Crain's Cleveland Business

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LOOK BACK: The subprime mortgage wave produced plenty of ripple effects. PAGE 19

Nonprofits feel squeezed as COVID costs and donations pile up.

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CRAINSCLEVELAND.COM I November 9, 2020

REAL ESTATE

DETERMINATION BUILDS Pandemic, recession aren’t deterring apartment developers

``BY STAN BULLARD | The boom in Cleveland-area

apartment developments continues to be undeterred by the pandemic, the resulting recession and the previous introduction of new suites into the market.

Construction crews in the next few weeks will start work on at least five additional projects, based on multimillion-dollar lender commitments made since the COVID-19 crisis struck in March.

Moreover, they extend the reach of the project pipeline beyond those already under construction, such as the mid-rise Intro apartment building by Harbor Group Real Estate Advisors of Chicago, which has a construc- Holtzman tion crane towering above the nearby West Side Market in Ohio City.

Moving ahead as most hotel, office and retail projects hit the pause button has even created a boon for multifamily developers: sweeter bids by building contractors who are starting to worry about the supply of future work.

Jonathan Holtzman, CEO of the

The 22-story City Club Apartments on lower Euclid Avenue will be moving ahead with construction this winter.

Detroit-based City Club Apartments chain, said that’s the word he’s getting from general contractors as his company completes a round of bidding for 300 suites in a planned 22-story tower on lower Euclid Avenue.

“The amount of interest is substantially more than six months or a year ago,” Holtzman said. “Prior to the pandemic, everyone was busy. This is a substantial project that can carry the successful bidders through the next two years. I can tell you the amount of bidders is much larger than what we have seen for about the last 10 years.”

See APARTMENTS on Page 18

VOCON

HEALTH CARE

ENERGY

Hospitals brace for surging COVID cases FirstEnergy readies for Health systems line up testing plans, treatment options before likely winter spike BBY LYDIA COUTRÉ

With weeks to go before the holidays bring families together, winter break sends students home from college campuses and colder weather forces people inside, Ohio already is setting record after record for newly reported COVID-19 cases as hospitalizations and fatalities climb.

Plus, the upcoming flu season, which typically brings a wave of hospitaliza-

tions, will add a layer of complexity.

Northeast Ohio hospitals have been preparing for these and other complications that the winter presents in stemming the spread of COVID-19.

Dr. Robert Wyllie, Cleveland Clinic’s chief of medical operations, said he expects the challenges will be the most severe through December and January.

“I think we’re going to have a rough six to 12 weeks,” he said.

With more than 2,000 COVID-19

NEWSPAPER

VOL. 41, NO. 41 l COPYRIGHT 2020 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

hospitalizations in the state, the current spike in cases is well above the April and July peaks, which each reached a daily hospital census of around 1,100 COVID-19 patients.

Ohio is not alone in the alarming rise in cases. The United States set its own bleak record in early November: surpassing 100,000 new confirmed cases in a single day.

These numbers foreshadow a likely growth in hospitals’ COVID-19 censuses, given that hospitalization and death numbers lag a week to 10 days behind cases. The Clinic is at its highest census of hospitalized COVID-19 patients. Summa Health and University Hospitals are also nearing their peaks. The numbers show “no signs of plateauing,” said Dr. Daniel I. Simon, chief clinical and scientific officer and president of UH Cleveland Medical Center.

See HOSPITALS on Page 17

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possible financial fallout from HB 6 scandal BBY DAN SHINGLER

Some of the ways the ongoing bribery scandal might impact FirstEnergy Corp. came out when the company had its quarterly earnings call Nov 2. Executives told analysts the matter could impact the company’s current plans to sell $1.2 billion in equity and is triggering up to $250 million in cuts to capital spending.

The Akron-based utility said it also will begin looking for ways to cut its operational costs. It’s doing that and cutting its capital expenditures to bolster its balance sheet against possible fines and penalties related to the scandal, executives said.

“That’s why we’re taking the steps

that we’re taking now to provide additional balance sheet flexibility … because we don’t know where we’re going to be in a year or so with the DeHouseholder partment of Justice and whether or not there’s going to be a fine or penalty,” chief financial officer Jon Taylor told analysts.

“So, we’re just slowing back on growth for the near term. We can take additional actions if necessary.

And I think that will provide plenty of balance sheet flexibility.”

See FIRSTENERGY on Page 17

11/6/2020 2:27:06 PM

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Early figures show drop in FAFSA completion rates in Ohio, nationwide Student aid applications are down 21% in Buckeye State

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Out of all of the benchmarks marking a college application season for high school seniors, like taking a college entrance exam or touring a prospective campus, filling out the Free  Concessions Application for Federal Student Aid Available (FAFSA) to potentially earn state or federal funding to attend a higher education institution can be one of the biggest boxes to check.

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The drop comes as enrollment at colleges and universities nationwide and in the region have taken a hit this year, especially for Black students and first-time students. FAFSA completions could be one indicator to 11-9-2020-SVN Ad-Great Oaks.indd 1 11/2/20 11:50 AM look at to see if that decline could continue.

“I would think that college presidents, in general, would be very scared about what potential enrollment next fall may look like,” said MorraLee Keller, a past president of NCAN and the group’s current director of technical assistance.

Barriers to bumping up completion rates existed nationwide prior to the pandemic. The nonprofit Education Northwest found that students and their families may be put off by the complexity of the FAFSA form and the filing process. And in a survey released in 2018 of a group of young people who didn’t submit the application, 23% said they felt like they didn’t have enough information about it.

In Northeast Ohio, NCAN’s numbers show the decline in returns at the Cleveland Metropolitan School District is worse than the state and national rates, clocking in at about a 50% drop compared with the like period in 2019.

CMSD’s Anthony Battaglia pushed back at that national data, though, saying internal tracking shows the completion gap year-to-year for the class of 2021 is far smaller than the national rate indicates.

“The FAFSA is paramount to all of our financial aid process,” said Battaglia, the district’s career and college readiness director.

He said a priority has been stressing to families that just because they may have unique circumstances, that doesn’t necessarily mean they’re immediately excluded from any funding the form could provide to a college-bound student.

“We’ve had a lot of success with the students doing their part, where the roadblock is just parents doing theirs, and then helping inform the community that just because you Flexible warehousing that won’t provide your information doesn’t break the bank. mean you’re financially liable,” he said. » Up to 200,000 square feet of available space CMSD and local nonprofit College Now Greater Cleveland began plot» Affordable shipping services ting out what their FAFSA completion » Contract and on-demand options events would look like beginning in January. Those plans, of course, shifted online in light of the pandemic.

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you’re in person, if you see a student walking down the hallway, you can say, ‘I haven’t seen you, come into my office,’ ” said Kate Schwab, senior director of advising programs and services at College Now. “That would probably be about the only difference in terms of outreach. Otherwise, we have done everything that we had set out to do.”

That outreach centers on hosting both specific building and districtwide completion nights. These

“I WOULD THINK THAT COLLEGE PRESIDENTS, IN GENERAL, WOULD BE VERY SCARED ABOUT WHAT POTENTIAL ENROLLMENT NEXT FALL MAY LOOK LIKE.” — MorraLee Keller, a past president of NCAN and the group’s current director of technical assistance

virtual offerings include providing general information as well as opportunities for students and families to break out into pre-scheduled appointments with staff members.

“If everyone has the paperwork they need and all the pieces they need to complete the FAFSA, we’re fully prepared to finish it that night,” she said. “And we’ve been successful with doing that.”

Officials say the pandemic has made attendance easier, in part, because families don’t have to worry about arranging transportation to attend an event. They mentioned the digital divide has been lessened thanks to the district’s efforts to supply devices, but technology fluency can be a challenge. Families also can make an in-person appointment with College Now if they need to receive more hands-on help.

And though the FAFSA is released on Oct. 1 for the following academic year, CMSD points out they’ve traditionally been a late-filing district.

Students are encouraged to submit the form close to that date because some aid is awarded on a first-come, first served basis.

Across the state, NCAN reports just 17% of Ohio seniors have submitted

their FAFSA as of Oct. 30.

Districts where Black and Hispanic students make up 40% or more of the population have lower completion rates so far this year. High schools in a city setting are seeing the biggest drop compared to their counterparts in towns, suburbs or rural areas.

“There are tens of millions of dollars that are left on the table in financial aid that could be utilized by students in Ohio to allow them to pursue their higher education goals,” said Ohio Department of Higher Education chancellor Randy Gardner.

Gardner applauded the longtime efforts of retiring U.S. Sen. Lamar Alexander. The Republican from Tennessee has long advocated for simplifying the application. Completion rates in Alexander’s state clock in near 80%, and it’s mandatory to complete to earn a state scholarship known as the Tennessee Promise.

Submitting a FAFSA is required to graduate in Louisiana, though a student can opt out.

Socially distant completion events hosted by groups similar to College Now have popped up nationwide this fall, too. An organization in Kansas offered help from a tent pitched outside a high school, while outreach programs curated tips on how to successfully host a drive-in event complete with counselors and connectivity.

Here in Ohio, the department of higher education launched its “3 to Get Ready” campaign two years ago.

It encourages high schools and higher ed institutions to offer help for FAFSA completion, calls for supporting students throughout their application process and encourages them to submit at least one application, and suggests celebrating post-secondary plans with a signing day in the spring.

“It is of concern that we have lower FAFSA completion rates across the board in the country,” Gardner said.

“And we need to impress upon our community leaders, our schools, and our parents and students that higher education is still an important value.

So that’s our mission.”

Amy Morona: amy.morona@crain. com, (216) 771-5229, @AmyMorona

2 | CRAIN’S CLEVELAND BUSINESS | NOVEMBER 9, 2020

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FINANCE

Top amount of SBA-backed 7(a) loans In the Cleveland SBA district, traditional SBA lending totaled $392 million over 1,480 loan in fiscal year 2020, or 4.8% more dollars and 1.5% more loans over 2019.

The reigning leader in SBA 7(a) lending in the market by a huge margin remains Columbus-based Huntington Bank, which provided 26% of all 7(a) activity in the district by dollars in 2020.

CLEVELAND LENDERS, FISCAL YEAR 2020 Bank

The Huntington National Bank United Midwest Savings Bank, National Association KeyBank National Association First Commonwealth Bank Live Oak Banking Company TCF National Bank CFBank, National Association Peoples Bank First National Bank of Pennsylvania Premier Bank SOURCE: SMALL BUSINESS ADMINISTRATION

Total loans

Total $ loaned

873 14 38 16 8 15 6 8 9 11

$107,220,800 $23,224,700 $22,927,200 $19,959,500 $14,220,000 $11,048,100 $10,697,000 $9,178,400 $8,662,400 $7,798,800

Huntington dominates lending in the flagship 7(a) Small Business Administration program Traditional Small Business Administration lending activity was relatively flat in 2020 compared with last year, but that is likely to change in 2021 as businesses continue adjusting to a post-COVID-19 world.

The reigning leader in SBA lending in this market by an incontestable margin, though, remains Columbus-based Huntington Bank.

In the Cleveland SBA district, traditional SBA lending totaled $392 million over 1,480 loans in fiscal year 2020, or 4.8% more dollars and 1.5% more loans than 2019. Huntington provided 26% of all 7(a) activity in the district by dollars in 2020.

Traditional SBA lending comprises the core 7(a) program, through which most loans are provided, plus the 504 and microloan programs.

Funds provided through the Paycheck Protection Program and Economic Injury Disaster Loans amid the coronavirus outbreak are excluded. The fiscal years ended Sept. 30.

Comparatively, there was $886 million in traditional SBA lending across Ohio in 2020 over 3,199 loans, or 2.4% fewer dollars and 8% fewer loans.

Nationally, there was more than $28 billion in traditional SBA loans made in 2020 over 49,958 loans, which amounts to a 0.65% increase in dollars lent across 15% fewer loans compared with 2019.

All combined — adding in PPP, EIDL funds and EIDL advancements with the traditional SBA products — SBA activity in 2020 amounted to more than $764 billion over 14.5 million loans nationally. That includes $24 billion provided across 364,730 loans in Ohio.

“It was a historic year for SBA’s disaster program, as we approved and disbursed more than three times as many funds for the COVID-19 EIDL program ($211 billion) as we have for all disasters combined in the agency’s 67-year history ($67 billion),” said James Rivera, associate administrator for SBA’s Office of Disaster Assistance, in a statement. “This was also the first time in SBA history that the agency had the statutory authority to declare a pandemic and make disaster loans.”

In Cleveland and Ohio overall, the

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CRAIN’S CLEVELAND BUSINESS GRAPHIC

Traditional SBA lending likely to pick up in 2021

BY JEREMY NOBILE

“We offer care and support;

biggest originator of SBA 7(a) loans is Huntington Bank, which once again is the largest SBA lender by volume in the country despite operating in just a nine-state footprint. The lender provided $488 million in total SBA 7(a) loan dollars over 3,161 loans.

Nearly 46% of those dollars and 48% of the loans were in Ohio.

Huntington, the third-largest bank in the state by deposit market share and the second-largest in Northeast Ohio, also was a big player in the PPP, issuing another $6.4 billion in loans through that program.

Typical SBA lending activity tends to be countercyclical with the economy as SBA products are designed to fill gaps when more traditional credit avenues aren’t available to borrowers — something that happens more in a down economy. With a good economy the past few years, conventional lending was common and credit available, which has contributed to traditional SBA activity being down to flat.

