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BLUE-COLLAR CLEVELAND EMBRACES PROGRESSIVE EVENT, WHICH COULD CHANGE AREA’S IMAGE By TIMOTHY MAGAW tmagaw@crain.com
ortheast Ohio was certainly an intriguing choice to host the 2014 Gay Games. A Rust Belt city on the Great Lakes — the heartland, some would call it — where change can be a tough sell and gritty, bluecollar values still drive conversation at the dinner table. Cleveland and Akron aren’t like San Francisco, Chicago, New York City, Sydney or some of the other larger — and some would say more glamorous and progressive — locales that have hosted the games. Some in the lesbian, gay, bisexual and transgender community questioned whether Northeast Ohio could pull off the games to be held Aug. 9-16. It was, after all, just 10 years ago when Ohioans signed off on a constitutional amendment that barred the state from recognizing or performing same-sex marriages or civil unions. And while not a single pitch has been thrown nor a race run, success already is evi-
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dent, game organizers say. “The goal for bringing the Gay Games to what they call the heartland is to change hearts and minds,” said Rob Smitherman, the associate executive director of Gay Games 9, who has worked on the last three games. “That’s already happened.” Gay Games 9 already has raised almost $2.9 million through sponsorships and donations, shattering the organization’s original goal of $2.1 million. For instance, Eaton, Forest City Enterprises, Sherwin-Williams, Lubrizol, Ernst & Young and others have financially backed the games. Plus, the Cleveland Foundation pumped $250,000 into the event, making it the first presenting sponsor of the Gay Games in its 31-year history. Participants from almost every state and 45 countries have registered, and more than 20,000 people are expected to attend. Opposition from conservative groups in the area has been nil aside from a slight dustup when a few cab drivers were upset with Gay Games ads on their vehicles — a headline that faded overnight. Also, roughly 2,000 people have
taken cultural competency classes offered by the Diversity Center of Northeast Ohio to prep for an influx in LGBT consumers — a group viewed as willing to spend and incredibly loyal to “ally” businesses. “We hope people will have a positive impression of the region,” said Thomas Nobbe, executive director for the games. “When they come here, they’ll be amazed at the Midwest embrace they get. Every sign says — based on support we’ve got so far — they’ll be welcomed with open arms. They will take that back with them.”
The lasting legacy? The $40 million in estimated economic impact that could be generated as part of the games has been a major talking point since it was revealed in 2009 that Cleveland had beat out Boston and Washington, D.C. to host the event. While the cash infusion certainly is welcome for a region still climbing out of the pits of the Great Recession, supporters say the games’ lasting legacy will go beyond a slight
uptick in economic activity. “We don’t want people to think we’re putting on window dressing just for the Gay Games,” said Christen DuVernay, director of programs for the Diversity Center of Northeast Ohio. “We want folks to carry this on in their interactions going forward and create sustainable change in their organizations.” The center’s sensitivity training serves as a crash course of sorts on LGBT culture. It includes a primer on LGBT terminology — for one, the difference between “transgender” and “transsexual.” How to handle sensitive issues, such as bathroom usage, and how to cope with the unconscious biases many people hold and display unknowingly, also is addressed. Hotels, law enforcement, small businesses and dozens of others have taken part in the training. While Smitherman has worked for three Gay Games, he’s been a part of five total. He said the games typically bring people to locales they normally wouldn’t go. Take Cologne, Germany — the last site to hold the See GAMES Page 17
RNC to spark big digital upgrade downtown Telecoms could spend hundreds of millions preparing for GOP selfies; broadband advocates see opportunity By JAY MILLER jmiller@crain.com
29
The local planners for the Republican National Committee were comfortable that the city would have the venues, hotel rooms and even the cabs and buses to handle the needs of 40,000 visitors when they arrive
for the party’s nominating convention in the summer of 2016 But what if half of the people coming to Cleveland two summers from now are sending selfies of themselves in Quicken Loans Arena back home at the same time? And what about the texts back and forth between convention visitors making plans to meet for lunch or dinner?
After the 2012 Republican convention, Verizon Wireless reported that it handled nearly 48 million connections — seven times the amount of data connections in a normal three-day span. Local convention planners believe Cleveland will be ready for such an unprecedented digital blitz at Quicken Loans Arena, the convention site and around downtown, where
it’s likely that hundreds of millions of dollars will be spent. Much of the cost for adding capacity will fall on the telecommunications companies. A report on the economic impact of the 2012 Republican convention in Tampa, Fla., pegged spending by AT&T Inc., Verizon Wireless and other digital and telecommunications firms in See DIGITAL Page 10
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The Dots fashion brand is getting a second chance, but the company running it no longer is based in the Cleveland area. The retail chain now is owned by Florida-based New Dots LLC, which purchased the intellectual property from the prior management in May, giving the beleaguered brand a chance at a fresh start. “Our objective is to bring back the old Dots,� said Austin Englebert, vice president of store operations, in an interview at the new Dots’ only Cleveland-area store, at Steelyard Commons. While Englebert and CEO Swapnil Shah declined to comment on where the prior management stumbled, they praised the original brand. “Dots ran a great company for a very long time,� Englebert said. When Dots LLC filed for Chapter 11 bankruptcy in January, Crain’s reported the women’s apparel retailer had about 400 stores and 3,500 employees across the country. At the time, the Glenwillow-based company said it planned to close just 36 of its stores and restructure, but by February, liquidation plans had been announced. The brand got another chance in May when the previous management entered into a set of asset purchase agreements with New Dots. The agreements covered intellectual property like trademarks, brand names and domain names. Shah declined to share the purchase price, but the amount listed in the court documents was about $325,000 for the dots.com domain name and about $326,000 for the rest of the assets. Shah and Englebert produced business cards bearing the name Simply Fashion Stores Ltd., a woman’s apparel brand, but declined to discuss any businesses outside of Dots in which they are involved. They said they had decades of experience, noting their current focus is on rejuvenating the Dots brand. The new management praised the way Dots has treated its customer base and said it plans to run the stores with the same concept, brands and vendors. Shah also said he’s looking to hire as many of Dots’ former employees as is appropriate. They’re actively pursuing those associates through social media and district and regional-level management. The company currently has about 70 employees at seven stores and another 35 in the New Dots’ Miami headquarters. The Steelyard Commons location had its grand re-opening on June 21 and Shah said the company is looking at additional opportunities in the
RACHEL ABBEY MCCAFFERTY
The Dots store at Steelyard Commons has been restocked and reopened.
SEEING DOTS: 400
Approximate number of Dots stores at time of bankruptcy
7
Number of Dots stores currently open
120-140
Number of Dots stores new ownership hopes to open in the next 18 months
Represents 10 stores. Represents planned stores.
Cleveland area. In the next 18 months, Shah said he hopes the company can open an additional 120 to 140 stores. Englebert said the company is busy contacting landlords about their former Dots spaces.
‘One chance to shine’ Mitchell Schneider, president of First Interstate Properties, the developer of Steelyard Commons, said the Florida group assumed the existing Dots lease. He’s excited to see the stores back in the hands of private ownership and said it looks like the merchandiser values strong relationships with its stores, associates and customers, much like the original Dots ownership. Often, private equity owners with-
CORRECTION
The DeVille School of Business Volume 35, Number 29 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2014 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
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out a merchant at the helm of their organization lose their way, Schneider said, which is what he thinks happened with Dots before the bankruptcy. The bankruptcy filing allowed Dots to shed its legacy liabilities, said Shawn M. Riley, head of the Cleveland office at McDonald Hopkins LLC, and the brand still has a “lot of name recognition� and goodwill among customers. Riley hasn’t worked with Dots, but he has been part of restructuring at retail companies in the past. Riley did express concerns about the amount of money the new management would have to borrow initially to stock shelves and pay employees. John Lane, managing director and CEO at turnaround firm Inglewood Associates LLC, said the regional spread of the currently open stores is a potential stumbling block for the new management. It’s important to cluster retail stores to maximize the potential to share staff and advertising, he said. Currently, Dots has two small clusters in the greater Chicago and Detroit regions, but the other stores are in Cleveland and Macon, Ga. “That’s a real problem,� he said. Lane spoke to Crain’s about the challenges Dots would face when it was planning to restructure; he thought the company would have a lot of work ahead of them to convince customers and vendors that things had changed. He has not been involved with Dots during this process. Hanging out an “under new management� sign only works if people don’t like the old management, he said. Lane said he thought Dots’ new ownership would have an advantage with vendors and customers because of its clean slate. But, especially with customers, they have to make that first impression count. “They’re going to have basically one chance to shine,� Lane said. „
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The July 7 Going Places column incorrectly identified the recipient of the Cleveland Metropolitan Bar Association’s President’s Award. The award was given to 200 new lawyers who joined the Cleveland Metropolitan Bar Association in 2013-2014.
