redevelopment and possibly the demolition of the courts’ tower, a plan that would e ectively reshape downtown, according to Audrey Gerlach, vice president of economic development and chief of sta at Downtown Cleveland Inc. (formerly Downtown Cleveland Alliance).

More connectivity

Gerlach said a downtown Cleveland without the Justice Center buildings, particularly the tower, would mean greater connectivity between the districts that have organically built up and been separated by the County Block.

“If redeveloped properly, it could go a long way to connecting not only

the north-south part of Public Square with the lakefront but also the east-west connections between the city’s Convention District and the Warehouse District,” Gerlach said.

“Right now, you can stand on St. Clair Avenue and have no idea how close you are to the lake,” she added. “ ere’s no visible visual sight line. But, even more than that, there’s no sense of connectivity.”

e Justice Center also has what she calls a “9-to-5 feel to it.” All the retail and restaurants service the courthouse sta and jurors but only during truncated business hours, cutting o the possibility of latenight or even weekend tra c, a problem for the adjacent Huntington Convention Center of Cleveland.

“What convention goers and hotel guests are looking for — when visiting downtown — is to be able to walk to amenities and with the district sandwiched between both of the malls and all the public buildings on that block, things that don’t feel like there’s a ton there for visitors,” Gerlach said.

Another option the RFP proposes is to keep the courts where they are, reinvest in the tower and redevelop the block around it for other purposes.

“Somebody could come to us and just want to buy the Justice Center block and suggest renovation,” Je ers said.

Je ers says the jails are “purpose-built,” making them di cult — if not impossible — to re-purpose in a cost-e ective manner.

Meanwhile, the southeast corner, where the tower sits, is basically o ce space, albeit in need of a lot of investment and upgrades.

“ e building has views of the lake and high ceilings. is is the kind of building that in many markets would get reskinned and reused. It also has a really well-done design setback from the street, which not a lot of taller buildings in Cleveland,” Je ers said.

e Courthouse Square and Warehouse District is ripe for an adaptive reuse similar to other buildings in the warehouse district, he adds. “It’s a lovely building with small oor plates, really good windows and a 106-car parking lot attached to it. It’s a layup for a developer,” he said.

e deadline for proposals is Oct. 26. County o cials said evaluation could take up to six months.

Je ers said he anticipates the project could have many di erent timelines as things progress in parallel, and could take years to complete.

Whatever the nal result, re-envisioning the County Block and opening it up for private development could be a welcomed change.

“We build a humane and modern jail; the courthouse and all of the economic activity makes a signicant contribution to downtown vitality and the Justice Center is re-imagined as a nexus between the Warehouse District, convention center and Public Square,” Ronayne said. “ is could be a win-win for downtown.”

deepening housing shortage and a mismatch between what it costs to build and what many buyers and renters can a ord.

“We have to grow the pot,” said Alyssa Hernandez, Cleveland’s community development director.

e Cleveland City Council approved a slate of 22 potential projects in June. But the full lineup of recipients probably won’t be clear until next spring. Many applicants still are working through a due diligence process with the city, which is requiring projects to be nished by late 2026.

Some of the prospective winners already have disappeared from the city’s list. e most common reasons? Developers’ lack of experience and capacity. Othernancing hurdles. Or, in a few cases, applicants’ failure to respond to detailed follow-up questions.

“I imagine that . . . a whole lot of projects are going to fall o the pipeline because there just aren’t adequate resources to cover them,” said Je Beam, a Columbus-based regional vice president of real estate development for the Community Builders, a developer of mixed-income communities. “ is is a national case, a statewide case, that there’s just not enough resource.”

e Community Builders sought city gap nancing for a series of projects and initially received approval for one — a 64unit apartment building that is part of the much broader replacement of the Woodhill Homes public-housing complex on Cleveland’s East Side. e new building, called Woodhill Station East, will include a daycare center and additional rst- oor commercial space.

at project stands to receive $5 million. e developer still hopes to secure city funding for another phase of the Woodhill project. Meanwhile, Beam and his colleagues are looking for other ways to nance residential makeovers of two historic Cleveland schools and a ground-up apartment building planned near the MetroHealth System’s main campus on the West Side.