Meanwhile, there was a lull in lending activity in the second quarter, especially because of COVID-19 lockdowns that shocked the business sector. Lenders at that time were more engaged with supporting customers through the early throes of the pandemic — and working through the PPP — than underwriting new loans.

With the economy continuing to be challenged amid the health crisis, it’s likely SBA lending will trend back up in 2021, said Maggie Ference, Huntington’s SBA director.

“We are back in recovery, so SBA programs will be more critical than ever in terms of access to capital,” Ference said. “One of the biggest reasons we use them is uncertainty. COVID is not done, and many small businesses are really just treading water.”

Ference said she expects more SBA loans to be sought in the coming year for the refinancing of debt in particular.

“There will be a lot of small business focused on organic cash flow and stabilizing coming out of COVID,” she said. “So we think it will be a big year (for SBA).”

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NOMS picks up where it ‘left off ’ by adding practices and imaging centers

BY LYDIA COUTRÉ

Sandusky-based NOMS Healthcare is back in its growth mode.

After several weeks of adjustment in the early stages of the pandemic, NOMS — an independent, physician-owned and -led medical practice — has spent its summer and fall adding new practices, growing its network of imaging centers and expanding its staff.

“We’ve really picked up right where we left off,” said Joshua Frederick, CEO of NOMS, which stands for Northern Ohio Medical Specialists.

NOMS’ patient volumes hit their lowest point in late April and have been climbing ever since. Its providers are still doing quite a bit of telemedicine services, which it quickly added in the spring ahead of a planned May launch.

“Really the last six weeks, each week has been a record as far as volumes, charges, revenue and number of visit,” Frederick said.

The practice is now positioning itself for further growth at the start of next year, adding more operational people to its team, including a chief legal officer.

Frederick said he expects to have a “nice presence” outside of Ohio in the first half of next year. He’s heard interest from markets in multiple states that need assistance on their ambulatory strategy.

NOMS has not only brought back roughly a quarter of its more than 1,000 staff positions it furloughed in the spring, but it has also grown its team by 10% on top of that by acquiring practices in the area, Frederick said.

NOMS added the seven-physician team at University Ophthalmology

Associates (now NOMS University Ophthalmology) in June, followed by Eastern Ohio Pulmonology Consultants in July. Now NOMS Eastern Ohio Pulmonary, that practice currently has five physicians, two nurse practitioners and a clinical nurse specialist.

NOMS has also picked up a few primary care providers and in September, acquired the assets of five Greater Cleveland, stand-alone imaging centers through a joint venture with Precision Diagnostics Imaging (PDI).

The centers — located in Parma, Westlake, Medina, Warrensville Heights and Middleburg Heights — will now be branded NOMS Allegiance Imaging, which is a nod to PDI’s Georgia-based affiliate company, Allegiance Imaging & Radiology, according to a news release.

NOMS plans to maintain these locations, upgrade equipment and partner with local, board-certified, subspecialty radiologists.

“Almost every physician orders some type of imaging study to diagnose and treat the patient; it is a necessary part of health care,” said Anna Tutlow, vice president of imaging services at NOMS. “And I think it is an added value to have that in our network, because there is some noncompliance with patients in getting exams if they’re too expensive. And this offers an alternative that is more affordable and therefore, they’re more compliant with their treatment.”

These moves are in line with the NOMS strategy of adding specialty groups that cover a larger footprint or offer important services in NOMS’ specialty mix — such as pulmonolo-

gists during the COPVID-19 pandemic, given the respiratory symptoms.

The organization’s primary care strategy looks a little different. Frederick said NOMS is able to pick up one- or two-provider practices to build cornerstones in its markets.

NOMS now has nearly 300 providers across more than 30 specialties, up from roughly 250 in the spring and 60 just a few years ago. Its budget has grown proportionally as well, from about $32 million in 2015 to roughly $120 million, Frederick said.

Through growth, NOMS has been able to make up the roughly $6 million hit it took this year, he said. Any federal support NOMS has received in response to COVID-19 is repayable, and Frederick said it didn’t ultimately have to use any of that cushion.

The pandemic has really underlined the need for — and effectiveness of — the strategic outpatient model NOMS offers, he said.

“I think this only highlighted the need for ambulatory practices and value-based practices,” Frederick said. “I think it has opened a lot of eyes.”

Because larger systems and traditional models of care often operate on slim margins and high fixed costs, the financial hits and large cuts to revenue many have faced this year are not sustainable, he said.

“For us, it was a blip,” he said. “For them, having all these fixed costs, it’s much more difficult.”

Operationally and financially, Frederick believes the model of the future is value-based outpatient services with partnerships and relationships with inpatient facilities.

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TECHNOLOGY

Increased IIoT focus could add billions to region’s economy

Team NEO is among groups pushing for more businesses to apply automation to everyday work BBY JAY MILLER

The internet, where people shop, play games and catch up with friends, is on its way to becoming an important place where businesses keep track remotely of all kinds of data that can be supplied by sensors on the ground, in the air and on manufacturing equipment.

What’s called the Industrial Internet of Things (IIoT) has the potential to significantly transform the way businesses in industries including health care, transportation, energy, agriculture and beyond operate.

Importantly for Northeast Ohio, IIoT is starting to be used to keep machines on manufacturing shop floors running smoothly, in some cases eliminating the need for an increasingly hard-tofind skilled worker to stand over the machine. Creating an internet-linked environment in manufacturing allows business owners and managers to monitor their production lines from the executive suite or even their home and to know about serious, immediate problems — and to better anticipate when equipment may require maintenance, repairs or replacement.

IIoT is a part of a broader category called the Internet of Things, or IoT, which refers to interconnected devices embedded in everyday objects that provide the ability for people to remotely connect with those devices.

With IoT, people can raise their home thermostat remotely on a smartphone or track the number of floors climbed or calories they’ve burned from a device on their wrist. The power of the Internet of Things comes from the ability to collect a lot of data and convert that into useful, actionable information.

But, said one supplier of sensors of both standard machine-based and IIoT sensors, businesses aren’t moving as quickly as they should into IIoT. Helge Hornis, regional technical director for Pepperl+Fuchs North America in Twinsburg, an outpost of a German maker of industrial automation controls, said managers of any type of business should be talking to their suppliers for any of their machines or equipment and asking them to explain what it is that their product can do differently and better using IIoT. “I wish our companies were more open to this discussion, but it’s not where I had hoped when this all started,” he said. “I mean, we started talking about this five, six, seven years ago, but not that many companies are willing to do a little test run. I think there are too many people who believe that it is very complicated.”

Locally, there is a movement to encourage and support the adoption of IIoT processes.

Team NEO, the regional economic development nonprofit, led an ad

hoc group called the Smart Manufacturing Cluster of Northeastern Ohio that has developed what it calls an IIoT roadmap for businesses to identify the opportunities and impact that IIoT can have in the region.

“How do you make your manufacturing facility more productive, more effective, more efficient? That’s by applying sensors and uploading that data, many times to the cloud, and then creating dashboards,” said Jay Foran, senior vice president for industry and innovation at Team NEO. “It’s really about problem resolution. Like where are your pinch points? Where are your problems? And you can do this now. You can put a sensor on one machine, even though you have 12, right? And you can then get started and do a pilot.”

Based on the group’s research, Team NEO believes that greater IIoT application in factory settings has the potential to add $5 billion annually to the regional economy by 2025.

The technology is beginning to have an impact on local metal benders, said David Klotz, president of the Independence-based Precision Metalforming Association. PMA’s 800 members use stamping, fabricating and other processes to create metal products used by, among others, the automotive, defense and medical products industries “A lot of them are using technology because, you know, they have to, because there’s a lack of (skilled) workers

out there right now. It’s is really tough for them right now,” he said. “So they’ve got to move on to doing more automation so they can say, ‘Tell me how this machine’s running?’ Or they can move on preventive maintenance in advance.”

At Jergens Inc. in Cleveland’s Collinwood neighborhood, IIoT is allowing the company to run some of its machine tools that make the pieces and parts — things like clamps and fasteners for American manufacturers — unattended at night and on weekends.

“We now are getting sensor (readings) and error (messages) sent to people’s phones where they can remotely log in, see if there’s a sensor that can be cleared out,” said Jergens general manager Matt Schron. “That allows us, at that point, to keep the machine (running) as opposed to having to sit there and do nothing.”

Sensors on shop floor machines aren’t new. They’ve been used for years to measure things like temperatures and speeds.

“What is new with IIoT is the fact that the information that comes from these sensors is no longer just at a (machine) location,” said Hornis, or Pepperl+Fuchs. “(Manufacturers) can create dashboards that allow them to handle whether it’s preventative maintenance or whatever, more quickly, more efficiently,” from remote locations.

Hornis is on the factory automation side of Pepperl+Fuchs. Its sen-

sors monitor machines that make things. Another side of the business, process automation, makes sensors for the oil and gas, pharmaceutical and food processing industries.

“You know, things that flow continuously,” he said. “It could be yogurt, where you have to measure consistency, temperature, all kinds of things.

You have to be constantly measuring.”

At CrewTracker Software, a Cleveland firm whose software is used by landscapers and snowplowing services, IIoT sensors around client properties provide the software with data on things such as ground temperature, air temperature, humidity and even parking lot pavement temperatures. That allows CrewTracker’s clients to better schedule lawn mowing and snow plow trucks. Its internet-connected software is also used by janitorial services.

“This software actually manages their crews,” said CEO John Paganini. “It tells (snowplowers) where their routes are, what the surfaces are like, what the services they’ll perform are based on road conditions, temperatures and how much snow is on the ground. If we can be very efficient on the exact chemicals and salt and sand that we’re dropping on the roads, we can have less impact to the environment. We can save money, we can save time.”

Jay Miller: jmiller@crain.com, (216) 771-5362, @millerjh

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BBY NDEDA LETSON

EDITORIAL

Trust the process I

t should not be controversial, in a close presidential election conducted during a pandemic, to respect democracy enough to let state officials do their jobs and make sure everyone’s vote is counted.

Joe Biden was able to do it, saying Thursday, Nov. 5, “Democracy is sometimes messy. It sometimes requires a little patience.

I ask everyone to stay calm. ... The process is working.” Ohio Gov. Mike DeWine, a supporter of President Donald Trump in a state the president won handily, did it, too, saying, “We believe in the rule of law. ... Every vote has to be counted. We as a country accept election results. We believe in counting all the votes.”

But the president himself? Couldn’t even clear this low bar, spraying inaccurate accusations in the wake of the Nov. 3 election, including this all-caps gem: “IF YOU COUNT THE LEGAL VOTES, I EASILY WIN THE ELECTION! IF YOU COUNT THE ILLEGAL AND LATE VOTES, THEY CAN STEAL THE ELECTION FROM US!” Reckless words, issued from the nation’s highest office, designed to attack the integrity of the electoral system and maximize suspicion about wideBIDEN SENT THE RIGHT spread voter fraud. (Noted radical Karl Rove wrote last SIGNAL BY SAYING THAT, week that “stealing hundreds of thousands of votes IF HE BECOMES would require a conspiracy PRESIDENT, ONE OF HIS on the scale of a James Bond That isn’t going to FIRST STEPS WILL BE TO movie. happen.”)

“TURN DOWN THE None of this is surprising from Trump. It’s not like we TEMPERATURE.” were anticipating statesmanship, or patriotic graciousness, in a time that calls for such action. It’s all just gamesmanship. His assault on democracy, his abundant bad faith, his hostility toward honesty — they’re all features of the last four years and reminders of why Trump isn’t fit to be the president, regardless of whether you like his tax policies, trade deals or general performance on the economy pre-COVID. The state counts of ballots were moving forward late last week in a way that points to the former vice president return-

ing to the White House, this time in the top job. If that’s how the count goes, so be it. We feel the same if, when all ballots are counted, Trump prevails. The principle here is more important than the individuals.

Biden sent the right signal by saying that, if he becomes president, one of his first steps will be to “turn down the temperature.” He added, “To make progress, we have to stop treating our opponents as enemies. We are not enemies.”

Too many people — and not just people in power — have forgotten that. Back in November 2016, in our editorial immediately following Trump’s election, we wrote that the country needed to move beyond its “endless cycle of political recriminations and grievances.”

That obviously didn’t happen, in no small measure because Trump has been a grievance machine who thrives on exacting political revenge on his perceived enemies — usually Democrats, liberals and the news media, but sometimes his fellow Republicans.

Could a return to normalcy still happen?

We hope so, though it’s only likely under a President Biden, who by temperament and circumstance — a Senate still likely under Republican control, and a narrower margin in the House — will be inclined to make deals. Whether that kind of approach would lead to good policy remains to be seen.

A couple other election observations: ``Former Ohio House Speaker Larry Householder won re-election, despite having been arrested as the key figure in a $61 million bribery scandal that cost the CEO of FirstEnergy his job — but somehow hasn’t led to the repeal of House Bill 6, the energy bailout bill that led to all the trouble. Householder won a race in which his only challengers were writeins. This would be an excellent time for House Republicans to remember they have the power to expel their former boss from the chamber. ``Ohio’s voter turnout topped 71%, the second-highest since 1940. Excellent job. One disappointment was the city of Cleveland, where turnout was below 2016, despite the get-out-thevote efforts of many individuals. One person absent from those efforts: Mayor Frank Jackson. Clevelanders will elect a mayor in 2021. It would help to have one who’s more energetic.

