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CRAINSCLEVELAND.COM I FEBRUARY 10, 2020

ENERGY

POWER STRUGGLE Federal ruling calls into question Ohio’s nuclear plant subsidies BY DAN SHINGLER

“THE FERC ORDER TIPS HOUSE BILL 6 ON ITS HEAD.” — From a statement provided by the Ohio Manufacturers’ Association

to a trend of state subsidization of uneconomical power plants, including those benefiting from the recently passed Ohio House Bill 6 (HB6),” the report reads. “The FERC order is a giant stick against state subsidies, and tips HB6 on its head: Rather than improve the economic position of select Ohio (and Indi-

ana) power plants, the HB6 subsidies now jeopardize these same power plants from competitively earned revenue in the wholesale electric capacity market. ... About $190 million in annual capacity revenue for these same generators is now at risk,” it adds.

FERC’s approach While it says it’s not telling Ohio or any other state whether to subsidize their power plants, FERC wants to make sure auctions for capacity power are fair and competitive. It’s instructed the regional grid operator PJM to institute a minimum offer price rule (MOPR) for its capacity auctions, setting prices at which subsidized plants could bid in. See FERC on Page 18

FIRSTENERGY

Federal regulators have taken issue with Ohio’s subsidies for the Davis-Besse and Perry Nuclear plants — and may shut the plants out of the power grid’s capacity auctions. As a result of a Dec. 19 ruling by the Federal Energy Regulatory Commission (FERC), manufacturers and power experts say the windfall of 2019’s HB6, which provides about $150 million per year in subsidies to the plants, will be blunted, if not wiped out completely. “The FERC order tips House Bill 6 on its head,” reads a statement provided by the Ohio Manufacturers’ Association, which did a study of the ruling. The OMA study was completed Jan. 30 by Columbus-based RunnerStone, OMA’s energy technical con-

sultant. It contends the actions of Ohio to subsidize the money-losing nuclear power plants helped to trigger FERC’s action, which in turn puts those same plants at new risk. “FERC’s order is a direct response

REAL ESTATE ANALYSIS

The making of the potential headquarters site for Sherwin-Williams Co. BY STAN BULLARD

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advocates and developers often bemoan the profusion of surface parking lots as much as downtown workers prize affordable parking rates, the many setbacks created a scarce opportunity in the midst of downtown. Considering the ground and its location, Frank Spano, an executive adviser to the Mayfield Heights-based Austin Co. design-build firm that specializes in site selection, asked, “How many cities have a site such as this? “Cleveland is a good-sized city with a good-sized downtown,” he added. “It has a thriving business culture. For a city to have that valuable a parcel in the heart of it is extremely rare. That land should have a skyscraper or be highly developed. But it’s a nice opportunity to have it available.”

Stitch together the pain of Cleveland pro football and baseball fans from The Fumble, The Drive and the baseball strike as if they were pieces of cloth to create a massive quilt of misery. In real estate terms, similar missed

opportunities over decades set the table for the 8-acre sea of parking lots on Public Square and northwest of it to produce a prospective site for Sherwin-Williams Co.’s new global headquarters with a million-squarefoot office complex in the city’s epicenter. Although city planners, downtown

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Likewise, Michael Cantor, a principal and managing director of Allegro Real Estate Brokers and Advisors, said he wonders how many downtowns would have such “a sea of parking at a crucial part of downtown. Every city is different, but usually the seas of parking are elsewhere, on the fringes of town. This should have been developed decades ago.” Cantor noted the search by Seattle-based Amazon for its second headquarters showed that cities can cobble together potential sites for projects they want. He estimated about 20 sites were submitted in that size range by cities in the quest for the online retailer’s monstrous second headquarters. See HEADQUARTERS on Page 18

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SPORTS BUSINESS

WEWS remains Browns’ preseason home New deal keeps exhibition games, other programming on ABC affiliate BY KEVIN KLEPS

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WEWS is joining head coach Kevin Stefanski and general manager Andrew Berry on the list of new long-term contracts for the Cleveland Browns. The Browns and News 5 Cleveland have agreed to a deal that will keep the team’s preseason games, along with other shoulder programming, on Cleveland’s ABC affiliate for at least the next few years The team and station announced the new deal on Friday afternoon, Feb. 7. The previous agreement, WEWS vice president and general manager Steve Weinstein told Crain’s in 2019, was for five years, with the Browns holding an option that could “roll it over another two years.” Instead, the parties have agreed to a new contract that, according to multiple sources, is similar in length to the previous deal. The move concludes a stretch in which each of Cleveland’s major TV stations — WEWS, WJW, WKYC and WOIO — expressed interest in Browns rights that, despite all of the franchise’s failings, remain valuable because of the large audiences the preseason broadcasts produce. The four Browns preseason games that aired on WEWS last summer generated an average rating of 20.4. The norm was 15.2% higher than the 17.8 average for the three preseason games that aired on WEWS in 2018. Three of the four preseason contests in 2019 drew ratings above 21. Only two of the 12 Browns preseason games on WEWS from 2015-18 had ratings of 21 or higher. The broadcasts aren’t big money-makers for the rights-holders, because the stations pay the talent and production costs and the Browns re-

The Browns’ 2019 preseason broadcasts, which included Odell Beckham Jr. for the first time, generated an average rating of 20.5 for WEWS. | CLEVELAND BROWNS

ceive the bulk of the advertising revenue. One source with knowledge of the deals told Crain’s that it can be difficult for the local station to turn a profit on the preseason games. Still, WEWS was eager to re-up with the team, which draws a considerable amount of interest no matter how much it struggles. The average rating for the Browns’ 16 regular-season games — contests that aired on WOIO, WKYC, WJW and ESPN — soared 11.2%, to 34.9, in the Cleveland designated market in 2019. The double-digit increase occurred during a year in which the club fell well short of playoff expectations. Sources told Crain’s that the Browns met with the local stations before Christmas, and several of the networks aggressively pursued preseason rights that, prior to 2015, had been owned by WKYC for eight years. “Everyone at our station is thrilled with the continuation of our long-

term partnership with the Cleveland Browns,” Weinstein said Feb. 7. The Browns’ unique radio rights deal, which was struck with CBS Radio (now under the Entercom Communications umbrella) and Good Karma Brands in 2013, also expired after the 2019 season. The incumbents — WKRK-FM, 92.3, and ESPN Cleveland — are considered the favorites to retain the rights, though WTAM-AM, 1100, is also in the mix, several sources told Crain’s. The fit with WTAM is more difficult, though, because iHeart also has Cavs and Indians radio rights, and the Browns deal comes with about 1,000 hours of annual programming. Keith Hotchkiss, iHeart’s northern Ohio president, told Crain’s the company has had some talks with the Browns, but the parties would have to figure out how programming rights for Cleveland’s three major sports teams “could work together.” The media deals will fall under the watch of another new Browns hire. Mike Mossholder, a former executive vice president of global marketing partnerships for the UFC, joined the Browns as chief marketing and revenue officer in January. Mossholder replaced David Freeman, who joined the Browns in 2016 and left at the end of 2018. Mossholder’s position, according to a team source, is more expansive, since revenue was added to the marketing and media aspects of the role’s job description. Freeman, a former head of brand strategy for Maple Leaf Sports & Entertainment, recently joined the Cavs as a marketing and content consultant. Kevin Kleps: kkleps@crain.com, (216) 771-5256, @KevinKleps

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GOVERNMENT

State targets eminent domain as park systems plan to expand Cleveland Metroparks opposes two proposed bills, saying it doesn’t treat eminent domain in a ‘casual’ manner BY KIM PALMER

Two proposed bills in the Ohio statehouse are targeting how metroparks systems acquire private property to develop recreational trails for public use. House Bill 288, sponsored by Rep. Don Manning (R) from New Middletown, would prohibit the employment of eminent domain for any trail used for biking, hiking and skiing. A subsequent bill, House Bill 476, co-sponsored by Manning and Rep. Stephen D. Hambley, R-Medina, would not completely ban the use of eminent domain for recreational trails, but would provide local elected officials veto authority over those specific types of private property acquisitions. Eminent domain is the right of a government agency to acquire, with just compensation, private property, as long as it is used for public use. Ohio law currently does give property owners the right to contest eminent domain in probate court. Hambley’s bill would allow local elected officials to have legal authority similar to probate judges to veto or nullify an eminent domain claim. “A local legislative authority like a city council or town trustee, who do land use planning and transportation planning, are often better than judges to evaluate these claims,” Hambley said. Cleveland Metroparks commissioner Bruce Rinker opposes both bills. The real estate lawyer and former Mayfield Village mayor said eminent domain is a rarely used but much-needed tool for creating trail networks popular with cities bisected by highways. “It is a very critical function for us to be able to do. Our purpose is to create parks and park amenities and connections. We are very mindful of having that power,” Rinker said. “Cleveland Metroparks has used eminent domain, but it has been more than 20 years since it was last used. It is not something that is treated in a casual fashion.” The anti-eminent domain legislation reflects a growing divergence of urban and rural priorities in the state, specifically where the necessity of public greenspace meets personal rights. Ohio’s Fifth District Court of Appeals in January upheld an eminent domain claim by the Ohio History Connection, previously the Ohio Historical Society, regarding golf course property adjacent to Hopewell Culture National Historical Park. Considered the largest American Indian earthworks, the state historical society argued a public need to protect and access the Hopewell property, which is slated to be added to the UNESCO World Heritage List. With 300 miles of existing bike trails and a countywide greenway plan, the Cleveland Metroparks’ string of successful projects, such as the park system’s takeover of Edgewater Park, provide a healthy amount of community goodwill to support long-term, expensive projects like the expansion of Towpath Trail. However, park systems in more rural areas — like those represented by one of the bills’ sponsors — face a more existential resistance from farmers and other landowners who see public trails as an intrusion. Manning said in HB 288 committee testimony that property owners in proximity to a proposed Mahoning County extension of the Mill Creek bike trail were being “taken advantage of through the use of eminent do-

main,” adding that it infringed their rights for “the creation of something as trivial as a bike trail.” Nate Kelly, president and managing partner of CRESCO Real Estate, said he disagrees, arguing that parks and bike trails, like the Centennial Trail Lake Link and Red Line Greenway, are crucial examples of the amenities needed to attract younger residents and employees to a city. “I don’t think there is a better use of eminent domain than for the public spaces, which has a lot of economic impact,” said Kelly. “Now more

“I DON’T THINK THERE IS A BETTER USE OF EMINENT DOMAIN THAN FOR THE PUBLIC SPACES, WHICH HAS A LOT OF ECONOMIC IMPACT.” — Nate Kelly, president and managing partner of CRESCO Real Estate

than ever, quality-of-life improvements that benefit our neighborhoods and attract talent are the kinds of things that are a good use of the public-sector authority. It seems

foolish to handcuff that.” Larger metroparks systems, Hambley said, are not affected by his bill, which only applies to rural areas with smaller and sometimes distant probate courts. Rinker, though, said he is concerned the legislation will provide a slippery slope for more restrictions. “If (eminent domain) can be amended today, it certainly could be amended later,” he noted. “This bill is assuming that what exists today is not good enough, and that is unfortunate because it is just not the case.” Currently, both bills have been as-

signed to the Civil Justice Committee. If not passed by the end of the year, new legislation will have to be reintroduced next session. Rinker said recent studies have demonstrated that “land proximate to a park has higher property values, is safer, healthier and the overall quality of life is better.” He added, “The next generation has taken notes and are looking for ways to do it better. I think the trails do it better.” Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive

