LOOK BACK
FOCUS | SMALL BUSINESS: S&P Work Lab offers a high-tech space to create. PAGE 12 Renee Singleton, president and CEO of Singleton & Partners and founder of S&P Work Lab
‘The Move’ lives in Cleveland sports infamy. PAGE 27
CRAINSCLEVELAND.COM I JULY 20, 2020
INDOOR AIR QUALITY: A HOT TOPIC IN A COVID-19 WORLD Local HVAC contractors flooded with questions about new technologies
BY MICHELLE JARBOE
General manager Drew Walker, left, and owner Brent Lewanski stand behind a bar at the Ivy, where they’ve installed Plexiglas dividers to keep customers apart.
It is, perhaps, not the ideal time for a downtown Cleveland bar owner to be spending $12,000 on new equipment. Yet Brent Lewanski and business partner Constantine Antonas are shelling out roughly that amount to clear the air inside the Ivy, their Warehouse District nightspot. Last week, they installed needlepoint bipolar ionization, a technology that destroys air contaminants and causes tiny floating particles to clump together, making them more likely to be caught by a filter or to fall to the floor, where they can be wiped away. BANKING
| MICHELLE JARBOE/CRAIN’S CLEVELAND BUSINESS
The coronavirus pandemic is spurring a surge of interest in indoor air quality, putting largely invisible systems under a microscope. For months, business owners like Lewanski have been surfing the web, parsing jargon and trying to sort out what’s a myth, what’s grounded in science, what’s sensible for their spaces — and what they can afford.
“I’m a poor restaurant guy,” said Lewanski, who had to close the Ivy from mid-March to mid-May, lay off part of his staff and rely on federal small-business loans to stay afloat. “I’m not the smartest guy around. I’m studying this stuff, and I can’t even pronounce half the words.” See AIR QUALITY on Page 22
SPORTS BUSINESS
Huntington dominates PPP lending in state, NEO Lost season ‘catastrophic’ for The Columbus-based bank also gave the most attention to local companies RubberDucks, Captains, others BY JEREMY NOBILE
Among 687 participating lenders, Columbus-based Huntington Bank dominated competitors in the Paycheck Protection Program in both
Ohio overall and Northeast Ohio itself in terms of total lending volume. This comes despite a number of fits and starts for the unprecedented stimulus program that primarily allowed for the processing of potential-
NEWSPAPER
VOL. 41, NO. 26 l COPYRIGHT 2020 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
ly 100% forgivable loans from April through June 30. While the original application deadline has passed, an extension allows lenders to continue to file requests until Aug. 8. Huntington at one time became so inundated with PPP applications this spring, it temporarily stopped accepting them. The small-business-focused PPP funded 140,277 Ohio businesses with a combined $18.3 billion in loans for entities with 500 employees or fewer during its three-month lifespan between April and June, according to U.S. Small Business Administration figures. See PPP on Page 22
P001_CL_20200720.indd 1
BY KEVIN KLEPS
Ken Babby knew the announcement was coming. That didn’t make it any easier for the owner of the Akron RubberDucks and Jacksonville Jumbo Shrimp when Minor League Baseball officially canceled its season on June 30. “It still really stung,” Babby said. “It was a really hard day for everybody.” Jordan Taylor, the general manager of the Mahoning Valley Scrappers, said the reaction from employees, fans and sponsors was “just sadness.” The worst might be yet to come for many of Minor League Baseball’s 160 organizations, “north of
half” of which could be forced to sell or, without government assistance, fold, MiLB president and CEO Pat O’Conner said when the 2020 season was brought to a halt before a game was even played. The Cleveland Indians’ five MiLB affiliates, four of which are in Ohio, don’t seem to be in danger of going bankrupt. The Scrappers, though, have been mentioned as being on the list of 42 clubs that are in danger of being cut as Major League Baseball seeks to reduce its minor league affiliations to four for each of its 30 big-league clubs. See BASEBALL on Page 25
7/17/2020 3:53:56 PM
Fifth Third Means Business™ From assessing risk to M&A advisory, we know your business requires unique solutions to meet the specific moments you’re navigating. That’s why, at Fifth Third Bank, we have a team of local experts who understand your business. Whatever your business goals are, we’re here to help you succeed. Let’s build, together.
Fifth Third Means Business™
53.com/CommercialBank
Fifth Third Bank, National Association. Member FDIC.
REAL ESTATE
Real estate investor Realife snaps up three properties Independence group pours $21 million into apartment, office building buys BY STAN BULLARD
In a spate of multimillion-dollar deals, Realife Real Estate Group of Independence is the new owner of three Northeast Ohio commercial properties, including a new Ohio City apartment building and two 1980s-era suburban office buildings. For $13.6 million, Realife bought the six-story Edge32 apartment building, 3219 Detroit Ave. in Cleveland, on July 10, according to Cuyahoga County land records. The seller was an affiliate of commercial builder Chip Marous, CEO of Willoughby-based Marous Brothers Construction, which in 2017 developed the property with a view of Lake Erie. Making a big switch in terms of property type, age and location, Realife on July 6 bought two low-rise Beachwood office buildings — Landmark Centre, 25700 Science Park Drive, and the Reflections Building, 24400 Chagrin Blvd. — from affiliates of the developer who constructed them, Bart Simon, chairman of Mayfield Heightsbased North Pointe Realty. Realife shelled out $3.8 million for Landmark and $3.2 million for Reflections, online county records report. Both buildings boast high occupancy. Realife paid a little more than the fair market value Cuyahoga
County assigns to the office buildings: $3.6 million for Landmark and $3 million for Reflections. Both structures are distinguished by classic ‘80s designs, primarily tinted glass exteriors with multiple angles that afford tenants many corner offices for executives and staffers. The older office buildings are not at the top of the buy list for most real estate investors amid the pandemic when there is a widespread question about future popularity of offices, a property type that was sagging even before the dangerous virus swept the nation. With many employees having spent months working from home and companies possibly seeing a chance to further slash overhead expenses, office buildings are not universally valued as the gems they once were in the past. Though, the question will only be answered by leasing action over the next few years. James Asimes, Realife director of acquisitions, said in a phone interview that the company thinks both buildings are good investments because they serve the east suburban market near the homes of multiple business owners. Simon responded to phone calls about the office building deals with an email. “Our firm was privileged to design,
The Reflections Building in Beachwood is marked by an edgy design for its time. An affiliate of the original developer, North Pointe Realty, just sold the structure to Realife Real Estate Group of Independence. | COSTAR
build and develop these two successful projects in the 1980s,” Simon wrote. “I am so pleased our ownership groups sold them to Realife Real Estate Group, which, in our belief, is an outstanding real estate company as committed to Cleveland as we are.” He did not respond to requests for more detail on why the company shed the properties after such long holding periods. At the other end of the age spectrum, Edge32 faces a different market dynamic. Edge 32 faces an onslaught of three new apartment buildings nearing completion or just starting to lease within a few blocks, with all of the competitors located closer to the popular West 25th Street and Hingetown beer, restaurant and retail districts. Vacancy at Edge32 is 15%, according to online realty data provider CoStar,
well above the 6.5% vacancy CoStar assigns to the downtown Cleveland and West Side area. Cuyahoga County assigns it a market value of $8.5 million for property tax purposes, although such residential properties benefit from property tax abatements. The appetite of Realife for both property types has been established by prior deals. Last year, it acquired the Battery Park Lofts, 1250 W. 75th St. in Cleveland, also from a Marous affiliate, as well as an Independence office building. Realife is led by Yaron Kandelker, an Israeli native who now lives in Cleveland. Kandelker has declined to be interviewed about the company, formed in 2014, and referred all Crain’s questions to Asimes. Kandelker’s profile on the Realife website states that his strategy is to use his on-the-ground experience in
areas where the company invests and to partner with experienced investors. The company has investors from Israel through an affiliated company of the same name, according to its website, but Asimes declined to discuss the company’s investors. Realife is not alone in having a recently demonstrated an appetite for older office buildings in the east suburbs. In a June 25 transaction, The Orlean Building, at 23875 Commerce Park Drive, which formerly housed the headquarters of the Beachwood-based home builder and apartment building operator, was sold for $1.2 million to 23875 CP LLC. The new owner is an investor group led by Kimball E. Rubin. Rubin’s namesake accounting firm is in the multitenant building. The one-story structure contains 15,000 square feet of office space. The Rock On Cleveland Opportunity Fund III, an affiliate of Waterstone Brainworks Co. in South Euclid, paid $4.8 million to buy the Omni-Chagrin Building, 29255 Chagrin Blvd. in Pepper Pike, from a California-based investor group, Metro Officeplex, on April 28. The three-story structure contains 33,000 square feet of office space. Waterstone owns and manages apartments and commercial real estate. Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter
We help you face legal complexities by not being one. Hiring a lawyer should mean exactly that. You’re gaining a partner, a risk manager, and a confidant so that you can finally take a well-deserved deep breath. Yes, we know exactly the kind of lawyers you’d love to hire, because we’ve hired them.
FrantzWard.com
Frantz Ward | Love Your Law Firm JULY 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 3
P003_CL_20200720.indd 3
7/17/2020 3:55:34 PM
CONSTRUCTION
Wood demand spikes as inventory slips HERE TO SHELTER
YOUR LOANS
COMMERCIAL REAL ESTATE INTEREST RATES AT ALL TIME LOWS. • Loans up to $10 Million • No Prepayment Penalties • As Little as 10% Down Your Business Lending Partner SM CONTACT Jonathan A. Mokri 440.526.8700 jmokri@cbscuso.com www.cbscuso.com
1,200,000+ SF OF INDUSTRIAL WAREHOUSE SPACE ON 184 AC
1590 WARREN AVE., NILES OH 44446
Incredible opportunity for a variety of possible uses. Seven industrial warehouse facilities totaling 1,223,125 SF. Buildings range from 120,000 SF to 200,000 SF each. 16’-18’ clear heights with 12-30 drive-in doors each. Active rail service by Norfolk Southern Railway with 5 rail spurs. Entirely fenced compound. 12” water line, fire hydrants & water reservoir on site. Building #5 (200,000 SF) is leased for 10 more years with over $115,000 in Net Annual Income. Go to Chartwellauctions.com to view aerial drone video. Offered for Sale at: $3,425,000 Michael Berland, AARE Christopher J. Hondlik, SIOR
www.hannacre.com
216.839.2032
216.861.5686
MikeBerland@hannacre.com
ChrisHondlik@HannaCRE.com
Do-it-yourselfers, mill closings add stress to already busy construction market BY STAN BULLARD
The past few years, Britt Raburn, owner of Lyndhurst Lumber Inc. in Lyndhurst, had wondered what became of do-it-yourselfers. In the meantime, he increasingly focused on contractors and the company doing projects itself. But about six weeks ago, the DIY market came back. Suddenly. “That’s when the phone started ringing off the hook with people looking for lumber,” Raburn said, as eager homeowners stuck at home decided it would be a good time to add a new deck and the big-box stores had run out of pressure treated wood. It became a national phenomenon as precautions for the COVID-19 pandemic sent office workers and others home to prevent the spread of the disease. “We went from a few DIY customers to 50 to 100 a day,” Raburn said. “I was fortunate to have a couple trucks come in. Usually it takes a month to sell a truck, but we’ve been doing that in four hours some days.” While the uptick is good for sales, Raburn and others say the situation is different from other material shortages that afflict the building business every few years. “In a hurricane or a fire, it raises a little havoc in one part of the country,” Raburn said. “This is different. It’s everywhere. The mills can’t crank up machines when no one is there (due to plant closings) to crank them.” Other factors compounded the impact of DIY demand on an already bustling construction market. Truck shipments became erratic as drivers cut down trips because of concerns about getting fuel and finding places to stop on the way. Meanwhile, lumber prices shot up 18%, according to wood data from the Association of General Contractors, a Washington, D.C.-based trade group. However, that price of wood may be offset by other factors to take the sting out of it, primarily low interest rates that allow higher prices to be paid over time. Wood is considered about 20% of the cost of a new house. The situation is similar on the West Side, where Avi Selva, sales and mar-
“IT’S A PERFECT STORM. DEMAND FOR TREATED WOOD EXPLODED BECAUSE OF THE DEMAND FROM DO-ITYOURSELFERS. THE INDUSTRY WAS NOT READY FOR IT ON TOP OF MILLS SHUTTING DOWN DUE TO COVID-19. ” — Avi Selva, sales and marketing manager of Cleveland Lumber Co.
keting manager of Cleveland Lumber Co., said that the company’s racks were not as full as he likes them to be. “It’s a perfect storm,” Selva said. “Demand for treated wood exploded because of the demand from do-ityourselfers. The industry was not ready for it on top of mills shutting down due to COVID-19. It seemed like overnight we went from getting an order in three or four business days to four or five weeks. All you can do is take a number and stand in line.” Treated wood is typically yellow pine, prized for durability where it touches the ground, although sometimes cedar may be substituted for it, experts say. The shortage does not grip hardwoods, such as oaks, that are used in furniture. Brenda Callaghan, executive director of the HBA of Greater Cleveland trade group for homebuilders, said homebuilding experts don’t expect the treated lumber shortage and price increases to work themselves out for some time. “Builders and remodelers started out with a very busy year, then everything stopped a few weeks when COVID-19 hit,” she said. “But now everyone says it is busier than before the state lockdowns of other industries.” Slowdowns in delivery of everything from cabinets to appliances stemming from plant closings have continued to challenge builders, she said. “With the new rules for social distancing, it’s taking longer to even hang a door,” Callaghan said. “Some delays in finishing houses are stretch-
MELENA-NSK/ISTOCK
YOUR LOCAL CREDIT UNION
ing from a week to several weeks.” Jack Dever, owner of Dever Design & Build in Willoughby for 30 years, said suppliers are having a particularly hard time finding 4x4 treated lumber because those pieces are central to the rest of a project like a deck. Even door hardware has become scarce because many of the components are made in China, he said. All those factors, along with price increases, make it hard for the customer builder and remodeler to conduct business as usual. “Getting repairs is also more difficult,” Dever said. “I had a job where a couple cabinet drawers were damaged. Rather than have them in 24 hours, we had to wait two weeks for them. It delayed closing out the job. Prices are also in so much flux that I can’t hold estimates long. They used to be good for a month; now it’s a week.” Supplies are so fickle, Dever said, that rather than ordering wood, cabinets or other materials about when he will need them, he orders them as soon as the contract is signed. Although steadily increasing prices may raise concern going forward, Dever said he has been heartened by the volume of work that has materialized since the state ended its shutdown orders for the general population. “I’ve never seen anything like this before,” Dever said. “It’s like it’s something new every week. But there is only one way to handle it. We have to just muscle through it.” Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter
“Any way you slice it, Beachwood is the best location.”
Mayor Martin S. Horwitz •Mayor@BeachwoodOhio.com •216.292.1901
WWW.BEACHWOODOHIO.COM
4 | CRAIN’S CLEVELAND BUSINESS | JULY 20, 2020
P004_CL_20200720.indd 4
7/17/2020 4:07:12 PM
REAL ESTATE
Developers forge ahead on apartment plans on Cleveland’s near West Side BBY MICHELLE JARBOE
Developers are pushing forward on plans for two noteworthy apartment projects on Cleveland’s near West Side, despite the pandemic and a recession that has left other real estate deals on rocky footing. On Friday, July 17, the Cleveland City Planning Commission gave an initial thumbs-up to Waterford Bluffs, a five-story apartment building slated for vacant land at West 20th Street and Lorain Avenue, near the western end of the Hope Memorial Bridge. And on Thursday, July 16, a city design review committee got its first glimpse of the Viaduct, a 27-story tower that could rise on the west bank of the Flats. Developer Stoneleigh Cos. hopes to break ground in September for Waterford Bluffs, a 241-unit building at the confluence of the Ohio City, Tremont and Duck Island neighborhoods. The project, with a roughly $60 million price tag, could be complete in mid-2022. Plans drawn up by Cleveland-based architecture firm Vocon show that 99% of the units will be studios and one-bedroom apartments, with an average size of 583 square feet. During a phone conversation,
Stoneleigh president Rick Cavenaugh said the small footprints will allow for lower monthly rents. At a projected average rate of $2.40 per square foot, a midsize apartment might rent for about $1,400 a month. “We certainly don’t want to get to $4,000 rents,” he said, adding that the Illinois-based company expects to attract tenants who want to live within walking distance of the West Side Market, a Greater Cleveland Regional Transit Authority Rapid station and downtown. Friday’s planning approval followed a Thursday vote from a design review committee that vets projects in downtown Cleveland and close-lying areas. That committee also gave Waterford Bluffs a nod, though members asked Stoneleigh and Vocon to keep studying landscaping, materials and site-access issues. Stoneleigh purchased the 4-acre site, which had been assembled and cleared by local developers, in late March for $7.6 million, according to public records. “This site is a long time coming,” Freddy Collier, the city’s planning director, said during Friday’s meeting. “I was very pleased with the fact that this was a midrise structure rather than a tower, that was originally proposed for this particular site.”
The planning commission didn’t discuss the high-rise Viaduct project, which was tabled Thursday at the behest of the design review committee. Committee members delayed a vote on the Viaduct until their next meeting, scheduled for Aug. 6, and asked developer Wayne Jatsek and his partners to meet with the owners of two small, historic buildings that flank the 0.3-acre site on the north side of the Superior Viaduct. Representatives for those buildings spoke up during Thursday’s meeting, expressing concerns about blocked sightlines and possible damage from excavation and construction. Architect Jack Bialosky, the committee’s chairman, said more communication is in order. “This project is, after all, a major intervention,” he said. But he and other members commended Paul Glowacki of Dimit Architects for his work on the designs, which show 165 to 173 apartments perched atop six levels of parking. The tricky site slopes down from the remnants of the old bridge toward Washington Avenue. Tenants would enter the garage from the rear of the building. A residential lobby and a small retail space, possibly a coffee shop, would front
A Cleveland design review committee got its first look at the Viaduct, a 27-story tower proposed for the west bank of the Flats, but the planning commission tabeled a vote on the project until its August meeting. | DIMIT ARCHITECTS
on the viaduct, facing the Stonebridge Towers condominiums. The tower’s floors would gradually narrow, stepping back at two points, with the top two levels reserved for fitness facilities, an outdoor deck and a pool. The Viaduct’s developers also are focused on smaller apartments, more than 80% of which would have a single bedroom. Plans show 156 parking spaces, plus bike storage. Jatsek, a local developer with a construction background, said he’s
not ready to talk about project costs. He and his partners have a contract to buy the property, at 2208-2210 Superior Viaduct, for an undisclosed price. They’re on the verge of picking a construction team and hope to start site work by mid-2021. The pandemic isn’t altering that timeline, Jatsek said during a phone interview Friday. “It’s not derailing us at all,” he said. Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe
Join us virtually as we celebrate the 2020 Excellence in HR finalists and winners in this tribute to Northeast Ohio’s leading human resources professionals.
