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Jakprints has a showy storefront, but behind the scenes, Cleveland company is so much more — P. 3 Team NEO is an organization in ‘transition,’ and it’s attempting to reverse disappointing trend — P. 3
THE PRICE OF PLAYING
CONTRIBUTED PHOTO
NCAA’s ‘out of date’ football attendance mandate makes it difficult on the likes of Akron and Kent State
By KEVIN KLEPS kkleps@crain.com
When the Kent State University athletic department completed an audit of football ticket sales after the 2014 season, it had surpassed the magic number of 15,000 per game. For some schools, meeting the NCAA mandate — which requires that the 125 programs in the Football Bowl Subdivision post an average paid attendance of at least 15,000 once in a rolling two-year period — can involve using every trick in the book.
Schools sell thousands of discounted tickets to corporate partners, knowing a good share of the seats will go unused. Others buy the tickets themselves — as the University of Akron did in 2013. The Zips posted an average attendance of 17,850 that year, but to get to that figure, they had to purchase nearly 57,000 tickets at $10 each. “They find ways to get around the intent of the rule,” said Todd Turner, the founder and president of West End, N.C.-based Collegiate Sports Associates, and a former athletic direc-
tor at four major Division I institutions. “So therefore it hasn’t become an issue. But let’s be honest, it’s not the intent of the rule.” The rule originally required that NCAA Division I-A football programs play in a 30,000seat stadium and average 17,000 fans per game once every two years. In 2002, the stadiums were taken out of the equation, and the attendance requirement was dropped to 15,000. Turner, whose company did a recent assessment of Kent State’s athletic programs, said the rule is “out of date and needs to be
revisited.” Universities that don’t meet the mandate receive a notice of noncompliance, as Kent State did after it recorded attendance norms of 8,999 and 10,639 in 2007 and ’08, respectively. The NCAA rulebook states that “further noncompliance with the Football Bowl Subdivision requirements within a 10-year period shall cause the institution to be placed in restricted membership.” But creative accounting — whether it’s See PRICE, page 24
OneCommunity sells Internet business to raise cash Everstream to receive $50M for its war chest; nonprofit gets sustainable income By CHUCK SODER csoder@crain.com
It takes a lot of money to become a major Internet service provider — even if you only operate in one region. That’s a big reason why OneCommunity plans to sell most of its ultra-fast fiber-optic network and the for-profit subsidiary that runs it. Two private equity firms plan to invest $50 million in that subsidiary, Everstream Solutions LLC. The subsidiary’s new majority owner will be M/C Partners of Boston; J.P. Morgan Asset Management also bought a stake. The deal will give the company a
bigger war chest to compete against much larger Internet service providers in the area. And it will give OneCommunity a guaranteed revenue stream that will allow it to fund other programs designed to help local organizations find new ways to use super-fast Internet speeds — the goal being to give Northeast Ohio digital advantage over other regions. That mission drove the 12-yearold Cleveland-based nonprofit to build the high-speed Internet service in the first place. Now, however, OneCommunity wants to get out of the telecommu-
nications business. Not only does it suck up a lot of the organization’s time and attention, but it’s a capital-intensive business. And as a nonprofit, OneCommunity couldn’t raise that capital from investors. But Everstream could. While OneCommunity traditionally has focused on selling Internet service to schools, hospitals and government agencies, Everstream was founded to sell that service to businesses. Everstream — which was incorporated in 2012 and launched in 2014 — is profitable, and it’s start-
ing to attract Fortune 500 customers, according to Everstream CEO Brett Lindsey. But profits can do only so much to finance the growth ambitions of a young company in the fiber Internet business. After all, Everstream has to lay new fiber every time it hooks up a new building. “We have … an almost insatiable need for capital,” Lindsey said. The new cash will allow Everstream to expand faster. For instance, Everstream plans to use some of the cash to expand its network in Beachwood, Avon Lake, See ONECOMMUNITY, page 25
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Small Business Matters i Want more information and resources on this week's topics, ideas and events? Go to www.cose.org/smallbizmatters.
PRESENTED BY
52 TIPS FOR YOUR BUSINESS
#37 – Stretch Your Content Resources Further *VU[LU[ THYRL[PUN VY JYLH[PUN HUK KPZ[YPI\[PUN OPNOS` ZWLJPÄ J JVU[LU[ TLHU[ [V PUZWPYL J\Z[VTLY HJ[PVU PZ HSS [OL YHNL [OLZL KH`Z 1H` )HLY WYLZPKLU[ VM THYRL[PUN JVUZ\S[HU[ *VU]PUJL *VU]LY[ JP[LK KH[H last week during the Content Marketing >VYSK *VUMLYLUJL [OH[ VM I\ZPULZZ [V JVUZ\TLY Ä YTZ HYL JYLH[PUN TVYL JVU[LU[ [OHU H `LHY HNV -\Y[OLY VM I\ZPULZZ [V I\ZPULZZ Ä YTZ HYL KVPUN [OL ZHTL HJJVYKPUN to research from the Content Marketing Institute and Marketing Profs. ;OL WYVISLT ^P[O [OH[ LZWLJPHSS` MVY ZTHSS I\ZPULZZLZ PZ OV^ [V MLLK [OL JVU[LU[ ILHZ[ PU H I\KNL[ MYPLUKS` ^H` ;OH[Z ^OLYL JVU[LU[ H[VTPaH[PVU JVTLZ PU )HLY ZHPK K\YPUN H ZLZZPVU HIV\[ JVU[LU[ H[VTPaH[PVU 0U H WOYHZL content atomization is the practice of stretching `V\Y JVU[LU[ HZ MHY HZ P[ JHU NV PUJS\KPUN YLJ`JSPUN P[ VU V[OLY WSH[MVYTZ HUK ZWPUUPUN V additional pieces of content from one idea. Finding additional places for your content to live is essential. Baer revealed data that
found that 85% of Internet time is spent on 15 or fewer websites. “The chances of your website being one of JPHSS` š OL ZHPK HKKPUN [OH[ [OVZL PZ V
PZ ^O` Ă„ UKPUN HKKP[PVUHS WSH[MVYTZ VU ^OPJO [V JH[JO WLVWSLÂťZ H[[LU[PVU PZ ZV JY\JPHS One example of creating these additional JVU[LU[ WSH[MVYTZ! )HLY ZHPK OPZ Ă„ YT JYLH[LZ ISVNZ WLY ^LLR [^V LHJO KH` ,HJO ^LLR [OL JVTWHU` [HRLZ P[Z [VW WLYMVYTPUN ISVNZ HUK has someone record an audio version of it by YLJP[PUN P[ (UK Q\Z[ SPRL [OH[ H WVKJHZ[ PZ IVYU “Content atomization creates resources V\[ VM [OPU HPY š OL ZHPK 0U MHJ[ )HLY YLSH[LK [OH[ L]LY` TPU\[L SVUN ]PKLV OL OHZ ZOV[ VU OPZ P7OVUL OHZ JYLH[LK HKKP[PVUHS WPLJLZ VM content. The additional platforms his content SHUKZ VU PUJS\KL @V\[\IL H ]PKLV WVKJHZ[ HU H\KPV WVKJHZ[ OPZ WLYZVUHS -HJLIVVR WHNL OPZ JVTWHU` -HJLIVVR WHNL H ISVN 3PURLK0U LTHPS :SPKL:OHYL HUK 4LKP\T “Trying to do one big idea is like trying to JH[JO SPNO[UPUN PU H IV[[SL š OL ZHPK
September 14
By The Numbers ;V H]VPK YLK\UKHUJ` [OL JVTWHU` YVSSZ [OL JVU[LU[ PU ^H]LZ Z[HNNLYLK HJYVZZ WSH[MVYTZ (SZV JVUZPKLYPUN [OL H\KPLUJL MVY each platform is important. “The audience for Medium and the audience for SlideShare is ]LY` KP LYLU[ š OL ZHPK Splitting up your big pieces of content into smaller pieces of content also helps amplify `V\Y JVTWHU`ÂťZ TLZZHNL ¸0[ NP]LZ [OL PTWYLZZPVU [OH[ `V\ÂťYL L]LY`^OLYL š OL ZHPK 7LYOHWZ Q\Z[ HZ PTWVY[HU[S` MVY ZTHSS I\ZPULZZLZ JVU[LU[ H[VTPaH[PVU TH_PTPaLZ YLZV\YJLZ ¸@V\ JHUÂť[ VUS` KV THQVY WPLJLZ VM JVU[LU[ š OL [VSK [OL H\KPLUJL ¸0)4 KVLZUÂť[ OH]L [OH[ RPUK VM I\KNL[ 3V^LÂťZ KVLZUÂť[ OH]L [OH[ RPUK VM I\KNL[ š
Content Marketing
27 mil The number of content marketing pieces being shared every day
50% The amount of customer time spent engaging with custom content SOURCE: AOL/NIELSEN, HUBSPOT
Connection Calendar
TECH TALK
BUSINESS VALUATION AND PLANNING THE NEXT STEPS PRESENTED BY US BANK
How to Choose a Data Center Not all data centers are created equal. This is an unfortunate lesson learned by many business owners. )LMVYL ^L NL[ PU[V [OH[ SL[Z Ä YZ[ KPZJ\ZZ what is a Data Center and why it is important [V `V\Y JVTWHU`Z Z\JJLZZ HUK SVUNL]P[` A data center is a purpose built facility that houses your critical data. The size of your JVTWHU` KVLZ UV[ TH[[LY ^OL[OLY `V\ HYL H I\ZPULZZ ^P[O VUL LTWSV`LL VY H T\S[P UH[PVUHS worldwide organization – we ALL have critical KH[H [OH[ T\Z[ IL HJJLZZPISL ZLJ\YL HUK always available. However based on your ULLKZ HUK YLX\PYLTLU[Z MVY \W[PTL H]HPSHIPSP[` HUK ZLJ\YP[` [OH[ PZ ^OLYL KH[H JLU[LY ZLY]PJLZ can become complex. :VTL JVTWHUPLZ OH]L HU PU[LYUHS 0; *SVZL[ HUK JVUZPKLY [OH[ Z\
JPLU[ MVY [OLPY ULLKZ albeit their business related data and hardware HYL SVJH[LK PU HU \UZLJ\YLK LHZPS` HJJLZZPISL location with no redundant systems in place. -VY H I\ZPULZZ V^ULY [OH[ PZ H YPZR` WYVWVZP[PVU as any downtime can be catastrophic to your business and brand. 4VZ[ I\ZPULZZLZ YLHSPaL H[ ZVTL WVPU[ ^OL[OLY [OYV\NO [YPHS HUK LYYVY WLYZVUHS WHPU SVZZ VM J\Z[VTLYZ VY L_[LYUHS NV]LYUPUN requirements that they will need to house their Primary and/or Secondary critical data and ZLY]PJLZ H[ H T\S[P [LUHU[ KH[H JLU[LY ;OH[ ZV\UKZ ZPTWSL OV^L]LY UV[ HSS KH[H JLU[LYZ HYL JYLH[LK LX\HS 0M `V\Âť]L L]LY [V\YLK H IPN ZX\HYL MVV[ VY IPNNLY KH[H JLU[LY P[ JHU IL V]LY^OLSTPUN :LJ\YP[` WYVJLK\YLZ Q\Z[ [V NL[ PU [OL MYVU[ KVVY SV\K I\aaPUN VM ZLY]LYZ Z[VYHNL HUK UL[^VYR LX\PWTLU[ YV^Z HUK YV^Z VM JHIPUL[Z ISPURPUN SPNO[Z [OL ^OVVZO VM
Petar Bojovic, BlueBridge Networks JVVS HPY JHNLZ JHTLYHZ JHISPUN NHSVYL >V^ – because most data centers look similar from HMHY ^OH[ PZ VUL [V KV& This is where the business owner must perform some due diligence and make sure their business needs and requirements align to the products and services the data center is WYV]PKPUN /V^& >LSS OLYL HYL ZVTL RL` HYLHZ of interest that would factor into your decision. Products and Services. Does the data JLU[LY WYV]PKL SLHZLK ZWHJL VUS` VY V[OLY ZLY]PJLZ SPRL JSV\K JVTW\[PUN ZLJ\YP[` ZLY]PJLZ KPZHZ[LY YLJV]LY` HUK I\ZPULZZ JVU[PU\P[` L[J /H]L H NVVK \UKLYZ[HUKPUN VM ^OH[ [OL` JHU KV I\[ HSZV \UKLYZ[HUK ^OH[ [OL` ^VU[ KV ;OPZ PZ PTWVY[HU[ [V \UKLYZ[HUK [OL SPUL VM KLSPULH[PVU >OLU `V\ [OL I\ZPULZZ V^ULY HYL L_WLYPLUJPUN HU PZZ\L `V\ ^HU[ to make sure all roles and responsibilities HYL JSLHYS` KLÄ ULK ^P[O UV HTIPN\P[` [O\Z PUJYLHZPUN `V\Y TLHU [PTL [V ILPUN VWLYH[PVUHS Power. (ZR X\LZ[PVUZ VU WV^LY KLZPNU redundancies and uptime. The data center should have detailed information on all aspects
of the power distribution and infrastructure. Network. This item at times might be overlooked. Does the data center provide Internet services with multiple carriers for PUJYLHZLK H]HPSHIPSP[` HUK YLK\UKHUJ`& +VLZ the data center only provide connections KPYLJ[S` [V ;LSJV *HYYPLYZ& <UKLYZ[HUK JVZ[Z for these connections as these charges can add up. Preventative Maintenance. This item is JYP[PJHSS` PTWVY[HU[ 0]L SLHYULK H[ HU LHYS` HNL PU I\ZPULZZ [OH[ `V\ ^HU[ [V THRL Z\YL [OL JVTWHU` ¸KVLZ ^OH[ P[ ZH`Z ( NVVK ^H` PZ [V HZR MVY YLJVYKZ VY THPU[LUHUJL UV[PÄ JH[PVUZ and repair. Keep in mind mechanical systems ^PSS MHPS [OLYL PZ UV ^H` HYV\UK [OH[ MHJ[ however understanding the redundancies in WSHJL HUK WYVHJ[P]L HWWYVHJO JHU ILULÄ [ [OL business owner and ultimately their customers. Contracts and SLA. Review all terms and JVUKP[PVUZ HUK ZLY]PJL SL]LS HNYLLTLU[Z HUK negotiate terms if you feel uncomfortable. A 4\S[P [LUHU[ +H[H *LU[LY ZOV\SK ^VYR ^P[O you in crafting a service and conditions that ^VYR MVY `V\ 3L[Z MHJL P[ HSS JVTWHUPLZ HJ[ KP LYLU[ [OPUR KP LYLU[ HUK TVZ[ PTWVY[HU[S` HYL KP LYLU[ @V\ ZOV\SK HSPNU `V\YZLSM ^P[O H WHY[ULY [OH[ PZ Å L_PISL *LY[PÄ JH[PVU Ensure the data center MVSSV^Z PUK\Z[Y` YLJVNUPaLK JLY[PÄ JH[PVUZ HUK stays current. References. ;OPZ VUL PZ H UV IYHPULY" OV^L]LY HZR MVY IV[O J\YYLU[ HUK WHZ[ customers as references. PETAR BOJOVIC is Director of Operations of BlueBridge Networks in Cleveland.