Public records show that the applicant pool spanned experienced and emerging developers. e proposals included new construction, preservation and renovations of existing housing. Some of the projects, including an apartment complex for formerly homeless young adults, already are rising from the ground. Others have been on the drawing board for years.

Most of the buildings are apartments, but the city earmarked $1.75 million for for-sale homes.

e audience is largely low- to middle-income tenants, but a handful of higher-rent proposals made the cut. e list also includes the renovation and expansion of the Norma Herr Women’s Center shelter, just east of downtown.

Collectively, the projects could create more than 1,000 homes. e city is pledging close to $49.5 million in subsidies, in the form of lowcost or exible loans and grants.

Of that pool, $30 million is from the American Rescue Plan Act, or ARPA, a federal relief program through which Cleveland received $512 million — one of the largest allocations in the nation. And $17.7 million comes from a separate bucket of federal recovery money, HOME-ARP, aimed at developments that will house homeless and extremely low-income individuals.

e rest of the cash, the $1.75 million for single-family homes, comes from bond funds.

Altogether, that’s a huge amount of funding for a city that, in a typical year, has only $3.8 million in federal aid to plug gaps in a ordable-housing projects.

Still, it’s nowhere near enough.

“ e need for extra gap nancing beyond what the city typically puts forward is a multi-year problem. And ARPA is a one-year solution,” said Tony Bango, the city’s housing development o ce manager in the department of community development.

Bango and Hernandez are working with their colleagues and other members of Mayor Justin Bibb’s administration on additional strategies to spur housing construction, whether that’s through pursuing outside grants, forming public-private partnerships or changing existing city programs to make them more e cient and easier to navigate.

e federal pandemic-recovery funds must be committed to projects by the end of 2024 and spent by late 2026. City o cials original-

ly intended to award $34.5 million this year, saving the rest of the money for a second round. But the response from developers was so staggering that the community development department put everything on the table at once.

“I thought the city had a recognition of the big picture,” said Kevin Nowak, president and CEO of CHN Housing Partners, a nonpro t developer. “And the big picture is that there has been incredible in ation in project costs caused by the pandemic. ese are real cost increases — and really have become the new baseline for costs when you’re developing a ordable housing and housing in general.”

Two deeply a ordable CHN projects — both permanent supportive housing for once-homeless individuals — made the city’s initial funding list. But a third, the long-gestating rehabilitation of the historic St. Michael School on the near-West Side, did not. at Gothic Revival building, on Scranton Road at the con uence of the Clark-Fulton and Tremont neighborhoods, is set to become apartments for low-income, elderly renters. It already has secured state and federal historic tax credits, low-income housing tax credits and nancing through a U.S. Department of Housing and Urban Development program.

Even with “every piece of the lasagna,” the numbers don’t quite work, Nowak said. CHN asked the city for $1.85 million to ll the remaining void. Public records show

the project is sitting near the bottom of the wait list, based on a scoring matrix that considered a property’s proximity to neighborhood amenities; access to public transportation; community support; and female and minority participation in development and construction.

Timing was just one factor in that scoring rubric.

In late August, the Northwest Neighborhoods community development corporation sent out an announcement about its $2 million award for Karam Senior Living, an innovative project that will combine low-cost apartments with a new Cleveland Public Library branch at West 80th Street and Detroit Avenue. e neighborhood nonpro t group and its partners started working on the concept well before the pandemic, but their expenses have skyrocketed in recent years.

e $22 million project still faces a nancial gap “in the small millions,” said Josh Jones Forbes, the organization’s marketing director. It’s not clear when construction will begin. But it certainly won’t start this year.

In other cases, the city funding was the last piece of a very complicated pie.