AUGUST 19 11 am – NOON
New
New this year will be a discussion on inclusion and diversity in the workplace, kicked off by keynote presenter Peggy Zone Fisher, president and CEO at The Diversity Center of Northeast Ohio.
BRONZE SPONSORS
REGISTER TODAY: CrainsCleveland.com/crains-events
Webcast questions: clbwebcasts@crain.com • Sponsorship opportunities: scott.carlson@crain.com
July 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 5
P005_CL_20200720.indd 5
7/17/2020 4:26:40 PM
MANUFACTURING
Ranpak stakes its future on sustainable packaging Concord Township manufacturer also looks to e-commerce and automation as pathways to growth BY RACHEL ABBEY MCCAFFERTY
Ranpak Holdings Corp. thinks paper is a product of the future. The Concord Township-based company makes paper packaging products and automated packaging equipment. A little more than a year ago, Ranpak was acquired by One Madison Corp. and went public as PACK on the New York Stock Exchange. It’s seen a lot of investment and growth in that first year, despite the pandemic that caused uncertainty for the company and many of its customers. Chairman and CEO Omar Asali said Ranpak has made progress in three main areas: sustainability, e-commerce and automation. That first measure, sustainability, is core to the company’s mission. Ranpak’s motto is “deliver a better world.” The company’s packaging products are made of paper, not plastic, and the majority of it is recycled, Asali said. And Ranpak is looking to make its plants more sustainable, too. The company has been investing in both recycling and energy- and waste-efficiency initiatives for its facilities. “When we talk about sustainability, it’s really very broad. It’s part of an ESG story, where we’re focused on environmental aspects. We’re fo-
Manufacturing recyclable paper packaging is one key to Ranpak’s sustainability goals, says CEO Omar Asali.
cused on social aspects and being more active in our community and more helpful. We’re focused on our governance, on diversity and inclusion,” Asali said. “It’s really the full picture.” The other growth measures Asali mentioned — e-commerce and automation — are more externally focused. E-commerce made up about a third of the company’s revenue at the time of the acquisition last June, Asali said. Today it’s about 45% of the business, and it’s the fastest growing segment for Ranpak. The COVID-19 pandemic, and the growth of online shopping that came with it, only intensified that trend. And Ranpak’s automated solutions
products have been getting more attention, too, in light of the pandemic. In addition to increasing efficiency, the equipment allows companies to operate with fewer employees. And that means people don’t have to work as closely together in factories and warehouses, Asali said. Automated solutions only make up about 3%-4% of Ranpak’s revenue, Asali said, but he sees it becoming a “significant” piece of the business going forward. Ranpak entered the automated solutions market through an acquisition about three or four years ago. In the past year, Ranpak has made efforts to integrate that business into its core and invest.
To that end, Ranpak has doubled its employees in that space from about 30 to 60 and built a new dedicated facility in the Netherlands for automation, Asali said. It has introduced new products, with plans for more. And Asali said he expects to build a facility focused on automation in North America in the coming quarters. The company is innovating in its core packaging products, too, adding new products and investing in material science. Ranpak soon will introduce new “cold chain” products for customers in the grocery and food-and-beverage markets, like meal kit delivery companies. The aim is to replace foam products with temperature-controlled paper products. In the past year, Ranpak has hired more than 60 new employees, Asali said, bringing the company’s global employment to about 600. Those hires have been in engineering, research and development, finance and supply chain. Ranpak also has been working to make itself more visible to potential customers. It launched a B2B campaign focused on the sustainability of paper packaging in May and will launch a B2C campaign in the future. Ranpak has shied away from public campaigns in the past, Asali said, but it’s time to educate end users on the company’s sustainable products. In
the future, Ranpak plans to offer more retail products that those end users would be able to buy directly. Ranpak demonstrated resiliency during the recession that begin in 2008, Asali said, and he thinks the company is showing that again during the COVID-19 pandemic. Sales were down by just 4.6%, adjusted for constant currency, in the first quarter of 2020 compared to the year prior, as e-commerce growth helped balance weaker industrial demand. Packaging systems placement increased by 8.5% year over year in the quarter. Overall, the company showed a $3.6 million net loss for the quarter, slightly more than the net loss of $3.4 million reported in the first quarter of 2019. Ranpak was considered an essential business across the globe, so its manufacturing facilities were able to remain open. It sent its office employees to work from home but began reopening those spaces at a lessened capacity at the start of June. Ultimately, the company didn’t “miss a beat,” in the past few months, Asali said. “I feel that we’ve delivered good results despite a very uncertain world,” he said. Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com
RETHINK reconnect REIMAGINE With flexible Internet solutions tailored to meet your new needs, you’ll have the connection you need to get back to business.
GET 25 MBPS INTERNET FOR
40
$
/mo*
for 6 months
• NO ANNUAL CONTRACT • FREE SELF-INSTALL • 30-DAY MONEY-BACK GUARANTEE
Paperless billing and auto-payment enrollment required
Call (877) 903-7884 or visit coxbusiness.com to switch today *Offer ends 7/31/20. Available to new commercial data subscribers (excluding gov’t agencies and schools) in Cox service areas. $40/mo includes Cox Business Internet SM 25 for months 1-6 and free self-install; $10 step-up in month 7. Rates subject to change after month 7 or if you cancel Auto Pay or Paperless Bill. Offer requires Auto Pay and Paperless Bill. Price excludes equipment, professional installation, construction, inside wiring, taxes, surcharges and other fees, unless indicated. Offer is nontransferable to a new service address. “No annual contract” means no specific term period requirement and no early termination fees. All Cox services are provided subject to Cox Business General Terms (including mandatory arbitration provisions), Acceptable Use Policy (including Cox’s right to terminate service for abuse of network), and other policies, which may be found at www.cox.com/aboutus/policies.html. CB Internet: Uninterrupted or error-free Internet service, or the speed of your service, is not guaranteed. Actual speeds vary. Rates and bandwidth options vary and are subject to change. DOCSIS 3.0 or higher modem may be required, unless indicated. See www.cox.com/internetdisclosures for complete Cox Internet Disclosures. Services are not available in all areas. Discounts can’t be combined or added with other promotions nor applied to any other Cox account. 30-day satisfaction guarantee limited to refund of standard installation/activation fees and the first month’s recurring service and equipment fees (and equipment purchase fees if purchased from Cox) for the newly subscribed services only. Excludes all other costs and charges. Refund must be claimed within 30 days of service activation. Other restrictions apply. © 2020 Cox Communications Inc. All rights reserved.
6 | CRAIN’S CLEVELAND BUSINESS | JULY 20, 2020
P006_CL_20200720.indd 6
7/17/2020 4:37:25 PM
GOVERNMENT
Dollar stores are paused in Cleveland as council considers their broad impact Ordinance stops spread of ‘small box discounts’ until November BY KIM PALMER
Cleveland City Council members have been deluged by complaints from residents that the rapid growth of dollar stores in their neighborhoods have left them with a proliferation of understaffed, poorly stocked targets for criminal activity. Referring to them as “small box discount stores,” council on June 17 passed an ordinance that, by not issuing zoning or occupancy permits until Nov. 1, halts any additional dollar stores from opening in the city “I’m concerned about how the facilities are kept. Some do a good job, but the majority operate in some deplorable ways,” said Blaine Griffin, Ward 6 Buckeye-Shaker area councilman, the primary sponsor of the ordinance. The ordinance is designed to provide time to craft legislation to deal with the problem of the saturation of the stores, which have multiplied throughout low-income and minority communities. “This is basically hitting the pause button on these stores,” council president Kevin Kelley said during a council meeting, adding, “This gives us a little bit of breathing room. But it also sets the clock and gives us a deadline.” The city of Cleveland has about 70 stores that qualify as small box retailers, which is defined by the ordinance as a store between 3,000 and 15,000 square feet with low price points for most items ($10 or less) and where fresh food makes up less than 15% of the overall product on the shelves. The legislation proposed by the city will focus on “distancing” store locations, city planning director Freddy Collier told council last month, with a hope to create an environment that would make room for other types of retailers to move into underserved areas. “This is about making sure that our communities are respected, and the investments are done thoughtfully,” Collier said. “We are trying to reinvest in our communities, and we need our land resources in our business districts to create economic opportunity. The oversaturation of these facilities creates an imbalance.” Small box retailers do have some fans. Tom McNair, executive director of Ohio City Inc. is one of them. In 2018, Ohio City Inc. bought a commercial space on West 25th Street so that a Family Dollar store there could remain without contending with skyrocketing lease prices. The community development corporation purchased the space for $775,000 with the help of a no-interest loan from the city of Cleveland. Ohio City Inc. staff manages the property, which McNair said is part of the organization’s commitment to maintaining affordable neighborhood retail. The juxtaposition is stark, as McNair made it a priority that Ohio City residents have access to the type of small box retailer that city council is curtailing. “I can speak of it only through the lens of (Ohio City Inc.). We have 2,000 units of public housing, the second-largest amount in the city, and some of those residents do not have cars,” he said. “Bringing in new and high-end types of businesses is a
CORPORATE LITIGATION SERVICES Apple Growth Partners provides experienced, unbiased economic damage and business valuation services for the corporate litigation process.
An oversaturation of “small box discount stores” by retailers like Dollar Tree, Dollar General, Family Dollar and others has prompted Cleveland City Council to pass an ordinance halting additional stores from opening until Nov. 1. | KIM PALMER/CRAIN’S
good thing, but if we are not doing what we can to support the 39% who are living under the poverty line, we are not doing a good job.” Whether these stores perpetuate or provide relief from food deserts — areas where residents must travel a mile or more to reach a store that sells fresh food — is a matter of interpretation. The moratorium ordinance was introduced in March 2019 but was not acted upon by council until this summer, when it was passed as an emergency measure. A week after the moratorium was signed by Mayor Frank Jackson, the city planning commission voted to halt a Dollar General store, slated to be built on Memphis Avenue in Old Brooklyn. That move came as a sur-
“WE ARE TRYING TO REINVEST IN OUR COMMUNITIES, AND WE NEED OUR LAND RESOURCES IN OUR BUSINESS DISTRICTS TO CREATE ECONOMIC OPPORTUNITY. THE OVERSATURATION OF THESE FACILITIES CREATES AN IMBALANCE.” — Freddy Collier, Cleveland planning director
prise to representatives of the company, who questioned the timing of the moratorium. Tony Coyne of Mansour Gavin, a law firm specializing in municipal, zoning, planning and property law, told the planning commission that the $2 million Dollar General project had passed multiple design reviews. He said the developers had spent $100,000 on the site and were assured that the moratorium would not hinder the approval process for the Old Brooklyn project. “This city needs investment, and the project is not getting any kind of incentive, tax abatement or anything else,” Coyne said. “Dollar General, during COVID time, has been one of the top retailers in addressing the needs for people who live in cities around the country because it provides products that people need at a reasonable price.” Dollar General and Dollar Tree have seen consistent growth during the last
decade, to the point where, critics say, locations are clustered in low- and moderate-income neighborhoods. Dollar General which currently operates more than 16,300 stores in 45 states with 15 locations and 250 employees in Cleveland, boasts that “approximately 75% of the American population is within 5 miles” of one of their locations. In 2020, Dollar General announced plans to open 500 new stores nationwide. Dollar Tree, which purchased Family Dollar in 2015, has 15,300 locations nationwide and is scheduled to open up 400 new locations this year alone. Part of the rapid and expansive growth of these retailers is a consequence of initiating and increasing alcohol sales. Dollar Tree in 2019 pointed to plans to sell “adult beverages” in 8,000 stores nationwide as a means to increase sales, adding freezers and coolers for that purpose. Those moves have not gone unnoticed by Cleveland City Council members. In one meeting in May alone, council objected to liquor licenses at three Family Dollar locations on the city’s East Side. Two Family Dollar locations have limited liquor licenses, and four Dollar General locations can sell beer and wine. State Rep. Juanita Brent, D-Cleveland, a member of the Ohio House of Representative’s Labor and Commerce Committee, which is considering two bills (HB 219 and HB 674) aimed in part at ending the requirement for businesses to seek local permission for all-day Sunday alcohol sales, is concerned about expanded alcohol sales and the proliferation of dollar stores in her district. Brent, who recently voted “no” on HB 674, is particularly sensitive to the city’s move to pull back on the dollar stores. She said she worries that expanding days and hours for alcohol sales will bring in more crime and strain law enforcement if overnight all stores with limited licenses would be eligible to sell alcohol all-day Sunday. For now, barring a possible appeal by Dollar General developers of the Old Brooklyn location, the moratorium stays in place until November or when new legislation aimed at curbing the retailer’s growth is introduced to council.
Contact us today to support your case: applegrowth.com SERVING NORTHEAST OHIO’S PRIVATELY-HELD BUSINESSES
Apple Growth Partners @applegrowthpartners AppleGrowthPartners @apple_growth
216.674.3800
Ca u l e y Fe r ra r i o f D e t ro i t 7 0 7 0 O rc h a rd L a k e R d. �e � t � l o o m � e l d� � � 4 8 3 2 2 Te l e p h o n e : 2 4 8 . 5 3 8 . 9 6 0 0 w w w. Ca u l e y Fe r ra r i . co m
Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive
NATIONAL REACH.
LOCAL
EXPERTS.
Taking collaboration in commercial real estate to a whole new level. Contact us to begin your SVN® story: 3009 Smith Road, Suite 25 | Akron, OH 44333 234.231.0200 | www.svnsummitcommercial.com All SVN® Offices Independently Owned and Operated JULY 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 7
P007_CL_20200720.indd 7
SVN Ad-Liverpool-10-21.indd 1
7/17/2020 4:28:57 PM 10/11/19 9:56 AM
FROM THE EDITOR
RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS
A somewhat welcome return to the office
EDITORIAL
Show, don’t tell C
orporate America largely is saying the right things these days when it comes to diversity and equality in the workplace. Less apparent: actual evidence of policies that open up leadership opportunities to everyone and that make the workforce fully representative of America. One large company that’s setting a good example is Akron-based FirstEnergy Corp., which was profiled last week by The New York Times in an analysis of companies that ties executive compensation to goals for hiring and promotion of workers from underrepresented groups. Turns out not many companies actually do this. The Times reported that “just 78 of roughly 3,000 companies said fulfilling diversity goals determined some portion of chief executives’ pay,” according to an analysis of public pay disclosures. Only 11 companies “revealed the share of pay affected by fulfilling diversity goals, and 21 gave some details of their diversity goals.” FirstEnergy is specific in its approach. The company in 2018 linked 10% of annual bonuses for CEO Charles E. Jones and other top executives to achieving diversity goals; that rose to 15% last year. The Times called FirstEnergy’s approach “strikIT MAKES SENSE TO ing” because it’s “extremely HOLD CORPORATE rare in corporate America.” Indeed, “paid out LEADERS ACCOUNTABLE nothingtheoncompany the diversity-relatFOR THE DIVERSITY ed part of the bonus in 2018 after the company fell short on GOALS THEY TOUT two of three targets,” according PUBLICLY. to The Times. It did better in 2019, paying partial bonuses for achieving goals in hiring women and people from underrepresented ethnic groups for professional jobs, and including them as candidates in succession plans. Executives didn’t meet a third goal, on employee responses to questions about diversity in a company survey. Jones told the Times bluntly, “Quite frankly, in a company like ours, which is 90% white, you actually have outright racism that still exists, that we have to deal with.” These kinds of policies aren’t panaceas, particularly if the underlying hiring and promotions targets are too modest.
And incentivizing executives hardly constitutes a rallying cry for bringing full engagement to companies’ diversity practices. (That should be taking place simply because it’s the right thing to do.) But as companies increasingly tie executive compensation to performance metrics related to profitability, or stock price, it makes sense to hold leaders accountable for the diversity goals they tout publicly. The country has opened up a discussion about racial equality that has engaged the corporate community. Specific corporate goals, communicated to the public, can help turn discussion into action.
Wait ’til next year T
he pandemic-induced shift to working from home could have major tax-collection implications for the cities where those workers normally spend their days. That point was underscored this month when the conservative Buckeye Institute think tank sued the city of Columbus. The organization argued, not illogically, that its employees who live outside Columbus shouldn’t have paid city income taxes while working during the state’s stay-at-home order. Buckeye Institute president Robert Alt told the Statehouse News Bureau that thousands of Ohio workers are in this situation, with potentially millions of dollars at stake. As the Columbus Dispatch noted, “An emergency Ohio law adopted in response to the state’s work-from-home order ... temporarily locked in the cities to which municipal income taxes were owed,” but that provision expires 30 days after Gov. Mike DeWine decides that the emergency has ended. Eventually, the state will have to reckon with what happens to municipal tax revenue collected across Ohio as large job-center cities — Cleveland, Akron, Independence, etc. — host companies whose employees increasingly work in far-flung places. The middle of a pandemic isn’t the time to do that. The emergency law needs to stay in place. The Legislature can take this up in 2021, when it can more fully measure the pandemic’s impact on municipal finances and craft a response that takes into account long-term employment trends.
