Crain's Cleveland Business

VOL. 38, NO. 20

MAY 15 - 21, 2017

SPECIAL REPORT: NEO as an Arts Community

In Arts we trust

Tax receipts Since the measure was first approved, about $170 million in cigarette tax revenue has been collected to fund local arts and cultural organizations, but that funding stream has continued to shrink. Projections for the next four years anticipate further declines of 3.6% per year.

Local funders look to evolve as the arts enter a new era

2007: $18.82 million*

By TIMOTHY MAGAW

2008: $19.54 million

tmagaw@crain.com @timmagaw

2009: $18.22 million

W

2010: $17.46 million

here there’s smoke, there’s fire. In Cuyahoga County, that also means there’s a thriving arts community. For more than a decade, smokers in the Cleveland area have made the county the envy of arts communities nationwide because of a voter-sanctioned cigarette tax that has pumped millions of dollars into local arts and cultural organizations of all sizes — from juggernauts like the revered Cleveland Museum of Art to smaller, neighborhood-based efforts like LakewoodAlive’s front porch concert series. A 2014 study by the Cultural Policy Center at the University of Chicago, for instance, put Cleveland at the top of the 13 metropolitan areas studied in the amount of public money per capita used to support the arts.

2011: $17.24 million 2012: $16.79 million 2013: $16.72 million 2014: $15.98 million 2015: $15.99 million 2016: $14.77 million 2017: $14.24 million** 2018: $13.73 million** 2019: $13.24 million** 2020: $12.76 million**

SEE ARTS, PAGE 13

Source: Cuyahoga Arts & Culture * 11 months in 2007 ** Crain’s calculations based on projected 3.6% decline per year.

Creative Fusion: Cleveland Foundation program builds culture. Page 11 | Cleveland Orchestra: Executive director André Gremillet. Page 12 Illustration by David Kordalski | Crain’s

Inside

FINANCE

Akron: Q&A with Dr. Cliff Deveny, interim president and CEO of Summa Health. Page 15

Accelerator for startups is expected to give institutions a lift

The List: Cultural attractions. Page 16 Source Lunch: >> Teleangé Thomas, director of Foundation Center Midwest. Page 19 Entire contents © 2017 by Crain Communications Inc.

Banks have asset in Fintech By JEREMY NOBILE jnobile@crain.com @JeremyNobile

As some of Northeast Ohio’s largest financial institutions, KeyBank, Fifth Third Bank, Chase Bank, Huntington Bank and First Federal Lakewood are more about competing with each other than sharing common ground. Indeed, it’s in their best interest to differentiate themselves in terms of

servicing customers as they jockey for market share. But it’s that very quest to be different and to serve clients better in the digital world that’s effectively brought them — and other companies in Ohio and across the country — together through Fintech 71, a first-of-its-kind global accelerator for financial technology startups in Ohio. “In the short term, we think this is going to be a huge shared asset for the state in the private sector,” said Fintech 71 executive director Matt

Armstead. (The “71” in the moniker is a nod to Interstate 71, which connects Ohio’s largest cities.) The area’s banks will be major benefactors. The accelerator, based in Columbus, has backing from companies across the state, including the bevy of banks and numerous others including Progressive, The Kroger Co., Grange Insurance and Safelite AutoGlass, among others. More are expected to back the program over time. SEE FINTECH, PAGE 17

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FirstEnergy Solutions facing risky future The same goes for some areas where it has plants, report says By DAN SHINGLER dshingler@crain.com @DanShingler

Akron-based FirstEnergy Solutions is in trouble. So are the Ohio communities where it owns power plants. And the state should be preparing now for the economic fallout that’s about to come as a result of plant closures. That’s the take of the Institute for Energy Economics and Financial Analysis, or IEEFA, a Cleveland-based nonprofit that says it “conducts research and analyses on financial and economic issues related to energy and the environment.� It has a fairly influential voice, and lobbyists say its May 5 report on FirstEnergy Corp. and its generation subsidiary, FirstEnergy Solutions, has been making the rounds around the Ohio Statehouse. But the IEEFA is hardly a bastion of support for fossil fuels and, with funding from groups like the Rockefeller Foundation and the Wallace Global Fund, it routinely warns of the dangers of climate change. So, the current situation is a particularly strange one, as IEEFA is saying the same thing FirstEnergy Corp. is now telling Ohio legislators: that most of its Ohio plants, and FirstEnergy Solutions, face a very real and existential threat. The IEEFA report paints a dire picture of the position of FirstEnergy Solutions, which it refers to as FES. “FES’s revenues declined every year from 2013 through 2016, and just within the past six months all three major credit rating agencies have downgraded its corporate bonds. In the fourth quarter of 2016, FES took an $8 billion loss to write

down the value of its remaining coal and nuclear units — an acknowledgment that FES’s coal and nuclear plants have lost 88 percent and 90 percent of their value, respectively,â€? wrote IEEFA author and researcher Cathy Kunkel. That means that all six of FirstEnergy Solutions' major coal and nuclear plants — four in Ohio and two in Pennsylvania — are at risk, she contended. The Ohio plants are the Bay Shore coal plant and Davis-Besse nuclear plant near Toledo, the Perry nuclear plant in Lake County, and the Sammis coal plant in tiny Stratton on the Ohio River. Most of the Sammis plant already is slated for closure. The outlook for the others is grim. “If FirstEnergy Solutions goes bankrupt, FirstEnergy would be looking to sell or retire FES coal and nuclear assets. Given the poor performance of the portfolio (as evidenced by the recent write-down of nearly 90 percent of its value), we think it highly unlikely that FirstEnergy would be able to find a buyer who would continue to operate these units for the long term — if it can find a buyer at all,â€? Kunkel wrote. “Bankruptcyâ€? is a word that is appearing more and more in terms of referencing FirstEnergy Solutions, and even FirstEnergy CEO Chuck Jones has said it’s a possibility. So perhaps it should not come as a huge surprise that FirstEnergy reluctantly agrees with Kunkel’s assessment of its performance and condition. “It’s not the kind of news we like to see about ourselves, obviously ‌ but there are definitely some valid points in there, and it’s certainly consistent with what we’ve been saying in our

earnings calls and testimony. It backs up the position we’ve taken,� said Tricia Ingraham, a spokeswoman in FirstEnergy’s financial communications department. Ingraham also agreed that some of the Ohio communities where it operates plants are at severe risk, because they often depend heavily on the plants for their local economies. “In a lot of those communities, we are the major employer,� Ingraham said. In terms of plant employment, FirstEnergy has 68 workers at Bay Shore, 341 at Sammis, 624 at Davis-Besse and 684 at the Perry plant, Ingraham said. Residents of towns like Toledo and Akron already know too well that the loss of 1,000 jobs can have a serious impact on their economy. But, in some smaller Ohio towns, the impact might be far, far worse. Stratton, for example, only has about 300 residents — fewer people than actually work at the power plant there, said Mayor John Abdalla. Asked how many of his citizens work making power for FirstEnergy, Abdalla simply said, “The majority of them.� And that doesn’t include the residents who worked at the plants in the past, which is a lot of people, since the plants have been operating in town since the 1950s, Abdalla said. What happens to their benefits in a possible bankruptcy also worries him and other residents. “I’m very concerned,� Abdalla said. The state Legislature is still considering what to do about FirstEnergy. The state has previously given the company's coal-fired plants some relief via add-ons to rates in Ohio, and

All six of FirstEnergy Solutions’ coal and nuclear plants, four of which are in Ohio, are in danger of closing. (NRC)

it's now considering giving nuclear plants some help in the form of “zero emissions credits.� But the credits are far from certain, and the Legislature hasn’t yet gotten to talking about what it might, or might not do, for towns like Stratton if they are hit hard. One energy industry lobbyist, who asked not to be named, pointed out that other Ohio utilities, such as Dayton Power and Light, are planning similar cuts or closures in rural communities. “They’re going to be devastated,� he said of some areas. The IEEFA’s Kunkel suggests that Ohio lawmakers might copy others. “Ohio and Pennsylvania lawmakers could look to nearby New York State, which created the Electric Generation Facility Cessation Mitigation Fund in 2016 to help communities protect their tax bases when power plants close,� Kunkel wrote. “The fund, originally set up with $30 million in annual funding for five years,

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recently was expanded to provide $42 million annually for seven years.� In the meantime, the conditions that have caused much of FirstEnergy’s problem persist — namely, that its older coal plants can’t compete with new natural gas plants, which are using a newfound fuel that is cheaper, cleaner and does not have to be shoveled. The company is a bit like a fixed-income senior citizen in an era of high-inflation. It can cut its costs to a certain point, but not beyond what it pays for necessities like coal. Matt Brakey, a consultant with Cleveland Heights-based Brakey Energy who watches FirstEnergy for commercial customers, said that unless something changes dramatically, the company’s plants can’t turn the corner. “If current market conditions hold, it’s hard to see how many of these plants will be profitable now and into the future,� Brakey said.

