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COMS is sprinting to big gains in software

SPECIAL SECTION

UNIVERSITY CIRCLE BUILDING A NEIGHBORHOOD

Broadview Heights company has more than doubled customer base since 2013 By CHUCK SODER csoder@crain.com

ROUNDING OUT A COMMUNITY

ALSO INSIDE

AREA’S HOME TO MORE THAN INSTITUTIONS By TIMOTHY MAGAW tmagaw@crain.com

or lack of a better phrase, life’s come full circle — in the Circle — for Allen Ford. He was born in 1928 at University Hospitals, and today, the 86-year-old retired Standard Oil exec resides at Judson Manor, a senior housing community in the heart of University Circle on Cleveland’s East Side. In between, Ford served on the boards at many of the Circle’s anchor institutions, including UH, Case Western Reserve University and the Western Reserve Historical Society. “There’s a lot of happy coincidence there,” Ford said. So, Ford saw first-hand University Circle’s transformation into Cleveland’s cultural and medical epicenter over much of the last century. More specifically, since he moved into Judson a decade ago, he has observed the Circle’s evolution into a more complete neighborhood — one ripe with desirable housing stock, a grocery store, modern dining options and a dense enough population to support those amenities. But for Ford, what makes University Circle a complete neighborhood isn’t so much the bricks and mortar, but the diversity. “It’s a marvelous center for several neighborhoods,” Ford said. “It has an incredibly diverse gathering here.” What makes a neighborhood is a bit of a subjective question. Some say it’s the people or a sense of community, while others say it would be the physical infrastructure and the ease of daily living. That said, most people agree that University Circle is a complete neighborhood or at least on its way to becoming one, though perhaps not in the same sense as others in Cleveland. Technically, University

WHO IS LIVING IN, AND MOVING TO, THE CIRCLE PAGE 13

If you’re a nursing home, history suggests that you will quintuple the money you spend on software from COMS Interactive. And that’s the worst-case scenario, according to customer data generated by the Broadview Heights company. Skilled nursing facilities are flocking to COMS — one of the fastest-growing technology companies in Northeast Ohio — to buy software that helps them take care of patients with multiple medical conditions. Today, COMS serves roughly 2,000 facilities, up from 850 in June 2013. The company’s strategy is to get big fast: COMS is pushing hard to win customers now, while the market is hot, according to CEO Ed Tromczynski. “For us, it’s a sprint to get into as many places as we can, as fast as we can,” he said. The 6-year-old company has won over customers and investors. A year ago, COMS — which stands for Clinical Outcomes Management Systems — raised a $21 See COMS, page 7

ROLE OF UNIVERSITY CIRCLE INC. AND ANCHOR INSTITUTIONS PAGES 14-15

JOBS DOWN THIS MONTH

DEVELOPMENT EFFORTS START MOVING UPWARD, OUT PAGE 16

See NEIGHBORHOOD, page 19

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RISK MANAGEMENT By selling most of its Tower City assets, Forest City Enterprises is attempting to reduce uncertainty in its $9 billion portfolio ■ Page 5

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CRAIN’S CLEVELAND BUSINESS

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Cleveland-Akron lost 7,242 jobs in July The Cleveland-Akron area lost 7,242 jobs last month, a 0.62% decline from June, according to the first Ahola Crain’s Employment Report, or ACE Report. Cleveland Heights economist Jack Kleinhenz, who developed the economic model, said the decline did not surprise him, because he has seen a drop in construction spending and a slower pace of hiring by large goods-producing firms. The one-month decline runs counter to the national trend, but Kleinhenz said by email that looking at longer-term trends “suggests that the pace of employment (for the full year 2014) should be picking up over the first half of 2014.” This employment report is based on payroll data from 3,000 employers, gathered by The Ahola Corp., a Brecksville payroll and human services firm. Looked at July-to-July, employ-

ment in the Cleveland-Akron area grew by just more than 1%, suggesting a slow but steady uptick in job growth The key numbers: The sevencounty region added 11,674 jobs in July 2014 over July 2013, bringing total private-sector employment to 1,170,981, a 1.01% year-to-year increase. Most of that growth, 11,266 jobs, was in service industries, such as financial services, transportation and the hospitality industry. The modest growth in manufacturing employment follows several years of more rapid growth following the Great Recession. “We’ve seen a slowing in manufacturing job growth and the services (now) are driving a lot of the job growth,” said Jacob Duritsky, managing director of research at Team Northeast Ohio, the regional economic development nonprofit.

Economists at Wells Fargo Securities agreed with that assessment in a July 15 commentary on the Cleveland region’s economy. “Although manufacturing still plays an outsize role in the region’s economy, it is unlikely to be the primary engine of growth,” the economists wrote. The information in the ACE Report is the first monthly analysis of regional employment growth that breaks jobs down by employer size. The ACE analysis shows that while 59% of jobs in the region are at firms employing 50 or more people, job growth at smaller firms actually grew at a slightly faster rate, year over year — 1.03% vs. 0.99%. The ACE data is built on an economic model developed by Kleinhenz, chief economist for the National Retail Federation and CEO of Kleinhenz & Associates. — Jay Miller

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Volume 35, Number 33 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 © 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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CRAIN’S CLEVELAND BUSINESS

Forest City ‘chopping’ away Sale of most of its Tower City assets is part of company’s effort to reduce risk in $9B portfolio By STAN BULLARD sbullard@crain.com

Forest City Enterprises Inc. executives knew the announcement contained in the company’s secondquarter financial results, released Aug. 6, would be big news in its hometown. And they recognized the news would have personal meaning for the company’s employees, especially 600 at its headquarters in Terminal Tower. David LaRue, Forest City’s CEO, used a voicemail message to give them the word simultaneously: The company is in talks to sell parts of Tower City Center, but not Terminal Tower. Forest City’s headquarters will stay in Cleveland. The personal touch is a close-tohome example of the difficult path Forest City has trod for years to sell billions in assets to reduce risk and leverage in its far-flung, $9 billion portfolio. While Forest City is shedding assets to focus on bigger urban areas, the prospective buyer of most its Tower City Center assets — sources say it’s Los Angeles-based Hertz Investment Group — has a taste for landmarks and office towers in Midwest downtowns. The source of Forest City’s course is found in its publicly traded status. The company’s $19.93 share price at the market close on Thursday, Aug. 14, is about 30% below the value of the underlying assets in its portfolio. The question comes up regularly on its conference calls with investors and analysts. On Forest City’s Aug. 7 conference call, Jason Young, managing partner at New York-based YG Operating Capital, posed it pointblank: What does it need to do to close that gap? Robert O’Brien, Forest City’s chief financial officer, responded, “I think that as management and shareholders we’re frustrated, too. Under (LaRue’s) leadership, we set out some strategies and we’re executing against them, and I think we’ve done a particularly good job at it. I don’t think we’re quite where we need to be in a number of places.” During the recession, Forest City started shedding assets to reduce risk and leverage, and that process continues today. Since 2012, Forest City has followed what LaRue has called a “high-quality properties in highquality markets” strategy. The company’s goal is to shift its capital to clearly stated core markets where it can employ its capital and development skills to reap returns. Those markets include Boston, Dallas, Denver, Los Angeles, New York City and Washington, D.C. Even after shedding properties worth millions, Forest City, as its executives say, “still has chopping to do.” The company gets almost 83% of its net income from core markets; its goal is 90%. Forest City says its strategy also is designed to benefit from increased urbanization globally and to focusing on “growing up” in major cities instead of growing out. Cleveland, where Forest City was founded in 1920, is not on that list.

County is seeking creative way to aid children By JAY MILLER jmiller@crain.com

Timing is in favor of a Tower City Center sale as the region, after a long hiatus, is getting outside investor interest, primarily because coastal commercial properties are considered too costly. That is where Hertz, which has substantial Los Angeles holdings, comes in; it is large and has bought millions of dollars worth of high-rise office towers in the Midwest.

Spread around the Midwest Hertz has been working for almost a year on a deal with Forest City for the region’s best-known commercial property, according to one of three sources who identified Hertz as the bidder for the properties. The three declined to be identified because they are not authorized by the principals to discuss the proposed transaction.

Hertz, founded by Judah Hertz, its CEO, in 1977, has a portfolio of 48 office buildings, representing upwards of 15 million square feet of office space. The Hertz website describes its focus as operating “exceptional properties” from prominent highrise office buildings to luxury hotels, apartments and international

Extending the concept of the public-private partnership into the social services, Cuyahoga County is embarking on a pilot program to attract outside funding to find innovative and lower-cost ways to assist families and children. Called “Pay for Success,” or social impact financing, the idea is to attract foundations and private investors who will create and fund new kinds of social programs from scratch, apart from existing, often lethargic, bureaucracies. The expectation is that if programs are well designed, they will provide quality service at a lower cost, and the investors would share in the savings created, essentially providing a return on their investment. The FitzGerald administration and Cuyahoga County Councilman Dale Miller have proposed legislation to Cuyahoga County Council to establish a social impact financing fund. “We’ve created the funding mechanism,” Miller said. “We’re now waiting for the contract to be developed.” Miller said the initial legislation passed with a 7-4 vote and he believes there is support to go forward, though, he conceded, skepticism remains. “It’s a very complex financing system; it’s innovative,” Miller said. Only two other social impact financing programs are underway nationwide. One is in Massachusetts targeting youth on probation. The other is in New York state, targeting prison recidivism. The county has enlisted assistance to develop the program from the Cuyahoga Metropolitan Housing Authority; Case Western Reserve University’s Center on Urban Poverty and Community Development; the Gund Foundation; and Third Sector Capital Partners, a Bostonbased nonprofit financial advisory service that has counseled similar efforts. The pilot program would offer housing and mental health care to mothers who otherwise would be homeless, a status that normally would send their children into the expensive foster care system. David Merriman, deputy chief of staff for health and human services in the FitzGerald administration, said it costs $70 a day to care for a foster child. Cuyahoga County spends more than $35 million annually on foster care, either to foster parents or to dozens of institutions. It also spends millions of dollars on housing and providing services to the homeless, through a number of organizations that serve the homeless. Merriman said he did not foresee using Pay for Success for core