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Highway officials can’t trust trust fund Lack of cash could hurt road projects By JAY MILLER jmiller@crain.com
.339 winning percentage) in that span, played in front of plenty of empty seats. The team has ranked 19th, 22nd and 16th in the NBA in attendance since 2011-12. “You’re going from a product that was almost unsellable to a team with LeBron James,” Klang
Local and state officials pray that Congress doesn’t leave for its August recess without at least patching the impending shortfall in federal spending on roads and bridges. But even if Republicans and Democrats can extend highway spending authority into fiscal 2015 those officials still believe the problem will have an impact on what highway work can move forward. “There are some projects we have going that have federal Highway Trust Fund money in them,” said Grace Gallucci, executive director of the Northeast Ohio Areawide Coordinating Agency. “Work will probably continue but Highway Trust Fund payments might come every other week or every month, instead of every week. “I’m more concerned about the long-term stability of the Highway Trust Fund; we can’t continue to have a fund that runs out of money before the end of the year. We’re not able to fully plan for a system in good repair.” Steve Faulkner, spokesman for the Ohio Department of Transportation, was diplomatic about the short term. “We fully expect our federal partners to do the right thing,” he said. But, he added, “We need a more confident flow of money; we can’t plan long term.” Congress is expected to kick the transportation funding can down the road, into the next Congress, before it leaves for recess in August. The highway funding law, called MAP-21, is due to expire Sept. 30. How long funding will be extended has yet to be negotiated between the House and Senate, but it’s likely to be less than a year. But that will only ease the problem for a few weeks, officials here believe. That’s because the fund is nearly insolvent. A “Highway Trust Fund Ticker” on the federal Department of Transportation’s website was saying as late as last Thursday, July 17, that the fund could be insolvent before the end of the fiscal year. “With the Highway Account expected to become insolvent by the
See TICKETS Page 18
See FUND Page 6
LEBRON: A GOLDEN TICKET Superstar’s return provides huge boost to a team that was ‘almost unsellable’ last year By KEVIN KLEPS kkleps@crain.com
ark Klang compares the Cleveland Cavaliers ticket business since 2010 to “trying to sell a winter jacket during the summer.” Now, with LeBron James back on board, Klang, owner of Amazing Tickets Inc. in Mayfield Village, and other ticket brokers might as well be wearing shades. No one knows that more than Dan Gilbert, who, in addition to the many financial benefits brought by James, stands to profit significantly from tickets that are resold on Flash Seats — the secondary ticket market controlled by the Cavs’ owner. Fewer than eight hours after James announced he was rejoining the Cavaliers on July 11, the Cavs’
M
self-imposed cap of a little more than 12,000 season tickets had been reached. A “significant percentage” of the 12,000 was sold after James revealed his decision, a team source said. For the Cavs, James’ return means a comeback of another sort — packed houses at Quicken Loans Arena.
In 2009-10, the season before James bolted for the Miami Heat in free agency, the Cavs sold every seat — 20,562 per game. The Cavs’ season-ticket number that season was “very similar” to the current total, the team source said. The last three seasons, the Cavs, who were a combined 78-152 (a
Northeast Ohio shopping center market is booming Sales of such properties account for 42% of commercial dollar volume so far this year By STAN BULLARD sbullard@crain.com
Even before Golden Gate Shopping Center in Mayfield Heights changed hands for $47 million, in-
vestment sales analyst Alec Pacella told himself that the market for shopping center sales was “on fire” in Northeast Ohio. Shopping centers accounted for 30% of the dollar volume of commer-
cial properties traded this year, until the 370,000-square-foot Golden Gate deal hiked the ratio to 42%. His survey of investment commercial properties selling for more than $1 million in the region shows retail far surpass-
ing the next largest classification — industrial properties — which make up 22% of the dollar volume so far in 2014. Given that four years ago failures of retail chains and uncertainty meant there was virtually no market
for shopping centers, the shift in activity is profound. Moreover, the respectable but not eye-popping prices that buyers are paying promise to produce more deals throughout the balance of the year or until market conditions, such as interest rates, change. See BOOMING Page 11
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Neighbor-helping-neighbor might be one way to put it, but the multimillion-dollar stakes are much bigger than sharing a cup of sugar in an emergency. Vestor, a startup crowdfunding site for real estate investments based at the Keith Building, 1621 Euclid Ave., has signed on to try to help developers fill a sudden $7 million hole in the $64 million plan to transform three dilapidated buildings at 1101 Euclid Ave. into a LeMeridien hotel. The emergency aspect loomed as Sandusky-based hotel consultant Lonnie Burghardt was close to ending a five-year quest to turn part of the stretch of Euclid into a 206room hotel with a 150-seat, firstfloor restaurant. Investor groups, the Starwood Hospitality Inc. brand and the capital stack were ready to go. However, a key piece of the plan fell out as the project was cut off from a funding source — federal New Market Tax Credits allocations — as the region washed out in the latest round of awards. That’s where personal contacts Burghardt forged through the city of Cleveland’s economic development department came into play. He knew Matthew Moss, Vestor cofounder and CEO, when Moss worked as a project assistant at the city, before Moss seized on the idea of a Midwest-based crowdfunding program to aid real estate development. Moss said his experience with the city demonstrated to him how much difficulty developers have financing good projects. Burghardt said he was willing to try Vestor crowdfunding at its infancy because he has confidence in Moss and his partners. He read widely about real estate crowdfunding ventures popular on the East and West coasts and even touched base with a few before the
HOW BAD IS THAT LEAK?
latest financing gap surfaced in May. “I think it’s a very attractive form of financing for real estate,” Burghardt said. “You have the security of real estate, of a building, compared to some other types of businesses. “It allows smaller investors to get involved in real estate at lower cost and without having to operate a property.” If Vestor can raise the cash for LeMeridien, Moss believes it will be
alum of several web, mobile and software solutions. Chen’s bio notes he began writing computer code while he was in high school. Vestor is housed at Flashstarts, a business accelerator in the Keith Building led by serial technology entrepreneur Charles Stack. Besides an initial investment of $25,000 upon being accepted for Flashstarts, it provides coaching and other business growth assistance for new companies. If Vestor cannot raise the invest-
“We’re going forward because of what has already happened in Cleveland with the medical market, casino and aquarium. Our analysis shows the market is short of hotel rooms.” – Lonnie Burghardt president, Hospitality 1st Partners the first crowdfunded real estate project in Ohio. It is also the beginning for Vestor, which can be used to raise debt or equity from qualified investors to assist other wouldbe property owners and real estate developers. Vestor posts projects on its site after extensive review. It uses the capabilities of Cleveland-based Crowdentials to vet the credentials of qualified investors under U.S. Securities and Exchange Commission rules. Sizing up potential projects is where Moss and co-founder Scott Schirg’s real estate backgrounds come into play. Before becoming Vestor’s chief development officer, Schirg was a business development associate who managed research for business development at the Cleveland office of Mohr Partners, a national tenant rep advisory firm and economic development services provider. The technological component is handled by the third co-founder, chief technical officer Jeff Chen, a computer science graduate of Case Western Reserve University and
ment the LeMeridien needs, Burghardt said he will simply go to more traditional sources of capital to fill the hole in the project’s financing plan. Most recently, Burghardt and his partners in the project planned to open the hotel by January 2016. However, that schedule may slip some because of the financing hiccup. Although the region would benefit from having LeMeridien’s rooms in place when the Republic National Convention lands in town later that year, Burghardt said getting the boost from the convention is not an essential part of its game plan. “You never base a project on a single event like that,” said Burghardt, who has 30 years of experience in hotel development consulting. “It’s in town a week. Then it’s gone.” Instead, Burghardt said, “We’re going forward because of what has already happened in Cleveland with the medical market, casino and aquarium. “Our analysis shows the market is short of hotel rooms.” "
Fund: Gas tax can’t support road work continued from PAGE 5
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end of August, the Department of Transportation will implement a cash-management plan beginning August 1 to manage the flow of federal dollars,” the site reports. “Under this plan, reimbursements to states for infrastructure work will be limited to the available cash in the Trust Fund. We will distribute incoming funds in proportion to each state’s federal formula apportionment in the fiscal year.”
What’s Plan B? If that happens for more than a couple weeks, Faulkner said, ODOT will quickly have to re-evaluate its longer-term plans. “If we get reduced or slow payments from the fed for more than
four or five weeks, we will evaluate future construction projects, and there is a possibility we will have to push them back or delay them,” he said. That will not affect the Inner Belt bridge now under construction in downtown Cleveland. That project uses federal highway funds, but that money is already in the bank, or “encumbered” in state budget-speak. “That will continue; that work won’t stop,” Faulkner said. That long-term problem could also hurt Northeast Ohio directly. NOACA’s Gallucci said her agency has been considering a bond issue of as much as $40 million to speed up road and bridge repair work. State and federal law allows agencies like NOACA to use expected future Highway Trust
Fund money to repay such loans. But with the trust fund’s solvency in question, bond-rating agencies are lowering their evaluation of these infrastructure bonds. “Because the trust fund isn’t totally solvent, while we could get 3% for the bonds for 2014, but the interest rate would go up to 5% after that,” Gallucci said. The federal gasoline tax has been fixed at 18.4 cents a gallon since 1993, though construction costs have risen rapidly and drivers are buying less gasoline because of more fuel-efficient cars and a decline in miles driven. A March report from the Congressional Budget Office gave legislators several options for solving the trust fund’s financial problems but no action has yet been taken.
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Want someone’s email? SellHack can help you out Tussle with LinkedIn helps startup lure 40,000 users, turn a profit immediately Getting a cease and desist letter from LinkedIn was one of the best things that could’ve happened to SellHack. The local startup has developed a way to find most people’s email addresses. The idea has generated a lot of online controversy — and a lot of interest from sales people, recruiters and others who need lots of email addresses. More than 40,000 people have downloaded the software, and roughly 20% of them are paying for premium versions of the app. Thus, SellHack already is profitable, even though it didn’t offer a paid version of the app until April. Co-founder Ryan O’Donnell, of Lakewood, gives a lot of credit to LinkedIn. The first version of SellHack’s software allowed users to alter their Internet browser so that a “HackIn” button would pop up on other people’s LinkedIn profiles. Want that person’s email address? Click the HackIn button. LinkedIn wasn’t a fan of the button. On March 31, after Yahoo! Tech wrote a story about the button, the business-focused social media site sent SellHack a letter ordering the company to stop putting HackIn buttons on LinkedIn profiles, saying it violated the company’s terms of service. But the letter turned out to be a good thing: Several bloggers and technology news sites wrote about LinkedIn’s beef with SellHack. Bad press turned out to be good press: Within a few days, the company’s user base jumped from 2,000 people to 25,000. “There couldn’t have been a better thing in our history to ever happen to us,” said O’Donnell, who founded the company with Marco DiDomenico of Cuyahoga Falls. They previously founded Sociagram and still work part time for the Rocky River company, which developed software that lets people email video greetings that complement gifts they send through the mail. However, that company is now led by former American Greetings executive Sally Schriner.