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
Two weeks ago, just after the long July Fourth holiday weekend, I returned to the office. Like many of you, I had been working from home since the end of March. Tuesday, July 7, marked the reopening of the Crain’s Cleveland Business office, with staff encouraged to come back to our downtown space on a voluntary basis and under specific safety Elizabeth guidelines that stress social distancing McINTYRE and face coverings in common areas. So far, about 15% of our staff has ventured into the office. Some folks have come in for one day only to assess the situation. Others are pretty much back full time. For the time being, I’ll likely work most of my week in the office while sprinkling a day or two at home as it makes sense for my schedule. I must say it feels good to be back downtown after three months away. I’ve savored the ability to concentrate completely on tasks at hand without the interruptions of — in no particular order — my kids (well, adults, actually) wondering where the can opener is, the new puppy looking like he’s on the verge of an accident, and the cacophony of barking dogs now that the puppy joins our 10-year-old schnoodle as fierce watchdogs. Little did I know how attune our dogs were during the day to the rumbles of the UPS, FedEx and USPS trucks. I’ve also missed my commute, believe it or not. There’s something about decompressing on the way home THERE’S SOMETHING from work that allows you to ABOUT DECOMPRESSING separate the work day from your home life — something I ON THE WAY HOME FROM struggled with while working WORK THAT ALLOWS YOU from home. On the morning TO SEPARATE THE WORK commute, the 20 minutes or so in the car give me the DAY FROM YOUR HOME chance to focus on the work LIFE — SOMETHING I ahead and mentally embrace STRUGGLED WITH WHILE my to-do list. The commute itself, of WORKING FROM HOME. course, is lighter now with fewer people working downtown as there were before the pandemic. It has been encouraging, though, to see as many people as I have in office buildings, on the streets, and socially distanced at the restaurants and grocery store in the Warehouse District. Even while walking into the building, I am reassured by how many people in downtown Cleveland are wearing masks inside and outside buildings. But downtown has certainly changed in the past three months. Looking out my office window last week, I was saddened to see two recently closed restaurants — more victims added to the endless list that the coronavirus has claimed so far. They sit catty-corner to each other on West Sixth Street and West St. Clair Avenue. And I look to other buildings, where plywood still protects the windows of a handful of businesses in our neighborhood, placed there during and after the downtown protests for police reform and social justice in the aftermath of the brutal killing of George Floyd on Memorial Day. I learned a lot working remotely — about how to be productive, how to use technology more efficiently, how to quiet barking dogs. And upon returning to the office, I’ve learned something else: Things will likely never be the same. I’d love to hear from you. Have you returned to your office yet? What are your plans going forward? What have you seen and experienced? Please email me at emcintyre@crain.com or give me a call at 216-771-5358.
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.
Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.
8 | CRAIN’S CLEVELAND BUSINESS | JULY 20, 2020
P008_CL_20200720.indd 8
7/17/2020 4:41:29 PM
OPINION
the spread of COVID-19
PERSONAL VIEW
Employers should be in charge of mitigation policies during reopening phase of pandemic BY FIROUZ DANESHGARI
4. Restrictive mitigation policies such as those implemented during the early phase of the pandemic prevent vital population immunity that would help us arrive at herd immunity.
Pleasant Valley Corp is equipped to provide the following preventive measure & cleaning services to help you ensure a safe work environment. • • • •
Signage; floor markings Touchless restroom fixtures Sneeze guards on registers Curbside signage
• Cleaning Services; Non-confirmed & confirmed COVID-19 cases)
• Parking lot markings
Call 330 239 0176
The reopening phase of the COVID-19 pandemic has left us with this question: Whose job is it to design and implement mitigation policies that would allow a controlled and evidence-based balance between the human and economic costs of the pandemic? 5. From the early phases of the panPublic health officials tell us that arriving at either of demic, we know that medical care is two destinations will allow containment of SARSnot even necessary for the vast maCOV-2: having achieved herd immunity or the availabil- Dr. Firouz jority of people who are infected. In ity of an effective vaccination. The vaccination is at least Daneshgari is a addition, the infection is so mild in a year away and the prevalence required for herd immu- professor of half of infected people that it goes nity is estimated in the range of 70% to 80%. surgery at Case Studies suggest that the current rate of prevalence in Western Reserve “undocumented,” without symptoms. the U.S. is no more than 2%-4%. University. Based on the above medical facts, For New York City to have a 15%-21% prevalence rate, I propose the following strategy for a catastrophic human cost was paid. As for the economic cost, arriving at that single digit of prevalence (2%- the reopening phase of the pandemic: 4%) has cost our country several trillion dollars in debt or loss of wealth. So, a simple math calculation will tell 1. Employers should be recognized as the leaders of deus that arriving at prevalence levels of 70% to allow the signing mitigation policies that would allow them to herd immunity is simply not affordable economically create HR policies that fit their business needs during the reopening phase of the pandemic. To design the nor tolerable humanely. At the same time, if the current pace of 60,000 con- policies, employers would need the following informafirmed new cases a day continues in the United States, it tion: the prevalence of employees with evidence of antiMinimum bodies present; employees who are will be well into 2021 before we at higher risk for exposure or morreach herd immunity levels. Delivery: tality/morbidity from COVID-19; Continuation of the mitigation 1 Pallet and the growth of prevalence as the policies implemented during the employees enter into more open early phase of the pandemic during phases of the pandemic in our socithe March-to-May period of this ety with increased exposure. year will continue to have economic ripple effects across the country, 2. Employers’ access to the above with the heaviest burden on eminformation would allow them to ployers. Therefore, the employers create HR policies that are based on have the most skin in the game of MEDINA, OH medical evidence that will afford what types of mitigation policies them a controlled containment apshould be designed or implemented 1-800-547-1538 proach that produces well-balanced during the reopening phase, poliSalt Distributors Since 1966 results between human and ecocies that would afford them a conwww.saltdistributormedinaoh.com nomic costs of the pandemic. The trolled containment approach that components of such policies could produces well-balanced results beinclude employees who have antitween the human and economic THE EMPLOYERS HAVE bodies present would continue to costs. Those polices must be based work following the CDC guidelines on the current understanding of THE MOST SKIN IN THE for personal exposure. Employees SARS-Cov-2 biology. GAME OF WHAT TYPES who are not at high risk of morbidiTo design such mitigation polity/mortality could continue to work cies that are based on the current OF MITIGATION POLICIES following the CDC guidelines. understanding of SARS-Cov-2 bio- SHOULD BE DESIGNED Employees who are high risk logical behavior, let’s review a few could be protected by one of the medical facts that have been ob- OR IMPLEMENTED available HR policies, including tained from the expansion of DURING THE REOPENING work from home; paid sick leave; COVID-19 across the globe: PHASE, POLICIES THAT unemployment insurance benefits; family leave of absence; monitoring 1. Individual risk. The recent fatality WOULD AFFORD THEM A of the progression of prevalence in rate reported by Stanford University puts it at 0.1% to 0.2%, a rate far low- CONTROLLED CONTAINMENT the workplace and durability of immunity among employees, until the er than previous World Health OrAPPROACH THAT employers’ workplace immunity has ganization estimates that were 20 to immu30 times higher. PRODUCES WELL-BALANCED reached to the level of “herdGrimm spring mix 05-04-20.indd 1 4/28/2020 nity”; and vaccination for those emRESULTS BETWEEN ployees at need and those whose 2. Population risk. It is evident that immunity has not lasted by the time the highest fatality rate in the U.S. is THE HUMAN AND when a vaccine becomes available. in the older population and those with underlying medical condi- ECONOMIC COSTS. 3. An employer-designed and -imtions. In New York City, more than 95% were over 50 years of age and about 90% of all fatal plemented program that would consist of detection and Hilton Head Outperform your dreams. periodic repetition of an acceptable level of immunity cases had an underlying condition. Monthly: Beaufort, South Carolina’s hidden gem: (by rapid-flow antibody tests or other means), and pro“TOP 25 GOLF Golf, tennis, boating, home! 3. Role of diagnostic tests. Among the current available active health risk assessment of all employees. COMMUNITY” Integration of this data into the above HR policies tests (antigen or antibody), rapid flow antibody tests that have received Emergency Use Authorization should suffice to allow the employers to take their com(EUA) from the FDA provide the fastest and easiest panies and our communities to the safe zones of the method of identifying those who have some level of pandemic: herd immunity or availability of a vaccine, (843) 838-3838 Learn more at Dataw.com whichever comes first. immunity.
SALT • SALT • SALT Water Softener • Industrial • Food Ice Melt • Sea Salt
Call For Pricing!!
HISTORICAL CHARM. NATURAL BEAUTY.
HISTORICAL CHARM. Extraordinary Living NATURAL BEAUTY.
Extraordinary Living
JULY 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 9
1:25:01 PM
REAL ESTATE
Playhouse Square switches leasing script Theater district enlists help of outside brokerage to fill office vacancies In a switch from having an in-house leasing team, Playhouse Square Real Estate Services has named Cushman & Wakefield/Cresco Real Estate its new office leasing agent. Tim Luli, president of the theater district’s realty unit, said Playhouse Square decided to use the outside brokerage because it has substantial office leasing breadth and had pursued the assignment. Retirements and departures also prompted the move, he said. Luli added that by partnering with Cushman & Wakefield/Cresco on office leasing, the Playhouse Square realty firm might gain some prospects for property management services. Playhouse Square Real Estate Services will continue property management services for the foundation’s theaters as well as the Hanna, Bulkley and Idea Center properties it owns. “We want to maximize our occupancy and produce all the value we can for the foundation” to support its theatrical and entertainment operations, Luli said. Nathan Kelly, Cresco managing director, said in a phone interview that he intends to promote Playhouse Square’s office space throughout Cushman & Wakefield/Cresco’s global office network. “Talk about an exciting location for
PLAYHOUSE SQUARE
BY STAN BULLARD
“IT’S THE CLOSEST THING CLEVELAND HAS TO A 19-HOUR DAILY OPERATION.” — Nathan Kelly, Cresco managing director
an office,” Kelly said. “It’s the closest thing Cleveland has to a 19-hour daily operation between the offices, the theaters, restaurants and hotel. And the buildings are classics in their own right.” The assignment is a good one because Playhouse Square has office space that needs filling, a total of more than 160,000 square feet in its Hanna, Bulkley and Idea Center properties. A big vacancy just came up as the Gallagher Sharp law firm, a Bulkley resident for a century, set up shop July 1 on the top floor of the contemporary 1215 Superior Ave. building, which takes its name from its address. That leaves about 60,000 square feet available. And long term, the Cleve-
land Foundation is pursuing a plan to build its own office structure in MidTown Cleveland, which at some point means about 50,000 square feet will be available at the Hanna Building. Kelly said he believes the space could be attractive for company headquarters or out-of-town firms seeking disparate offices during the pandemic. The structures also have attractive parking, he noted. Dyann Davison, a senior vice president in office leasing at Hanna Commercial’s Cleveland headquarters, said Playhouse Square and Cushman & Wakefield/Cresco, like other landlords, will face an emerging tenant’s market. “Companies are reluctant to commit until they know what their future operation may look like,” Davison said. Office rents will go down as office subleases may hit the market and landlords will have to be aggressive to market properties and offer decorating expenses. Luli said Playhouse Square has funds available for outfitting tenant spaces. However, he said the amount available will depend on negotiations and factors such as the size of the office and length of the lease. In addition to Kelly, Cresco agents Alex Russo and Connor Redman will handle the Playhouse Square assignment. Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter
• 19 MONTH PROGRAM • MEETS ONE WEEKEND/MONTH • GMAT TYPICALLY WAIVED
10 | CRAIN’S CLEVELAND BUSINESS | JULY 20, 2020
REAL ESTATE
Developer looks to put last building in big Twinsburg business park Commercial Roofing Experts
INSTALLED BETTER TO LAST LONGER
PVC Roofing • TPO Roofing Metal Roofing • Roof Repairs Replacements FULLY INSURED & BONDED
dcaroofing.com • (330) 988-2379
Since 1959 Massive white warehouses already dot much of the former Chrysler Stamping Plant in Twinsburg. Developers of Cornerstone Business Park are readying a plan to build another lookalike warehouse on the last parcel available at the park. | CONTRIBUTED PHOTO
Indianapolis firm is planning to build $20 million warehouse that would occupy final 17 acres at Cornerstone Business Park BY STAN BULLARD
tionships that would permit it to finance the additional building on a speculative basis, Elam worries that problems in the retail and office markets may make lenders nationally less willing to finance industrial space on a speculative basis. Terry Coyne, a Newmark Knight Frank vice president who represents Scannell on the project, is more bullish. “We’re finding that people want to move in a hurry,” Coyne said. “You almost can’t wait to build in this market.” He noted that speculative projects
100,000 square feet in the northwest suburbs. The proposed building at state Route Indianapolis-based real estate de82 and Chamberlin Road will be the veloper Scannell Properties is having sixth property in the park that Scannell, architects design a sprawling wareCoyne and DiGeronimo Cos. of Indehouse building that will occupy the pendence launched a decade ago. It last 17 acres of Cornerstone Business replaced a more than 2-millionPark in Twinsburg. square-foot stamping plant Chrysler Tim Elam, managing director of Corp. had operated on the site since Scannell, said in a phone interview the 1950s. The industrial park, now that the company plans to start mostly covered with massive white building the 279,000-square-foot buildings surrounded by huge parking building by October or early next lots, is home to 11 companies and year on a speculative basis, launchmore than 1,000 employees. ing construction before a tenant Larry Finch, direccommits to any tor of community part of the prop”PEOPLE ARE RECOGNIZING THE planning and develerty. By industry esQUALITY OF NEWLY BUILT INDUSTRIAL opment in Twinsburg, said the city has timates, that $20 PROPERTY IN THIS MARKET AND ARE not yet seen the million investplans, but the parcel ment makes WILLING TO PAY FOR IT. IT’S VERY is zoned appropriatesense based on DIFFERENT FROM THE MARKET OF ly for a distribution demand for huge center. warehouses in FIVE YEARS AGO.” Finch said the city the market. Variis pleased with the ous experts say at — George Pofok, senior vice president, Cushman & Wakefield/Cresco success to date, addleast a half-dozen prospects each are searching the launched by Scannell in Bedford ing that business dictates another market for more than 100,000 square Heights and Strongsville that are now warehouse. However, he said the city under construction have landed ten- had hoped for a denser mix of office feet of space. In Scannell’s case, the company ants — respectively, Amazon and on- and retail properties on the final site positioned itself to build the last line home furniture supplier Wayfair. on the corner of the park. The industrial market has little va“I’m not complaining,” Finch said. structure that Cornerstone can accommodate by leasing about half of a cancy, about 4%, said George Pofok, “This has been good for the schools 276,000-square-foot building it fin- a vice president at the Cushman & and the community. We had hoped ished late last year to accommodate Wakefield/Cresco brokerage. Given for a few more jobs than warehouses what Elam described as a “Fortune that figure, he believes a speculative provide.” Coyne said Cornerstone’s owners 100 company” that he would not move is prudent. “People are recognizing the quali- had competed for office headquaridentify specifically. However, market sources say that Lowe’s will occu- ty of newly built industrial property ters for the site but came up empty. in this market and are willing to pay He said the choice comes down to py that space. Elam said that nationally, some- for it,” Pofok said. “It’s very different responding to a market with strong demand as opposed to serving the what fewer tenants are looking for from the market of five years ago.” He said he knows of at least a softer office market. space than before the pandemic hit, but companies continue to commit half-dozen prospects in the southeast suburbs, and prospects are even Stan Bullard: sbullard@crain.com, to new properties. While Scannell has lending rela- looking for locations of more than (216) 771-5228, @CrainRltywriter
SAME DAY
Courier, Route, Box Truck, Tractor Trailer Services WE ARE OPEN!
As an essential business during COVID-19, we are focused on meeting your delivery needs including no contact delivery.
216-696-6033 • www.bonniespeed.com
Class A Office Space for Lease
Park Center Plaza I, II, III 6050 - 6100 - 6150 Oak Tree Blvd Independence, OH
Available Suites from 1,300 to 29,000 SF
COMMERCIAL REAL ESTATE SERVICES LEE CLEVELAND
Abram Schwarz, SIOR | 216.282.2210 | www.leecleveland.com JULY 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 11
P011_CL_20200720.indd 11
7/16/2020 2:55:11 PM
LIFE-CHANGING JOBS Solutions at Work matches developmentally disabled workers with businesses. PAGE 14
SMALL BUSINESS
From left, Briana Phillips, communications specialist; Brian Travalik, senior video production and studio manager; and Renee Singleton, president and CEO of Singleton & Partners, do double duty managing S&P Work Lab, a co-working space for video and digital professionals in Cleveland’s emerging Superior Arts District. | JAY MILLER/CRAIN’S CLEVELAND BUSINESS
A STEP INTO THE FUTURE S&P Work Lab gives independent videographers, webinar producers and others a high-tech space to create
BBY JAY MILLER
Renee Singleton wanted something different. She’d been running Singleton & Partners, a marketing agency, for 18 years and she needed a challenge. That challenge has turned into S&P Work Lab, a co-working space to attract independent videographers, webinar producers, podcasters, photographers and anyone else who needs a place to meet with collaborators and have access to state-of-the-art audio and video equipment, software and studio space to create content.
“I HAD TO LOOK AT MY BUSINESS MODEL WITH THE FIRM AND I NEEDED TO MAKE A DECISION WHETHER OR NOT I WAS GOING TO REVISE THE MODEL AS IT WAS OPERATING, EXPAND IT OR DO SOMETHING ELSE. I JUST COULDN’T STAY THE SAME.”