NATIONAL PREPAREDNESS MONTH TIPS In recognition of National Preparedness Month this September, COSE will provide a preparedness tip of the week each week on the Small Business Matters page of Crain’s Cleveland Business. Today’s tip has to do with regular inspections.
Regular Equipment Inspections Perhaps the easiest way to prevent disaster from striking in your workplace is to get out in front of any potential mishaps. The Occupational /LHS[O HUK :HML[` (KTPUPZ[YH[PVU YLJVTTLUKZ V
JPHSS` UHTPUN JLY[HPU LTWSV`LLZ [V IL YLZWVUZPISL MVY [OL WYVWLY THPU[LUHUJL VM LX\PWTLU[ HUK Z`Z[LTZ 0TWYVWLY THPU[LUHUJL JHU SLHK [V LX\PWTLU[ THSM\UJ[PVUZ ^OPJO JHU YLZ\S[ PU PUQ\YPLZ [V LTWSV`LLZ Ă„ YLZ VY V[OLY JH[HZ[YVWOLZ CONTENT PROVIDED AND PAID FOR BY THE COUNCIL OF SMALLER ENTERPRISES
Knowing the value of your business is critical for your success when planning for the future. >OL[OLY `V\ÂťYL JVUZPKLYPUN ZLSSPUN `V\Y I\ZPULZZ VY JYLH[PUN H Z\JJLZZPVU WSHU WSHUUPUN MVY YL[PYLTLU[ VY L]LU MVY [H_ W\YWVZLZ ^L PU]P[L `V\ [V QVPU [OL L_WLY[Z at U.S. Bank for a workshop on understanding the value of your business.
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10TH ANNUAL COSE SMALL BUSINESS CONVENTION There are hundreds of reasons small business owners and entrepreneurs should attend the Small Business *VU]LU[PVU /LYL HYL Q\Z[ H ML^! -PYZ[ K`UHTPJ keynotes featuring powerful stories of people following [OLPY KYLHTZ V]LYJVTPUN HK]LYZP[` HUK I\PSKPUN successful empires remind you why you stepped V\[ VU `V\Y V^U :LJVUK TVYL [OHU LK\JH[PVUHS workshops designed around topics that meet your ULLKZ HUK HKKYLZZ `V\Y JOHSSLUNLZ -PUHSS` `V\ ^PSS make valuable networking connections at a packed [YHKLZOV^ KPUULYZ HUK JSVZPUN UPNO[ WHY[`
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Check out www.cose.org/events for all the latest happenings.
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
3
Transformed Team NEO is trying to fill the job gaps With region lagging behind others in state, organization is attempting to buck trend By JAY MILLER jmiller@crain.com
REBECCA R. MARKOVITZ
A wall full of product samples at the Jakprints facility, which owner Nick DeTomaso said is sometimes mistaken as merchandise for sale.
‘Little guys’ are doing big things in printing Jakprints started in Willoughby apartment, now expects to hit $30M in sales By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
The first thing customers see when they walk into Jakprints Inc.’s headquarters on Chester Avenue appears to be a retail store filled to the brim with vibrantly colored Tshirts. It’s not. Custom printer Jakprints styles its lobby as a hands-on area for potential clients to touch and feel the products. It helps the company cast a wider net for clients, said CEO Nick DeTomaso. Some people may be comfortable just taking Jakprints’ word that a product is good quality, but a large number of people want to see for themselves. When you’re buying in bulk, “you better like the way it fits and feels,” he said. The company’s first out-of-state location, which opened at the end of last year in Oceanside, Calif., takes a similar approach. And DeTomaso intends to open more storefronts across the country over time. Today, the printer that started in an apartment in Willoughby has about 275 employees, including more than 250 full-time employees in Cleveland. It had sales of close to $25 million in 2014 and is on track to hit $30 million this year, DeTomaso said. The company, which has grown from a simple screen printing shop to one that handles all kinds of apparel and paper products, was founded by Jacob Edwards and Dameon Guess in 1999. DeTomaso came on board in 2001 and moved up the chain, eventually becoming CEO. Today, Edwards is on the tech side, while Guess handles marketing and curating, DeTomaso said. And he holds down the headquarters at 3133 Chester Ave., which Jakprints moved to in 2005. “We were the little guys,” DeTomaso said. See JAKPRINTS, page 14
In the last 18 months Northeast Ohio has been hitting below its weight when it comes to attracting new jobs and capital investment to Ohio. Economically the largest region in the state, Northeast Ohio has not been keeping pace with other, smaller regions in Ohio in growing its business base, and it fares worse in comparison with the pace of growth nationally. That has led to a major reorganization of the way the region’s business and civic leaders try to attract new businesses and encourage existing businesses to continue to grow here, rather than elsewhere. In January, Team NEO, the 12-year-old nonprofit that broadly promotes business development in the region, merged with NorTech, a nonprofit that focused on nurturing technology-businesses. Team NEO also has become the regional business and civic community’s quarterback for coordinating economic and workforce development strategies. It took over execution of the Regional Economic Competitiveness Strategy, or RECS, the creation of an ad hoc group of civic leaders operating as the Regional Competitive Council. And the new organization took on a new boss. William Koehler, who has been the organization’s president and CEO for three months, said Team NEO is a new, transformed organization that is prepared to lead the region’s economic development system. He said its goal is to coordinate an effort by business and civic groups, and local governments, to rev up the region’s economic growth so it’s on par with the rest of the state and the country. A November presentation on RECS pointed out that had the region’s growth kept pace with the national economy over the last 25 years, Northeast Ohio would have 400,000 more jobs, and the average annual income of a worker would be $1,840 higher. “Our role as a regional organization is to lead, support and coordinate a lot of strategies that many (other economic development organizations) are employing over the region,” Koehler said during an hour-long interview at Team NEO’s office on Bolivar Avenue in the Gateway District. “We’re in a transition,” he said. “We’ve been challenged over time, but there is still tremendous opportunity out there if we choose to take the actions we need to take in order to achieve the goals we’ve set.”
‘A call to action’ CONTRIBUTED PHOTOS
Above, from left, Jakprints founders and owners Dameon Guess and Jacob Edwards, and CEO and owner Nick DeTomaso. At right, one style of T-shirts that the company prints for Nickelodeon.
Meeting those aspirations is a tall order for Team NEO, which has struggled to have the kind of success that younger organizations that play similar roles in the state’s other regions are having. Northeast Ohio’s 18 counties account for 35% to 40% of the state’s economy, depending on who is doing the measuring, and its businesses and nonprofit organizations employed 1.6 million people in 2012, according to U.S. Census figures. That’s 37.4% of the state’s private employment. Yet the region overseen by Team NEO contributed only 16.9% of the new jobs created in See TEAM NEO, page 26
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Visit weatherhead.case.edu/executive-education or call 216.368.6413 to learn more. Volume 36, Number 37 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2015 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: 212-210-0750 Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-9911, or email to customerservice@crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.
The city of Independence wants to be known as more than a bedroom community that is home to the largest part of the Rockside Road office corridor with a smattering of retail. It picked the developer of Hudson’s First & Main project and other big developments to make that happen. Given the scale of two city-owned sites that may be developed under the recently approved memorandum of understanding with Fairmount Properties of Cleveland — developer of the First & Main mixeduse project as well as the Flats East Bank Neighborhood and College Town | Kent — a major project may be in the offing. Planning studies commissioned by the city for a 33-acre property near Rockside Road and Oak Tree Boulevard see the site as a potential home for as much as 1 million square feet of mixed-use office, retail and residential property. The cityowned site of the former Independence Middle School on Brecksville Road might support a 40,000square-foot retail-office center and as much as 100 units of housing, according to Jeremy Rowan, Independence’s economic development director. However, the plan has many hurdles to cross before Fairmount and the city can spell out what’s on tap, said Emerick Corsi, a Fairmount managing director. “We’re just starting to dig into these properties,” Corsi said in an interview. “The city has a massing plan, but we need to do wetlands and other studies to determine how much of the land is actually developable. We also want to work with property owners adjoining the cityowned land on Rockside so that our plans coordinate with theirs.” Other landowners near the cityowned Rockside parcel control about 40 acres, which means the plan eventually could open the door to even more development. Dalad Group, an Independence-based real estate developer and owner with a major portfolio of land near Rockside and other portions of the southern suburbs along the I-77 corridor, did not respond to two emails about its reaction to the plan. Dalad has talked generally about developing its land near the city-owned land in the past. Corsi emphasized what Fairmount knows about both opportunities. “We want to get a vision of what can be developed and what can be built,” he said. “Look at where Independence is located. Within a 20minute drive, you can reach a million people. It already has a lot of great things going for it. The city has a great name as a home for corporate office space. What it needs is a new vision.” Corsi knows the site well as he grew up in neighboring Seven Hills. “There is some beautiful land
STAN BULLARD
The former Independence Middle School on Brecksville Road could be developed into a retail-office center and have 100 housing units. here,” he said.
Something old, something new Ironically, Fairmount was pursuing development of the smaller Independence Middle School parcel before the city showed it the possibility of undertaking the Rockside land, Corsi said. The middle school is in an area of Independence with a smattering of local-focused retail that flourished serving Independence and surrounding communities until Interstate 77 supplanted Brecksville Road as the main artery for northsouth traffic in the area. Substantial neighborhood and Rockside-focused retail continues to do well there. Corsi said Fairmount sees the old middle school site itself as a potential retail center with some office space above it. The old building probably will have to come down, he said, since its location would prevent effective redevelopment of the site. Behind that is another 16 acres that could provide single-family or townhouse properties. “This area lends itself to bringing back the town square concept,” Corsi said. He said he does not believe a project in the southern suburb would compete with Fairmount’s proposed Pine Crest mixed-use project in Orange Village, an eastern suburb. Dino Palmieri, owner of the Dino Palmieri Salon and Spa chain who also has a custom homebuilding business and does commercial and residential development, is Fairmount’s partner for the residential part of the downtown land. Palmieri confirmed he will partner with Fairmount on developing the vacant acreage east of the middle school for residential use. He plans to undertake the final housing developments himself. He sees it as an attractive site for large townhouses of more than 2,000 square feet such as he developed with Fairmount at Cedar Road and Fairmount Boulevard in Cleveland Heights and perhaps some single-family housing. “There are a lot of people in that area who have lived there for 40 years and want something new, but (they) don’t want to leave Independence or the area,” Palmieri said. “I’m excited about the idea.”
Palmieri said he may also consider a role with Fairmont on the Rockside land, but the Brecksville Road site is first up.
Big aspirations Fairmount was selected from a half-dozen real estate developers that the city discussed its goals with, said Rowan of Independence. The city did not do a formal request for proposals or qualifications because it went through an RFP (request for proposal) process for the middle school land a decade ago that came to naught. Before any development can proceed, the city and Fairmount have to flush out the development concepts and agree to a development agreement, which would deal with the question of how much or what Fairmount has to invest to get the projects off the ground. The city also has to draft and adopt planned unit development (PUD) zoning to accommodate both projects. If the PUD zoning includes any element of multifamily housing or cluster homes, that element will have to go to the voters. Fairmount, which partnered with Iris and Scott Wolstein to develop the Flats East Bank Neighborhood office, hotel, apartment and retail project in downtown Cleveland, has created a niche for working with cities, said David Browning, managing developer of CBRE’s Cleveland office. Browning said that not all developers are willing to work with as many stakeholders as it takes to engineer such a city-sponsored real estate development. Vern Blaze, Independence financial coordinator, said the city obtained both parcels because it wanted to set a new direction in its development. “We wanted to go to the market and show the city’s aspirations for the sites,” Blaze said. “Our $2.5 million investment (buying the Rockside site last year) gave us legitimacy,” he said. “We want to do something transformational. We want to attract more young professionals and keep empty nesters who may want to live in something walkable, but in a suburb that’s close enough to downtown Cleveland to enjoy its amenities.”