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Opioid epidemic evident in rising insurance claims By LYDIA COUTRÉ

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As the country grapples with the sweeping opioid epidemic, one study offers a different lens through which to view the crisis: private insurance claims. In Ohio, private insurance claims that reflected an opioid-dependence diagnosis grew 770% between 2007 and 2014. And in Cleveland, 680%, according to a recently released analysis from FAIR Health, a national nonprofit working toward transparency for health care costs and health insurance information. As for Cleveland’s spike, while high, it’s lower than the four other metropolitan areas cited in the study — Dayton, Columbus, Cincinnati and Toledo. Toledo saw the sharpest increase over that period, with claims rising 1,022% over that period. Insurance companies are looking for solutions to meet the challenges of the crisis. “Not taking a role and not providing adequate care for members who are exposed to opiates or become addicted runs the risk of what we hear every day: the death of an individual from an accidental overdose,� said Dr. David Muzina, senior medical director at Cleveland-based Medical Mutual of Ohio, whose background is in behavioral health and addiction medicine. Every day, 91 Americans die from an opioid overdose, according to the Centers for Disease Control and Prevention. The country is well aware of the opioid crisis plaguing its communities, said Robin Gelburd, president of FAIR Health. The stories of loss and struggle are pervasive, she said. “We’re taking it from that micro level of John or Ann Smith who are having trouble maintaining their jobs or their health or their family structures because of the opioid crisis,� she said. “We try to lift that conversation to a macro level to see how many Johns and Ann Smiths there are, and what that means in terms of making sure there are appropriate resources out there in the community; that there’s access to the services; that there are appropriate reimbursement levels for the services; and there are proper screening tools and education.� Across the country, claims with opioid-related diagnoses rose more than 3,200% between 2007 and 2014, according to FAIR Health, which reports it has the nation’s largest collection of private health care claims with data on more than 150 million covered lives. “By looking at this dataset, it allows private insurers to start thinking about how to be creative and impactful in treating the needs of those with this diagnosis,� Gelburd said. Anthem Blue Cross and Blue Shield, which is based in Indianapolis but has a large coverage area in Ohio, has implemented some pharmacy initiatives in the past couple of years to help identify and address members addicted or at risk of becoming addicted to opiates, said Tracy Harrell, director of clinical pharmacy strategies at Anthem. The insurer monitors members for signs of potential abuse: pharmacy hopping, doctor shopping, lots of controlled substances. Identified members are sent a warning letter

Opioid-related claims in Ohio Ohio and five of its metropolitan areas all showed an increase in claims with opioid-related diagnoses, according to a recent report from FAIR Health, which maintains a database of more than 23 billion privately billed health care claims. Across the country, claims with opioid-related diagnoses rose more than 3,200% between 2007 and 2014. Increase in percent

2007 to 2014

2011 to 2014

Cincinnati

856%

448%

Cleveland

680%

101%

Columbus

773%

188%

Dayton

744%

532%

Toledo

1,022%

232%

Rest of Ohio

869%

104%

Ohio total

770%

171%

Source: FAIR Health

“We really ask (treatment providers): What do you need? ‌ And we share what we’re looking for to deal with these issues.â€? — Pat Philpot, director for Anthem Blue Cross and Blue Shield’s behavioral health unit in Ohio.

that they may be asked to find a “pharmacy home,� to help reign in any problematic behavior. One year into this initiative, Anthem doesn’t have data on outcomes to release, but Harrell said they’re “encouraged� by what they’re seeing. Anthem has set a couple of goals for its opioid program: reduce the number of filled opioid prescriptions by members by 30% by 2019, and double the number of members receiving evidence-based behavioral health services. In March, Anthem rolled out a substance abuse disorder resource line so providers can get support and educational information to help find the right services for a member. And in January, Anthem removed the prior authorization requirement for medication-assisted treatments. Previously, someone seeking medication-assisted treatments must also be getting psycho-social counseling in addition to the medication. “But as we watched the opioid epidemic, we realized that the benefit of having that (prior authorization) requiring the counseling did not outweigh having some members leave without a prescription for that important medication,� Harrell said. Gelburd said she’s seen many insurers removing this barrier. Medical Mutual hasn’t had that requirement for years, said Muzina, who has also continued caring for patients in a private practice, where the nurse and office staff have to complete lots of prior authorization paperwork for other insurers. “Even a delay of one day can prevent someone from getting the medication and getting started because

they just can’t wait because of the intense withdrawal,â€? he said. Medical Mutual also monitors and limits exposure to prescription narcotic medications. It partners with its pharmacy benefit manager to know if a prescription is medically necessary, at the right dose and for the appropriate duration. Muzina said there’s no hard limit on those rules, but every case is individually reviewed. And members starting newly prescribed narcotic medications receive a letter highlighting the risks and benefits and the importance of staying connected with their provider and getting off the medication as quickly as possible. Medical Mutual is also partnering with the county and MetroHealth for a Cuyahoga County Opioid Marketing Task Force, to help people understand dangers with opioids before filling their prescription. Both Medical Mutual and Anthem have looked for ways to expand their networks or create new affiliations to ensure they have an adequate supply of appropriate, quality providers. They, like many other insurers, are also working to ensure that the providers they already work with are providing the best treatment. “We see them as the experts in treating this, and we just continually have dialogue with them and ongoing conversations,â€? said Pat Philpot, director for Anthem Blue Cross and Blue Shield’s behavioral health unit in Ohio. “We really ask them: What do you need? ‌ And we share what we’re looking for to deal with these issues.â€? Philpot applauded Gov. John Kasich for rules announced this spring limiting opioid prescriptions to only up to seven days of painkillers for adults and five days for kids and teens. Philpot said the move is a step in the right direction. Knowing the breadth of the epidemic, Philpot argues that if data didn’t show an increase in claims around the opioid crisis, “that’s bad news,â€? as it indicates that folks aren’t getting the care they need. “We know if members aren’t identified and treated, their medical claims will be a lot higher,â€? he said. “And so it only makes financial prudence to spend money on these members.â€? But the real motivation, Philpot stresses, is to get them to treatment “just to stop the devastating toll it’s taking on the members and their families,â€? he said. The total cost of care is significantly increased for individuals with untreated behavioral health and addiction problems, Muzina said. Someone actively abusing prescription medications is more likely to be present in an emergency room, have urgent conditions or other medical complications that are the result of addictive behaviors, he said. While members and their families remain the primary reason to address the opioid crisis, Muzina notes that all of these issues increase the cost of care. “If one were to ignore this problem and try to do nothing about opiates and addiction, from a business perspective, total cost of care goes up,â€? Muzina said. “And that oftentimes is connected to what your monthly premium is. So anything we can do to contain health care costs and provide quality access to care is something that we are keenly interested in always.â€?

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Cleveland had a big 2016, which led to plenty of wide-ranging looks on TV. (Photographs by Goodyear)

TV beauty shots require teamwork behind scenes By JAY MILLER jmiller@crain.com @millerjh

Glued to the television by a backand-forth Cleveland Cavaliers playoff game, local fans may get impatient, during a commercial break, for a return to the action as video of East Fourth Street or the sun glistening off Lake Erie behind Terminal Tower plays out on their television. The folks at Destination Cleveland, Goodyear Tire & Rubber Co. and Goldfarb Weber, though, may just smile and appreciate the fruits of their labor. Those shots are a staple of sports broadcasts. They smooth the transition from live event to commercials. So, for Cavaliers games or an Indians World Series matchup, you’ll see video, called “B-roll,� supplied by Destination Cleveland, the regional convention and visitors bureau, or live shots from the Goodyear blimp. For local residents, familiarity may breed impatience, but for those organizations, showing the community at its most interesting or inviting is valuable advertising. “Having Cleveland B-roll available to media gives us an opportunity in high-profile broadcasts to show off what the region has to offer — which ultimately helps us change perceptions about Cleveland,� said Emily Lauer, senior director of public relations and communications of Destination Cleveland, in an email. “The standard B-roll package we offer showcases a combination of the world-class attractions and experiences we’re known for, our revitalized downtown and surrounding neighborhoods, our culinary and beer scenes, aerial shots of the city and our great outdoor assets,� she said. B-roll was used by networks broadcasting from the Republican National Convention last year. It has also been used in the last year, Lauer said, by the Travel Channel, “The Late Show with Stephen Colbert,� and by NBC for “American Ninja Warrior.� Destination Cleveland can track the requests it gets for B-roll, but Lauer said there is no way for her organization to track who uses what video. “But we know that many of those who requested the footage used at

least a snippet of it — including ABC, which aired the Cavs-Golden State game on Christmas Day,� she said. The sports event B-roll video is culled from the video shot by Goldfarb Weber that Destination Cleveland uses in online videos and in television advertising it has to pay for in cities like Buffalo, Columbus, Erie, Detroit and Pittsburgh to entice tourists to Northeast Ohio. Its sport-event B-roll costs only the cost of repacking the video for the broadcast. Tony Weber, Goldfarb Weber’s CEO, said his staff of 10 has been capturing city life in Northeast Ohio for Destination Cleveland and its predecessors for more than 20 years, producing videos showcasing attractions all over the region. “Right now, we’re putting together a new PR reel (for Destination Cleveland), so we’ll go out and shoot any event happening around town,� he said.

“We listen to the director, just like every other camera operator.� — Joshua Miller, Goodyear’s chief of aerial broadcasting

Goodyear’s three airships provide footage for about 200 sporting events per year.