“I think it was just a natural progression,” she recalled recently in a interview at the building she’d bought in the Superior Arts District. “I had to look at my business model with the firm and I needed to make a decision whether or not I was going to revise the model as it was operating, expand it or do something else. I just couldn’t stay the same.” Singleton described her marketing firm as a boutique agency that has between eight and 10 people working for her or on contract at any given time. Singleton & Partners, according to Jeanette Geer, director of health care strategy for Spectrum Reach, the advertising sales arm of the Charter Communications Inc. business, was the first marketing firm in
——Renee Singleton 12 | CRAIN’S CLEVELAND BUSINESS | July 20, 2020
P012_P013_CL_20200720.indd 12
CONTRIBUTED
7/16/2020 12:13:04 PM
Nor that niza wom aud C Wom Gee Th deve ope —a com “W ting gram with nee tion vide to h with Th 7,00 and in A ton Octo “ tena spac an o affo men U fere in a Prespac For offe
FOCUS | SMALL BUSINESS
BS
es d
E
Northeast Ohio to develop strategies that adapt the marketing of an organization’s products or services to women and growing multicultural audiences. Crain’s named Singleton a 2020 Woman of Note, in part because of Geer’s nomination. That something different was to develop what had been an undeveloped area for the firm — production — and to go into it by creating a new companion business. “We were doing very well with putting together culturally sensitive programs and connecting our clients with consumers,” she said. “But we needed to home in on more production work. I knew that ‘video, video, video,’ was the future, and we needed to have a stronger representation with video.” The end result is S&P Work Lab, a 7,000-square-foot co-working space and production center that opened in April. It’s also the home for Singleton & Partners, which moved there in October. “Singleton & Partners, which is a tenant here, utilizes the production space,” Singleton said. “But it’s also an opportunity for creators who can’t afford to have state-of-the-art equipment and a facility to operate out of.” Up front are desks, tables and conference rooms where people can plug in and produce or videoconference. Pre-pandemic, Singleton said, the space could accommodate 75 people. For now, the capacity is 35. The space offers daily, weekly and monthly use
Humble G tha Fiddla performs in a video shoot in the S&P Work Lab studio. | CONTRIBUTED
passes. A day pass costs $29, with other passes rising to $400 a month, depending on the level of service, which can include conference room use or photocopying, for example. All of the conference rooms have cameras for Zoom calls or webinars, said marketing specialist Briana Phillips, and the larger ones have video screens. Phillips said the place attracts everyone from “your one-man show with his camera,” all the way up to Spectrum. The common thread is the technology, she said.
Among the users in the first months were young, local singer Buddy Vonn for a recorded performance, and Humble G tha Fiddla for a concert June 12 that was livestreamed on YouTube. S&P’s 3,000 square feet of production space has an array of video and audio equipment in the editing bay, starting with five Sony cameras and moving through a package of Ross Video recording and processing equipment. It also has a studio with Barbizon LED lighting and a 25-foot
g h , e n
Jay Miller: jmiller@crain.com, (216) 771-5362, @millerjh
One bank. Countless solutions. At First Commonwealth Bank,® we understand that today’s businesses need more than yesterday’s banking services. They need solutions to see them through every financial journey. That’s why we provide a comprehensive set of products to help businesses open, grow and succeed. We offer a full array of loan products, Treasury Management and merchant services, investment and retirement plan administration, employee benefits consulting and insurance solutions. To find out more about the financial solutions we have to help you bank, borrow, invest and protect, visit us online at fcbanking.com, or call our Regional President, George Moy, at 216- 407-0468.
a d . l e g
t e t
infinity cyclorama for professional video production. It also has several conference rooms and even has a separate podcast studio. Users can access the S&P server remotely if needed. Karl Turner, Ohio news director for Spectrum News1, the statewide cable news operation of Charter Communications, confirmed that S&P Work Lab will be the home of his Cleveland news staff. Singleton said her twoyear contract with Spectrum calls for the news operation to build a set in
the studio and for eight reporters to work in the space. Rensin Ventures LLC, Singleton’s corporate entity, purchased the vintage steel warehouse building in August 2018 for $360,000 and with the help of KeyBank, Singleton said, has invested a total of $2 million to buy and fill out the space. Though the renovation kept some of the original details, including some of the brick work, building out the production facilities in back is strictly 21st century. “This studio here is completely soundproofed,” said Brian Travalik, senior production and studio manager. “So whatever happens in the back of the house, you will not know it’s happening up in the front of the house. When we had to do some rewiring, it was funny to watch the technician actually (work) through six layers of sheetrock.” Singleton came to the agency world from radio. She spent 20 years at WZAK, working her way up from special-events person to general sales manager. “The world has changed now, I mean, podcasting and social media platforms, this is the way of the world,” Singleton said. “The traditional three TV stations and so many radio stations, that’s gone. So folks are getting content from everywhere and they’re making their own content and putting it out there. So this is just a facility to help creators with that process.”
fcbanking.com
NOT Guaranteed by the Bank
NOT FDIC Insured
NOT a Deposit
NOT Insured by any Federal Government Agency
May Lose Value including Loss of Principal
Insurance products offered through First Commonwealth Insurance Agency, a licensed insurance affiliate of First Commonwealth Bank. Investment products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. Infinex and First Commonwealth Bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.
Member FDIC
July 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 13
P012_P013_CL_20200720.indd 13
7/16/2020 12:14:15 PM
FOCUS | SMALL BUSINESS
Community First Since 1935
Providing developmentally disabled employees with life-changing jobs
We are proud to support the banking needs of Northeast Ohio businesses. Our commitment to our community defines who we are, and who we will always be.
“Thank you for your efforts to get our Payroll Protection Loan processed and approved. I know this has been unchartered territory for all of us, and you were all so professional, efficient and responsive – it’s truly been a pleasure to work with each of you! On behalf of everyone at Twentieth Century Construction Co., we want you to know how appreciative we are for all you have done to assist us.” - Allison Moore, 20th Century Construction
A client of Solutions at Work puts in a shift at a Just-A-Buck store, where workers get retail training in a supportive envirnoment. SAW owns and operates the stores. | KURT SHAFFER
Let our team help yours thrive.
Contact Kurt Kappa at (216) 529-2998 or kkappa@ffl.net
Solutions at Work has connected hundreds of clients with scores of businesses in need of skilled workers BY DOUGLAS J. GUTH
STAY IN THE KNOW with Crain’s email newsletters Subscribe FOR FREE : CrainsCleveland.com/enewsletters
Local Financial Planning Firm. National Recognition. Forbes’ Top 250 Wealth Advisors Barron’s Top 100 Independent Financial Advisors Inaugural Barron’s Hall of Fame Advisors
Visit ncafinancial.com toVisit schedule your initial meeting ncafinancial.com 9
to schedule your initial meeting
6095 Parkland Blvd., Suite 210, Mayfield Hts., Ohio 44124 (440) 473-1115 Securities offered through Royal Alliance Associates, Inc. (RAA), Member FINRA/SIPC. RAA is separately owned and otherentities and/or marketing names, products or services referenced here are independent of RAA. RAA does not provide tax or legal advice. Investment advisory services offered through NCA Financial Planners. For additional information visit www.ncafinancial.com/awards
Helping the developmentally disabled discover their best selves is not new to Judith Carey. As a teenager, Carey volunteered at Camp Happiness in Lakewood, where she built the work and social skills sets of impaired children and young adults. Though the Rocky River native is no longer a teenager, she is still part of a larger effort to aid an all-too-often underrepresented population. As executive director of nonprofit Solutions at Work (SAW), Carey is providing vulnerable adults with potentially life-altering employment opportunities at area businesses. Before closing its six adult activity centers in March due to the coronavirus pandemic, SAW — a Cleveland-based 501(c)3 — assisted more than 800 clients via vocational habilitation and group employment services. Alongside a bevy of multinational organizations, SAW has contracts with a number of small businesses — JP Quality Printing, Progressive Machine Die and others — in need of skilled workers. New employees receive training either on a job site or at the activity centers SAW took over last year from the Cuyahoga County Board of Developmental Disabilities (CCBDD) following changes in federal rules. An on-staff methods engineer works with employers to determine how SAW’s charges can most effectively perform their assigned tasks. “You might have a person who has cerebral palsy, so our engineer comes up with a solution to help them complete a job, like punching a lever where a machine makes the connection,” Carey said. “We get called by providers who say, ‘Let’s look at Johnny and help him be a faster or more accurate worker.’ Our engineers are thinking out of the box.” The nonprofit also has placements at Just-A-Buck stores in South Euclid and Parma, where individuals undergo valuable retail training in a warm and supportive environment. SAW owns and operates the stores, with referrals
coming from school systems and CCBDD support administrators. For some workers, tasks that include sweeping, running the register and merchandise sorting comCarey prise their first true job experience. Ideally, training at the dollar store chain will ready clients for full-time retail positions elsewhere.
A mission of enhancing lives Kim Chisholm, manager at Just-ABuck’s Parma location since its opening in 2009, said her developmentally disabled employees begin work after their eligibility to receive special education services in high school ends at age 22. Trainees may have physical impairments or live with autism, Asperger’s or Down syndrome. Although the store is not geared toward specific disabilities, Chisholm and her staff play to an individual’s strengths while defining possible areas of improvement. “It could be soft skills, hygiene or things like not being able to count money,” Chisholm said. “Or some people want structured work where they’re doing the same things every day.” New workers are trained for 30 days, staying on for seven to nine months until they’re rotated out. Employees may move onto jobs at Walmart or other retailers, or require further training to safeguard their employment prospects. “Our mission is to enhance someone’s life, whether it’s through work, school or adult day services,” Chisholm said. “To give them real-life work experience is the most rewarding job I’ve ever had.” Patience and compassion are vital when onboarding folks who haven’t had the responsibility of even parttime work. Luckily, SAW’s professional trainers are available to upskill a historically underserved group that
Carey thinks has so much to offer. “They’re not only good for a business, they’re good for morale,” Carey said. “People are united around some of our individuals. Work becomes a nurturing place. They become family, and they become friends.”
Getting back in the game SAW is ramping up efforts to reopen activity centers, re-integrating a population whose lives have been especially shaken by Gov. Mike DeWine’s stay-at-home orders. The organization is granted through Medicaid and the Ohio Department of Developmental Disabilities, so a lack of face-to-face services means no funding for needful clientele. The opening is starting slow, buttressed by social distancing guidelines that include operating in smaller groups with dedicated entrances and bathrooms. SAW is targeting July 20 for the relaunch of two centers, with July 27 the nonprofit’s aim for bringing its Just-A-Buck locations back online. In the interim, SAW is offering members Zoom classes with Jazzercise, singing and additional activities. Carey is concerned about finances even in a post-pandemic world, considering an economic downturn could be an ongoing obstacle to job placements. As someone who grew up around a cousin with Down syndrome, it’s not difficult for Carey to have empathy for people who may not understand why their well-loved job is currently inaccessible. “When everything closed down, there were rules put forward about schools and nursing homes, but our clients were the least heard,” Carey said. “We have to be their voice and stand up for them. The goal is to find out what they want to do. In their families, they may still be thought of as children. But at work you’re an adult. You have responsibilities, and you earn a paycheck.” Contact Douglas J. Guth: clbfreelancer@crain.com
14 | CRAIN’S CLEVELAND BUSINESS | JULY 20, 2020
P014_CL_20200720.indd 14
7/16/2020 12:16:00 PM
FOCUS | SMALL BUSINESS | ADVISER
Shifting to e-commerce platforms requires revisiting sales tax rules
FOR SALE
BY JONATHAN WOLNIK
quirements and liability, if threshold is generally driven the facilitator has substanby the seller’s gross receipts tial nexus with Ohio pursuPrior to the pandemic disrupting on sales of tangible personal ant to the thresholds dethe global economy, the Supreme property or certain services fined above. Sellers working Court’s ruling in South Dakota v. within Ohio. If a business through marketplace faciliWayfair created e-commerce and sells more than $100,000 to tators should contact their e-nexus standards that significantly Ohioans or has at least 200 account representative and changed sales tax compliance from transactions in Ohio, then review their agreements to state-to-state. Wayfair empowered the seller likely has “subdetermine how sales tax states to tax commercial activity oc- stantial nexus” with Ohio Wolnik is a tax compliance is being adcurring over the internet or by phone and the seller is required to attorney with dressed from state-to-state. between in-state buyers and out-of- charge and collect sales tax the McCarthy, The use of a facilitator may state sellers, meaning that sellers from its buyers. The seller Lebit, Crystal & not automatically alleviate without brick-and-mortar storefronts must then file sales tax re- Liffman law the seller’s liability or rein Ohio may be subject to sales tax on turns and remit the tax col- firm in sponsibility for sales tax sales to Ohio residents. It also means lected. Additionally, sellers Cleveland. compliance, but sellers typthat Ohio businesses selling to out- need to have proper licenically do not collect and reof-state buyers may have sales tax sure to sell products in Ohio. In Ohio, like in many other states, mit sales tax on sales made through compliance requirements outside of sales tax is a “trust fund tax,” mean- the facilitator if the facilitator is doing the Buckeye State. With the pandemic continuing to ing the sellers collect and hold the so. However, at least in Ohio, those require social distancing, e-com- money in trust on behalf of Ohio un- sales must still be considered when merce is expected to become even til it is remitted. Failure to do so im- determining whether substantial more prominent, perhaps even vital parts personal liability upon the nexus exists, so the accounting can to business survival, so small busi- business owners and those responsi- become tricky. Out-of-state sellers nesses seeking to increase their on- ble for collecting and remitting sales must reconcile sales made directly to line e-commerce activities must be tax. Because of this risk, businesses Ohio and those made through a facilcognizant of the court decision and should be very meticulous about itator on their tax return. By now, most states have adopted how it impacts state tax compliance sales tax compliance and the presere-nexus statutes in rein locations where they are sponse to the Wayfair case making sales. IN OHIO, LIKE IN MANY OTHER STATES, but may have different statThe Wayfair case ruled utory thresholds. Crossthat out-of-state-sellers no SALES TAX IS A “TRUST FUND TAX,” state sales tax compliance longer need to be physically MEANING THE SELLERS COLLECT AND can be complicated and present within a state to be companies that do not have subject to state sales tax HOLD THE MONEY IN TRUST ON BEHALF in-house tax compliance rules. In other words, states OF OHIO UNTIL IT IS REMITTED. FAILURE units should be corremay apply sales tax to sponding with professional e-commerce transactions, TO DO SO IMPARTS PERSONAL LIABILITY regardless of where the sell- UPON THE BUSINESS OWNERS AND THOSE advisers to ensure compliance as they seek expanded er is located. In response to revenue sources across Wayfair, Ohio enacted sub- RESPONSIBLE FOR COLLECTING AND state lines. Audits, by any stantial new nexus provi- REMITTING SALES TAX. taxing authority, can be sions, as well as “marketplace facilitator” statutes, meaning vation of reliable documentation that stressful and expensive, and sellers that selling through a virtual market- may substantiate their sales tax com- should be aware that states will be tracking activity closely as budgets place to Ohioans may open business- pliance. Ohio’s sales tax law and nexus continue to tighten due to the panes to Ohio sales obligations. Because the Ohio Department of Taxation thresholds also apply to marketplace demic’s disruption of the economy. employs powerful analytical tools to facilitators, which are those busi- Obtaining professional guidance priidentify businesses availing them- nesses or organizations (such as or to expanding business operations selves to Ohio markets without fully eBay, Amazon or the new Walmart+) through e-commerce platforms may complying with Ohio’s sales tax law, that contract with third-party sellers save time and stress, especially conbusinesses should be ready to defend to sell products through the facilita- sidering the risks of potential audits. tor’s platform. Doing so opens the The adage holds true: An ounce of any potential audit. Ohio’s economic nexus taxation facilitator to sales tax compliance re- prevention is worth a pound of cure.
CORPORATE CAMPUS AVAILABLE FOR LEASE Wickliffe, Ohio
• • • • •
4999 Laddie Dr, New Franklin, OH ISLAND (5 acres) on Portage Lakes plus 4 bedroom/3.5 bath house on adjoining 3 acres. All-brick home with walk-out lower level includes garage space for 4 vehicles, a playhouse and a stable.
50 minutes from downtown Cleveland and less than 15 minutes from the Akron-Canton Airport.
234-284-3218
Looking for warehouse space? Need logistics help? Candor Logistics is a true 3rd party logistics company offering: Premium Warehouse Space ● Local Cartage, brokerage & supply chain fulfillment ● Pick & Pack, expedite & de-vanning services ●
Certified to handle any product regardless of size, field of industry or scope.
Call now to discuss your warehousing and logistics needs! 216.378.7100
●
Bedford Hts, OH
●
www.candorlogistics.com
Webinar Series
Candor Logistics Ad-4-8 copy.indd 1
4/20/20 11:03 AM
August 11, 2020
4 Story Office Bldg. - 280,000 Divisible 170,000 Industrial - 120,000 Office 40+ Acre Campus Close to I-90 + SR2 Former ABB Corporate Headquarters
Special Needs Trusts 12:00 p.m. & 6:00 p.m.
August 22, 2020
Probate Avoidance 2:00 p.m.
JOIN US FOR A WEBINAR
September 12, 2020 Business Succession Planning 2:00 p.m.
Zoom Webinar on your computer, smartphone or tablet.
September 26, 2020 Medicaid Asset Protection 2:00 p.m.
Call 216-765-0123 to RSVP or visit ssandplaw.com/events to register. Estate Planning
Probate & Trust
Elder Law CE
Northeast Ohio’s Premier Real Estate Developer
L E B R AT I N
G
Business Law
216-765-0123 SSandPlaw.com
| ( 2 1 6 ) 3 4 1 - 1 2 0 0 | premierdevelop.com |
JULY 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 15
P015_CL_20200720.indd 15
7/16/2020 12:17:36 PM
FOCUS | TOPIC | ADVISER
Understanding state, local tax implications of remote work Due to the coronavirus pandemic, many employers now have a substantial portion of their workforce working remotely. Accordingly, companies may find themselves with employees working in states where they previously did not have a presence. It is crucial to understand the implications of this from a state and local tax perspective so businesses can develop a strategy for dealing with the issues that will inevitably arise.
Nexus Nexus is the level of connection between a jurisdiction and a company that allows the jurisdiction to impose a tax on the company. States have consistently asserted nexus over companies with even one employee working in the state, so companies need to understand the nexus rules of the states in which their employees are working. While states might assert nexus over companies with employees working from home, some jurisdictions have provided nexus relief for companies with employees that are telecommuting due to the coronavirus pandemic; others have not. Once stay-at-home orders are lifted, states may discontinue nexus relief, causing employers to have nexus in those states from which employees continue to telecommute.
Income tax Telecommuting employees may cause a company to have to pay income tax in a state for the first time.
Federal law protects a company from state income taxation when its only activity in the state is soliciting orders for sales of physical goods. However, having Grassi is a employees telemember of commute from McDonald the state may Hopkins LLC. cause the company to lose this protection. For a company with substantial sales outside its home state, loss of this protection could lead to significant tax exposure. The presence of remote workers in a state may affect apportionment of a company’s income among the states with which it has nexus. Some states look to the extent of the company’s payroll in the state to source the company’s income, and some states require certain sales to be sourced to the state where the underlying income-producing activity occurs. As a result, presence of a remote worker in these states may change the sourcing of the employer’s revenue for state tax purposes.