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Monopoly on Ohio marijuana market could be cloudy issue If ResponsibleOhio’s initiative passes, experts believe Ohio eventually would have a difficult time blocking the sale of pot from other states By DAN SHINGLER dshingler@crain.com
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If the federal government ever lifts its national prohibition of marijuana, ResponsibleOhio’s proposed monopoly on growing it in Ohio likely would go up in smoke. That’s because of the U.S. Constitution’s Commerce Clause, which reserves the ability to control trade between states exclusively for the federal government, constitutional scholars say. Ohio can do what it wants in terms of limiting what happens within its borders, they say — but not when it comes to trade from another state. “State and local governments cannot enact laws that discriminate against interstate commerce,” said Brannon Denning, a constitutional law scholar and associate dean and a professor at Samford University’s Cumberland School of Law in Alabama. “It would be discriminatory on its face, the way Ohio’s proposed amendment is written. … If someone in Colorado was growing and they wanted to sell it at a dispensary in Ohio, they could bring suit.” Such a grower could sue Ohio — and prevail — even if the federal government does not legalize marijuana nationally, but would be more likely to do so if the prohibition was lifted, say Denning and other scholars. And if courts ruled the way they have for more than 100 years on such matters, Ohio likely would lose, Denning predicted. Ohio, or any other state, could keep marijuana illegal altogether, but under federal law it could not make it legal for in-state growers and still keep out marijuana from other states. The issue could be a big one if Ohioans vote in favor of ResponsibleOhio’s ballot initiative in November. A vote in favor of the proposal would amend the Ohio constitution to make marijuana legal for medical and recreational use, but limit its production to 10 growing sites owned by ResponsibleOhio’s backers. That carve-out of Ohio’s industry for 10 financiers of a political campaign has raised hackles. Many have complained that the state should not grant a monopoly for marijuana or any other product to one group of individuals or businesses. But other legal experts agree with Denning that such a measure likely would be struck down as unconstitutional by federal courts, forcing Ohio to allow pot from other states to be sold here as well. “The states can’t interfere with interstate commerce. … That was maybe the main reason that the constitutional convention was called and met in 1787,” said Steve Lazarus, who teaches constitutional law at Cleveland State University. “The articles (of confederation) weren’t working and each state was setting up its own trade barriers to protect its own industries.” For example, Ohio could not al-
ISTOCK
low bourbon made in Ohio to be sold at state liquor stores, but then tell Kentucky distillers that they could not sell their whiskey here, Lazarus said. Indeed, Ohio about 10 years ago tried and failed to do something similar to protect its instate wine industry, when it prohibited shipments directly to consumers by out-of-state wineries, Lazarus said. “They didn’t give (out-of-state producers) the same privileges that in-state wineries got, so that was declared unconstitutional,” said Lazarus, who thinks the same law and logic would be applied by the courts against a state-supported monopoly on the Ohio marijuana market.
course, they say, with the states following close behind. Sooner or later, the federal government will catch up, says Jon Gettman, an associate professor of Criminal Justice at Shenandoah University in Virginia and a former national director of the National Organization for the Reform of Marijuana Laws (NORML). “I think by the (2016) presidential election this is going to be a pressing issue, and by the election after that this will be wrapped up,” Gettman said. “At a certain point, it will be a fait accompli with so many states legalizing it at the state level. It just won’t be so uncomfortable for the federal government to do something, and they’ll have less of a choice about whether to act.”
Grow with the flow Even Christopher Stock, attorney for ResponsibleOhio, thinks Ohio could have to accept pot imported from other states, if it were made legal both at the state level and nationally. “If the federal government says that marijuana is legal for personal use across the U.S. — all the (state) systems would have to capitulate,” Stock said. But Stock, who said his group really hadn’t given much thought to the interstate commerce clause, said competing with growers from other states might not be a bad thing. “If the federal government comes in and says this is legal across the board, then we’ve kind of done our job and would be happy to work in that new world,” Stock said. Such a scenario would work both ways, too, which means Ohio’s 10 growers would also be allowed to sell their product in other states. It’s all speculative right now, of course. The federal government has not lifted its prohibition and, currently at least, Congress does not appear as though it’s prepared to do so. But the same could have been said of gay marriage, say observers and proponents of marijuana legalization, and now it’s the law of the land. Public acceptance of marijuana legalization is following a similar
A head start But that doesn’t mean Gettman favors a ResponsibleOhio monopoly, or that he trusts the group’s backers to let things play out on their own. They will still have a dramatic head start on any eventual competition, in terms of technology, expertise, market share and also lobbying clout, Gettman said, even if their monopoly in Ohio only last a few years. “That’s a pretty significant period of profit making for a cartel,” Gettman said. “Then they could argue for a national system that mirrors their system. All sorts of things could happen.” Stock agrees that federal legalization looks likely, but said it’s too soon for ResponsibleOhio to begin worrying about competing with other states. “Gay marriage was like a hockey stick on a graph, and I think you’re seeing the same thing with marijuana,” Stock said. “It’s a little bit speculative when you talk about what the federal government is going to do … but it’s a very interesting question.” Denning thinks that if Ohioans pass ResponsibleOhio’s proposed amendment, the state should expect a fight. “Constitutionally, I think they’re potentially buying themselves a lawsuit,” he said.
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Local women take common path to unusual partnership By JEREMY NOBILE jnobile@crain.com
Walden Wealth Partners LLC, owned and operated by two Cleveland women, is bucking a national trend in the male-dominated asset management industry. Northeast Ohio natives Sarah O’Neil Hannibal and Karin Maloney Stifler both worked for large companies through their respective careers. Both grew up in Cleveland suburbs, studied at Miami University, moved away for work and returned to the region for new opportunities. Serendipitously, their paths first crossed at an educational seminar just a few years ago. They marveled at what they had common — both are also married and are parents to three boys — and saw an opportunity to realize their own dreams of starting their own wealth management business together. Hannibal most recently operated an independent Cleveland office for Chicago-based GEM Asset Management, while Stifler ran a similar operation through True Wealth Advisors in Hudson. Those local operations dissolved as Stifler and Hannibal combined their clients into the 100-person client base they opened Walden with in Solon, where they currently log $80 million in assets under management. They transitioned into their new business in June. The name is a nod to Henry David Thoreau, who wrote that “wealth is ability to fully experience life.� After working at large companies, each moved to midsize firms in search of how they could make a greater impact and, they say, help individuals experience that quality of life the transcendentalist author references. They saw that opportunity in working directly with individuals instead of one person in a multi-person team working with a massive company. “Big companies also direct things from the top down,� said Hannibal, whose past employers include Deloitte and J.P. Morgan. “There wasn’t much flexibility to do what you thought was the right thing to do.� In Walden’s business model, that “right� thing, the founding duo says, includes offering a fee structure they feel will appeal to new clients — particularly considering the growing awareness by the public of costs in asset management, which is helping drive an overall fee compression in the industry, and competition from new, robo-adviser services. The industry overcharges the highest worth individuals and “underserves� those in the lower end of the spectrum, Hannibal said. Walden’s model aims to combat that. Walden charges 0.8% of assets under management, a shade lower than the national standard of about 1%. They charge a minimum fee of $2,000 a quarter and have no tiered system for clients of varying wealth. Interestingly, they also offer a cap on charges, which would seemingly benefit ultrahigh net worth individuals. Industrywide, that’s rather uncommon. “That bubbled up out of that sense of what’s fair,� Stifler said. “The fees in our industry can be excessive at times, and we didn’t feel comfortable being a part of that.� Both declined to share projections for end-of-year incomes and said they haven’t pegged any specific growth goals, asserting they’re confident organic growth will come through word of mouth. They do no advertising or marketing beyond their company website. “We’re not trying to build an empire
here,� Stifler said. “We’re just trying to serve each client one at a time at our highest possible capacity.� Besides a business plan different from many others in the overall financial advising space, being wholly owned by a team of women also makes Walden unusual. The Cleveland region itself does have a rather strong history of women in asset management. A handful of firms here are owned or founded by women, including Spero-Smith Investment Advisers, which was founded in 1972 by Karen Spero. However, Walden may be the only firm of its kind in Cleveland with two women sharing ownership. Similarly structured companies with a pair of female leaders are
rare industrywide, considering the disproportionate presence of women to men in the field Only an estimated 12% of all financial advisers in the country are female, according to analytics from Cerulli Associates, a Boston-based research firm specializing in asset management. According to the Bureau of Labor Statistics, that’s still just about 26%. Not surprisingly, firms across the country are making concerted efforts to bolster their ranks with women and minorities. “Being a small-business owner in a male-dominated industry, there are some hurdles,� Stifler said. She added, “We both feel good about modeling for our sons that women can reach their career dreams, too.�
CONTRIBUTED PHOTO
Sarah O’Neil Hannibal, left, and Karin Maloney Stifler
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Behind Premier’s humble home is burgeoning biz Developer stayed busy during downturn and is thriving now By STAN BULLARD sbullard@crain.com
BE WHERE YOU WANT TO BE
Drive too fast after exiting Interstate 77 southbound at Grant Avenue and you’ll miss the driveway for Premier Development Partners LLC, a potent player in Northeast Ohio property and construction markets. The other reason you might miss it is that one of the region’s largest real estate developers and designbuild contractors is in an unassuming office adjoining a large industrial building with multiple tenants that’s owned by an affiliate of one of Premier’s principals, Spencer Pisczak. It’s not a high-toned address or showy surroundings favored by many real estate developers, though Premier produces such things for its clients. The tiny headquarters — it’s just 7,400 square feet — occupies the office section of what was built as a factory. Inside, it’s a contemporary office with industrial design that houses a firm with a staff of 24. Pisczak, Premier’s president, said in an interview that the firm keeps its focus on its tenants and remains located where it was launched in 2006 for a simple reason. “It’s a great location,” Pisczak said. “You can get most anywhere quickly from here.” And Premier and its products are spread throughout the region, from Kent to Oakwood Village and Brunswick. The economic recovery is working out well for Premier, one of the few real estate developers and builders that survived the brutal downturn. In the first overview of the firm’s activities in almost a decade, Pisczak said the firm remained busy throughout the downturn, although its activities mean it’s doing 50% more construction and development than in 2010. Premier also is finishing up a $40 million development that’s the largest industrial warehouse-office project in a decade in the region. It will own through an investor group the Arhaus Inc. distribution center in Boston Heights, a
700,000-square-foot warehouse and office complex that also will serve as the furniture retailer’s headquarters. “We competed with three other builders and developers for that project,” Pisczak said. “We believe it is the best location for their business.”
They’ve got (new) skills Arhaus is typical of what Premier does these days: general contracting or build-to-suit construction with the capability to own the structure at the end if the customer does not want to do so. It also develops, buys and renovates buildings for its own account. During the downturn, Premier surfaced with some unexpected projects. It gained expertise in residential construction by serving as the construction manager for College Town | Kent with Fairmount Properties of Cleveland and for Kent State University’s Regional Academic Center in Twinsburg. It also built and owns a classroom building that is leased by Lakeland Community College in Kirtland. “This was part of our diversification and expanded our skill set,” Pisczak said. A stack of renderings and photos in Premier’s conference room shows some of its other projects of late, always better known by the name of the tenant or owner than its builder. One is the 3-year-old OverDrive Inc. digital content distributor’s headquarters in Garfield Heights; another is the renovation of a building for SKF Solution Factory, a Swiss-owned machine maker and maintainer for industrial operations in Highland Heights. It recently put Core-Mark Holding Co., a supplier for the convenience store industry, into the vacant former Dots Inc. warehouse in Oakwood Village. At the other end of the extreme, it built the interiors for Hanna Commercial’s new office at US Bank Centre on Playhouse Square. Premier also has a to-die-for industrial site at its disposal. Pisczak
and Ross Farro, a restaurateur and former office building developer, in 2006 bought 300 acres in four suburbs from Indianapolis-based Duke Realty Corp. About 200 of those acres remain. Both Pisczak and Farro were former ranking execs for the real estate investment trust when it conducted operations in Northeast Ohio.
Voices of experience The ownership of Premier has expanded over the years as it has grown. Besides Farro, its chairman, and Pisczak, other principals are Jerry Gruszewski and Kevin Callahan, who both carry the title of senior vice president. Each of the firm’s principals has 30 years of experience in the region’s rough-andtumble development and construction market. Linda Sherman, a vice president who handles tenant build out for the concern and as a project manager who was just promoted to senior vice president, has 20 years of experience in the industry. The firm also has made a strategic hire that shows it looks to pick up the pace in the future, particularly with acquisitions and development for its own account. Frank Black, a former corporate services specialist at Newmark Grubb Knight Frank, has joined it as a vice president. Callahan said Black’s corporate and investment background will give the firm a boost in the regional market and around the country. Although the average Northeast Ohioan might not know Premier’s name, the brokerage industry knows it well. When brokers have a client who may need to build or buy a new structure, it’s one of the stops. Geoff Coyle, a managing partner at Hanna Commercial, said Premier has a reputation for producing results. “They’re focused and hardworking,” Coyle said. “They’re a good partner to have when you have a client who needs space. “They are accomplishing a lot.”
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PUBLISHER:
John Campanelli (jcampanelli@crain.com) EDITOR:
Elizabeth McIntyre (emcintyre@crain.com) MANAGING EDITOR:
Scott Suttell (ssuttell@crain.com)
OPINION
Art matters Arts and culture play a critical role in preserving a high quality of life for a community’s residents, from a play that challenges your perceptions, to music that transports you in time. Arts and culture also are a powerful economic driver. They provide jobs, attract investments and spark innovation. They are a potent lure for businesses, talented people and tourists with money to pump into our economy. Cuyahoga County is blessed with a rich and diverse array of cultural offerings, from the world-renowned Cleveland Orchestra and the Cleveland Museum of Art to the Latino Arts and Culture Celebration and the Near West Theatre. The county is also among the nation’s leaders in providing public funding for arts and culture, thanks to voters who passed the arts and culture levy in 2006. Prior to its passage, Cuyahoga County was one of the largest metro areas that offered no government support for the arts. In order to keep Cleveland and Cuyahoga County in the top realm of arts and culture, we urge Cuyahoga County voters to renew the cigarette tax that supports arts organizations ranging from the city’s major museums to individual artists, neighborhood arts festivals and children’s theater productions. Issue 8 on the Nov. 3 ballot would extend for 10 years the current tax of 30 cents per cigarette pack sold in Cuyahoga County. The tax on cigarettes generates about $15 million a year and is used to fund hundreds of arts organizations and projects. Just look at 2013, when levy-supported organizations had an impact on the local economy by spending more than $342 million, including almost $150 million in salaries. Since 2008, the levy has raised more than $125 million for the arts. That revenue, which will continue to be administered through a competitive process by Cuyahoga Arts and Culture, has funded more than 300 organizations and contributed tens of thousands of workshops, classes and field trips for students of all ages. If the cigarette tax is renewed, however, arts and culture backers are on the clock to find a new revenue source. They’ll need to slap on a nicotine patch because they’ll have 10 years to wean themselves from cigarette tax revenue that is projected to continue to decline along with the number of smokers in the county. Projections from Cuyahoga Arts and Culture show that revenues from the levy would be less than $10 million a year by 2026. Quitting cigarette taxes for the arts is no easier than quitting cigarettes for smokers. In either case, the will to live a long and happy life should provide plenty of incentive.