Mining data sources SellHack did disable the HackIn button. However, a few weeks later it released a new version of the software that lets users put a little blue button on their web browser, in the upper right hand corner. Click the button, and a small screen asks you to type in someone’s name and the company where they work. It will then ask for
an email domain name, though the software often fills out that line for you. Click the “run search” button and you’ll get a validated email address more than 70% of the time, O’Donnell said, citing data the company produced from searches conducted with the tool. So how does it work? SellHack’s software is tied into eight publicly available data sources that contain large numbers of email addresses, according to O’Donnell. He wouldn’t give the names of those sources, saying it is one of the company’s competitive advantages. When the software finds an email address that appears to be correct, it reaches out to that email system to get an automated response as to whether the address exists. If SellHack can’t validate the address, it often will give you a few guesses based on other data. For instance, if your coworker’s address uses the firstname.lastname@company.com format, it assumes your address follows that formula. Of course, some people don’t want you to find their email addresses.
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‘Automating a process’ After the LinkedIn letter surfaced, several bloggers complained that SellHack was violating people’s privacy. Emil Protalinski from TheNext Web.com wrote that SellHack “is clearly up to no good.” Charlie Warzelof of Buzzfeed said the technology was “unnerving,” given how easy it was for him to find email addresses for his boss and LinkedIn cofounder Reid Hoffman. Other bloggers said that SellHack was hacking into LinkedIn’s servers, which isn’t true. O’Donnell said SellHack just saves people from doing a bunch of Google searches looking for addresses or sending the same email message to several different addresses in an effort to hit the right one. “All we’re doing is automating a process that people have been manually doing for years,” he said. O’Donnel said he and DiDomenico are “able to feed our families off this business.” Of the paid users, 40% opt for the basic $9 plan. About 50% use the $29 and $99 plans, which let you conduct more searches and provide other perks. And 10% use the $249 “rainmaker” plan. Eventually, though, the founders will have to decide whether SellHack should raise venture capital in an effort to expand quickly. “Is this a lifestyle business, or do we go after a bigger opportunity in the market?” O’Donnell said.
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PUBLISHER:
John Campanelli (jcampanelli@crain.com) EDITOR:
Elizabeth McIntyre (emcintyre@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Fill the tank F
or 55 years, the Inner Belt Bridge carried millions of people on its back to downtown Cleveland and beyond. Tired and worn from the task, it breathed its last shortly before 6 a.m. on July 12. With a blast from 182 lbs. of explosives, the original Inner Belt Bridge was laid to rest. The second of dual spans replacing it will rise sometime in 2016. The resurrection of this vital artery would not have happened without federal help, some of which came from the Highway Trust Fund. States build and maintain roads, bridges and mass transit with help from the fund. In Ohio, about 59% of the money that the Ohio Department of Transportation devotes to infrastructure comes from the federal government. The Highway Trust Fund, however, is running on empty, and our congressional leaders seem content to keep pumping a few dollars in the tank and hoping for the best. Last week’s House approval of an $11 billion fix is a good example; it’s expected to last only until May 2015. If the Senate agrees and President Obama signs it, this will be the 19th time in the past five years that the nation has opted for a quick pit stop. It’s time for Congress to fill up the tank for the long haul. The most recent short-term fix is a gimmick that would allow some companies to reduce their pension fund contributions, resulting in higher taxable profits in the short term, with the increased taxes diverted to infrastructure. It simply delays the bigger issue and speaks volumes about a Congress that seems content to lurch from crisis-to-crisis without finding long-term solutions. Washington must find a years-long solution for the Highway Trust Fund so that far-ranging transportation funding can happen. As the U.S Chamber of Commerce has pointed out, the current approach is bad for business and bad for the economy. Beyond critical repair and construction of our infrastructure, jobs are lost when permanent funding is lacking. The most obvious solution? Raise the gas tax. Since 1993, 18.4 cents per gallon of gas (24.4. cents for diesel) goes to the Highway Trust Fund. The quirk lies in the fact that the gas tax wasn’t indexed for inflation. Had it been, the tax today would be 29 cents per gallon (38 cents for diesel.) We admit that increased taxes bear a consequence. But let’s put this in perspective. Americans on average pay $3.69 a gallon at the pump, according to Bloomberg. In Norway, it’s $9.79 a gallon. And a gas tax puts the burden squarely on the users. That’s not the only possible long-term solution, though. Congress needs to get serious about finding one.
FROM THE PUBLISHER
‘She change’ needs to happen here L does not go unnoticed. ast week, I walked into the Crain’s Maybe it’s best right now to apologize. Cleveland Business library, which We haven’t been doing our jobs, and doubles as the mail room, supply we’ve disappointed local businessroom, umbrella-drying room and secret women and the businessmen who work refreshment center (there’s a dorm alongside them. fridge in there). I’m not looking for some sort of quota I grabbed two random back issues of of female faces or sources on Crain’s — one from July 2011 our pages, but women make and one from October 2012 — JOHN and began flipping through CAMPANELLI up 51% percent of the population and nearly half the work them. I wanted to do a quick, force. unscientific survey of the faces In Crain’s, they have often and voices in our publication. been a rarity. The results were sobering. We need to change. In those two issues, we ran 32 I’m not viewing this as photos of men and 10 photos some sort of penance or burof women. As a percentage, den. This is going to be fascithat’s 76% male faces and 24% nating and perhaps a bit fun, female. (Interestingly, in our and it’s going to make us betadvertisements, the breakter. down was a bit less lopsided: 62% men, I’ve asked new Crain’s editor Elizabeth 38% women.) McIntyre to gather together a dozen or Then I went through the articles and so of Northeast Ohio’s top female execmade a tally of the people we quoted diutives to ask them what they think is rectly. missing from Crain’s, what they want Things got worse. and need from a local business media We quoted 74 men in those two issues brand and what we can do to make our and only 10 women, which means that coverage more valuable, relevant and injust 12% of our sources were women. If I’m a female in business in Greater clusive to as many local business profesCleveland and (hopefully) a Crain’s subsionals as possible, whether they rock scriber, that lopsided representation pumps or wingtips.
(If you want to offer your own thoughts or suggestions, please send them my way at jcampanelli@crain.com.) We’ll then come up with a plan of action to get better. This is smart business, long overdue. And not just for us. If you’re not working to get more women in your office, in front of your customers and on your executive team, you’re losing. Fortune 500 companies with more women on their boards and in senior leadership do better financially than those with fewer women. Female executives, in general, bring a more-evolved culture to their teams. They’re more collaborative, more communicative. They value diversity more. And they bring a unique voice and dialogue. They are changing business and business culture for the better. Heather Ettinger, managing partner at Fairport Asset Management, calls it a “she change.” She also points out the women are “the largest emerging demographic on the planet.” They control 51% of America’s private wealth and make the decisions for 80% of household spending. The traditional boys club — and we here at Crain’s — have a choice: Get with it or get run over.
TALK ON THE WEB Re: Cleveland Foundation commits $8M to Public Square overhaul ■ Cleveland needs this kind of thing, and lots more of it. They need the artistry and beauty of other thriving cities — and they also need the business. — Julia Struchiemer
In regards to visitors from surrounding suburbs, nothing they can do will make it that big of a draw to drive up, find parking, and spend a day walking around this miserable city. — Allen
■ Call me cynical, but I think this is more about moving the bus stops (and the people who inhabit them) than anything else. — two_ghosts
■ Allen, you are a sandy poopy pants! Cleveland has come a long way and it will only get better. Plus, a few thriving cities have similarly crappy weather, especially Chicago. If you don’t like it, get out. It will be a better city with you gone. — Dominique M.
■ At the end of the day, it’s Cleveland, Ohio. People will not be drawn here for one reason, and that’s simply the horrible weather we have.