See FOREST CITY, page 8

See COUNTY, page 22

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Currency manipulation has a huge impact on manufacturers, says Bill Adler, president of Stripmatic Products Inc. in Cuyahoga Heights. Indeed, the past chairman of the Precision Metalforming Association thinks itâ€™s the biggest hurdle U.S. companies face when it comes to competing globally. â€œWe see and feel the direct impact of lost jobs, lost revenues because of unfair currency manipulation,â€? Adler said. The issue of so-called currency manipulation â€” when a government purposefully devalues its currency â€” and its affect on manufacturing was highlighted last week in Cleveland. Last Wednesday, Aug. 13, the leaders of three trade organizations representing industries employing more than 42,000 Ohioans gave a news conference at the City Club in Cleveland, calling for controls for currency manipulation to be enacted as part of the Trans-Pacific Partnership. The Trans-Pacific Partnership is a potential trade agreement being negotiated between the U.S. and Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. According to the Office of the United States Trade Representativeâ€™s website, the U.S. wants the agreement to help open markets and set trade rules by addressing issues such as tariffs, work conditions and intellectual property rights. Matt Blunt, the former governor of Missouri and the president of the American Automotive Policy Council, which led Wednesdayâ€™s conference along with the American Iron and Steel Institute and the National Council of Textile Organizations, said currency manipulation affects manufacturers in three main ways. It makes it difficult to penetrate closed markets, such as Japan, he said. It amounts to an unearned export subsidy for the countries manipulating their currency. And it makes it difficult in markets where both countries are competing for exports, like the Middle East. â€œCurrency manipulation has a real impact on our ability to be competitive,â€? Blunt said in a meeting with Crainâ€™s before the news conference. Blunt said the groups are looking for the negotiators of the Trans-Pacific Partnership to put a set of standards in place to determine whether a country is manipulating its currency and implement a penalty â€” the loss of the tariff agreement with the markets for a year â€” against countries that violate those standards. Thereâ€™s no concrete precedent for this, Blunt said, but he compared it to the environmental and labor issues now addressed in trade agreements. He said he thinks itâ€™s the next step in free trade. And the groups donâ€™t see this as an issue stopping with the TransPacific Partnership. Thomas J. Gibson, president and CEO of the American Iron and Steel Institute, said the potential agreement will likely serve as a model for trade agreements going forward.

FOTOLIA

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com

â€œItâ€™s important to get it right now in the TPP,â€? Gibson said.

Jobs at stake John Colm, president and executive director of manufacturing economic development group WireNet, said the issue of currency manipulation and the trade deficit to which it contributes have put jobs at stake in Northeast Ohio. Colm said that, according to the U.S. Bureau of Labor Statistics, the state lost 3,500 manufacturing plants from 2000 to 2010. Colm said thatâ€™s in part because domestic demand is down. â€œWe know itâ€™s having an effect on Ohio companies and jobs,â€? Colm said. A February 2014 report from the Economic Policy Institute estimated that the United States could lower the trade deficit and create 2.3 million to 5.8 million jobs if currency manipulation was eliminated from 20 countries. The report encouraged fighting currency manipulation in a number of ways, including adding such controls to the Trans-Pacific Partnership and notes that Ohio would be one of the top 10 states to gain jobs. â€œThese are big numbers,â€? Blunt said of the report. And the trade associations arenâ€™t alone in their campaign. The industry groups on Wednesday touted bipartisan, bicameral support of the efforts to include currency manipulation controls in the trade agreement, providing copies of letters signed in 2013 by 60 senators and more than 230 members of Congress. Ohioâ€™s legislators have been strong supporters, the group said. That includes Sen. Sherrod Brown, a Democrat who has introduced two acts related to currency manipulation to Congress since 2011; Sen. Rob Portman, a Republican, and Rep. Dave Joyce, also a Republican. Joyce also co-sponsored a currency manipulation bill, and said the practice puts enormous pressure on the U.S. economy. Creating a level playing field through this type of legislation is important to preserve jobs and lay the foundation for a better system in which to export. â€œItâ€™s important because itâ€™s about jobs,â€? he said. Though Colm of Wire-Net is heartened by the bipartisan support, heâ€™s not completely optimistic that the trade agreement would address the currency manipulation issue. From his perspective, the administration has had multiple

opportunities recently to find currency manipulation among the countryâ€™s trade partners, and itâ€™s declined to act.

Local impact Currency manipulation isnâ€™t a new problem. Randy Solganik, owner and president of City Plating in Cleveland, said currency manipulation had a big effect on his company in the late â€™90s and early 2000s as companies started to take advantage of the low-cost supply chain and labor in countries like China. He said he thinks it has since reached a plateau. Adler of metal stamper Stripmatic also noted that the industry has been battling currency manipulation for years. He said heâ€™d like to see a clear definition and enforcement standards enacted to help level the playing field. He believes it should be part of the Trans-Pacific Partnership, if it gets signed. Michael Stumo, CEO of the Coalition for a Prosperous America, said he doesnâ€™t think the country can fully recover from the recession until currency manipulation is addressed. It affects the trade deficit, jobs and the supply chain, he said. Stumoâ€™s national organization is focused on balancing the trade deficit. Last week, Stumo was in Cleveland visiting some of its member companies, including Exact Tool and Die Inc. in Brook Park. Frank Chesek, president and owner of Exact Tool and Die, said heâ€™s seen opportunities dwindle in the years that currency manipulation has been going on. As a supplier to exporters, heâ€™s seen companies close or move their tool and die work offshore. Chesek, who is co-chair of the coalitionâ€™s Ohio chapter, said he thinks his tool and die and stamping company would have grown more had it not been for currency manipulation. The company has just fewer than 40 employees. Stumo said members of the House and Senate have been â€œsolidâ€? on the point that currency manipulation controls need to be part of any future trade agreements and he thinks it would be near-impossible to get the Trans-Pacific Partnership through Congress without them. If itâ€™s not, a trade agreement can reduce a tariff, but a country can immediately reverse that win with currency manipulation. â€œYou can totally undo the whole trade agreement by manipulating currency,â€? Stumo said.

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COMS continued from page 1

DaylightIQ, and that means more revenue, according to Tromczynski, citing customer data generated by the software. The facilities retain residents by keeping them alive and out of the hospital, he said. For instance, COMS clients have an average 30-day hospital readmission rate of 12.7%, according to the company. The average readmission rate for all U.S. skilled nursing centers stood at 23.5% in 2006, the last time the Centers for Medicare and Medicaid Services published data. In 2012, the average for all Medicare patients — regardless of whether they are sent home or to a skilled nursing facility — was 18.4%, according to CMS. And by keeping residents healthier, COMS win referrals, Tromczynski added. “A month in, they’ve mastered the product. Two months in, they’re seeing clinical outcomes. Three months in, they’re starting to make money,” he said.

million investment from Summit Partners of Boston. At the time, a managing director from the private equity firm said Summit was impressed by COMS’ ability to make good on the promise it makes to every customer: In each contract, the company guarantees that the amount of new revenue the customer generates in a year will be at least five times greater than what they spent to subscribe to COMS’ web-based software for one year (usually $25,000 to $30,000). Not one client has missed that goal, Tromczynski said. The closest was a customer that only generated nine times as much revenue as they spent, he said. How’s that possible? The software, DaylightIQ, allows skilled nursing facilities to document each resident’s medical conditions and vital signs, as well as the steps taken to treat them. The product can tell staff members when medications conflict with each other, and it can send out alerts when it spots a potential problem. COMS’ customers typically fill more beds after they start using

Build, sell, charge As the company’s customer base grows, so does its staff. COMS employs about 60 people, including 30

Tromczynski, who is best known as co-founder of PlanSoft Corp. That company provided online services for the meetings business and employed 200 in Twinsburg before a series of mergers in the early 2000s.

at its new headquarters in Broadview Heights. Those numbers should go up fast: Within a year, the company probably will employ 100 people, including 50 at its headquarters, Tromczynski said. COMS’ local employees had been scattered across three offices totaling about 3,000 square feet, until July, when it upgraded to its new 10,000-square-foot office at 9100 South Hills Blvd. The move gives COMS room to grow: The company has first right of refusal on another 14,000 square feet next to its third floor office, Tromczynski said.

A little Daylight So what’s COMS’ long-term plan? Well, lots of investors have wanted to give money to the company, which took a deal from Summit Partners because of its depth of experience in the health care space, Tromczynski said. Eventually, COMS could raise more cash from investors, assum-

“A month in, they’ve mastered the product. Two months in, they’re seeing clinical outcomes. Three months in, they’re starting to make money.” – Ed Tromczynski CEO, COMS Interactive But revenue growth will probably outstrip the growth of COMS’ staff, he said. That’s typically what happens at successful companies that deliver software via the Internet on a subscription basis. “We build it once, sell it to many and charge them every year,” said

ing they could help the company expand internationally or connect with bigger companies that make electronic medical record systems for hospitals, he said. For one, he would like to integrate DaylightIQ with those hospital systems. But if things keep going well,

Tromczynski said he also could see a scenario where COMS eventually gets bought by an electronic medical record company that wants to get into the skilled nursing market. That outcome wouldn’t surprise Jim Weisman, a vice president at BioEnterprise, a Cleveland nonprofit that assists local biomedical companies. For one, the Ohio Venture Association named COMS its 2014 Venture of the Year. Weisman, who managed that event, has kept in touch with COMS ever since its founders — the late Dr. Tom Riemenschneider and his son, former nursing home administrator Jim Riemenschneider — decided to create a software business out of a consulting business that helped nursing homes keep patients out of the hospital. The fact that COMS was able to break into a market that traditionally pinches its pennies says a lot about the company’s momentum, Weisman said. “They have a working solution that has proven itself,” he said. That momentum may give COMS the ability to do some acquiring of its own, Tromczynski said. “We’re growing fast enough to be the guy that buys the other company,” he said.