FROM THE PUBLISHER
Staying strong in time of weakness The mailman must have seen the outname, maybe, or delivered a comeback, of-state plates, or maybe he just wanted something like: “Maybe you don’t live in to break up the monotony of his route Ypsilanti because you’re not smart along one of Ann Arbor’s quiet residential enough to spell it.” I should have done streets. Regardless, he walked something, anything, to let up to our car as my family and this clown know that what he I were buckling up. said was not all right. He seemed friendly, put his But that would have taken head into the passenger-side courage. On that day, I didn’t window and asked about Ohio. have any. I failed the test. We chatted a bit, told him we Which brings us to the Rewere visiting and then asked publican candidates running him where he lived. He menfor president. Their next test tioned a small town that I’ve happens this week on the long forgotten, but what he stage of the Reagan Library in said next, I remember clearly, JOHN California. even though it was more than CAMPANELLI Right now — with some three years ago. small exceptions — the field is “I would live in Ypsilanti, but there are sitting silently in the passenger seat as too many black people.” Donald Trump spits his anti-immigrant My wife and I froze — and said nothsludge. ing. The mailman turned around and He’s promised mass deportations. He’s trudged back to his route. pledged to build a wall along the border. It took a moment or two for the shock He pushed out a Willie Horton-style ad on to wear off, for us to ask each other, “Did Instagram. He’s criticized Jeb Bush for that just happen?” and for the anger to speaking Spanish. He’s repeatedly equatbegin simmering, anger at that nitwit — ed immigrants with violent crime — deand at myself. My kids had watched it all spite decades of evidence that shows firstfrom the backseat, watched how their fageneration Americans are actually less ther did and said nothing. likely than the general public to commit What should I have done? Gotten his violent crimes or end up in jail.
Before answering any questions on Wednesday, or even thanking CNN or the Reagan Library, each candidate should take a moment to condemn Trump’s rhetoric, to call out his hate and to tell the audience that silence is no longer going to be the response. And as the evening goes on, any time The Donald begins with his anti-immigrant bile, the other candidates need to interrupt him, immediately. “Enough is enough,” they need to say, or maybe go back 60 years and dust off: “Have you no sense of decency, sir?” I want my next president to be strong, to be able to stand up to Putin and ISIS and any other threat to our nation and allies. Yet this group has, for the most part, been afraid to stand up to a reality-TV star. Yes, the risks are obvious: Trump’s a bully who’s very good at the counterpunch, and anything perceived as being “establishment” (aka “sane”) seems to be a real negative this cycle, for both parties. But, again, this is about courage and doing what’s right. Maybe that’s asking too much from any politician. After all, I would love to live in Washington, but there are too many cowards there.
TALK ON THE WEB Re: University of Akron teams with LeBron We can’t continue the status quo at the university, that’s true. But what is the status quo? It’s spending on flash over substance. It’s spending on vice presidents and associate vice presidents, assistant vice presidents, associate provosts, buildings, football and marketing. It’s anything but academics and advising. Here’s a good idea: Why not try to get the basic job of being a great university right and let the reputation follow? Or UA can just continue to lay off people and invest in gimmicks. I’m surprised LeBron wants anything to do with this. — Olive Jar
Not a knock on LeBron, but he never went to college, and if he would have it would have most likely been Ohio State. Maybe using some highly successful alumni would be a better use of marketing dollars. — Brett Padgett Maybe they should stop messing with the kids who are enrolled and pushing so many new “fees” on them. I know our kids are looking to transfer out because of this attitude. It’s almost a hostile place for the kids to earn their degrees anymore. It’s such a shame, as Akron was such a great school just a few years ago. Financial mismanagement has really messed this up. — Harry Dunne
Sure, King James is a marketer’s dream. However, marketing is not education. Using LeBron James … may get some young people and their parents to look at UA. But if university president Scott Scarborough and his overpaid cronies don’t put the money into full-time faculty, advising and academic programs, enrollment increases will not occur and will not be sustained. Scarborough has a playbook that he brought with him from the University of Toledo. It focuses on expensive sports marketing and outsourcing of essential services. It failed there … and it will fail at UA, too. The morale on campus is at an all-time low. Students can’t help but pick up on that. — Grew Up in Akron
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WWW.CRAINSCLEVELAND.COM
CRAIN’S CLEVELAND BUSINESS
CRAIN’S SUMMER IN THE CITY PHOTO CONTEST “A city known for its culture adds agri-culture” — By Tammy Wise Tammy Wise was on an Ohio City netwalk with a colleague when she noticed people working in a field at Ohio City Farm. Wise, of Solon, is the president of WISECHAPTER3, a sales and marketing company for entrepreneurs. Her prize is a one-month pass for her and a guest to EB Fitness Club.
OUR CITY. OUR TEAM. YOUR FIRM.
Go Browns! PROUD SUPPORTER OF THE CLEVELAND BROWNS
Summer in the City is a contest inviting people to share their Cleveland photos. Weekly prizes include gift certificates to metro Cleveland venues, grocery stores and retailers at a value of $50 to $100. Three grand prizes will be awarded later this month. Add images at crainscleveland.com/SITC.
PERSONAL VIEW
Ohio supplies national solar boom, sees own capacity slip By RHONE RESCH
While the American solar industry continues to grow by leaps and bounds across the country, Ohio falls further behind its neighboring states in the amount of solar installed. Indeed, Ohio is a cautionary tale of how smart government policy, like the federal investment tax credit (ITC), can help a young, cuttingedge industry like solar grow, attract investment and create jobs while bad government policy can stunt the growth of an industry. Total U.S. solar capacity is expected to double over the next two years, and more than 30% of all electric generating capacity installed in the U.S. last year was from solar. In 2010, the federal ITC helped Ohio companies install more than 19 megawatts of solar, to make it the 13th biggest solar state, ahead of Indiana, Illinois, and even sunny Hawaii at the time. Solar in Ohio continued to grow from 2010 to 2013, adding an additional 86 megawatts. But in 2014, renewable energy sources like solar hit a major roadblock in Ohio when the state legislature and Gov. John Kasich enacted legislation to freeze Ohio’s renewable portfolio standard (RPS) for two years. Bad policy decisions have consequences. Over the next two years, Indiana is expected to install 165 megawatts of solar power, and gain all the jobs and economic benefits that come with the build-
Rhone Resch is president and CEO of the Solar Energy Industries Association in Washington, D.C. out, while Ohio won’t even install half as much solar (76 megawatts), despite a much larger electricity need. Ohio’s drop in the solar rankings is more than a loss of pride — it’s a missed opportunity. Building out solar projects translates into good, well-paying jobs for America, but Ohio lawmakers are fighting solar’s full economic potential by burying their heads in the sand. It’s time to restart the RPS and allow Ohio’s renewable energy market to fully develop. Ironically, Ohio companies have ramped up operations to support their growing out-of-state business, and the jobs are telling. According to The Solar Foundation’s 2014 State Solar Jobs Census, solar jobs in Ohio have grown 45% in the last two years, from 2,900 in 2012 to 4,300 in 2014, with the majority of those jobs in the manufacturing sector. These manufacturers produce a variety of solar components from wiring, electronics and glass, to solar panels and the metal racking that hold them in place. Ohio’s solar paradox thickens, as some of the country’s largest and most iconic brands find value in going solar in Ohio. This year, General Motors’ largest solar installation in the western hemisphere became operational in Lordstown. The 6.5acre structure contains 8,550 pan-
els and provides 2.2 megawatts of power to GM’s Lordstown Complex, which is among the highestvolume, single-line vehicle assembly facilities in the world. GM now has a total of 4 megawatts of solar energy powering its Ohio facilities. Meanwhile, Walgreens has more than 2 megawatts of solar on its Ohio stores, while Walmart has more than 5 megawatts. However, the scheduled drop at the end of 2016 in federal ITC from 30% to 10% for commercial users, and to zero for residential users, combined with the freeze of the Ohio RPS, will cause the market for Ohio’s solar manufacturers to contract significantly. Any realistic chance for the state’s already beleaguered solar installers and developers to turn the tide in the state will disappear. The deadline in 2016 to renew the federal ITC for solar energy and lift Ohio’s RPS freeze will be here before we know it. As an industry, we strongly urge Ohio lawmakers and the state’s Congressional delegation to support lifting its RPS freeze and extending the ITC for five years. By then, analysts predict solar will reach grid parity in most electricity markets, helping to create a level playing field among energy producers, diversifying our power sources, offering more consumer choices and boosting the state and national economy. Solar is an economic engine for America and its future in Ohio should be bright.
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
SEPTEMBER 14 - 20, 2015
GOING PLACES FOR COMMERCIAL LEASING INFORMATION, CONTACT: DYANN DAVISON | 216.781.4828 ddavison@KandD.com www.KandDRealEstateServices.com
JOB CHANGES CONSTRUCTION CLEVELAND CEMENT CONTRACTORS INC.: Joseph R. Simonetti to assistant project manager/safety coordinator
EDUCATION URBAN COMMUNITY SCHOOL: Tom Gill to associate director.
FINANCE GEAUGA SAVINGS BANK: James Kleinfelter to president, CEO; Betty Kimbrew to business development manager.
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Dry cleaning service. On-site restaurants. On-site car rental agency. Florist. Concierge services. ATM machine. Bike storage.
SERVICE BENEFITS RESOURCE GROUP: Cris Board to business development specialist.
MANUFACTURING
DIRECT CONSULTING ASSOCIATES: Charles Aiken III to lead recruiter.
KARCHER GROUP: Tim Ruby to web designer.
NONPROFIT BOYS & GIRLS CLUBS OF CLEVELAND: Robert Koonce to chief development officer. ESPERANZA INC.: Laurel Wirtanen-Siloy to director of development.
BSB PARTNERS, CPAS & BUSINESS ADVISORS: Stephanie Davis to staff accountant. CROSSCOUNTRY MORTGAGE INC.: Darrel Bilbrey to chief operations officer. FAIRPORT ASSET MANAGEMENT: Geoffrey Palya to portfolio administrator. SKODA MINOTTI: Deb Marino to insurance and risk assessment specialist; Darren Kerr to accounting assistant.
Vento
BRITTON GALLAGHER: Eric Treend to executive vice president, Recreation & Attractions Division.
MARKETING
BROWN GIBBONS LANG & CO.: Kurt A. Kautman and James M. Cocita to associates; Sean T. Edmonson, Eric H. Eschliman and Andrew R. Vento to analysts; Daniel A. DiCarro to vice president and Jamie M. Dunford to analyst, BGL Real Estate Advisors.
Eschliman
INSURANCE
OMNOVA SOLUTIONS: Steven Falloon to general manager, Performance Materials.
FINANCIAL SERVICE
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Edmonson
Cocita
KIDNEY FOUNDATION OF OHIO: Molly DeBrosse to client services and community manager.
REAL ESTATE HOWARD HANNA: Rich Barber to manager, North Olmsted; Lisa Foley-Spittler to manager, Mentor; Christine Merry to manager, Lakewood; Sue Smith to manager, Madison.
STAFFING
DIRECT RECRUITERS INC.: Doug Kellermeyer to project manager, public safety, public sector and federal IT practice area.
BOARDS INTERNATIONAL SPECIAL EVENTS SOCIETY CLEVELAND CHAPTER: Nick Borelli (Colortone Staging and Rentals) to president; Vincent Iannaggi to president-elect; Rachael Fuller to immediate past president; Amy Van Duyne, Dale McDonald and Ann King to vice presidents.
AWARDS FEDERATION OF DEFENSE AND CORPORATE COUNSEL: Craig A. Marvinney (Walter Haverfield) received the FDCC Connect Award.
Send information for Going Places to dhillyer@crain.com
25
ANNUAL
Alumni
distinguished
awards
CONGRATULATIONS TO CLEVELAND STATE UNIVERSITY’S 2015 DISTINGUISHED ALUMNI AWARD RECIPIENTS GEORGE B. DAVIS AWARD FOR SERVICE TO THE UNIVERSITY
COLLEGE OF LIBERAL ARTS AND SOCIAL SCIENCES
WAYNE ZACHARY, BA ’73 Chief Executive Officer, Starship Health Technologies LLC
TIMOTHY J. COSGROVE, BA ’83/JD ’87 Partner, Squire Patton Boggs (US) LLP MONTE AHUJA COLLEGE OF BUSINESS
SCHOOL OF NURSING
DARIA L. ROEBUCK, BBA ’80 Retired Vice President, Human Resources ERICO International Corporation
BRANT RUSSELL, BSN ’98 Chief Operating Officer, St. John Hospital and Medical Center COLLEGE OF SCIENCES AND HEALTH PROFESSIONS
COLLEGE OF EDUCATION AND HUMAN SERVICES
JO MANETTE NOUSAK, BA ’75 Audiologist/Researcher, National Intrepid Center of Excellence Walter Reed National Medical Center
PETER LILIENTHAL, MED ’70 Founder and Chief Executive Officer Management Communication Systems, Inc.