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

As there are countless examples of human suffering and inequities in our communities, organized resources from business — capital, expertise and leadership — across all sectors are in critical need. However, the practice of business philanthropy, as an external and responsive endeavor, has to change.

In times of crises, the role of business philanthropy is pronounced. Currently Letson is vice we are deeply mired in three com- president, pounding crises, that no one sector can Midwest community address alone: development ``A global health pandemic ``An economic recession that thrust mil- market manager lions of Americans into unemployment and Community and led to hundreds of thousands of tem- Reinvestment porary and permanent business closures Act (CRA) officer and a recovery that has been slower for for Citizens. different segments of the population ``Systemic racial inequities that have spotlighted and exacerbated lived experiences of Black and Brown Americans Philanthropic responses to some of these crises have shown businesses at their best in scale and speed. Major philanthropy has committed tens of billions of dollars, with record speed, few constraints and significant collaboration, IN TIMES OF CRISES, all hallmark behaviors worth continuing. However, the his- THE ROLE OF BUSINESS torical deployment of busi- PHILANTHROPY IS ness philanthropy has always been hyper-proficient in pro- PRONOUNCED. viding relief (read: responsive) CURRENTLY WE ARE and insufficient in providing systemic remedies (read: pro- DEEPLY MIRED IN active and transformative).

THREE COMPOUNDING I am an African American woman, a descendent of en- CRISES, THAT NO ONE slaved people whose freed SECTOR CAN ADDRESS heirs migrated to the northern Midwest in the late 1920s from ALONE. a rural, deep Jim Crow South, in hopes of realizing a modicum of wealth inherited from the production of their collective labor and sacrifice — and securing the dreams of a prosperous life for their family. It is important for me to work for a company whose philanthropy makes the best use of its resources to help create access and economic opportunity for everyone to reach their potential.

Here, in Northeast Ohio, home to the world’s first community foundation, world-class medical and educational institutions, and a handful of world-renowned Fortune 500 companies, our core city — a predominately Black city — continues to bear the moniker of the poorest mid-to-large-size city with the highest poverty rate in the country. Further, known COVID-19 cases and deaths are disproportionately in the Black and Brown community. One’s zip code should not be a predictor of socioeconomic status, health outcomes and life expectancy and more needs to be done to solve these persistent problems.

To address these issues, businesses need to look inward at their own values and the role they play “in helping to develop and care for human beings” — the very definition of philanthropy — in the communities they have the privilege and responsibility to serve.

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

See LETSON on Page 7

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

6 | CRAIN’S CLEVELAND BUSINESS | November 9, 2020

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OPINION We provide everything you need: • Property Management Services • Facility Management Services

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Time to rethink talent acquisition strategies

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may decide they need stronger team players, Your Oct. 26 article about the toll COVID-19 is and this is a good time to build that team. We’re taking on global talent acquisition echoes what’s seeing lots of hiring going on, with the common happening in Northeast Ohio. The study cited theme being hard to fill entry-level positions. raised some interesting points. But it’s important This in itself may be an argument for outsourcto also think about what companies can do now ing the recruiting function. After all, if you are to “rethink their talent acquisition strategies.” going to post a position, you better be ready to The study stated that “more than 60% of act immediately, because applicants have so those surveyed reported that their top priority many more opportunities. is filling open positions quickly.” We’re seeing We’ve also seen companies who had laid off that, too, and it’s presenting a challenge. Since D’Agostino internal talent acquisition teams due to May, we’ve seen companies steadily searching for replacement employees at two different levels: en- COVID begin to slowly rebuild their teams to support try-level and professional level. And they’re having diffi- massive hiring. But employers don’t know for sure what the future will look like — so they’re proceeding cauculty finding people to fill these existing positions.

Faced with this difficulty, companies are turning to re- tiously and supplementing with outsourced recruitcruiters for help. As the pace of business continues to pick ment. There is stiff competition for talent. What compaup, it’s going to be a battle to get the right people into your nies need to do now is position themselves in the market organization. This could turn into an opportunity to bring to be able to secure talent for the future. So whether they new, higher-level talent on board. People not content turn to a recruiter for help or build an internal recruitwith how their company performed during a stressful ment team, they need to prepare now for when the pace time may be looking for new opportunities. Or, after ex- picks up. If you’re not doing it now, your competition is.

Mark D’Agostino, President, ConnectedHR periencing the stress of the COVID economy, companies

• Brokerage

LETSON

From Page 6

They need to ensure that the primary motivations of their efforts include an understanding of context, and a commitment to pro-action toward achieving long-lasting change.

Citizens is taking a multifaceted, multiyear approach that aligns strongly with its values. Primary components include:  Grants and charitable support for immediate and longer-term initia-

tives aimed at supporting minority-owned small businesses, increasing awareness of racial disparities, and supporting underserved communities through technology, education and digital literacy initiatives.  More than $500 million in incremental financing and capital for small businesses, housing and other development in predominately minority communities.  An acceleration of our ongoing efforts to increase leadership and workforce diversity while expanding awareness of social equity issues

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and providing additional opportunities for colleagues to make an impact within our communities.

Main Street small businesses and startups keep our economy moving.

An avalanche of small business closures may hollow out lower-income communities, where jobs and income loss has been greater. Philanthropy can expand support for these small business community anchors by direct equity investment, increasing digital access, mentorship and coaching, connecting and networking.

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P007_CL_20201109.indd 7

11/5/2020 4:18:39 PM

HOLIDAY WOES Giving goals may be hard to reach as shoppers stay home.

THE BUSINESS OF PHILANTHROPY

THPSTOCK VIA ISTOCK

PAGE 10

THE HIDDEN COST OF COMPASSION

Local nonprofit thrifts are feeling the squeeze as COVID costs and donations pile up fast; cleaning costs and worker shortages are big headaches for charities with secondhand stores ``BY JUDY STRINGER | Goodwill and Salvation Army thrift stores were

some of the big winners when homebound Americans cleared clutter from closets, attics and basements during COVID lockdown.

As donations “piled outside its doors,” Goodwill Industries of Greater Cleveland and East Central Ohio permitted employees to re-enter stores to process donations amid the shutdown, according to president and CEO Anne Richards.

“It was easily three and four times what we were used to getting,” she said.

Salvation Army of Greater Cleveland’s Major Van Wirth said collection trucks ran even as its retail shops were closed, hauling materials from overfilled donation drop boxes to its Euclid Avenue location, where a small staff was on hand for sorting and storing.

“We were really getting a little tight,” re-

called Wirth, who is administrator of the Salvation Army Adult Rehabilitation Centers in Cleveland. The organization’s 11 thrift shops fund the centers.

To the south, Dee Dee Collura, vice president of retail operations for Goodwill Industries serving Summit, Portage, Medina, Ash-

Richards

Wirth

land and Richland counties, said that area households apparently stockpiled their donations. While its 16 stores did not have a problem with donation dumps during the shutdown, they were swamped with “twoto-three-months” worth of secondhand products, she said, within two weeks of a May 12 reopening.

Collections have somewhat slowed, although donations are still coming in by the

“truckload” rather than the “trunk-load,” Collura said.

Processing issues aside, area nonprofits that rely on thrift sales to fund their benevolent operations welcomed the surge in sweaters, socks and sofa tables. Less welcome are the costly COVID challenges that make it difficult to see any real gains from these goodies.

Richards estimates her Goodwill affiliate, for example, spent more than $100,000 in cleaning supplies, sanitizer and Plexiglas barriers before reopening its 22 stores in May. Roughly in line with Richard’s calculations, John Habat, president and CEO of Greater Cleveland Habitat for Humanity, pegs pre-opening costs for the organization’s ReStore resale outlets at about $5,000 per store.

The Cleveland Habitat operates two ReStore locations.

See DONATIONS on Page 12

8 | CRAIN’S CLEVELAND BUSINESS | November 9, 2020

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11/5/2020 2:17:29 PM

Accelerating our commitment to affordable housing There’s a shortage of affordable housing in America, especially in communities of color.

The impact of this health and humanitarian crisis has intensified the need for increased action.

As part of our commitment to invest $1 billion over four years to advance racial equality and economic opportunity, Bank of America is accelerating our investment in development in neighborhoods of color — including right here in Ohio. We’re working side by side with nonprofits and community leaders to help revitalize neighborhoods, expanding on work we’ve had underway for many years.

My teammates and I remain committed to addressing Ohio’s affordable housing gap and helping build the community in which we live and work.

Jeneen Marziani Ohio Market President

Building together Here in Ohio, we’re partnering with organizations that are expanding affordable housing options. They include: Greater Cleveland Habitat for Humanity CHN Housing Partners

To learn more, please visit bankofamerica.com/community

Bank of America, N.A. Member FDIC. Equal Housing Lender

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PROMOTE. CRAINSCLEVELAND.COM I JUNE 29, 2020 I

Why not?

Dr. Sandra Hong

CRAINSCLEVELAND.COM I JUNE 29, 2020 I “We get to do detective work and figure out how and why things are going on,” Hong exRegional Medical plained. “We’re absolutely makDirector, Cleveland Clinic ing people feel better. It was a laAllergy and immunology com- bor of love to create the program.”

Helming the Clinic’s allergy prise what Sandra Hong calls a “happy field” of medicine, con- center marks only one of her leadsidering practitioners can make ership positions. Hong, who to do detective work 2005,get followan immediate impact on a pa- joined the Clinic in “We figureis out ing a fellowship inand Boston, di- how and why CRAINSCLEVELAND.COM I JUNE 29, 2020 I tient’s quality of life. things are going on,” Hong exMedical rector for the hospital system’s “There are studiesRegional that make alplained. “We’re absolutely makDirector, Cleveland Clinic southern region, orchestrating lergies equal to open heart suring people feel better. It was a lagery, where people are prevented operations in Brunswick, Medina, Allergy and immunology com- bor of love to create the program.”

Township from full functionality in school Wadsworth, Olmsted Helming the Clinic’s allergy prise what Sandra Hong calls a and Strongsville. and work,” said Hong, who among “happy field” of medicine, con- center marks only one of her leadHong created and positions. impleother leadership positions is diership Hong, who sidering practitioners can also make mented new scribe rector of ClevelandanClinic’s new impact joinedprograms the Clinic in 2005, followimmediate ontwo a pain 2020: a postbaccalaureate de- in Boston, is diFood Allergy Centertient’s of Excellence ing a fellowship quality of life.

“We get to do detective work signed in alcollaboration withhospital system’s (FACE). “We absolutely are are makrector for the “There studies that make and figure out how and why Stanford and a region, proing patients feel better.

Theequal beautyto open orchestrating lergies heartUniversity sur- southern things are going on,” Hong exRegional in which Medical third-year stuof it is, we’re takinggery, care where of generoperations in Brunswick,plained.

Medina, “We’re absolutely makpeoplegram are prevented dentsDirector, the Cleveland Ohio University ations of families.” from full functionality Clinic Wadsworth, Olmsted Township infrom school ing people feel better. It was a laHeritage College of Medicine reHong helped develop northern and Strongsville. and work,” said Hong, who among bor of love to create the program.”

Allergy andtraining immunology ceive hands-on under acom- and Ohio’s first food-allergy center, Hong also created impleother leadership positions is diHelming the Clinic’s allergy prise what Sandra Hong calls a physician. which launched inrector February.

To- tenured of Cleveland Clinic’s new mented two new scribe programs marks only one of her lead“happy field” of medicine, Cleveland Clinic staffcon- centerdeday, she leads a multidisciplinary in chief 2020: of a postbaccalaureate Food Allergy Center of Excellence practitioners can make ership positions. Hong, who Herbsidering Wiedemann, who recruited team of allergists, (FACE). pediatric“We psyin collaboration with absolutely are mak- signed joined the Clinic in 2005, followanto immediate impact on Hong the hospital’s allergy de-a pa- and chologists and dieticians working Stanford University a proing patients feel better.

The beauty ing a stufellowship in Boston, is diquality of life. gram in which has watched while she third-year of it is, we’re takingpartment, caretient’s of generto diagnose allergies and disease rector hospital system’s studies thatcommake aldents and from the Ohio University of families.” grew as“There both aare clinician picked up byfor Thethe Daily Show with caused by reactionsations to food.

The Hong file southern lergies equal Heritage to open College heart surofTrevor Medicine re- region, orchestrating Hong helped northern municator.

Noah.

About 32 million people in the develop operations Medina, gery, where people are prevented ` Hobbies: ceive hands-on training under Hong a in Brunswick, Ohio’s includfirst food-allergy center, “Sandy has an enthusiastic Though loves talking U.S. have food allergies, Olmsted one Township from full functionality in school tenured physician. launched February.

To-personality, engaging and is shop,Wadsworth, she’s never watched of Swimming ing 8% of children.which Hong’s own inand and work,” said Hong, who among Cleveland Clinic chief of Strongsville. staff shepeanut leads a multidisciplinary able and to communicate very well her own interviews, leaving that nephews live with day, severe ` Currently reading: Hong also created impleother leadership positions Herb Wiedemann, whotorecruited team of allergists, psylay audiences, which in heris diup her proud mother,and who’s allergies, which cause hives, itch- topediatric “Born a Crime: Stories from a South African mented new scribeofprograms of Cleveland new Hong toClinic’s the hospital’s allergy de-two chologists and dieticians working case rector includes patients,” Wiedefond of taking screenshots her ing and shortness of breath. PeaChildhood” by Trevor Noah in 2020: postbaccalaureate Food Allergy of Excellence partment, has watched while she to diagnose allergies and disease daughter’s TVaappearances, occa- demann said.