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HEALTH CARE

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ON-SITE INSPECTIONS

New location in Beachwood will be latest to offer home care BY LYDIA COUTRÉ

Having spent more than four decades carving out its space in the regional market, the Centers for Dialysis Care (CDC), a Northeast Ohio nonprofit provider of dialysis and related health services for people with kidney failure, is looking to continue its growth. CDC began in 1974, with one room in St. Luke’s medical building, serving eight patients. Today, it has more than 27 locations and about 550 employees, plus a new program slated to open in Beachwood this year. “We’re in a growth mode,” said Gary Robinson, CDC’s president and CEO. “Our history has been on the east side of the Cuyahoga (River), and we are growing on the west side, so I think that’s intentional on our part.” Convenient access to dialysis care is important for patients, who often require multiple visits a week for treatment, said Diane Wish, president of the Ohio Collaborative Dialysis Coalition, an educational outgrowth of the Ohio Renal Association, where she also serves as president. Wish previously led CDC for 35 years. “When you’re going three times a week, you really need something that’s conveniently located,” she noted, adding that many people need someone else to drive them to care because they may not feel up to driving after treatment. “It’s a big commitment, but if it’s local and it’s more convenient, it makes it much easier to do that.” The Ohio Collaborative Dialysis Coalition in late January released a report on the state’s 350 community dialysis centers. Together, these centers provide local treatment to more than 17,000 Ohioans and employ more than 6,000 workers. Roughly 88% of Ohio dialysis

patients choose treatment at a community-based clinic, according to the report. Wish said the number of these community dialysis centers continues to grow as the Robinson number of patients on dialysis grows annually. “It’s still growing at probably around 2%-3% per year of new patients that still, unfortunately, have a fairly high mortality rate,” she said. Dialysis care has helped people live longer, be healthier and stay out of the hospital, but a lot of hospitalization still occurs, so there still a lot of work to be done, Wish added. “We’re really hoping, on the prevention side, to try to create awareness with everybody about the causes of it, which is high blood pressure and diabetes are the main reasons,” Wish said. “And we want people to see their physicians and to — if they have one of these diseases — to try to make sure that they are getting the appropriate follow-up and so forth so that hopefully they won’t end up with the complication which could lead to end-stage renal disease.” Robinson also noted that the demand and need for dialysis services continue to grow. CDC’s most recent new location was added in Middleburg Heights in 2018. Last year, it opened a new flagship operation in University Circle. The Centers for Dialysis Care East was effectively a relocation of CDC’s first and oldest freestanding operation. “There is definitely a need for these services,” Robinson said. “I would say what we’re starting to see, probably

over the last five years or so — and it’s going to continue to escalate — is a shift toward more home care.” This has been largely driven by patient and provider demand, as well as new payment models that encourage the movement to home care, he said. For patients who have the support system and capabilities to receive dialysis at home, that’s often the preference. Nationally, the shift to home care has been slow. A 2017 study noted that fewer than 12% of patients requiring dialysis therapy receive it at home. CDC has had a home care program on the East Side for many years, Robinson noted, and started a program on the West Side within the last couple of years. The new location opening in Beachwood will offer home care services. Though outpatient center care is still by far the most prevalent patient treatment modality for CDC, the organization is seeing some revenue shift to the home care side. CDC’s patient revenue for 2019 was roughly $68.3 million, similar to the year prior. Of course, not everyone can use home care, so there will “always” be a need for other avenues as well, Robinson said. CDC’s health care team works closely with its patients to determine which treatment option is best for them and their lifestyle, he added. CDC plans to continue its growth on both fronts, including combining outpatient centers with home care, because both are needed. “I think what we’re looking at in the future is kind of a hybrid model that incorporates your traditional outpatient centers and can accommodate home care as well,” Robinson said. Lydia Coutré: lcoutre@crain.com, (216) 771-5228, @LydiaCoutre

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FINANCE

Klonk, now Oswald’s chairman, has ambitious growth plan Newly promoted executive envisions company as one of largest privately held agencies in U.S. BBY JEREMY NOBILE

With years of steady growth behind it, Cleveland’s Oswald Cos. is ready to lay on the gas with plans for gaining size and market share, which seemingly includes a more aggressive acquisition strategy. For the Cleveland-based insurance and employee benefits business, that all ramps up in what could otherwise be a down year for the insurance business broadly — or at least a more challenging one, according to Deloitte’s 2020 Insurance Outlook — though market pressures aren’t necessarily the drivers behind Oswald’s initiatives as much as a sense of opportunity to capitalize on in the market. “We are very happy with growth in the last seven years,” said Oswald CEO and newly installed chairman Robert Klonk, “and now I want to take that and double it in the next five.” Ultimately, Klonk said he sees Oswald growing into one of the largest privately held agencies in the country. He shared such goals while reflecting on the business the past seven years since he became CEO and where it’s going from here as he’s assumed the additional title of chairman effective Feb. 1. It’s all part of a previously announced succession plan with Marc Byrnes, who moved from CEO to chairman as Klonk became chief executive and who now

becomes chairman emeritus. “On behalf of the board, we are honored to promote Robert to this well-deserved position and excited to see our firm through Klonk its succession strategy,” Byrnes said in a statement. “It has been an honor to serve as chairman, and I look forward to continuing my commitment to the success of Oswald Cos. for years to come.” A CEO transition from Klonk to the next executive won’t play out for another four to five years. Oswald, now in its 127th year of business and employee-owned since 1985, has grown revenue at a clip of about 12% annually for the past few years, Klonk said, with perhaps a few exceptions. It has about 430 employees. Total sales last year were up 21%, elevating 2019 revenues to $95.5 million. The firm is projecting $105.5 million in revenue at the end of 2020 — and that’s without factoring in any potential acquisitions. “Our goal will be to be at $200 million by 2023 by creating strategic alliances with likeminded firms,” Klonk said. Among companies public and private, Oswald was the 42nd-largest in-

surance brokerage in the country in 2019, according to the most recent rankings by Business Insurance, with brokerage revenues of $85.47 million in 2018, reflecting annual growth in that business of 3.2%. The firm’s growth has historically been predominantly organic, with a few roll-ups sprinkled in. Its most recent deal involved InsureOne Benefits Inc. of Litchfield, a health insurance and Medicare benefits brokerage firm acquired in October. Prior to that, in 2016, Oswald made two other key deals with rollups of fellow insurance firm The Hoffman Group (Oswald’s largest deal to date) and Transactional Risk Advisors, a small insurance advisory with a slant toward M&A dealmakers. Klonk said the last seven years have been “sort of laying the foundation for us to expand by acquisitions and organic growth” today. At least one deal in the pipeline is expected to close this year, he said, with expectations for more to come in the following years. The company now runs seven offices, six in Ohio and one in Detroit. Deals could enhance the company’s presence in Michigan to build up market share there or otherwise involve more niche businesses in which Oswald doesn’t currently play. Klonk said the company is looking to be disciplined and selective, yet

still “acquire aggressively” outside both Ohio and Michigan. Deals will generally remain focused on the Midwest, though. “I’m not a big fan of the coasts,” he said. “But everything in between I could be interested in.” Klonk said he suspects the success of past deals, combined with the firm’s employee ownership proposition, could position it as an appealing partner for sellers, which could aid Oswald on its quest for targets. He added that it’s difficult to remain employee-owned with all the consolidation that’s going on, but likes to emphasize that “we have a culture worth fighting for.” As far as company growth, Klonk lauded the firm’s management team while suggesting Oswald’s focus on risk management has been key. That’s on top of excelling in new markets, whether in pockets of Ohio, which Oswald effectively covers entirely, or in places like Detroit. Klonk referred to the firm’s “predict and prevent” model to that end, noting deals would likely bolster that side of the business as much as anything. “We are going to get stronger on the risk management side,” he said, “not just the broker side.” Klonk added he’s expecting a similarly strong year in 2020 compared to past ones, despite a number of factors weighing on the industry that could dampen profits in coming quarters: a projected “modest deterioration” in

P&C underwriting profitability, according to Deloitte; falling interest rates; general economic turbulence; and a U.S. election that could result in a more liberal, less business-friendly president. Oswald’s revenue projections call for growth of at least 10% this year without any prospective deals factored in and regardless of all those potential headwinds. One line of thinking is that some firms may pursue deals to maintain growth in what may be a down year — not unlike what could inspire some banking M&A. Klonk said that’s not the strategy for Oswald. “We don’t need to do these acquisitions to stay healthy. We are doing them because it makes us healthier,” he said. “We believe there is an opportunity for some of these firms out there that will make good strategic partners that maybe don’t see the future as brightly as we do.” He acknowledged it could be a more challenging year for the industry. He just doesn’t think Oswald will feel much struggle because of its business model and approach to growth. “There are a lot of unknowns out there, the election being one of them,” Klonk said. “But we feel very confident in our strategy.” Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile

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Furniture chain to add three Northeast Ohio stores BY STAN BULLARD

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lows it to buy in volume and pass the savings along to customers, he said. Adding Northeast Ohio stores is a natural extension of the company’s growing footprint in the Midwest. Bob’s stores also are in the works in Cincinnati and Dayton. The closest existing stores are in Toledo and Pittsburgh. Flanagan said Bob’s is continuing to add stores in new and existing markets. He did not say how many it might ultimately add in Northeast Ohio. However, the Ashley HomeStore chain serves the Cleveland-Akron Metropolitan Statistical Areas with six locations. Retail experts say it generally requires at least five Northeast Ohio stores for companies to take full advantage of television advertising. Bob’s advent also takes advantage of the thinning ranks of older, locally owned furniture stores, such as the 97-year-old, family-owned Basista Furniture in Parma, which closed in 2017. In the meantime, startups are at work in the region, such as Northeast Ohio Factory Direct, which operates five locations, including four showrooms. Bob’s joins the Northeast Ohio market as sales of home furnishings climb with a vigorous home sales market, which the region has enjoyed since 2011, and low unemployment rates mean more consumers may be able to buy. Launched in 1991, Bob’s is owned by the Boston-based BainCapital private equity and specialty finance company. Bob’s plans to open 20 stores in 2020, Flanagan said.