MAXINE GOODMAN LEVIN COLLEGE OF URBAN AFFAIRS
WASHKEWICZ COLLEGE OF ENGINEERING
FLOUN’SAY CAVER, MPA ’00 Director, Hayden District, Greater Cleveland Regional Transit Authority
ANTHONY COLNAR, BSME ’42 Retired Engineer, NASA
ATHLETICS
CLEVELAND-MARSHALL COLLEGE OF LAW
BRUNO BIASIOTTA, BBA ’85 Chief Executive Officer/President, The GNA Group
MICHAEL GIBBONS, JD ’81 Founder/Senior Managing Director, Brown, Gibbons, Lang & Company
JOIN US IN HONORING THESE OUTSTANDING GRADUATES
FRIDAY, SEPTEMBER 25, 2015 5:30 p.m. Reception
•
6:30 p.m. Dinner & Awards
BERT L. & IRIS S. WOLSTEIN CENTER • 2000 PROSPECT AVENUE TICKETS: $125 per person • Business Attire Richard Bowen + Associates, Inc.
www.csuohio.edu/alumni/daa/ • 216.687.5045 • rsvp.events@csuohio.edu
CLEVELAND STATE UNIVERSITY ALUMNI ASSOCIATION
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companies must act more current and hip with their offerings in order to compete with smaller businesses with more creative and nimble benefits. Since millennials — who will comprise 75 percent of the global workforce by 2025 — seek rapid growth in their careers, employers are required to closely match expectations where possible. In addition to offering benefits such as competitive 401(k), financial literacy training can reduce young workers’ anxieties about money and lead to more satisfied, loyal and engaged employees. In fact, financial wellness programs are becoming the new normal in workplace benefits, and include discussions around debt management, budgeting, college savings and personal savings habits. In short, employers are improving the personal lives of their employees, not just boosting financial acumen. Not surprisingly, in the Bank of America Merrill Lynch 2015 Workplace Benefits Report, 81 percent of mid-size companies said financial wellness will be a standard benefit program 10 years from now. RECOGNIZING GENERATIONAL DIFFERENCES Understanding what motivates the new workforce and its needs will help employers maintain a competitive edge in attracting talent. Millennials are seeking meaningful work from an employer committed to societal issues. In the course of managing the new, younger workforce, there
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corner stone Helping you build business success in Cleveland on a strong foundation of community spirit, expert analyses, sound advice and trust. That’s the power of a local connection, with you year by year, wherever you want to grow. bofaml.com/yourcorner
For marketing disclaimer, visit bankofamerica.com/disclaimer. ©2015 Bank of America Corporation
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SEPTEMBER 14 - 20, 2015
JAKPRINTS continued from page 3
REBECCA R. MARKOVITZ
In one process used by Jakprints, a plain tank top is placed between two sheets of ink-covered paper, and heat is used to transfer the color onto the fabric.
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Overall, the company has grown with its clients, DeTomaso said, and most of its entertainment contacts were made by working with people before they made it big. Jakprints doesn’t use traditional salespeople on commission and relies on more of a business development model that
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Jakprints puts a premium on “empowering� other companies like they empowered themselves, DeTomaso said. He describes it as helping people build their businesses, rather than just printing products for them. The company’s employees create relationships with customers where they can guide them toward what makes sense for them and what’s working best in their industries. But printing products — lots of products — is what the company does best. On the paper side, that’s
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everything from business cards to band posters to giclee prints. In apparel, it’s primarily shirts, though the company also can print on items like hats and bags. All of the company’s orders receive personal attention, as employees work to make sure customer files match the specs, optimize products for print and assess finished products for quality. And since the company provides the shirts it prints on, rather than relying on customers to send them in, those have to meet the company’s standards, too. “You don’t want to sell shirts if they don’t make people feel good when they wear them,� DeTomaso said. Aside from bulk printing projects, Jakprints also offers virtual inventory for about 25 big-name clients. That means that when a consumer clicks buy on a T-shirt on a client’s site, the order gets sent directly to Jakprints for one-off printing and shipping. DeTomaso said the company originally got into the technology used for this printing to make high-quality samples and prototypes, but realized it could also be used as a way to supplement bulk printing. The service, which the company began offering two to three years ago, is just for apparel products now, but DeTomaso said he plans to expand into other products in the future.
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“We kind of snuck into the printing business.� Jakprints isn’t so little any more. About a year ago, Jakprints bought the building next door at 3005 Chester Ave., after steadily taking over more and more of the space over the years. DeTomaso said the expansion was planned and negotiated years prior, though he didn’t disclose the amount invested. The company finished remodeling the offices a couple months ago and now has turned its attention to updating the open space in between, adding pallet gardens and picnic tables for employees. In Cleveland, Jakprints has a sizable operation, with 150,000 square feet. Its new venture in California is quite a bit smaller, at 6,000 square feet. Many Jakprints customers have operations out West, so opening a location there cut down on shipment time for customers, DeTomaso said. The new California location has 10 employees and is helping establish the company as part of that community. DeTomaso said he plans to open more such locations, though he doesn’t have concrete plans for them yet.
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depends on connections. “Everyone can say word of mouth is the best marketing, but we’ve built our business around it,” DeTomaso said. Valerie Lugtu, a senior manager of e-commerce at Viacom Inc., said Jakprints was internally referred to them. The entertainment giant has been using Jakprints for about the past year for bulk printing and virtual inventory on some of its brands, including TV shows “South Park,” “Kroll Show” and “The Daily Show.” The printer has been “absolutely great,” Lugtu said, noting that she likes that they’re very thorough and available. DeTomaso said the company is always looking for opportunities outside of Cleveland, but it doesn’t plan to run out of town. He wants to keep the headquarters in Northeast Ohio and keep the money funneling back into the community. “It’s home for us,” he said. REBECCA R. MARKOVITZ
At top, part of the Jakprints office space on Chester Avenue. At far left, Brandon Clark operates a laser-assisted digital cutting table to cut custom-shaped stickers. At left, Jarod Boyes sets up a shirt to be produced on a digital garment printer.
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Every time Jakprints Inc. gets an order, it plants a tree. Yes, that’s every single order. Fliers? Plant a tree. Stickers? Plant a tree. T-shirts? You get the idea. The company has an “ecological conscience,” said CEO Nick DeTomaso. And that’s been there from the beginning. While the company always has printed its own T-shirts, it used to broker out work on the paper side, but realized it couldn’t make a difference until it actually got in the business. The trees are planted through a Maryland-based nonprofit, Trees for the Future. The group plants the trees in countries with less responsible deforestation practices, DeTomaso said. At home, Jakprints makes an effort to buy only sustainably sourced paper from North America and Europe, and it uses biodegradable water-based coatings. If a customer asks for a more traditional, shiny paper coating, DeTomaso said the company tries to make them understand their point of view. For example, he might ask a company if a music festival lasting three days really needs a pass that lasts hundreds of years. In April, the company installed a $2 million Heidelberg brand printer that will help drastically cut down on paper waste. The new machine uses one consistent film of ink, instead of having to use 19 and adjust ink levels, said lead pressman Norm Koplin. The new machine cuts paper waste on a job to 20 to 30 sheets instead of hundreds. — Rachel Abbey McCafferty
We’ve Moved! IntelliNet is pleased to announce that it has moved into its new Corporate Headquarters in Cleveland’s exciting “9-12 District,” overlooking Chester Park. The 17,000 square foot build-out features a re-engineered, state-of-the-art Network Operations Center, from which IntelliNet manages its client’s IT environments in 44 states, 25 countries across 4 continents. The IntelliNet team looks forward to enjoying “Walnut Wednesdays” with their new neighbors! Contact us to arrange a tour of our new facilities.
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SEPTEMBER 14 - 20, 2015
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Nexen Tire Corp. will invest $7 million in an expanded research and development center in Richfield. The South Korea-based tire maker plans to construct a 30,000square-foot building on a four-acre site purchased from the city once it signs the contract in September, said Don Lee, Nexen’s director of technology at Richfield. The building will account for $4.6 million of the total investment. Nexen plans to break ground on the project in late 2015 or early 2016, with completion expected about one year later. The site should be operational by 2017. At that time, 10 jobs will be added to its workforce of about 16. The firm could create up to 30 total jobs as it moves into the second and third phases of the project, which Lee said are not yet finalized. “We have a plan to expand our businesses to other American automotive companies,� he said. “To actively expand the business, we believed that we need more research and development functions in this country.� Nexen operates out of two buildings in Richfield — an 8,000-squarefoot office building and a 5,000square-foot development space. Lee said the new building will bring all of Nexen’s operations under one roof and will include a full test facility in addition to expanded space for projected future business. He said Nex-
CONTRIBUTED PHOTO
A rendering of Nexen’s planned research and development center in Richfield. en’s corporate research and development center in South Korea currently does all the company’s testing. The firm supplies Fiat Chrysler Automobiles, Hyundai and Kia America with original equipment tires. Lee said the company hopes to secure future business with Ford, General Motors, Honda and Toyota. Nexen contacted several city governments, including Akron and Fairlawn, but officials ultimately decided to remain in Richfield largely because of their frequent travel to Detroit. “We believe Richfield offers the best option for our new tech center,� Lee said. “In addition to that, to do business with our OE customers, including (Fiat Chrysler), we need to travel to Detroit. This area has very easy access to Interstate 80. We can save more than an hour both ways compared to our competitors.� Nexen’s Richfield center is its only research and development facility in the United States, and the company currently does not manufacture tires in the region. It operates two tire
plants in South Korea and one in Qingdao, China. The firm reported 2014 sales of $1.68 billion. In July, Nexen received approval from the European Commission to receive nearly $128 million in aid to build a third tire plant in Zatec, Czech Republic. The commission announced in July that the tire facility will create at least 1,000 jobs in Zatec. The plant will be built on about 2 million square feet and represents a $907.3 million investment. Nexen’s European factory is projected to begin operations in 2018 and eventually produce 12 million tires per year. The firm disclosed plans to expand its facility in Seoul, South Korea, to 10 million square feet and eventually produce 35 million tires per year there. The plant is 5.2 million square feet and produces about 11 million units per year with 1,200 employees. Sweeney is a reporter at Rubber & Plastics News, a sister publication of Crain’s Cleveland Business.
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SMALL BUSINESS Building a work of art, creativity 78th Street Studios a hub for events, innovation, energy in Gordon Square By KATHY AMES CARR clbfreelancer@crain.com
On an August evening in a northwest pocket of the Detroit Shoreway neighborhood, admirers of the local arts stream through the double doors of a hulking 170,000-squarefoot industrial landmark. Inside, culture, energy and commerce converge within a four-level labyrinth of galleries, studios, live music and pop-up food vendors. All told, about 1,500 individuals will have experienced the free art walk featuring the creative works of about 50 tenant and guest artists after the popular Third Fridays monthly event commences at 78th Street Studios. “I love that people can come here and embark on a new adventure each time,” said 78th Street Studios owner Dan Bush. “You can walk in and walk out with a $35 piece of art, or a $35,000 piece of art. There’s such variety.” 78th Street Studios is a conduit for the energy pulsing within the Gordon Square Arts District and an early feeder of the humming neighborhood’s rediscovery. Eighty businesses have opened since 2007 when Gordon Square Arts District launched its $30 million capital campaign, and half of them are located at 78th Street Studios, said Judi Feniger, president and executive director. “There’s a sheer critical mass of creativity at 78th Street Studios,
which is helping nurture our overall vision using arts and culture as an economic catalyst for the neighborhood,” she said.
Then and now The building was constructed in 1905 and originally used as a production facility for early automobile bodies. (Two freight elevators that date to the building’s founding still are in use today.) Longtime tenant American Greetings Creative Studios occupied the building before consolidating its operations to Brooklyn. Bush — a former display designer at American Greetings, a roving carpenter for local theaters and a residential real estate investor — purchased the commercial building in 2001 after some nudging from a local real estate broker who saw greater potential. At the time, the building was about 60% occupied, with a countertop fabrication facility, a couple art studios and a bingo hall among the tenants. Bush did most of the renovation work to minimize costs. He rented affordable spaces to promising local artists. Now, the 78th Street Studios is about 94% occupied with 60 businesses in the fields of art, product design, publishing, music and special events. “This is kind of the standard in Cleveland these days,” Bush said. “We get calls daily. I’ve had to hire See STUDIOS, page 19
CONTRIBUTED PHOTO
Creativity is on display at the popular Third Fridays monthly event at 78th Street Studios on Cleveland’s West Side.
Niche chambers zero in on member needs By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com
Different demographic groups have specific challenges that can be difficult to bring up in a mainstream chamber, says N. Michael Obi, chairman of the recently formed Presidents’ Council Business Chamber. For African-American-owned businesses, that can include the challenges of becoming certified as a Minority Business Enterprise, or MBE. Obi, who also is chairman and CEO of business operations management firm Spectrum Global Solutions LLC, said the chamber will advocate for a more streamlined process from the current system, which requires companies to become certified at the city, county and state levels.
The Presidents’ Council’s new chamber joins a number of business groups in the region that focus on supporting individuals of a particular race, ethnicity, gender or sexual orientation. Rather than trying to be everything to everyone, these organizations turn their attention to issues specific to each group. And while they aren’t explicitly aimed at helping small businesses or entrepreneurs, the groups offer access to a host of resources and networking opportunities for them. These niche organizations offer “safe spaces” to individuals who already have something in common, said Steve Millard, president and executive director of the Council of Smaller Enterprises. COSE doesn’t view them as competition, he said, but rather as different parts of a
larger “ecosystem” that helps support small businesses. Working with other groups is important, said Michelle Tomallo, board president of Plexus, an LGBT and allied chamber in Cleveland. Plexus officially formed as a chamber in 2006 and has about 125 members. When working with small businesses or entrepreneurs, Plexus first has to find out what their needs are, said Tomallo, who also is president and co-founder of FIT Technologies, a managed IT services firm. Plexus can offer some of those services, but it also promotes resources from other groups. “We’re not duplicating necessarily the exact same program or tapping the exact same resources,” she said. Instead, that frees up the groups
to focus on their strengths. At Plexus, that’s cultural competency for businesses, LGBT business certification and working toward enacting more non-discrimination laws and policies. Small and midsize companies, in particular, tend to need the group’s non-discrimination practice and policy audit, as many companies have values that they haven’t put in ink, Tomallo said.