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L.A. brokerage opens space here

AUGUST 18 - 24, 2014

FOREST CITY continued from page 5

By STAN BULLARD sbullard@crain.com

Three real estate brokers with deep roots in the region are putting their talents together to open the first Ohio office for Los Angelesbased Lee & Associates, a national commercial real estate services firm. Scheduled to open the office on Monday, Aug. 18, are Joseph Greenberg, Brad Coven and Jeremy Steiger, who previously operated their own practices. The three share ownership of the office — currently in temporary space in Beachwood — and the title of co-president. It’s Lee’s 50th office nationwide. The brokerage also opens with substantial listing assignments for almost 5 million square feet of industrial and office space, as Greenberg will continue to do leasing for Solon-based Chelm Management Inc. and Coven will continue to handle leasing for Beachwoodbased Coven-Goldman Associates. Lee & Associates signs will start going up on properties they list immediately, Greenberg said. Chelm and Coven-Goldman will continue to manage their properties in-house. Greenberg said the three identified Lee as the brokerage to join because it is owned by the member brokerages that run its offices, which reduces overhead and maximizes commission for local brokerages. “We are entrepreneurial, and we wanted to maintain the same control we had with our own businesses,” Greenberg said. At the same time, Lee was looking to establish an office in Cleveland, so it was a natural fit. Greenberg said he and

Greenberg his partners wanted to join a national brokerage to provide more exposure for their client listings nationally. Major decisions by Lee are made at meetings of its member brokerages. Greenberg said Lee is making an investment for an amount he would not disclose to add the Cleveland office. The three are searching for a permanent office on Chagrin Boulevard in Beachwood, Greenberg said. Jeremy Steiger focuses on office and medical-office leasing and will be able to gain listings for Lee clients looking for space in the region, Greenberg said. The office’s first associate is Dan Steiger, Jeremy Steiger’s cousin and a veteran of Brecksville-based Flair Corp. development concern. Lee plans to add more associates as it finds people with the right mix of skills and assignments, but Greenberg said it has no specific number it seeks to add in the next year. Jeffrey M. Rinkov, Lee’s CEO, said in a news release, “This marks a sig-

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Steiger nificant move on our part to get a foothold in the Ohio market as well as growing our Midwest presence.” Rinkov said Lee wanted an office in Cleveland because of its increased national attention. The Northeast Ohio office joins nine others the brokerage has added in 2014, including locations in Atlanta; Baltimore; Charleston and Greenville, S.C.; Edison and Elmore Park, N.J.; Indianapolis; Kansas City, Kan.; and New York City. Greenberg and Coven knew each other from working at CBRE Group earlier in their careers. Greenberg has 15 years of commercial real estate experience and previously ran Greenberg Real Estate Advisors in Solon. Coven has 16 years in the industry and previously worked directly for the family owned firm. Jeremy Steiger has operated Select Ohio in Beachwood since 2010 and has 18 years of experience in the business.

centers selling fashion, gifts and jewelry. With downtown Cleveland’s second-tallest skyscraper as its focal point, parts of the massive Tower City Center project under Forest City’s control include almost 1.8 million square feet of office and storefront space in four office buildings, including the massive Post Office Plaza building, built in 1934 as the city’s main post office and converted to offices in 1990. Forest City in 2012 transferred the office building at 250 W. Huron Road, and its upper-floor Ritz-Carlton, to gaming operator Rock Ohio Caesars, the joint venture of Cavs owner Dan Gilbert and Las Vegasbased Caesars Entertainment Corp. Rock Ohio last year bought from Forest City the Higbee Building, once a department store that originally served as Tower City’s retail anchor, but is now Horseshoe Casino Cleveland, Two calls each to Judah Hertz and James Ingram, the company’s chief investment officer, were not returned. However, Susan Ilda, Hertz’s spokeswoman, left a voicemail message last Monday, Aug. 11, saying, “We would not have any comment on Tower City right now.” Asked if Hertz is the buyer for Tower City, Forest City spokesman Jeff Linton declined to comment. He cited a longstanding company policy not to discuss the identity of buyers until after it closes a transaction. Hertz is heavily represented in other metropolitan Ohio downtowns and the Midwest. Hertz owns two prominent downtown Cincinnati office towers, the Capital Square office building in Columbus, and four office buildings in Indianapolis. In Pittsburgh, Hertz owns the four high-profile Gateway Center skyscrapers that front the city’s famous Point State Park. The Pittsburgh Business Times reported on Aug. 11 that Hertz is marketing its Gateway Center for sale. Hertz’s website notes it has sold 39 other office buildings, hotels and apartment properties through the years. A January 2012 story in The Wall Street Journal reported Hertz was

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diving into the Midwest markets for office towers at bargain prices compared to commercial properties on the nation’s coasts.

It’s ‘complicated’ Forest City in an Aug. 6 filing with the Securities and Exchange Commission provided substantial detail on the sale talks. In the filing, Forest City said it had agreed to terms with a buyer it did not identify for the Skylight Office Tower and Post Office Plaza portions of Tower City Center. However, Forest City said those deals would not be consummated without agreements to sell the prospective buyer both the 4,000space parking lot underneath the massive Tower City complex and a half-interest in The Avenue, the retail portion of the property. Such steps show the nationally known developer will not allow a buyer to pluck its better assets and leave it with lesser ones. Some of Hertz’s aggressiveness is apparent in the quest for Terminal Tower, although Forest City said it will not sell it. The building has 23% vacancy, or about 158,000 square feet of empty space.

“It’s the most complicated building downtown.” – Alec Pacella NAI Daus That is as much vacant space as the Post Office Plaza and Skylight Office Tower combined, according to online commercial realty data provider CoStar. To the buyer, the empty space represents potential upside if it went into the deal. The sale of only a half-interest in the Avenue reflects how difficult the negotiations have been. Such a provision typically means the seller insists an asset is worth more than a buyer is willing to pay. Selling 50% of the retail component of Tower City means Forest City would stay in the ownership group to profit from it in the future — or to share in the pain if no gains are to be had. Similarly, since Forest City owns multiple suburban malls as well as shopping centers in New York City and San Francisco, it might have leasing connections with retailers that might be useful for Hertz, which has less depth in the shopping center business. Alec Pacella, an investment sales expert who manages Beachwoodbased NAI Daus, said any buyer of parts of Tower City would not be a typical real estate investor. “They have to be an operator,” Pacella said. “It’s the most complicated building downtown. There are interrelationships (below ground) between the different buildings, parking and the (Greater Cleveland Regional Transit Authority) rapid station. With this combination of easements, access ways and air rights you’d have to be a very handson operator to want to get involved in it.” Do Forest City execs feel any pain at putting most of Tower City on the market? The company spokesman, Linton, said the property is “obviously close” to the company but said that as a professional developer it has always been a seller of assets. “It’s not like they are going away,” Linton said of the buildings.

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PUBLISHER:

John Campanelli (jcampanelli@crain.com) EDITOR:

Elizabeth McIntyre (emcintyre@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Keep building The phrase “world class” gets tossed around casually in all sorts of contexts, usually to describe something that’s not quite at that level. Cleveland is fortunate enough, though, to have some assets — the orchestra, the art museum, the health care institutions — that genuinely merit the term. One thing they have in common: their presence in, or close proximity to, the vibrant University Circle area. If you haven’t been to University Circle in a while, by all means check out the package of stories in this week’s issue coordinated by sections editor Amy Ann Stoessel. (Or better yet, go there for a visit. You won’t be disappointed.) The stories paint a portrait of a true neighborhood benefiting from the full scope of city life, from arts institutions to schools, and hospitals to new residential developments and transit assets. There’s still work to be done to make University Circle an even better place to live, work and play. As Lillian Kuri, program director for architecture, urban design and sustainable development at the Cleveland Foundation, says in a story you’ll find on Page One, “We’re on the cusp of a lot of great progress, but have put in motion things to make this a district unlike any other.” One more encouraging sign for the area came from the MidTown Cleveland Inc. economic development nonprofit. That group last week hired Jeff Epstein to be the first director of the Health-Tech Corridor, an umbrella organization that promotes development along the East Side spine between downtown and University Circle to health industry businesses. Epstein, who has been a vice president of the Coral Co., a Cleveland commercial and residential real estate developer, will develop a business and marketing strategy for the corridor. He brings the ideal background to the job. And he has a lot to work with, as the Health-Tech Corridor, which was created by a group of foundations and nonprofits including BioEnterprise, already is home to more than 130 technology companies. We look forward to watching the progress Epstein and others make in building the Health-Tech Corridor into another — dare we say it? — world-class asset for Cleveland.

Dogged pursuit More than 12,500 people now call downtown Cleveland home, according to Downtown Cleveland Alliance. And still more are on the way, as 1,000-plus residential units, at properties including The Residences at 1717 and The 9, are slated to come online in the next two years. Market rate apartment occupancy downtown now tops 98%, DCA estimates. But here’s how we know downtown’s a hot ticket: an online fundraising campaign has launched to raise money to build a dog park at Settlers Landing Park, on the eastern bank of the Cuyahoga River. The campaign is being run by Tackk, a Cleveland web design startup. DCA says it will match every donation, dollar-for-dollar, up to $10,000, to create a space that would serve the estimated 1,000 dogs who live with those 12,500 humans downtown. You don’t have to be a dog lover to recognize services like this are a hallmark of a healthy, growing city where people are comfortable and want to live. Think of it as further unleashing downtown’s potential.

FROM THE PUBLISHER

City’s global perspective is shortsighted Back in 2008, then-new Philadelphia unique. Since 2010 alone, more than 30 Mayor Michael Nutter set a goal to incities and states have launched immicrease his city’s population by 75,000. grant-welcoming initiatives. They inLike Cleveland, Philly saw its populaclude Detroit, Cincinnati and Dayton. tion peak in 1950 … and then hemorCleveland is not one of them. rhage for decades afterward. We have groups, foundations and inWhen he dug into the data, Nutter nodividuals in town working hard to atticed that while his city was losing net tract, connect and welcome immigrants population, it was gaining for— most notably Global Cleveeign-born residents, especially land and its funders — but this younger ones. immigrant-attraction thing reNutter made it one of his quires widespread support. goals to open the City of BrothThat’s because it isn’t easy. erly Love to immigrants. He First off, there aren’t that signed an order requiring all many immigrants out there. city departments to have a Only about a million green “language access” plan for cards for legal permanent reshelping residents who spoke idency are issued every year. limited English. He formed a Second, immigrants often task force to come up with JOHN choose a city because of famiways to help immigrants settle CAMPANELLI ly members, friends and the into the city. And he created an current immigrant communiimmigration and multi-cultural affairs ofty already there. In other words, immifice within City Hall. grants bring more immigrants. Less than In general, the city whose fans gained 4% of Cleveland’s population is foreigninfamy for booing and throwing snowborn, compared with about 12% in Philly balls at Santa Claus worked to warmly (and more than 30% in Cleveland in welcome new Americans. 1920). The results? In 2011, Philly reported its We have all been celebrating “New first population growth in 60 years. In Cleveland” this summer — the RNC, Le2013, the city was up about 105,000 in toBron, new development, downtown tal population, shattering Nutter’s initial population growth, the Gay Games — goal. but on immigration the “Old Cleveland” Philadelphia’s efforts are hardly mindset seems to remain, insular and

provincial. It’s not that we are anti-immigrant, it’s just that luring foreign-born residents doesn’t seem to be much of a priority for many of our leaders, even as our population and tax base continue to bleed. Every spring, we let hundreds of smart, tech-savvy and entrepreneurialminded foreign-born graduates walk off the stages at local universities … and into buses, cars and planes bound for other cities. These are tomorrow’s employers, customers and business partners. It’s going to take a monumental fullcourt press to make Cleveland a popular destination for immigrants. We’ll need plans, people, policy, programs, cooperation, infrastructure and lots more. But most important, we need the will. We need political leadership that recognizes the benefits — economic and cultural — that immigrants bring a city. They should be leaders who can quickly and bravely shout down the myths that immigrants are job-stealers or one-party voters. Leaders with the vision of Mayor Nutter who can imagine what 40,000 or 50,000 more immigrants might mean to our community and economy. This summer has shown us all that Cleveland’s secret is reaching the nation. Why not go global?