In the same way naval artillery bombards a shoreline to clear the way for an invasion, television ads for Manchester, Conn.-based Bob’s Discount Furniture are popping up on Northeast Ohio TV screens. Within days, they will be joined by “opening soon” ads to ready the region for its first wave of shops, which in addition to furniture (obviously) offer free coffee and cookies. The physical side of the 122-store chain’s landing in the region will be in late May as it opens three stores almost simultaneously in Mayfield Heights, North Olmsted and North Canton. That’s an easier thing to do than in the past, as the company locates in 32,000- to 43,000-square-foot locations shed by the closings of superstores. In the case of the Akron-Cleveland area, Bob’s will occupy a former HHGregg store in Golden Gate Plaza in Mayfield Heights, the former Remington College (and one-time PickN-Pay) site at Great Northern Plaza in North Olmsted, and the shuttered Babies R Us store at The Strip in North Canton. Ads to fill jobs in all three locations, for positions ranging from managers to sales personnel and stockers, already are visible on job websites. Sean Flanagan, a Bob’s spokesman, said the company is positioned to appeal to “price- and style-conscious consumers by offering everyday low prices without resorting to sales and gimmicks.” Bob’s eschews high-priced lines, he added, as it supplies furniture and mattresses. The company’s scale al-

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

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Post Office Plaza lands tech, property services companies

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OnShift, Exacta Land will occupy first two floors BBY STAN BULLARD

Two more companies are planning to make their new addresses at Post Office Plaza, the building at 1500 West Third St. in downtown Cleveland owned by K&D Group of Willoughby. OnShift, a Cleveland software company serving the senior care market, has 220 employees that it plans to move in late summer to the second floor of the building, but it will likely have even more people on staff by then. “We’re growing like crazy,” Mike Rich, OnShift chief financial officer, said in a phone interview. “We have 20 open positions as we speak.” Although the company pared 31 jobs early last year in what Rich characterized as a realignment of its operations, it’s in hiring mode once more. Growth is coming from both new products and the expansion of assisted living and other senior care providers that OnShift serves with software used for recruiting and scheduling staffs. OnShift was launched in the late 2000s on the top floor of the Keith Building at 1621 Euclid Ave. It moved within the structure as it grew and now occupies four floors there. “We decided we needed to do something else” in terms of its office space, Rich said. “We realized that in about a year we would need to take a fifth floor.” The company considered suburban sites but decided it wanted to stay downtown because its generally young workforce enjoys being in the center of the city. “We really had few options. Post Office Plaza offered us the chance to be on a single floor, while the others would have likely required two floors,” Rich said. Moreover, K&D gave the firm the ability to have right of first refusal on the remaining 25,000 square feet on the floor it won’t occupy. Doug Price, K&D CEO, said in a phone interview that his company and its broker, CBRE, worked hard to retain the company in its portfolio, as the 21-story Keith is also part of its holdings. “In this market, you don’t want to lose a tenant, especially one that’s growing,” Price said, even though it means K&D will have to find a replacement tenant or multiple com-

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panies to backfill the space OnShift will vacate. CBRE already has an email marketing campaign in operation for the Keith space. The other company that has just leased space at Post Office Plaza for a substantial expansion is Exacta Land Surveyors, a Cleveland-based provider of land surveys nationwide. Exacta will take almost 20,000 square feet on Post Office Plaza’s first floor, moving about 60 employees from its current headquarters in the Knights of Columbus Building, 1219 E. Ninth St. The company’s operations here handle survey reports from surveying crews in six states used in real estate transactions and for mortgages across the nation. Exacta was acquired by private equity firm Summit Capital of Charlotte, N.C., in February 2019. Price said the recent lease signings will take the nearly 440,000-squarefoot property to more than 80% leased, more than double the rate when K&D bought it from the former Forest City Realty Trust Inc. of Cleveland in 2017. Conor Coakley, a CBRE first vice president who markets Post Office Plaza and Keith for K&D, said just 40,000 square feet in the building is clearly available as other prospects may take more space. K&D has made substantial investments in Post Office Plaza, from adding prominent exterior signage to an upgraded fitness center and outfitting a conference room available to tenants with a large conference table left in Terminal Tower, where K&D has added apartments, when the old tenant moved to new offices at Key Tower. “The building has taken on a new character as more tech-focused companies have moved in,” Coakley noted. OnShift’s Rich said among the things that attracted the firm were the additional technology-oriented spaces in the building and that the adjoining Avenue Shops and other parts of the former Tower City Center complex may house the proposed Blockland center to foster innovation in the region. “Even so,” Rich added, “Playhouse Square is a wonderful place to be, and we’ll miss it.” Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter

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PERSONAL VIEW

Businesses must plan now for coronavirus outbreak RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

BBY BRUCE HENNES

EDITORIAL

Job well done O

ne measure of a departing leader’s legacy is pretty straightforward: Did you leave the place in better condition than when you arrived? For Case Western Reserve University’s president, Barbara R. Snyder, the answer is a resounding yes. Snyder, 64, last week announced that she will leave the job to become head of the Association of American Universities, an organization that represents 65 top research universities, including CWRU. She will start in that job sometime at the end of the fall 2020 semester, with the exact timing based on the progress of CWRU’s search process for her replacement. Fred DiSanto — the chairman and CEO of Ancora, and a CWRU alumnus and trustee who begins his term as board chair in June — will lead the search. It’s a good thing he’s such a talented executive, because Snyder has set a high bar for measuring success as a university president. Snyder in 2007 took the top job at a CWRU that looks very different from the one we know today. The previous president, Edward Hundert, resigned in 2006 after a no-confidence vote from the arts and sciences SELFISHLY, WE’LL MISS faculty. Most critically, Snyder inherited a $19 million THE SKILLS AND ENERGY deficit, which she pledged to fix by 2010 — a goal she BARBARA SNYDER beat handily, eliminating it BROUGHT TO CLEVELAND, before the end of 2008. In raising money, too, BUT WE WISH HER WELL Snyder has excelled. Case IN THE NATIONAL GIG. Western Reserve’s Forward Thinking capital campaign launched in 2011 with a $1 billion goal. It met that number by 2014, and now is at $1.82 billion. Putting the university on more solid financial footing has enabled CWRU to remake its campus with 11 renovation and building projects, including the Sears think(box) innovation space for researchers and aspiring entrepreneurs, and the Tinkham Veale student union, a $50 million-plus project. In turn, undergraduate applications have doubled. These are all critical developments not only for the institution, but for Cleveland, which needs a strong CWRU as a

magnet for young talent and a feeder to growing companies. Selfishly, we’ll miss the skills and energy Snyder brought to Cleveland, but we wish her well in the national gig. The academic community, and the country, will be better off if Snyder has as much success in her new role at AAU as she has had at CWRU. We have every expectation that will be the case. James C. Wyant, chair of the CWRU board, said Snyder’s impact “has been so broad and deep that we will not understand the full extent of her legacy for years and perhaps decades to come.” Fortunately, the template is set for continued progress at CWRU.

Covering NE Ohio Here’s a number you don’t see too often in this region: $600 million. That’s the amount, at minimum, that The Sherwin-Williams Co., the paint and coatings giant, plans to invest as it builds a 1 million-square-foot global headquarters in downtown Cleveland and a 500,000-square-foot research-and-development operation in Brecksville. The facilities are expected to house a combined 3,500-plus employees, with lots of room to grow, as Sherwin-Williams expects to add at least 400 jobs over time. That’s up 11% from the current local workforce. This is a transition that will take a while, with moves to new facilities not expected until at least 2023. The planned downtown HQ site, in an asphalt wasteland of Warehouse District parking lots, is a clear win for the city of Cleveland. And while the city surely wanted to keep the R&D center, it’s a victory to keep that in the region — and maybe not such a bad thing to move it from the banks of the Cuyahoga River, freeing up that space eventually for new uses. Since Sherwin-Williams last September confirmed the HQ and R&D site searches, there had been a lot of speculation (and some anxiety) about what the company would do. Between then and now, there was a lot of teamwork by the city, Cuyahoga County, Team NEO, JobsOhio and others to keep the company here. Northeast Ohio’s story too often is one of stagnation or decline. This announcement can be the start of a new, growth-oriented chapter of our history.

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

Viruses that originate in an animal and jump to a human can and often do change or mutate, presenting challenges to doctors and researchers. Especially during rapidly developing situations, reporters will likely demand simple and definitive answers, even in situations where simple and definitive answers don’t exist. As well, bloggers with political agendas may accidentally or purposely report fact Hennes is CEO as fiction and vice versa. of Hennes On the internet, anyone can be a “re- Communications. porter” with the ability to publish imme- a Clevelanddiately and without the safety net of edi- based crisis tors, fact-checkers and other traditional management media gatekeepers. Consider also the and crisis pressure on traditional media of balanc- communications ing the need to report immediately vs. firm. reporting accurately. Given those factors, the emerging coronavirus provides another fertile field for confusion with consequences. The Spanish flu killed some 50 million to 100 million people worldwide over about a year in 1918-19 — one of the deadliest pandemics in human history. The 2003 severe acute THE KEY LESSON respiratory syndrome (SARS) outbreak turned out to be less HERE: THE WORD than a pandemic, but caused “PANDEMIC” MEANS 774 deaths in 17 countries, according to the World Health AN INFECTIOUS Organization (WHO). The 2009 DISEASE HAS SPREAD swine flu (H1N1) outbreak featured high rates of human- TO LOTS OF PEOPLE IN to-human transmission, yet LOTS OF PLACES. TO was thought to have been less lethal than originally feared, BE A PANDEMIC, AN with a minimum of 18,449 con- OUTBREAK HAS TO BE firmed deaths. In fact, though, the U.S. Centers for Disease WIDESPREAD AND Control (CDC) has since estiINTENSE. IT DOESN’T mated the global death toll at 284,000 — 15 times those con- HAVE TO BE SEVERE. firmed cases. All of these examples should serve as cautionary tales for how we approach and talk about this latest potential pandemic. I reached out to Peter Sandman, perhaps the United States’ pre-eminent risk communication speaker and consultant. Here’s what Sandman told me in his email reply: The key lesson here: The word “pandemic” means an infectious disease has spread to lots of people in lots of places. To be a pandemic, an outbreak has to be widespread and intense. It doesn’t have to be severe; 1918 was, 2009 wasn’t — at least in comparison. This coronavirus? The experts are pretty sure it’s going to go pandemic. They don’t know yet how severe it will be, though many are guessing it will be closer to 2009 than to 1918. Even a mild pandemic kills a lot of people, simply because a small percentage of a huge number is a lot of people. And a mild pandemic can certainly be disruptive: hospital overcrowding, absenteeism, supply-chain problems, etc. If it’s mild and stays mild, it won’t be catastrophic.

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

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8 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 10, 2020

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OPINION Providing a private travel experience that exceeds expectations.