■ Put the park on the lake. Don’t destroy the urban fabric of the city. There is no designer who can ‘improve’ the (downtown) plan. Let’s start with that at
the very least. — anti lorax
Re: Pick one — Toby Cosgrove or LeBron James ■ While James adds value to our lives, Dr. Cosgrove and the Cleveland Clinic create value making our lives better. Both, though, are helping make this city the “best location in the nation” again. — Neil Dick ■ Financially, it’s LeBron. Medically, it’s Toby. But maybe someone should look into the fact that Dr. Cosgrove was instrumental in this country having Obamacare and ruining all the medical continued on PAGE 9
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WWW.CRAINSCLEVELAND.COM
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egarding publisher John Campanelli’s column in the July 14 edition (“So, you’re from Cleveland?�): Are you sure you want to change the minds of people who have a bad impression of our great city? The consequences are many and severe if we let on about the real Cleveland. Like you, I am in love with this city; I have been for quite some time. Seventeen years ago I moved south, not too far south, but far enough that I couldn’t see the skyline. It was misery. I wasn’t sure which direction was north, the food was mundane, the words art and craft were interchangeable. I needed to be back in our city. The opportunity came, and I took it. We all can name hundreds of wonderful things about Cleveland: the food, our Metroparks, the wonderful people of every race and religion, the suburbs and so much more. I like to think that Cleveland is just for us and the few choice people that we find worthy to share
it with. Please don’t misunderstand, I want Cleveland to thrive. I am excited the RNC is coming and that LeBron James is back. All the new things in our city are fantastic. We live in a “sleeper� city. No one knows about the wonderful things that make up this great town, like fabulous food from every ethnic background, rush hour traffic that lasts 30 minutes, parks that seem to never end, world-class health care, University Circle, Little Italy, Tremont. The list is forever ongoing. I know I’m being selfish. I know that we want Cleveland to prosper, that growth comes with prosperity. I want the local restaurateurs, shop
owners, farmers and every entrepreneur in Cleveland to survive and flourish. My business depends on Cleveland business. But if we quiet down, maybe just for a little while longer, we can still enjoy walking down the street in a straight line, our $5 martinis, $80 theater seats, and an empty room at the Cleveland Museum of Art to contemplate a piece of art. When we have to pay more, wait longer and have less space to ourselves, we have to remember it is our doing and we are doing what is best for all of us. But, I beg you ‌ shhhh, please ‌ just a little while longer. — Wendy Clawson Orange Village
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plans for everyone! — Retiree
Re: More on broadcaster Bob Frantz’s firing â– I truly enjoyed Bob’s perspective on many topics. He’s a very intelligent individual who just has that radio “gift.â€? ‌ Clear Channel blew this one!!! — John Decker â– I will greatly miss Bob Frantz; he was my favorite personality on WTAM. Although he was a little conservative for my liking, he was rational, a family man and made “senseâ€? in the crazy world we live in. My best to Bob! — Donell Newman â– Bob Franz was THE reason I have listened to WTAM for many years! I cannot figure out for the life of me why he was fired. I am a Democrat and I have truly benefitted from Bob’s opinions. He is an eye-opener and a great, smart, interesting part of the station! I’m sorry to say you lost a faithful listener, WTAM. Between this and having no female perspective anymore on the TRIV show this station will lose out. Now it’s like a “good ol’ boysâ€? sports network. GOODBYE, WTAM. — Robin â– Now we know why WTAM is in trouble. They have no clue what they are doing! They probably are giving Mike Trivisonno another pay raise, and needed to free up money, just like they did when they fired Kim, Marty and Paul. So thank Triv for destroying the station out of greed. Go to WKNR, Bob; they’re the next big thing, anyway. ‌ I have no reason to listen to WTAM anymore. — Wayne â– I was a fan of Franz in the early days, but as he got more exposure on WTAM, he became just another loudmouth spewing the conservative talking points. What is it about Clear Channel and all these Rush
Limbaugh wannabes they put on the air? WTAM doesn’t have much left in the talent department. Triv is a joke, a real embarrassment to Cleveland. — qwerty
the most resilient and affable fans in the world. The Cleveland renaissance is up to each of us. Let’s make it happen. — Dr. Akram Boutros, CEO, The MetroHealth System
Re: Cleveland’s having a moment
■What a great time to be a Clevelander! Something is happening here real big! For that first game opening night in October at the Q, the whole world will be watching. Every media company in the world will be coming to Cleveland. It’s going to be a really emotional night. Cleveland, if you can’t see what’s going on, you are co-starring in a movie starring LeBron James. If LBJ is able to bring a championship to Cleveland and Ohio, that’s a movie. He will then transcend from a basketball player to a world icon. — Jonathan Thomas
■I tell people I moved to Cleveland temporarily in 1982 from Buffalo, N.Y., and decided to stay for the weather and the economy. Best part is, I’m telling the truth! — Bob Dianetti ■When I’m asked where I am from, I tell people, “Originally I am from New York City, and finally I got the chance to move up to Cleveland.� This gives me the opportunity to extol playhouse square, museums, orchestra, culinary scene, great people, lack of gridlock, and ability to root for sports teams with some of
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Digital: City’s infrastructure needs support continued from PAGE 1
advance of that convention at $291.5 million. Officials for those companies weren’t prepared to talk about plans for Cleveland in 2016. But the convention and the unprecedented telecommunications demand it will create is likely to accelerate the buildup of the city’s digital backbone, an ever-more important element in attracting the jobs of the future. “This infrastructure push is going to be so significant,” said Brett Lindsay, chief operating officer of
OneCommunity, a local nonprofit provider of broadband capacity. “Wi-Fi is important because you’re going to have thousands of people hitting the city, and you’re going to want their experience while they’re here to be as positive as possible. “And what happens to all these hotels that are coming online and how are they going to have sufficient capacity as well?” he continued. “Over the next 90 to 120 days, it’s going to get fleshed out how much this is going to cost and how
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many partners are going to be involved in it.”
Biggest line-item Planning the digital and telecommunications infrastructure for the convention site already is underway. Jon Pinney, a lawyer who is in charge of budgeting and contracts for the Cleveland 2016 Host Committee, said he and a group of local folks met with Republican representatives last week at The Q to begin sketching out details of the telecommunications needs. “It’s by far the most technical and complicated aspect of the entire event,” Pinney said. “It will be the single largest line-item (in the community’s budget for the convention).” Pinney said it’s too early to put a price tag on the upgrades needed at the arena, the broadcast nerve center that is expected to be at the Cleveland Convention Center, and other facilities. Most of that cost likely will be borne by the telecommunications firms. One reason for the cost is that the event will attract so many broadcasters. “What’s lost on people is that these things are more media events than anything else,” Pinney said. “It’s one of the few events in the world where all five major networks are simultaneously broadcasting.” Each broadcaster needs its own dedicated fiber-optic connections between the convention floor and its command center. Pinney said the committee has been told to expect to meet the needs from as many as 30 affiliated broadcasters.
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Quicken Loans Arena has kept up with the technological times better than did the Tampa Bay Times Forum, which hosted the Republicans in 2012. Handling the digital traffic also will require additional power and backup generators. The cost here probably won’t be as high as it was in Tampa. Pinney said that because Quicken Loans Arena is a National Basketball Association arena, its digital facilities have kept up with technology better than those at Tampa Bay Times Forum, which hosted the Republicans in 2012. Lev Gonick, CEO of OneCommunity, sees the convention as an opportunity to build the city’s digital infrastructure beyond just what’s needed by the convention site because he believes the higher volume of cellular and digital traffic will exceed the capacity of the existing carriers. “Cellular service with 35,000 or
more people using the system all at once will completely swamp the existing infrastructure,” he said. “The great news is we’ve got the digital infrastructure to enable the city to run that activity. “We have fiber to many, many of the downtown buildings where those carriers will want to reinforce their cell infrastructure,” he said. Ever the technology futurist, Gonick even envisions convention goers having a Wi-Fi link wherever they travel around the region. “It would be terrific if Cleveland had a commitment with all of the buses ferrying people from the hotel to the convention so people could work at Wi-Fi speed instead of on their cell phones at 3G speed while they are commuting from Beachwood or wherever,” he said.
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STAN BULLARD
Independence Square Shopping Center was sold on June 13.
Booming: Retail stops getting ‘hammered’ continued from PAGE 5
To show that, Scott Wiles, an Independence-based Marcus & Millichap senior vice president who is part of a busy three-person team focusing on retail properties, points to his pipeline of pending deals, many in Ohio but also extending east of the Mississippi River. His team forecasts it may sell more than $100 million of shopping center properties, most in Northeast Ohio and Columbus, but also in other parts of the Midwest, in the next 90 days. It has closed $243 million of shopping center sales in the region during the last 12 months, he said. Several factors — many national in nature — put a match to this situation. Wiles and others say a lot of money is chasing real estate deals now. At the same time, large, publicly traded real estate investment trusts and investors are shedding lesser properties to concentrate on buying higher-quality properties. Locally, aging owners and investor groups see it as a good time to sell, as was the case at Pavilion Shopping Center in Beachwood and Independence Square Shopping Center in Independence. Those centers sold, respectively, on April 1 and June 13. The sale of Golden Gate fits that model because it was sold as part of a strategy by the publicly traded, Cleveland-based real estate developer Forest City Enterprises Inc. to shed properties that are not in major metropolitan cities, which offer the most growth in rents and population, among other factors.
The hammering has stopped The turnaround in appetite for shopping centers also is because retailing has stabilized compared with a few years ago, Pacella said, from when the sector “was getting hammered by national retailer bankruptcies.” Moreover, during the downturn, few additional shopping centers were developed in Northeast Ohio compared with typical periods, so there is greater security in owning existing properties, Pacella said. In the meantime, brokers who lease
empty selling space are busier than they have been in some time, although the market’s vacancy rate only has inched downward to 8.2% as of June from 8.6% in September 2013, according to CoStar, the online real estate data service. Buyers generally are focusing on the market’s top-performing retail centers. On one hand, those are large power centers with national retailers, such as Golden Gate, a category with 3% vacancy this June. The other hot property type is smaller, neighborhood shopping centers that are anchored by supermarkets and have a vacancy rate of 4.6% according to CoStar. Pavilion, for example, is a grocery-anchored center, as it has a Giant Eagle on its tenant roster.
“With 94% occupancy, we felt it was the best time to profit from our hard work. We can then redeploy capital to another project.” – Mark Jablonski president, CenterMark Development, on the May sale of Village Green Shopping Center Another factor fueling the frenzy is low interest rates, in the 4% range for well-located, high-occupancy centers, which investors feel will not last forever. Although financing remains tough to obtain in historic terms, large enough loans are available to boost investor returns, said Mark Jablonski, president of University Heights-based CenterMark Development.
Value shopper Consider a recent deal by Jablonski. An affiliate of CenterMark in May sold Village Green Shopping Center, a 47,000-square-foot shopping center at 18235 Euclid Ave., Cleveland, for $2 million to ProVest Properties LLC, a Miami Beachbased investor group. That’s a big change from the $860,000 it paid in 2005 for the then 30% vacant center. Jablonski said his development company is a value investor that
looks for opportunities to buy properties where it can add value, as it did with adding a Save-A-Lot grocery store to Village Green along with a multitude of other steps to improve the center, including selling off some vacant land. “With 94% occupancy, we felt it was the best time to profit from our hard work. We can then redeploy capital to another project,” Jablonski said. He said he benefited from the strength of investor appetite for grocery-anchored shopping centers. “Any grocery-anchored shopping center is in demand now, whether it is a high-income neighborhood or a low-income one. The feeling is online retail is not going to do away with your need to buy food, pick up dry cleaning or get a pizza,” Jablonski said. “However, you still have to ensure they have a positive experience when they are there with a well-maintained center.” His brokers were able to secure six offers to buy the shopping center, Jablonski said. “If you are an investor who thinks the stock market is unreliable, you want a steady-eddy return, and like sticks and bricks, these are nice investments to own,” Jablonski said.