Withholding Withholding obligations on employers can change depending on the remote employee’s location. Wages are sourced to the state where the work is performed, so when an employee begins telecommuting, a company’s withholding obligations may change. Employers that once had no withholding requirement
Introducing
Jennifer Hallos
Trusts & Estates Planning Group
erally, payroll taxes are paid to only one state, and all states use the same four-part test, which must be applied in the following order: 1. The tax is paid to the primary location of services (i.e., where all or most of the employee’s services are performed). 2. If no primary location is discernible, the tax is paid to the state where the base of operations is located (i.e., where the employee ordinarily returns to receive instructions or perform functions relating to the provision of services). NUTHAWUT SOMSUK
BY CARL GRASSI
outside their home state may find themselves subject to withholding requirements in every state from which their employees telecommute. Municipal withholding may be affected as well. Some states have adopted the “Convenience of the Employer” test. Under this test, compensation is allocated to the employer’s location, unless the performance of the work from a remote location is a necessity for the employer rather than to accommodate the employee. The presence or absence of a work-at-home order may affect whether a remote working arrangement is considered to be for the convenience of the employer or of the employee, thereby changing withholding obligations.
We are pleased to announce that Jennifer R. Hallos has joined McCarthy, Lebit, Crystal & Liffman in our Trusts & Estates Planning Group. Jen will leverage her years of practice in Federal, State and Local Tax Planning and Controversies, Estate Planning and Mergers & Acquisitions. She will also be advising clients on multigenerational wealth preservation and transfers.You can reach her at 216696-1422 or jrh@mccarthylebit.com.
Sales and gross receipts taxes The presence of a telecommuting employee in a state or locality may create sales tax collection obligations for sales to customers in that jurisdiction where they did not exist before. Remote employees may also expose companies to gross receipts tax liability in certain jurisdictions. For example, Ohio’s Commercial Activity Tax and Tennessee’s Business Tax apply to an employer with $50,000 of payroll in the state.
Unemployment and workers’ compensation Remote working may affect state unemployment obligations, too. Gen-
3. If no base of operations is discernible, the tax is paid to the state where the corporate or regional headquarters from which the employee receives instructions is located. 4. If none of the three tests above provide an answer, the tax will be attributed to the employee’s state of residence. Employers must also obtain workers’ compensation insurance in the state to avoid penalties for noncompliance.
Conclusion The coronavirus pandemic has shown that a remote workforce may be a feasible option for many businesses. However, it is critical for employers to understand the tax implications of any remote work arrangement. A failure to do so may lead to additional tax exposure or unwanted compliance obligations.
the best in local banking has a
new name. McCARTHY LEBIT CRYSTAL LIFFMAN Expect More. Get More.
Together, we formed Premier Bank. You’ll enjoy more products, enhanced services—and the same great banking relationships. YourPremierBank.com
McCarthy, Lebit, Crystal & Liffman Co., LPA 16 | CRAIN’S CLEVELAND BUSINESS | JULY 20, 2020
P016_CL_20200720.indd 16
7/16/2020 12:19:31 PM
CRAIN'S LIST | EMPLOYEE BENEFIT SERVICES FIRMS Ranked by number of full-time benefits professionals in Northeast Ohio LOCAL BENEFITS PROFESSIONALS RANK
COMPANY LOCAL OFFICE
2020
2019
TOTAL LOCAL STAFF
% OF CLIENTS IN NE OHIO
COMPENSATION STRUCTURE
SERVICES
TOP LOCAL EXECUTIVE
1
OSWALD COS. 1100 Superior Ave., Cleveland 216-367-8787/oswaldcompanies.com
165
156
347
85%
Fees, commissions
Employee benefits strategic consulting, group benefits brokerage, human capital strategies, health and wellness management, retirement plan consulting
Robert J. Klonk, CEO
2
SELMANCO One Integrity Parkway, Richmond Heights 800-735-6262/selmanco.com
147
134
151
3%
Fees, commissions
Administration of life and health insurance programs for employers, insurance companies, financial institutions and affinity groups
David L. Selman, president, CEO
3
CBIZ INC. 6050 Oak Tree Blvd. S., Suite 500, Independence 216-447-9000/cbiz.com
132
107
304
—
Fixed fees, commissions
Group health benefits consulting and administration, retirement plan services, payroll services, property and casualty, talent and compensation solutions
Jerome P. Grisko Jr., president, CEO
4
WILLIS TOWERS WATSON 1001 Lakeside Ave., Suite 1500, Cleveland 216-937-4000/willistowerswatson.com
120
120
155
—
Project, commissions, fixed fees, hourly, retainer
Benefits strategy, design and pricing; pharmacy benefit management consulting; benefits administration and exchange; communication and change management
Gina Kashuk, managing director, office leader, Cleveland
5
FINDLEY 1660 W. 2nd St., Suite 900, Cleveland 216-875-1900/findley.com
89
87
89
—
Fee-for-service based on hourly rates
Health and group benefits, retirement consulting, actuarial services, defined contribution plan recordkeeping, defined benefit plan administration
Matt Klein; Nancy Pokorny, principals
6
ARTHUR J. GALLAGHER & CO. 1111 Superior Ave., Suite 1601, Cleveland 216-623-2600/ajg.com
79
88
80
—
Fees, commissions
Brokerage and consulting in health and welfare, retirement, wellness, human resources, compensation, health care analytics, benefits compliance
David D. Kempton, Ohio president
7
ONEDIGITAL 4200 Rockside Road, Independence 216-520-3300/onedigital.com/team/cleveland-oh
71 1
59
79
90%
Commissions, fixed fees, fee for service, contract based
Strategic benefits advisory services, online administration, analytics, compliance support, HR capital management tools, insurance
John Wain, managing partner; Jim Schade, Adrienne Vichill, Kevin Mackay, Blair Larrance, principals
8
MERCER 200 Public Square, Suite 900, Cleveland 216-830-8000/mercer.com
53
53
53
—
By project, commissions, fixed fees, hourly rates
Health and wellness benefits, retirement and risk management, investment consulting and management, talent strategies and management
Mike Ponicall, partner, Great Lakes office leader
9
THE FEDELI GROUP LLC 5005 Rockside Road, fifth floor, Independence 216-328-8080/thefedeligroup.com
52
50
98
—
Commissions, fixed fees and consulting services
Plan design, consulting, compliance, wellness, selffunding, data analytics, voluntary and executive benefits
Umberto P. Fedeli, CEO
10
TRINITY PENSION CONSULTANTS 202 Montrose West Ave., Suite 310, Copley 330-668-3747/trinitypension.com
40
30
45
—
Retainer, fixed fees, by project
Actuarial consulting, administration, plan design, plan documents
Anthony J. Warren, CEO, partner
11
USI INSURANCE SERVICES LLC 1001 Lakeside Ave, 12th Floor, Cleveland 216-591-0088/usi.com
38 2
30
58
90%
Commissions, fixed fees
Employee benefits strategic consulting, group benefits brokerage, population health management, retirement plan consulting
Matt Baird, president, Employee Benefits Cleveland
12
NFP 4700 Rockside Road, Suite 540, Independence 216-264-2707/nfp.com
36
36
49
70%
Fees, commissions
Corporate benefits, property and casualty, private client group, HR technology solutions and retirement
Brian Hirsch; Jim Dustin, managing directors
13
MARCUM LLP 6685 Beta Drive, Mayfield Village 440-459-5700/marcumllp.com
33
35
198
68%
By project, commissions, fixed fees, hourly, retainer
Benefits, compensation, 401(k), Affordable Care Act planning and compliance, benefit plan audits, retirement plan design and administration
Dani B. Gisondo, office managing partner
14
HUNTINGTON INSURANCE INC. 200 Public Square, Cleveland 888-576-7900/huntington.com
30
27
52
47%
Commissions, fees
Consulting and strategic planning in population risk management, on-site clinics, data analytics and predictive modeling, results-based wellness and health care reform
Craig Mottice, executive VP, managing director, Northeast Ohio
15
THE J.P. FARLEY CORP. 29055 Clemens Road, Westlake 440-250-4300/jpfarley.com
30
—
31
20%
Fixed fees
Health plan administration services
James P. Farley, president, CEO
16
CPI-HR 6830 Cochran Road, Solon 440-542-7800/cpihr.com
29
30
29
90%
Consulting fees, commissions, administration fees
Human capital management firm combining consulting, brokerage and administration
Jim Hopkins, president
17
TODD ASSOCIATES INC. 23825 Commerce Park, Suite A, Beachwood 440-461-1101/toddassociates.com
24
24
62
80%
Commissions, fixed fees, project based
Health insurance, disability insurance, dental insurance, vision insurance, life insurance, executive compensation/ benefits, section 125 plans, wellness programs
Edward J. Hyland Jr., president
18
BUCK GLOBAL LLC 6000 Freedom Square, Suite 100, Independence 216-642-4254/buck.com
23
23
24
—
By project, commissions, fixed fees, hourly rates, retainer
Health and productivity, retirement, communications, compensation, benefit audits, benefit outsourcing
Tom Tomczyk, principal, market leader Cleveland and Pittsburgh; Audrey Cervas, director
19
ALTHANS INSURANCE AGENCY INC. 543 E. Washington St., Chagrin Falls 440-247-6422/althans.com
20
20
55
—
Commissions, fees
Risk consulting and management, plan design and compliance, group medical, disability, dental, life and vision insurance
James C. Althans, president, CEO
20
VANTAGE BENEFIT ADVISORS INC. 6200 Rockside Road, Independence 216-642-7878/vanfinbenefits.com
18
17
68
90%
Commissions, fees, project
Employer sponsored insurance programs, retirement plans, flexible spending arrangements, benefits technology, human resources, compliance and Medicare
William M. McCormick, CEO
21
PK FINANCIAL GROUP INC. 9261 Ravenna Road, Unit B4, Twinsburg 216-393-8182/pkfinancialgroup.com
17
17
24
80%
Fees (percent of assets managed); commissions
Retirement plan consulting services for the for-profit and not-for-profit sectors
Pete Kaplan, president; Brian Petros, CEO
22
NOBLE-DAVIS CONSULTING INC. 6190 Cochran Road, Suite D, Solon 440-498-8408/nobledavis.com
15
16
21
93%
Fixed fees plus hourly rates for special projects
Retirement plan consulting, plan design and administration, welfare plan documents and filing
Jan L. Davis, president
23
MAGIS ADVISORY GROUP LLC 36711 American Way, Suite 2F, Avon 440-934-4102/magisadvisorygroup.com
15 2
—
17
95%
Commissions, fees
Employee benefits strategic consulting and benefits brokerage including voluntary and worksite, retirement plan consulting, executive benefits
Philip J. Amos, president, cofounder; Aaron M. Marinelli, CEO, cofounder
24
MOSKAL GROSS ORCHOSKY INC. (DBA MGO) 24400 Chagrin Blvd., Suite 310, Beachwood 216-771-4242/mgo-inc.com
14
14
28
100%
Fees and commissions
Plan design and consulting, plan investment selection and monitoring, fiduciary liability protection, plan administration, employee education and communication
Ronald S. Gross, president, CEO
25
CHELKO CONSULTING GROUP 24651 Center Ridge Road, Suite 110, Westlake 440-892-2600/chelkogroup.com
14
11
18
—
Fee-based retainer, by project
Medical, prescription, life and disability plan management services: data analysis, design, planning, vendor selection and reporting, stop loss, compliance, audits, wellness
Rick Chelko, president
Researched by Chuck Soder: csoder@crain.com | When ties occur, firms are ranked by total local employees. Information is supplied by the companies. Employment figures are full time; 2020 data is as of June 1, while 2019 data is as of April 1. Send
feedback to Chuck Soder: csoder@crain.com. NOTES: 1. OneDigital acquired DS Benefits Group of Medina on July 1, adding another 14 full-time local employees, including 11 focused on benefits, that are not included in these figures, which are as of June 1. 2. Chapman & Chapman of Twinsburg was acquired in April 2020 by USI. A portion of Chapman’s business also was purchased by Magis Advisory Group of Avon.
Get all 33 firms and more executive names in Excel format. Become a Data Member: CrainsCleveland.com/data July 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 17
P017_CL_20200720.indd 17
7/16/2020 1:27:04 PM
CRAIN’S
THOUGHT LEADER FORUM Position yourself as a thought leader in your field. Showcase your industry expertise in this new paid feature from Crain’s Content Studio – Cleveland. Use this opportunity to speak to the Northeast Ohio community about current events, trends and hot issues affecting the future of work in the region alongside similarly themed content. This is a fully integrated forum, encompassing
SEPTEMBER 21 // Family law OCTOBER 19 // Manufacturing NOVEMBER 16 // Impact investing DECEMBER 21 //Economic outlook Close date 4 weeks prior to publication date; materials must be received 2 weeks prior to publication.
print, digital and e-newsletter components.
See a topic you’re interested in influencing? Contact Amy Ann Stoessel at astoessel@crain.com for more information on this custom advertising opportunity.
SPONSORED CONTENT
July May20, 18,2020 2020 S1 S2
SPONSORED CONTENT
THOUGHT LEADER FORUM
EMPLOYEE BENEFITS INNOVATION WELL-ROUNDED BENEFITS ESPECIALLY IMPORTANT IN UNCERTAIN TIMES These unprecedented times of the coronavirus pandemic afford employers an opportunity to demonstrate to employees how they continue to support their workforce despite new challenges and uncertainty. Reframing and communicating the aspects of their employee benefits programs is an ideal way to underscore an employer’s commitment to the health and well-being of employees and their families.
THE RISE OF TELEHEALTH SERVICES Nearly all employers report that they are offering telehealth services to help workers receive medical care while reducing their risk of COVID-19 exposure, according to an International Foundation of Employee Benefit Plans’ “Employee Benefits in a COVID-19 World: April 2020 Survey Report.” Prior to the pandemic, 88% of employers had telehealth services in place. Since then, an additional 10% of employers have implemented or are considering implementing telehealth. Nearly all employers have reduced or eliminated employee cost-sharing to encourage employees to utilize these services.
VIRTUAL WORKFORCE PERKS Work-from-home has shifted from an employee perk to a necessary function of business. Companies and organizations are creating new and clever ways to connect with employees and deliver benefits within a virtual work environment, including “get up and move together” breaks, impromptu virtual coffee meetings, no-meeting days, stipends for daily lunch pick-ups or delivery, and matching or double-matching employee donations to support services and equipment for frontline health care workers.
ACCESS TO MENTAL HEALTH SERVICES
INCENTIVIZE OPEN ENROLLMENT
This same survey also revealed that employers recognize the significance of mental health services during the pandemic. About 12% of employers have added telepsychiatry, allowing employees to access mental health services virtually. Further, 9% of employers have reduced or eliminated cost-sharing for mental health benefits, while 6% have relaxed or eliminated eligibility requirements.
This is a time to consider active enrollment (versus default enrollment) to encourage employees — even those who don’t expect to make any changes to their plans — to review their options and reacquaint themselves with their plan’s benefits. Employers also should consider encouraging questions, activating manager involvement and promoting proactive enrollment through prizes or awards, according to the Society for Human Resource Management.
Compiled by Kathy Ames Carr, Crain’s Content Studio-Cleveland
Sources: Employee Benefit Research Institute, International Foundation of Employee Benefit Plans, Society for Human Resource Management
Optimizing rewards: Tune in and focus forward KYLE ANTHONY Lockton Kyle.Anthony@lockton.com Kyle Anthony, president, joined Lockton this year. He has over 20 years of leadership, sales, client management, analytics and underwriting experience in the human capital, employee benefits, total rewards and risk management fields on both the carrier and consultant side.
CHANGE – THE NEW NORM. The initial phase of COVID-19 required organizations to navigate changing business conditions with high-level, short-term tactical concern. Now, many employers are turning toward a more strategic focus designed to improve near-term and long-range financial outcomes. Like any other investment, your organization’s total reward strategy should strive to maximize a return. That’s why organizations are increasingly focused on total reward optimization.
pandemic’s significant impact on the needs and perceptions of the workforce. Employee expectations of compensation, health and financial security, career growth and connection to the organizational structure have shifted.
Want to eliminate cost while protecting and enhancing the rewards that matter most to your employees? Tune in and focus forward.
Similar to trying this summer’s family road trip without GPS – employers may tend to navigate total rewards without a roadmap. Failing to develop a thorough profile of the needs and preferences of various employee groups can leave the organization lost – struggling to achieve alignment between investment cost and perceived employee value.
TUNE IN. Pulse surveys conducted from March through June 2020 showed the
STEP NO. 1: TALK LESS – LISTEN MORE. Want to know your employees’ concerns and
how to best support them? Ask them. While employee response rates to workforce surveys may have been low in the past – today’s employee wants to be heard and is participating in surveys at record rates. FOCUS FORWARD. Tuning in enables a more honest assessment of the benefits, resources and programs in your total rewards toolbox. This isn’t just about figuring out what you can add, delete or invest in, but is about better coordinating and maximizing existing programs – connecting value to the workforce. Even thriving businesses that have protected their compensation and benefit programs should take note. Every organization had employees impacted by the pandemic – failure to evaluate your strategy could put highperforming talent at risk. STEP NO. 2: PRIORITIZE STRATEGIC SHORTCOMINGS. This exercise reveals whether: • Some of your existing underused benefits solve employee concerns. • “Sacred cow” benefits once previously protected actually are ranked low across employee populations. • You’re keeping up with the fine print of recent regulatory changes.
STEP NO. 3: TRUST AND CREDIBILITY COMES FROM LEADERS WHO COMMUNICATE WITH CLARITY AND TRANSPARENCY. Especially with today’s remote workforce – it’s time to re-evaluate communication strategies. To connect and engage the workforce, many organizations will need to enhance clarity, transparency and frequency of total reward communications. Making sure participants understand program basics and where to go with questions is no longer sufficient. Leadership-sponsored messaging to employees (and their families) must emphasize a focus on the purpose and value of your total rewards program. WHERE TO GO FROM HERE. While cliché, “now more than ever” it’s time to lean on your partners and demand they map this journey with you. The right partner will quickly understand where you are and support where you need to go with resources, expertise and a solid strategic plan. After all, the right total reward strategy drives performance by inspiring your organization’s best competitive advantage.