TALK ON THE WEB Re: More on standing desks There are situations when a standing workstation can be “ergonomically correct,” and there are circumstances with a standing workstation can be detrimental. We help companies decide which is best. (We don’t sell them). I dare you to give one to a pregnant woman with orthopedic problems. Someone will ... “make you pay.” — Lee Mayer

Re: Algal blooms in Lake Erie Actually, with the high cost of fertilizer it is being used more responsibly all the time already. Maybe some more riparian buffers

might help. The zebra mussels are the primary cause and rapidly became invasive and grew to enormous populations in the early 1990s. Note the timing of the return of cyanobacteria (toxic algae). The problem is the mussels have a feeding preference for the nontoxic beneficial algae, to the point of expelling unused ones to the bottom of lake. Nature abhors a vacuum, so the algae that are left to really dominate the lake environment in a manner reminiscent of hospital diseases are the toxin producing forms. They really need a predator or disease to control the mussels. — Keith Pritchard We don’t have any Asian Carp yet, and I don’t understand how a zebra mussel

causes algal blooms. Climate change, fertilizers, heavy rain, combined storm and sanitary sewer system, those are easily identifiable causes. — Robert Chalfant

Re: Recent tech megadeals We need the Cleveland entrepreneur who says, “I’m gonna be the buyer, not the seller!” — Robert Salmon

Re: A downtown Cleveland dog park? This is awesome. Another great step toward making downtown Cleveland a place you’d like to live. — Donna Bernsdorf

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PERSONAL VIEW

Union rules force changes By RICK HEPP

The National Labor Relations Board is set to make the final moves in a strategy seemingly designed to expand union representation in the private sector. Under the Obama administration, the NLRB has systematically reinterpreted and expanded labor laws through a series of decisions and new rules. This, in itself, is not necessarily surprising. Unlike courts, which tend to hew to the precedents of earlier cases in deciding outcomes, it’s not uncommon for the NLRB to modify how labor rules should be applied after a new party takes office. The news here is that, in this case, the five-member NLRB is putting its efforts to strengthen unions ahead of its mission to protect employee rights. Section 7 of the National Labor Relations Act, which is the very heart of labor law in the United States, says that employees “shall have the right to self-organize, to form, join or assist labor organizations … (and) the right to refrain from any or all of such activities.” Section 7’s entire focus is on employees, not unions or employers. Yet, the NLRB is expected to implement new union elections rules within a few weeks that will dramatically limit an employee’s ability to receive information before having to cast a vote for or against union representation. Once in place, these new “quickie” election rules will, in most cases, require ballots to be cast within 14 to 21 days of a union filing a representation petition. The average time now is 38 days, a historic low. This shortened timeframe will make it virtually impossible for employers to effectively publicize information about the benefits of remaining union-free once an election petition is filed. Two to three weeks just isn’t enough time for employers to communicate their message in a way that allows employees to thor-

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Hepp is an associate in the Employment & Labor Group at Benesch Friedlander Coplan and Aronoff. Benesch is representing the National Association of Manufacturers, National Restaurant Association and National Waste & Recycling Association as amici curiae in a case titled Browning Ferris, Inc. (Case No. 32 RC 109684), in which the NLRB is considering the parameters of the joint employer doctrine. oughly consider the issues involved. More importantly, it will force employees to make decisions without being able to vet both sides of the argument. In essence, the NLRB is saying the union is here to help — trust them. The board also is considering whether to broaden the 30-year-old definition of “joint employer,” which could fundamentally alter the way businesses utilize temporary employees through staffing agencies and expand through franchise agreements. Traditionally, businesses have been considered joint employers when they actively share control over the terms and conditions of an employee’s employment. If that’s the case, those businesses are on the hook for any unfair labor practices involving their shared employees. Now, however, NLRB General Counsel Richard F. Griffin is urging the board to broaden the definition to cover businesses that indirectly or potentially control the terms and conditions of a staffing agency’s or a franchisee’s employees. While it might appear slight, this change would mean that businesses could be held liable even though they had no involvement in the staffing agency’s or franchise owner’s employment decisions. Griffin previewed his version of the joint employer definition last

month in a case involving McDonald’s USA LLC. He claimed McDonald’s USA and its franchisees were jointly liable for the firing or discipline of franchisee employees who participated in protests calling for higher wages, even though McDonalds USA said it has no control over how its 3,000 independent franchisees hire, fire, schedule or pay their employees. The consequences of this new definition will be dramatic for the franchise industry and for businesses utilizing temporary employees. It also will have significant consequences for those who work in those industries. The National Association of Manufacturers, National Restaurant Association and National Waste & Recycling Association have all warned that any joint employer definition that includes the indirect or potential control of a worker would compromise their members’ ability to operate and “provide employment opportunities in a stable, predictable environment.” In other words, those businesses may be forced to find a model that doesn’t subject them to liability. That’s not good news for the millions of people currently working for staffing agencies and franchisees. Employers will need to assess how to deal with these new rules. With the new election rules, employers will need an ongoing union-free program and a rapid-response team that can be launched as soon as union organizational activity occurs. Employers also will need to analyze how and when they engage leased employees to make sure they aren’t unwittingly exposing the business to liability. It is not an impossible task. But at the very least, it will mean that employers will have to shift time and resources toward risk management and away from growing their business, which is not good for anyone, particularly the employees.

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UNIVERSITY CIRCLE

BUILDING A NEIGHBORHOOD

REBECCA R. MARKOVITZ

A cultural mecca, for many Vibrant medical, educational and arts district draws diverse population of residents By CHRISSY KADLECK clbfreelancer@crain.com

elcome to the fastest-growing employment district in NorthW east Ohio and the city’s fastest-growing residential neighborhood outside of downtown. It’s no surprise and certainly no accident that this square mile is in its third wave of growth and development, said Chris Ronayne, president of University Circle Inc., the nonprofit that has led the strategic advancement of University Circle by leveraging anchor eds, meds and arts organizations and helping to develop a spectrum of residential projects that capture a growing number of professionals, millennials and internationals. In fact, UCI is on track to accomplish its goal set in 2007 to create 1,000 new housing units in 10 years. “It really is a showplace for re-energizing an urban community,” he said. “It’s been strategic, building off improvements like the Euclid Corridor, building off the millennials’ return to cities, building off internationals’ interest in being a part of a transit-oriented neighborhood and working off strategic policy initiatives like the Greater Circle Living program to incent workers to live here.” The Greater Circle Living program offers one month’s free rent or up to $30,000 in forgivable mortgage assistance to those who move to University Circle or adjacent neighborhoods. Ronanye’s more than proud to rattle off an impressive list of job and population gains that have been essential building blocks of University Circle’s transformation into a vibrant mixed-use dis-

trict that rivals coveted live-work-play metropolitan areas. “This city feels like a cosmopolitan 21st century, diverse, international, transit-oriented walking city,” he said. “In our neighborhood of University Circle, you could be in Shanghai, you could be in New York, you could be in Chicago, you could be in Bogota, but you’re in Cleveland. It’s exciting.” From 2000 to 2010, the area grew 17% from its base population and is now home to some 9,366 residents. Demographic trends show the area is drawing those who are younger and international, Ronayne said. “But the reality is we are diverse in race and age, and we’re one of the most diverse in the state of Ohio,” he said. Recent data from one new development in the area revealed that 95% of residents were from outside the state and coming to go to school or work at one of the institutions, and of that total, 25% are from out of the country. Job growth in the “eds and meds” has led to an increasing population, according to Ronanye, who added that it’s growth “we have captured in this marketplace by providing quality upscale new product or renovated product in an exciting neighborhood … We think we’re up over 50,000 employees now.” Think physicians, nurses, researchers, specialists, university professionals, fellows, residents, hospital administrators and graduate students, among many others. “Circulating in this district is what we call the complete neighborhood where everything can be accessed including a job in a See LIVE, page 18

Trading their house in the suburbs for a three-story townhome in the heart of University Circle is just the residential about-face Fred and Nissa Franks plan to make this fall with their children. The urban switch-up dovetails perfectly into the couple’s desire to drive less, walk more and offer their boys – 6 and 7 – an engaging homeschool education surrounded by arts and culture. Living across from a baseball field doesn’t hurt either.