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A close look Moreover, he noted some buyers may now secure yields as high as 15% if they can add bank loans to their transactions. He said investors post-bust are more cautious than previously. Buyers now scrutinize crime rates, household income and nearby retail, he said, compared with the early 2000s, when buyers typically focused on cash flow. So far this year, the highest prices have been secured by Golden Gate and Pavilion, which both snared more than $125 a square foot, according to Wiles’ statistics. Other properties have garnered from $20 to almost $90 a square foot so far this year, his statistics show. “Anytime you can get more than $100 a square foot for a retail property in Cleveland, you are doing well,” Pacella said. “You’re on a par with prices similar properties in Chicago and Atlanta are getting.” ■
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Brokaw is expanding, staying put By STAN BULLARD sbullard@crain.com
“RNC, LBJ and BRO select CLE.” That was the headline that a Cleveland-based advertising agency put on its July 16 news release announcing that it plans to expand by 60% its offices at the 425 Lakeside Building in downtown’s Warehouse District. Brokaw, known for quirky, prizewinning ad and social media campaigns, has a notable first-floor presence on the street, partially due to a mannequin in a window that
wore a Cleveland Browns jersey with Tim Couch’s name on it … and slips of paper identifying his many quarterback successors since 1999. In a signal of a switch, Brokaw last week put a LeBron James jersey on the mannequin. The agency switched the attire to celebrate with the rest of Cleveland on July 11, but Gregg Brokaw, a coowner of the agency with his brother, Tim Brokaw, said, “This decision had absolutely nothing to do with maintaining a prime location in the window for our jersey. OK, maybe just a tiny bit.”
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Brokaw snagged room to grow as it elected to stay in what it characterized as a resurgent downtown over moving to sites in Tremont, Ohio City and in the suburbs. It also listened to its employees, Gregg Brokaw said, who wanted to stay amidst downtown’s vibrancy and keep its central location. The agency searched for space because it needed the room to grow. The firm’s staff has increased to 54 now, who worked in the same amount of space the firm had in 2010 with 18 employees. To make things work until the agency landed more space, co-owners Tim and Gregg Brokaw agreed to share an office. Nautica developer Jeffrey Jacobs, who owns 425 Lakeside, agreed to allow the firm to expand into the former Bob Golic Sports Bar & Grille restaurant space on the building’s first floor. When the firm’s first floor space is expanded after its space is renovated, it will gain a new entrance and address at 1213 W. Sixth St. Putting the former restaurant space in the mix allowed Brokaw to expand to all of the building’s first floor and it will continue to occupy half of the second floor. According to an analysis of CoStar data, the renewal and expansion increases the agency’s space 60% to 22,857 square feet from 14,235 square feet. Councilman Joe Cimperman, who represents downtown, was happy the agency stayed downtown. “This adds to the zestiness of our great community,” Cimperman said. The 425 W. Lakeside Building dates from 1905 and was empty for years before Jeffrey Jacobs renovated to 57 apartments and commercial office and retail space in 2007. ■
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SMALL BUSINESS Seeking strength in numbers As growth continues around West 25th, merchants group aims to create unified voice
A
bout 10 years ago, a group of Ohio City merchants would informally meet over beers to talk about the neighborhood. “Back then, it was, ‘How can we fill empty storefronts?’ These gatherings focused upon, ‘What can we do to grow this neighborhood?’” said Sam McNulty, co-owner of five Ohio City establishments, including Nano Brew. “The current focus has shifted to, ‘How can we manage this accelerating growth?’ and, ‘How can we ensure a positive discussion?’” The “current focus” was revisited last year when the Ohio City Merchants Association became a merchantdriven group. Earlier this year, the group established a five-member board, said Greg Patt, an association board member and treasurer and Orange Blossom Press president and majority owner. Patt also is a board member of the Market District Improvement Corp. and Ohio City Inc. (OCI). “We’re about to make bylaws,” said Mary LaVenia, another board member and Great Lakes Brewing Co.’s public relations and outreach specialist. “We do have a long way to go. People come because they know we’re trying. We are becoming more confident to be a strong face in the community.”
Leadership from within While opinions vary regarding the current association’s mission or primary focus, members interviewed agree about the catalyst for the association: Ohio City Inc., the neighborhood’s economic development nonprofit. From late 2010 until late 2012, OCI undertook the initial outreach in reviving a merchants association and subsequently the scheduling of merchant meetings. By late 2012, OCI encouraged merchant ownership and
direction of the association, said Tom McNair, OCI’s acting director and director of economic development and planning. The merchants took over the group in early 2013, LaVenia said. “OCI wants the merchants to drive the meetings,” McNulty said. “It should be a merchant association led by merchants and the mission driven by the merchants themselves.” McNulty is an association member and Amanda Kotynski, marketing coordinator at Market Garden Brewery, another McNulty-founded establishment, is a board member. These days, hour-long association meetings are held the first Monday of each month. OCI representatives attend meetings and give OCI updates, but the agenda is determined by the merchant members and the association leadership. For now, a core group of five or so members consistently attend the meetings, with overall attendance fluctuating around 20 merchants and their representatives. “There are so many merchants in the neighborhood. It’s time for us to have our voice,” said Theresa Gorski, a board member and owner of Vision Yoga & Wellness. “There’s value in us coming together as a neighborhood and as merchants,” she said. “We’re an original and fascinating group of entrepreneurs that should be supporting one another. If we can start to support one another through a larger entity, then our individual voices can be heard together with more strength.”
Neighborhood sustainability Councilman Joe Cimperman said his ward, which includes Ohio City, has “60 different civic associations,” all wanting a voice and all contributing to the ward’s “deep democracy.” “There’s value in a merchants association. There’s value in any group that wants to come together for their See VOICE Page 14
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By SHARON SCHNALL clbfreelancer@crain.com
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Clearly, small business owners are busy. Time spent attending merchants association meetings is time away from pressing business concerns. But, can a business owner afford not to be an active member of a merchants association? Here are approaches to attract members to a merchants association, develop an overall organization focus and ensure the long-term success of an association. ■ Organizational leadership is a critical element of a merchants association and that leadership comes from within, not from an outside organization. “You need merchant participation in the leadership. ... The fact that you have a merchant running it probably sends a message to other merchants: You may have something of common interest that’s worth getting together,” said Sean Watterson, co-owner of the Happy Dog restaurant and co-chair of the Detroit-Shoreway Merchants Association. ■ Strike up an informal partnership between the merchants association and a community development corporation and other neighborhood entities. Draw upon that entity’s expertise to build the association’s structure and obtain help with selected communication and event planning initiatives. Recognize, though, that outside support is finite and launching, growing and maintaining a merchants association depends on its members and leaders. “If you want a true merchants association, you want a voice that develops from within — same as with resident-driven block clubs,” said Tom McNair, Ohio City Inc.’s acting director and director of
economic development and planning.
■ Be inclusive. Maximize the association’s geographic reach by acknowledging all businesses in the district, not just those along a main thoroughfare or in a popular district segment. Send announcements to all business owners, whether they are regular participants, occasional attendees or have yet to appear at association meetings. Also, periodically send meeting invitations to businesses located in connecting areas between the association’s district and adjacent business districts.
■ Set a fixed monthly merchants association meeting time, duration and day. No slot suits everyone. Encourage owners to show up; encourage them to send a representative. “As a small business owner, your time is incredibly valuable,” Watterson said. “We (the merchants association) talk about things that can impact the bottom line positively.” ■ Rotate the meeting location, if possible, to different members’ businesses. “We rotate where the meeting is held every month,” said Mary LaVenia, Ohio City Merchants Association board member and Great Lakes Brewing Co.’s public relations and outreach specialist. “It’s
been really cool every month. It’s a nice way for businesses to get acquainted.”
■ Welcome new businesses and their owners to the neighborhood. Post a welcome on the association’s Facebook or website page; include individual welcomes on different merchants’ Facebook pages and websites. Have the new business owner attend association meetings by special invite; put them on the agenda to talk about their business. “It sends the message that we want you to come to the meeting and speak up. It sends the message that it (the association) is not older business owners running the meeting,” Watterson said.
■ Merchant association goals and initiatives do not have to be grandiose or costly. “At the very least, we can meet. We can get to know one another. We can have a process to know what’s going on in the neighborhood,” said Theresa Gorski, Ohio City Merchants Association board member and owner of Vision Yoga & Wellness. “We can do all of these things only if we become more cohesive.” And, she added, that takes time.
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The West 25th area in Ohio City has had a burst in small business growth over the past several years. For a photo gallery, go to www.CrainsCleveland.com.
Voice: It’s a ‘boom town’ continued from PAGE 13
community,” Cimperman said. “They (the Ohio City Merchants Association) provide a unique perspective to the community. ... They’re merchants. They have a view of providing services to visitors.” And, when members are asked to name merchant concerns, themes arise: formalizing a strategy to address the current parking shortage; neighborhood sustainability vis-àvis a diverse merchant mix; and launching an annual fall festival. “It is a little boom town here right now. Everything is coming in,” said Diane Miller, co-owner of the J. Palen House bed and breakfast. “As a merchant, we’re obviously happy to see this. We know that if we don’t pay attention, it can go away, faster than it got here.” The association wants to provide feedback, to local government, area landlords and OCI, about what future businesses will round out the community, keeping the merchant balance between lifestyle and fullservice businesses and those businesses catering to the entertainment and nightlife segment. “I want this to be a long-term neighborhood. I don’t want this to be a 10-year entertainment district,” Gorski said. “There’s a concern that it will tip too much toward entertainment and not enough toward lifestyle.” And, keeping with a preferred family-friendly neighborhood orientation, the merchants would welcome a harvest festival. To that end,
the merchants association wants to partner with OCI. According to OCI’s McNair, a festival of this size and scope would most likely be offered by fall 2015.