“She’sCenter a superb allernut allergy is the most common signed collaboration (FACE).

“We grew absolutely are makas both a clinician and com-in up by four The with Daily Show with travel causedanaphyby reactions to food. ` Her bucket-list gist, but because of her various sionally with onepicked of Hong’s cause of food-induced Thedestination: Hong file Stanford University and a proing patients feel better. beauty municator.

Trevor Noah.

About 32 million people in theevolved talents, she’s in a The numchildren smooching their mom’s An overwater bungalow in French Polynesia laxis, a potentially life-threatengram in which third-year stuofareas.” itincludis, we’re taking care has of gener“Sandy an image enthusiastic U.S. have food allergies, ber of on screen. Though Hong loves talking ` Hobbies: ing reaction. ` Best piece she’s received: Swimming dents from the Ohio University ations of families.” and engaging personality, andKorean-born is shop, she’s never watched one of ofadvice ing 8%Strongsof children. AHong’s own sought-after speaker, Hong Hong’s mother Based in Hong’s native “Be kind, workthat hard and stay humble.”

Heritage College of Medicine rehelped develop northern able to communicate her own interviews, leaving nephews live withconducted severeHong peanut 19 media presentaand very fatherwell — a former cytologist ville, FACE also treats patients ` Currently reading: ceive hands-on training undermother, a Ohio’s first food-allergy center, to layallergy-reaudiences, which in her upowner, to herrespecproud who’s allergies, which itchtionshives, in 2019, tackling and grocery-store with allergic diseases such as cause a Crime: Stories from a South African ` Her dream job as “Born a child: caseinincludes patients,”tenured Wiede-physician. fond of taking screenshots of her which launched February. ing and shortness of breath.

Trevor Noah for, among other out- Totively — instilled in their child the Lifeguard. “My mother’sChildhood” asthma and eczema, conditions lated topicsPeadream jobby was for me TV appearances, occasaid. “She’s a superbCleveland aller- daughter’s nut allergy is the mostday, common Clinic chief of staff she leadsmann a multidisciplinary often exacerbated by anxiety, iso- lets, NBC Nightly News, The New value of hard work and kindness, to be a doctor. Mothers really do know best.” gist, but because of herHerb various sionallywho withrecruited one of Hong’s four ` Her bucket-list travel destination: anaphycause of food-inducedteam anaphy Wiedemann, of allergists, pediatric psylation and bullying. Researching York Times and USA Today. An virtues that Hong utilizes today. talents, she’sworking evolved inHong a numlife-threatenlaxis, a potentially life-threaten to the children hospital’ssmooching allergy de-their mom’s An overwater bungalow in French Polynesia chologists and dieticians Thera‘I’ve always tried to treat people and eventually improving every interview on Aimmune ber of areas.” image on screen. ing reaction. watched while she to diagnose allergies and disease partment, has Best piece — a biopharmaceutical in the way I want to be treated, or doingmother facet of an individual’sBased life isinwhat a job that `speaks to of meadvice andshe’s received: A sought-after speaker, Hong’speutics native StrongsStrongs grewHong as both a Hong’s clinicianKorean-born and com- picked up by Show with caused by reactions to food.

“BeThe kind, Daily workIt’s hard and stay humble.”The Hong file developing treatments how I want my family to be treat- allows me to help spurred Hong’s initial others. what conducted 19 inmedia ville,interest FACE in also company treats patients municator. and father — a former cytologist Trevor Noah.

About 32 million people the presentafor food allergies — in was2019, even ed,”allergy-reshe said. “I’mand blessed to be a owner, the field, she said. with allergic diseases I love respecdoing.” — `Douglas J. job Guth tions tackling grocery-store such as food ` Hobbies: Her dream as atalking child: “Sandy has an enthusiastic Though Hong loves U.S. have allergies, includlated topics for, among other outtively — instilledand in their asthma and eczema, conditions “My mother’sone dreamof job wasSwimming for me personality, is child shop,the she’s Lifeguard. never watched ing 8% of children. Hong’s own and engaging Reprinted with permission from Crain’s Cleveland Business. © 2020 Crain Inc. All rights reserved.

NBC Nightly News, The New value of hard work and kindness, isooften exacerbated by anxiety, iso to be a doctor. Mothers reallythat do know best.” able to Communications communicate very well her own interviews, leaving nephews livelets, with severe peanut ` Currently reading: Further duplication without permission prohibited. #CC320 York Times and USA Today.

An virtues that Hong today. lation and bullying. Researching to islay audiences, which in utilizes her up to her proud mother, who’s allergies, which cause hives, itch“Born a Crime: Stories from a South African interview on Aimmune Theraalways tried to treatfond people and eventually improving every includes ‘I’ve patients,” Wiedeof taking screenshots of her ing and shortness of breath.

Pea- case Childhood” by Trevor Noah — common a biopharmaceutical in the way I wantallerto be treated, or TV facet of an individual’s life what ispeutics doing a job that speaks daughter’s appearances, occa- to me and mann said. “She’s a superb nutisallergy the most company developing how I want myvarious family to be treat- with spurred Hong’s initial cause interestofinfood-induced allows help others. what gist, but because of her ` Her bucket-list travel destination: sionally one me of to Hong’s four It’s anaphy- treatments for food allergies — was evenshe’sed,” she said. blessedchildren to be a smooching the field, she said.

I love doing.”

— Douglas Guth talents, evolved in “I’m a numoverwater bungalow in French Polynesia their mom’s J. An laxis, a potentially life-threatenber of areas.” image on screen. ing reaction. ` Best piece of advice she’s received: Reprinted with fromStrongsCrain’s Cleveland © 2020speaker, Crain Communications Inc. All rights reserved. mother A Business. sought-after Hong Hong’s Korean-born Based inpermission Hong’s native “Be kind, work hard and stay humble.”

Further duplication without permission is prohibited. #CC320 ville, FACE also treats patients conducted 19 media presenta- and father — a former cytologist with allergic diseases such as tions in 2019, tackling allergy-re- and grocery-store owner, respec- ` Her dream job as a child: asthma and eczema, conditions lated topics for, among other out- tively — instilled in their child the Lifeguard. “My mother’s dream job was for me often exacerbated by anxiety, iso- lets, NBC Nightly News, The New value of hard work and kindness, to be a doctor. Mothers really do know best.” lation and bullying. Researching York Times and USA Today. An virtues that Hong utilizes today.

‘I’ve always tried to treat people and eventually improving every interview on Aimmune Therafacet of an individual’s life is what peutics — a biopharmaceutical in the way I want to be treated, or doing a job that speaks to me and spurred Hong’s initial interest in company developing treatments how I want my family to be treat- allows me to help others. It’s what for food allergies — was even ed,” she said. “I’m blessed to be a I love doing.” — Douglas J. Guth the field, she said.

Dr. Sandra Hong

Dr. Sandra Hong

CRAINSCLEVELAND.COM I AUGUST 24, 2020 I

FOCUS | NOTABLE LGBTQ EXECUTIVES Crain’s Cleveland Business is celebrating the professionals who have an impact on Northeast Ohio in their business and in advocacy work in the LGBTQ community — as members, allies and supporters.

Our profiles of 21 professionals, written based on nomination forms submitted to Crain’s, honor their business, civic and philanthropic achievements while highlighting their work on LGBTQ equality and inclusion.

Gregg Levine Title: Senior Career Consultant, Ratliff & Taylor Last degree earned: MBA, Cleveland State University Guiding people in their careers and protecting human rights have been the focus of Gregg Levine’s life.

Currently senior consultant at Ratliff & Taylor, a talent management firm in Independence, Levine provides guidance to executives and other professionals with career transitions. Outside the job, he is active in the Human Rights Campaign and chairs the community relations committee of the Cleveland Jewish Federation(CJF).

“Gregg is a leader in every sense of the word,” said Debbie Klein, the Jewish federation’s managing director for community relations, in the nomination. “He listens intently, he feels the pain of those who are disenfranchised and responds with action, and he brings people along. Gregg is an incredible asset to the organizations fortunate enough to call him a lay leader and volunteer.”

Levine spent 33 years at BP America, starting, according to the nomination, as a “gas jockey” when it was the Standard Oil Co. (Ohio) and rising through a succession of marketing and human resources jobs. After retiring from BP, he earned an executive coaching certificate from Case Western Reserve University and began a second career at Ratliff and Taylor.

While at BP, he worked in London for much of 2012, promoting the company’s sponsorship of the 2012 Olympic Games there. That led to a role on the executive committee of the Gay Games that were held in Cleveland in 2014.

According to nominator Michael Jacobson, a longtime marketing executive who is now president of MHJ Consulting Group, Levine’s greatest contribution to other members of the LGBTQ community is his active, open lifestyle.

“By being open and speaking out about his struggles and lifestyle changes, Gregg continues to lead by example,” Jacobson wrote. “His story of his struggles lets others know they are not alone or the only ones seeking answers.”

In that role, Levine leads discussions at several local Jewish synagogues to help young people and their families who are working to come out. — Jay Miller

Reprinted with permission from Crain’s Cleveland Business. © 2020 Crain Communications Inc. All rights reserved.

Further duplication without permission is prohibited. #CC320

Reprinted with permission from Crain’s Cleveland Business. © 2020 Crain Communications Inc. All rights reserved.

Further duplication without permission is prohibited. #CC345

Laura Picariello, Reprints Sales Manager Phone: (732) 723-0569 • Fax (888) 299-2205 Email: lpicariello@crain.com

10 | CRAIN’S CLEVELAND BUSINESS | NOVEMBER 9, 2020

Pandemic likely will slow holiday drives

BY DOUGLAS J. GUTH

will find other means to make up the difference before the close of its fiscal year next September.

“Any deficit at the end of the year has to come from reserves,” Applin said. “We will go to our donors and supporters with appeals to help us.”

To offset a possible decline in kettle donations in 2020, the Salvation Army recently launched a “Rescue Christmas” initiative to inform potential givers of the obstacles the pandemic presents. The campaign began in mid-September, allowing for a head start on crucial efforts such

The fast approach of the holidays won’t slow down the pandemic, an unfortunate reality for charitable nonprofits that rely, at least in part, protocols, as all toys are handled in a on shopper foot traffic to help meet warehouse by a few masked, socially annual giving goals. distanced Marines.

For the Salvation Army, COVID-19 is Managed by the U.S. Marine Corps increasing need while decreasing the Reserve, the national program this number of traditional red kettles seen year has partnered with Good360 — a each holiday season at store entrances. global product philanthropy organiThomas Applin, divisional secretary zation — to help distribute 2 million for the Salvation Army of Greater toys to families-in-need. Toys are preCleveland, said online shopping, high ferred over monunemployment etary donations, rates and the on“MILLIONS OF UNEMPLOYED TURNED simply so the gifts going national TO NONPROFITS AFTER THEIR ENHANCED get in children’s coin shortage hands all the could result in a BENEFITS EXPIRED. WITH EVICTION more quickly. significant downMORATORIUMS EXPIRING AS WELL, “Cleveland has turn in red kettle always been a funds this year.

THERE’S MORE NEED FOR FOOD, very generous “The big conCLOTHING AND SHELTER.” city,” Blair said. cern is fewer peo“The people here ple at merchants, — Rick Cohen, chief operating officer for the National Council of Nonprofits like to give.” even at grocery Charitable needs nationwide are stores, where there’s more remote as the Angel Tree Program, which pickups and nobody’s walking by a ket- provides toys and clothes to under- surging alongside spiking COVID cases, with arts organizations in particular tle,” Applin said. “Fear of contact with privileged children.

“People usually don’t want to hear facing a shrinking list of donors, said other people is big, too. We’re doing everything we can to make a safe envi- about Christmas early. I complain Rick Cohen, chief operating officer for ronment, but we can’t take away fear about that myself,” Applin said. the National Council of Nonprofits.

Childcare, mental health and “We’ve got to get the message out. It’s people have of coming to the store.”

Kettle bell-ringers will be required too urgent to not let as many people clothing drives are all confronting prospects of a long, cold winter, Coto don masks and stand at an appro- know as possible.”

Toys for Tots’ Cuyahoga County lo- hen said. priate distance, with wipes and hand “Millions of unemployed turned to sanitizers acting as further safe- cation distributed 43,000 toys in guards for each location. Although 2019, a mission that included devel- nonprofits after their enhanced benregular donors kept the organization oping large-scale events with local efits expired,” he said. “With eviction afloat in spring, the pandemic’s pro- pro sports franchises. The flagship moratoriums expiring as well, there’s longed nature has raised concerns holiday charity collects new, un- more need for food, clothing and about adequately funding homeless wrapped toys from October through shelter.”

Nonprofits that normally bank on shelters, grocery assistance and oth- December, an endeavor that coordinator Tethonia Blair said will contin- high shopper turnout are challenged er programming. now as any organization is when The trickle-down impact of ue unabated this year.