The current sports B-rolls come from 25 videos Goldfarb Weber’s staff of 10 have shot recently at locations and events all around Northeast Ohio. Destination Cleveland then pulls what it wants to showcase from those hours of video. “We also did the pitch video that helped bring the Republican National Convention here,� Weber said. “That was a very cool job.� Goodyear, of course, has been using its airships to promote the tire company for decades. The first television camera went up Jan. 1, 1955, in Pasadena, Calif., for the Rose Parade and Rose Bowl football game. Now, according to Edward Ogden, airship public relations specialist and historian, the company’s three airships cover about 200 sporting events a year. Wingfoot Two, which has been flying over Cavaliers games recently and is currently based in Suffield Township near Akron, was put in service last year. Although the company still refers to the airship as a blimp, it is more accurately called a zeppelin, since it has a semi-rigid frame under its skin. A blimp is more akin to a balloon, its shape maintained solely by the gas within its envelope. Joshua Miller, the company’s chief of aerial broadcasting, said the airship is treated as just another camera location by the game’s broadcaster. “We listen to the director, just like every other camera operator,� Miller said. “All the cameras have numbers, so we’ll hear, ‘ready camera 30, take camera 30,’ and we have a number, though they’ll sometimes say, ‘ready blimp, take blimp.’ � Miller said the camera operator in the blimp has some discretion about what to focus the camera on, although they typically open a program with a shot centered on the arena or stadium that shows its relationship to the city. The blimp also shoots a lot of what Miller called “to-and-fromcommercial shots.� Going to the commercial, the shots usually start out tight on the arena and pulls back wide, doing the reverse coming back from commercial. “A lot of that stuff you do as the camera operator autonomously, but then if the director wants something, he’ll say, like at a Cavs game, say, ‘Hey, go in on the giant LeBron poster.’ �

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The Luxe brings builder Friedman back to roots By STAN BULLARD

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Jason Friedman is back to building in the Cleveland suburbs. Before Associated Estates Realty Corp.’s purchase in August 2015 by Toronto-based Brookfield Asset Management Corp., he had spent six years working as senior vice president for acquisitions and development at the apartment company, working for his father, CEO Jeffrey Friedman. “I’d gone into it thinking I’d be spending my life building in the suburbs, but the market changed and we began building in urban areas,� Jason Friedman recalled. “It was a Harvard education in real estate. We did about $1 billion in development and acquisitions in those years.� After the buyout, Friedman launched JA Friedman Capital in Pepper Pike as his new business and pursued local for-sale residential development. “I wanted to do something local,� he said, “but the problem in Cleveland is that construction typically costs so much you can’t get the (apartment) rents. Now there’s enough (rental) being built, so I wanted to focus on specialty, unique products.� The first was developing eight home sites in Moreland Hills, but Friedman just started construction of his largest venture outside the publicly traded real estate investment trust. Called “The Luxe,� the project is the $20 million development of 40 units on the southeast corner of Cedar and Brainard roads in Pepper Pike. The development will consist of 20 side-by-side duplex buildings costing upwards of $500,000. The two-story townhouses range from 1,900 to 2,500 square feet and have two or three bedrooms. All have firstfloor master suites. “We’re describing it as a transitional modern design, but more in the modern than traditional style,� Friedman said. However, some elements of his apartment-building background figured into this project. JA Friedman Capital plans to build all of the units at once — with the first

Interiors of suites at The Luxe offer contemporary design.

available this year — rather than adopting the sell-it, build-it pattern most builders use to reduce risk. There are construction efficiencies in this approach, but Friedman also points to a marketing one. “We’ve seen too many customers get lost waiting, wondering when they can move in,� Friedman said. Plans also call for the gated community to have a fitness center and community room, which essentially

recently. “I grew up nearby and considered this area the center of the universe,� Friedman said. “There’s so little construction we think it’s a good opportunity.� He’s said he's also looking for other opportunities “where we think we can make money.� Friedman is carrying on a tradition in construction and realty development that’s both genetic and environmental.

“We’re describing it as a transitional modern design, but more in the modern than traditional style� — Jason Friedman, JA Friedman Capital, on The Luxe

are required elements in current multifamily rentals. Leah Gibbons, the Howard Hanna agent who is marketing The Luxe, said adding the fitness center and community room makes it a lifestyle community. The project is the first to take advantage of a 2003 initiative in Pepper Pike to rezone Cedar between Brainard and Gates Mills Boulevard for construction of townhouses to provide more housing and redevelopment options in the suburb. However, owners of the homes on 1-acre lots had been unwilling to sell until

He’s a third-generation builder-developer in Northeast Ohio, a grandson of the late Carl Milstein, an apartment, hotel and office building developer. In addition to Associated Estates, Jeffrey Friedman pursued his own projects in the region. And now, at age 42, Jason Friedman recalls enjoying riding around as a kid on weekends with his father as the elder Friedman made checks on local construction projects. “I vividly remember pulling into Eton Chagrin Boulevard going up,� Friedman said of the six-story office building now called Eton Tower.

CRAIN’S CLEVELAND BUSINESS

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Lidl, a German-based grocer, is checking out possible sites in Ohio, and Northeast Ohio is expected to be in the mix. (Lidl US)

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Germany’s Lidl may be next challenge for regional grocers International grocer making a big splash in the U.S.; insiders expect NEO presence By STAN BULLARD sbullard@crain.com @CrainRltywriter

Competition for food dollars in Northeast Ohio may ratchet up some more as Lidl, a German-based grocer selling in 26 countries, weighs additional U.S. expansion. In an email to Crain’s Cleveland Business, Will Harwood, spokesman for Arlington, Va.-based Lidl US, said it has started looking at sites in Ohio. Even so, he added, “Our focus is in our operations along the east coast,

“Within Cuyahoga County, they will have to redevelop sites. However, many shopping center owners with high vacancy rates they’ve struggled with for years may see this as a time to sell.” — Keith Hamulak, vice president at CBRE Group Inc.’s Cleveland office

where we’ll be opening our first stores this year.” The first proposed Lidl store to surface in Ohio is at a site in Austintown Township in Mahoning County that is the subject of a rezoning pending before its trustees. However, Northeast Ohio retail experts familiar with the situation say Lidl is searching for sites for a potential entry, though none has surfaced publicly so far. It’s easy to see why Lidl is weighing sites without committing to the region. It’s undergoing a massive entry in the U.S. and plans to open its first 20 stores this summer in North Carolina, South Carolina and Virginia. It plans to have 100 stores open within the first full year of operations within the U.S., the company has said. Lidl said it sells fresh produce, meat, bakery items and a wide array of household products at the lowest possible price. It operates 10,000 stores globally today after evolving

from neighborhood grocery stores to a smaller concept with three workers in 1973. Lidl is entering the U.S. because it considers it the world’s largest food market and argues its technology and practices “will be a game-changer in the U.S. market,” it said on its website. Lidl stores stand alone, are 36,000 square feet in size and occupy 4-acre sites, according to its website. The company said it seeks sites with traffic counts of more than 20,000 vehicles daily. Keith Hamulak, a vice president at CBRE Group Inc.’s Cleveland office, said Lidl won’t have trouble finding sites. “Within Cuyahoga County, they will have to redevelop sites,” Hamulak said. “However, many shopping center owners with high vacancy rates they’ve struggled with for years may see this as a time to sell.” In outlying areas with population density such as Avon, finding sites will not pose a problem, Hamulak predicted. With more big-box stores targeting Northeast Ohio, mainline retailers adding food to their inventory to compete with online sales and established grocers coping with the first lower food prices in a half-century, Lidl’s entry would increase the battle for the consumer food dollar. However, Hamulak takes a market-oriented approach to the problem. “Competition,” he said, “is good for everyone.” Aldi, a German retailer with a huge U.S. and Northeast Ohio presence, operates smaller stores, many freestanding, in the 18,000-square-foot range.

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Corrections J An article and graphic on Page One of the May 8 issue incorrectly identified a loft project at 1526 W. 25th St. The article also incorrectly identified the developer of Edge 32 and Battery Park, all in Cleveland. The project at 1526 W. 25th St. is named West 25th Street Lofts. Vintage Development Group of Willoughby developed Edge 32 and Battery Park.

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CRAIN’S CLEVELAND BUSINESS

Opinion From the Editor

C-Suite Gala will shine spotlight on top execs

Editorial

State of the arts Say what you will, for good or ill, about Cleveland, but on this there’s broad agreement: The city punches well above its weight, culturally speaking. From high-end institutions with global reputations like the Cleveland Orchestra and the Cleveland Museum of Art, to well-regarded regional organizations like the Cleveland Play House, Great Lakes Theater and MOCA Cleveland, down to locally focused arts group of countless varieties, Clevelanders are the beneficiaries of an extraordinary amount of creative capital. This isn’t just about keeping us busy on the weekend, though that’s surely a great benefit. These arts organizations stimulate our minds, provide new educational opportunities for our children and bring fresh perspectives to our lives. They help make Cleveland the kind of city people want to live in, which is critical as businesses compete for talent in a globalized economy. We all have a stake in making sure Cleveland’s arts community continues to thrive, which is why we devoted space on Page One this week to sections editor Timothy Magaw’s examination of the state of public funding for organizations in Cuyahoga County. Thanks to county voters who in 2015 renewed a 10-year, 30cent a pack tax on cigarettes, Cleveland is a leader in public money per capita used to support the arts. At a time when government funding for arts groups is in doubt, and when foundations and other philanthropic sources are asked to do ever more, this is a significant competitive advantage. But as fewer people smoke (and that's a good thing, by the way), the approximately $15 million in annual revenue brought in by the cigarette tax is getting smaller. We’re encouraged, though, at the early start that Cuyahoga Arts and Culture and other groups with a stake in arts funding, as well as artists themselves, are giving to consider ways to make up for future revenue shortfalls. As Magaw explains in the story, CAC used some entrepreneurial thinking to secure a $50,000 Art Works grant from the National Endowment for the Arts that was matched by money from the Group Plan Commission and will be used to support

arts programming this summer at Public Square provided entirely by small, locally based groups. Karen Gahl-Mills, CAC’s CEO and executive director, wants to explore that kind of arrangement before raising the subject of any kind of new tax. That’s certainly understandable, given political sensitivities and economic realities of raising taxes or enacting new ones. In other communities that offer public funding for the arts, hotel bed taxes are a popular source for those dollars. Cuyahoga County, though, already directs bed tax money to support Destination Cleveland, the Rock and Roll Hall of Fame and the Cleveland Convention Center, and with some of that Destination Cleveland money set to go to the renovation of Quicken Loans Arena, the bed tax is an unlikely source of future arts dollars. There’s time to find future tax solutions, if required. More pressing, though, is figuring out how to maximize the public money already being generated by making sure dollars are distributed equitably throughout the region, to groups of various sizes and with differing missions. This isn’t easy. CAC’s plan to rework its Creative Workforce Fellowship program, using the Community Partnership for Arts and Culture (CPAC) as the distribution vehicle, was met with significant resistance, and CAC continues to look for a way to remake the program while supporting the needs of individual artists. It’s easy to forget, though, how far we’ve come. Before the first cigarette tax was passed in 2005, Cuyahoga County offered no public funding to arts organizations. The tax provided a significant safety net to local arts organizations in the aftermath of the economy’s collapse in 2008-2009, when many arts groups nationwide couldn’t sustain themselves amid serious financial pressures largely out of their control. We have a good thing going right now. It isn’t perfect, or permanent. We’ll need some creativity — possibly with a new tax, or maybe just with new ways of thinking about spending the money already available — to continue to offer a backstop to the arts community. If there’s any field ripe for creative endeavors, this is it.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