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Efforts gel to connect communities, institutions Greater University Circle Initiative aims to balance interests of residents with goals of ed, med giants By LEE CHILCOTE clbfreelancer@crain.com

At a recent Wade Oval Wednesday concert, a large, diverse crowd from across Greater Cleveland danced to Latin music, ate ice cream cones and took advantage of free health screenings offered by the Cleveland Clinic and University Hospitals. This summer, University Hospitals launched Step Up to University Hospitals, a new program geared toward helping job seekers who live in and around University Circle find jobs at the institution. UH is partnering on the program with the nonprofit Towards Employment and the community building initiative Neighborhood Connections. On Chester Avenue in the neighboring Hough neighborhood, the Finch Group just broke ground on 177 units of new market-rate housing. The Upper Chester project ultimately will consist of more than 300 apartments and storefronts, and the developer plans to hire local residents. These are just three of the projects helping to connect the neighborhoods adjacent to University Circle with the district, tearing down walls that once divided the institution-rich area from its neighbors and helping to create opportunities for residents. The net effect, say advocates, is that the Circle has widened, becoming stronger and more inclusive. Since 2005, when institutions, the city of Cleveland and nonprofit leaders launched the Greater Uni-

Physical development

ANCHOR DISTRICT COUNCIL COALESCES Like Cleveland, many cities have large anchor districts or â€œsecond downtowns,â€? where major hospitals, universities and cultural institutions are located. The Uptown District in Cincinnati, Midtown in Detroit and Oakland in Pittsburgh are examples. And, in recent years, these districts have emerged as powerful drivers of the new urban economy. A few years ago, these anchor districts started banding together into a new council that serves as a learning exchange. On the heels of a 2012 conference hosted by University Circle Inc., leaders from these districts began meeting and traveling to each otherâ€™s cities in order to learn from best practices and also to exchange ideas. â€œWhat weâ€™re finding in the cities weâ€™re studying is that the growth pockets are the eds-and-meds arts districts â€” and that in some cases, theyâ€™re growing faster than the traditional financial districts,â€? says Chris Ronayne, UCI president. versity Circle Initiative, the effort has spurred millions of dollars in physical development, created several new worker-owned companies through the Evergreen Cooperatives and helped employees to finding housing in the area. â€œWeâ€™ve seen success as the hub of an innovation district, but the

Ronayne believes there are lessons to be learned from organizations like UCI, which has leveraged the areaâ€™s real estate assets to provide shared public services, including a police force. Anchor districts everywhere are models for economic growth, he says, with institutions like the Cleveland Clinic spinning off startups and growing the economy. â€œIf you have eds and meds, then you have growth opportunities,â€? he says. â€œItâ€™s all about leverage â€” taking a hub of innovation driven by eds, meds and arts and making it grow.â€? This fall, the Anchor District Council plans to hold its 2014 meeting in Midtown Detroit. Up to this point, the council has been unincorporated and managed by existing staff. Ronayne says leaders will begin looking at ways to formalize the council, including creating a website, developing an advocacy agenda and potentially hiring staff. â€” Lee Chilcote real measure lies in how weâ€™ve moved the needle in terms of community development in areas around us,â€? says Chris Ronayne, president of University Circle Inc. â€œWhen we look back 30 years from now, weâ€™ll be asking the question, how did we impact the neighborhoods?â€?

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Historically, there has been a great divide between the prosperity of University Circle institutions and impoverished neighborhoods such as Hough, Glenville and Fairfax. Local residents complained that institutions had built up walls around their castles. â€œIf you look at how they developed their campuses, they really turned their backs on the neighborhood,â€? says India Pierce Lee, program director for neighborhoods, housing and community development with the Cleveland Foundation, one of the drivers behind the Greater University Circle Initiative. â€œThere was an enclave of institutions, with the neighborhoods around them.â€? Yet thatâ€™s slowly changing. Lillian Kuri, program director for architecture, urban design and sustainable development with the Cleveland Foundation, points to several physical development projects that have better connected residents with University Circle. She also points to the fact that the term Greater University Circle has been widely adopted by residents and the Cleveland Planning Commission. â€œWeâ€™re breaking down those historical, physical and psychological barriers,â€? she says. For example, the $88 million Uptown project has resulted in a new grocery store, Constantinoâ€™s Market, where none existed. The redevelopment of the Mayfield and Cedar Road RTA stations is making the area more accessible. And the reconfiguration of the traffic circle at East 105th Street and MLK Jr. Drive â€” once nicknamed â€œSuicide Circleâ€? because of its hazards â€” is making the community more pedestrianfriendly. Ronayne points farther afield, to the Heritage Lane housing development in Glenville, the Circle East townhome project in East Cleveland and the Upper Chester project in Hough as examples of how the physical geography of University Circle has widened. The HealthTech Corridor has attracted hun-

dreds of new jobs to Midtown, and the Opportunity Corridor project could help attract new businesses to East 105th. â€œIn terms of community development, weâ€™re just getting going,â€? he says. â€œWe can create (housing) that works for Cleveland Clinic workers and long-standing residents of Hough.â€?

Live, buy and hire local Another goal of the Greater University Circle Initiative has been to encourage more employees of institutions to live in the immediate area. In 2012, only 4,500 Greater University Circle employees, or 5% of the total, lived in University Circle and the surrounding neighborhoods, according to a 2013 report prepared by the Cleveland Foundation. Since 2005, the Greater Circle Living program has helped about 300 people to find housing in the neighborhood. A little more than half of these have received incentives, including a free month of rent, forgivable loans and matching grants for exterior repairs. Leaders say these modest numbers should improve in the wake of the housing crisis. The same report stated that in 2012, the institutions spent 28% of their collective $3 billion in purchasing power on goods and services provided by suppliers in Cuyahoga County. Approximately half of that was spent on companies located in Cleveland. Finally, the Greater University Circle Initiative places an emphasis on helping more local residents find employment opportunities. Unemployment in these neighborhoods is about 25%, but Lee says itâ€™s higher if one includes individuals who have stopped looking for work. To help create more local buying and hiring opportunities, the Greater University Circle Initiative has invested in the Evergreen Cooperatives, a group of worker-owned startups that now includes a green laundry company, a green energy startup and a 3.25-acre hydroponic greenhouse. The initiative has also

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funded NewBridge Cleveland, a job training and youth arts program. Heidi Gartland, vice president of government and community relations with University Hospitals, says UH alone has invested $1 million in NewBridge and $1.25 million in Evergreen Cooperatives. The new Step Up to University Hospitals program, which was launched last year, has resulted in 42 local hires with an 84% retention rate. “So goes the neighborhood, so goes Cleveland,” she says. “If we have neighborhoods that have high unemployment and low levels of education, then we’re going to wither.” The final goal of the Greater University Circle Initiative is to better connect residents, workers and institutions within Greater University Circle and make sure they have a voice in community planning. The Cleveland Foundation tapped Neighborhood Connections, a grassroots grant-making and community building effort, to lead programs to build networks in the community. Neighborhood Connections has helped organize innovation teams, which spur residents and institutions to build on neighborhood assets; organized communal dinners to bring neighbors together; and sponsored a “Neighbor Up” night to promote collaboration. “How do we bring people together and say, ‘It’s not us against you, it’s us together,’” says Tom O’Brien, program director of Neighborhood Connections. “We’re trying to create a space where there’s a level playing field and those relationships can happen.”

THE FORMIDABLE INFLUENCE OF UCI Chris Ronayne, president of University Circle Inc., has a letter on his desk from Robert Moses — the planner who shaped modernday New York City — to Elizabeth Mather, the Cleveland philanthropist who helped create UCI in 1957. In the letter, Moses advises her to create a plan for the area’s growth and sustainability. Mather not only followed his advice, she had the foresight to create an organization that served as a land bank for area institutions. The leaders that followed her took it a step further, creating a police force, helping to plan new development, offering free educational programs and advocating for residents and institutions. Today, University Circle is one of the fastest-growing employment centers in Ohio and a nationally-touted example of creative place-making. UCI has grown into a sophisticated nonprofit organization with a $10 million annual budget, a 75-member board of directors and a police force that’s as large as many suburban ones. UCI is unique because each of its more than 40 member institutions has a seat on the board and contributes to the budget. About one-third of UCI’s funding stems from institutions, onethird from philanthropy and one-third from real estate services. Ronayne likens UCI’s structure to the U.S. Senate — yet promises it’s much better at getting things done. “The smallest institutions have a seat at the table with the biggest, just like Connecticut has a seat at the table with Texas,” he says. “I love that, because I know that the Music School Settlement needs as much as the orchestra in terms of place-based services.” Whereas the organization that Mather created was primarily a land bank, today UCI is helping to develop some of the most exciting real estate projects in Northeast Ohio, including the $65 million Uptown development and new housing in the Circle. “Our development agenda has been to take the empty pieces between institutions and revitalize them,” says Ronayne. “Years ago, the view of the highest and best use was parking. In the 21st century, the view of the highest and best use is development.” — Lee Chilcote

UNIVERSITY CIRCLE INC. MEMBERS: The Sculpture Center The Temple-Tifereth Israel The Mt. Sinai Health Care Foundation The Children’s Museum of Cleveland The Church of the Covenant University Circle United Methodist Church Cleveland Hillel Foundation Inc. Magnolia Clubhouse Inc. The Western Reserve Historical Society Pentecostal Church of Christ Judson Retirement Community American Heart Association The Cleveland Museum of Art Cleveland Sight Center Cleveland Museum of Natural History Cuyahoga County Medical Examiner’s Office Artist Archives of the Western Reserve American Cancer Society Maximum Accessible Housing of Ohio Musical Arts Association Cleveland Hearing & Speech Center Cleveland International Piano Competition The Music Settlement Hawken School The Junior League of Cleveland Inc. Montessori High School at University Circle The Cleveland Institute of Art University Circle Inc. Cleveland Botanical Garden University Hospitals of Cleveland Mt. Zion Congregational Church Ambleside Towers The Cleveland Institute of Music Case Western Reserve University MOCA Cleveland Cleveland Friends Meeting Cleveland Public Library Free Medical Clinic of Greater Cleveland Ronald McDonald House of Cleveland Inc. Center for Dialysis Care Inc. Gestalt Institute of Cleveland

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Strategic development key to future growth By STAN BULLARD sbullard@crain.com

Commercial development with new stores and apartments that has recast University Circle the last four years is encountering its next challenge: a dearth of available empty sites that are under the control of University Circle Inc. and ready for development, or sites that are underutilized within its square-mile domain. Much of the building action at University Circle was stoked by developers putting projects on sites that University Circle Inc., which oversees area development and provides services in the Circle, had under control in a land bank through which UCI began accumulating property in 1957 for institutional expansions. Originally the land bank was intended to ensure that institutions would have room to grow in the Circle. However, in 2009, UCI’s board authorized its staff to try to spur retail and residential development to refresh the Circle and transform it into a full-fledged neighborhood. Eight properties, all locations that might have someday become valuable to UCI members, were made available to developers. The results ranged from the Courtyard by Marriott, 2021 Cornell Road, and Uptown, a mixed-use project with retail and rental apartments at Euclid Avenue and Mayfield Road, to the Hazel 8 Apartments at 1608 Hazel Drive. Just three sites under UCI’s control remain available for real estate development: two straddle the Cleveland Institute of Art’s Joseph McCullough Center, 11610 Euclid, and the other is on Stokes Boulevard near Carnegie Avenue. However, Chris Ronayne, president of University Circle Inc., calls the shortage a good problem to have and already sees how the area will retain its hard-fought development momentum. “Our next frontier is either in the air or in adjoining neighborhoods,” Ronayne said. He said the Euclid sites that UCI controls are suited to dense, multi-story development. However, on Stokes, the sloping topography of the sites likely will

UNIVERSITY CIRCLE RESIDENTIAL/INFRASTRUCTURE CONSTRUCTION COMPLETED, CURRENTLY FOR SALE OR LEASING NEW RESIDENTIAL Hazel 8, Hazel Drive One- and two-bedroom, single-floor and multi-level floor plans Circle 118 Townhomes, East 118th /Euclid Avenue Sold out project 118 Flats-Circle & 118 Flats-Square, East 118th One-bedroom units just north of the Circle 118 Townhomes CircleEast Townhomes, Euclid Avenue 20 two-bedroom, 2½ bathroom, three-level townhomes with attached garages (In East Cleveland, but a project of UCI) Uptown Phase I, Phase II, Euclid Avenue Multi-use development, including one- and two-bedroom units and studio living as well as student housing for the Cleveland Institute of Art th

Wade Park townhomes, East 118 Five upscale townhomes, ranging from 1,700 to 2,000 square feet th

University Place Townhomes, East 118 Eight townhouses, 10 rowhouses and a coachhouse

limit the heights of potential projects on those parcels to three stories.