“There will be more families re- forced to cancel an in-person fundCOVID-19 hasn’t stopped the Salvation Army’s local division from setting questing toys than in previous years,” raising event. Cohen’s council is ena $2.7 million fundraising target for Blair said. “There’s a lot of people out couraging creativity among its network, especially in terms of outreach Holiday 2020. While the kettle cam- of work right now.”

Despite increased demand, Blair for folks choosing to stay home. paign is a vital facet of the nonprofit’s “It’s a matter of raising visibility to Christmas push, those interested also expects the charity to have slightly fewer toys available than last year. show that the need is there,” Cohen can give online or by check.

“We say to people that we don’t set Lack of live collection events could said. “Remind donors that every little a goal which is above what we need have an impact, though Toys for Tots bit helps.”

If traditional toy drives aren’t possi— it’s what we need,” Applin said. and the Cleveland Indians are cur“That’s billed into our budget. If we rently organizing a holiday drive. ble, organizations may partner with a don’t make it, we have to work harder Meanwhile, families shouldn’t worry retail outlet to provide a donation opabout COVID affecting distribution tion at online checkout. A shift toward the rest of the year.” online giving is not new to the Charitable needs surging pandemic, as the Salvation Army The Salvation Army of Greater already engages Cleveland has six service centers shoppers through scattered throughout the region, serApple Pay and vicing 100,000 residents in Cuyahoga Google Pay if they County annually. Nationally, the orlack cash for the ganization served 23 million people donation kettle. in 2018, according to its 2019 annual Even with digireport. Basic social aid, holiday assisApplin tal adaptations, tance and disaster help are among some charities are balking at the assothe services the nonprofit provides. ciated costs, Cohen noted. Between Applin said virus-sparked job loss is 3% and 8% of online contributions are resulting in food insecurity and similost to processing fees, a problem that lar existential issues among an aldoes not exist when donations arrive ready struggling population. in the form of cash or check.

Last holiday season, the nonprofit’s A glimmer of good news came in Cleveland division raised $2.2 million March, when the CARES Act allowed of a $2.7 million target, a campaign a $300 deduction for charitable concomprising around a quarter of its antributions, a benefit that will extend nual budget. If this year’s efforts falls BRADLEY C. BOWER/BLOOMBERG NEWS beyond the 2020 tax year. Though Cosimilarly short, the Salvation Army

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Trialogue aims to connect nonprofits, contractors Centralized job board will focus on opportunities at Northeast Ohio groups

BY RACHEL ABBEY MCCAFFERTY

U.S. Marines help with a Toys for Tots toy drive at FirstEnergy Stadium during a Browns game in 2019. | CONTRIBUTED

hen worries about donor fatigue, he remains hopeful about this year’s holiday prospects.

“People want to help their communities as much as they can,” he said. “There’s a balance of concern and optimism as we look at the general spirit of donors around the holidays. I hope that’s enough.”

Applin of the Salvation Army said carefully considered disaster response remains a foundational tenet of the charity, even under such unique circumstances.

“This is not something we do; it’s something we are,” Applin said. “It’s such a privilege to serve the people in this community.”

Contact Douglas J. Guth: clbfreelancer@crain.com

Tom Sarago, principal and owner of marketing and communications agency Spruce, knows the freelance and contract life isn’t easy.

About half of his workweek is often spent looking for opportunities.

In talking to his peers, he came to realize “how much work there is trying to find work,” he said.

“You’re either going to the finish line on a project, or you’re looking for the next race to run in,” Sarago said.

He wasn’t aware of a centralized job board specifically for local contract opportunities, which left the search piecemeal for most contractors. He thought there could be a better way, and that he could create it.

Enter the new company he founded, Trialogue. Trialogue, which means a dialogue between three parties, aims to serve as the mediator between nonprofits and contractors.

The idea came to Sarago last fall.

He worked on it while continuing to run Spruce and partnered with local brand and design firm BrandPivot to make Trialogue a reality.

The service will focus on Northeast Ohio nonprofits, a segment he has often worked with in his career.

Working with Trialogue means the organizations won’t have to waste time on RFPs, he said. And hiring contractors instead of a larger agen-

cy could be more cost effective.

The COVID-19 pandemic complicated things, but it also made the idea more necessary, Sarago said.

He thought as more people were laid off or furloughed, they’d turn to contract or freelance work.

Though Trialogue will focus on Northeast Ohio nonprofits, Sarago thinks there is an opportunity for the organization to serve as a model for other communities.

And the service will be more than a job board. Trialogue will work with nonprofits on their job postings, which will be exclusively posted through the service, and vet candidates to make sure they’re a good fit.

And for candidates, Sarago said, listings will be transparent, including the jobs, the time frames and the fees.

Sarago was hopeful that the first jobs would be posted in the coming weeks.

Already, almost 175 people are registered on the contractor side of the service, Sarago said. And their areas of expertise range from public relations to graphic design to videography.

A larger challenge will be getting the word out and connecting with the nonprofits, Sarago said.

“We just want to be their resource so that when they do need something, they’re not looking all over the place to find talent,” he said.

One of the organizations that will likely be a client of Trialogue is the

UCP of Greater Cleveland.

“I think it’s very interesting, and I think it’s well worth considering. I am definitely going to try it when the time is right,” said Patricia Otter, president and CEO of the nonprofit.

UCP stands for United Cerebral Palsy, but the organization has long served children and adults with a broad range of disabilities. Otter worked with Sarago on a short-term marketing project a couple of years ago and said she was impressed with how he took UCP’s mission “to heart.”

“YOU’RE EITHER GOING TO THE FINISH LINE ON A PROJECT, OR YOU’RE LOOKING FOR THE NEXT RACE TO RUN IN.”

— Tom Sarago, founder of Trialogue MICHELLE LOUFMAN PHOTOGRAPHY

The two stayed in touch, and she’s been learning about Trialogue as Sarago developed it.

Nonprofits tend to save their money and time for their mission and programming, Otter said, not administrative projects. When those needs have arisen for UCP, Otter felt like she was “grasping at straws,” looking for the right contacts and relying on outdated lists, she said. Trialogue will help her save time by pre-screening candidates.

Craig Dorn, president and CEO of workforce development organization Youth Opportunities Unlimited, thinks Trialogue could be a good tool for local nonprofits. It will be particularly helpful post-pandemic, as nonprofits work to be flexible and adaptable.

Dorn said he expects to use Trialogue. Much of the current talent is focused in marketing and communications, but he said he would find it helpful if the service brought on more individuals with expertise in “back office” skills such as IT, HR or accounting going forward.

Sarago said in an email that Trialogue will continue to add individuals with more areas of expertise. And if an organization has a specific need that isn’t met by the contractors who are signed up for the service, Trialogue will work to find them.

Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com

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And replenishing sanitizer and cleaning supplies will be an ongoing pain point for charity thrifts, said Rick Cohen, chief operating officer of the National Council of Nonprofits.

The individual costs may be small compared to other budget line items, but “added up they will strain the nonprofits’ very slim profit margins, if they had any,” he said.

Labor is a still bigger headache.

Juggling personnel to schedule around pandemic-related absenteeism stresses already short-staffed thrifts. Collura said some 25% of the employees from Greater Akron Goodwill stores didn’t return to work after the shutdown.

The executives said there have been few — if any — COVID cases MEDINA, OH among returning staff. Yet they are 1-800-547-1538 routinely dealing with employees Salt Distributors Since 1966 who miss multiple days of work because they show symptoms or have www.saltdistributormedinaoh.com been exposed to a confirmed coronavirus carrier.

The true cost of labor shortages, however, is the inability to process donations rapidly. Wirth estimates the Cleveland area Salvation Army stores arePM“conservatively” in need of Grimm Winter mix 2x4.33.indd 1 9/22/2020 1:14:55 between 30 to 40 associates. Richards counts 80 current job openings in Providing a private travel experience Goodwill’s Greater Cleveland and that exceeds expectations East Central Ohio division.

“I was just on a conference call with all the Ohio Goodwills — there are 12 of us — and every single CEO said staffing is the biggest issue, because we can’t process the donations if we don’t have the staff,” she said.

“The containers we use we call them Gaylords, and every Gaylord is worth about $240 in sales. When you can’t process them, that is thousands of dollars sitting in a back room or warehouse.”

Growing competition for truck drivers is an added constriction. The growth of Amazon and other delivery services in the region are making it more difficult to attract and retain FlySkyQuest.com HOW TO FLY WITH SKY QUEST: credentialed drivers with clean re» On-Demand Charter cords, according to Habat. » Jet Card Memberships In addition to “wage increase pres216-362-9904 sure,” Habat said, the competition has Charter@FlySkyQuest.com » Aircraft Ownership Opportunities complicated operations more recently as driver shortages are exacerbated by “COVID scares” that take drivers off the schedule for days at a time.

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“If you called for us to do a pickup at your house right now, we are three to four weeks out,” he said.

The Cleveland and Akron Goodwill affiliates, Habat meanwhile, are dealing with another burdensome COVID expense — unemployment bills. The organizations are self-insured, which means they don’t pay into the Ohio insurance fund and must reimburse the state for benefits claimed by employees or former employees.

“Our initial bill from the state was almost $600,000,” Richards said.

“Now the [U.S.] government through CARES Act has given us 50% back, but that left us with a $300,000 bill for something that we have paid $30,000 per year for the last five years.”

The Akron area Goodwill stores rung up a $258,000 unemployment bill, according to Collura, paying $129,000 after the feds pitched in half.

Sales up, shoppers down Sales are a bright spot for some nonprofit thrifts. Habat said the Cleveland area ReStore locations have broken sales records every month since reopening. Sales this October, for example, were 10% to 12% higher than October 2019 receipts.

Transactions at Cleveland-area Goodwills, Richards said, spiked from a $16-per-ticket average in 2019 to a $20-per-ticket average this year.

Still, COVID’s tentacles are inescapable. If history is any guide, secondhand sales should increase during a recession, Cohen said. In this downturn, however, the virus compresses revenue potential by keeping shoppers at home and out of stores.

“On a Wednesday, for example, in our Strongsville store, we might have had 450 to 500 customers on that day before, now we are seeing more like 250,” Wirth of the Salvation Army said.

Richards estimates foot traffic deficits of 30% over pre-pandemic levels among her Goodwill stores.

“On top of that, because people aren’t shopping as much anywhere really, they aren’t buying new things to replace things that they might otherwise donate,” she said.

Wirth said nonprofit leaders like him and his peers are resilient and “will continue to push forward.”

“I think as we settle into this new normal, there will be a time when people feel more comfortable coming out and into the thrift stores,” he said. “I also believe our donors support our missions and continue to do so even more as they see their friends and neighbors in need.”

Contact Judy Stringer: clbfreelancer@crain.com

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CRAIN'S LIST | PRIVATELY HELD COMPANIES Ranked by 2019 revenue REVENUE (MILLIONS) RANK

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

COMPANY NAME

MEDICAL MUTUAL OF OHIO, Cleveland 216-687-7000/medmutual.com

LOCAL FTE STAFF 6-30-2020

YEAR FOUNDED

TYPE OF BUSINESS

TOP LOCAL EXECUTIVE

2019

2018

% CHANGE

$3,741.2

$3,479

8%

2,358

1934

Health insurance company

Rick A. Chiricosta, chairman, president, CEO

GREAT LAKES CHEESE, Hiram 440-834-2500/greatlakescheese.com

$3,200 1

$3,200

0%

739

1958

Packager and manufacturer of natural and processed cheese

Dan Zagzebski, president, CEO

DEALER TIRE LLC, Cleveland 216-432-0088/dealertire.com

$2,500 2

$1,700 3

47%

—

2002

Distributor of tires and automotive parts

Scott Mueller, CEO Dean Mueller, president

MTD PRODUCTS INC., Valley City 330-225-2600/mtdproducts.com

$2,400 4

$2,400 5

0%

—

1932

Manufacturer of outdoor power equipment

Robert T. Moll, chairman, president, CEO

9%

1,676

1848

Insurance, banking and financial services company

Edward Largent, president, CEO, board chair

$2,400 7

-4%

1,500

1943

Craft and fabric retailer

Wade Miquelon, president, CEO

$1,620

38%

865

2003

Private aviation company: fractional, JetCard, charter, management, maintenance, pilot training

Michael A. Rossi Kenneth C. Ricci, principals

—

—

—

—

Manufacturer of automotive and industrial equipment components

Patrick K. James, CEO

WESTFIELD, Westfield Center 330-887-0101/westfieldinsurance.com JO-ANN STORES LLC, Hudson 330-656-2600/joann.com DIRECTIONAL AVIATION, Richmond Heights 216-261-3000/directionalaviation.com