CLEVELAND BUSINESS

Managing Editor:

Scott Suttell (ssuttell@crain.com)

Sections Editor:

Timothy Magaw (tmagaw@crain.com)

Contact Crain’s:

216-522-1383

In addition to the important work our staff of journalists do to keep you informed about the Northeast Ohio business climate, I’d like to think that we here at Crain’s Cleveland Business are known for our events and awards programs. Our staff does amazing work every year putting on a variety of programs, from breakfast panels and virtual roundtables to large-scale award ceremonies and forum discussions. We have long recognized Northeast Ohio business leaders through various C-level award programs: CIO of the Year, CFO of the Year, General and In-House Counsel Awards and the Archer Awards for human resources professionals. This year, we’ve decided to honor these great leaders in a slightly different way. Rather than a series of individual events, Elizabeth we’re celebrating the entire C-Suite with a McIntyre gala event honoring the leaders responsible for their organization’s growth, strategy and success, as well as their civic involvement and career achievement. This Dec. 7, we will host our first C-Suite Gala, a night of networking and celebration honoring C-level executives for the leadership, business and civic contributions they have made to their organizations and to the Northeast Ohio community. Finalists will be profiled in the Nov. 6 and Nov. 27 issues of Crain’s Cleveland Business. Here’s your chance to nominate a leader who deserves recognition for the work they do. We are now accepting nominations, which are due July 8, for individuals from both the for-profit and nonprofit realms, in the following roles: J Chief executive officer J Chief marketing officer J Chief operating officer J General counsel J Chief financial officer J Chairperson J Chief information officer J Director/trustee Human resources professionals will continue to be honored separately through our Archer Awards program. You can go to CrainsCleveland.com/nominations to submit an outstanding C-level professional for consideration. Applications will be judged by an independent panel of judges assembled by Crain’s. The judges will look for a diverse group of honorees, by industry, size of organization, product or service, financial success, and other factors. We want this group of leaders to be a true reflection of the diversity of businesses and business people in our region. At this year’s inaugural C-Suite Gala, we will also honor a Northeast Ohio business leader with the Champion Award, given in recognition for distinguished service and extraordinary efforts in promoting and advancing Greater Cleveland outside of the region. The work done by this person should have a direct economic impact, attracting outside investment and direct spending. Additionally, this person’s efforts should help to positively advance the region’s image, both nationally and internationally. For our first year in giving out this award, we could think of no one who better embodies what the Champion Award represents than David Gilbert, president and CEO of both Destination Cleveland, the regional convention and visitors bureau, and the Greater Cleveland Sports Commission. Gilbert also served as president and CEO of the Cleveland 2016 Host Committee, which oversaw the preparation of the city of Cleveland for Republican National Convention last July. The other honorees are up to you. We look forward to reporting back to you on the nomination process and, finally, this year’s honorees. And we hope to see you at the gala on Dec. 7.

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 letters@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.

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HOW BAD IS THAT LEAK?

Web Talk Re: The Q renovation financing deal Am I the only person who is wondering why the effort to develop a community equity fund (Greater Cleveland Congregations’ great idea) doesn’t have the public support of the business community? With the city facing increasing challenges to keep up its infrastructure and to make Cleveland a sustainable city for its citizens, it seems that opportunities exist for a collaboration between the business community and GCC. Here is a short list of process steps of how these opportunities could be developed for a viable solution: develop a businessdriven alternative agenda for spending the money in a community equity fund on a viable Cleveland model aligned with a consensus of business needs to invest in a viable city and with GCC priorities; leverage that agenda into a communication effort with the larger community and the media; get that message from the business community to the Cavs, the city council and the county; set a longer-term goal for a GCC/business collaboration to influence city council spending priorities in general. — Dan Yurman

Re: ESPN Cleveland's podcast plans I think the pushback on the new app The Land On Demand is coming from the fact that most (if not all) of the ESPN on-air personalities are thin-skinned egomaniacs and aren’t likable. ... It’s funny to the audience that they are now charging. I’m not sure anyone really cares. They are just too easy of a target. It would be the same reaction if the Browns raised ticket prices after last season. — Daniel

Re: Remaking Lakewood Hospital site I was totally against Cleveland Clinic closing Lakewood Hospital. Not only did citizens of Lakewood and nearby suburbs depend on this for health care, but the building is an icon in Lakewood and has served Lakewood residents for many years. ... This definitely was a disservice to the citizens of Lakewood and neighboring communities. It was decided long before it was in the news media or presented to the public. As a senior, I believe the bottom line in health care is the welfare of patients, not making money! — Sally A. Weiland

Personal View

Ohio’s economy would get jolt from tax reform

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Recently, right on the heels of tax day, the White House rolled out principles for reforming the U.S. tax code. This should be welcome news for all Americans, considering it has been over 30 years since the U.S. tax code was reformed. During that time, while other countries have modernized their tax codes, the U.S. has stood still — and even increased our tax rates. Today, American businesses suffer from a tax rate of 39%, while their foreign counterparts face an average tax rate of 25%. Why should we care? Because the tax code has a direct impact on economic growth and job creation. Our current corporate tax system encourages the overseas production of goods, which are then imported into the U.S. That matters everywhere in the country, but especially in Ohio, where more than 13,045 manufacturers employ almost 682,600 workers. Those jobs could be threatened if the current tax code is not reformed. And that possibility is even more disturbing since Ohio is already struggling with job creation. Between December 2015 and December 2016, Ohio saw only a 0.9% increase in jobs, which is well behind the national average of 1.6% during the same period. The current code also encourages U.S. companies to relocate to save on their tax bills. A few years ago, for example, medical technology company Medtronic merged with an Irish company and moved its headquarters to Ireland (which has a corporate tax rate of 12.5%). Other household names such as Johnson Controls and Pfizer have considered similar transactions (called “inversions”) to avoid the high taxes levied by the United States. With a number of flagship U.S. companies, such as Big Lots, Cintas and American Electric Power, having a major presence in Ohio, the specter of a tax-based business transaction is always present. Fortunately, there is a growing consensus that it is time to fix this broken system. President Trump has pledged to develop “historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone.” Congressional leadership has done the same. In the House of Representatives, Speaker Paul Ryan and House Ways & Means Chairman Kevin Brady have released a detailed blueprint, called “A Better Way.” Both the White House and the House plans would dramatically lower corporate rates — to 15% and 20%, respectively — bringing the U.S. tax rate closer in line to competitor nations. Taxes for small businesses would be reduced as well, hitting their lowest mark since World War II. Besides lower rates, both proposals would move us to a more competitive international tax system. Our current system, known as a worldwide system, assesses U.S. taxes on all income, regardless of whether it is earned in the United States or in foreign countries that have a lower rate. The United States is the only country in the Group of Seven (the world’s most advanced economies) that still has a worldwide system. In its place, both the White House and the House propose to institute a territorial system, whereby businesses would be taxed only on the income that they earn in the specific country. This change, especially if coupled with the House proposal for border adjustments, would help to level the playing field for companies in Ohio, like Procter & Gamble, that have significant foreign operations. It also would encourage U.S. companies to bring back some of the trillions of dollars currently parked overseas, where they have been accumulating to avoid paying higher U.S. taxes. These reforms aren’t just abstract policy proposals. They would have a real impact on the bottom line. The Tax Foundation (an independent tax policy nonprofit) recently estimated that provisions from the House blueprint, for example, would create nearly 65,000 jobs and produce annual after-tax income of more than $4,000 for median households in Ohio. We’ve been waiting long enough. Now is the time for President Trump and Congress to work together and reform the tax code, thereby helping American business and families, and giving Ohio a much-needed boost.