High hopes Although the carefully orchestrated development of sites that UCI controlled launched the district’s new activity, the next round of projects may depend on the ability of real estate developers to identify viable locations for additional projects. Examples of that traditional real estate development know-how already are starting to be seen. The biggest example is at the current home of the Children’s Museum of Cleveland, 10730 Euclid. That is where developers Mitchell Schneider, CEO of Lyndhurst-based First Interstate Properties Inc., and Sam Petros, CEO of Broadview Heights-based Petros Homes, have proposed building a more than 20-

RESIDENTIAL-PROPOSED OR UNDER CONSTRUCTION

INFRASTRUCTURE-UNDER CONSTRUCTION OR COMPLETED

One University Circle, near the current site of the Children’s Museum High-rise apartment tower with plans for about 280 apartments

Cedar-University Rapid station Little Italy-University Circle Rapid station HealthLine

Intesa, near Mayfield Avenue and 117th Street A $110 million office, retail and apartment project in a twin, 10-story tower complex

Opportunity Corridor E.105/MLK roadway reconstruction

118 Flats-Oval, East 118th Another planned phase of the 118 Flats development, to the north of 118 Flats-Circle and 118 Flats-Square

story apartment tower dubbed One University Circle. The plan calls for about 280 apartments that will be in a structure taller than the 200-foot W.O. Walker Building next door and below the 260-foot height permitted by the parcel’s zoning. Schneider said the height was not driven by the need to get a large number of units on a small parcel. Instead, he said, the 20-story height came from the desire to fit the context of University Circle with a building that would have “unparalleled” views of the area. The project would also require rents in the range of $2 a square foot that the city is only now reaching. High-end rents are necessary to cover construction costs that escalate astronomically as buildings rise above the three-story level because of the need for larger foundations and structural supports. “Yes, we will be coming in at the top of the market in rents. We will not be at the top of the market in terms of the number of people who want to live there,” Schneider said. New apartments at such a rarefied height are planned in only one other location in the region, on upper floors of The 9, the Streetsborobased Geis Cos. conversion of the 21-story former Ameritrust Corp. skyscraper to a hotel and apartments downtown. “We believe that there is a significant depth of jobs and income,” Schneider said, “with the right demographic of empty nesters, wellpaid academics and doctors who can afford a wonderfully appointed apartment within walking distance of what University Circle has to offer.” The other side of the dynamic driving such scale is simple, according to Petros. He notes the $2,000 monthly rent in suites in the building is less than the property tax bill of some prospective tenants who would be downsizing from large homes in nearby Shaker Heights and Cleveland Heights.

Site selections The other strategy is to locate available or underutilized properties in or near University Circle. Although finding fresh sites nearby is new for the Circle, it is part of the regular drill for every new project that real estate developers undertake. Consider Fairview Park-based WXZ Development Co.’s next project on East 118th Street in University Circle. WXZ already has built the Circle 118 project at East 118th and Euclid Avenue and just north of there has just finished 17 units at what it calls the 118 Flats project. However, it has pieced together on its own the next site for its developments on East 118th. WXZ acquired five homes on East 118th on the north side of the entrance to East Cleveland Cemetery. That site, where four of the homes have already been demolished will become a second phase of the 118 Flats that will add another 30 units to the Circle. WXZ plans to soon seek city approvals to develop the additional suites, according to WXZ CEO Jim Wymer. Construction of new institutional buildings or other projects also change the nature of what kind of development is possible at the Circle by changing its context. WXZ has seen this first-hand. New dorms and a playing field completed by Case Western Reserve University several years ago proved crucial for WXZ. “There was a time when we started on East 118th that there was a feeling we were outside of the Circle,” Wymer said. “The (CWRU) development has changed the street’s perception in the market.” University Circle-fostered development is also pushing west, most prominently along Chester and Euclid avenues. Boca Raton, Fla.-based Finch Group, which helped kick off the apartment rush in the Circle by

Photo: University Place Townhomes construction Source: University Circle Inc., Crain’s research

installing luxury rentals in the Park Lane Villas, is constructing in a joint venture with Ozanne Construction Co. of Cleveland a six-story apartment complex at 10001 Chester Ave. The 177 suites are technically in Cleveland’s Hough neighborhood. However, the suites will be marketed to typical University Circle tenants: medical residents, graduate students and postgraduate researchers. Similarly, Chicago-based developer John Murphy plans to build a 274-room Holiday Inn on a site leased from the Cleveland Clinic Foundation at Euclid Avenue and East 86th Street. That project will go up almost 10 blocks west of the Circle’s western edges.

Up or out Those projects lend credence to Ronayne’s feeling that there are opportunities for projects “all around the dial” from University Circle. Those projects will serve the market that University Circle tenants create and help transform blighted but land-rich neighborhoods surrounding the Circle. “Gone are the days of turf politics in Cleveland,” Ronayne said. “We’re now in an era of spacebased planning.” Real estate developments in neighborhoods such as Fairfax, Hough and Little Italy will continue to have their own identities but will also benefit from the jobs created by institutions at University Circle. How far can those developments reach beyond the Circle? The key constraint may be how close each site is in walking distance to the Circle’s institutions and how close they are perceived to be to the Circle. “We will all find out how far we can push that boundary,” Wymer said. “There are already dwindling opportunities within the boundary of University Circle.” In other words, there is no choice to go up or out from the Circle.

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Specialty shops sprout up as neighborhood prospers By JUDY STRINGER clbfreelancer@crain.com

Big-name developers and University Circle anchor institutions are not the only ones basking in the glow of the neighborhood’s new life. Dozens of new businesses are sprouting up in and around University Circle, feeding off expansions of the area’s venerable health care, education and arts organizations and ambitious development projects like Uptown. The number of small businesses in University Circle alone — not counting growth just outside of this one-square-mile area — has doubled in the last two years, according to Laura Kleinman, vice president of services for University Circle Inc. (UCI). Kleinman, who oversees the Uptown Business Association, said the bulk of those companies are retailoriented, including new shops, boutiques and eateries, where the growing population of residents and visitors can enjoy “anything from macaroons and ice cream to fine dining.” Homegrown Constantino’s Markets opened a store in the Uptown development in 2012. The first two years had been a bumpy ride for the Cleveland-based grocer, said Constantino’s University Circle general manager Andrew Revy. The neighborhood had not been home to a grocery store in about 60 years, Revy said, and established residents were accustomed to shopping elsewhere. Such habits do not change overnight, he said. Then there is the “massive amount” of development and construction around the University Circle store, Revy said, which sometimes made it difficult for customers to access it or parking. Still, Revy is optimistic about the direction of University Circle and Constantino’s future there. “All the projections we did, and the economic studies that pointed to prosperous operations there, are

all true, but we were just a little bit ahead of schedule with those economic projections,” he said. Part of his optimism also stems from neighborhood-building initiatives that are giving a boost to small businesses in and around University Circle. University Hospitals, for one, has committed to buy 80% local. While that is more of a regional pledge, entailing suppliers all over Northeast Ohio, it certainly translates into more opportunities for University Circle businesses, from daily catering and landscaping needs to construction services for the neverending list of renovation projects, said Mary Beth Levine, vice president of system resource management at UH.

Sweet developments Revy and shop owners Shane and Britt-Marie Culey, who opened Coquette Patisserie across from the Cleveland Institute of Art early this year, count the local institutions among their catering clientele. Shane Culey said his French confection shop recently delivered a large pastry order for nearby Cleveland Hearing and Speech Center. He has also done business with divisions of CIA and Case Western Reserve University. “There is most definitely a supportive relationship between the large institutions and the little guys like us,” Culey said. Local business owners say recent gains, however, are more likely tied to the overall growth of University Circle as a place to live, work and visit rather than buy-local strategies cropping out of the neighborhood’s anchor institutions. Culey points to anecdotal evidence like an increase in sightings of “scrub-wearing” customers and more couples and families stopping into the shop before or after visiting local museums. In neighboring Little Italy, local photographer David Schwartz has

seen foot traffic at his studio increase as more residential and commercial tenants move into University Circle. That is especially exciting, he said, since the development is not complete and because UCI and the Uptown Business Association are actively helping local small companies capitalize on the momentum. For her part, Kleinman said the recent additions have brought many of the products and services needed to support a thriving neighborhood, but more is to come. Meanwhile, much of what it still lacks — an auto body shop, for example — can be found in one of the adjacent communities. University Circle is not an island. Supporting businesses and development around its edges is another way to encourage prosperity within the Circle, she said. “It’s important to look at the broader corridor, because we are all connected,” Kleinman said.

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UNIVERSITY CIRCLE PICTURING A NEIGHBORHOOD From the new Museum of Contemporary Art Cleveland (top) to colorful residential construction like Circle 118 (pictured), today’s University Circle is becoming a place to live, work and play. PHOTOGRAPHS BY REBECCA R. MARKOVITZ

LIVE continued from page 13

20-minute walk,” he said. “There are a lot of people living and working in the district who are attracted to a high-density, walking, transitoriented neighborhood. We also have empty nesters and young professionals working downtown but living in the Circle.” The Franks are a great example of that. Fred, 33, who works as the chief information officer for FIT Technologies downtown, said the couple was interested in moving closer to his job and slashing his long commute from Bath Township. Once they move into their University Place townhouse he plans to sell his car and take the RTA’s HealthLine or bike to work. Since Nissa, 31, homeschools their boys they had the freedom to

buy in any nearby neighborhood without having to worry about proximity to public or private schools. “We see it as a good investment and we really love the location because it’s across from the Case campus. We have the cemetery behind us and it feels like there is a lot of green space over there and nice walkable streets,” Nissa said. “I can walk 10 minutes and be at the botanical garden, art museum or natural history museum. Everything that I could need is right out my front door. I could walk to Constantino’s market. If I don’t feel like making lunch I can go to Panera. Or if I am having a dinner party, I can go grab some flowers at the corner. It just seems simpler than getting the car out and loading in the kids.”