Taking responsibility The Presidents’ Council chamber will take a similar approach. Obi said he doesn’t want to duplicate what groups like COSE already offer, and he’ll encourage members to join multiple chambers. Obi said the chamber, which supports African-American-run businesses,
has decided to not disclose its number of members. For the Northeast Ohio Hispanic Chamber of Commerce, the focus is on total inclusion, said executive director Jenice Contreras, rather than focusing on a style of diversity that fails to consider people who are Hispanic, women, part of a particular religious background or members of the LGBT community. “Northeast Ohio can be very black and white,” Contreras said. The chamber has fewer than 300 members, but it doesn’t aspire to be much larger. The small size of the chamber allows for the group to pivot quickly if an issue of interest arises and for deeper relationships to be built. Tomallo said the networking component of what she calls affinSee CHAMBERS, page 22
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The 78th Street Studios’ mix of small studio and expansive spaces offers a range of uses for both in-house and third-party host events. THIRD FRIDAYS (Pictured) Members of the public are invited to experience this indoor public art walk from 5 p.m. to 9 p.m. each third Friday of the month. Third Fridays has grown in size and scope through the years, evolving from a quarterly event in the early 2000s that attracted a couple hundred people to a monthly celebration of culture that attracts between 1,500 and 1,800 visitors. “We see a really eclectic crowd on Third Fridays, from younger people in their 20s and 30s, to the more mature customers with disposable income,” said Lisa Nemeth, owner of Northcoast Promotions Inc., an arts show organizer that recruits 20-plus guest artist vendors to Third Fridays. “Money is being spent at 78th Street Studios.” Food trucks and resident food vendors, like Spice Kitchen + Bar’s Spice Box Cafe, offer handheld eats, local craft beer and wine. Onsite maps guide visitors through the maze of gal-
leries, studios and vendors, the mix of which fluctuates each month. New York jewelry designer and Cleveland native Rhea Kulcsar will be displaying her line of natural stonebased jewelry pieces later this year. Cleveland’s Derek Hess, an internationally acclaimed music industry artist, just unveiled his new gallery in August that will serve as an exhibition space for both his work and other fledgling talent. “I love watching … first-time visitors walk around with their mouths open when they come in to discover this incredible art experience,” Nemeth said. Winter months typically yield more robust crowds and higher sales. “January and February are the best-selling months,” Nemeth said. “People have recovered from the holidays and are ready to spend money on art for themselves.” The next Third Fridays is this Friday, Sept. 18. For more information, visit 78thstreetstudios.com.
CLEVELAND BAZAAR This festive indie holiday market, now in its 11th year, experienced a record-breaking year in traffic last year with an estimated 7,000 shoppers buying locally made gifts from 125 vendors. “The creative energy of 78th Street Studio’s year-round tenants add to our event and vice versa,” said Shannon Okey, the market’s founder. She expects another record-breaking year during this year’s craft show, set for Dec. 12-13, since the function will be adding an additional level of floor space. “We’ll have the ability to bring more makers together to supply Cleveland with one-of-a-kind handmade gifts,” she said. But first, Okey is prepping for a lateSeptember wedding at 78th Street Studios that transpired as a result of a previous holiday market at the arts complex. One of the Cleveland Bazaar’s original recurring vendors met her future spouse at her vendor
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table, and asked Okey to officiate. “I’m so honored,” she said. “Cleveland Bazaar is a family.” For more information, visit www.clevelandbazaar.org.
UNIQUE BACKDROP From tenant nonprofits to suburban-based corporations, the 78th Street Studios is drawing interest from entities looking to host an event with some verve. ARTneo’s new 2,500 square-foot ramp-level space will be on display Saturday, Sept. 26, when the museum hosts its annual benefit and auction at 78th Street Studios. The nonprofit that collects, researches, documents and displays significant works of art from Northeast Ohio artists and architects in May relocated from its longtime home at the Beck Center for the Arts in Lakewood to the 78th Street Studios. “We’re surrounded by our mission, which is focusing
on Northeast Ohio artists,” said John Farina, ARTneo’s executive director. The benefit will honor Henry Adams, an author, historian, curator and educator whose contributions have made a profound impact on the Northeast Ohio art scene, Farina said. A gallery dedicated to his curatorial work will also be on display. Farina estimates the benefit will draw about 200 donors, sponsors, artists and other ARTneo supporters. Universities, organizations and corporations are also filling the industrial space’s events calendar. Solon-based Swagelok, a designer and manufacturer of gas and fluid system products, hosted its product innovation awards luncheon this year. “We had two busloads of executives, and they all looked very intrigued when they pulled up,” said 78th Street Studios’ Bush. “Half of them came back for the following Third Fridays event.” — Kathy Ames Carr
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an assistant the past year to manage inquiries.” Tenants have shuffled into larger spaces as demand for their product or work grew. Original occupant Rachel Davis Fine Arts swapped her studio for a space about 30% larger. Alternative Press Magazine, one of the world’s largest music magazines, more than doubled its space, to 9,000 square feet, after a five-year occupancy. Jakprints’ storage unit-sized lease in 2003 was short-lived. The printing company quickly outgrew that 15-foot-by-15-foot suite, expanding within the building three different times before planting its own flag in Midtown as business evolved to serve international clients. “Jakprints helped resurrect Cleveland as a printing town, and I’m proud to say we helped play a role in their growth,” Bush said. SUZANNE PRICE
Bien venue
Special events now make up 15% to 20% of business at 78th Street Studios.
Meanwhile, the commercial art complex’s galleries and its 6,000square-foot smARTspace have become trendy special events destinations for businesses and individuals who appreciate an industrial aesthetic and the hallmark oversized checkerboard windows. “Events are about 15% to 20% of our business,” Bush said. “We host everything from wed-
dings to corporate functions to a student arts show for Cleveland Metropolitan schools.” The facility, meanwhile, is “heavily booked” with Republican National Convention-related events next year, he added. By that time, construction on the 78th Street Studios’ remaining 12,000 square feet of available low-
er-level studio space should be complete. “I’ve had people patiently waiting for two years, when we started talking about the spaces,” Bush said. “Some individuals come to every Third Fridays event, just to express their continued interest. We’ll have no problem filling those spaces, that’s for sure.”
HOW CAN SOMEONE HAVE ALL YOUR ANSWERS BEFORE THEY ASK ANY QUESTIONS? Clairvoyance isn’t one of our skills. But curiosity is. It’s what leads us to listen to you. To think about what you’re telling us. And then ask thoughtful questions. It’s the only way to crack the puzzle. Because the answers don’t just jump out. You have to dig. Subordinated debentures, equity infusions and other solutions are all well and good, but when is the right time to use them? And why? Shouldn’t your bank want to find out? We do. Learn more at 53.com/Commercial We’re Fifth Third Bank.
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Maker trend sparks business opportunities Spaces offer aspiring crafters, builders a place to learn and practice their skills By EILEEN BEAL clbfreelancer@crain.com
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Brian Schaffran in March opened Skidmark Garage, a DIY motorcycle repair shop in Cleveland. It is one of a number of maker-style spaces that have opened to allow people the chance to build, create or develop a skill.
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What do inventors, tinkerers, engineers, fixers, innovators, artists, crafters and birdhouse-building hobbyists have in common? They are all makers, people who turn ideas into realities, and bits and pieces into products. And, they’ve helped spawn a new kind of business: for-profit spaces that are niche-, craft- and mediumspecific. These spaces, which are cropping up throughout Northeast Ohio, provide tools, equipment and materials, foster camaraderie and are staffed with knowledgeable teachers who instruct and inspire. Additionally, they tend to be open a wide range of hours, meeting the needs of those who have daytime commitments. “In a maker space you aren’t just getting access to equipment and tools and knowledge and skills,” explained Scott Zitek, the Fab Lab coordinator at Lorain County Community College who also coordinates the school’s public maker space. “You get opportunities for the kinds of interactions and collaborations you can’t get in a home-based space.” For the most part, those who have opened local maker spaces did so for profit and to follow their bliss. “We saw an opportunity that looked profitable, and we saw a real need for the kind of workshop we wanted to create,” said Peter Debelak, co-founder and co-owner of Soul Craft Woodworking Shop in the Clark-Fulton area of Cleveland.
Doing their homework But these entrepreneurs didn’t go into business blinded by their bliss. They created business plans. However, since the model for forprofit maker spaces is still in its infancy, nothing is carved in stone. “It is a living document, so it’s changing every week now that we are open,” explained former history teacher Brian Schaffran, who in March opened Skidmark Garage, a DIY motorcycle repair shop in Cleveland. They also zeroed in on revenue streams. The lion’s share of income for for-profit maker spaces comes from memberships and class fees, drop-in passes and special programs. And a couple of spaces also sell the supplies used in projects. Not surprisingly, getting the right client and income mix is a juggle. “Our space is a marriage of community development and arts innovation, so our user fees and our sale of art-craft supplies to the public balances our need for income to sustain us and our community’s need for a space to make,” explained Nicole McGee, founder of Upcycle Parts Shop, an arts-based
center in Cleveland’s St. Clair neighborhood. Space also is a consideration for those opening a maker space. Cleveland is full of empty locations that look like good bets. But street-level spaces with the kind of windows that provide good light and are inviting to potential members, without sky-high utility bills, are at a premium. “When I was looking for a space, I visited every Cleveland CDC (community development corporation),” explained Jessica Pinsky, executive director of recently opened Praxis Fiber Workshop. “The only place I could get exactly what I wanted was the Waterloo District in Collinwood.” McGee’s research revealed that for her center to thrive — drawing community residents for classes and programs and attracting art-crafters who would buy the center’s donated supplies — it couldn’t just provide space and supplies, it had to have regular hours, classes and programs. “To build the market we needed,” she added, “we had to have the currency of trust — consistency.” Debelak, meanwhile, expected that his woodworking shop’s customers would be retiring boomers and young urban professionals. And they are, but it’s always attracted furniture designers, too. “They come for the woodworking,” he explained, “but they also come for access to … the professional networks that they can find in this kind of maker space.”
Investing in a community Those behind the creation of Northeast Ohio’s maker spaces have made their fair share of investments — both tangible and intangible. “I probably have $40,000 worth of equipment,” said Schaffran of Skidmark Garage, “but I paid maybe $3,000 for it, because I found most of it on craigslist.” Pinsky got an even better deal on her equipment. When the Cleveland Institute of Art closed its fiber arts program, it liked her vision-driven business plan so much it donated looms, dying supplies and other material. Most have discovered that their best marketing tools are a visit or word of mouth. “It’s hard to explain it in words or ads,” said Schaffran, “but once they see it, they’re sold.” “Right now,” explained Pinsky, “I’m going to every local yarn, fabric, upholstery and like-minded store I can find and talking to owners and leaving materials.” Of course, a little bit of hope goes a long way, too. “The way I envisioned it, new people would come to learn and work with tools,” Schaffran said. “But it’s become a whole lot more than that. A culture — a community — is being created here.”
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TAX TIPS Peter A. DeMarco
Ohio budget bill provides considerable tax savings for local business activity Ohio’s operating budget for 2016 and 2017 calls for reductions in tax rates that could prove important to small business owners in the Buckeye state. This summer, Gov. John Kasich signed into law the two-year Ohio budget bill that expands deductions for small businesses and reduces tax rates on business income and individuals. Kasich originally called it his “Blueprint for Ohio.” Perhaps most significant is an exemption on a certain portion of business income for Ohio small business owners that do business as an S corporation, limited liability company or sole proprietorship. The provision does not apply to C corporations, but any business that is structured as a pass-through entity so that its income flows directly from the business to individual shareholders for tax purposes. Under the provision, to the extent such a business earns income sourced to Ohio, the first $250,000 of that income will be exempt from income tax. Above $250,000, income apportioned to business activity in Ohio will be taxed at a rate of 3%, which is a significant reduction from the highest rate paid today of nearly 5%. Ohio first introduced this provision in 2013 with a 50% deduction of the first $250,000 in business income apportioned to Ohio. In 2014, it rose to its current level of 75%, which will also be in effect for 2015. Now Ohio is raising it to 100% of the first $250,000, beginning with tax year 2016, giving many Ohio business owners a significant break on their income tax, especially if they do most or all of their business within the state. Increasing the percentage of the exemption creates a considerable tax savings, ranging from roughly $6,200 in 2013 to $7,500 when fully in effect 2016. Consider the effect of the new exemption provision coupled with the flat rate of 3% for a married couple that reports Ohio business income of $1.25 million. Before the 3% flat tax or the complete exemption of the first $250,000, that couple would pay the top tax rate of 4.997%, producing a tax liability of approximately $53,000. Both provisions reduce that liability to $30,000, cutting the tax bill by 43%. For individual rates, the news is also good. Before the budget bill, Ohio personal income tax rates ranged from 0.528% to 5.333%. Under the new budget bill, the range drops to 0.495% on the low side to 4.997%. That’s a 6.3% reduction in tax rates. For a taxpayer earning more than
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$200,000, that’s a savings of approximately $336 for each $100,000 of income. There are a number of other tax provisions in the bill around sales and use taxes, cigarette excise taxes, credits and incentives, municipal income taxes and lodging taxes. There are also several tax provisions that were considered but rejected in the current budget bill, including an increase in the
commercial activity tax rate, an increase in the sales tax rate and an expansion of the sales tax base. The budget bill sets these issues up for future consideration, however, so there could still be changes ahead in those areas down the line. Gov. Kasich also vetoed a tax amnesty program, which is an opportunity for delinquent taxpayers to bring themselves into compliance with little or no penalty.
Kasich reasoned it was too soon after the last amnesty period to offer a new one. “Waiting longer between amnesty programs will encourage greater tax compliance in the interim and generate higher revenues when programs are held,” he said. For Ohio business owners, the tax provisions in the Ohio budget for 2016 and 2017 provide some significant savings opportunities.
Peter A. DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.