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CRAIN’S CLEVELAND BUSINESS

Coalition selling region on jobs task force Groups believe Northeast Ohio employment hubs need a stronger pool of candidates By JAY MILLER jmiller@crain.com @millerjh

A civic coalition is hoping to get what its members call “job access� on the region’s radar screen. They want public officials and other community leaders to focus on creating a strong, diverse pool of job candidates to areas they call job hubs that are attractive to businesses looking at Northeast Ohio as an expansion candidate. Groups in the coalition — the Fund for Our Economic Future, the Northeast Ohio Areawide Coordinating Agency (NOACA) and Team Northeast Ohio — are making the rounds of governments and business groups like chambers of commerce, hoping to sell them on joining what’s being called a jobs hub task force. They believe making Greater Cleveland more attractive to the kinds of businesses that bring new dollars and jobs into the region requires a vigorous effort to build up the existing employment centers that have the best opportunity to attracting jobs in what are called the “traded sectors� of the regional economy. By that, they mean businesses that produce goods and services meant to be sold outside the region, such as manufacturers and professional service firms like engineering or software design businesses or call cen-

ters. In Northeast Ohio, the groups say, that also includes health care services. New or growing companies in the traded sectors want to locate and expand in areas where there is an affordable, skilled workforce; that have reliable and well-maintained roads, utilities and other infrastructure; and offer attractive office space or building sites. The coalition believes the region needs an investment strategy that will create attractive areas — job hubs — for these companies. The groups say the region now has nearly two dozen job hubs, but not all are growing or can be expected to attract new traded sector businesses. The existing job hubs range from Oberlin and Elyria on the west to Chardon and Middlefield on the east, with Independence, Medina and Solon in between. The two largest jobs hubs are downtown Cleveland and University Circle. Coalition representatives told the members of Cuyahoga County’s economic development board on April 28 that the five primary counties of Greater Cleveland — Cuyahoga, Geauga, Lake, Lorain and Medina — are falling behind competing cities when it comes to being able to assure site selectors that they will find a sufficiently large pool of job candidates around a job hub. “Where (qualified job candidates) are matters,� Bethia Burke, director of

“Where (qualified job candidates) are matters. It matters for economic competitiveness, and the trends are not in our favor.� — Bethia Burke, director of strategy and resource allocation at the Future Fund

strategy and resource allocation at the Future Fund, told board members. “It matters for economic competitiveness, and the trends are not in our favor.� The labor pool around a location shrinks if qualified candidates think a commute is too long, or they can’t reach it by public transportation. Burke told the group that between 2000 and 2012, according to a Brookings Institution study, the number of jobs within a reasonable commuting time of an average metropolitan Cleveland resident declined by 26%, the greatest decline of 96 metropolitan areas in the study. In part, that’s a result of jobs moving away from the core city and further into the suburbs and more rural areas. The coalition believes it’s important to find sites and grow the transportation and other infrastructure needs of a handful of core hubs. That, in turn, would give a group like Team NEO attractive job sites to sell to businesses looking for a place to expand.

But Christine Nelson, a Team NEO vice president, said places in the region that offer the best pools of job candidates — generally, those closer to the core city — lack attractive sites for manufacturers, warehouses and other businesses in the traded sectors. Those firms want to be located where they can find a suitable existing building or a large enough building site to accommodate their needs. But Nelson said the region has a hard time meeting those criteria in places where there are the largest pools of job candidates. “One of the things we hear most often is companies are asking for buildings sites of over 30 acres or buildings with 24-foot ceilings,� she said. “The majority of our buildings were built before 1960. They do not have 24-foot ceilings, and that’s not competitive for today’s requests. And in the job hubs, 30 acres would be hard to come by.� One way the coalition believes the attractiveness of a site in Northeast Ohio can be improved in a site selec-

tion competition is to expand the available job pool by improving the transportation system. Grace Gallucci, executive director of NOACA, told the county board that the region’s road network, designed for a target population the region hasn’t reached, is strong, though not necessarily in good repair. Labor pools could be expanded, Gallucci said, if the public transportation system was in better shape. “In this region, you need a car, because public transportation is the weak link,� she said, noting that less than 10% of people use public transit to get to work, a percentage that is smaller than in many cities. A better public transportation system would open up jobs to a larger labor pool. For instance, Burke said a qualified candidate for a job in Solon, who lives in Cleveland’s Collinwood or Glenville neighborhood, might be put off from applying because of the 90-minute one-way commute by public transportation. Nelson summed up the presentation by saying bolstering job hubs will make the region more competitive for new businesses. “The community that can figure out how to deliver talent is a winner,� she said. “So if we can be more competitive in our infrastructure and with our inventory (of building sites) in the places where we have talent, that puts us at a high competitive edge.�

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Focus

SPECIAL REPORT: NEO as an Arts Community

British artist David Shillinglaw’s mural brightens the side of a building in the Hingetown area of Ohio City. It was made possible through the Creative Fusion program. (Kathryn Dike)

Fusing global ideas for the greater good The Cleveland Foundation’s Creative Fusion arts program deepens the city’s cultural makeup By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

S

ince bright, colorful murals were completed in December in the Hingetown area of Ohio City, people checking out the artwork have been coming to areas of the neighborhood they may not have even thought to visit otherwise. Residents and visitors are perusing local businesses, stopping in coffee shops or juice bars and walking around taking pictures of the new murals — created by international and local artists collaborating through the Cleveland Foundation’s Creative Fusion initiative, an international artist residency program. “It’s amazing to see the amount of people coming in to see the murals in the middle of winter,” said Ashley Shaw, economic development and planning manager at Ohio City Inc. “I can’t imagine when the weather’s nice how many people will be coming here.” Since 2008, Creative Fusion has brought more than 70 artists from around the world to Cleveland. Dancers, sculptors, designers, painters, musicians, poets and more have traveled to Northeast Ohio and partnered with local artists to create something new in the region. This spring, the theme is Cuba. In this unique exchange connecting cultural institutions, Cuban architects, dancers, designers, poets and more are visiting the Greater Cleveland community. And people — beyond those seeing a performance or snapping photos of new murals — are taking note, said Lillian Kuri, vice president for strategic grantmaking and arts and urban design at the Cleveland Foundation. “We’ve had now 70 artists who go

Cuban architect Ernesto Jiménez looks out the door of the former Winnie’s Nursery. (Tim Harrison for Crain’s)

Cuban architect Sofía Márquez Aguiar (left) talks to Glenville resident Victoria Trotter at the CLExHAV pop-up event. (Tim Harrison for Crain’s)

back and say, ‘This is an extraordinary place. People need to know about Cleveland,’” said Kuri, who leads Creative Fusion for the foundation. “That’s the kinds of stories we want them to tell when they go back to their countries. Creative Fusion funds 12 residencies annually — six each in the fall and spring. Each of the six international artists are paired with a local artist and a host organization. The Cleveland Foundation allocates $300,000 annually for the program, Kuri said. The work in Ohio City in the fall was the first time the program centered around a theme: Street Art. The plan is to continue theme-based residencies to create more impact and galvanize differing audiences around the work, Kuri said.

In one of the residencies, the funding is helping continue a partnership Kent State University began last year with Havana-based architects Sofía Márquez Aguiar and Ernesto Jiménez of Fábrica De Arte Cubano (Cuban Art Factory). The Kent State Cleveland Urban Design Collaborative was selected as a host for Creative Fusion’s spring 2017 cohort. The architects are working alongside a 2017 CUDC Urban Design and Landscape Architecture graduate studio and a Cleveland Institute of Art Interior Design studio to offer proposals for two neighborhood projects: one in Cuba, and another in Cleveland’s Glenville neighborhood refreshing and connecting two buildings, creating an integrated arts space. A group of students visited Cuba over spring break and worked on design proposals for Havana’s Vedado neighborhood, where Fábrica De Arte Cubano is located. David Jurca, CUDC associate director, said the hope is for students to take some of the lessons learned during the design process in Havana and apply them in Cleveland, while also identifying unique challenges and strategies in Glenville. In May, Márquez Aguiar and Jiménez traveled to Cleveland, where they reviewed the students’ design proposals for Vedado and then worked with them on the local project to refresh and connect two structures in Glenville to create a more cohesive, welcoming feel and to accommodate large outdoor activities. The architects both have expertise in designing and fabricating projects with limited resources, reused material, found objects and significant constraints, Jurca said. The program offers students a chance to gain SEE FUSION, PAGE 14

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CRAIN’S CLEVELAND BUSINESS

SPECIAL REPORT: NEO as an Arts Community

Orchestra eyes artistic, financial growth By SCOTT SUTTELL ssuttell@crain.com @ssuttell

André Gremillet knows he’s in a privileged position. As executive director of the Cleveland Orchestra, Gremillet is responsible for the business and management operations of one of the world’s great orchestras. Gremillet has been in the job since January 2016, and he’s at the helm at a major inflection point, as the orchestra continues to reach new heights artistically — the latest validation comes in rave national reviews from The New York Times and The Wall Street Journal for its production of the Debussy opera “Pelléas et Mélisande” — and plans a series of major events for its centennial season in 2017-18. “It’s an artistic organization, an exceptional one, at its heart,” Gremillet said during an interview at his office in Severance Hall. His job, in some respects, is simple — “to make it possible for (the orchestra) to continue to grow artistically,” Gremillet said. But that’s not a simple job at all. Gremillet came to Cleveland from the Melbourne Symphony Orchestra, where he had been managing director since November 2012. From 2007 to 2012, Gremillet was president and CEO of the New Jersey Symphony Orchestra. When his hiring for the Cleveland job was announced in August 2015, Dennis W. LaBarre, then president of the board of trustees of the Musical

“I believe the music is timeless and universal, and that there are many opportunities to attract more people who want to experience that.” — André Gremillet, executive director (photo by Don Snyder, courtesy of The Cleveland Orchestra)

Arts Association, which oversees the orchestra, said Gremillet had “successfully enhanced the fiscal health of two symphony orchestras.” That experience is valuable, since Gremillet said “the biggest challenge” the orchestra faces today is financial. For the 2016 fiscal year, the orchestra reported a deficit of $2.4 million on expenses of $52.2 million — a figure that was $1.4 million more than the prior year as the organization continues to reach for higher levels of artistic excellence under music director Franz Welser-Most. In fiscal 2015, the orchestra had a small surplus, $72,000. Gremillet said “most of the fundamentals” for the orchestra, primarily attendance, ticket sales and fundraising, are strong. The orchestra also benefits from a strong global brand and “extraordinary levels” of support at home, he said, though its big challenge is that it’s “by far the greatest orchestra in America in the smallest market.” Improving the orchestra’s financial position, he said, is about “developing even greater support (from donors) and reaching out to the wider community of people who are music lovers and value the Cleveland Orchestra.”