$2,300.7 $2,300 6 $2,242.4

$2,110.4

FIRST BRANDS GROUP LLC, Cleveland 248-371-1700/tricoproducts.com

$2,200 8

JONES DAY, Cleveland 216-586-3939/jonesday.com

$2,077 9

$2,057 9

1%

621

1893

Law firm

Heather Lennox, Cleveland partner-in-charge

SWAGELOK CO., Solon 440-248-4600/swagelok.com

$2,000

$2,000

0%

4,276

1947

Manufacturer of industrial fluid system products and assemblies

Thomas F. Lozick, chairman, president, CEO

GANLEY AUTO GROUP, Brecksville 440-584-8202/ganleyauto.com

$1,875.3

$1,761.4

6%

2,147

1968

Auto dealership group

Kenneth G. Ganley, president, CEO

THE KENAN ADVANTAGE GROUP INC., North Canton 800-969-5419/thekag.com

$1,700 10

$1,730

-2%

—

1991

Tank truck transporter and logistics provider

Bruce Blaise, president, CEO

THE CARTER-JONES COS. (CARTER LUMBER), Kent 330-673-6100/carterlumber.com

$1,504

$1,482.4

1%

590

1932

Building materials retailer

Neil Sackett, chairman, CEO

AMERICAN GREETINGS CORP., Westlake 216-252-7300/americangreetings.com

$1,420.6 11 $1,460 11

-3%

—

1906

Creator of paper and digital greeting cards, party supplies and other products

Joe Acuri, CEO

ASSOCIATED MATERIALS INC., Cuyahoga Falls 330-929-1811/associatedmaterials.com

$1,318.1

$1,305

1%

1,021

1947

Manufacturer of exterior building products

Brian C. Strauss, president, CEO

$1,251

$1,234

1%

1,185

1974

Manufacturer of snack foods

Bill Nictakis, chairman, CEO

THE DAVEY TREE EXPERT CO., Kent 330-673-9511/davey.com

$1,143.7

$1,024

12%

777

1880

Tree services, grounds maintenance and consulting services firm

Patrick M. Covey, president, CEO

OHIO CAT, Broadview Heights 440-526-6200/ohiocat.com

$1,065.2

$995

7%

605 12

1945

Service, sales and rental for Caterpillar equipment and engines

Kenneth E. Taylor, president

SQUIRE PATTON BOGGS, Cleveland 216-479-8500/squirepb.com

$1,035

$1,035

0%

291

1890

Law firm

Michele Connell, managing partner, Cleveland Frederick Nance, global managing partner

THE GARLAND CO., Cleveland 800-641-7500/garlandco.com

$892.3

$738.2

21%

172

1895

Manufacturer of roofing, flooring, coatings, sealants and maintenance systems

David M. Sokol, president

HYLAND, Westlake 440-788-4988/hyland.com

$820

$696.3

18%

2,124

1991

Content services software developer

Bill Priemer, president, CEO

GEON PERFORMANCE SOLUTIONS, Avon Lake 888-910-0536/geon.com

$800 13

—

—

—

2019

Manufacturer of polymer products

Tracy Garrison, CEO

DISCOUNT DRUG MART INC., Medina 330-725-2340/discount-drugmart.com

$789

$716

10%

2,453

1968

Regional drug store chain

Don Boodjeh, CEO

BDI WORLDWIDE, Cleveland 216-642-9100/bdiworldwide.com

$775.6

$782

-1%

164

1935

Distributor of industrial products and supply chain services

Carl G. James, chairman, CEO

BAKERHOSTETLER, Cleveland 216-621-0200/bakerlaw.com

$732.5

$667

10%

366

1916

Law firm

Brett A. Wall, chief operating partner Matthew A. Tenerowicz, Cleveland office managing partner

HEINEN'S INC., Warrensville Heights 216-475-2300/heinens.com

$600 14

$600 14

0%

1,682

1929

Grocery store chain

Jeffrey Heinen Tom Heinen, co-presidents

LEAF HOME SOLUTIONS, Hudson 800-290-6106/leafhomesolutions.com

$582

$340.4

71%

568

2005

Gutter protection and in-home accessibility products

Jeff Beck, president, CEO

MAJESTIC STEEL USA INC., Pepper Pike 800-321-5590/majesticsteel.com

$520

$507.6

2%

335

1979

Steel service center; distributor of prime flat rolled steel

Todd M. Leebow, president, CEO

RESERVE MANAGEMENT GROUP, Stow 440-519-1768/reserve-group.com

$478

$535

-11%

210

1991

Metal recycling, electronics repair, resale and recycling services provider

Steve Joseph, president, CEO

THE ANDERSON-DUBOSE CO., Lordstown 440-248-8800/a-d.us

$446.3

$577.7

-23%

—

1991

Distributor of food, paper and beverage products

Warren E. Anderson, chairman, CEO

CLEVELAND BROWNS, Berea 440-891-5000/clevelandbrowns.com

$431 15

$399 15

8%

223

1946

Professional football team

Jimmy Haslam, principal partner Dee Haslam, managing partner

VALLEY TRUCK CENTERS, Valley View 216-524-2400/valleytruckcenters.net

$418.6

$392.3

7%

365

1964

Dealership management group

Brian E. O'Donnell, president, CEO

SHEARER'S FOODS LLC, Massillon 330-834-4030/shearers.com

Researched by Chuck Soder: csoder@crain.com | Companies in some cases submit rounded revenue figures. Information is from the companies unless footnoted. NOTES: 1. This is a 2018 revenue figure. 2. From Moody's; includes Dent Wizard, which Dealer Tire acquired in 2020. 3. From Moody's, for 12 months ending September 2018 4. Estimate from 2019 annual report filed by Stanley Black & Decker, which owns a 20% stake in MTD. 5. This is a 2017 revenue figure from an annual report filed by Stanley Black & Decker, which owns a 20% stake in MTD. 6. Approximate; from Moody's 7. From Forbes 8. From Moody's; for 12 months ending March 2020; includes revenue from acquisitions that closed in July 2020 9. Gross revenue from The American Lawyer's Am Law 200 10. From Moody's 11. Crain's estimate 12. As of March 1 13. Company estimate from a March 2020 Crain's story 14. This is a 2018 revenue figure from the Cleveland Jewish News. 15. Estimate from Forbes

Get 155 companies and 850 executives in Excel format. Become a Data Member: CrainsCleveland.com/data 14 | CRAIN’S CLEVELAND BUSINESS | November 9, 2020

P014_CL_20201109.indd 14

11/5/2020 3:46:05 PM

DATA SCOOP

Crain’s Privately Held list keeps growing, as do firms on it

BY CHUCK SODER

Our Privately Held Companies list just keeps getting bigger.

The full digital list, available to Crain’s Data Members, includes a whopping 155 companies — up from 117 last year and 51 the year before.

Not only did we add lots of small and midsize companies, but we’ve added some big ones, too, as you’ll see from the print version of the list on Page 14.

The biggest company to join the list is First Brands Group LLC, which manages several mostly aftermarket automotive product brands from its headquarters in Cleveland.

The company — previously known as Trico Group — generated $2.2 billion in revenue in the 12 months ending March 1, 2020, if you count a few acquisitions that closed in 2020, according to Moody’s Investors Service.

That was good enough for No. 8 on the list.

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Other bigger companies joining the list for the first time include PolyOne spinoff Geon Performance Products at No. 22 and Heinen’s Inc. at No. 26.

Granted, we lost the second-largest company on the list in April when Atlanta-based Novelis Inc. acquired aluminum products maker Aleris of Beachwood for $2.8 billion. But Medical Mutual of Ohio is back at No. 1 and Great Lakes Cheese moved into the No. 2 spot.

So who took Aleris’ place in the top

three? Dealer Tire LLC, which jumped to No. 3 from No. 10 last year with a 47% revenue increase. (Granted, it’s not a perfect year-over-year comparison as the 2019 revenue figure, from Moody’s, includes St. Louis-based DentWizard, which was acquired by Dealer Tire in 2020.)

Directional Aviation at No. 7 also posted a strong 38% revenue increase, which the company attributes to a big year for private aviation.

Combined revenue for the entire

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OneDigital, the nation’s leading strategic advisory firm, is pleased to announce Robyn Franzinger as the marketing manager for the Ohio region.

Robyn has 6 years of design and marketing experience in the manufacturing industry and is eager to bring her skill set to the health and benefits industry.

OneDigital’s strategic, fresh thinking, and personal approach to converge health, wealth and human resources into a hub of services and business guidance is what attracted Robyn to the company.

Heather Light brings a rich background in non-profit, broadcast media, and corporate management to Y.O.U. as the new Manager of Light Foundation & Corporate Relations. Following several years of retail management experience, she commenced her career in radio where she developed a deep passion for Cleveland and its people. She has taken this passion with her in her work in the non-profit sector, bringing to Y.O.U solid knowledge of the Nathanson corporate philanthropic landscape via her nearly two decades of professional experience.

She is taking over from Marc Nathanson, who is retiring after serving as Y.O.U.’s Senior Executive of Development for nearly 10 years and in the nonprofit sector for 20 years.

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list rose 7.3% for the 134 companies for which we have figures for 2018 and 2019.

But combined full-time equivalent employment fell 2.9% for the 113 companies that submitted data for both 2019 and 2020 — no surprise, since those figures are as of June 30 and would have been impacted by the pandemic-induced recession.

INSURANCE

McGowan Allied Specialty Insurance Joe K. Boyd has joined McGowan Allied Specialty Insurance, the country’s leading insurance firm for amusement-related risks, as an Underwriting Manager. In his new role, Boyd will be responsible for a team of underwriters within defined industry verticals and will have new business, underwriting, and profitability responsibilities. Boyd will also have oversight over several key agency relationships and will be involved with placing both facultative and treaty reinsurance & regulatory filings.

INDUSTRY ACHIEVERS ADVANCING THEIR CAREERS

LAW

Frantz Ward LLP Matthew Selby joins Frantz Ward as Partner focusing on Transportation Law. He represents a variety of domestic and international transportation organizations including motor carriers, leasing companies, third party logistics providers, regional and national shippers and large private fleets. He also has experience dealing with safety, compliance and risk matters for a transportation company. He earned his J.D. from Cleveland Marshall College of Law and his B.A. from John Carroll University.

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NOVEMBER 9, 2020 | CRAIN’S CLEVELAND BUSINESS | 15

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AKRON DEVELOPMENT

Efforts for Merriman Valley master plan move forward Akron and Cuyahoga Falls join forces to hire a consultant to help guide development BBY DAN SHINGLER

Against a backdrop of increasing concern by local residents, Akron and Cuyahoga Falls are moving forward with efforts to produce a master plan to direct the development of nearly 1,100 acres in and around the scenic Merriman Valley the two cities share.

A request for qualifications from consultants that could help the cities develop a plan went out last month, and Cuyahoga Falls planning director Fred Guerra said the cities have received nine responses. He said the cities aren’t ready to release the proposals prior to a review by city officials, but added he was pleased with what they received.

“It’s a good response. I was happy,” Guerra said in a Nov. 3 interview. “I was thinking we’d get five or six, and we almost doubled it. … They’re all really good outfits. They’re all good planning firms. We haven’t really officially started going through them.”

The two cities will work together on a development plan, according to Guerra and Jason Segedy, Akron’s director of planning and urban development. The cities also will evenly share the cost of a consultant.

“We have budgeted a minimum of $50,000 (for Akron’s share of the cost), with the ability to spend more, if needed,” Segedy said. “We won’t know the final amount until we review the proposals and negotiate a price with a consultant.”

The RFQ calls for a consultant to work on a plan for a broad swath of the valley. The affected area stretches from just below Sand Run Parkway and Riverview Road, on the south, to just below Theiss and Hardy roads, on the north. It extends from Northampton Road, on the east, to near the intersection of Smith and Riverview roads, on the west.

Approximately 783 acres of the valley would be covered by the new master plan, which “will guide future land use and development activities” in the area, the RFQ states.

The plan also would cover an additional 314 acres, known as the Schum-

Many existing homes are nestled into an area with rustic and rural attributes residents say they want to protect. | DAN SHINGLER/CRAIN’S

acher Area, around the intersection of Portage Trail and Northampton Road.

That’s a largely open space currently used for residential and industrial developments, according to the RFQ. The RFQ states the master plan will build upon a framework for the area developed by Cuyahoga Falls in 2005.

That framework, according to the document, includes preserving the area’s natural resources, providing networks for pedestrians and bicyclists, and creating opportunities for green industries.

Guerra said the cities’ goal is to hire a consultant by the end of this year and to complete the development plan in 2021. After that, Akron and Cuyahoga Falls will codify the plan and use it to guide zoning in the area, according to the RFQ. City officials may be under pressure to move quickly, as residents of the valley are hoping to stave off any development before the plan is completed and approved.

That includes, some local residents say, holding off the development of 45 acres owned by the city of Akron on Theiss Road, for which the city in August

put out an RFP for possible residential development and the sale of the land.

The city received six bids for the property, including one from the Western Reserve Land Conservancy to preserve the site, but has yet to select a developer.

Ellen Lander Nischt, Akron’s press secretary and senior strategic counsel, said rumors that the city has chosen the land conservancy’s bid for the property — the lowest in price the city received — are not true. Segedy also said the city has yet to pick a buyer for the Theiss Road land and is in no hurry to do so. He added that the conservancy’s bid will be considered alongside the others.

“We’re still looking at that for Theiss Road, and there are considerations for conservation. We did get a proposal from the land conservancy and will continue to look at that as time goes on,” Segedy said.

Meanwhile, Merriman Valley resident Andrew Holland said he’s working with other area residents to organize and ensure that planning happens before development. He also wants to make sure a new master plan

takes into consideration the needs of the valley and its residents but also protects the valley’s natural resources.

Late last week, Holland was organizing a mini rally of about 25 people that was scheduled to take place Saturday, Nov. 7, at Blimp City Bike & Hike in Merriman Valley, followed by what he hoped would be a larger car rally that would make a loop of the area. He said there’s plenty of interest among local residents but that he was limiting the size the event to provide for social distancing.

Holland said he wants to see development in the valley that is planned and controlled.