On August 29, Sustainable Community Associates bought the old Nathaniel Hawthorne Elementary School on West 130th Street from the city. e developer paid $45,000 for the cast-o landmark building, which will become midpriced workforce housing in a

neighborhood that is neither bustling nor deeply distressed.

e Cleveland-based developers expect to close on nancing and start construction in October, said Josh Rosen, a co-founder of Sustainable Community Associates. e project will receive a $3 million city loan, which Rosen described as “patient” capital.

e deal does not involve any conventional bank debt. Instead, it’s drawing on a mix of tax credits, brown eld clean-up money and a loan from Cleveland Development Advisors, the real estatenance arm of the Greater Cleveland Partnership, the local chamber of commerce.

Without Cleveland’s gap- lling commitment, Rosen said, “I think we would have waited many years to see if the labor market and materials market got better. Or we would have just given the building back to the school district.”

In Hough, on the East Side, the city has made preliminary commitments to two phases of the Allen Estates, a roughly 5-acre project led by a Black, female development team. e subsidy will allow Frontline Development to keep prices from escalating even more on ve single-family homes, which are being marketed at $400,000 to $550,000, according to city records.

Another tranche of public funding is designated for a mixed-income apartment building on which Frontline — a startup — is partnering with an experienced housing developer.

“It’s not easy to establish a market,” said Sheila Wright, Frontline’s president. “With realistic issues like appraisal gaps and costs of materials and just the blocking and tackling that comes with being a developer, it was signi cant for the city to get behind us. … It also allows for us to hover over our mission, which is to make sure that we create a project that is inclusive and that there’s space for people at various income levels.”

e Bibb administration is likely to return to the City Council in late 2023 or early 2024 to present a revised slate of award recipients. Council is requiring o cials to get approval for any runners-up that become eligible for funds as other deals fall through. In June, a few council members expressed dismay about wait-listed developments, denials or the apparent lack of viable projects in their wards.

Some of the city-endorsed projects are waiting on news from the Ohio Housing Finance Agency, which will announce critical competitive bond gap nancing awards in December.

Beam, from the Community Builders, described the city’s process as a pragmatic one, a method that started with, and responded to, data gathered from the marketplace.

“ ey took an approach that was transparent and focused on what projects actually need, as opposed to a process where they might award more projects but not get any of them su cient resources to close,” he said. “So this, I think, will get more shovels in the ground than any other strategy.”

Construction fencing surrounds Cuyahoga TAY in the St. Clair-Superior neighborhood. The 50-unit building will serve young adults, ages 18 to 24, who are homeless or at risk of becoming homeless. The project is set to receive $1.2 million in gap funding. | MICHELLE JARBOE

A rendering shows the planned Karam Senior Living apartment building and Walz branch of the Cleveland Public Library at West 80th Street and Detroit Avenue. The $22 million affordable housing project recently secured a commitment of $2 million in funding from the city of Cleveland, but the development team is still trying to ll a nancial gap. BIALOSKY CLEVELAND; ROBERTP MADISON INTERNATIONAL INC.

e site was selected from 13 Northeast Ohio golf courses that Pulte considered for its next Del Webb project in a ve-year-old master plan. e 325-acre site of the closed Hickory Nut Golf Course lls the bill for many reasons, Paul Spentho , Greater Cleveland division president for Pulte, and Jim O’Connor, Greater Cleveland planning director for Pulte, said in an interview at Pulte’s local headquarters in Medina.

“ is is so signi cant that we’ve had senior leadership size up the site,” Spentho said. “We’re able to undertake this because of our nancial strength as a company to spend years developing the site and achieve the vision for (what the rm calls) Del Webb Hickory Greens.”

e hickory name recalls the history of the site under the Hickory Nut name in the community. e greens match Del Webb branding requirements, Spentho said.

Pulte research shared with Crain’s Cleveland Business shows the western suburbs of Cleveland, from Westlake to southern Medina, will see population growth among people 55 and over (and with more than $75,000 average income) of 27% from 2020 to 2025, above the 23% forecast for all of Northeast Ohio.