HENNES

hiatus but then come roaring back in the fall (as did the Spanish flu). Government agencies are already placing visitors From Page 8 from China into quarantine. This may suddenly escaWhether it’s mild or severe, though, a pandemic late, with the closure of airports and other ports of entry. eventually makes containment efforts futile, and there- Stock markets may dramatically tumble — but then refore a waste of effort. Patient isolation, contact tracing cover just days later. Or they may not. And if things realand monitoring, quarantines and travel restrictions are ly escalate, schools, malls, theaters and other venues the four main containment tools. The first two are con- may close — and grocery shelves may empty. In the face ventional. The last two are controversial, not because of this uncertainty and volatility, prudent business ownthey’re less effective than the first two but because they ers and managers should be using “peace time” to prepare for the worst. have bigger downsides. Now is the time to: None of the four, separately or to- PATIENT ISOLATION,  Examine your sick-leave policies. gether, can stop a pandemic. They can Family-leave policies, too, should be slow it a little, which isn’t nothing: It CONTACT TRACING AND looked at because many employees buys time for preparedness (emotion- MONITORING, may unilaterally decide to hunker al as well as medical and logistical). But as soon as the virus is spreading QUARANTINES AND TRAVEL down at home, especially if they have small children or elderly relatives to widely in a place, that place has no RESTRICTIONS ARE THE care for. further use for containment. The risk communication lesson FOUR MAIN CONTAINMENT  Encourage and utilize good hynow: Stop telling people that con- TOOLS. THE FIRST TWO ARE giene practices (e.g., hand-washing, coughing into the crook of the elbow tainment will “work.” If the coronaviinstead of the hand). rus goes pandemic, as noted immu- CONVENTIONAL. THE LAST nologist Dr. Anthony Fauci, director TWO ARE CONTROVERSIAL.  Consider what a travel ban might do to your business. of the National Institute of Allergy and Infectious Diseases, and nearly every other expert  Remind your employees — and yourself — to depend expects, eventually (and probably pretty soon) it will be on only the most reliable sources for information about spreading widely in the U.S., too, and containment coronavirus. The WHO, the CDC and state and local health boards are reliable. Facebook isn’t — and the adwon’t make sense. One feature of the 2009 flu outbreak was the changing vice given by the pundits on cable television must be nature of advice. At first, pregnant women were to re- taken with more than the proverbial grain of salt. ceive priority for inoculations. Then, it was anyone with  Remember to remind all of your stakeholders that sita compromised immune system, followed by those over uations like this are fluid and the information given out the age of 60. As I recall, during this era before social now may be preliminary and subject to change. Even media exploded and become a main source for news, advice from the CDC and WHO can change, depending reporters, columnists and other pundits were quick to on the facts at hand. criticize the The CDC, the WHO and other federal, state  Employees, customers and other stakeholders will and local health officials for the lack of definitive advice cross-check what you tell them against other sources. If you mislead them, they’ll hold it against you. Be espeand prognostication. As this is being written, there is no way to tell whether cially careful not to sound over-reassuring or overconfithe coronavirus is going to be highly infectious but not dent, which Sandman says are the two most common lethal or highly infectious with a high degree of lethality. crisis risk communication mistakes other than outright It might even burn itself out — or it may seem to go into dishonesty (also common, sadly).

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HEAD IN THE CLOUD Valley View firm designs, builds and deploys custom cloud-based solutions | BY MARY VANAC

vantia Inc. may be the largest information technology consultancy in Northeast Ohio. Never heard of it? That could change soon. Founded and led by Jennie Zamberlan, the Valley View company creates custom IT systems that enable governmental, financial services, health care, manufacturing and retail clients to do business, mostly online. Clients include ABM Industries, Ben & Jerry’s Ice Cream, Oriana House and Space Telescope Science Institute. “Her company does a lot of custom development of large-scale systems,” said Bill Nemeth, a former IT executive who now directs the Burton D. Morgan Mentorship Program at JumpStart Inc., in which Zamberlan participates as a mentor. “There are very few companies of Avantia’s size doing that, especially in Northeast Ohio.” Zamberlan is rather unique in the information technology world,

Nemeth added. She started out as a computer programmer in the 1970s, in Cleveland-area workplaces dominated by men, where she was at times the only woman. She worked her way into project management and then into leading multiple projects for her employers. In 1989, Zamberlan started her own IT consultancy, Adams & Reynolds, selling it to Compuware in 1996. She stayed with Compuware until 1999 — the eve of the dot-com bust. Zamberlan “retired” for three months before starting her second company, Avantia, in September 2000. “She is a woman who has grown up in the tech field,” Nemeth said. “She also is a serial entrepreneur in the tech world.” Both characteristics make Zamberlan an effective mentor for women-led technology companies at JumpStart, he noted. The 1990s and 2000s were decades of great change for the information technology industry and for Zamberlan.

“YOU DON’T INSTALL ANYTHING ANYMORE; IT’S ALL IN THE CLOUD. THAT INNOVATION IS REALLY WHAT ALLOWED TECHNOLOGY TO MOVE FORWARD SO MUCH FASTER.” — Jennie Zamberlan, founder and president of Avantia

Personal computers, developed in the 1970s, took a “major quantitative and qualitative leap” when PCs were connected to one another via local area networks, or LANs, wrote Gil Press, managing partner at gPress, a marketing, publishing, research and education consultancy, in a 2013 op-ed piece for Forbes magazine. The next leap occurred with the popularization of the World Wide Web, now simply known as the internet. “It led to the proliferation of new applications which were no longer limited to enterprise-related activities but digitized almost any activity in our lives,” Press wrote. “Most important, it provided us with tools that greatly facilitated the creation and sharing of information by anyone with access to the internet.” A series of events in the early 2000s, however, put industry growth on hold. The dot-com bubble burst, causing the failure of many tech companies that had

grown too fast with too much investor money. Technology companies WorldCom and Enron failed because of accounting fraud, robbing tens of thousands of IT workers of their jobs. And the 9/11 terrorist attacks of 2001 disrupted worldwide information and financial operations. “It was tough,” Zamberlan recalled, “but we lived through all that. Everything we do now is predicated on what those companies that went out of business were doing, like selling things on the internet. But the infrastructure wasn’t there yet. We still had dial-up modems. It’s hard to buy things online when you don’t have the speed.” In 2005 and 2006, Zamberlan and her colleagues built what would be known today as a “killer app.” “But the problem was, we were a little bit too early,” she said. “It was before the iPhone came out, and you had to use this complicated matrix of the operating system and the carrier to get things onto the phone.”

10 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 10, 2020

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Apple changed everything in 2007 with the introduction of its iPhone, which had a “consistent operating system and a consistent way to get things onto the phone,” Zamberlan said. After the Great Recession “cleared itself up” in the late 2000s, “people started spending money again,” leading to innovations in internet browsers and the building of software that’s browser- and cloud-based. The convergence of wireless fidelity (better known as WiFi), highspeed internet, smartphones and consistent operating systems enabled technology companies to take another leap forward. “You don’t install anything anymore; it’s all in the cloud. That innovation is really what allowed technology to move forward so much faster,” Zamberlan said as she casually thumbed the screen of her iPhone. Today, Zamberlan and her 60 or so associates do two things for corporate clients: They create big,

complex and multifunctional websites that are built on content management systems and they build custom IT systems from scratch. Avantia has secured servers hosted in a Tier 1 hosting facility for source-code management and is experienced in architecting, building and deploying cloud-based solutions on platforms such as AWS and Azure. In addition to building custom software systems, Avantia also works with partners like Acquia, the open digital experience platform for the content management framework Drupal, and the customer relationship management platform Salesforce to build software systems for clients. Avantia built a software system for Oriana House, a nationally recognized community corrections and chemical dependency treatment agency based in Akron, about five years ago. “There are a lot of software packages out there for court systems, jails and prisons, but nothing to help operations of a halfway house or a community corrections agency,” said Bernie Rochford, executive vice president of administrative services and business relations for Oriana House. He hired Zamberlan’s first company to build Oriana House’s first software system in 1993. “We used that system for about 20 years,” Rochford recalled. “But over the years, business rules and dynamics change. The system was woefully outdated and we needed a change.” Avantia worked on the new Oriana House system for about a year and a half, “because it is an elaborate system and has so much more robust features” than the first system, Rochford said. “It’s very intuitive,” he said of the new system. “I can sit at my desk in Akron and I can tell you what the case plan is for a client out in Sandusky or Cleveland.” Most of the systems Avantia builds work behind the scenes, which is why most people don’t know the company’s name. Zamberlan said she is considering growing her company through acquisitions or developing products that companies or individuals could buy from the cloud. The company has been recognized for its growth five times by Case Western Reserve University’s Weatherhead 100 list and six times by Inc. magazine’s Inc. 5000 list. “The big buzzwords today are ‘machine learning’ and ‘artificial intelligence’ and ‘neural networks,’” Zamberlan noted. “And some of that technology dates back to the ’60s and ’70s. But we’ve got the processing power and the bandwidth to be able to use those things today.” Add in the power of today’s PCs and “it’s a very exciting time,” Zamberlan said. Contact Mary Vanac: clbfreelancer@crain.com

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The psychology fueling innovative thinking BY STACY FEINER

Leaders of businesses of all sizes are looking for a competitive advantage wherever they can find it, and innovation is where it’s at. In addition to assigning innovation goals to design engineers and creative marketers, leaders are giving the assignment to their workforce as well. They are trying to inspire innovation using trends such as relaxed dress codes, high-tech gyms and replacing restrictive PTO days with permanent flexibility. While furnishing an innovative environment and fostering an innovative culture are definitely best practices for creating a workplace that is receptive to new ideas, a crucial component of the formula is missing — and it reveals a glaring blind spot that frustrates leaders and holds many companies back. Innovation requires more than comfortable surroundings and a relaxation from routine. You actually need new ideas — original thoughts — in order to have innovation. This is where the conversation

takes us into the realm of creativity, and creativity resides in human psychology. Many leaders employ a topdown approach to gain organizaFeiner is founder tional buy-in and encourage everyand CEO of one to jump on Feiner board. But creEnterprises. ativity does not emerge with this strategy. Rather than starting topdown, creativity starts at the beginning of the innovation equation, which is in fact human psychology: where creativity resides and where original ideas are generated. (individual: creative) → (teams: inventive) → (company: innovative) Psychology is a human resource, and leaders need to learn to value it in this way. We are now realizing that “soft skills” and emotional intelligence are the most valuable natu-

ral resource for companies. Many leaders are focused on the results of innovation, such as increasing profit, beating the competition and disrupting industries. That can lead them to neglect to focus on the source of innovation. When they do focus on it, however, it changes everything. Creativity is spawned within a person’s psychology through a synthesis of complex processes where novel ideas are conjured. When the conditions are right, we suspend our mind from habits of convention, enabling us to escape the present, reconstruct the past and imagine the future — to envision something that does not exist and change the world with it. The problem is, the inner realm where people can unleash their creativity has been compromised by pressures in business to be right, to follow the rules and to compete. So how do we create the right conditions for spawning original thought — and can we get there fast? Psychologists are the professionals who set the stage and facilitate

Get to Know Our People The Rea Way Name: Ken Stefanski Years in accounting: 31 Years with Rea: 31 Biggest professional accomplishment: Becoming partner at the firm where I started my career Area of specialty: Serving closely held private companies in their accounting and tax needs, and auditing employee benefits plans

the process that allows people to readily move from conventional to unconventional, from original thought to true innovation. A fundamental aspect of our profession is to apply a refined set of relational tools — evolved from theory, research, experience, training and practice — that stimulates the conditions for creativity and growth. It takes experience to consistently unleash human potential:

pands our radius of awareness and opens our minds to possibility. When we experience positive emotions like joy or appreciation, our emotions spiral upward, readying us to create.