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Why niche marketers win You have great products or services but your results are disappointing. Is marketing the problem? Are you trying to be all things to all people? Is your messaging resonating with customers? Is your target audience seeing your advertising? Are you targeting a mass audience when niche marketing is the answer? Even successful companies that sell products with mass appeal often started by selling to a discrete audience. Case in point: the rolling suitcase. Northwest Airlines pilot Bob Plath watched his colleagues drag their suitcases through busy airports and invented the Rollaboard. Before Plath’s invention, luggage was oriented horizontally. In 1987, Plath designed a vertical bag with two wheels and an extendable handle that could easily be rolled through airports. Plath started selling them to pilots and flight attendants, and it didn’t take long for passengers to see the game changer product and ask airline employees where they could buy one. Start niche. Go mass later. Once you have an established, delighted customer base that’s willing to endorse your product, then you can broaden your audience. Done right, niche marketing stretches your marketing budget. No more wasting money trying to capture the attention of consumers who don’t find your product or advertising particularly relevant or will be slower to try it. So how do you win big in a small market? Here are six steps. Step No. 1 — Define your product or service: What are you selling? It’s a simple question that many new and established companies struggle with answering. Many companies develop extensive product offerings in an attempt to sell a lot to a broad market. While this approach may be successful for huge advertisers like Apple, Nike and L’Oreal, without significant consumer research and advertising budgets it’s challenging for smaller companies to succeed. Niche marketers can prune their
product portfolios and focus on the “winners” for their target market. Step No. 2 — Define your target audience: Segmentation is crucial to defining a smaller target market for your niche business. The smaller the target market, the greater opportunity you have to better understand and create a relationship with your customers. It’s not enough to know basic customer information including age, income, marital status and geography. For example, does the niche offer an opportunity for an attractive return on your marketing investment? Determining the profitability of your target audience is key. Step No. 3 — Tailor your message to your target audience: Think Lehman’s, the family owned and operated hardware store that offers “simple products for a simpler life.” Founded in 1955 by Jay Lehman to serve the local Amish population, the single hardware store now ships simple U.S.-made products to more than 85 countries. Since its inception, Lehman’s has touted the same message, “we sell non-electrical products that are dependable and reliable.” It happily acknowledges that it sells “low-tech items in a high-tech world.” That’s not a message that resonates with everyone. However, it’s very attractive to their niche. Step No. 4 — Hear your customers: Staying abreast of what your customers are saying about your products and your competitors is another important step in the niche marketing process. Your customers’ words belong in your advertising. Their product comments, positive and negative, are invaluable inputs for product development. The beauty of niche marketing is there’s likely a blog, website, LinkedIn group, Instagram account, online forum and other online outlets where your customers are hanging. Find where your customers are and listen. Step No. 5 — Tailor your marketing to your target audience: Don’t just assume that you can identify your niche and then do the same
old marketing. Traditional advertising campaigns don’t make sense for most niche markets. They’re too expensive, too difficult to target precisely enough and the messages are too general. There are entire product categories, such as craft beers, where most products are never advertised. Their marketers have learned how to use consumer-generated online content including reviews, ratings and customer feedback. Find where your customers are and start a conversation. Step No. 6 — Test, refine and then test some more: Just because sales are up, profitability goals are being met and customers are happy, doesn’t mean you can coast. Consider every marketing program as a test. Consumers’ needs change. The media world is dynamic. A marketing campaign that worked yesterday may not work tomorrow. Win big by targeting small. Pick the right product and the optimal audience and tailor everything you do for them. Spend your marketing dollars wisely by studying your audience and using their language in your advertising. Rollaboard did it and today 15 of Amazon’s 20 bestselling suitcases have wheels. Go niche!
Suite Spot LLC, a consulting firm. “And these responsibilities still land on us.” The Cleveland chapter of the National Association of Women Business Owners also serves women, but it focuses on business owners of companies of all sizes. Board president Megan Patton said that for small business owners and entrepreneurs, in particular, the group’s educational programs give professionals “solid tools” to succeed. And the networking is important, too, as members are accessible and giving of their time. The group, which has just under 75 members, has been in Cleveland for about 35 years and can draw on the expertise of the national organization.NAWBO also has been developing a new program to further support business leaders where small, committed groups of members will meet regularly and act like one another’s informal board of directors. Other NAW-
BO chapters have already been using these groups. One has been running locally for about a year-and-ahalf as a pilot and has helped members launch new services and rebrand their businesses, said Patton, managing director of ODA Strategy, the new name, as of Sept. 14, for what had been known as O’Donnell & Associates. Obi of the Presidents’ Council pointed out that helping entrepreneurs grow can help the community as jobs are created. African-American-owned businesses tend to hire more African-American individuals in their communities, he said. Overall, Obi said networking can be vital to entrepreneurs, as it can take awhile for banks to invest in an idea. “Entrepreneurship can be a lonely place,” he said. “Entrepreneurs benefit when they can get together among themselves and share ideas and talk.”
Laura Sheridan is president of Viva La Brand, a Cleveland-based brand and marketing strategy and ad agency search firm.
CHAMBERS continued from page 17
ity chambers is part of why those groups have thrived in Cleveland. People want to do business with people they know, and members of an affinity chamber already have something important in common, she said. The nonprofit WIN (Women in Networking) Cleveland was created in 1997 by a few women who were reentering the workforce after having children or going through divorces, said president Suzanne Carle. The women wanted a safe place to grow a professional network. The group typically serves entrepreneurs and women working a book of business of their own. Its 60 to 75 members support one another’s businesses and discuss issues that often hit home for women professionals, in particular, like balancing work and family. “Women still are the caregivers,” said Carle, who also is president of
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PRICE continued from page 1
selling tickets to a corporate partner or booster, or using school funds to purchase seats — is well within the rules, and it’s likely the reason no FBS schools have been booted for not meeting the magic number. “They can revoke your membership, but that’s never happened to my knowledge,” said George Van Horne, Akron’s senior associate athletics director for development and marketing. Kent State director of athletics Joel Nielsen said the Golden Flashes’ FBS status when he was hired in March 2010 “was about as tenuous as you can probably get. “We kind of walked in with the mandate that we make the number,” Nielsen said. “The NCAA was understandable with the change (in athletic directors). They allowed us to make the number our first year.”
‘Ongoing challenge’ Kent State’s independent audit showed a norm of about 15,100 per football game in 2014. Asked if that was a relief for the 2015 season, Nielsen said, “I don’t know if the pressure is ever off. I don’t even think it’s the process of making that ticket number. It’s an obligation to the coaching staff, players, alumni and fans (to get as many people to the games as possible).” In the Cleveland-based Mid-American Conference, that’s often a bigger challenge than it is for any of the nine other FBS leagues. According to the NCAA’s 2014 attendance report, the MAC’s per-game norm of 15,431 last season was down 1,308 from 2013 and was the worst of the 10 FBS conferences. Akron’s 9,170 average was the lowest of the 125 FBS programs in 2014, and Kent’s 13,544 norm (Nielsen said the NCAA figures often differ from the schools’ year-end audits) ranked 119th. Four of the eight teams that failed to average 15,000 fans per game were from the MAC. “I think that’s an ongoing challenge,” MAC commissioner Jon Steinbrecher said of getting more fans to attend sporting events. “Back in the day of three channels and whatever, you went to the games. We’ve in some ways made it easy to
CAN PARTNERING HELP? stay home.” Turner — a former AD at Connecticut, North Carolina State, Vanderbilt and Washington — said getting casual fans away from the comforts of home on a football Saturday “is really an art, and that’s especially true of the millennial generation.” Attracting fans “in the margins, which a lot of students are, that’s a real challenge,” he said. It’s one that has the likes of Akron and Kent State pulling out all the stops.
Here, have a season ticket Since 2008, the year before the debut of the 30,000-seat InfoCision Stadium, Akron has hit the 15,000 attendance mark every other year. It’s an odd year, which for the Zips means it’s one in which the mandate must be met. For its home opener against Pittsburgh on Saturday, Sept. 12, Akron took a page out of the minor league baseball playbook that has been so successful for the nearby RubberDucks. There was a Zips Fest, which included inflatables in and around the stadium, a live band, digital photo booth, face painting and even postgame fireworks. Throughout the spring and summer, Van Horne said the Zips went all out in an effort to promote the football program to the community. The outreach extended to the students, with booths at the student union, a meeting with the 1,000-member AK Rowdies and an RA appreciation day. “We’re really trying to engage them and get them excited,” Van Horne said. “We’ve built an interaction, and we hope to get a better crowd of students to our games.” And instead of buying the tickets themselves — “but then they’re just sitting in the drawer and you never distribute them,” Van Horne said — the Zips are simply giving a bunch away. Graduates from the last year received a pair of free football season tickets in the mail (about 9,000 were distributed in all), with the hope that quite a few will become future customers. “We’ll track that throughout the year — how many tickets are used and which accounts use
them,” Van Horne said.
‘Are you not committed?’ Larry Williams has been in charge of Akron’s athletic department for fewer than two weeks, but with a résumé that includes stints as a practicing attorney, the leader of a top corporate licensing program and serving as the director of athletics at Marquette University, he’s very familiar with budget constraints and unpopular NCAA decisions. The 10th-round pick of the Cleveland Browns in 1985 said the effects of the FBS attendance mandate are “well noted,” and he believes “the intent of the rule is well-placed. “We want to make sure at the Division I level there is a significant commitment to the game,” Williams added. “You can’t exist in that space without a significant commitment. How schools demonstrate that commitment varies.” Turner’s biggest problem with the rule is that FBS schools are already demonstrating their commitment by dedicating major dollars to football, plus handing out the equivalent of 85 full scholarships. “I don’t know why attendance becomes a metric,” the president of Collegiate Sports Associates said. “Back in the day, maybe it was more important.” One of the many athletic directors with whom Turner has worked, Nielsen, agrees. “In basketball, if you don’t hit an attendance number, are you not committed?” the Kent State AD said. “You can make that argument about everything we do.” There is an obvious way for Akron and Kent State to make it easier on themselves in meeting the attendance mandate. The Zips are 16-56 since InfoCision Stadium opened in 2009, and the Golden Flashes have had one winning season since 2002. “Ultimately, I don’t care how entertaining we make the circus or event, at the end of the day, it’s about competition,” Williams, the Akron AD, said. “People in Northeast Ohio appreciate success. They vote with their feet and wallets.”
Cleveland State University boasts one of the highest-performing collegiate sports programs in the region with its basketball team, though not many folks are attending those games, either. That’s something university officials hope will take a turn for the better with a new partnership with Quicken Loans Arena. According to the most recent NCAA men’s basketball attendance report, Cleveland State averaged a mere 1,996 fans for its home games at the Wolstein Center during the 2014-2015 season, well below the NCAA Division I average of 4,754. With this new partnership, university officials hope to add a bit more dazzle to its basketball program as it calls for Cleveland State to play five men’s basketball games and at least one women’s contest at The Q during the 2015-16 season. But perhaps of even more importance to Cleveland State is that it’ll have access to the same, well-oiled engine that sells tickets for the Cavaliers, Lake Erie Monsters, Cleveland Gladiators and the Canton Charge. “We’re in a very fortunate place with our NBA product,” said Kerry Bubolz, president of business operations for the Cavs and The Q. “We have a lot of great fans out there, and we want to introduce them to Cleveland State as another option. We’ll have a dedicated infrastructure just focused on Cleveland State.” As part of the relationship, The Q’s sales operation will take over all sales for Cleveland State home basketball games — not just those five at The Q. And given that The Q plans to cross-promote Cleveland State games with its other successful team properties, officials are hopeful that’ll translate to an attendance boost, even among students who receive two free tickets to each home contest. “With that infrastructure and our cross-promotional platform, that’s a pretty big engine we can then take and apply to Cleveland State,” Bubolz said. — Timothy Magaw
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Westlake, Mentor, Solon, Akron and Canton. Everstream has about 40 employees today, but Lindsey thinks that figure could double in five years. The company will receive $46 million up front and the rest over time, as needed, Lindsey said. An undisclosed amount of money will go toward paying off debt.
Lots at stake Gonick says that the investment will help Everstream unlock the true commercial value of the fiber network. Over the years, he’s often referred to it as a $200 million network. The investment also will help OneCommunity achieve its mission, he added. For one, the ongoing payments that OneCommunity will receive should help the organization sustain itself over the long term. Everstream’s success also could help solidify OneCommunity’s financial future, since the nonprofit will retain a minority stake in the company, according to OneCommunity chairman Ray Voelker, who also is the chief infor-
mation officer at Progressive Corp. in Mayfield Village. “At some point, our equity stake that remains becomes the seed for an endowment for OneCommunity,� he said. The deal has been a long time in the making. For instance, just three weeks after Lev Gonick became CEO of OneCommunity in mid2013, he sat down with Lindsey at the Blue Point Grille, which is next door to OneCommunity’s headquarters on St. Clair Avenue. After that conversation, Gonick knew that he’d walked into an organization that had a wealth of opportunities but needed more cash, he told Crain’s. OneCommunity formed Everstream partly as a way to generate revenue to fund its programs, while furthering its mission to connect more local organizations to ultrafast Internet connections. OneCommunity’s board took it a step further a year-and-a-half ago, when it decided to start the process of finding a partner that could provide an injection of cash. It hired an out-of-state investment banking firm called Media Venture Partners
Who are the most connected people in Northeast Ohio, and how do they rank?
to go looking for that partner.
Next steps Now, OneCommunity is talking to local technology leaders and innovators “to figure out what it is we really want to do next,� Gonick said. OneCommunity — which now consists of three employees, including Gonick — has been holding events designed to get more local companies and organizations interested in tackling projects that could take advantage of the high-speed network. Such projects might involve processing lots of data, or allowing factory machines and other devices to communicate via the Internet. Now OneCommunity has to figure how it can help other organizations “connect those dots,� Voelker said. OneCommunity also is working on a handful of pilot projects and a few other programs that are “not ready for prime time,� Gonick said. But those projects will not involve owning lots of fiber-optic cable, Voelker said. “Being in the network business is capital intensive. It’s resource intensive,� he said.
Crain’s Cleveland Business this year is celebrating 35 years of making connections by attempting to answer that question. On Oct. 26 we will publish a data-driven section, created in partnership with the New York-based technology company Relationship Science. The section will use information collected from Crain’s weekly lists to determine who has the most access based on their links to individuals, institutions and organizations. In a nutshell, this list lets the facts speak for themselves to create a picture of who knows whom — and how. And, trust us, there are some surprises. But you don’t have to wait until Oct. 26 to find out who made the list. Over the next several weeks, we will be releasing the list alphabetically, 20 names at a time. Below includes the second installment: Stephen H. Gariepy Stanley C. Gault Jay A. Gershen James R. Geuther Daniel B. Gilbert Robert W. Gillespie James A. Goldsmith Christopher M. Gorman Paul G. Greig Bonnie W. Gwin
Michael J. Haas Karen R. Haefling Stephen R. Hardis J. David Heller Peter S. Hellman Christopher J. Hyland Alex B. Johnson Jerry L. Kelsheimer R. Steven Kestner Richard J. Kramer
To see more names, go to crainscleveland.com/mostconnected, and stay tuned for the rankings on Oct. 26.