“We’ve found people want to live close to retail but don’t want it next door,” Spentho said. e proposed site on Royalton Road is even on the same street as SouthPark Mall and Costco in Strongsville, about three miles east.

e seller also fought a court battle that ended in 2007 with a consent decree allowing a prior development plan. at decree allowed for the decree to be revised and for the plans and participants to change, opening the door for Pulte to negotiate a new consent decree with Columbia Township trustees. Lorain County Judge D. Chris Cook approved the revised consent decree Aug. 22, according to online court records.

pro t, has actively supported the Pulte plan because of its scal bene ts to the township.

“ ere is a segment of our community that wants to keep it rural,” Brassell said. “But that comes at a cost. You have to support the schools and public services. (Del Webb) would bene t the community. e alternative would have been devastating to the community.”

out, $3 million annually in additional property taxes for the schools and $495,000 annually for the township. Townships, unlike municipalities, can’t levy income taxes.

e Del Webb concept has a following among senior citizens. Its initial Pioneer Ridge Del Webb community in North Ridgeville is sold out.

O’Connor said the site is near existing communities so it avoids the problem of “going south of Lodi” to the edge of the Cleveland-Akron housing market to nd a site large enough for a master-planned active-adult community.

e national homebuilder plans to start seeking approval from the Lorain County Planning Commission soon. e consent decree covers the township’s planning needs, though it has to secure permits. After those are secured, it will close on buying the 1965 vintage golf course from 23601 Royalton Road LLC, a Cleveland-based investment group.

e property last changed hands for $4.77 million on April 5, 2022. at was when 23601 Royalton, which takes its name from the address of the golf course, bought it from Hickory Nut Land Development LLC, which had held it since 2003, according to Lorain County land records. Pulte declined to disclose what it will pay for the property.

e old plan, which called for two houses per acre, provided Pulte a big selling point as it negotiated the Del Webb plan with township trustees over the past nine months. e old plan called for 340 single-family homes and 64 acres of green space. Pulte estimates the empty-nester community will boost the township’s population by 1,057 people, compared with 1,360 under the prior plan. However, Pulte estimates less than half the tra c with the Del Webb plan. And it will not add the estimated 680 students to the Columbia school district that a single-family plan of such a size would bring.

Mark Cunningham, a township trustee, said the current plan is vastly di erent than the prior one, which called for the golf course to remain intact and houses to go in around it, including a section of townhouses.

“Pulte was responsive to the needs of the township and what it needed for the project in the negotiations,” Cunningham said.

“We asked them to do public hearings. Very few people had objections to it. As a trustee, you get calls from people to complain about plans. People said they wanted it. It surprised me.”

Wayne Brassell, a member of the school board and the Columbia Education Foundation non-

e density of the Pulte plan would favor mixed-use development and a higher level of investment on Royalton Road, Brassell believes.

“We can’t buy a cup of co ee in the township,” Brassell said. “We spend that money elsewhere. We have a new Tractor Supply store in town. You would need 127 Tractor Supply stores to generate the same revenue for the township.”

Brassell, 68, grew up in the township and has lived nowhere else. Cunningham moved there with his wife and family in 1977 from Parma.

Both men agree there is one reason that people have moved to the township over the years: its rural nature.

However, the path of development has been heading its way from adjoining Cuyahoga County for years.

“We’re a prime target for real estate developers,” Cunningham said.

e situation is such that the township adopted a moratorium on additional residential development in June 2022 except for properties already approved or with a consent decree in place. A committee is preparing a comprehensive plan. Even with the moratorium in place, Cunningham said, more than 100 homes have gone in under previously approved plans.

One “whereas” in the moratorium resolution shows the development pressure on the place, as 287 single-family homes were

built in the township from 2000 to 2018, and 400 more in the next three years.

To soften the impact on the township, Pulte agreed to pay a $900 fee after each house is sold. at will generate more than $550,000 for township parks, $600,000 for emergency medical and re services and $120,000 for township sta ng. It will donate a 3.5-acre site for a new township re station.