1. SAFETY: We need a safe space to be genuine, a space where no harm will come, no confidence will be breached, where no ulterior motive lurks.

7. DIVERGENT THINKING: This process allows outside-the-box thinking where your mind generates creative ideas about how unrelated ideas connect and you can imagine unusual uses for an object with an otherwise prescribed purpose.

2. AUTHENTICITY: We need to feel mutual respect with the person calling out our true self. 3. CONNECTION: We need someone empathetic and intelligent to help us evolve out ideas — not someone judgmental or evaluating, but rather curious, eager and accepting. 4. EXPERIMENTATION: Finally, we need time and space to tinker with the idea as it takes shape. When you provide the conditions for creative thinking, your people experience the psychological processes to generate new ideas for innovation. So, what goes on when the conditions are put in place? Here are four psychological processes that ignite and interact to fuel original thought that leads to creativity: 5. POSITIVE EMOTION: This feeling ex-

6. ASSOCIATIVE THINKING: This state allows ideas to flow freely and opens the mind to easily link ideas, images, observations, sensory input, existing knowledge and the subconscious.

8. REFLECTIVE THINKING: Reflection allows the mind to observe the larger context, the meaning and implications of an experience with an awareness of one’s own agency and influence. Psychology is a catalyst for creativity. Businesses with a persistent blind spot to the source of original thinking necessary for innovation will fall behind those that bring aboard professionals who can create the conditions for creativity to flourish. How is your business accomplishing this? A flex policy won’t do it, but introducing a psychologist to your team will help foster creative thinking that promotes valuable innovation. Understanding the source of innovation is necessary in order to encourage it.

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12 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 10, 2020

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TAX TIPS

SECURE Act’s impact on retirement and estate plans BBY CARL GRASSI

By now most people know that Congress passed and President Donald Trump signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) into law in late 2019. The SECURE Act makes a number of changes to employersponsored retirement plans and to IRAs. Some of those changes are mandatory, while others are optional. These may not sound like dramatic changes, but their impact will be far-reaching, affecting most employers and millions of participants. I note a few of the key changes below, but this is far from a comprehensive list. Check with your company’s benefits counsel to determine how the SECURE Act will affect your company’s plans. You may also want to talk to your estate-planning attorney if a “stretch IRA” was part of your plan. Under current law, a plan is not required to cover employees who work less than 1,000 hours in a 12-month period. Under the SECURE Act, 401(k) plans will be required to cover employees who complete three consecutive 12-month periods during which they are credited with at least 500 hours of service. These “part-time” employees are only required to be covered so they can make 401(k) salary deferrals. The employer is not required to make matching or other contributions on their behalf, including top-heavy minimum contributions. The part-time employees are not required to be included in discrimination testing. These rules are effective for plan years beginning after Dec. 31, 2020. Prior to enactment of the SECURE Act, beneficiaries were permitted to “stretch” distributions of benefits they received on the death of a plan participant or IRA holder over their own life expectancies. Effective for deaths after Dec. 31, 2019, designated beneficiaries, with certain exceptions, are required to be paid out by the end of the 10th calendar year following the death of the plan participant or IRA holder. In some cases, the benefits must be paid out more rapidly. In the case of “eligible designated beneficiaries,” the life expectancy stretch is still available. An eligible designated beneficiary includes a surviving spouse, disabled or chronically ill individuals, individuals who are not more than 10 years younger than the plan participant or IRA owner, and minor children of the plan participant or IRA owner, as long as they are minors. This change to the distribution rules that apply to beneficiaries at death may disrupt many estate plans. If your estate includes significant amounts of retirement plan benefits and IRAs, consider reviewing your planning now in light of the SECURE Act. Under prior law, distributions from IRAs and retirement plans were generally required to begin in the year the participant or IRA owner attained age 70½. The SECURE Act changes that age to 72. This is effective for distributions for individuals who attain age 70½ after Dec. 31, 2019. This is an optional change, but we expect plans and IRAs to make it. Defined benefit plans and money purchase pension plans are generally prohibited from making distributions while a participant is still employed. These plans can make in-service distributions after “normal retirement age” set by the plan, or after attaining

age 62. The SECURE Act EFFECTIVE FOR DEATHS AFTER DEC. 31, 2019, permits these plans to allow DESIGNATED BENEFICIARIES, WITH CERTAIN in-service distributions after age 59½. This is also an opEXCEPTIONS, ARE REQUIRED TO BE PAID OUT BY THE tional change. END OF THE 10TH CALENDAR YEAR FOLLOWING THE The SECURE Act created DEATH OF THE PLAN PARTICIPANT OR IRA HOLDER. an exception to the 10% early withdrawal penalty for distriThe concept of unrelated ployees to join a Multiple Employer butions taken prior to age employees sharing plan Plan sponsored by a “pooled plan pro59½ from retirement plans Grassi is a documents, administration vider.” We expect financial service or IRAs that are used to cover member of and investment options has companies, third-party administrathe costs of adoption or McDonald been around for some time, tors, insurance companies or similar childbirth, up to $5,000. The Hopkins LLC. but there have been regula- organizations to establish and prodistribution must be made within the one-year period tory and practical hurdles. mote these types of plans after 2020. beginning on the date the child is born The SECURE Act may change that. It The SECURE Act permits individuor the adoption is finalized. specifically authorizes unrelated em- als who have attained age 70½ to

make IRA contributions. As with younger IRA contributors, an individual may not make deductible contributions if he or she is an active participant in a retirement plan. The SECURE Act makes many more changes, including some affecting safe-harbor plans, plan loans, frozen defined benefit plans, automatic enrollment, late filing fees and a credit for adopting a new plan. Many of the provisions of the SECURE Act will require amendments. An employer may operate in accordance with the provisions and amend by the end of the 2022 plan year, or later if the IRS extends the deadline.

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February 10, 2020 | CRAIN’S CLEVELAND BUSINESS | 13

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FOCUS | MIDDLE MARKET

All signs point to growth for Blink Blink Signs grew 692%, launched subsidiaries Blink Swag and Blink Sourcing BY DAN ANGELO

Unsatisfied with the services available to him, Abhi Goyal decided to expand his firm — Blink Marketing — into a company offering the signage his clients needed. However, Blink Marketing and Signs was just too long for a website, so Blink Signs was born. The company, started in 2007 in Independence, has grown into a multimillion-dollar force in the industry, supplying signage to a wide variety of Fortune 500 companies. It landed at No. 9 on Crains Cleveland’s Weatherhead 100 list, recording 692% growth between 2014 and 2017. “When we went to the market, we were not very happy with what we were getting,” recalled Goyal, the company’s president. “The super-huge companies didn’t want to service someone with 60 to 70 stores and the small guys didn’t have the capabilities or infrastructure to service them, so that led us to opening our own company to service our accounts.” Z Wireless was Blink’s first big customer, hiring the company to help it rebrand 150 stores. Now, Blink Signs is responsible for signage at all 600 Z Wireless locations across the country. “Not everybody gets that chance,” Goyal admitted. “We were very transparent with the customer, always have been, and we told them we have

little experience but we were going to save them money and do a great job for them. The buyer liked us and gave us a shot.” That first big order led to substantial growth for Blink Signs, which now has annual revenue of more than $25 million. It soon outgrew its offices in Independence and bought a building on St. Clair Avenue in downtown Cleveland. It has also opened offices in Columbus and St. Louis, Mo., with another soon to open in Chicago and more on the way. “We don’t do cold-calling, we don’t knock on doors,” Goyal said. “Ninety-nine percent of our business has been word-of-mouth. That’s really how it’s grown so far. We come from a mentality of service and we always build the business with that mindset.” In addition to signage, Blink Signs has expanded into other fields, opening Blink Swag, which offers clients custom promotional items through its open-market platform Ink Your Swag. Goyal also opened Blink Sourcing to provide clients global sourcing solutions with offices in India and China. “It was clients asking for us to provide these services, and that led us to do it for one customer, which led us to do it for other customers,” he explained. “I got very aggressive with it last year and, to be honest, I sometimes ask myself why I signed up for this, but it’s good work, it’s a great

Abhi Goyal, president of Blink Signs, said “Ninety-nine percent of our business has been word-of-mouth. We come from a mentality of service and we always build the business with that mindset.” | CONTRIBUTED

product and people love it.” Cleveland is the project management headquarters for the firm and home to more than 100 employees. Blink Signs, which also has partnerships with manufacturing facilities in nearby Mentor, as well as Indiana and St. Louis, employs 250 throughout the company. “We push ourselves a lot,” Goyal said. “We are very focused on the business, but I think we are a very process-oriented company. Our mind is always on system and process, system and process. How can we make sure the quality in our organization is great?” One way is the 35-hour workweek

for company employees. “A lot of people work extra hours just because they want to, but the business is not requiring them to do it,” Goyal said. “We’ve kept a core team the last couple of years. We’ve had no turnover. Our employees like the work and we focus on the culture. If you take care of your people, you’re going to grow.” While Goyal said he’d hoped for the kind of growth his company has experienced, he never expected it. “This is not something a small company out of Cleveland plans to start with,” he said. “There is no way that you can think you are going start off talking with Fortune 500 compa-

nies and you are going to be working with them — not a small business out of Cleveland in a rented space. There is no way you can think that big.” The future looks even brighter for Blink Signs. The parent company continues to offer brand management, custom signs and maintenance and repair, while Blink Swag has hit the ground running with clients such as ReMax and Verizon, and Blink Sourcing is doing work for Home Depot, among others. “We’ve always believed in the process and doing it every day and getting better, but I think there’s going to be substantial growth this year,” Goyal said. “We built the business for expansion and scalability and we feel as if the business was built to take on huge volumes of business. I think it will probably double in 2020, to be honest.” As for the name “Blink,” that’s just how it worked out, according to Goyal. “I would love to make up a story, but there is not one,” he said. “Speed was always a thing for us and blink comes with speed, like ‘blink of an eye.’ We always felt it was about our speed and as the business evolved, you always want it fast. “We’re just fortunate to be in Cleveland,” he added. “We’ve done all of this because we’re in Cleveland.” Contact Dan Angelo: clbfreelancer@crain.com

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14 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 10, 2020

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THE LIST

Largest Commercial Property Sales of 2019 Ranked by price

PROPERTY TYPE

PRICES/ESTIMATES PRICE QUALIFIER (2)

SQUARE FEET OR # OF UNITS

PRICE PER SQ. FT. OR PER UNIT

DATE

BUYER

SELLER

Goodyear headquarters 200 E. Innovation Way Akron, 44316

Office

$134,206,073 Confirmed

639,002

$210.02

Aug. 29, 2019

Fortress Investment Group LLC

Angelo, Gordon & Co.