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Kenneth B. Liffman ’79 Barbara K. Roman ’77 David E. Nager ‘90 David M. Paris ’78 Katie L. Farrell ’14 Dennis R. Lansdowne ’81 Andrew J. Renacci ’12/Patrick J. Burke ’03 Missia H. Vaselaney ’84 Diane S. Leung ’92 / Andrew L. Turscak, Jr. ’01 Thomas W. Baker ’98
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Dean Craig M. Boise, the faculty, staff and students of Cleveland-Marshall sincerely thank you.
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the state in deals tracked by JobsOhio, the statewide economic development nonprofit that funds tax incentives and vets tax credits. Northeast Ohio also accounted for only 21.6% of the jobs retained, according to JobsOhio’s tracking. Jobs retained is a measure of the number of jobs that stayed in-state as a result of the support provided by JobsOhio and its regional partners, including Team NEO. JobsOhio also measures the amount of capital investment pledged that received JobsOhio financial support for locating or upgrading operations in Ohio. There, too, Northeast Ohio lagged, snagging only 13.5% of the $11 billion invested in building or expanding operations. Koehler, though, is looking forward, arguing that the regional economy has been struggling for 40 or 50 years to transition from what he called a “people-based” economy to a technology-based one that, now, is on the verge of breaking out. “I start from a point of view that this is the reality we are in and that it is a call to action,” he said.
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The plan laid out for Koehler by Team NEO’s new, expanded board of directors includes sharpening its focus on industries with growth potential — the biomedical industry will be one of those — and supporting, for the first time, startup businesses. The organization also will increase its emphasis on keeping and growing existing businesses and doing more to address the tal-
ent and workforce needs of the region’s employers. Those are ambitious goals, but they’re not so different from the ones Team NEO and the region’s economic development leaders have set in the past. “Yes, you have heard this before. There is no quick fix silver bullet,” wrote Edward “Ned” Hill, professor of public affairs at Ohio State University and former dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University, in an email. A number of economists believe that the region’s economy will continue to lag behind any state or national average until the region’s population grows. “We need population growth, but we also need growth in educated workers,” Hill wrote. “The in-migration of residents into downtown Cleveland is part of the change.” Northeast Ohio has been in a population tailspin for decades that continues. Between 2010 and 2015, according to census figures compiled by the Ohio Department of Development Services Agency, while the country’s population grew by 4.1% and the state population remained the same, Northeast Ohio lost 1.2% of its population. Koehler, pointing to the growth of downtown Cleveland and the influx of young professionals, see signs that decline can be reversed. But the problems for Team NEO are also structural, owing to the nature of the region. Pete Carlson, president of a Washington, D.C, public policy consultancy, Regional Growth Strategies, has worked with
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Northeast Ohio’s economic development groups. He said that while Team NEO may be able to lead the marketing effort to attract new businesses into the region, it will continue to have a harder time coordinating efforts to encourage existing businesses in the region to expand here. That’s because, unlike most regions that are built around a single metropolitan economy, the Team NEO region has at least four distinct and heretofore independent,
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metropolitan economies — AkronCanton, Cleveland, Elyria-Lorain and Youngstown-Warren. Most of a region’s job growth — more than 75% typically — comes from existing businesses expanding. “I thought the region was violating the laws of regional physics by defining the region across so many metro areas,” said Carlson, who has been studying economic growth and opportunity in 10 metropolitan regions, including Northeast Ohio, for the Brookings
Institution since 2011. “You can do that when you are playing the attraction game because there are economies of scale,” he said. “But you can’t do that when you’re trying to put together a good ground game (for expansion and retention) because that is a much more local kind of effort. It makes much more sense to organize that by individual metro area.” That attitude has been shared, usually privately, by government and civic leaders in recent years, and
the frictions within the partners in Northeast Ohio’s economic development lineup have at times hampered efforts to operate effectively. Koehler said Team NEO can play a strong supporting role in retention and expansions by making businesses and economic development officials more aware of the services Team NEO and its network of economic development nonprofits can provide to businesses looking to grow. Among the organizations Koehler was referring to
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THE WEEK SEPTEMBER 7 - 13 The big story: OneCommunity plans to sell the majority of its operations — its high-speed Internet services business and the fiber-optic network that the business was built upon. Two private equity firms plan to invest $50 million in Everstream Solutions LLC, the subsidiary that runs the Internet services business for the Cleveland-based nonprofit. See related story, Page One.
Lead position: Look for conversion of downtown Cleveland’s 15-story Leader Building to a primarily residential building to begin immediately. Doug Price, CEO of Willoughby-based K&D Group, said the company recently closed on a $62 million financing package for the project. The project uses federal and state Historic Preservation Tax Credits, which Price said attracted PNC Bank to serve as its lead lender. K&D expects to complete the installation of 224 one and twobedroom apartments in the structure by July 2017.
What’s in store?: New Orvis and Lululemon stores, plus an expansion of the existing Trader Joe’s, are among the highlights of a new lineup at Crocker Park as the mixed-use property in Westlake grows in anticipation of the opening of the new American Greetings headquarters. Officials at Crocker Park on Sept. 9, formally unveiled the lineup of new retail tenants — totaling 250,000 square feet — that will open as part of the $400 million expansion. The expansion includes what will be called the American Greetings Creative Studios, a Hyatt Place hotel and 318 new luxury apartments.
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Small firms are onboard with goals of this bus Fifth Third Bank’s e-bus promotes financial literacy and access to banking services — but it’s bringing support for small business owners along with it, too. Loosely dubbed the e-bus, the Financial Empowerment Mobile continues its 11th annual tour through Cleveland neighborhoods this week, but it’s making some additional stops for the Northeast Ohio Small Business Bus Tour as well. The purpose of the tour is to provide small business owners and entrepreneurs with business coaching, access to capital and supplier diversity opportunities, said a spokesperson for the bank. On the bus, participants can receive free credit reports, one-on-one coaching for capacity building and sourcing opportunities. Other information will center on coaching and strategies to move a business forward, marketing and business law, among other topics. There will also be a paneljudged pitch competition for business owners where winners will be selected based on quality of the pitch, creativity, passion and product viability. Interested attendees should contact Tanisha Rush at Fifth Third Bank, at 216-2745443 or via tanisha.rush@53.com. Here’s where the small business bus tour will be: 9 a.m. to 2 p.m. on Wednesday, Sept. 16 at Akron Global Business Accelerator, 510 S. Main St. in Akron; and 9 a.m. to 2 p.m. on Thursday, Sept. 17, at JumpStart, 6701 Carnegie Ave., Cleveland. — Jeremy Nobile
MILESTONE
Bird is the word: Cedar Point aims to swoop into more record books next year when it unveils Valravn, which it’s billing as “the world’s tallest, fastest and longest dive coaster.” The Sandusky amusement park on Sept. 9 unveiled plans for its 18th roller coaster — pronounced “val-rey-vuhn” — which will open in summer 2016 and will be built near the park’s marina entrance. Cedar Point said Valravn will set 10 world records when it opens, including tallest dive coaster (223 feet) and fastest dive coaster (75 mph).
Looking into it: Shiloh Industries Inc. missed the Sept. 9 filing deadline for its quarterly financial report because of what it called “an ongoing internal investigation into the accounting for certain costs” at the company’s operation in Wellington. The Valley City-based maker of lightweighting, noise and vibration products disclosed in a regulatory filing that due to the investigation, it could not meet the deadline “without undue effort and expense.” Shiloh said it is “working toward filing the quarterly report as soon as practicable.” The report covers the quarter ended July 31. Shiloh said it “expects that the aggregate impact on company’s net income will be in the range of $2.2 million to $2.5 million.”
gate you’re not guaranteed a seat at actual convention sessions, only “priority consideration” for an otherwise empty seat. And, of course, you don’t get to vote for a candidate. — Jay Miller
Recognition for 30-plus years of jobs well done
$2,500 to be an honorary delegate is not Trump change Not a Republican or a member of the media, but you want to join in the hoopla of next July’s presidential nominating convention anyhow? There might be a way. The Ohio Republican Party is offering members of Cleveland’s Union Club — regardless of party affiliation — the opportunity to become an “honorary delegate” at the Republican National Convention. “All honorary delegates are invited to exclusive ‘delegate-only’ functions, including daily delegation breakfasts featuring national Republican officials and strategists, as well as the nightly Ohio delegation postconvention receptions and many other special events that week,” read the email to club members, under the Union Club logo, from Susan Waidner, finance director of the Ohio Republican Party. “This offer stands regardless of your party affiliation,” she wrote. The cost? Only $2,500, though Waidner is quick to point out that as an honorary dele-
Do the math
COMPANY: Hitchcock Fleming & Associates Inc., Akron OCCASION: Its 75th anniversary The full-service advertising and marketing agency, now known primarily as hfa, was cofounded in 1940 in downtown Akron by Ralph Hitchcock and Robert Wolfe. At the time, they conducted business as Akron Advertising Art. By 1968, hfa had moved to 475 Wolf Ledges Parkway, and Hitchcock’s son, Cy Hitchcock, along with Bob Fleming, had assumed leadership of the firm. It was renamed Hitchcock Fleming & Associates in 1978, when the firm moved to its current location at 500 Wolf Ledges Parkway. Hitchcock and Fleming hired the next generation of leaders — Stan Buda, who became chairman after Cy Hitchcock retired, and Jack DeLeo, who rose to president/CEO and who led hfa for nearly 20 years through his retirement in 2013. Today, with nearly 100 employees, the firm says its “core values” include “collaboration, engagement, integrity, aspiration, creativity and fun,” enabling it to serve clients in Akron and around the world. It’s led by Chuck Abraham, who became managing partner in 2013, and by seven other partners: Shirley Shriver, Keith Busch, Kevin Kinsley, Matt McCallum, Dale Elwell, Maggie Harris and Tracy McCutcheon. For information, visit www.teamhfa.com. Send information about significant corporate anniversaries to managing editor Scott Suttell at ssuttell@crain.com.
A woman whose career at the Cleveland Orchestra spans the tenures of three administrative leaders has been named the winner of the orchestra’s Distinguished Service Award. Rosemary Klena, who was hired by the orchestra in 1984 and retired from the staff at the end of July, will receive the award prior to the orchestra’s concert at Severance Hall on Thursday, Sept. 24. It will be presented by Dennis W. LaBarre, president of the board of the Musical Arts Association. Klena originally worked as secretary to orchestra general manager Kenneth Haas. She continued serving as executive assistant to Thomas W. Morris (the orchestra’s executive director from 1987 to 2004) and Gary Hanson (executive director, 2004 to 2015). She also served as an officer for the Musical Arts Association, and in the past decade took on responsibilities including working as a personal assistant to music director Franz Welser-Möst. “Few people have served the orchestra in more ways, over a longer period of time, and with greater dedication than Rosemary Klena,” LaBarre said. The award was established in 1996 to recognize “ongoing and extraordinary service” to the orchestra. — Scott Suttell
BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.
State of the art: The city of Cleveland’s plan to place public artworks along the Greater Cleveland Regional Transit Authority’s Red Line from Cleveland Hopkins International Airport to downtown got a big boost from the Cleveland Foundation. The foundation approved a $150,000 grant to LAND studio to support the plan, which aims to be done in time for the Republican National Convention next July. In making the grant, the foundation supplements $357,000 in Northeast Ohio Areawide Coordinating Agency funding for the first phase of the project. The public artworks will be inspired by the Anisfield-Wolf Book Awards, the annual literary prize it presents that recognizes books that confront racism and celebrate diversity.
SEPTEMBER 14 - 20, 2015
The Cleveland Clinic earned a mention in a Washington Post story about the building boom in cancer facilities. The paper noted that more than 1.6 million people in the United States will be diagnosed with cancer this year, according to the American Cancer Society, which said the number is certain to rise with the aging of the baby boom generation. As a result, The Post said, “There is a push to bring the latest specialized treatments and access to more clinical trials to patients who don’t live near major academic research centers. And there is fierce competition among hospitals searching for reliable revenue in a rapidly changing health care landscape.” The expansion of cancer facilities “is driven largely by math,” according to the story, as an estimated 10,000 Americans are signing up for Medicare each day. Many of them will end up with a cancer diagnosis. “Cancer is going to overtake cardiovascular disease, if it hasn’t already, as the number one cause of death for U.S. citizens,” said Brian Bolwell, head of the Taussig Cancer Institute at the Clinic, which is building a $300 million outpatient center that is scheduled to open in 2017. “We’re seeing more and more patients,” he said. “It shows no signs of abating. We literally don’t have enough space.”
Worth emulating LeBron James is “the signature socially conscious athlete of his time,” according to an essay in ESPN The Magazine. Howard Bryant wrote, “White America grows exasperated by the insistence that race still matters, but these facts are a neon sign pointing not at post-racialism but to an entrenched underclass. In Akron, Ohio, hometown of LeBron James, the black
poverty rate is 28 percent, 12 points higher than the state average. To James, the numbers are not just a topic, ammunition for winning an argument, but statistical recognition of his life before fame.” He noted that just days after the anniversary protests marking Michael Brown’s death in Ferguson, Mo., James “partnered with the University of Akron and countered the numbers with other numbers, pledging $41 million to send as many as 2,000 at-risk Akron kids to college.” The massive initiative is “a reminder that, in addition to protest and pressure, the rhetoric of pulling oneself up by one’s bootstraps means nothing without boots. It was also something else: proof that James is the signature socially conscious athlete of his time. By this measure he need not aspire to be Michael Jordan. He’s already run right past him.”
Hey, that’s our title! A Chicago Tribune reader is worried that George Lucas is helping the Windy City take on a famous Cleveland moniker. From the letter to the editor by Steve Sarich of Grayslake, Ill.: For many years the city of Cleveland held the less than flattering description as the “Mistake on the Lake,” a reference to the city’s location on Lake Erie. When Lake Erie literally caught fire in 1969 — or more precisely, the Cuyahoga River, which flows into Lake Erie — it did nothing to enhance Cleveland’s future reputation as the “mistake.” Chicago is about to embark on an effort to appropriate Cleveland’s erstwhile moniker by allowing George Lucas, of “Star Wars” fame, to build his museum, based largely on the foundation of the “Star Wars” movie franchise, on the lakefront. He concluded, “Let’s not create a new moniker for the city of Chicago by creating the ‘Farce on the Lake.’ We don’t need the ‘farce to be with us,’ in perpetuity.
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