And that is on top of, at full build-

Plans for Del Webb Hickory Greens include a 14,000-squarefoot clubhouse, indoor and outdoor pools, a tness center, a golf simulator, a ballroom and a sta activity organizer. e grounds include bocce ball and pickleball courts, a dog park and walking trails. en there is the other selling point: a maintenance-free lifestyle. e plan calls for single- oor houses with two or three bedrooms, with half the homes having green space or a water feature beside them. e community will have a modern farmhouse design. Spentho said pricing for Hickory Greens is not set yet. However, Del Webb homes typically sell for $350,000 to $550,000, he said. If things go per Pulte’s plan, it may have the rst units available in spring 2025. It will have about 80 homes to sell annually, O’Connor said.

In preparing its game plan for Columbia Township, Pulte conducted multiple focus groups to identify what features prospective buyers want in their homes. Spentho said that prompts it to plan to o er basements at about half the properties or three-car garages.

“We’ve found this buyer often wants storage on the same oor as the dwelling,” Spentho said.

The missing L from the Hickory Nut Golf Course sign on Royalton Road in Columbia Township signals its duffer days are behind it. STAN BULLARD

“We can’t buy a cup of coffee in the township. . . .We spend that money elsewhere.”

Wayne Brassell, Columbia Township resident and school board member

PEOPLE ON THE MOVE

To place your listing, visit www.crainscleveland.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ACCOUNTING

Barnes Wendling CPAs

We are pleased to announce that Rosemary Rehner, CPA, CEPA, has been named the rm’s president-elect. Effective July 1, 2024, she will succeed Jeffrey Neuman, CPA, JD. Rosie joined the rm in 2007, serves as a director in the accounting and assurance services department, and leads the rm’s employee bene t plan audit practice group. She is involved with AICPA, MGI, and serves as board president of Greater Cleveland Volunteers, and audit committee chair for the Cleveland Play House.

ENGINEERING / CONSULTING

Davey Resource Group, Inc.

FINANCIAL SERVICES

Glenmede

Emily Campbell named president, CEO of Center for Community Solutions

ADVERTISING / MARKETING

thunder::tech

thunder::tech is thrilled to introduce Dana McFadden as the agency’s newest Account Manager. With more than a decade of experience in Account Management and Client Relationships, Dana brings invaluable expertise to the team. Her strengths in strategizing digital efforts, integrated marketing and growing partnerships make Dana an ideal t to help clients achieve their goals.

Davey Resource Group, Inc. (DRG), a subsidiary of The Davey Tree Expert Company, announces the appointment of two, Eric Smith and Ben Morgan, along with the announcement of its new transportation engineering service offering. Smith has been appointed to the newly created position of director, transportation engineering. He holds a bachelor’s degree in civil engineering from The University of Akron and a master’s degree in real estate development from Virginia Commonwealth University.  Morgan has been appointed to the newly created position of lead transportation engineer. He holds a bachelor’s degree in civil engineering from The University of Akron.

Glenmede is proud to welcome Michael A. Simmons! Building on over 30 years of industry experience, Mike will serve as a Wealth Advisor based out of our Cleveland of ce. He will be providing our clients with wealth management advice, solutions for duciary, charitable, nancial and wealth transfer planning and trust and account administration.

MANUFACTURING

Oatey Co.

Oatey Co., a leading manufacturer in the plumbing industry, has promoted Patrick Aquino to Senior Vice President, Wholesale. With nearly 20 years of experience in sales and business development, Aquino is a seasoned executive with deep knowledge of the plumbing industry. Formerly Vice President, Wholesale, the eight-year Oatey veteran will now take on an enhanced leadership role, including responsibility for customer service and technical support.

Emily Campbell will be the next president and CEO of e Center for Community Solutions.

Campbell has worked for the organization for 16 years. She has served as chief operating ofcer since May 2022.

Her move to CEO will take effect Dec. 1, according to a news release issued by the organization on Sept. 8.  e Center for Community Solutions is a nonpro t in Ohio’s health and human services space that centers around policy advocacy, research and data analysis.

She succeeds John Corlett, who announced his retirement earlier this year after nine years as president and CEO. Corlett will retire e ective Nov. 30 and transition to a senior visiting fellow role.

e organization has 25 employees and a budget of more than $4.5 million.

e board of trustees selected Campbell following a search that resulted in more than 470 applicants.