“I’m not anti-development. If we go that route, we will lose,” he said.

“We as a community will lose. The valley is kick-ass. It just needs to be thought through.”

In fact, he thinks a plan could be useful to correct past mistakes, such as the way the border between the two cities was drawn up in jigsaw shapes when Northampton Township merged with Cuyahoga Falls in 1986.

“I pay taxes in Cuyahoga Falls, but I have an Akron address; I’m part of the

Northampton mess,” Holland said.

But he and other residents are leery that the cities will try to slip in development before the plan is complete, he said.

He said he’d be happy to see the conservancy preserve the Theiss Road site, but worries it will be conservation window dressing to pave the way for unplanned development of larger parcels, such as the former Riverwood Golf Course Pine Valley Sports site nearby on Akron-Peninsula Road.

Holland said he worries the city will sell the Theiss Road land to the land conservancy, use the sale to claim it has done ample preservation work, then move forward to develop larger parcels like the golf course.

“It’s the sacrificial lamb, in my view,” Holland said of the Theiss Road site.

Segedy — whose longstanding reputation as an urbanist opponent of suburban sprawl might be tested in the valley — said that’s not the case.

Segedy said the city, too, wants planned development that will preserve the area’s character and assets and cement its role as a scenic gateway to the Cuyahoga Valley National Park. He said Akron is focused on residential development, in part because it generates less traffic than things like big-box retail developments.

“It wouldn’t be an anti-development plan, but the whole idea would be to not have free-for-all development either and to guide development in the valley,” Segedy said.

But Segedy stopped well short of promising that a sale of the Theiss Road parcel will be held off until a master development plan is completed and approved.

“I think we can walk and chew gum at the same time,” he said.

He continued, “I think we’re going to be in a position where we can have the two processes inform one another.

As we look at options for Theiss, what we learn there could inform the planning process for the valley at large.”

Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

MANUFACTURING

Kent Elastomer shifts into high gear to produce pandemic supplies Company makes thousands of bellows for UK ventilator project BBY ERIN PUSTAY BEAVEN RUBBER & PLASTICS NEWS

Mike Barlow doesn’t believe in impossible. Not anymore.

Because this year, he watched the impossible become reality, and a company in Kent played a big role in that.

Until this spring, Penlon Ltd., based in the United Kingdom, wasn’t in the emergency ventilator business. But at the height of the COVID-19 pandemic, when ventilators were desperately needed, Penlon found a way to make them. What seemed insurmountable, Barlow said, was possible because of support from partners like Kent Elastomer Products Inc., which made bellows — thousands of them — faster than anyone thought possible.

“We saved lives,” Barlow, materials manager at Penlon, said of the col-

“WE SAVED LIVES. WE WILL TELL OUR GRANDCHILDREN ABOUT THIS.” ——Mike Barlow, materials manager at Penlon

laboration between Penlon, Kent Elastomer and others. “We will tell our grandchildren about this.”

As COVID-19 spread across Europe and the number of hospitalizations climbed, the United Kingdom government issued the Ventilator Challenge U.K. to its manufacturing base, urging the development and production of much-needed medical equipment.

Barlow said Penlon was positioned to meet the challenge because of the work it already did. With some changes to the schematics, the anesthesia systems it regularly produces

could be redesigned and used as critically needed ventilators.

Within a week, the company not only drew up plans for a new ventilator, it also created a prototype. And after a month, Penlon received certification from the proper governmental authorities and was poised to produce tens of thousands of ventilators.

The initial goal was to make about 30,000 machines in three months, and the project brought together suppliers as well as OEMs in the automotive and aerospace sectors. Ford U.K., McLaren Racing Ltd., Airbus S.E. and Siemens A.G. all joined the effort to ensure that the ventilator project had the manpower and manufacturing space for the ventilators to be built quickly and precisely.

See ELASTOMER on Page 17

A Kent Elastomer Products employee cleans a work station at the company’s manufacturing facility. | CONTRIBUTED

16 | CRAIN’S CLEVELAND BUSINESS | November 9, 2020

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FIRSTENERGY

From Page 1

The call came just five days after FirstEnergy fired its CEO, Charles E. Jones, and two other executives on Oct. 29 amid the ongoing federal prosecution of former Ohio House Speaker Larry Householder on charges he allegedly orchestrated a $61 million bribery scheme to pass House Bill 6.

FirstEnergy said in a news release announcing the firings that the executives “violated certain FirstEnergy policies and its code of conduct.”

Shortly after Householder was charged, it was reported that FirstEnergy was being investigated by the Securities and Exchange Commission’s Public Finance Abuse Unit, which typically investigates corruption allegations linked to publicly traded companies, municipal securities and pension plans.

The law that came out of HB 6, unless repealed or halted by the courts, will send more than $1 billion in ratepayer-funded subsidies to Ohio’s two nuclear plants. The plants were owned

by FirstEnergy subsidiary FirstEnergy Solutions (FES) when the law was passed in July 2019. FES emerged from Chapter 11 bankruptcy in February of this year as an independent company called Energy Harbor.

Jones’ firing came on the same day

ELASTOMER

From Page 16

“We were doing things in a matter of hours or minutes rather than in days or weeks,” Barlow said. “It (seemed) impossible from the start, like it could not be done. … The reason it did happen was that it was a common goal for everyone. We were facing a crisis and people were dying, and every device we were making could potentially save lives.”

Moving quickly Pumping life into this collaborative effort was a midsize rubber products maker from the heartland of Ohio.

Kent Elastomer Products, a subsidiary of Meridian Products Inc., is no stranger to manufacturing lifesaving products. Founded in 1960, the company specializes in thermoplastic and natural rubber and PVC tubing, dip-molded products, and nonlatex tourniquets, among other products. Medical products comprise roughly 85% of the company’s business. But this moment was different, according to Joe Williamson, Kent Elastomer vice president of sales and marketing.

There was an urgency to the moment that called the company to take its services to a new level and expand collaborative efforts. For Kent Elastomer, that meant stepping up big for a customer that typically accounted for a small part of the business.

“When Mike brought these volumes to us, (we thought) this is insane,” Williamson said. “We do 50 (bellows) a month for you guys, about 600 a year. How can we produce 30,000 to 35,000 within a three-month period?”

A number of factors allowed Kent Elastomer to quickly transition and produce the thousands of bellows needed for the ventilators — about 15,000 in all, once the project was said and done. Most prominent, Williamson said, was the dedication of the company’s entire team and their determination to prove the impossible was possible.

The Perry Nuclear Power Plant is scheduled to close in 2021, but some observers predict zero emissions credits from the state will save the facility. | CRAIN’S FILE

that Householder aide Jeffrey Longstreth and lobbyist Juan Cespedes pleaded guilty in the case, presumably freeing them to testify against Householder and to provide prosecutors with additional evidence.

Jones’ sudden ejection left Steven Strah — FirstEnergy’s president, who the company said already had been groomed as Jones’ successor — taking over as acting CEO and manning the analyst call.

Strah told participants the company still expects to post compound annual growth of between 5% and 8% through 2023, and still plans to issue up to $600 “They were so resilient,” Williamson said. “When their backs were up against the wall, and they were facing the unknowns of COVID ... they stepped up their game and put all hands on deck.”

Another reason Kent Elastomer could accommodate the incredible surge in product demand was the shift in demand elsewhere. While a large portion of the products the company makes are for the medical sector, not all of them were needed when COVID-19 took hold. Hospitals, to ensure they had the space and resources to treat COVID-19 patients, halted elective surgeries and other nonessential procedures. That led a drop in demand for some medical products.

In Kent Elastomer’s case, that turned out to be a small blessing. It meant dip production lines could be converted and resources redirected to get the tooling in place and produce the bellows in the quantity that Penlon needed.

What Kent Elastomer achieved is astounding, said Barlow, who emphasized the pace at which the company turned around the custom tooling for the bellows. Project leaders collaborated to make it all happen, working late nights and weekends, expanding the lines of communication.

“The major impact is that we get it done now,” Barlow said. “There isn’t time to contemplate if there is a problem. We hit the problem straight on and we solve it in a matter of minutes or hours rather than days or weeks.”

What Penlon and its partners achieved cannot be understated, Barlow said. Together, they took a project that should have taken 18 months or longer and turned it into a project easily measured in weeks.

Working with that kind of timeline wasn’t easy, Barlow said, but it was necessary.

“We saved lives,” Barlow said. “At the moments when things were really tough —and they were really tough often — I just thought, ‘There is a family somewhere in the country, sitting around having dinner that would otherwise be mourning the death of someone at that table.’ That was my motivation for keeping going.”

million of equity in 2022 and the same amount again in 2023. But it’s preparing for potential problems.

“With that said, we are mindful that the current situation may present additional challenges to meet this objective,” Strah told analysts.

The company declined several analysts’ requests to discuss the ongoing investigation into the Householder affair, but told analysts the risks presented by the matter are driving some of its current decisions.

Asked whether the company would consider selling assets in the event of fines and penalties, or due to difficul-

ties selling equity, Taylor did not rule it out but said the company will first cut its capital and operational expenditures. Those typically represent things such as investments in new infrastructure and equipment in terms of capital expenditures, while operational expenses could include jobs in Akron and other FirstEnergy locations.

“I think we’re taking these actions internally with CapEx reductions, OpEx reductions, to give us flexibility including issuing equity. So I think those are the things that we’re focused on first, and then we’ll see where we are sometime down the road,” Taylor said in regard to asset sales.

The company plans to cut its upper limit on 2021 capital expenditures by $250 million and will look for other ways to cut unspecified costs, he elaborated.

“From a tactical perspective, our 2021 base (operations and maintenance cost) is flat to 2020 levels and we will soon begin developing plans for reductions to operating expenses, if necessary,” Taylor told analysts. “With respect to our overall capital programs, for 2021, our CapEx programs will be at the $3 billion level and we will consider reductions if necessary.”

Prior to Jones’ firing, the company had been saying it would spend up to $3.25 billion on capital expenditures in 2021.

Taylor told analysts that low interest rates are helping the company keep its costs low. While FirstEnergy doesn’t

HOSPITALS

From Page 1

The pandemic’s initial anticipated surge here never reached the dramatic heights seen elsewhere in the country, and the bump in cases in the summer didn’t pan out to be a stressor to systems, said Dr. John Baniewicz, chief medical officer for Lake Health. But what they’re seeing right now is “somewhat unprecedented” and going up fast.

The past several months of the pandemic have given health care providers crucial time, experience and knowledge that will help them address this new surge.

Doctors have a better understanding of how COVID-19 is spread and have more treatment options for those infected, including the use of steroids and the antiviral medication remdesivir. They have found alternatives to ventilation and ways to shorten patients’ length of stay in the hospital.

Diagnostics have improved and testing capacity has grown exponentially.

Plus, health systems have had months to be able to build up their inventory of personal protective equipment (PPE) and other resources.

“I think that the efforts in the spring have prepared us,” said Dr. David Custodio, senior vice president and hospital president of Summa Health’s Akron City & St. Thomas hospitals. “We’re in a better position than we were then going into this fall resurgence and flu season.”

Northeast Ohio’s health systems have the needed PPE; they have the beds available and flex plans to add capacity. The problem could be in staffing and keeping providers healthy and able to care for patients.

“Staffing will be one of the great limiting factors that we have to consider,” Custodio said.

Wyllie stressed that hospitals need the community’s help in keeping their workforce healthy. Caregivers are getting infected at the same rate as the general public, indicating they’re not getting sick in the hospital but in their communities, he said.

“If people will wear masks, then

Baniewicz

Ray

we can keep people working as the numbers go up,” Wyllie said. “So it’s not only protecting themselves and their relatives and people in their family, but it’s also protecting people who are going to take care of them and others if they do get sick.”

In addition to COVID-19 cases, hospitals are also preparing for flu season. Influenza and COVID-19 are not clinically distinguishable, said Dr. Amy Ray, MetroHealth’s medical director of infection prevention.

COVID-19’s most common symptoms are consistent with an influenza-like illness with fever, cough and sore throat, said Ray, also an infectious disease doctor and health care epidemiologist.

She’s hopeful for a mild flu season as she looks to the mild season experienced in the Southern Hemisphere, which usually signals the same for the North. Plus, the behaviors that reduce risk of spreading COVID-19 — hand hygiene, masking, distancing — can also slow the spread of influenza.

“In preparation for influenza season, coupled with the ongoing pandemic, we fully acknowledge that there will be an increased clinical demand for testing because of increased number of cases in the community, and so we have planned in advance for that, including the development of and expansion of testing guidelines internally,” Ray said.

In past years, doctors could treat patients for the flu without testing them based on symptoms. But this year, it’s critical that providers know exactly what they’re dealing with, said Lake Health’s Baniewicz, who’s also a practicing internist.

Health systems are developing or obtaining testing methods that allow them to test for influenza A and B

foresee missing its financial targets because of any fines, penalties or adverse regulatory rulings in light of the scandal, it is preparing for the worst.

FirstEnergy beat analysts’ estimates for its third-quarter results, announced Nov. 2, posting earnings of $454 million, or 84 cents per share, on revenue of $3.02 billion.

“Now, there is some uncertainty that we have to deal with and that’s why we’re taking these steps to kind of provide for some flexibility if something doesn’t go our way. But just because we’re cutting back CapEx $250 million is not going to throw us off track to hit those results,” Taylor said.