Central to doing that is activity around the orchestra’s centennial celebration, which will run from September 2017 until the end of 2018. It’s packed with high-profile events, including two operas: Wagner’s “Tristan and Isolde,” with soprano Nina Stemme and tenor Gerhard Siegel in the title roles, and Janacek’s “The Cunning Little Vixen.” A two-week festival called “The Prometheus Project” will feature Welser-Most and the orchestra performing all nine of Beethoven’s symphonies and several of his overtures. Guest conductors during the centennial season will include Christoph von Dohnanyi (the orchestra’s music director laureate) as well as Vladimir Ashkenazy, Charles Dutoit and Michael Tilson Thomas. A-list guest artists, such as pianist Emmanuel Ax and cellist Alisa Weilerstein, also will appear. The orchestra in the centennial season also will return to New York’s Carnegie Hall, and it will do international tours in Europe and Asia. Gremillet, a conservatory-trained pianist who holds a master’s degree from the Mannes College of Music and an MBA from McGill University, said the ambitious centennial season

plans are a reflection of the strength of the vision of Welser-Most. “We work very closely together,” Gremillet said. “I’m a firm believer in and supporter of what he hopes to accomplish artistically, which is why we have to work to meet financial realities.” One of those realities has been scaling back the scope of the orchestra’s Miami residency. For the 2018 season at the Adrienne Arsht Center in Miami, the residency will consist of two programs on two consecutive weekends, rather than four programs spread over the winter and spring. The orchestra’s endowment at present is around $175 million. Although the orchestra has not announced a formal campaign to grow that figure, Gremillet said an organization of its size and ambitions should have an endowment in the $300 million range. Richard K. Smucker, executive chairman of The J.M. Smucker Co. and, since March, the president of the orchestra’s board, agreed that the endowment needs to grow so that the organization’s missions artistically and educationally — more than 60,000 students each year experience some sort of programming from it — can continue to grow. Gremillet, he said, is an ideal person to help do that. “He’s just so energetic,” Smucker said. “He has an ideal background, both professionally and musically, to make the case for a vigorous, growing orchestra. ... He’s someone that I think is going to make a very big mark in Cleveland.”

The orchestra is an important source of pride for Northeast Ohioans, Smucker said, since it’s among a handful of local institutions with a truly global reputation. But it’s also a valuable asset for the region’s economy, as Northeast Ohio competes for businesses and talent. Smucker noted, for instance, that after J.M. Smucker in 2015 bought San Francisco-based Big Heart Pet Brands for $5.8 billion, Severance Hall was one of the stops when Big Hearts executives came to town. “They were astounded but what they saw,” he said. “It’s an area of competitive advantage for Cleveland.” Gremillet said the orchestra is fortunate today to play in a hall that has been renovated recently and to have a good relationship between labor and management. Orchestra members’ current labor deal runs through August 2018; Gremillet said work will start early next year on carving out a new deal. He said he hopes to leverage technology to make membership programs and the ticket-buying experience even easier, with a goal of reaching out to new audiences. Gremillet and his wife have settled in Shaker Heights with their two young children, ages 4-and-a-half and 10 months, and he said he has been “amazed and gratified” by his reception in Cleveland and the place the orchestra holds in residents’ hearts. “There’s a real passion about it, and I take that responsibility seriously,” he said.

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SPECIAL REPORT: NEO as an Arts Community

ARTS

CONTINUED FROM PAGE 1

But as Cuyahoga County slides into the second decade of a smoker-supporter arts scene — voters renewed the 10-year, 30-cent a pack tax in 2015 — arts organizations are mindful of a potential decrease in that critical support as fewer people light up. Plus, Cuyahoga Arts & Culture (CAC), the political subdivision of the state of Ohio that distributes the cigarette tax revenue through grants, is doing some high-profile soul-searching of its own — namely about how it should tweak its grantmaking strategy to have the greatest and most equitable impact with a finite amount of dollars. That, of course, could mean a deliberate tradeoff in the types of organizations that are supported. Underscoring the narrative that arts funders in Northeast Ohio are at a turning — or even maturation — point, two of the region’s most-powerful philanthropic organizations, the Cleveland and Gund foundations, have seen changes in the offices overseeing arts grants. They, too, are grappling with that equity question. It’s not a new debate, but perhaps one that hit Northeast Ohio later than other places in the country, said Jennifer Coleman, the senior program officer for the arts program at the George Gund Foundation. “It’s about lifting up those artists within neighborhoods and putting them in parity with the systems that exist,” said Coleman, who took over for Deena Epstein who retired after 25 years in the role. Karen Gahl-Mills, CAC’s CEO and executive director, characterizes the situation this way: “The way the demography of our country is changing, that’s not necessarily what big institutional funders have been set up to fund,” she said. “We fund a lot of things in a white, West-

Contributed support by organization size, 2015 Small arts organizations tend to rely more heavily on government funding than larger organizations, which tend to have more corporate support. 0.9%

0.3%

0.9%

0.9%

6.0% 6.1% 7.9%

7.7% 2.2%

12% 4.5%

Other Corporate Fundraising/Events Trustee/Board Individual Government

Up in smoke?

Foundation

6.9%

Source: CPAC, Metris Arts Consulting

4.5%

18.5%

10.9% 32.9%

27.2%

23.1%

30.0% 9.3%

30.5% SMALL

34.1% MEDIUM

24.5% LARGE

ern-European tradition. We aren’t a white, Western-European country anymore. Our colleagues here are thinking and talking about that a lot. There’s change on the horizon for everybody, but nobody wants to destabilize what’s already happening. Cleveland’s got a good thing going.”

The state of the arts When Gahl-Mills was interviewing for her job at CAC in fall 2009, the nation’s arts scene — like the economy as a whole — was in turmoil. The worry locally was a bit more tem-

porate headquarters from Northeast Ohio, and corporate leadership no longer requiring staff to sit on boards. “The whole dynamic has changed,” said CPAC executive director Tom Schorgl. “They’ve seemed to be more focused on projects that are relevant to what they do as a corporation. That has somewhat limited their giving.”

pered because of the financial backbone made possible by CAC’s multiyear operating grants. Arts and cultural organizations around the country contracted, including a few locally, such as Red (an orchestra) and the failed merger of Cleveland Opera and Lyric Opera. “But when you look around the country at other cities Cleveland’s size and larger, there was a lot more churn in the system that we simply didn’t have here because what these dollars were designed to do they did, which was provide some stability,” Gahl-Mills said. A recent, five-year analysis — “Culture Pulse” — from the Cleveland-based Community Partnership for Arts and Culture (CPAC) and Metris Arts Consulting concludes that since the throes of the recession, the health of the local arts landscape has only improved. Revenue has climbed steadily after plummeting in the recession’s wake, while expenses have remained in check. Still, there are worries. Several focus group participants mentioned in the report expressed concerns about falling general operating support — the most flexible dollars — especially from private foundations in Cuyahoga County. And while corporate support has increased from 2011 to 2015 by 22.7%, securing those dollars is becoming more difficult. Focus group participants noted the exodus of cor-

The biggest worry concerns the cigarette revenue, though it’s not the only vulnerable pool of public dollars. The report cites the Ohio Arts Council, which also is subject to “the vagaries of budget cuts.” However, in terms of public support, county funding remains the lion’s share — 61.4% of total government support in 2015 came from the county, the report states. The report found that small organizations, on average, experienced an increase in county support from 2011-2015, while midsize and large organizations saw decreases. The decline in cigarette revenue isn’t a surprise. The smoking rate for adults has been on the decline nationally for half a century, but that doesn’t make the quest for additional dollars any easier. CAC officials say cigarette revenue has decreased at a rate slower than what was originally forecast. The $15 million in revenue brought in each year still allows CAC to remain the largest local institutional funder for the arts. CAC officials said forecasting any future declines would be purely speculative, but the best the organization can do is consider the revenues’ annual average rate of decline since its inception, which is 3.6%. CAC and others in the arts community are in early talks about how to make up for that lost revenue. “This was a really smart solution for a community that didn’t have any public investment in the arts at all,” Gahl-Mills said. “It is not a 100-year solution. No-

body thought it was when it was built.” Gahl-Mills said CAC already is experimenting with how it can bring additional dollars to the table for local organizations and in a way that doesn’t put CAC up against groups it funds when seeking outside dollars. Its first “toe in the water” in that area, Gahl-Mills said, was a $50,000 Art Works grant from the National Endowment for the Arts that will be used to support arts programming at the renovated Public Square. The award was matched with local funding from the Group Plan Commission. Because the NEA grant was only available to local arts agencies — which CAC is — it wasn’t competing with others in the community for those dollars. That’s the sort of entrepreneurial thinking CAC wants to explore before broaching the idea of an additional tax. Other communities with tax-based grant dollars for the arts, meanwhile, are rooted in hotel bed taxes. Now, Cuyahoga County’s 5.5% tax on hotel stays supports Destination Cleveland, the city’s tourism and visitors bureau; the Rock and Roll Hall of Fame; and the Cleveland Convention Center. Soon, some of Destination Cleveland’s dollars generated by the tax will be diverted to support the $140 million renovation of Quicken Loans Arena.