This advertising-supported section/feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.
P019_P021_CL_20200720.indd 19
7/16/2020 11:09:16 AM
SPONSORED CONTENT
S2 S1 July May20, 18,2020 2020
THOUGHT LEADER FORUM SPONSORED CONTENT
EMPLOYEE BENEFITS INNOVATION HEALTH CARE TOP OF MIND FOR EMPLOYEES Employee benefits are a key tool in talent attraction and retention. According to a 2018 survey conducted by the Society for Human Resource Management, 46% of employees reported that employer-sponsored health coverage was the deciding factor or positive influence in their decision to choose a job. Employers will need to be cognizant and creative in structuring attractive employee benefits plans as the unforeseen health care costs associated with COVID-19 continue to shape the industry’s landscape.
AT A PREMIUM The average annual premiums for employersponsored health insurance in 2019 were $7,188 for an individual and $20,576 for family coverage. The average premium for family coverage has increased 22% over the last five years, and 54% over the last 10 years, which is significantly higher than wages and inflation, according to a 2019 Employee Benefits report published by the Kaiser Foundation.
A PRICEY PROPOSITION
A COSTLY ERA
Health insurance carriers are debating their plan rates for 2021. If carriers decide they must recoup 2020 costs price for the same level of costs next year, and protect their solvency, 2021 premium increases for individuals and employers from COVID-19 alone could range from 4% to more than 40%, according to Covered California, a government subsidiary.
COVID-19 health care costs could reach $556 billion over two years, according to America’s Health Insurance Plans, a national association of members in the insurance and health carerelated services industries.
BEST PRACTICES FOR PLAN SPONSORS IN THE AGE OF COVID
HEALTH INSURANCE MATTERS Employees rank health care as the most critical issue in the nation, according to a 2018 Employee Benefit Research Institute/ Greenwald & Associates Health and Workplace Benefits Survey. Further, 73% of workers surveyed reported that health insurance is one of the top three most important benefits when considering whether to remain in or find a new job.
Sources: America’s Health Care Plans, Covered California, Employee Benefit Research Institute, International Foundation of Employee Benefit Plans, Kaiser Foundation
Many health care plan participants delayed or did not go to the emergency room, or seek elective or preventive care during the last few months of the pandemic, according to the International Foundation of Employee Benefit Plans. To help manage plan costs and promote ongoing employee health, plan sponsors should be sure to communicate to employees that hospitals and clinics have safety procedures in place for patients. Plan sponsors also should encourage employees to access their preventive care services and tweak employee wellness programs to encourage employees to access those benefits.
Compiled by Kathy Ames Carr, Crain’s Content Studio-Cleveland
No health care fairytale: Lower costs, higher quality Connect & Care
CONNECT & CARE LLC Cleveland connect-and-care.com
Patient-Centric Care, Communication & Coordination
Connect & Care has one focus and its goal is to promote, maintain, and protect the health and well-being of individuals and prevent or reduce the burden of disease and disability. Health care is no fairytale, but there is a fairytale that can tell a great deal about health care. Hans Christian Andersen’s “The Emperor’s New Clothes” provides a fitting portrayal of today’s health care landscape. The Emperor – health care stakeholders -cared little for anything but extravagant clothes (high-cost services, high-priced medications). The Emperor’s (health care stakeholders) advisers and subjects (vendors, employees/ patients) ignored the truth about the Emperor’s clothes (high costs, poor quality, limited care navigation, etc.) for fear of upsetting the Emperor (health care stakeholders). Our final character and arguably the most important, is the hero, the one that recognizes the deception. In our health care analogy, the hero needs to be employers. Employers need to recognize the pervasive themes of the story in the context of their health care programs.
Employers need to stop behaving like so many others, and avoid accepting “facts” without question. Employers need to recognize there is an undeniable truth about their health plans: their backs are not against the wall on health care spending and quality, and undue, collective complacency can be avoided. So how can employers call out the truth? Employers can follow the “Four A’s”: Audit, Analytics, Accountability and Action. Asking these questions illustrates where you can lower costs while improving quality of care. AUDIT • Are your health plan fees presented as line items or all-inclusive? Line items allow for transparency and are subject to justification. • What services are you paying for? Each service and its scope should be clearly defined. • How is the ROI calculated for each service? Ensure the numbers are real, measured and accurate. Real ROI has irrefutable results.
• What kind of documentation validates the ROI? Each ROI should be supported by clinically relevant metrics. • What clinical or financial metrics are being missed, ignored or providing value? Population health strategies are required. ANALYTICS • Analytics in health care has become a buzzword. Having analytics implies you have data, but data does not uniformly translate to information. • Analytics must be more than a report of summary statistics. Reporting past events has limited utility. • What data elements are analyzed? Analysis needs to be incorporated in real time management decisions. • Ask specifically, how is my data impacting my employees? Data-driven care strategies are paramount. • How is data being used to lower cost or verify better outcomes? Outcomes are real when the evidence shows better compliance, lower costs and other metrics including productivity. • How are these analytical assertions verified? Data has to be supported by the conclusions. ACCOUNTABILITY • Are employees receiving the best care possible? Quality metrics, appropriate screenings, preventive health and enhanced care navigation are all parts of a bigger puzzle. • Are high value benefit design principles
deployed? Quality care will result in lower costs. • Are the programs seamless between care events or transitions in care? Active care navigation should be routine for employees. • Are all your medical and pharmacy claims being reviewed for medical necessity and clinical validity? ACTION • Refuse to conform to what everyone else is doing (especially if doing nothing). • Challenge what you are being told by your service providers or advisers. If it is measureable, it should be managed. • Require that your service providers validate their assertions with facts. • Speak up and speak out about your health plan. • Make meaningful changes in health plan design that demand responsiveness. “The Emperor’s New Clothes” has a lesson and message relevant to health care today. As an employer or service provider getting answers and alignment with the “Four A’s” may seem daunting. You should engage an expert to help you demand better for your health plan. Demanding better will result in healthier and more productive employees, and lower health care costs for all. It takes courage to stand up and stand out, but the end result will be a welcomed revelation.
This advertising-supported section/feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.
P019_P021_CL_20200720.indd 20
7/16/2020 11:09:41 AM
SPONSORED CONTENT
July 20, 2020
S3
SPONSORED CONTENT
THOUGHT LEADER FORUM
EMPLOYEE BENEFITS INNOVATION HEALTH CARE IS A COMPLICATED BENEFITS CHALLENGE Health care coverage often is a pillar of an employee benefits package.
HEALTH CARE AND BIG DATA
HIGH DEDUCTIBLE PLANS ON THE RISE
The Society of Actuaries estimates a 4% decline in projected annual insured health care costs during each month in which a high level of social distancing is enforced, compared with a “No COVID” baseline scenario. However, about 40% to 60% of this decline is projected to be recouped at a later date when social distancing is relaxed, when patients receive some of the services they had deferred.
Big data will continue to inform plan sponsors’ potential changes to health care plans in 2021. The following factors will help drive any changes to plan structures or pricing: medical plan, diagnoses and volume; prescription drug costs; primary care utilization; and short-term disability use, according to the International Foundation of Employee Benefit Plans.
In 2019, 15% of privately insured adults had a plan that was associated with either a health reimbursement arrangement (HRA) or health savings account (HSA), collectively known as consumer-directed health plans (CDHP), according to the Employee Benefit Research Institute/Greenwald Consumer Engagement in Healthcare Survey.
HEALTH PLAN PREFERENCES
POTENTIAL IMPACT OF COVID-19 ON HEALTH CARE COSTS
Most consumers rank the following aspects of their health care as among the most important: the network of health care providers; easy access to health care; low out-of-pocket costs; prescription drug coverage; low premiums; plans that are easy to understand; and the inclusion of specific coverage. Choice and access are more important to a consumer than their financial stake in the plan. Consumers rank the provider network and access to health care as more important than the lower premium costs or lower out-of-pocket costs.
The coronavirus outbreak’s net impact on projected future health care costs in 2020-2022 depends on future rates of infection and future levels of social distancing, reports the Society of Actuaries. Each of these scenarios has a high degree of uncertainty. Higher levels of social distancing will reduce the volume of elective and non-urgent services and their respective health care costs. Higher levels of infection increase the range of inpatient and outpatient treatment services.
Historically rising costs coupled with inertia in the health care marketplace will continue to present challenges in terms of costs to employers and plan participants. Creativity and communication will be essential to delivering innovative employee benefits solutions.
FLUCTUATING ANNUAL HEALTH CARE COSTS
Sources: Employee Benefit Research Institute, International Foundation of Employee Benefit Plans, Society of Actuaries’ Illustrative Forecasts of the Impact of COVID-19 on Health Care Costs
Compiled by Kathy Ames Carr, Crain’s Content Studio-Cleveland
Improving the health of your innovation process DENISE MIRTICH Spark360 and Oswald Labs 216-649-7786 denise.mirtich@spark360.com Denise Mirtich is director of the Oswald Labs initiative and chief information officer for Spark360. Oswald Labs is an innovation engine designed to seek out, create, and deliver disruptive solutions in the health care space. More information can be found at www.OswaldInnovation.com. It’s called the annual health insurance renewal; however, for companies facing rising costs and lack of control, it can be far from a “refreshing” experience. Innovation brings new products, technologies and platforms forth to help manage costs, enhance plan value and improve the health of employee populations. The challenges come when solutions are too complex to successfully implement and sustain, or too short-sighted to move the needle and achieve meaningful results. To strike the right balance and make solid financial decisions, organizations need to embrace employee benefits innovation as a critical business operations function. It is no longer an option, or solely the responsibility
of human resources; it’s a leadership initiative that requires a strategic process and the emphasis on execution. In late 2019, Oswald Companies, in partnership with Spark360, launched Oswald Labs. It’s a collaboration combining the expertise of a 127-year-old insurance broker and a health and wellness technology company, to give organizations objective perspectives on all angles of their benefits’ strategies. APPROACH TO INNOVATION. The first step, exploration, should be twofold. In addition to connecting clients with the most relevant solutions, there is significant opportunity in listening to clients’ perspectives. Clients live these challenges daily and can identify the problems, but the
solutions may seem out of reach or not yet exist. The second step is scientific evaluation, through a diverse group of advisers who collaborate to identify potential solutions. The third step is where solutions are defined, some from scratch and others in the improvement of existing sources. The only solution that works is one that meets the needs of each client; it is not a one-sizefits-all reality. The fourth step is in the activation of the solutions and making them simple to implement and measure. Speed, real-time quality testing and advancement are of the essence. NEW PATHS TO PERFORMANCE. Simply stated, innovations should focus on addressing costs and improving health, through a data-driven and holistic view. Here are a few examples:
Organizations make financial decisions based on the total cost of health care, but traditionally manage health insurance and workers’ compensation separately. We will challenge our clients to look at the data together, to affect change and improvement across all areas, with oversight of medical doctors and risk professionals. The existing state of pharmacy benefits management lacks transparency and consumer understanding of medication costs. We are working to improve the patient experience and manage the overall costs while increasing transparency using pharmacists and doctors to review data and identify what’s driving the plans experience. Companies today have near unlimited access to information and solutions designed to advance their employee benefits strategies. Put your best efforts in motion through a process that filters what will work for you, and a team that will take a comprehensive view of care, from the personal well-being of your employees, to the overall financial health of your organization.
COVID-19 has seen an increase in participation in telehealth and alternative access to health care. The virtual world we have been forced into could be the key to crack the behavioral health crisis through increased comfort in these services being provided through telemedicine.
This advertising-supported section/feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.
P019_P021_CL_20200720.indd 21
7/16/2020 11:10:00 AM
Top Paycheck Protection Program lenders in Ohio Columbus-based Huntington Bank made the highest number of PPP loans in the state, and also provided the most PPP loans by volume in Northeast Ohio. Rank
1 2 3 4 5 6 7 8 9 10
Lender
Loans $150k and more
Huntington Bank PNC Bank Fifth Third Bank JPMorgan Chase Bank KeyBank U.S. Bank Citizens Bank The Park National Bank First Financial Bank Peoples Bank
4,035 2,436 1,382 1,335 1,617 532 309 622 545 534
NOTE: APPROVALS THROUGH 06/30/2020 SOURCE: U.S. SMALL BUSINESS ASSOCIATION
PPP
From Page 1
An HVAC contractor prepares to install a new air-conditioning wall unit at the Ivy in downtown Cleveland. The space behind him is a dance floor, but it’s now filled with tables to ensure social distancing between groups of patrons and to discourage dancing. | MICHELLE JARBOE/CRAIN’S
AIR QUALITY
From Page 1
Heating, ventilation and air conditioning contractors in Northeast Ohio say they’ve been flooded with queries from businesses hoping to curb the spread of COVID-19, the illness caused by the novel coronavirus. Those conversations started with hospitals early this year but quickly broadened to include office buildings, schools, shopping centers and funeral homes. Questions about air quality jumped this month, after more than 200 scientists signed on to an open letter asking the World Health Organization and other groups to speak up about the potential for airborne transmission of the coronavirus. The letter’s authors noted the importance of bringing clean outdoor air inside and supplementing ventilation with technologies such as high-efficiency filters and ultraviolet lights that kill germs. Those gadgets, from simple filters to state-of-the-art gizmos, are getting harder to find. Robert Ambrose, a senior executive engineer at Gardiner, a large HVAC company based in Solon, said demand for bipolar ionization and devices that use ultraviolet light is three times what it was a year ago. It can take four to six weeks, on average, to get those items in stock. Air filters that once took five to 10 days to arrive now carry a two-month waiting period, said Todd Duncan, a district manager for filtration company AAF Flanders whose territory spans Northeast Ohio, western Pennsylvania and western New York. “Everybody’s panic buying like everybody was panic buying toilet paper,” Duncan said of MERV 13 pre-filters, which many commercial property owners are inquiring about. Though industry groups have come up with recommendations – purging and replacing indoor air chief among them — there’s no one-size-fits-all solution for making structures safe. “Every building is unique, and we should be careful not to generalize too much,” said Rachel Gutter, president of the International WELL Building Institute, an organization focused on health and wellness in the built environment. At an old school building without a central heating and cooling system, for example, the best approach might be adding fans and opening windows,
even during winter when the heat is running. For a church, it might make sense to schedule services several hours apart, providing enough time to fully flush out the space between gatherings. “Short of a major renovation, there’s not much you can do. Older facilities equal labor-intensive compliance for COVID strategies,” said Todd Barnhart, Gardiner’s president. “New facilities lend themselves to utilizing some more modern technology.” At newer buildings, including distribution centers and hospitals, property managers are re-programming existing HVAC systems to provide better ventilation. At least one office tower owner in downtown Cleveland is tallying the costs of adding bipolar ionization and ultraviolet devices to a bigger renovation project. Switching to more dense filters,
“OLDER FACILITIES EQUAL LABOR-INTENSIVE COMPLIANCE FOR COVID STRATEGIES.” ——Todd Barnhart, Gardiner’s president
which catch smaller particles, seems logical. But there’s a risk of making an HVAC system work too hard, if it’s not powerful enough to push air through a less porous barrier. Duncan compared installing a denser filter to donning a mask and struggling to breathe. “The same thing happens to your air system if it’s not designed for it. … That’s kind of been the conversation the past three to six months, is how can we improve the efficiency of our systems without choking out our buildings,” he said. Air quality is the top subject that Gutter and her colleagues at WELL have been hearing about from building owners and managers. Protective gear is fairly straightforward. So is social distancing, to ensure at least 6 feet worth of space between people. HVAC systems, by contrast, are technical. And until the coronavirus crisis came along, they weren’t a mainstream topic. WELL, which launched a detailed ratings system for buildings in late 2014, rolled out a narrower program inspired by the pandemic on July 8. The Cleveland Cavaliers are among the first organizations globally to seek WELL’s new health-safety rating for facility operations and management, for Rocket Mortgage Field-
House downtown and Cleveland Clinic Courts in Independence. When it comes to air quality, the health-safety rating calls for higher ventilation rates along with treatment systems, such as better filters or ultraviolet lights in dark places where mold and bacteria could grow. Routine maintenance also is key, since neglected or overtaxed systems actually could degrade indoor air and spread respiratory diseases. Gutter stressed that building owners and consumers need education about what they can change, and what they can’t — or shouldn’t. Homeowners, even more than commercial property owners, are getting sales pitches for tools that are costly and ineffective against COVID-19, she said. It’s possible to mitigate risk, she said, but there’s no way to eliminate it completely. “We cannot design a space to be free of coronavirus,” she said, “and the best thing you can do is teach occupants how they can support the health of one another. … The No. 1 thing we believe that an organization could do is to have a policy and a culture that supports people staying home when they’re sick. That is going to be more effective than the best HVAC solutions in the world.” At the Ivy, though, improved air quality feels like a matter of survival — and one way to exert control during a time of near-constant upheaval. Since reopening when a statewide shutdown order lifted, the 8,000-squarefoot space on West Sixth Street has drawn crowds of 20- and 30-somethings on Friday and Saturday nights. But without major sporting events, there are no fans buying drinks. And there’s a hush over happy hour. With hearings still on hold at the nearby Justice Center, prosecutors and defense attorneys aren’t around to wander over. The city of Cleveland’s July 3 decision to impose a 50% occupancy limit on restaurants, bars and entertainment venues was an additional blow, Lewanski said. It’s not clear whether air-quality upgrades will bring more patrons through the doors. But Lewanski hopes the investments will make existing customers, and his staff, feel safer. “We’re going to have to adapt, because we can’t roll over,” he said. “What’s the other option?” Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe
Ohio companies claimed 2.9% of all U.S PPP loans made (nearly 4.9 million) and 3.5% of all dollars lent — which at $521.1 billion is more than 18 times what the SBA allocated in all of fiscal year 2019 — but hosted 5.8% of all jobs retained countrywide (51.1 million), according to a Crain’s analysis of SBA data released July 6. The Northeast Ohio region claimed 41% of all PPP loans funded in the state.