The company said it does not intend to increase its dividend while the Householder prosecution is ongoing.

The company continues to investigate the Householder matter internally, but will not be sharing the results until the federal investigation is complete, according to FirstEnergy executive director Christopher Daniel Pappas.

“The investigation is ongoing and we will not be providing updates during that period. And we have no certainty on the timeline at this point from the DOJ,” Pappas told analysts.

Company officials declined to elaborate or be interviewed after the call.

Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler and COVID-19 in one swab. Some can also simultaneously test for respiratory syncytial virus, or RSV, a common virus that infects children.

“You’re going to have to do this multichannel kind of testing, because we have to know more than we ever knew before,” Baniewicz said.

Health systems are working together to make sure they’re collectively prepared for whatever flu season, the COVID-19 surge and the winter might bring. Hospitals continue to communicate regularly about their PPE supplies, bed capacities and resource inventories, prepared to load balance across the state if necessary.

“What we won’t do is let somebody get overwhelmed,” Wyllie said.

But key in all of that is individual behavioral changes, which is the only way currently available to prevent transmission, Ray said.

“What we have to do is think about our individual activity and behaviors (and) keep the marathon thinking in place,” she said. “We have to get through this together as a community.”

For families getting together this holiday season, Simon urges continuing to practicing social distancing, masking and hand hygiene. He recommends keeping gatherings small and bringing back the “kids table” for returning college kids to sit separately when they unmask to eat.

As pandemic fatigue — or in some cases, denial — wear on everyone, compliance with public health guidelines is critical, Wyllie said.

What this surge looks like will largely depend on the public’s diligence in distancing, masking, washing hands and not congregating, particularly in large groups indoors.

“The question that we ask in terms of our own capabilities — and all the other major health systems are asking — is how high is it going to go?

And how much is this going to stress the system?” he said. “We’re at the end of this chain, so the public will decide the rate of infection eventually by their actions.”

Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre

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APARTMENTS

From Page 1

Rick Cavenaugh, president of Chicago-based Stoneleigh Development Co., said he’s getting bids from subcontractors, such as wall framers, who were so busy that they were not pursuing jobs a few months ago.

“We’re seeing seven or so subcontractors for components that we expected to get bids on from two or three,” Cavenaugh said.

He wouldn’t estimate projected savings on the company’s 241-suite Waterford Bluffs project. Building permits are in hand to start construction within weeks at the site on the northwest corner of the Hope Memorial Bridge in Ohio City.

However, there are hiccups.

City Club Apartments in Cleveland had a stated start date of November, but Holtzman acknowledges it now is likely to launch in January due to delays posed by the pandemic.

“I think everyone working from home slows things down,” Holtzman said. “The time of year slows things down. The recession slows things down. We also see that as the opportunity. You want to build in a recession and deliver the apartments when the economy improves or after the vaccine arrives.”

Holtzman said his family began developing real estate more than a century ago, and that long-term perspective tempers his outlook.

“When there are events that we don’t control, such as recessions or a pandemic, it might affect the timing but not our plans,” Holtzman said.

Excavating crews soon will begin to ready the ground for Waterford Bluffs, an apartment development that will occupy a site overlooking Columbus Road, the Flats and West Side Market near Cleveland’s Hope Memorial Bridge. | CONTRIBUTED RRENDERING

Panzica

Kertesz

“We selected this site because we believe the direction in downtown

Cleveland is very positive.”

For Waterford Bluffs, Stoneleigh recently filed documents for a $15 million construction loan with Sungate Capital of Chicago, but Cavenaugh said he will not draw on it for some time. That’s because the project has substantial equity, 85%, compared with the typical 35%, because it is a federal Opportunity Zone project that allows investors to shelter capital gains from U.S. taxes.

Meantime, MyPlace Group of

Cleveland closed on a total of $30 million in loans last month for two projects, one at West 44th Street and Lorain Avenue, the other at 4815 Franklin Blvd. Both are in Ohio City with 77 and 24 units, respectively.

“We did not experience any issues (with financing),” MyPlace president Chad Kertesz said. “To be honest, my projects and my partnership are strong. We expect to be in full go within weeks.”

Across town in Little Italy, an affili-

ate of M. Panzica Development of Cleveland has construction crews pouring concrete and will soon go vertical on a $17 million project with 44 suites adjacent to the famed former Baricelli Inn. The only change due to the pandemic, said Michael Panzica, M. Panzica’s principal, is that the scope of the Cornell Road project will increase because he now plans to add suites in the landmark inn following the closing of the restaurant there that had replaced Baricelli.

“We still believe Cleveland has pent-up demand for apartments,” Panzica said. “The low interest rate environment also gives us confidence to move forward, especially for when we will be able to lock in longterm loans.”

He’s also encouraged because a related development project that he leads, the new Church + State apartments on lower Detroit Avenue in Ohio City, is 40% leased so far, slightly below the 50% leased rate projected for this time. He is continuing to pursue the purchase of a Cuyahoga County-owned site next to Veterans Memorial Bridge for another project, and both he and Kertesz say they and others continue to seek multifamily project sites.

All the developers of next-wave projects pooh-pooh the impact of downtown’s 16% vacancy rate. They are confident that projects including Lumen, the May and others should be leased up by the time newer projects open in 2021 or 2022.

Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter

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18 | CRAIN’S CLEVELAND BUSINESS | November 9, 2020

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CRAIN’S CLEVELAND LOOK BACK | SUBPRIME MORTGAGE MELTDOWN

The ripple effects of underwater mortgages

crainscleveland.com

Publisher Mike Schoenbrun (216) 771-5174 or mike.schoenbrun@crain.com Executive editor Elizabeth McIntyre (216) 771-5358 or emcintyre@crain.com Group publisher Mary Kramer (313) 446-0399 or mkramer@crain.com Managing editor Scott Suttell (216) 771-5227 or ssuttell@crain.com Assistant managing editor Sue Walton (330) 802-4615 or swalton@crain.com Creative director David Kordalski (216) 771-5169 or dkordalski@crain.com Web editor Damon Sims (216) 771-5279 or dasims@crain.com Assistant editor Kevin Kleps (216) 771-5256 or kkleps@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Editorial researcher William Lucey (216) 771-5243 or wlucey@crain.com Cartoonist Rich Williams

Scars of the financial crisis lie deep within the blighted properties and empty lots that stretch across Greater Cleveland. The economic downturn that followed the burst of the housing bubble sank Cleveland into an economic valley it has never truly dug out of, and possibly never will — especially with a fresh recession resulting from a global health crisis.

At the root of these issues was a meltdown in subprime mortgages. Swaths of homebuyers were sold properties they couldn’t afford, causing a ripple effect throughout the financial system as homes sank underwater and loans turned sour. — Jeremy Nobile

``THE HISTORY

``IN THEIR OWN WORDS

Greed drove the financial crisis, but that was enabled by a dearth of regulatory oversight — and perhaps a bit of financial illiteracy by a population that didn’t know it was being sold a raw deal.

With a national push for homeownership underway and interest rates plunging in the early aughts, banks became heavily involved in the mortgage market as demand skyrocketed. Lenders couldn’t get enough, creating the subprime mortgage: high-rate, interest-only loans that borrowers couldn’t afford and should’ve never been sold.

With minimal government oversight, lending standards sunk, and these otherwise nontraditional loans surged.

Between 2000 and ’03, the top 25 subprime lenders nationally nearly tripled subprime loan volume to $310 billion.

These loans then were sold in the secondary market, where they were bundled together and resold as mortgage-backed securities by hedge funds and other investors, like Lehman Brothers, that took advantage of this system.

Jim Rokakis, vice president of Western Reserve Land Conservancy, told a federal commission investigating the financial crisis that securitization was a “brilliant” financial innovation, one that worked well until “people realized they could scam it.”

This is what created the housing bubble. Cheap loans were easy to get, fostering a hot mortgage market that drove up prices before melting down.

Meanwhile, by the mid-aughts, housing supply caught up with demand. Struggling borrowers wanted to sell, but there was a glut of homes.

This contributed to tanking home values, trapping many in mortgages they couldn’t pay.

The bubble is considered to have burst in 2007, plunging America into the Great Recession as defaults soared, making many loans, and the securities they were based on, worthless.

“Securitization was one of the most brilliant financial innovations of the 20th century. It freed up a lot of capital. If it had been done responsibly, it would have been a wondrous thing because nothing is more stable, there’s nothing safer, than the American mortgage market. … It worked for years. But then people realized they could scam it.”

REPORTERS

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——Jim Rokakis, vice president of Western Reserve Land Conservancy, talking to the National Commission on the Causes of the Financial and Economic Crisis in the United States.

Financial Crisis Inquiry Report, 2011

Foreclosures and vacant homes, such as this East Cleveland house pictured in 2008, plagued the region’s residential real estate market. | JASON MILLER FOR CRAIN’S

``WHY IT MATTERS TODAY Amy Hanauer, founder of Policy Matters Ohio, wrote in spring 2019 about how and why the Buckeye State tends to suffer longer after a recession because of a manufacturing-heavy economy.

In January 2010, she noted, Ohio’s unemployment rate was 11.1%, compared with a national unemployment rate of 9.9% in 2009. It stayed above 5% through 2015.

Meanwhile, in low-to-moderate income neighborhoods like Slavic Village and Maple Heights that already struggle economically, home values wouldn’t recover to pre-recession levels for a decade.

These kinds of impacts are stark reminders of how effective regulation — or a lack thereof — can have catalytic economic effects for better or worse.

As a former bank regulator, Kevin Jacques, Boynton D. Murch Chair in Finance at Baldwin Wallace University, may be biased. But the financial crisis, he said, is effectively a case study in why proper oversight matters.

“Regulators really had a belief in a ‘free market.’ And there was as strong belief these free markets would correct themselves and adapt accordingly,” Jacques said. “In retrospect, it was obvious there were financial institutions out there who were more than willing to undertake business practices with short-term profit in mind and didn’t give a damn about what it meant in the long term.”

Regulations may only go so far, but they’re a significant part of protecting the economy.

After all, those who forget history are doomed to repeat it.

“It was almost devastation across our county, across our city, across our state. Foreclosures were the No. 1 issue.”

——Lou Tisler, current executive director of the National Neighborworks Association and former executive director of Neighborhood Housing Services of Greater Cleveland.

Marketplace, January 2018

“The fact that the group of experts whose job it is to make sense of the direction of the economy were more or less blinded by their assumptions about how that reality works is a sobering result.”

——Neil Fligstein, Jonah Stuart Brundage and Michael Schultz, professors at the University of California, Berkeley. “Why the Federal Reserve Failed to See the Financial Crisis of 2008: The Role of ‘Macroeconomics’ as a Sense making and Cultural Frame,” 2014

THE WEEK SAFE PASSAGE: The presidential election dragged on, but voters in Cleveland and Cuyahoga County decisively approved two levies on the Nov. 3 ballot.

By a 61%-39% margin, Cleveland voters approved Issue 68, a 15-mill levy renewal with a 5-mill increase. The levy supports the district’s broad, improvement-focused Cleveland Plan in a significant way. Cuyahoga County voters, meanwhile, passed Issue 70 by a margin of 60%-40%. It’s a 1-mill increase to a continuing 2.5-mill levy that will generate about $18 million a year to enable the Cuyahoga County Public Library to continue operating its 27 branches and maintain programs and services at their current levels.

ON THE MOVE?: Financial and retail technology company Diebold Nixdorf Inc. of North Canton is consider-

grant the company a 50% income tax credit for 10 years to move to a vacant building off Boston Mills Road. The resolution says the company would bring 314 jobs to the city and generate $31.4 million in payroll.

Cleveland voters approved a school levy by a wide margin. Cuyahoga County residents did the same via support for a library levy. | BLOOMBERG

ing moving its global headquarters and some of its operations to Hudson, according to a resolution introduced Nov. 4 at Hudson City Council.

Council placed on first reading a resolution authorizing the city to enter into a job creation grant agreement with Diebold Nixdorf that would

Stan Bullard, senior reporter, Real estate/ construction. (216) 771-5228 or sbullard@crain.com Lydia Coutré, Health care/nonprofits.

(216) 771-5479 or lcoutre@crain.com Michelle Jarboe, Enterprise reporter.

(216) 771-5437 or michelle.jarboe@crain.com Amy Morona, Higher education.

(216) 771-5229 or amy.morona@crain.com Rachel Abbey McCafferty, Manufacturing, K-12 education/ technology. (216) 771-5379 or rmccafferty@crain.com Jay Miller, Government.

(216) 771-5362 or jmiller@crain.com Jeremy Nobile, Finance/legal/beer/cannabis.

(216) 771-5255 or jnobile@crain.com Kim Palmer, Government.

(216) 771-5384 or kpalmer@crain.com Dan Shingler, Energy/steel/auto/Akron.

(216) 771-5290 or dshingler@crain.com

JOINING FORCES: University Hospitals entered into an agreement with Western Reserve Hospital to obtain a minority interest in the independent, physician-owned hospital in Cuyahoga Falls. Terms weren’t disclosed. The Cleveland-based health system will work with Western Reserve Hospital’s board of directors, physicians, leadership and employees to bring investments and cost efficiencies to the Summit County hospital, including enhancements to facilities, equipment and services.

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November 9, 2020 | CRAIN’S CLEVELAND BUSINESS | 19

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