Changes on the way Following the successful renewal of the cigarette-tax levy with 75% of the vote — the first go-around garnered about 56% — CAC embarked on a more than year-long listening session in the community to determine how it could better serve the community with its limited resources. What they heard, Gahl-Mills said, was that the arts were valued by taxpayers but that CAC should “recognize and equitably support things SEE CAC, PAGE 14

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SPECIAL REPORT: NEO as an Arts Community

CAC

CONTINUED FROM PAGE 13

that might be outside the mainstream.” Those findings already have started to influence CAC’s activities. Notably — and controversially — CAC planned to rework its Creative Workforce Fellowship, which, using CPAC as the distribution vessel, sent

funding to individual artists in the community rather than the institutions CAC funds on its own. CAC had wanted to spur more involvement from minority artists — something it said CPAC had not done, despite requests to tweak the program. Late last year, CAC moved to replace the fellowship program with something administered by National Arts Strategies (NAS), a Washington,

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D.C.-based nonprofit, but the group bailed amid community uproar over the change. All the while, CAC hasn’t backed off on its support of individual artists as it decides how to recast the program. Moreover, as part of its push to bring more artists under its umbrella, CAC’s board last month eased application requirements on smaller organizations. It also trimmed the maximum grant amount available — from $35,000 in 2017 to $30,000 in 2018 — to increase capacity. CAC isn’t the lone funder to push organizations to do more work in underserved communities and to reward artists who otherwise felt disenfranchised by the local funding community. In 2016, The Cleveland Foundation pumped $13.2 million into the arts scene — $3.3 million of which was from donor-advised funds. Since Kathleen Cerveny retired from overseeing the foundation’s arts grantmaking, the organization has ramped up its “mastery-based arts initiative” that brings more programming to Cleveland’s neighborhoods — particularly those its describes as “arts deserts.” The foundation’s most potent example of this work is its support of Cleveland Public Theatre and its two programs that work with Cuyahoga Metropolitan Housing Authority youth. “When I think about the arts-mastery program, it falls into all of our buckets. It’s as much about youth, the arts and education as it is about neighborhood revitalization,” said Lillian Kuri, the foundation’s vice president of strategic grantmaking who oversees arts and urban design initiatives.

Repurposed window blinds comprise an art installation at the former Winnie’s Nursery. (Tim Harrison for Crain’s)

FUSION

CONTINUED FROM PAGE 11

experience working with these architects that they can apply in their professional careers “as they impact Cleveland and other cities’ design, culture and projects.” “We also hope that this mode of working, which embraces constraints and reuses materials (and) appreciates first of all relationship in the design process and the need for multiple disciplines to collaborate together could inspire the future for this site and other projects in Cleveland,” Jurca said. Kuri said she hopes to see the residencies inspire and launch similar exchanges and ongoing relationships between local and international artists. Shaw has seen benefits far beyond the walls displaying the new murals

in Hingetown. The local and international artists learned from one another during the three-month residency. And local artists hope to gain opportunities having worked alongside well-known artists from around the world. People in Los Angeles, Italy and Australia all have reached out hoping to come to Cleveland to paint murals, she said. “It’s making people take a second look at Cleveland in terms of tourism,” Shaw said. “We have these really talented artists from all over the world who now are reaching out saying they want to come here and do a piece alongside all of our other pieces.” Shaw said she’s figuring out what’s next: How to continue this work, bring in more artists and fund these programs outside of Creative Fusion. “I think it’s definitely put Cleveland on the map in terms of public art,” Shaw said.

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AKRON SPECIAL REPORT: NEO as an Arts Community

Q&A: Dr. Cliff Deveny

Interim president and CEO, Summa Health

Jessica Lofthus, one of the first artists in the SummitLive365 directory, painted a mural for the Cascade Plaza parking garage as part of the Ohio & Erie Canalway Coalition’s iTowpath beautification process. (Contributed photo)

After initial successes, ArtsNow is looking ahead By JUDY STRINGER clbfreelancer@crain.com

Nicole Mullet has a secret. Actually, it’s more like a covert mission. Deep down, the executive director of the 2-year-old ArtsNow initiative fantasizes that her efforts to bolster and legitimize Akron’s creative community will lure her brother Adam, a Seattle-based artist, back to Ohio — specifically Akron. Adam may not be packing his bags yet, but thanks to Mullet and ArtsNow, the Summit County arts community is moving in the right direction. Institutional leaders are meeting regularly — something that wasn’t happening just a few years ago. Arts patrons now can easily find activities and events of interest — that too had been missing. Perhaps most importantly, artists are getting work or advice they might not have had access to in the past. In two short years, GAR Foundation president Christine Mayer said, ArtsNow has “had a really tangible effect on a lot of arts groups and made their work and presence more viable in the community.” Akron illustrator and painter Kevin Smalley, for example, said ArtsNow was the “starting line” for a cascading series of job opportunities that began with a classified ad on the organization’s SummitLive365 website and culminated in a commission with Ohio Arts Council and his work being permanently exhibited at OAC’s Columbus headquarters. In addition, the Ohio & Erie Canalway Coalition selected Jessica Lofthus, one of the first artists to list her profile in the SummitLive365 directory, to create a 400-foot mural for the Cascade Plaza parking garage as part of its iTowpath beautification process. Outside of Akron, ArtsNow was instrumental in the formation of a fledgling arts council in Cuyahoga Falls and instituted community dialogue in support of a burgeoning arts district in Barberton. “We definitely would not be where we are at without the support of ArtsNow,” said graphic designer Molly Hartong, co-director of Collide:

Cuyhoaga Falls. “People in the Falls had not heard about what we were trying to do, but they were excited about ArtsNow, and the fact that ArtsNow was supporting our effort gave us some credibility. ArtsNow launched in 2015 as a vehicle to make citizens more aware of the artistic events and cultural gems around them and to strengthen ties among the creative contingent. It was not formed on a whim. A 2013 study confirmed what Mayer and her colleagues had been hearing for more than a year. While the Akron area was home to a vibrant arts community — more artists per capita than peer cities, Mayer said — residents did not know where to go to find out about showings or artists’ talks or dance productions, for example. The study also unearthed a lack of communication among artists and art organizations. “The sector wasn’t behaving like a sector,” said Howard Parr, executive director of the Akron Civic Theatre and an ArtsNow board member, “and we needed to get ourselves together and talk to one another and start to be pulling all along the same path.” So GAR, the Knight Foundation, Akron Community Foundation, Burton D. Morgan Foundation, and Mary S. and David C. Corbin Foundation supplied the funding to establish ArtsNow. The nonprofit’s first order of business was SummitLive365, a website listing of arts events in Summit County, which Mullet said has been wildly successful as the go-to spot for all things culture. On any given day, she said, there are between 600 to 1,000 event listings on SummitLive365, “which is incredible and speaks to what the assessment in 2013 told us. There are things happening here. People just didn’t know about them.” The website also includes a classified section and directories where artists and art organizations can create profiles — both of which have been surprisingly fruitful. “That’s been the biggest surprise,” Mullet said. “These directories, while unsexy, have been some of the most valuable work that we have done because we are starting to build that community beyond just the usual suspects.”

ArtsNow also began convening individuals in the arts community to create connections and foster a sense of unity that had been absent. Parr said the executive directors of area organizations such as the Civic, the Akron Art Museum and Nightlight Cinema now meet quarterly. Other meetings target development executives and marketing professionals within arts organizations, or individuals artists or artists’ collectives. A recent meeting involving community art centers mashed up more established organizations, such as the Cuyahoga Valley Art Center, with newbies like Hive Mind on West Exchange and Pump House — an arts center planned for the vacant Pump House building next to Summit Lake — to discuss programming ideas, inspiration and even management issues, such as where to go for insurance. ArtsNow’s early efforts are exciting, but another big benefit of having an arts point person has been the newfound influence the sector enjoys in Akron and countywide, according to Mayer and Parr. When Akron mayor Dan Horrigan or Summit County executive Ilene Shapiro gather stakeholders to discuss neighborhood development, placemaking population growth or social services, Mullet is at the table. “Nicole is right there with data about the sector, and she can pull together artists and arts groups to come forward and meet needs that government officials or private sector people have,” Mayer said. “She’s just become this really important connective tissue between the arts and culture sector and other parts of our community.” Mullet is quick to credit not only the foundations supporting ArtsNow, but also city and county officials who have been supportive and appear eager to help in the next phase of the organization’s strategic plans, which include a pretty ambitious plan to measure and track the art sector’s economic impact in Summit County. “There would have been no better place than Summit County and Akron to launch something like this — this scrappy startup with these really robust goals — because once you explain why, everyone is on board,” Mullet said.

Two months into his post as Summa Health System’s interim president and CEO, Dr. Cliff Deveny indicates that the system is beginning to move past its rocky start to 2017. Deveny, who began in his role March 13, replaced Dr. Thomas Malone, who resigned at the end of a tumultuous January after vocal opposition to a decision not to renew the contract of the independent physician group that had staffed the hospital’s emergency departments for decades. Already, Deveny has made changes to the system’s leadership structure in an effort to be “much less top heavy, much more efficient.” Though he doesn’t have any other operational changes planned, he said, “I anticipate change will be the new normal.” Deveny said there’s not currently any ongoing search for a permanent CEO. He’s focused on the 12 months his contract runs and dealing with Summa’s culture after Malone’s exit and everything that led to it. “We all acknowledge there was a lot of self-inflicted wounds,” Deveny said. “If the community, if government officials, if church leaders, if other physician groups all feel that Summa is a critical asset to this community and that it’s locally controlled, locally managed, we all have to rally around it. ” Below is an edited conversation with Deveny. — Lydia Coutré What have you seen in the first eight weeks? I’ve seen a lot of re-energized people much more excited about Summa’s future, where we’re going. Everything from the announcement of the new building (to) obviously having a change in culture. People are feeling more empowered, a little more hopeful. Those kinds of things. Would you consider the turmoil of the first couple of months of this year settled? Or what else needs to happen? Not boiling. Still simmering, and rightfully so. A lot of people have to work through their personal emotions, but I think we have to earn trust. You can’t get it just by naming somebody; you can’t get it just by having a bunch of little meetings. … Are employees feeling like they’re being listened to? Are leaders feeling empowered? Is there something behind the corner that’s going to happen? And I think what we’re trying to do is alleviate any of those kind of anxieties, but my sense is it’s gonna take time. The start of these issues surrounded contracts. Do you have any contracts that are coming up for renegotiation, and do you have a plan for how to do so? There’s two answers to that. One is there’s always contracts upcoming, and so there is a much more deliberate prescriptive process in place to anticipate that and obviously, they are worked on in months in advance. And so even if something’s 18 months out, the process starts. That had been traditionally the case prior to what happened in November and December. What do you have to assure that that’s happening? Well, the board is overseeing that. They want to make sure that there is a process in place and then update