Top Ohio lenders According to federal PPP lending data — which is separated in two tranches for loans less and greater than $150,000 — Huntington didn’t just provide the most loans in the Buckeye State, it also gave the most attention to local companies (as a percentage of total loans made) compared with its Ohio-based, super-regional competitors, Cleveland’s KeyBank and Cincinnati’s Fifth Third Bank. Those three comprise the Ohio-headquartered banks included in the top-15 commercial bank PPP lenders countrywide, according to the SBA. By volume, Huntington issued 54% of all PPP loans it made in total in Ohio, compared with 26% for Fifth Third and 17% for Key. In total, Huntington provided 19,918 PPP loans in the state, with 80% of those being for less than $150,000. Huntington is followed by PNC Bank (10,207 loans, 76% for less than $150,000); Fifth Third (9,789 loans, 86% for less than $150,000); JPMorgan Chase Bank (7,842 loans, 83% for less than $150,000); and Key (7,022 loans, 77% for less than $150,000). By deposit market share, U.S. Bank is the largest financial institution in Ohio. The Minneapolis-based bank — the eighth-largest PPP lender nationwide — ranks sixth in total PPP loans made in Ohio at 6,553 (91% for less than $150,000). About 6% of its total lending volume was in the state. Chase Bank, the largest PPP lender by dollars in the country, according to the SBA, and the fifth-largest bank in Ohio by deposit market share, made 3% of all its loans by volume in this state. Huntington, which has been the largest provider of traditional SBA loans in the U.S. several years running, ranked 11th in PPP lending by volume in the country. Its average loan size among all loans in total is $175,854.
Loans less than $150k
% above/ below $150K
Total
15,883 7771 8407 6507 5405 6021 3871 2848 2500 2300
19,918 10,207 9,789 7,842 7,022 6,553 4,180 3,470 3,045 2,834
20%/80% 24%/76% 14%/86% 17% /83% 23%/77% 9%/91% 7%/93% 18%/82% 18%/82% 19%/81%
CRAIN’S CLEVELAND BUSINESS GRAPHIC
Top NEO lenders In the Northeast Ohio market — which Crain’s defines as 15 counties and some surrounding areas in and around Greater Cleveland, including the Akron/Canton region to the south — Huntington bested Key for PPP lending in the latter’s backyard. As the No. 1 and No. 2 banks in the region by deposit market share, the two constantly jockey for dominance here. Huntington provided the most PPP loans by volume in Northeast Ohio at 10,625 (81% for less than $150,000). It’s followed by: PNC (4,672 loans, 81% for less than $150,000); Key (4,592 loans, 76% for less than $150,000); Citizens Bank (3,760 loans, 92% for less than $150,000); and Chase (3,191 loans, 82% for less than $150,000). Those rankings loosely correlate with those companies’ respective shares of the regional deposit market. The top community bank lender in Northeast Ohio is the Farmers National Bank of Canfield, which made 1,596 PPP loans in the region (81% for less than $150,000).
More takeaways ``Here are average loan sizes across all loans for some other major PPP players in this market: Key, $196,177; PNC, $178,833; Fifth Third, $142,271; Chase, $107,882; Citizens Bank, $100,806; U.S. Bank, $73,438. ``The top 10 PPP lenders in Ohio account for 53% of all PPP loans made by volume in the state. The top 20 account for 65%. ``The top 10 PPP lenders in Northeast Ohio account for 61% of all PPP loans made by volume in the region. The top 20 account for 75%. ``Cleveland-based Growth Capital Corp., the second-largest provider of traditional SBA loans by volume in fiscal year 2019, provided 290 PPP loans in Ohio, with all but two in Northeast Ohio. ``Georgia-based online fintech Kabbage Inc. was a surprisingly busy PPP player both in Ohio and across the country. Launched in 2011 and backed by SoftBank Capital, Kabbage funded 2,403 PPP loans in Ohio (99% for less than $150,000), with 1,028 of those (99% for less than $150,000) in the Northeast Ohio region. That ranks the fintech just outside the top 10 PPP lenders in the state. The nonbank reported processing more than 209,000 PPP loans across the U.S., amounting to $5.8 billion, which would make it the third-largest PPP lender by volume in the country. Its total average loan size was $28,100. Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile
22 | CRAIN’S CLEVELAND BUSINESS | July 20, 2020
P022_CL_20200720.indd 22
7/17/2020 3:58:37 PM
Join us!
Join Crain’s award-winning journalists and local experts as we examine the various long-term effects created by COVID-19 on the real estate and health care sectors through our free editorial webcasts.
HEALTH CARE SERIES
BEHAVIORAL HEALTH AND COVID-19 WEDNESDAY, SEPTEMBER 16
COVID-19 has simultaneously negatively affected many people's mental health and caused new roadblocks for them to access that care.
TELEHEALTH
WEDNESDAY, OCTOBER 21
What is the long-term sustainability of the adjustments that made telehealth technology’s widespread use possible?
HEALTH CARE AFTER COVID-19 TUESDAY, NOVEMBER 3
In many ways, the pandemic has the potential to upend the future of how health care is delivered and paid for.
COMMERCIAL REAL ESTATE OUTLOOK WEDNESDAY, SEPTEMBER 9
Threats and opportunities exist for real estate services companies and owners alike. Join us to learn about the pandemic’s impact on commercial real estate in Northeast Ohio.
RESIDENTIAL REAL ESTATE OUTLOOK TUESDAY, NOVEMBER 10
We will explore how residential real estate professionals have reacted to the crisis, what future opportunities may be ahead, and how COVID-19 may change how we think about and develop residential real estate.
Register Today: CrainsCleveland.com/webcasts Interested in sponsoring a webcast? Contact Scott Carlson today at scott.carlson@crain.
AKRON REAL ESTATE
Akron is seeing a big boom in housing construction Mayor Dan Horrigan’s population initiative, abatement program help fuel new developments BBY DAN SHINGLER
Akron’s mayor might become known as Dan “Hammerin’” Horrigan if things keep up. Not because he’s beating anyone down, but because of all the housing construction in Akron since Horrigan entered office in 2016 and announced a 15-year abatement on new construction and improvements that year. “It’s like a before and after picture,” said Jason Segedy, Akron’s director of planning and urban development, who’s a stalwart advocate of the mayor’s program and Akron’s revitalization efforts. “In 2015, the year before Mayor Horrigan came into office, this wasn’t’ even contemplated. I think that year there were 14 new houses built in the city. … Now we have 1,200 units in either the planning-construction phase or that were recently completed,” Segedy said. That’s huge, given that one of Horrigan’s more ambitious goals is to rebuild Akron’s population. Segedy said he hopes the city can draw as many as 50,000 new residents, he said. Segedy went through a laundry list of new housing projects in Akron. Some of the bigger ones are well known, such as the Bowery District and Law Building conversions downtown, which together represent more than $70 million in investment and about 200 new apartments. The Bowery already has rented many of its units, and the Law Building expects to open at the end of the year. Also downtown, developer Joel Testa is working to convert the former, 19-floor City Center Hotel into 147 modern apartments for his Ascend development. That project, which will include a two-story pool area, rooftop bar, gym, theater and co-working space, is expected to be ready for tenants in spring 2021, Testa said. “Yes, we absolutely are looking at projects in Akron differently now with the abatement,” he said. “Yes, I do think it was critical for the city to be able to compete with other markets, like Cleveland, that already offered this. I personally built my loft at Northside to take advantage of it. “It was a key factor in us doing the Ascend project, and I am working on several projects with the city and the Home Builder’s Association to help our local builders take advantage of this as well and create more homeownership opportunities for residents in Akron.” Testa said he is also in the process of converting his Canal Square Lofts — 67 units in the 15-floor former YMCA building downtown — to condos that will offer “an entry-level ownership option for downtown residents.” Another former downtown landmark, the Mayflower Manor senior housing facility, is getting a $44 million renovation by its owner, New York State’s Capital Realty Group. That project reportedly got a $21.5 million, tax-exempt state loan late last year, so it will get a double tax benefit. It’s more than 200 units are expected to be remodeled and mod-
Ryan Homes continues to sell units at its Hickory Ranches development, seen under construction here in last winter, just north of downtown Akron. The project is a mix of townhomes and stand-alone, single-family homes. | CRAIN’S CLEVELAND BUSINESS
The interior of one of the Bowery District’s apartments offers a view of downtown Akron. Many of the units in the project already are rented. | CONTRIBUTED
“YES, WE ABSOLUTELY ARE LOOKING AT PROJECTS IN AKRON DIFFERENTLY NOW WITH THE ABATEMENT. YES, I DO THINK IT WAS CRITICAL FOR THE CITY TO BE ABLE TO COMPETE WITH OTHER MARKETS, LIKE CLEVELAND, THAT ALREADY OFFERED THIS. “ ——Joel Testa, developer
ernized but still offered as subsidized housing that city leaders say downtown needs to retain. Outside of downtown there are big projects too, including developer Stu Lichter’s current work to add another 80 apartments to his East End development. Lichter said via text that the 106 apartments he built in the project’s initial work are “100% occu-
pied” and that he’s beginning work on another 60 residential units at the former Goodyear campus on East Market Street. Ryan Homes continues to sell units at its Hickory Ranches development, where it’s building 50 homes in the $200,000-plus range north of downtown. The company did not return calls for information, but on its website it said it has only two home sites left to sell. While those are all projects backed by well-connected developers, other smaller entities are busy, too. Alpha Phi Alpha Homes, a nonprofit housing development and management corporation formed by alumni of the predominantly Black Alpha Phi Alpha Fraternity in Akron in 1966, plans to build townhouses and single-family, detached homes on Mull Avenue near the Good Park Golf Course. Alpha Phi also is marketing lots fronting the golf course to private developers. Alpha Phi’s project is on the site of the Akron’s former Perkins Middle School, an 17-acre site that Segedy
and other city officials wanted to see repurposed for just this sort of new construction. Alpha is awaiting Akron City Council to approve the sale of the city-owned land to it. “We’re proposing redevelopment of that site and what we’re proposing is for-sale housing of three different types,” Alpha Phi executive director Tom Fuller said. “We’re planning to build the infrastructure so we can build all three types of housing at the same time.” Alpha Phi plans to pay for at least some of the roads, water and sewer lines, utilities and streetlighting to make the site ready for 82 residential units to be known as The Residences at Good Park. Fuller said plans include 34 for-sale townhouses, 23 “park-side units” that will border a new park on the site, and 25 residential lots fronting the Good Park golf course, some of which Alpha Phi will offer to developers or other buyers looking to build larger homes. “Those are the bigger homes on bigger lots, and the idea is we would sell those lots to homebuilders and others that want to build custom-built homes. That way we have a variety of homes, sizes and selling prices,” Fuller said. “We will be doing some of them, but we’ll be selling lots to homebuilders and partnering with another developer to do the middle section.” The Good Park project is working its way through planning steps with the city so it can be built next year, and Segedy said the city supports the project based on the plans officials have seen so far. The East Akron Neighborhood Development Association also is busy with housing projects, CEO Cheryl Stephens said. EANDA is working with the LeBron James Family Foundation to develop the I Promise Village, which will offer 50 apartment units at South Maple Street and West Cedar Street on the city’s near west side. That project, which will offer transitional housing to families of I Promise
School students, is expected to cost a little more than $13 million and, in addition to benefiting from the city’s tax abatements, has received $10 million in low-income tax credits and a $600,000 grant from the Ohio Housing Finance Association, Stephens said. “We’re working on the design work with our architect, and we’re negotiating with a couple of banks for a small loan,” Stephens said. There are other projects, too, and still more homes being built as oneoffs or smaller projects, Segedy said. Developer Tony Crasi, for example, is building 14 single-family homes on the site of the former Harris Elementary School in North Hill to serve that neighborhood’s growing immigrant community, Segedy said. Crasi has already build one home for the community on nearby Tallmadge Avenue. “That house is a good example of construction this (abatement) has spurred. … Those are the hardest projects to do because a lot of builders don’t want to do a one-off house here and there,” Segedy said Developers, for the most part, applaud the city’s recent efforts. Some say there’s too much effort focused on new construction rather than the rehab work that many Akron houses need. But those too are eligible for the tax abatement, Segedy said, and developers say the rebound in housing demand and construction is helping the entire residential market. There are more residential projects going on in Akron than are listed here. While some might have been developed on their own, many backers give Horrigan credit for spurring development. That includes not only the abatement, they say, but also making city-owned land available, such as the Perkins and Harris school sites. “There’s interest in building in the city because of the abatement program,” Fuller said. “That’s generating a lot of interest in the city. In fact, in my neighborhood in Highland Square, you can see that there are some substantial (residential) buildings being built, and that’s because of the city abatement.” Stephens, who took the helm of EANDA in 2018, said the mayor’s abatement, as well as his attitude, are driving investment. “I laugh and say to Jason (Segedy) that the mayor keeps trying to put stuff on my to-do list,” Stephens said. “But it’s really good when you say, ‘I have a project, we’re going to need some money, but we don’t know how much yet,’ and they don’t say, ‘It’s too early.’ … And they don’t laugh. They listen. So, I’m incredibly appreciative,” Stephens said of the city. In return, Stephens said she’s more than happy to help the mayor reach his goal of bringing new residents to Akron. “Our organization is going to be one of the builders of houses for those 50,000 residents he wants,” Stephens said. “All I have to do is my job, and he’s helpful, thoughtful and engaged.” Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler
24 | CRAIN’S CLEVELAND BUSINESS | July 20, 2020
P024_CL_20200720.indd 24
7/17/2020 4:15:09 PM
CRAIN’S CLEVELAND BUSINESS
|
S E P T E M B E R 3 - 9 , 2 018
|
PA G E 2 5
BASEBALL
is also beneficial. The same goes for the city of Eastlake showing a willingness to work with the club on its lease payments. Add it all up and the Captains will “live to fight another day,” Carfagna said. The assistance, however, can’t compare to a full slate of minor leagues games for the full-season, Class A affiliate of the Tribe. The Captains have furloughed almost half of their staff of 15 full-timers, with the majority of the layoffs in ticket sales. The Scrappers, one of the Tribe’s three Class A affiliates (along with Lake County and the Lynchburg Hillcats), have furloughed five of their 10 full-time staffers. The club, which plays at Eastwood Field in Niles, wasn’t supposed to start the home portion of its schedule until June 24. But the Scrappers also lost a full spring of events because of the pandemic, Taylor said. “It’s a major, major financial hit for us, and it takes a while to recover from,” the club’s longtime GM said. And unlike the RubberDucks and Captains, the Scrappers don’t know if they’ll have an MLB affiliation in 2021. Something that could be in Mahoning Valley’s favor, Lantz said, is that the upcoming minor league restructuring could free up a spot for the Scrappers, especially if some clubs don’t recover from the pandemic. Should that happen, the Scrappers could be forced to switch from the Indians to another bigleague partner. “At this point, the Cleveland Indians is all we know,” Taylor said. “We’ve been affiliated with them for 22 years. We would want to continue with them, and that is our priority moving forward.”
From Page 1
The Professional Baseball Agreement between MLB and MiLB expires on Sept. 30. Minor League Baseball hopes to “keep as many of our existing teams as possible,” senior director of communications Jeff Lantz said, but MLB seems likely to win out as it seeks to trim its minor league workforce. A more pressing matter might be how many clubs, some of which were expected to be safe from the minor league cuts, find themselves, in the words of O’Conner, in “dire straits” because of the pandemic-induced shutdown. Minor league clubs, unlike their major league counterparts, don’t have lucrative broadcasting agreements. Instead, almost all of their revenue stems from hosting games, which, on average, can bring in $70,000 in gross revenue, The New York Times reported. Full-season clubs have about a five-month window to generate the vast majority of their revenue. For short-season teams such as the Scrappers, the timeline is cut in half. “A lot of them are furloughing employees, doing pay cuts, laying people off all together,” Lantz said. “It’s a really difficult time, and a lot of people are having to make some real hard decisions.” He added, “It’s going to take years for these teams to recover from the lack of income.”
‘Catastrophic’ financial hit When asked about the profitability of the minor league clubs before the pandemic, Lantz broke the 160 teams into three groups. Roughly one-third of the clubs “do quite well and make pretty good money,” he said. Another third makes some money, but they are susceptible to years in the red if it’s a season in which clubs get hit with quite a few rainouts. The remaining group loses money off and on, but some of the teams in this category, Lantz said, are owned by MLB teams that prioritize player development over profits. The Indians’ top two affiliates, the Class AAA Columbus Clippers and Double-A RubberDucks, fall into the first category, Lantz said, thanks to quality ownership, excellent facilities and strong merchandise sales. Babby, who purchased the Akron Aeros after the 2012 season and re-
The Akron RubberDucks, a Class AA affiliate of the Indians, posted a gate average of 5,077 in 2019. | ACCENT IMAGES
“I WOULD SAY IT’S A CATASTROPHIC FINANCIAL EVENT FOR US. WE’RE NOT SHARING NUMBERS, BUT I CAN TELL YOU THAT THE LOSSES WILL BE INCREDIBLY SIGNIFICANT.” — Ken Babby, owner of the Akron RubberDucks and Jacksonville Jumbo Shrimp
branded the team as the RubberDucks prior to 2014, has presided over a franchise that has averaged at least 4,996 fans per game each season since the name change. Still, that didn’t prepare the 40-year-old owner for a year in which the biggest baseball game at Canal Park would be an Akron high school match-up between Archbishop Hoban and St. Vincent-St. Mary. “I would say it’s a catastrophic financial event for us,” Babby said of the lost season. “We’re not sharing numbers, but I can tell you that the losses will be incredibly significant.” Despite the hit, the RubberDucks have held to their March promise that none of their 32 full-time employees would lose their job because of the COVID-19 crisis. Support from the Payment Protection program helped, Babby said. U.S. Small Business Administration records show that Babby’s Fast For-
ward Sports Group, which includes the RubberDucks and the Double-A Jumbo Shrimp, received a payout in the $350,000 to $1 million range. Those funds pale in comparison to the revenue that a typical season with 70 home games would produce. Hosting other events, such as the high school game, can make up for a small share of the losses, but the rising COVID-19 cases have further limited what the RubberDucks can do. The RubberDucks are benefiting from something that is crucial for any team in minor league baseball’s first washed-out season since its start in 1901: season-ticket holders and corporate partners who have made it clear they aren’t going anywhere. Many of Akron’s season-ticket holders have pushed back their purchases to 2021, and the club is batting 1.000 with its corporate partners.