Vantage Apartments (formerly The Hamptons) 27040 Cedar Road Beachwood, 44122

Multifamily

$95,000,000 Approximate

561,283

$169.26

Jan. 9, 2019

GoldOller Real Estate Investments

Brookfield Asset Management, Millennium Management

The Shoppes at Parma 8001-8303 W. Ridgewood Drive Parma, 44129

Retail

$80,550,000 Confirmed

726,275

$110.91

Nov. 19, 2019

Allied Development

PREP Peco Real Estate Partners

The Edge on Euclid 1750 Euclid Ave. Cleveland, 44115

$62,000,000 Confirmed

262,000

$236.64

April 11, 2019

Goldenrod Capital Partners LP

Clayco and Korman joint venture

Rockwell Automation 1 Allen Bradley Drive Mayfield Heights, 44124

Office

$61,129,154 Confirmed

460,000

$132.89

Nov. 1, 2019

ElmTree Funds

Mohr Capital

Deer Run 9957 Darrow Park Drive Twinsburg, 44087

Multifamily

$59,100,000 Appraised

581,316

$101.67

Jan. 8, 2019

Town Management

Brookfield Asset Management, Millennium Management

PNC Operations Center 4100 W. 150th St. Cleveland, 44135

Office

$51,667,197 Confirmed

252,000

$205.03

Feb. 15, 2019

Oaktree Capital Management LP

PNC Bank

FedEx 2050 E. Aurora Road Twinsburg, 44087

Industrial

$47,703,771 Confirmed

303,888

$156.98

Nov. 22, 2019

ElmTree Funds

Scannell Properties

Colony Club Apartments 625 Turney Road Bedford, 44146

Multifamily

$37,670,000 (3)

April 29, 2019

GSH Group (3)

Zaremba Group (3)

Royal Oaks Apartment 7475 Glenmont Drive North Royalton, 44133

Multifamily

$37,000,000 Approximate

451,680

$81.92

June 5, 2019

Banyan Capital

JVM Realty Corp.

Butternut Ridge 5800 Great Northern Blvd. North Olmsted, 44070

Multifamily

$32,500,000 Appraised

480,311

$67.66

April 4, 2019

Nolan Real Estate Services Inc.

JVM Realty Corp.

Shearer's Warehouse (land sale) Cincinnati Street Massillon, 44646

Land

$31,607,200 Confirmed

Oct. 24, 2019

U.S. Realty Advisors LLC

Geis Cos.

Dover Farms Apartments 8290 Royalton Road North Royalton, 44133

Multifamily

$31,000,000 Approximate

267,748

$115.78

June 5, 2019

Banyan Capital

JVM Realty Corp.

Hilton Garden Inn Downtown Cleveland 1100 Carnegie Ave. Cleveland, 44115

Hospitality

$28,160,000 Confirmed

138,116

$203.89

Dec. 3, 2019

MCR

Starwood Capital Group

FedEx 3201 Columbia Road Richfield, 44286

Industrial

$27,016,000 Confirmed

230,000

$117.46

April 12, 2019

Investcorp International Inc.

Link Industrial Properties

Spectrum Orthopaedics 7442 Frank Ave. North Canton, 44720

Office

$26,075,000 Confirmed

44,000

$592.61

Dec. 20, 2019

Welltower Inc.

Hammes Partners

Columbus Park Apartments 5999 Bear Creek Drive Bedford Heights, 44146

Multifamily

$24,510,000 (3)

May 8, 2019

Monarch Investment and Management Group (3)

Kushner Cos. (3)

Twin Lakes 42660 Albrecht Road Elyria, 44035

Multifamily

$22,000,000 Approximate

361 (4)

$60,941.83

Feb. 1, 2019

PGIM Inc.

Twin Lake Homes Ltd.

Residence Inn Cleveland Beachwood 3628 Park East Drive Beachwood, 44122

Hospitality

$21,850,000 Confirmed

126,578

$172.62

Jan. 10, 2019

Starwood Capital Group

Noble Investment Group

Sherwood Food Distributors 16625 Granite Road Maple Heights, 44137

Industrial

$20,861,117 Confirmed

345,009

$60.47

July 23, 2019

Brennan Investment Group

AIC Ventures

Former Kmart distribution center 541 Perkins Jones Road N.E. Warren, 44483

Industrial

$19,000,000 Confirmed

1,365,535

$13.91

May 15, 2019

Industrial Commercial Properties LLC

ESL Investments Inc.

Battery Park Lofts 1250 W. 75th St. Cleveland, 44102

Multifamily

$17,750,000 Confirmed

117,420

$151.17

Nov. 26, 2019

Realife Real Estate Group

Vintage Development Group

ComDoc 8247 Pittsburg Ave. N.W. North Canton, 44720

Industrial

$17,600,000 Confirmed

107,500

$163.72

June 21, 2019

Global Net Lease Inc.

Industrial Commercial Properties LLC

Rosemont Commons (land sale) 3750 W. Market St. Fairlawn, 44333

Land

$16,000,000 Confirmed

Feb. 11, 2019

KAWA Capital Management

Stark Enterprises Inc.

The Avenue District 1211 St. Clair Ave N.E. Cleveland, 44114

Multifamily

$15,450,000 Confirmed

79,874

$193.43

Oct. 2, 2019

Geis Cos.

Avenue Developers LLC

Harborside Broadview Heights 2801 E. Royalton Road Broadview Heights, 44147

Health care

$13,718,187 Confirmed

55,332

$247.93

Jan. 28, 2019

Peace Capital

Welltower Inc.

Home Depot 3460 Mayfield Road Cleveland Heights, 44118

Retail

$13,700,000 Confirmed

114,000

$120.18

Dec. 31, 2019

Metcalf Family Trust

Namdar Realty

Loganberry Ridge Apartments 26680 Loganberry Drive Richmond Heights, 44143

Multifamily

$13,503,904 Allocated

457,004

$29.55

June 19, 2019

The Chetrit Group

Roco Real Estate

RANK

PROPERTY (1)

RESEARCHED BY CHUCK SODER: CSODER@CRAIN.COM

Get 31 deals and detailed transaction notes. Become a Data Member: CrainsCleveland.com/data

Crain's does not independently verify all information, and there is no guarantee these listings are complete or accurate. Send feedback to Chuck Soder: csoder@crain.com. (1) Source: Costar, NAI Pleasant Valley, county records and news reports. Other sources are footnoted. (2) Allocated means the price was estimated from the total price paid for multiple properties. Confirmed means the price has been confirmed by CoStar, NAI Pleasant Valley, county records or a media outlet. Some prices may include business value in addition to real estate. (3) Reported by Colliers (4) Units

February 10, 2020 | CRAINâ€™S CLEVELAND BUSINESS | 15

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2/6/2020 4:15:10 PM

Advertising Section

PEOPLE ON THE MOVE

To place your listing, visit www.crainscleveland.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com.

ACCOUNTING

ENGINEERING & CONSULTING

LAW

NONPROFITS

STAFFING & SERVICES

Card, Palmer, Sibbison & Co.

Hilscher-Clarke

Frantz Ward LLP

Flight Services & Systems, LLC

CPS is proud to announce that Katelyn M. Digiantonio, CPA, has been promoted to partner. Katie has been a valued member of our team for over a decade and focuses her practice on providing clients with assurance, tax planning and consulting services. She works with a diverse client base including manufacturing, construction and personal service entities. She also has extensive experience with not-for-profit entities and employee benefit plans.

Hilscher-Clarke, a regional leader in electrical engineering and contracting, has named former president Scott Goodspeed as chief executive officer and chairman of the board. In his new role, Goodspeed will continue to focus on opportunities for the company’s growth and expansion. A Walsh University alumnus and licensed State of Ohio contractor, Goodspeed joined Hilscher-Clarke in 2001 as a project manager and estimator. He was promoted to president and chief operating officer in 2007.

Travis N. Teare joins Frantz Ward as an Associate in the Labor and Employment Practice Group. Travis has represented management in front of various state and federal administrative agencies, as well as state and federal court. Travis advises and counsels management on topics including leave management, discrimination, harassment, and retaliation. Travis earned his J.D. from The Ohio State University Mortiz College of Law and his B.A., cum laude, from Adrian College.

Conservancy for Cuyahoga Valley National Park The Conservancy for Cuyahoga Valley National Park has hired Dan Blakemore, CFRE as its new Development Director. Blakemore brings more than 12 years of non-profit fundraising experience to this role. For the last 3½ years, he was the Director of Major Gifts & Planned Giving at Stan Hywet Hall & Gardens. For the first 9 years of his career, he worked at various non-profit organizations in New York City. Blakemore has held his Certified Fundraising Executive credential since 2013.

ENGINEERING & CONSULTING FINANCIAL SERVICES

Hilscher-Clarke Hilscher-Clarke, a regional leader in electrical engineering and contracting, has announced that John Fether has been promoted to president. Fether joined Hilscher-Clarke in 2002 as an apprentice through the Canton Electrical Joint Apprenticeship program, from which he graduated in 2005. He worked as a journeyman electrician and industrial project manager before being promoted to industrial superintendent in 2011, vice president of operations in 2014 and chief operating officer in 2017.

Ancora We are pleased to announce that Mr. Greg Hopkins has joined Ancora as a Vice President and Family Wealth Advisor to provide investment advice and personalized service to Ancora’s clients, especially those in central Ohio. Greg’s previous experience is with Merrill Lynch and BDO Alliance firms GBQ Partners and Skoda Minotti. Greg earned a Bachelor of Science in Accounting from Miami University’s Farmer School of Business. We look forward to working with Greg and welcome him to Ancora.

LAW

PROFESSIONAL SERVICES

Benesch

APG Office Furnishings

Jacquelyn Friedman has been promoted to Director of Finance at Benesch. Jackie brings a decade of Benesch experience and a demonstrated history of working in the legal industry. As Director of Finance, Jackie will serve in a key leadership role within the firm’s Accounting Department. She will lead all aspects of the firm’s accounting, billing, accounts payable, payroll functions, financial systems and any other accounting activities that assist the firm in achieving its financial goals.

The Cleveland branch of APG Office Furnishings is pleased to introduce Josh Kremer as Business Development Manager. Josh will be responsible for guiding clients through the journey of furnishing their ideal workspace. A reliable and enthusiastic team player who takes time to understand the unique goals of each project, he helps envision spaces to move organizations forward and become more productive.

Flight Services & Systems, LLC is pleased to announce the additions of Ryan Horvath and Jennifer Barbosa. Ryan Horvath Horvath is the Communications Manager for FSS. He is an experienced graphic designer and marketing specialist and will assist in the company’s marketing initiatives. Mr. Horvath earned a bachelor’s degree in digital media design from Baldwin Wallace University. Jennifer Barbosa is the Barbosa Software Developer. Her insights into server analysis and management will assist in ticket management for the IT department. Ms. Barbosa earned her certification in full-stack software development from We Can Code IT.

NEW HIRE? PROMOTION? BOARD APPOINTMENT?

FINANCIAL SERVICES LAW

ENGINEERING & CONSULTING

Ancora Hilscher-Clarke Hilscher-Clarke, a regional leader in electrical engineering and contracting, has promoted Jeff Floyd, former senior business executive and project executive, to chief operating officer. Floyd earned a bachelor’s degree in business administration, accounting, from The University of Akron. He spent more than 30 years in the construction industry with a focus on implementing strategic plans and improving operational excellence and financial performance before joining Hilscher-Clarke in 2018.