A unified voice A merchant-run association, in and of itself, is an accomplishment. “Having a merchants association makes communication better on issues. It’s faster. You can be more proactive,” said Sean Watterson, coowner of the Happy Dog restaurant and co-chair of the neighboring Detroit-Shoreway Merchants Association. For the time that the Ohio City Merchants Association has been actively merchant run, it has accomplished plenty: recruiting members and leaders; heightening awareness regarding immediate concerns, such as area crime or pending zoning; collecting optional donations to build an advertising fund; and creating a sense of familiarity among merchants. “If the merchants association gets a unified voice, we can take that voice into account. ... That’s one thing we’ve always impressed on them: ‘It’s much easier to be taken seriously when you have a conglomerate speaking (versus) two or three scattered voices,’” McNair said. “The more they can coordinate their efforts, the easier it is to look at their feedback. From our perspective, it is always easier talking to a unified group than three people with three ideas about the same issue.” ■
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A decade of fueling growth By KIMBERLY BONVISSUTO clbfreelancer@crain.com
Ten years ago, aspiring minority entrepreneurs had few options in Cleveland to turn to for help in growing their businesses. But that situation started to change in 2004, after a study by the Cleveland State University Maxine Goodman Levin College of Urban Affairs prompted the creation of the Entrepreneurship Center at the Urban League of Greater Cleveland. Michael Obi, owner of Spectrum Global Solutions in Richmond Heights, was Obi tapped to run the center, which is intended to help minority businesses grow in sophistication and scale. Today, the Entrepreneurship Center, part of a national program at the National Urban League, provides management counseling, mentoring and training services to help minority entrepreneurs obtain financing and contracts that support job creation. The center has three major programs. The Cuyahoga Small Business Development Center is a non-minority focused program that offers comprehensive business management and education services to any entrepreneur. The Northeast Region Minority Business Assistance Center helps with contracts, bonding and financing. And UBIZ Connect is a revenue and jobs accelerator. Last year, the center served 668 clients and had an $11 million impact, and in 2012, it served 1,040 and had an $8 million impact. According to Obi, the center has averaged the creation of 100 new jobs annually over the past three years. In celebration of the Entrepreneurship Center’s 10-year anniversary in September, Obi is creating a growth strategy contest to reward businesses that are working hard but don’t have the ability to borrow funds. Participants will present their business growth plans in front of a panel of judges. Obi said he hopes to raise $10,000 to award prizes ranging from $1,000 to $5,000 through the contest. “I think (the Entrepreneurship Center) has impacted the community in a big way. If you ask people in the African-American community where to go to get help as entrepreneurs, there is always a chance in the first three names they will mention the Urban League,” Obi said. “That’s a test for me that 10 years ago wasn’t possible.”
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Cuyahoga Small Business Development Center
Northeast Region Minority Business Assistance Center
Historically, Urban Leagues were civil rights, work force training, youth and education organizations. In Cleveland, the Urban League saw entrepreneurship as a way to bridge the gap between inequalities in wealth. To that end, the Entrepreneurship Center built a relationship with the Small Lane Business Administration to house its Small Business Development Center in the Urban League foundation — a first in the federal program’s history, according to Obi. Thomas Lane, president and CEO of Innovation Foods/Red’s Gourmet Buffet Express in Twinsburg, used the CSBDC to find the resources he needed to grow his business, including consultants for financial management and human resources, and training for himself and his staff. He came to the program after being part of the first cohort to go through the Goldman Sachs 10,000 Small Businesses Program. The Entrepreneurship Center partners with the program, providing pre- and post-graduation technical support to entrepreneurs. “On the financial management side, they helped bring focus to our efforts,” Lane said. Lane worked his way through the food industry, starting as a dishwasher at age 12 and advancing to a position as executive chef by the time he graduated from college. He opened Red’s Place, a Twinsburg-area restaurant, and then expanded the business to include a child care center. Providing food service for the child care center led to a new food service arm of his business that now serves child care centers, summer programs and charter schools in the Cleveland and Akron areas. Lane recently closed Red’s Place to expand the growing New Adventures child care center. He also intends to open a chartered kindergarten for the 2015-2016 school year. The Entrepreneurship Center’s CSBDC, he said, served as a good nexus for making connections throughout the region. Lane said established entrepreneurs — not just startups — can benefit from the Entrepreneurship Center. “Before I started dealing with them I was in business for 10 years,” Lane said. “If you are a healthy business you are always growing. There are always occasions where you will need help.”
David Price founded Cleveland-based Price Builders and Developers in 1999, growing it into a $5 million-a-year company that provides construction services, construction supplies and consulting and marketing services for residential, commercial and industrial projects. Price Builders and Developers recently was awarded a state contract from the National Joint Powers Alliance with the help of the Minority Business Assistance Center. When he came to the Urban League’s MBAC program, Price said his business was ahead of the average MBAC participant. The MBAC program filled Price in the gaps to make his company whole by making key introductions and educating him about funding, certifications and capital. “I had to go backward to fill in the voids to move forward successfully. That’s how MBAC helped me,” Price said. Today, Price is a strategic partner with MBAC programs across the state, mentoring and speaking at roundtables, town halls and public meetings to advocate for small minority businesses. He also works at the state level by educating state leaders and departments about the processes and shortcomings in recruiting minority businesses. Price advises business owners looking for help from MBAC to first identify the critical information and knowledge they need to grow. “You have to ask how to get your company whole and get you to where you need to be,” Price said.
UBIZ Connect The UBIZ Connect accelerator program offers satellite office space for businesses at the Urban League headquarters, as well as access to technology and Obi’s expertise 24/7. Obi said the program challenges businesses to double their revenue in three years. At the end of the second year of the program a few of the companies have exceeded the revenue goal, including APB and Associates — a project management firm with offices in Cleveland and Washington, D.C. — and Improve Consulting and Training. Ellen Burts-Cooper started Improve Consulting Burts-Cooper and Training Group in 2006. Her company is a personal and professional development consulting firm with experience in leadership development and continuous improvement. Burts-Cooper came to Cleveland in 2007 and became acquainted with the Urban League of Greater Cleveland through her community service and volunteer work. As a newcomer, she said the Entrepreneurship Center provided her with the exposure, support and coaching she needed to continue moving her company in the right direction She now envisions growing her nine-employee company into a major player in Northeast Ohio, growing her client list and expanding her team-building franchise into five major U.S. cities within the next few years.
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Software leaves data trail IRS has access to electronic records and can mine information Accounting software simplifies the bookkeeping process for small business owners, but some are surprised to learn that it also creates a detailed data trail for the Internal Revenue Service — and they are entitled to every bit and byte of it.
PETERDEMARCO
TAX TIPS Few small business owners these days rely on paper-and-pencil journal entries and ledgers to keep track of their revenue and expenses. Even the smallest shops typically rely on some kind of electronic documentation to record when and how they generate revenue and how they disburse funds to pay their expenses. Off-the-shelf, name-brand software packages make it relatively simple even for those with little or no training in accounting to input information on business activity. Ultimately, that produces figures that become the basis for completing necessary tax filings. In a routine encounter with the IRS, the income tax return that results from the accounting software is all an agent will ever see. But if an agent has questions and decides to look more closely,
he or she will ask for the program files that contain the books and records. And they won’t be looking just for paper copies of receipts, invoices, check stubs, or bank statements. The electronic files that contain the company’s books and records are fair game for the IRS. Agents know how to use any tool or software package that any small business owner might use, and they know how to mine those files for important information — not only the numbers and how they are recorded, but also when they were recorded, and who recorded them. That can become important evidence in an audit or other tax dispute. That was the case, in fact, in 2012 when the IRS pressed tax evasion charges against a Connecticut man who tried to blame his accounting software for his significant understatement of income in a given tax year. The business owner said he believed a coding error led to the improper classification of hundreds of thousands of dollars of business revenue into an equity account, which led to the underreporting of taxable income. Upon seizing his metadata — which is information gathered by the software program that describes when and by whom information is collected or modified — agents determined the business owner corrected the coding problem only after his office was searched and copies of his computer hard drive
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had already been seized. Maybe the IRS showed this particular business owner no mercy because he was a tax preparer and a former IRS agent, so presumably should have known better. But the IRS gives little credence to defense arguments that the individual operating the software was relying on the software or even their accountants to do the thinking for them. Classifying personal expenses as business expenses is a classic area of IRS focus. Agents are on the lookout for evidence that personal expenses have been cast onto the business books to reduce the business owner’s taxable income. Some business owners might use their accounting software to mask personal expenses as business deductions. The IRS pursued a case against a Maryland accountant and his client when the accountant taught the business owner how to use a particular software package and then coached the business owner through using the software to bury personal expenses into the books. The IRS quickly caught on that the business owner asked a lot of questions about how to characterize personal expenses as business deductions and then the accountant turned a blind eye to the expenses when preparing the tax return. In five tax years over a seven-year span, the disallowed personal expenses for school tuition and family trips totaled more than $1.1 million. Accounting software is an excellent tool for maintaining clear business records, but small business owners should be aware that the IRS has full access to the electronic records and can mine significant information from such files to get a clear picture of how they were created. ■ DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.
NLRB moves forward with ‘quickie’ union elections The National Labor Relations Board is moving full speed ahead on a rules change that should make all employers wary, especially those who value maintaining union-free status.