The entire group, Babby said, is rolling over their commitments, “which will be the catalyst that allows us to weather the crisis and continue to build for the 2021 season.”
‘Live to fight another day’ Similar resolve from fans and sponsors is helping the Lake County Captains ride out the storm. Another key, Captains owner Peter A. Carfagna said, has been revenue from a confidential deal with the Cleveland Indians, who are using Classic Park in Eastlake as a second training site as the Tribe gets ready for an abbreviated season. And prior to the Tribe’s prospects coming to town, Classic Park hosted a plethora of youth baseball games. A PPP loan, which SBA records say is in the $150,000 to $350,000 range,
Kevin Kleps: kkleps@crain.com, (216) 771-5256, @KevinKleps
ANNOUNCING
THE NEW AND IMPROVED Our newly enhanced data offering now provides the following high-level business intelligence services to fill your lead-generation and market research needs:
Advertising Section
CLASSIFIEDS To place your listing in Crain’s Cleveland Classifieds, contact Suzanne Janik at 313-446-0455 or email sjanik@crain.com BUSINESS OPPORTUNITY
Industrial Media Change Out, Water Blasting & Vacuum Company For Sale Sales $2.0M
mike@empirebusinesses.com
empirebusinesses.com 440-461-2202
LIST YOUR RETAIL SPACE HERE!
Customized executive contact lists and company data sets.
More executive contacts than ever before.
Must-read Crain’s lists with enhanced display options.
Enhanced intel.
CHECK IT OUT AND LEARN MORE AT
CRAINSCLEVELAND.COM/DATA JULY 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 25
P025_CL_20200720.indd 25
7/17/2020 3:59:45 PM
PEOPLE ON THE MOVE
Advertising Section
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
ACCOUNTING
HUMAN RESOURCES
REAL ESTATE
STAFFING & SERVICES
Apple Growth Partners
Apple Growth Partners
Leaf Home Solutions
Weber Wood Medinger
Direct Recruiters, Inc.
Christine Waltjen, CPA, has joined Apple Partners’ Executive Committee. Waltjen is a senior tax manager and director of tax. In her role, Waltjen is responsible for the management, scheduling, onboarding, and leadership of the firm’s largest department. Waltjen began her career nearly 18 years ago with KPFF, LLC, which merged with AGP in 2018. Waltjen was promoted to tax manager in 2018, then named director of tax in 2019.
Jeff Stinson, CFA, has been named chief operating officer for Apple Growth Partners. Stinson joined AGP as an experienced COO, and his time with the firm has led to significant change in the organizational structure and process development. Stinson spearheaded the firm’s internal response to the recent COVID-19 disruption, including implementing a remote workforce without notice during the firm’s busiest time.
Leaf Home Solutions (LHS), parent company of LeafFilter Gutter Protection and Leaf Home Safety Solutions, is pleased to announce that VP of Talent & Human Resources Sean Loboda has been promoted to Chief Human Resources Officer. Loboda joined the team in August 2019 and has quickly made a number of important internal improvements, including a focus on programmatic recruitment advertising, the implementation of a new learning management system, and fostering new initiatives to emphasize diversity and inclusion recruiting. Sean will continue to lead the development and implementation of HR strategies and programs for LHS with an innovative and progressive approach to drive efficiencies and policy/processes improvements.
WWM is pleased to announce the addition of new Associate Kevin Woidke to WWM’s Cleveland HQ. Kevin will join WWM’s Capital Markets team where he will assist the firm’s Partners in working on complex investment and sale leaseback deals. Kevin graduated from The Ohio State University, Fisher College of Business where he studied Real Estate and Urban Studies. Kevin walked onto The Ohio State Buckeye football team where he lettered 4 of his 5 years. He is a graduate of Cleveland St. Ignatius HS.
Direct Recruiters, Inc. is pleased to announce that Kasey Fahey Kaiser and Josh Olgin have been named Partners. Both have Kaiser been dedicated, top-performing members of our team, and have exemplified our core values throughout their years at DRI. Kasey Fahey Kaiser began at DRI over 7 years ago and has played an integral role in the success of the Healthcare IT, Payer/Health Plan Software and Life Sciences practices, in addition to providing mentorship and training across DRI. Josh Olgin joined DRI in 2010, providing us with 10 years of Olgin high-level recruiting within the Robotics and Automation industries. He is known for his dedication, tenacity, and building strategic partnerships with both clients and candidates across the industry.
Apple Growth Partners Susan Burnoski, CPA, has joined Apple Growth Partners’ Executive Committee. Burnoski is a principal and director of audit and assurance. Burnoski joined AGP more than 13 years ago as an audit associate. As the director of audit, Burnoski leads the firm’s auditing team, responsible for scheduling, hiring, onboarding, and management. Burnoski was named a 30 for the Future by the Greater Akron Chamber in 2016 and one of Crain’s Forty Under 40 recipients in 2019.
FINANCIAL SERVICES
Ancora We are very happy to announce that Brittney Garrett has joined Ancora as a Vice President and Business Analyst. Brittney will serve as a strategic finance partner for the firm, providing cross-departmental support and improving business processes. She has nearly a decade’s worth of corporate finance experience at two Fortune 500 companies. Brittney earned a Bachelor of Arts in Finance from Miami University. We look forward to working with Brittney and are excited to welcome her to the firm.
FINANCIAL SERVICES ACCOUNTING
Apple Growth Partners Dmitriy Berkovich, CPA, has been promoted to principal in the tax department, effective July 1, 2020. He joined AGP in December 2018, providing an instant wealth of knowledge to the tax department. In March 2020, Berkovich helped form the firm’s COVID-19 Response Team. He was named the firm’s subject matter expert for the Main Street Lending program, in which he has advised clients and referral partners in understanding the program’s outlines, including non-profits.
26 | CRAIN’S CLEVELAND BUSINESS | JULY 20, 2020
Encore Funding Encore Funding, a new private lending firm serving entrepreneurs who do not meet conventional lending requirements, has named Matthew Williams as Vice President. In his role, Williams will oversee all operations. Prior, Williams served as General Counsel at Roundstone Insurance, an organization dedicated to helping businesses lower health care costs. His work in diverse entrepreneurial environments has exposed him to corporate law, business development, risk assessment, deal making and more.
LAW
McCarthy, Lebit, Crystal & Liffman Jennifer R. Hallos joins McCarthy, Lebit, Crystal & Liffman as a Principal in the Trusts & Estates, Taxation, and Business & Corporate practice areas. Hallos has 10 years of experience formulating, reviewing and updating estate plans; drafting wills and trusts; estate and trust administration; tax research and consulting; managing tax controversy at federal, state and local levels and is an active CPA. Hallos earned her J.D. from the University of Akron School of Law.
REAL ESTATE
Stark Enterprises Stark Enterprises announces the return of Lidia Saluan Richani as Executive Vice President of Leasing. For over 30 years, Lidia has leased shopping centers and outparcel spaces to reputable national, regional, and local tenants across the country. Prior to rejoining the Stark team, she was a commercial real estate agent with Passov Real Estate Group. The success of her previous tenure with Stark Enterprises led her back, now overseeing efforts for the company’s dynamic portfolio spanning 8 states.
NEW GIG? Preserve your career change for years to come.
Plaques • Crystal keepsakes Frames • Other Promotional Items
C O N TA C T
ACCOUNTING
Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569
WHAT’S YOUR COMPANY’S NEXT MOVE?
Create your own business headlines with Companies on the Move For more information, contact Debora Stein at 917.226.5470 / dstein@crain.com CrainsCleveland.com/ CompanyMoves
CRAIN’S CLEVELAND LOOK BACK | ART MODELL MOVES THE BROWNS
A move that lives in Cleveland sports infamy Prior to 2016, Cleveland’s professional sports history was as infamous as any city’s. The heartbreaks have been chronicled on many an ESPN montage, and the titles that came with them signified disappointment, not championships. Still, it is one two-word combination — not “The Drive,”“The Fumble” or “The Shot” (not to be confused with Kyrie Irving’s title-deciding 3-pointer in Game 7 of the 2016 NBA Finals) — that is almost certain to draw the most visceral reaction from longtime Northeast Ohio sports fans. “The Move” produced a new NFL team in Baltimore, turned the Browns into an expansion team and was a career-defining decision for a former New York advertising and TV executive who purchased the Browns in 1964 at just 35 years old. — Kevin Kleps
``THE HISTORY Municipal Stadium had been around for more than 64 years when Art Modell announced he was moving the Browns to Baltimore, where they would soon be named the Ravens. The owner had grown tired of waiting on a new stadium or the city at least delivering on its promise to renovate the Browns’ declining home. And he wasn’t happy that local officials were prioritizing new facilities for the Cavs and Indians. Baltimore lured the Browns with a sweetheart of a deal that included a $200 million, rent-free stadium that would be ready by 1998. That was more than enough to sway Modell, who at the time of the move claimed that the Browns had lost $21 million in the previous two years and a combined $66 million since 1974. City officials, of course, disputed those numbers. Later, they also disputed Modell’s most common gripe — that they refused to build the Browns a new stadium. After Modell passed away in 2012, former city council president George Forbes told Cleveland.com that leaders proposed that a third new sports building — a stadium for the Browns — could be part of the Gateway project that led to the development of Progressive Field and Rocket Mortgage FieldHouse. Modell, Forbes said, preferred to stay at a renovated Municipal Stadium. By now, you likely know the rest. Modell, reviled in Cleveland, fled for Baltimore, but Cleveland retained the Browns’ name, colors and history. Five years after the move, the Ravens claimed the first of their two Super Bowl crowns. (The second occurred five months after Modell’s death.) Cleveland’s NFL franchise returned as an expansion team in 1999 and began play at a $283 million home on the lakefront. The results barely have been above expansion level in quite a few of the seasons since.
``IN THEIR OWN WORDS “The fans were saying 'I love you' and 'You'll always be a Brown,' and that gave me an even deeper sense of appreciation for them.”
Many Browns fans voiced and showed their displeasure with Art Modell because of the late former owner’s decision to move the team to Baltimore following the 1995 season. | KIMBERLY BARTH/AFP VIA GETTY IMAGES
``WHY IT MATTERS TODAY Dee and Jimmy Haslam purchased the Browns from Randy Lerner in 2012. Lerner had inherited the team from his father, Al, who was a friend of Modell’s and was with him when the move was announced in Baltimore. A roster tear-down produced the worst two-year stretch — 1-31 in 2016 and ’17 — in team history, and the Browns have averaged just four wins per season during the Haslams’ ownership. There have been signs of hope, though, and the 2020 club is viewed as a serious playoff threat, should quarterback Baker Mayfield regain the promise he displayed as a rookie in 2018. The Haslams, whose family owns the Pilot Flying J chain of truck stops, brought their son-in-law, James Wood Johnson III, into the fold in a full-time role in 2018. Johnson and his wife, Whitney Haslam Johnson, have been established as the next in line, though Dee and Jimmy, each 66, have no plans of leaving anytime soon. The same could be true of the Browns and FirstEnergy Stadium, which underwent a $125 million renovation that was completed in 2015. The team has, however, been studying the possibility of a major development that
Art Modell was joined by Maryland governor Parris Glendening, left, and Baltimore mayor Kurt Schmoke when it was announced on Nov. 6, 1995, that the Cleveland Browns would be moving to Baltimore after the season. | RICHARD ELLIS/AFP VIA GETTY IMAGES
likely would include another renovation of its venue, which is now tied with Nissan Stadium in Nashville as the league’s 12th-oldest. A "concerning mix of auto and pedestrian traffic" and "the lack of a proper connection to downtown" are key sticking points as the Browns mull their future, chief operating officer David Jenkins has told Crain's. What's certain is the Haslams have no designs on leaving town, and the team has nine seasons remaining on its lease at FES. A better question is whether their latest regime change can finally turn around a franchise that is 101-234-1 in 21 seasons post-Modell.
——Former Browns running back Earnest Byner, after the team's last game at Municipal Stadium on Dec. 17, 1995
“There is a trail of deception here in terms of what he told the community. You're seeing a gut-bucket reaction to being deceived.”
—Former — Cleveland Mayor Michael White, on Modell, to The Washington Post in 1995
“I have a great legacy, tarnished somewhat by the move. The politicians and the bureaucrats saw fit to cover their own rear ends by blaming it on me.” ——Art Modell, in 1999
THE WEEK UA CUTS: The University of Akron will let 178 employees go, about half of whom are faculty members. The board of trustees approved these cuts on July 15. Ninety-seven of those positions are members of the bargaining unit faculty, 21 are contract professionals and 60 are staff who are not part of a bargaining unit. The university estimates that it will save about $16.4 million through the cuts. President Gary L. Miller said UA faces challenges that include reduced state funding, declining enrollment and the uncertainty caused by the surge in COVID-19 cases in Ohio. MASK UP: Citing “explosive” growth of COVID-19 cases in Florida and Arizona, Gov. Mike DeWine implored Ohio residents “to take ac-
ring reminder of just how quickly our fate can change.” The address came as the state continued to report higher levels of new coronavirus cases, fatalities and hospitalizations.
Gov. Mike DeWine addressed residents of Ohio on July 15, imploring — but not mandating — the wearing of masks to combat COVID-19. | THE OHIO CHANNEL
tion now, to sacrifice now” to stem the spread of the coronavirus in the state as it nears April peaks in hospitalizations. “Ohio is sliding, and we are sliding down a very danger-
ous path with our once flattened path starting to sharpen and to spike,” DeWine said on July 15. “This worrisome, disturbing reversal of our progress should be a jar-
FOLLOW THE MONEY: The largest venture capital fundraises for Ohiobased businesses through the first half of 2020 included investments in Northeast Ohio companies Splash Financial, Athersys and EmployStream, according to PwC and CB Insights’ Q2 2020 MoneyTree report. Through the first half of 2020, deals for VC deals in the U.S. and dollars invested were down 15.6% and 7%, respectively, compared with the first half of 2019 — indicating larger investments among fewer deals.
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 Assistant managing editor Sue Walton (330) 802-4615 or swalton@crain.com Creative director David Kordalski (216) 771-5169 or dkordalski@crain.com Web editor Damon Sims (216) 771-5279 or dasims@crain.com Assistant editor Kevin Kleps (216) 771-5256 or kkleps@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Editorial researcher William Lucey (216) 771-5243 or wlucey@crain.com Cartoonist Rich Williams REPORTERS
Stan Bullard, senior reporter, Real estate/ construction. (216) 771-5228 or sbullard@crain.com Lydia Coutré, Health care/nonprofits. (216) 771-5479 or lcoutre@crain.com Michelle Jarboe, Enterprise reporter. (216) 771-5437 or michelle.jarboe@crain.com Rachel Abbey McCafferty, Manufacturing/energy/ education. (216) 771-5379 or rmccafferty@crain.com Jay Miller, Government. (216) 771-5362 or jmiller@crain.com Jeremy Nobile, Finance/legal/beer/cannabis. (216) 771-5255 or jnobile@crain.com Kim Palmer, Government. (216) 771-5384 or kpalmer@crain.com Dan Shingler, Energy/steel/auto/Akron. (216) 771-5290 or dshingler@crain.com ADVERTISING
Local sales manager Megan Norman, (216) 771-5182 or mnorman@crain.com Events manager Erin Bechler, (216) 771-5388 or ebechler@crain.com Integrated marketing manager Michelle Sustar, (216) 771-5371 or msustar@crain.com Managing editor custom/special projects Amy Ann Stoessel (216) 771-5155 or astoessel@crain.com Associate publisher Lisa Rudy Director of advertising sales Scott Carlson Senior account executive John Petty Account executives Laura Kulber Mintz, Loren Breen People on the Move manager Debora Stein, (917) 226-5470, dstein@crain.com Pre-press and digital production Craig L. Mackey Office coordinator Karen Friedman Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich CUSTOMER SERVICE
Customer service and subscriptions: (877) 824-9373 or customerservice@crainscleveland.com Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com
Crain’s Cleveland Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice chairman Mary Kay Crain President KC Crain Senior executive VP Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr., Founder (1885-1973) Mrs. G.D. Crain Jr., Chairman (1911-1996) Editorial & Business Offices 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 (216) 522-1383 Volume 41, Number 26 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for the first issue in January, July and September, the last issue in May and the fourth issue in November, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2020 by Crain Communications Inc. Periodicals postage paid at Cleveland, OH, and at additional mailing offices. Price per copy: $2.00. Postmaster: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, MI 48207-2912. 1 (877) 824-9373. Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, MI, 48207-9911, or email to customerservice@crainscleveland.com, or call (877) 824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax (313) 446-6777.
JULY 20, 2020 | CRAIN’S CLEVELAND BUSINESS | 27
P027_CL_20200720.indd 27
7/17/2020 4:20:30 PM
JOIN THE 2020 WOMEN OF NOTE THIS WEDNESDAY AT 11 A.M. Every year, Crain’s Cleveland Business salutes a group of inspiring women whose dedication and achievements enrich Northeast Ohio, its institutions and its people. This year, join us virtually as we celebrate and learn from these the extraordinary female business leaders.
AMY BACKUS
MARIANNE CORRAO
ROMONA DAVIS
DURIYA DHINOJWALA
JACQUELINE GILLON
DR. SANDRA HONG
DR. REBECCA SPOONER KORWIN
SUSANNA KREY
DR. GRACE MCCOMSEY
REBECCA RUPPERT MCMAHON
NANCY MENDEZ
NATOYA J. WALKER MINOR
RENEE SINGLETON
KRISTIN WARZOCHA
DEB YANDALA
Register Today: TITLE SPONSOR:
CrainsCleveland.com/crains-events
BRONZE SPONSORS:
GOLD SPONSOR: |
EVENT QUESTIONS • clevents@crain.com | SPONSORSHIP OPPORTUNITIES • scott.carlson@crain.com