Board president Kyle Miller said the organization faced a tough task in nding a replacement for Corlett, who is widely known and respected throughout Northeast Ohio. e trustees wanted a candidate who would build on the organization’s longstanding legacy in Northeast Ohio while also focusing on the future.

Miller said Campbell’s tremendous work over the years made her the ideal selection.

“After reviewing many standout prospects, the CCS board of directors concluded the strongest candidate for this important post was right here in our back-

yard, and that leader is Emily,” he said in a statement. “Emily has great knowledge and understanding of the organization, public policy, networks, strategy and a vested interest in the community’s well-being. She knows where the organization has been and where it needs to go to best serve the health and human service needs of Greater Cleveland and all of Ohio.”

Prior to becoming chief operating o cer, Campbell’s work focused on directing demographic and socioeconomic research. Working with the Ohio Department of Health, she led the development of the Ending the HIV Epidemic 10-year strategic plans for Cuyahoga, Hamilton and Franklin counties. She also worked on needs assessments and strategic planning for public and private entities.

Campbell said she felt honored by the board’s con dence in her ability to lead and to continue the good work of the organization.

Her work has largely focused on the causes and consequences of poverty. One of her goals for the nonpro t is to illuminate facts about communities and use information to create positive change for individuals and families.

Campbell has a bachelor’s degree in economics and international studies and a master’s degree in political science from Case Western Reserve University.

She is involved with community organizations such as the Literacy Cooperative of Greater Cleveland, Greater Cleveland Food Bank and the Health Policy Institute of Ohio.

She lives in Cleveland Heights with her husband and two children.

CONSTRUCTION

Marous Brothers Construction

We are pleased to announce Tina Brostek as our Director of Human Resources. Tina comes to Marous Brothers

Construction with over 25 years of Human Resource experience. She works directly with the CEO/ President to support the growth of the business through leading an experienced HR Team in retention strategy, succession planning, bene ts, payroll, compliance, as well as enhancing our learning and development programs through Marous University for all employees. Welcome to the team, Tina!

ENGINEERING / CONSULTING

R.E. Warner & Associates, Inc.

Multi-discipline engineering rm R.E. Warner & Associates announces that Tony Sansone, PE, Esq. has joined the rm as Vice President of Operations. With 28 years of experience, Sansone will lead and enhance rm processes as it continues rapid growth – the rm has tripled in size since 2020. Sansone’s expertise includes strategic plan implementation, process redesign, change management, engineering execution, project controls, staf ng, and acquisitions and satellite of ce expansions.

ECONOMY

From Page 6

e adoption of blockchain technology can lead to signi cant cost savings for the government and taxpayers alike. Blockchain’s e ciency in record-keeping and data management will streamline bureaucratic processes, reducing administrative overheads and eliminating ine ciencies. is cost-e ectiveness can be particularly appealing for budget-conscious decision-makers looking to optimize public spending.

gy, further encouraging adoption.

I’m hopeful that leaders including U.S. Sens. Sherrod Brown and JD Vance also will strive to learn more about our industry and how they can further support us in Washington, D.C. e importance of embracing digital assets and blockchain technology cannot be overstated. Ohio has the chance to position itself as a pioneer, leading the Midwest’s charge towards a tech-driven economy.

Laura Picariello

Reprints Sales Manager lpicariello@crain.com

(732) 723-0569

Another crucial aspect of supporting this industry is educating the public and dispelling misconceptions surrounding digital assets. By promoting awareness and understanding, Ohio’s representatives can pave the way for a positive perception of digital assets and blockchain technolo-

Events like MidwestCon in Ohio demonstrate our state’s commitment to embracing this transformative industry. However, the state’s success in this endeavor relies heavily on the support and collaboration of those who represent us. I hope they see the road ahead is promising, and the time to embrace the future is now.

Morgan

Smith

Paige Bennett Campbell

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Volume 44, Number 33

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