JAMESWILKINS
ADVISER In February 2014, the NLRB proposed to change its rules in order to dramatically accelerate the timeline for union elections. The proposed rules, which have frequently been referred to as the “ambush” or “quickie” election rules, would give employers and employees opposed to unionization as few as 10 days to campaign once a union files a petition seeking to represent a group of employees. Under current NLRB procedure, employers typically have six weeks or more to educate employees so that they can make an informed decision about whether they choose to be represented by a union. For years, the Obama administration and the NLRB have been looking for ways to speed up the union election process. A fast election process is widely perceived as increasing the prospects for unions to win more elections. In 2009, efforts to speed up elections through passage of the socalled Employee Free Choice Act stalled in Congress, largely because the law also would have eliminated secret ballot elections in many cases. In 2011, the NLRB adopted rules virtually identical to those proposed in February, but those rules were struck down in court because they were adopted at a time when the NLRB did not have a quorum. Why does the timing of an election matter so much? Frequently, unions will try to stay under the employer’s radar when trying to organize an employer’s work force. As a result, employers frequently
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find themselves playing catch-up when it comes to countering the sales pitch that the union has been making to employees. The quicker the NLRB conducts an election after a petition is filed, the less time an employer has to communicate with its employees. This change is likely to especially impact smaller employers who may not have the inhouse resources to quickly respond to the union’s organizing effort. In addition to speeding up the election process, the proposed rules will significantly restrict the range of issues that can be raised in a preelection hearing, which traditionally has been used to address a variety of legal issues associated with the union’s organizing effort. The proposed rules would require any hearing to be held within seven days of the filing of the petition. The rules would require the non-petitioning party to submit a position statement addressing voter eligibility, the unit, and all other issues prior to the hearing. This would leave employers little time to conduct a thorough investigation into what is often a complex and fact-intensive inquiry. In most instances, failure to raise an issue in the position statement would constitute a waiver of the right to raise the issue at a later date. Taken as a whole, the proposed changes affecting representation hearings could greatly reduce an employer’s ability to effectively challenge the attempted unionization of their work force. The proposed rules change would also hamper an employer’s ability to make lawful challenges to both the scope of the unit the union is seeking to organize as well as the eligibility of individual employees in that unit. Currently, once a petition for an election is filed, the NLRB requires an employer to provide the union with the names and home addresses of all employees the union is seeking to organize. The proposed rules would require employers to turn over employee phone numbers and e-mail addresses as well. This aspect of the proposed rules has raised significant privacy-related concerns for employers as well as employees. The comment period on the NLRB’s proposed rules change closed in April. The NLRB held hearings in mid-April and is likely to issue the final (and probably unaltered) version of the rules fairly soon. The rules are virtually certain to be challenged by employer organizations such as the U.S. Chamber of Commerce. If the changes to the rules are implemented, employers who place a value on maintaining union-free status will have to re-evaluate their strategies and preparedness for responding to organizing efforts. The law protects the free-speech rights of employers and allows employers to communicate with employees to assure that they make an educated, informed decision about whether representation by a union is in their best interest. “Ambush” elections simply won’t give employers very much time to exercise those free speech rights. ■ Wilkins is a shareholder and vice president with Fairlawn labor and employment law firm Kastner Westman & Wilkins.
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Competitors bowl during the 2006 Gay Games in Chicago.
Games: Event inspires LGBT fund continued from PAGE 1
games in 2010 — which had rave reviews from participants. “That’s going to be doubly so for Cleveland and Akron,� he said. “The reputation here is not like Chicago. People are going to come here and say ‘Oh my gosh, this is fantastic. I’m really excited about this, so I’ll come back.’ That’s one of the lasting impressions regionally.� Also, being that Cleveland and Akron are the smallest cities to host the games, the impact, in a sense, will be amplified. Smitherman said it was easy for the legacy of the games to get lost in the mix in, for instance, Chicago — a city always brimming with major events and
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Story from www.crainscleveland.com
RevoLaze LLC to install 5,000-watt laser machine RevoLaze LLC is about to install a machine that Darryl Costin Jr. described as “5,000 watts of total power.� With the help of an investment from a member of the Disney family, the Westlake company is planning to install a manufacturingscale machine designed to etch patterns into denim and other types of fabric. But RevoLaze isn’t a manufacturer, according to Costin, president of the company. RevoLaze licenses its high-speed etching technology to other businesses. Its primary targets are clothing companies that want to give denim a faded look. RevoLaze already has a 2,500 watt machine that it uses to produce small samples for potential licensees, but some of them want to see the technology work on a larger scale, Costin said. Last month, RevoLaze announced that it had received a substantial investment from Roy P. Disney, the grandson of Walt Disney’s brother, Roy O. Disney, who helped start the Walt Disney Co. The company has raised $7.6 million since June 2013, which also included an investment from — Chuck Soder Lear Corp.
conferences.
Motivated to act The Cleveland Foundation also is taking on a major role in preserving the legacy of the games. At the conclusion of the games, the foundation will launch a new LGBT fund that would provide funding for LGBT organizations. “Our hope is that kind of work will continue beyond the games,� Cleveland Foundation executive vice president Robert Eckardt said about the efforts to make Cleveland a more inclusive community for the LGBT community. “The games become a motivating factor to do it.�
Operationally, the Gay Games is a big undertaking. The games will tie together two communities that historically have had trouble working together. Akron, for example, is a fiercely independent community and always bristled at being in Cleveland’s shadow. That said, the two cities have begun to link their infrastructure — security forces and public transit, for starters — to host the games throughout the region. “There are differences between the two cities, but I’ve seen firsthand how regionalism can work,� Nobbe said. “When there’s something like the Gay Games to bring them together, there can be great cooperation.� „
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said. James, in addition to being the world’s best player, is its biggest oncourt draw. The year before he signed with the Heat, Miami ranked 15th in the NBA in attendance. In the four seasons since, the Heat were among the top five in league attendance each year. Last season, Miami played at 100.9% capacity, averaging 19,781 fans at an arena, AmericanAirlines, that is listed as having 19,600 seats. On the secondary market, the Heat, predictably, flourished. The average price of Heat games on the secondary market was $57 in 2009-10. The next season, with James and the “Big Three” of Dwyane Wade and Chris Bosh together for the first time, Miami’s secondary-market norm jumped 123% to $127, according to SeatGeek, a ticket search engine that compiles listings from secondary market sites such as StubHub, TicketsNow and Razorgator. The demand for Cavs tickets on the secondary market, which Klang described as “abysmal,” soured as quickly as many fans’ feelings for James after he made his infamous Decision in 2010. SeatGeek communications analyst Connor Gregoire said the Cavs’ secondary-market average went from the NBA’s third-highest in 2009-10 to its 10th-lowest in 2010-11. The average cost of a Cavs ticket on
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the secondary market dropped 40% in one season — from $94 in 200910 to $58 in ’10-11. Klang said there were “a handful” of Cavs games that generated interest, such as when marquee opponents such as the Los Angeles Lakers and Oklahoma City Thunder came to town, but, for the most part, “it was a struggle” to sell tickets after James departed. Now? It should be akin to selling “tank tops and shorts all year in Miami,” Klang said.
Cavs tickets could top list Gilbert, who purchased the Cavs for $375 million in 2005, might be steering yet another billion-dollar enterprise, should James, as he said in the Sports Illustrated essay announcing his return, play the rest of his career with the Cavs. (Forbes estimates that Gilbert’s Quicken Loans produces an annual revenue of $2.8 billion.) There are plenty of obvious benefits to having James back — to the franchise, surrounding businesses and Northeast Ohio as a whole. One that might not immediately come to mind is that Flash Seats, a paperless ticketing system that is part of Cleveland-based Veritix and is owned by Gilbert, charges a 23% fee to the buyer for every ticket that is resold. Non-Wine and Gold United members (the Cavs’ season-ticket program) pay a 23% buyer fee and 5% seller fee. Gregoire, SeatGeek’s communi-
JULY 21 - 27, 2014
cations analyst, estimates that Gilbert could pull in between $5 million and $6 million on Flash Seats fees alone. SeatGeek’s data is based on the Cavs generating an average of $150 per ticket on the secondary market, which would be an increase of $90 from 2013-14 and put the team a little above the Heat’s 2013-14 norm of $142. Gregoire estimates that Cavs tickets sold on Flash Seats last season totaled about $1.4 million in fees, and that the team could quadruple that figure this season. “Cavaliers tickets realistically could be the most expensive on the secondary market in 2014-15,” he said.
‘Substantial’ increase? The last two seasons, the Cavs have split single-game ticket sales into two stages. In 2013, singlegame tickets for the first half of the season (23 of the 41 home games) went on sale Oct. 5. In announcing the switch in 2012, the team cited historical data that showed that during the initial preseason selling period, a “significant number” of single-game tickets for contests that occurred in the second half of the season were bought by “non-affiliated secondary markets.” That’s not as much of an issue with James back, since the demand is so high that Klang believes the team, should it not divide its individual ticket sales into halves, could sell out the entire season almost
“immediately.” A Cavs source said the team hasn’t determined if it will divide individual ticket sales into two segments again, and stressed that the reason the franchise limits its season-ticket total is to have a significant number of tickets available for partial season-ticket packages, group and individual sales.
The Cavs source said the team has yet to determine when individual tickets will go on sale, and it hasn’t “defined its primary pricing point” for those seats. Klang expects a “substantial” increase in costs, thanks to the arrival of a certain four-time league MVP. What does it all mean for Gilbert? Forbes estimated the Cavs’ gate
“Cavaliers tickets realistically could be the most expensive on the secondary market in 2014-15.” – Connor Gregorie communications analyst, SeatGeek One certainty seems to be that the Cavs no longer will have one of the league’s cheapest average tickets. The 2013-14 Team Marketing Report showed that the Cavs’ average ticket price of $43.31 was more than $8 below the league average of $52.50. The Cavs’ norm ranked 20th in the league. As fans scooped up Cavs season tickets at a furious pace in the hours after James’ announcement, the Cavs didn’t raise their prices. That is expected to change when individual tickets go on sale, likely in late September or early October. Individual tickets are dynamically priced, and with demand skyrocketing, the costs will, of course, increase. In 2009-10, the Cavs’ average ticket price, according to Team Marketing Report, was $55.95 — 22.6% above their norm of $43.31 last season.
receipts at $54 million and $53 million for 2009-10 and ’10-11, respectively. Last season, the magazine calculated that the Cavs brought in $30 million at the gate. The $24 million difference would be more than enough to pay James’ $20.7 million salary this season. In a March 2013 column for Grantland, Bill Simmons estimated that James, if teams were permitted to operate without a salary cap and fear of luxury tax penalties, could command at least $75 million per season on the open market. Gilbert might gladly pay that amount for the biggest cash cow in sports. “LeBron makes you instantly great,” Klang said. The Amazing Tickets owner was referring to James’ on-court value, but the description applies to Klang’s business — and that of many others.