We are happy to announce that Mr. Jacob Burnett has officially joined Ancora after spending time with the firm as an intern. Jacob will serve as an Assistant Vice President of Insurance Services and Data Analytics, supporting both the Insurance and Retirement Plans divisions. Jacob has held a number of intern positions with firms such as Oatey, Garick and Malley’s Chocolate. Jacob earned a Bachelor of Arts in Economics from Cleveland State University. We are happy to have him join the team full time.

16 | CRAIN’S CLEVELAND BUSINESS | February 10, 2020

STAFFING & SERVICES

Benesch Heather DiFranco has joined Benesch as Director of Professional Development. In this role, Heather will work collaboratively with Practice Group Leaders to further the firm’s strategic objective of training and developing attorneys to ensure quality and innovative legal services. Additionally, she will be responsible for developing firm-wide and practice specific training programs and succession plans, the firm’s pro bono initiative, as well as managing the attorney evaluation process.

Flight Services & Systems, LLC Flight Services & Systems, LLC is pleased to announce the addition of Nick Poorbaugh as the Vice President of Sales and Marketing. In his role, Mr. Poorbaugh will build a cohesive team across FSS locations nationwide while building its footprint through various new marketing initiatives. Mr. Poorbaugh earned a bachelor’s degree in communications from the University of Toledo and is working toward an MBA at Kent State University.

Crain’s People on the Move showcases industry achievers and their companies to the Northeast Ohio business community. For more information, contact Debora Stein at dstein@crain.com

Advertising Section

PEOPLE ON THE MOVE

AKRON REAL ESTATE

Kent development tide turns toward North Water Street BY JUDY STRINGER

Don Schjeldahl has been selecting sites for businesses of all types for 35 years, and he is pretty confident by now that he can spot a winner. Downtown Kent development over the past 15 years has been primarily in the city’s southern half from Main Street down, Schjeldahl noted. But today, he said, the tide is turning northward, specifically toward the roughly seven-block span of North Water Street. Plans to redevelop the expansive and vacant Star of the West property, and its looming grain towers, are underway, with early discussions of rehabbing the site into a mixture of restaurants, retail shops and housing. The city also has secured $1.4 million in state funding to begin adding bump-outs and other pedestrian-friendly streetscape features along the North Water Street this spring. The corridor — an area now being called the Mill District — is already home to a handful of thriving businesses, including two coffee shops, a healthful options restaurant and a cultural arts center. “Over the next 10 years, this is going to be the place to be,” said Schjeldahl, principal at Kent-based DSG Advisors. “I’ve seen it a hundred times.” The former Austin Co. executive is

putting his money where his mouth is (so to speak) on this location pick. He is part of a management team that will own and operate North Water Brewing Co., slated for the northern edge of Water Street. In late January, Schjeldahl’s team closed on the purchase of a 4,200-square-foot building at 101 Crain Ave., most recently Knapp Collision, and began predemolition for a seven-barrel brewhouse, a 99-seat taproom and a 50seat outdoor patio. Meanwhile, local entrepreneur Mike Beder, owner of Water Street Tavern and Tree City Coffee, among others, plans to open a craft brewery about midway down the strip, according to Kent economic development director Tom Wilke. Projects further along include the rehab of 257 N. Water St., which will house commercial businesses on the first floor and apartments in the upper levels, and renovations at 156 N. Water Street, a building owned by Nate Mucha. Mucha operates his Each + Every marketing design firm on the main level and is in the process of transforming the upper floor into a co-working space. The big fish in Mill District’s revitalization, however, is the 140-yearold former flour mill at 162 N. Water St. with the area’s most distinctive structures. Star of the West Milling

Co. owned and operated the plant from 1999 to 2014, when the company moved manufacturing to a roomier parcel in Willard. In June, The Tulips LLC bought the mill and silos portion of the property for $405,000, according to online records from the Portage County auditor’s office. Wilke said Tulips is a development group represented by Kent resident Badreeyeh Al Hasawi and her husband, Manouchehr Salehi. When reached by phone, Salehi declined to “speak for” the company or discuss plans for the site, other than to say the firm intends to repurpose the mill and silos without significant changes to their facades. Wilke said to his knowledge Tulips is working with an architect “to more thoroughly examine the various spaces within the mill property to determine how the building code will affect their ability to readapt those spaces to other uses such as residential, office or retail.” Kent, for its part, is courting proposals for a developer to take on the remaining Star of the West parcels — two three-level buildings at 252 and 266 N. Water St. and an empty lot in between. Downtown Kent Corp. (DKC) purchased those parcels on the city’s behalf in September for $365,000, according to the county auditor’s records.

Star of the West used the buildings predominantly as offices and storage, the economic director said, but before the mill owned them, they housed street-level cafes, bars and retail shops over the years with residences and/or office in the walkout basements and upper levels. Of the 15 prospects Wilke has walked through the city-owned property as of late January, he said almost half were locals, many see a portion of the site hosting “hospitality-type commercial businesses,” and “nearly all have expressed interest in rehabbing one or both of the buildings.” “I have only had two parties that said they are considering the possibility of a total teardown to put up a new, much larger building,” he said, adding that the city has not received any formal proposals or offers yet. Kent City Council member Gwen Rosenberg said a “total redo” might be the best approach. The three parcels present a bit of a challenge in that the vacant lot between the buildings is not at street level. Plus, unlike the iconic mill and nearby silos, the city-owned properties don’t appear to have the same level of historical significance, according to Rosenberg. “To me personally, it makes the most sense to just raze the building and put something there in the whole

space,” she said. “It backs up to the Cuyahoga River, so if you are looking for something that has a view, you’d be hard-pressed to find a better one.” Rosenberg said council has not identified specific parameters for what it would like to see go into the site, but the general consensus favored local business ownership over a chain and council would like any housing proposals to focus more on the empty-nester and/or the young professional market rather than student housing. “There was just a housing study that was done that (found) we are pretty well saturated, if not oversaturated, with student housing,” she said. Whatever becomes of the city’s property, progress on readaption of the mill and silos — both in terms of size and prominence — will have the biggest impact on the Mill District’s revitalization momentum, Mucha said. He sees an opportunity for the area to emerge as an arts district, fostering the creative energy of recent efforts to its blend industrial-style architecture with modern-day needs. “We run a design firm. We have a dance studio in our building. I think it’s a nice place to be ‘uniquely Kent,’ ” he said. Contact Judy Stringer: clbfreelancer@crain.com

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CRAIN’S CLEVELAND BUSINESS

FERC

From Page 1

Capacity power is electricity the grid keeps on reserve to meet its maximum load requirements. It’s tapped into when the grid exceeds its base load and needs more juice. Power companies bid to provide that power at a set price. When the grid needs it, PJM begins buying the lowest-priced power and keeps buying more expensive power from other bidders until it has enough. Then, all of the capacity power providers get that last and highest price for all of the capacity power they provided. FERC says allowing nuclear plants supported by state subsidies to bid into these auctions at lower prices than other nuclear plants could support is not fair. So, it’s ordered PJM to set a minimum price at which Davis-Besse, Perry and other subsidized plants can bid in. “Our goal is to ensure that the markets remain competitive by establishing a level playing field and being resource-neutral,” FERC chairman Neil Chatterjee said in a Dec. 19 meeting. “In this way, we can help promote competition that will benefit consumers. That is why today we direct a replacement rate that will help enhance the competitiveness of the PJM capacity market.” FERC gave PJM 90 days to comply. In the meantime, there’s a bit of handwringing going on among the OMA and others who watch Ohio’s power scene closely. Noah Dormady, an Ohio State University associate professor of public policy who does economic analysis on energy and public policy, said FERC’s approach is consistent with its goals of maintaining a competitive market, even if it is heavy-handed. Without an MOPR, Ohio’s nuclear plants could bid zero on the capacity

auctions, essentially winning every time, he noted. “When you’re a price-taker and you bid in zero and take the base price, that’s a problem for the market,” Dormady said. He declined to try to put a specific number on what an MOPR would cost the Ohio plants in lost revenue from the capacity auctions, but said being shut out of them is a significant issue. “They have to bid a minimum offer price, and that’s problematic,” Dormady said.

Now what? Dormady said it’s silly to think Ohio won’t react somehow to the FERC ruling. “The MOPR is a response to what Ohio’s already done,” he said. The state is not without options, either, and it’s already pursuing one. The Public Utility Commission of Ohio is asking FERC to hold a rehearing on the matter. That’s something FERC says it must and will do upon request, but those hearings don’t involve testimony or even meetings, according to FERC media relations officer Craig Cano. And while the commission has 30 days to respond to the request of the PUCO and other petitioners seeking a rehearing, the process is likely to take much longer. “The commission very often issues what is known as a ‘tolling’ order on the 30th day, allowing it to take as much additional time as it needs to adequately address the merits of the rehearing petitions,” Cano said via email. In the meantime, the MOPR remains in effect, he added. FirstEnergy Solutions, the company that owns the Davis-Besse and Perry plants, can also appeal to PJM, said Jennifer Lemley, an analyst with Brakey Energy, a consulting firm in Chagrin Falls. The MOPR assumes certain operating costs for plants based on the fuel

they use, she explained, and if PJM can be shown that the Ohio plants operate more efficiently than most, they could be afforded some latitude regarding the price they can bid on the capacity auctions. “They can request that PJM independently calculate costs for their unit specifically,” Lemley said. But to clear the hurdle FERC has set, it appears those plants would have to be far more efficient than most others, which could call into question why they even need a subsidy. FERC has the plants’ operating costs pegged at $380 per megawatt-day and recent capacity auctions have required a price of $140 per MWD or lower before the grid buys power, Lemley noted. FirstEnergy Solutions declined an interview request. Jason Copsey, an outside spokesman for the company at the Falls public relations firm in Cleveland, said it’s too soon to speculate on the impact FERC’s ruling will have. “FirstEnergy Solutions is considering options, but no decisions have been made at this point,” Copsey said. Neither he nor the company responded to questions about whether FirstEnergy was discussing the matter with state legislators to find a solution, such as another subsidy. John Fortney, press secretary for the Ohio Senate, said he’s heard no discussion of the matter so far and indicated lawmakers may be waiting to see if the PUCO resolves the matter. “The PUCO filed for a reconsideration with FERC recently, and the utilities commission is the agency with statutory authority to make the state’s case,” Fortney said. “The legislature, at least the senate, isn’t working on any legislative strategy regarding that at this point, as the issue is being handled by the PUCO.” Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