LIVING IN THE CIRCLE: Trained musicologist and guitarist Roxy DePue, 47, was thrilled to ditch his more than two hours of commuting when he moved into his contemporary Uptown apartment in December. DePue’s upscale onebedroom apartment is only a short walk to his day job in patient services at the Cleveland Clinic, which allows him to devote his newfound free time to practicing his instrument, working out and exploring new musical opportunities in the cultural neighborhood.

From Honolulu, Hawaii, Heejin Kang moved to University Circle six years ago to pursue her doctorate in piano performance at the Cleveland Institute of Music (CIM). The Korean-born, 29-year-old lived in the Triangle high-rise apartments for the first five years. Once she graduated from CIM and was asked to join the faculty there and teach at Case Western Reserve University, she was able to move up to the next level of rental living without leaving the Circle.

Stem cell research on cardiovascular diseases attracted Dr. João Pedro Lopes, a cardiologist from Portugal, to move to Cleveland and take a one-year position as a research associate at the Cardiovascular Research Institute at CWRU in 2011. Lopes, who was asked to continue his work at CWRU and plans to apply for a medical residency and stay in Cleveland, said it has been exciting to witness the transformation of his University Circle neighborhood. “I love Cleveland and this area of the city is a really good place when you need to grow scientifically and personally,” said Lopes, who lives at University East Apartments. “All the restaurants, the new Museum of Contemporary Art, all the great assets in terms of culture but also in terms of architectural beauty, this area has become completely remodeled and more and more beautiful by the day since I first moved here.”

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DOWNIE PHOTOGRAPHY

Music lovers congregate during Wade Oval Wednesdays, a free summer concert series at Wade Oval in University Circle.

NEIGHBORHOOD continued from page 1

Circle is a roughly one-mile stretch about three miles east of downtown. However, the community’s social fabric is influenced by the dynamic neighborhoods that surround it: Fairfax, Glenville, Hough, Little Italy and others. The Circle isn’t bound by a particular ethnic group or defined by a single institution. Instead, it’s a cultural melting pot with a slate of powerhouse institutions — in many cases, competing ones — that create a sense of place unmatched in the region. “University Circle is one of the most unique neighborhoods in Ohio because of its diversity, international flare, architecture, density,” said Chris Ronayne, president of University Circle Inc. “University Circle is a place of memory. It’s a place everybody has a story about — a first date at the botanical garden or a first beer at Euclid Tavern.”

A place to live, work, play Since 2000, a few billion dollars have been invested in University Circle. Anchor institutions like the Cleveland Museum of Art, the Cleveland Botanical Garden, Case Western Reserve and University Hospitals have pumped millions of dollars into their own campuses. At the same time, outside investors have pumped millions into new housing and entertainment options in the area. Take the $65 million, mixed-use Uptown development that’s slowly transforming the once-dead, no man’s land at the core of University Circle into one of the city’s most exciting urban enclaves. Also, University Circle Inc. is working with two prominent Cleveland-area developers to build a $130 million residential high-rise on a site occupied partially by the Children’s Museum of Cleveland. The project — One University Circle — calls for a building of 25 to 28 stories with about 280 units ranging in size from 720 square feet to a 4,200square-foot penthouse. Transportation has long been one of the biggest barriers to making University Circle a well-rounded place to live, though efforts are underway to remedy that situation. One of those new projects under way is a $17.5 million, Little ItalyUniversity Circle rapid station at Euclid Avenue and East 120th street. “Living next to fixed-rail transit

accessibility has become a core value in why a neighborhood becomes successful,” said Lillian Kuri, program director for architecture, urban design and sustainable development at the Cleveland Foundation, whose support for transportation planning spurred more than $1 million in support for engineering studies for three transportation initiatives near University Circle. “We’re on the cusp of a lot of great progress, but have put in motion things to make this a district unlike any other,” she said.

matters aren’t helped by the fact that the neighborhood’s anchor institutions are some of the region’s major employers. One effort under way to ease that issue includes University Circle Inc. and Cleveland Heights encouraging the 3,300 people who live in the Heights and work in the Circle to make the trip in something other than single-occupant vehicles. About 75 years ago, Ronayne

said University Circle would have been described as a complete neighborhood. That impression faded in time, especially in the wake of World War II when throngs of people vacated urban cores across the country for the suburbs. “When you think about it, people haven’t thought about this place as a neighborhood for most of the last century,” he said.

But in many cases, that’s changing. Sure, there’s still plenty of work to be done, but a big reason for University Circle’s growth is the willingness of the local anchor institutions — the museums and hospitals, specifically — to work together for the betterment of the entire neighborhood. “The whole tenor of the culture is evolving in a very positive way,” Ford said.

Completing the circle University Circle Inc. believes what defines a complete neighborhood is a place where people can achieve everything they need in their daily living within a 20-minute walk. That could include a grocery store, housing, a variety of school choices and access to health care. Based on those metrics, University Circle could be characterized as a complete neighborhood. And if any of those needed daily amenities aren’t yet in place, they’re likely well on the way. “You can get the things you need in every day life increasingly, but not completely,” said Terry Schwarz, a neighborhood planner and director of Kent State University’s Cleveland Urban Design Collaborative. “It’s starting to coalesce.” For one, Schwarz said University Circle has plenty of great civic spaces — the cultural gardens, the art museum’s atrium, the courtyard outside the Museum of Contemporary Art, for example — but none of them seem to have been shared by the public like, say, Central Park in New York or Public Square in downtown Cleveland. Also, safety will continue to be an issue, or at least a perceived one, much like downtown Cleveland. Matters weren’t helped earlier this summer when a group of Case students were robbed at gunpoint in a university building. The event led university officials to launch a new crime-prevention program, which included the addition of new security officers to the area. University Circle has its own full-service police department that works with all of the local anchor institutions’ security forces. Also, while the new transportation options could ease the crunch, parking remains another issue in the densely populated area. Those

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AUGUST 18 - 24, 2014

CRAINâ€™S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

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RESEARCHED BY Deborah W. Hillyer Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.

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20140818-NEWS--22-NAT-CCI-CL_--

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RCF Group buys two local COUNTY office furniture dealers continued from page 5

By STAN BULLARD sbullard@crain.com

There’s a new force entering Northeast Ohio’s office interior supply market. RCF Group of West Chester, a suburb of Cincinnati, is the new owner of the former Cuyahoga Cos. of Lakewood and S. Rose Co. of Cleveland. RCF will operate both companies under its name. It acquired both because they are Haworth office furniture dealers, the same brand that RCF carries, according to Scott Robertson, RCF chairman. He said RCF wanted to enter the Cleveland market because of its size and the number of businesses based here with national and global furnishing requirements. Clark Rose, the seller of S. Rose, will remain with RCF, which will consolidate both operations at the S. Rose Co. building, 1213 Prospect Ave. Tom Pons, the former owner of Cuyahoga Cos., is not staying with the consolidated operation. The combined firms will create an office with about 25 employees. Robertson said RCF will not reduce staff because it wants to grow sales here and likes the talents of the office designers, project managers and other personnel the predeces-

Contact: Phone: Fax: E-mail:

sor owners had in place. Part of the reason RCF was interested in doing business in Northeast Ohio, Robertson said, is because it has been a long-term supplier to KeyBank. Indeed, it was KeyBank that introduced RCF, a certified minority business, and Rose. Poppie Parish, KeyBank senior vice president of diversity and inclusion, said in a news release announcing the combination, “Their story shows how important it is for the rest of the community, including companies like KeyBank, to support business growth, advocate for diversity and foster economic inclusion.” RCF plans to occupy the S. Rose Co. building until it sells. Robertson said RCF plans to shift to a more efficient one-floor layout in an office/warehouse property after the downtown building trades. The four-story S. Rose Co. building has an asking price of $1.55 million, according to a listing by Cushman & Wakefield Cresco of Independence. While Haworth is its office furnishing line, Robertson said, RCF carries other items for outfitting offices from some 5,000 different suppliers. RCF also operates businesses related to office interiors, from managing moves to landscaping.

Denise Donaldson (216) 522-1383 (216) 694-4264 DDonaldson@crain.com

county services. Rather, he sees the subject of the pilot as a kind of preventive service that can avoid resorting to more expensive traditional services like foster care and homeless shelters. “We spend all this money, and few (children) ever get home,” he said. “We’ve tried everything.” Merriman said the county is looking at committing $4 million to develop the program and it hopes it can reduce by 25% the length of foster care stays.

Investing in community A key to this and similar programs is developing fair and accurate ways to measure success, which, in turn, sets the rate of return on any investment. The county is working with Frontline Services, a Cleveland nonprofit that already contracts with the county’s Alcohol, Drug Addiction & Mental Health Services Board, to set the benchmarks for success for a family unification program that could attract private funding.

AUGUST 18 - 24, 2014

The funders likely would be foundations and banks, both of which already make community development investments with public agencies in hard assets such as real estate improvements or affordable housing loans. This pilot program already has caught the

“We spend all this money, and few (children) ever get home. We’ve tried everything.” – David Merriman Deputy chief of staff for health and human services, Cuyahoga County interest of several local foundations, which see Pay for Success as a way to stretch their spending on social service programs. The Cleveland-based Gund Foundation has been involved in the New York program and is advising Cuyahoga County in developing its pilot program. Banks might invest in this program as they invest in community development programs — as a way

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to satisfy their regulatory obligations to meet the banking needs of low- to moderate-income neighborhoods. In New York, a program was created to tackle recidivism among 2,000 recently released prison inmates. Most of the $13.5 million needed to start the program came from Bank of America and Merrill Lynch. In Massachusetts, the state, with help from Third Sector Capital, developed a program to keep at-risk young men leaving the juvenile justice system from returning to the adult justice system. Caroline Whistler, a co-founder of Third Sector Capital, said the funding is very much like high-risk loans and represents another way that foundations, banks and others can reinvest in their communities. “They are ways for banks, for community impact investing lenders, to innovate with new programs,” she said. “The hope is you get your moderate interest back, but it’s not going to be financially lucrative” like investing in a hedge fund.