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THEINSIDER
THEWEEK
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
JUNE 14 - 20 The big story: The Cleveland Foundation committed $8 million toward a $30 million effort to overhaul Public Square. The grant is the first public financial commitment toward the project. The grant dollars will be directed to LAND Studio, a nonprofit that specializes in public space design, to support the Group Plan Commission’s efforts to remake the square. Officials expect the foundation’s grant to spur additional giving required to complete the transformation by May 2016. In recognition of the grant, the south plaza of the redesigned space will be named the Cleveland Foundation Centennial Plaza. Moving on:
Pilot Flying J, the Tennesseebased operator of travel centers and travel plazas that is owned by the family of Cleveland Browns owner Jimmy Haslam, agreed to pay $92 million to resolve the company’s criminal liability for its employees’ conduct in withholding diesel fuel price discounts from customers. U.S. Attorney Bill Killian in Knoxville, Tenn., said Pilot “accepted legal responsibility for the criminal conduct of its employees, which caused more than $56 million in loss to its customers.” Haslam said, “We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers’ trust and getting on with our business.”
Bank on it: KeyCorp agreed to buy Pacific Crest Securities, a technology-focused investment bank based in Portland, Ore. Pacific Crest will become part of KeyBanc Capital Markets, the corporate and investment banking business unit of Cleveland-based Key. Pacific Crest has 170 employees. Randy Paine, president of KeyBanc Capital Markets, said Pacific Crest’s place as a top technology investment bank gives Key the tech expertise and research ability of much larger banks without jeopardizing Key’s strengths.
Demand continues for new apartments in old buildings ■ First the Standard Building, then the Leader Building. Which downtown Cleveland office building is the next likely target for an apartment redo? None other than the Halle Building, which is known for its role as the department store in Drew Carey’s old TV show and the Christmas-time home of Mr. Jingeling. K&D Group is in the leading role to land the 1228 Euclid Ave. building, according to two sources familiar with the situation. Another source said the paperwork is not done, though building owner Forest City Enterprises Inc. has settled on K&D as the prospective buyer in a deal to close by year’s end. A question about K&D pursuing Halle drew a quick, “No comment, no comment,” from Doug Price, K&D CEO, as he discussed plans by K&D to buy the Leader Building for future partial conversion to apartments. In Securities and Exchange Commission filings, Forest City lists the property for disposition. The company previously wrote down the building’s value dramatically and now values it at $8.5 million, according to Forest City spokesman Jeff Linton. Asked if
WHAT’S NEW
Fresh start: At the July 15 grand opening of the new Cuyahoga County administrative headquarters building, County Executive Ed FitzGerald called the eight-story, $80 million building a testament to the turnaround in county government. “We’ve gone from the deepest depths a county government could go to the height of integrity, efficiency, economy and understanding that our mission is to serve the public,” he said. He also said he believed the building — along with the rest of the $260 million, redeveloped Ameritrust complex — will help bolster the Ninth Street corridor. Curb appeal: Efforts to rejuvenate the onetime Finance District on East Ninth Street in downtown Cleveland as a lively NineTwelve mixed-use district received a $100,000 push from the National Endowment for the Arts. A joint venture led by LAND Studio and Ingenuity, the nonprofit behind the annual IngenuityFest, received one of 66 grants awarded under NEA’s “Our Town” program. The NEA grant, which must be matched by local grants, sponsorships or donations, will be used to fund a year-long project in 2015 combining public art projects and sustained programming on East Ninth.
They’ve seen the light on blocking out light ■ A new Kent State spinout company knows how to make windows switch from clear to opaque and vice versa. Flexible ITO Solutions (FITOS) has an informal development agreement with a smart window maker that could use the technology to create windows that can block light. Eventually, the technology could be used to create less expensive displays for touchscreen devices, said FITOS CEO John West. For now, the company is focused on commercializing the window technology. It works like “a virtual venetian blind” that can let in some light while blocking the rest, according to West, a Kent State professor who led the development of the technology. FITOS will make flexible, transparent films that can fit between panes of glass. The films contain indium tin oxide — the ITO in FITOS. The company controllably cracks
Setting the standard
COMPANY: EYE Lighting International, Mentor PRODUCT: LED Wallpacks The manufacturer of lamps, luminaires, controls and related lighting systems, says it has two new LED Wallpacks: The WPS, which delivers up to 4,000 lumens, and the WPL, which delivers up to 7,000 lumens in compact housings that measure 7” x 7” x 4” and 8” x 10” x 4”, respectively. EYE Lighting says the WPS and WPL LED Wallpacks “are ideal for any area where safety and security are a priority: schools, retail stores, offices buildings, warehouses, municipal buildings and many other applications.” The 25-watt and 50-watt WPS model features a color temperature of 4000K — color temperature is measured in degrees Kelvin — and weighs just 4 pounds. The 50- and 75-watt WPL model also features a color temperature of 4000K and weighs less than 10 pounds. Both models exceed 80 lumens per watt efficacy and deliver “a forward-throw asymmetric beam pattern,” EYE Lighting says. The products come with a five-year warranty. For details, visit www.eyelighting.com.
Send information about new products to managing editor Scott Suttell at ssuttell@crain.com.
that material, creating invisible electrode patterns that make it possible to control the movement of light through the window. FITOS is based at Kent State’s Centennial Research Park. West isn’t yet being paid, nor is chief operating officer Cevin Cole. The only paid employees are Nick Diorio, a postdoctoral researcher at Kent State’s Liquid Crystal Institute, and Paul Olson, a University of Akron student doing an internship in West’s lab at Kent State. — Chuck Soder
Everybody wants a piece of Cleveland these days ■ Cleveland has just landed a big convention in 2016, Crain’s has learned. No, not that one. But it’s an important group nonetheless. The International Economic Development Council soon will announce officially that it will bring its 2016 convention to the Cleveland Convention Center. Joe Marinucci, president and CEO of the Downtown Cleveland Alliance, told Crain’s that the group typically brings 1,300 to 1,400 public and private economic development professionals to town, including 300 from Canada and Europe. The four-day conference begins Sept. 25, 2016. “Ohio represents a strong membership state for them,” said Marinucci, who served as chairman of the organization’s board in 2006. Members with Team NEO, the Greater Cleveland Partnership and the city and county economic development departments put together the proposal with Marinucci and Michael Taylor, a Clevelandbased senior vice president of PNC Bank. — Jay Miller
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
Leadership position:
Willoughby-based K&D Group plans next month to acquire the Leader Building, according to Doug Price, CEO of the apartment development firm. However, don’t look for K&D to immediately work on converting the Leader to apartments. Price said K&D needs to get historic designations for the building to qualify for federal historic tax credits. It also plans to go after Ohio Historic Preservation Tax Credits. Initially, Price said, K&D will continue to lease the building as offices. However, it will convert part of the Leader to about 200 apartments in the future.
a deal is near, Linton said Forest City never comments on the status of properties until it closes a sale. None of the sources would be identified because they were not authorized to discuss the bid or are not affiliated with either principal. The Halle Building, like the Leader, would remain as offices until K&D decides to convert it to apartments, but with a surprise twist: One source said K&D may move first on converting part of the Halle Building garage between Huron Road and Prospect Avenue to apartments while keeping lower floors for parking. — Stan Bullard
■ LeBron James’ return to Cleveland got the highbrow think-piece treatment in columns from The New York Times and The Guardian. The Times’ Ross Douthat wrote that James is emblematic of an effort to reverse “the trajectory of our nation’s most talented citizens, who since the 1970s have been clustering ever more densely in certain favored cities, and gradually abandoning the places in between.” He acknowledged it’s easy to make too much of “a rich athlete’s brand-managing P.R.” Even so, Douthat wrote, “there will be a spillover effect of some sort from his decision. Even if it only happens on the margins, LeBron really did just make a down-at-the-heels part of America a slightly better place to live and work and settle.” In The Guardian, Kevin Blackistone argued that a “combination of self-determination and notoriety is making James the modernday embodiment of the ideal athlete championed by the sociologist Harry Edwards in ‘Revolt of The Black Athlete:’ an athlete who understands community building.” James, Blackistone wrote, “is establishing a standard, and he is doing so in a manner that underscores he is a student of political
LeBron might just save the entire world.
change, not just a parrot of its vernacular.” He concluded that James “is sowing seeds to wind up more than just a role model. He could be a standard-bearer of black empowerment.”
If basketball doesn’t work out … ■ Among Cleveland Cavaliers All-Star point guard Kyrie Irving’s many talents: He’s an online video superstar. The Wall Street Journal said “advertisers are scrambling to figure out how to craft ads that have a better chance of going viral. Pepsi believes it’s found the right formula: surprising consumers.” In an ad that debuted July 15, Pepsi filmed a local baseball team in Milwaukee being surprised with the chance to play their scheduled game at a major league ball park. People “like the unexpected,” said Lou Arbetter, a Pepsi marketing executive. Adding an unpredictable twist to something that is expected “automatically makes it shareable,” he said. Pepsi has racked up more than 57 million views with spots featuring Irving “disguised to look like an old man (who) takes to the local basketball game to show off his moves.”
Taking a toll ■ Federal Reserve chair Janet L. Yellen spent nearly two hours on July 15, responding to U.S. senators’ questions on a range of subjects. One of the best ones came from Sen. Sherrod Brown, D-Cleveland, who asked about the human cost of unemployment. “It takes such a toll on families and children,” Yellen responded, according to Bloomberg. “Anyone who ever talked to people experiencing significant unemployment realizes what the psychological toll is and the ways it affects their well-being and that of their community.”
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