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From Page 1

The size of the potential site set the foundation for the announcement by the paint and coatings maker on Thursday, Feb. 6, that it was pursuing the potential development of a million-square-foot global headquarters. The site cobbles together both the Jacobs family-owned site on Public Square and the larger Superblock site between West Third and West Sixth streets, Superior Avenue and West St. Clair Avenue. All but a tiny corner of the Superblock site is owned by the Weston Inc. real estate firm based in Warrensville Heights. Both sites are flat and situated between the city’s rejuvenated Warehouse District and the upgraded Public Square. The best-known setback revolves around the smaller Jacobs-owned parcel that sits on the west side of Public Square. The late Richard E. and David Jacobs, shopping center developers and brothers, had proposed a 70-story skyscraper on the Public Square site that was to be anchored by the old Ameritrust Corp. bank and house a Hyatt Hotel. The Westlake-based Jacobs Group, as it was known at the time, bought two buildings on the edge of Public Square and paid to move tenants out of them. It also funded construction drawings for Ameritrust Center, which was designed by Kohn Pedersen Fox of New York, at the time regarded as the nation’s skyscraper factory because it designed so many. However, a recession that was tough on real estate followed the first Gulf War. The purchase of the ailing Ameritrust by KeyCorp predecessor Society Corp. in 1991 prompted the Jacobs brothers to drop the project. Over the years, other efforts to develop the prized property came to naught. Most prominently, in 2008, Richard Jacobs joined with famed global real estate developer Hines Interests Limited Partnership of Houston to propose a 21-story, 500,000-squarefoot building on the site. However, both prospective tenants of the tower committed to leasing space in existing structures instead. Insiders say an iteration for Eaton Corp. on the site was floated as one of several bids to keep that company downtown. However, the company, preferring a land-rich campus concept to a skyscraper, exited downtown in 2013 for its 10-floor, 600,000-square-foot American

PA G E 17

headquarters in Beachwood. Fast-forward to the Sherwin-Williams announcement. It has an agreement to buy the site, which was confirmed by James Eppele, president of Jacobs Real Estate Services LLC, which oversees the property. Similar missed opportunities abound on the Superblock. In the early 1980s, a 20-story skyscraper was proposed for the block facing Superior on the west side of West Third by the former First Union Real Estate Inc., a Cleveland real estate investment trust that has since been absorbed. Additional property needed to make it a go was deemed too expensive, so the plan was dropped. Likewise, a skyscraper was proposed for the southeast corner of the Superblock at West Sixth Street and Superior Avenue by late Solon real estate developer Irv Chelm, who had Forest City Realty Trust as a partner in the land. A green parking garage and a cash-checking site were demolished to become another parking lot. Forest City also proposed the Superblock as an alternative site for a new convention center before Cuyahoga County agreed to develop The Huntington Cleveland Convention Center atop the city’s existing venue. Weston proposed developing the site as the Citymark project, a complex of primarily apartment buildings and ground-floor retail with some office components, in 2016. The Asher family that controls Weston went through detailed planning of the site with city officials and acquired additional parcels on the site it did not control — to the tune of more than $2 million. Weston has never explained why it did not proceed with those plans and did not reply to Crain’s emails and phone calls about the Sherwin-Williams deal. It’s widely thought the principals of the family firm caught wind of a potential Sherwin-Williams project in 2016, but that idea was scuttled when the company instead pursued the $11 billion Valspar acquisition. However, now it’s back to dealing with its antiquated headquarters. At a press conference Feb. 6, Mayor Frank Jackson said he had paid no attention to other cities that might be trying to entice the massive company to leave its hometown. Instead, something simpler was crucial. “We were negotiating with them about incentives,” the mayor said, “and came to an agreement when we realized they were sincere about staying in Cleveland.”

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CRAIN’S CLEVELAND LOOK BACK | MARIJUANA IN OHIO

A new industry on the grow

crainscleveland.com

Publisher/editor Elizabeth McIntyre (216) 771-5358 or emcintyre@crain.com Group publisher Mary Kramer (313) 446-0399 or mkramer@crain.com Managing editor Scott Suttell (216) 771-5227 or ssuttell@crain.com Sections editor Michael von Glahn (216) 771-5359 or mvonglahn@crain.com Creative director David Kordalski (216) 771-5169 or dkordalski@crain.com Web editor Damon Sims (216) 771-5279 or dasims@crain.com Associate editor/Akron Sue Walton (330) 802-4615 or swalton@crain.com Assistant editor Kevin Kleps (216) 771-5256 or kkleps@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Editorial researcher William Lucey (216) 771-5243 or wlucey@crain.com Cartoonist Rich Williams

With estimated sales of $250 billion in 2019, alcohol has blossomed into one of America’s largest businesses in the decades since Prohibition’s repeal. Just as a legal alcohol industry flourished as federal laws came down, so, too, is a marijuana industry poised to find its place in the engine that is the U.S. economy, thanks to growing public support and recognition of its health benefits. Ohio and other states have acknowledged these factors by launching medical and/or recreational marijuana programs, enabling development of a regulated business sector conservatively forecast to top $44.6 billion in revenue and 743,000 jobs by just 2025, all despite marijuana’s lingering federal prohibition. — Jeremy Nobile

``THE HISTORY

``IN THEIR OWN WORDS

In June 2016, Ohio set the foundation for a strictly regulated marijuana business sector as Gov. John Kasich ratified H.B. 523 with little fanfare. Kasich had previously been wholly dismissive of medical marijuana, at least before campaigning for president. Current Ohio governor Mike DeWine isn’t a fan, either. The bill may never have come to be when it did had it not been for the failure of Issue 3 in 2015. A ballot measure, Issue 3 would have legalized recreational marijuana use, something popular with voters then and even more so now. Bill sponsors were looking to ride the pro-legalization wave to victory. But the legislation would have simultaneously allowed for only a select number of cultivators — chosen by the bill’s investors/sponsors, which included ’90s boy band singer Nick Lachey of 98 Degrees — at predesignated grow sites. Critics, including the state, which worried about losing control of the marijuana situation, framed Issue 3 as a monopoly on the lucrative cultivation business. While not a literal monopoly, the idea was that one group of investors working together would effectively gain unilateral control over who would be allowed to grow medical pot and where in the Buckeye State. That left many marijuana advocates unimpressed. Issue 3 ultimately failed, but not without sending a message to lawmakers: Establish a marijuana program now or risk someone else doing it for them later. With medical marijuana preferred to outright legalization in the conservative state of Ohio, as Issue 3 burned out, H.B. 523 rose from its ashes.

“This is a joyous day for the thousands of Ohioans who will finally be able to safely access much-needed medicine.”

REPORTERS

——Aaron Marshall, campaign spokesman for Ohioans for Medical Marijuana, following passage of House Bill 523. Associated Press, June 2016

Buckeye Relief CEO Andy Rayburn walks through the rows of nearly mature marijuana plants inside the Eastlake grow facility in 2018. | TIM HARRISON FOR CRAIN’S

“If you ask firms about projections for the next three years, you’ll get a smile and they’ll give the best they have. … None of us knows exactly what will happen next year. Or the year after. But it makes me feel excited to find out.”

When Kasich signed the law, Ohio became the 25th state with a comprehensive medical program, though sales weren’t permitted until September 2018. Because of hiccups with the program’s rollout, including how the state issues licenses, the first sales didn’t occur until January 2019. Today, 33 states have medical marijuana programs and 11 permit adult/ recreational consumption. The rules in each state establish frameworks for regulation and licensing of the businesses and supply chain that will serve customer/patient demand. The more states defy federal laws to set their own marijuana policies, the

——Andy Rayburn, CEO of Buckeye Relief, an Eastlake marijuana cultivator. Crain’s Cleveland Business, November 2018

“There is still a lack of access to financing. But (that) … has opened up a huge opportunity to private equity and venture capital to play in the space and fill the need.”

``WHY IT MATTERS TODAY

——Tom Haren, a cannabis lawyer with Frantz Ward, on banking and financing challenges in marijuana. Crain’s Cleveland Business, May 2019

“It would really be a mistake for Ohio, by legislation, to say that marijuana for adults is just OK.” ——Ohio Gov. Mike DeWine, addressing whether he’d support recreational marijuana. Statehouse News Bureau, January 2020

more likely prohibition’s inevitable repeal becomes. Besides being part of the sea change that is America’s evolving attitude toward marijuana in society, the creation of a marijuana program has led to an entirely new, legitimate commercial business sector supporting the Ohio economy. The years since H.B. 523’s passage have led to myriad new business activity, and this is still early days. There are now dozens of licensed entities growing, processing and selling medical marijuana (with more to come), plus a slew of other businesses serving the industry, from testing labs, hardware manufacturers and insurance companies to a cannabis school. Ohio alone is conservatively projected to have nearly 19,000 jobs attributed to marijuana by 2025 just in retail, cultivation, processing, manufacturing, testing, wholesale and distribution. While the $58.3 million in marijuana sales after one year of business in Ohio is muted compared to early expectations, stakeholders remain confident the industry can flourish. Ohio is watching the beginnings of an entirely new industry unfold — one poised to get bigger, depending on how state and federal laws play out — and that’s not something that happens very often.

THE WEEK OUR TOP STORIES: There were two gigantic developments last week, with Sherwin-Williams Co. announcing plans to build a new global headquarters in downtown Cleveland and an R&D facility in Brecksville, in an investment totaling at least $600 million, and Case Western Reserve University’s president, Barbara R. Snyder, announcing she will leave the job this fall to become head of the Association of American Universities. You can read more about both on the editorial page (that’s Page 8), and an analysis of the Sherwin-Williams deal on Page One. MOTIVATING FORCE: A partnership formed last fall by BioMotiv of Cleveland and New York-based pharmaceutical giant Bristol-Myers Squibb Co. produced its first company. Bio-

inflammatory diseases. The intellectual property behind Anteros was developed by Yale University. BioMotiv also announced that Satish Jindal has been named its CEO. Jindal was recruited to BioMotiv in January 2019 as managing director.

Case Western Reserve University president Barbara R. Snyder will leave the job this fall. | CWRU

BioMotiv announced that Satish Jindal, recruited as managing director in 2019, has been named its CEO. | BIOMOTIV

Motiv, a biotechnology accelerator associated with the $340 million Harrington Project for Discovery & Development, and Bristol-Myers

Squibb have launched Anteros Pharmaceuticals, a biotech company focused on developing a new class of drugs for fibrotic and other

AROUND THE BLOCK: Westlake-based Hyland, a software producer and content services company, acquired a blockchain-anchored credentialing provider for governments, companies and educational institutions. Terms of the purchase of Learning Machine, a company from Cambridge, Mass., that has developed its technology in partnership with the Massachusetts Institute of Technology and the MIT Media Lab, were not disclosed. This was Hyland’s first acquisition in the blockchain space.

Stan Bullard, senior reporter, Real estate/ construction. (216) 771-5228 or sbullard@crain.com Jay Miller, Government. (216) 771-5362 or jmiller@crain.com Rachel Abbey McCafferty, Manufacturing/energy/ education. (216) 771-5379 or rmccafferty@crain.com Jeremy Nobile, Finance/legal/beer/cannabis. (216) 771-5255 or jnobile@crain.com Kim Palmer, Government. (216) 771-5384 or kpalmer@crain.com Dan Shingler, Energy/steel/auto/Akron. (216) 771-5290 or dshingler@crain.com Lydia Coutré, Health care/nonprofits. (216) 771-5479 or lcoutre@crain.com ADVERTISING

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