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AUGUST 18 - 24, 2014

THE WEEK AUGUST 11 - 17 The big story:

Cleveland Clinic announced plans to build a $276 million cancer facility, which will unite much of the cancer care currently scattered around the Clinic’s campus east of downtown Cleveland. The 377,000-square-foot, seven-story facility will be north of Carnegie Avenue between East 102nd and East 105th streets adjacent to the Crile building. The Clinic expects to break ground on the facility Sept. 29 and hopes to have it complete in early 2017. The new facility will unite all of the treatment care teams — organized by disease group — on its main campus in one central facility.

New in town: The prospective buyer of most of Tower City Center is Hertz Investment Group, a Santa Monica, Calif.-based specialist in downtown office towers with a taste for landmarks and markets overlooked nationally. Hertz has been working on a deal with Cleveland-based developer Forest City Enterprises for almost a year, according to one of three sources who identified Hertz as the bidder. Hertz, founded in 1977, has a portfolio of 48 office buildings, representing upwards of 15 million square feet of office space. Representatives of Hertz and Forest City would not comment.

Package deal: The owner of Ranpak Corp. in Concord Township agreed to sell the packaging manufacturer to private equity firm Rhone Capital. New York-based Odyssey Investment Partners did not disclose terms of the sale of Ranpak, which has more than 430 employees worldwide. The Wall Street Journal, citing a source familiar with the deal, reported that the transaction values Ranpak at $900 million, including debt. The transaction is expected to be completed in the third quarter. Well, well, well: Cleveland-based Bravo Wellness secured a $22 million investment that its leaders say will help it get even bigger. The investment from ABS Capital Partners, a venture capital firm with offices in Baltimore and San Francisco, will allow the wellness company to add more staff, more service offerings and perhaps enable it to take on more office space at its headquarters on Cleveland’s southwest side, according to Bravo Wellness chairman and CEO Jim Pshock. As part of the deal, ABS will take minority ownership of Bravo Wellness. The parties wouldn’t disclose the size of the stake. Cut out: Jo-Ann Fabric and Craft Stores of Hudson said Travis Smith is out as president and CEO, a post he held for about three years. The company said its board of directors “is undertaking a comprehensive search to identify a replacement” CEO. Kerr Jim Kerr, the company’s executive vice president and chief financial officer, was named interim CEO while continuing as CFO. A Jo-Ann news release did not state a reason for Smith’s departure. Margaret Skinner, JoAnn’s director of corporate communications, said the company would not comment beyond the release.

Billion here, billion there: With a bank account bursting from strong returns on investments, the Ohio Bureau of Workers’ Compensation proposed a second $1 billion rebate to the 200,000-plus employers who pay premiums into the system for injured workers. Gov. John Kasich calls it the “Another Billion Back” program. The first $1 billion rebate program ran last year. The rebates are possible because BWC’s investment portfolio is showing a return on investment of 8.9% over the last three years, including 13.3% for the first six months of 2014. If approved by the BWC board, eligible private and public employers would receive a rebate equal to 60% of premiums paid during the policy year of July 1, 2012, through June 30, 2013. See editorial cartoon, Page 10

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CRAIN’S CLEVELAND BUSINESS

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Seidman Cancer Center plots growth as demand grows

A career in the trades requires a tradeoff

University Hospitals’ highly regarded Seidman Cancer Center is continuing to spread its wings. Without offering many details, Dr. Nathan Levitan, the cancer center’s president, told Crain’s there were three or four more cancer centers in the works. At present, there are 15 Seidman Cancer Center locations beyond UH’s main cancer hospital on Euclid Avenue. Some of those are in wholly owned facilities, while others — like the one at Mercy Cancer Center in Elyria — aren’t owned by UH. Mercy Cancer Center is part of Mercy Health, the state’s largest health system formerly known as Catholic Health Partners. “There’s not a significant revenue stream that flows back,” Levitan said. “It’s a relationship that’s focused on the care.” The Seidman Cancer Center has been one of UH’s fastest-growing service lines. In 2011, the health system opened its freestanding, $260 million cancer hospital. It has since opened a handful of outpatient locations throughout the region, including sites at UH Parma Medical Center, formerly Parma Community General, and St. John Medical Center in Westlake. — Timothy Magaw

For men without college degrees, it might make more sense to move into a so-called pink-collar job rather than risk male-dominated fields like manufacturing or construction. At least if they’re craving stability. Janette Dill, a University of Akron sociology professor, and her colleagues analyzed U.S. Census Bureau data to compare how low-skilled men in male-dominated occupations fared in comparison to men in health care-related roles that don’t require a four-year degree and are dominated by women, such as nursing assistants or administrative workers. The verdict? “It’s kind of a tradeoff,” Dill said. “You get lower wages in these health care jobs, but you have greater job stability. If you have a blue-collar job, you’ll likely have higher wages but higher susceptibility to being laid off or unemployment.” That doesn’t mean men craving stability are flocking toward nursing assistant openings, particularly because of the stigma that these roles are only suited for women, Dill said. With that in mind, men are moving into more frontline-allied health jobs, including surgical tech posts and other related positions that often require a two-year degree or some sort of certificate. Dill and her colleagues will present their research Tuesday, Aug. 19, at the American Sociological Association’s annual meeting in San Francisco. — Timothy Magaw

The Google Street View team tours Kent State University.

You’ve likely heard how much Kent State’s campus has changed over the last few years, and if you haven’t had a chance

to see the improvements first hand, Google is here to help. The university is the first in Northeast Ohio to have its campus added to Google’s Street View for University Campuses. A Google Maps crew recently visited Kent State’s main campus for two days to take more than 4,600 photos of the campus — even areas not accessible by vehicle. In some cases, cameras were mounted on backpacks. “This feature will allow someone who may be interested in Kent State to literally tour the campus from the comfort of their own home,” said Justin Hilton, Kent State’s senior associate vice president for university relations, in a news release. “They can walk our entire campus, and it is completely interactive and shows 360 degrees.” Kent State also had a little fun with the project. The university said the Google crews captured hidden items on camera throughout the tour, which will allow the university to host virtual scavenger hunts for prizes. To view Kent State’s campus and others — including Northwestern University, the University of Michigan and Duke University — visit tinyurl.com/ozxfujx. — Timothy Magaw

WHAT’S NEW

BEST OF BLOGS

You won’t need a weekend for these campus visits

Excerpts from recent blog entries on CrainsCleveland.com.

Firing up the imagination

COMPANY: The Kennedy Group, Willoughby PRODUCT: ChatterAds The Kennedy Group, which helps customers package, promote, identify and track their products, has partnered with plastic bag and film products maker Hilex Poly to create ChatterAds, which the companies describe as “a removable, portable message delivery system that secures to plastic bags in retail, grocery, hardware, mass merchant, QSR and convenience stores.” ChatterAds, essentially, is an “in-hand billboard that turns … plastic bags into an opportunity” for marketing, The Kennedy Group says. “With consumers facing today’s media overload, traditional message options can be easily overlooked,” according to the company. “ChatterAds ensures messages reach consumers, whether the goal is immediate coupon redemption, driving customers to other departments within the store, visiting the store’s website, or return trips to the store.” Patrick Kennedy, vice president of sales and marketing for The Kennedy Group, says ChatterAds designed for functions including retailer and vendor product promotion; third-party advertising partnerships; brand advertising; retailer-specific coupons; store openings; private label; and drive-through windows promotion. For information, visit: www.chatterads.com.

Northeast Ohio entrepreneur Garett Fortune is among startup operators nationwide seizing marijuana-related business opportunities as more states move toward legalization, according to The New York Times. Fortune runs a company called OdorNo, which makes odor-proof bags for human and animal waste. The Times said the idea for a new venture came from tragedy: his brother was found to have cancer in early 2013, and “it was so advanced that all he could do was to try to live out the remainder of his life in as little pain and discomfort as possible.” Marijuana, Fortune said, significantly reduced his brother’s need for pain pills. That gave Fortune the idea for a business. “With more states legalizing marijuana for medical uses — and, in Colorado and Washington, recreational ones — Mr. Fortune identified one of the industry’s challenges: packaging,” The Times said. “The old standby, the resealable plastic bag, was not sufficiently effective, especially for a regulated industry.” The story noted that he then “proposed a new product, odor-proof and child-resistant marijuana bags, to OdorNo’s advisory board. He expected the members to laugh him out of the room, but they did not.” In May, The Times reported, Fortune “licensed out production and distribution of OdorNo, and he and his team began building FunkSac in Denver.” FunkSac bags still await government approval, but Fortune told The Times that he has hundreds of thousands of orders from cultivators, dispensaries and wholesalers. He said he has been contacted by dispensaries in 17 of the 22 states where medical marijuana was legal. “Right now,” Fortune told the newspaper, “it’s like drinking from a fire hose.”

Auto austerity Say this for the Midwest: If you own a car, this is the cheapest region of the country in which to operate it. A new survey from Bankrate.com factored in the annual costs of gasoline, insurance and repairs to quantify how much it costs, on average, to operate a car in each state. In Wyoming, a typical driver spends $2,705 per year to operate his or her vehicle, due largely to the $1,588 average gasoline expense. By contrast, the cheapest state was Iowa, where the average driver spends just $1,942 per year. Ohio was second-cheapest, at $1,973. The national average is $2,223. Four of the five least-expensive states were in the Midwest. In addition to Iowa and Ohio, there were Illinois ($1,999, good for No. 3 on the cheapest list) and Wisconsin ($2,018, No. 5 on the list). Bankrate.com said Ohio has the secondcheapest insurance costs in the country — 23% below the national average — as well as relatively inexpensive car repair costs.

Fulfilling a quest for fun Lakewood is getting a new bar later this month, called The Side Quest. Nothing unusual there; Lakewood has lots of bars. This one, though, comes from Sam Bridgeman, the man who writes the Every Bar in Lakewood blog, in which, well, he attempts to visit and document every bar in Lakewood. He describes The Side Quest as “destination for all things geek, nerd and beer.” In a news release, Bridgeman said the bar will offer 24 craft beers on draft and will feature food designed to be eaten with one hand — all the easier for patrons to play games that can be loaned out to play at the bar, including Munchkin, Settlers of Catan, Scrabble and Life. There will be lots of “console gaming, geeky TV shows … trivia, theme nights, lecture series and live television programming,” Bridgeman promised.

20140818-NEWS--24-NAT-CCI-CL_--

8/15/2014

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Crain’s Cleveland Business is proud to join Northeast Ohio’s business community in supporting

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