on all of those. I think the second thing is the whole resident issue. There’s a national spotlight on Summa because a lot of health systems have moved to these big physician groups managing a hospital-based service, and with that is the teaching program. The (Accreditation Council for Graduate Medical Education) is asking that question as to how do we assure the residents aren’t vulnerable to a contract negotiation again? Is there any path to regain that residency? There is. We have two phases. One, we have a probation of the whole system that has to be addressed. And we’re working on that right now. The (emergency department) residency will cease on July 1. And then what we’ll do is we will go through the process of getting the probation lifted. (When under probation), you can’t reapply for a residency, and you can’t make any changes. … Right now, the full intent of the board, leadership, what’s called the graduate and medical education committee, is to reapply. A lot of this sounds like getting back on course? Absolutely. It’s technology, capital and then just growth. Is there anything else you have course-corrected in the past couple of months? We’ve met with everybody in the health system. We’ve met with all of the areas where there has been tension, whether it’s Wadsworth or Summa Western Reserve, and trying to make sure that one, we make the introductions, but then how do we work through those issues? And we’ve tried to be pretty public about that as well. So, there’s a lot of conversations going on I would say around the theme of how do we regain trust and how do we partner with providers and other health systems in a positive way?

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THE LIST

Cultural Attractions — Nonprofit Ranked by 2016 attendance

ATTENDANCE THIS YEAR COMPANY (1)

2016

2015

2016 EXPENSES % CHANGE (MILLIONS)

PEAK PERMANENT SEASONAL YEAR EMPLOYEES (2) EMPLOYEES (3) FOUNDED DESCRIPTION

TOP LOCAL EXECUTIVE

1

Playhouse Square Foundation 1501 Euclid Ave., Suite 200, Cleveland 44115 (216) 771-4444/www.playhousesquare.org

1,040,858

969,573

7.4

NA

162

NA

1973

Nonprofit offering performing arts and arts education while creating a destination that strengthens the region's economy

Art Falco president, CEO

2

Cleveland Metroparks Zoo 3900 Wildlife Way, Cleveland 44109 (216) 661-6500/www.clevelandmetroparks.com/zoo

1,023,608

1,090,148

(6.1)

$22.7

195

175

1882

Zoo with a focus on securing a future for wildlife

Christopher Kuhar director

3

The Cleveland Museum of Art 11150 East Blvd., Cleveland 44106 (216) 421-7340/www.clevelandart.org

602,712

642,228

(6.2)

$57.2

332

50

1916

Comprehensive art museum

William M. Griswold director, CEO

4

Rock and Roll Hall of Fame and Museum Inc. 1100 Rock and Roll Blvd., Cleveland 44114 (216) 781-7625/www.rockhall.com

542,753

510,486

6.3

$21.2

117

23

1995

Museum that aims to engage, teach and inspire through the power of rock and roll

Greg Harris president, CEO

5

Akron Zoological Park 500 Edgewood Ave., Akron 44307 (330) 375-2550/www.akronzoo.com

398,878

363,903

9.6

NA

80

70

1953

Zoo

Doug Piekarz president, CEO

6

Cleveland Museum of Natural History 1 Wade Oval Drive, Cleveland 44106 (216) 231-4600/www.cmnh.org

300,000

285,000

5.3

$14.0

130

NA

1920

Ohio's largest museum dedicated to natural history, with active research in 11 curated sciences

Evalyn Gates executive director, CEO

7

Great Lakes Science Center 601 Erieside Ave., Cleveland 44114 (216) 694-2000/www.greatscience.com

282,092

272,837

3.4

$7.4

75

NA

1996

Informal science, technology, engineering and math (STEM) education for Northeast Ohio

Kirsten M. Ellenbogen president, CEO

8

Cleveland Botanical Garden 11030 East Blvd., Cleveland 44106 (216) 721-1600/www.cbgarden.org

204,570

209,746

(2.5)

NA

30

50

1930

Themed gardens, glasshouse, special exhibits; part of Holden Forests & Gardens

Paul Abbey interim president and CEO

9

The Holden Arboretum 9550 Sperry Road, Kirtland 44094 (440) 946-4400/www.holdenarb.org

177,675 (4)

99,195 (4)

79.1 (4)

NA

57

40

1931

Forests, gardens, hiking trails, tower and canopy walk; part of Holden Forests & Gardens

Paul Abbey interim president and CEO

10

The Musical Arts Association 11001 Euclid Ave., Cleveland 44106 (216) 231-7300/www.clevelandorchestra.com

165,000

163,500

0.9

$52.2

203

NA

1918

Operates The Cleveland Orchestra, Severance Hall and the Blossom Music Festival

André Gremillet executive director

11

Akron Civic Theatre 182 S. Main St., Akron 44308 (330) 253-2488/www.akroncivic.com

133,833

115,946

15.4

NA

15

NA

1929

Performing arts center

Howard Parr executive director

12

Stan Hywet Hall & Gardens 714 N. Portage Path, Akron 44303 (330) 836-5533/www.stanhywet.org

133,597

134,112

(0.4)

$4.8

41

52

1957

Accredited nonprofit historic house museum and historic gardens

Linda Conrad president, executive director

13

Western Reserve Historical Society 10825 East Blvd., Cleveland 44106 (216) 721-5722/www.wrhs.org

130,000

103,000

26.2

$6.3

43

22

1867

Nonprofit educational institution that inspires people to explore the history and culture of Northeast Ohio

Kelly Falcone-Hall president, CEO

14

The Butler Institute of American Art 524 Wick Ave., Youngstown 44502 (330) 743-1107/www.butlerart.com

120,000

100,000

20.0

$2.3

25

0

1919

Museum dedicated to American art

Louis A. Zona executive director, chief curator

15

Great Lakes Theater 1501 Euclid Ave., Suite 300, Cleveland 44115 (216) 241-5490/www.greatlakestheater.org

105,601

111,236

(5.1)

$4.2

19

66

1961

Professional classic theater company performing at the Hanna and Ohio Theatres at Playhouse Square

Bob Taylor executive director

16

Cleveland Play House 1901 E. 13th St., Suite 200, Cleveland 44114 (216) 400-7000/www.clevelandplayhouse.com

102,023

97,171

5.0

$9.8

46

105

1915

Professional regional theater

Kevin Moore managing director

17

Canton Palace Theatre Association 605 Market Ave. North, Canton 44702 (330) 454-8172/www.cantonpalacetheatre.org

89,435

97,432

(8.2)

$0.6

3

15

1926

1,489-seat historic, atmospheric theater located in downtown Canton

Georgia Paxos executive director

18

Wolstein Center 2000 Prospect Ave., Cleveland 44115 (216) 687-9292/www.wolsteincenter.com

75,000 (5)

57,000 (5)

31.6 (5)

NA

8

NA

1991

Mutipurpose facility located on the campus of Cleveland State University

Jennifer Kelly executive director

19

Akron Art Museum One S. High St., Akron 44308 (330) 376-9185/www.akronartmuseum.org

57,553

54,536

5.5

NA

20

NA

1922

Museum showcasing regional, national and international art created since 1850

Mark Masuoka executive director, CEO

20

Magical Theatre Co. 564 W. Tuscarawas Ave., Suite 307, Barberton 44203 (330) 848-3708/www.magicaltheatre.org

51,818

46,296

11.9

$0.5

3

44

1972

Professional resident and touring theater for young audiences and families

Dennis O'Connell co-producing director

21

McKinley Presidential Library & Museum 800 McKinley Monument Drive NW, Canton 44708 (330) 455-7043/www.mckinleymuseum.org

51,229

49,710

3.1

$0.8

12

0

1946

Comprehensive family center designed to entertain and educate children and adults

Joyce Yut executive director

22

Beck Center for the Arts 17801 Detroit Ave., Lakewood 44107 (216) 521-2540/www.beckcenter.org

49,331

51,438

(4.1)

$3.0

36

NA

1933

Professional theater on two stages, curriculum-based arts education, creative arts therapies, outreach and exhibitions

Lucinda B. Einhouse president, CEO

23

The Cleveland Pops Orchestra 24000 Mercantile Road, Suite 8, Cleveland 44122 (216) 765-7677/www.clevelandpops.com

48,280

42,965

12.4

$1.0

6

65

1993

Independent symphonic pops orchestra serving Northeast Ohio

Shirley Morgenstern president, CEO

24

Museum of Contemporary Art Cleveland 11400 Euclid Ave., Cleveland 44106 (216) 421-8671/www.mocacleveland.org

38,912

36,143

7.7

$2.9

30

NA

1968

Museum offering three major exhibition seasons per year featuring local, national and internationally prominent artists

Jill Snyder executive director

25

Maltz Museum of Jewish Heritage 2929 Richmond Road, Beachwood 44122 (216) 593-0575/www.maltzmuseum.org

36,700 (6)

25,300 (6)

45.1 (6)

$3.3

9

16

2002 (7)

Museum providing education, exhibitions and programs that celebrate culture, explore identity and connect people

Ellen Rudolph executive director

26

Canton Museum of Art 1001 Market Ave. North, Canton 44702 (330) 453-7666/www.cantonart.org

35,000

35,000

0.0

NA

7

NA

1935

Regional museum featuring national touring exhibitions, original collection programs and arts education

Max R Barton II executive director

RESEARCHED BY CHUCK SODER

Want the full version of this list — and every other Crain's list? Become a Data Member: CrainsCleveland.com/data

The digital version of this list includes 35 nonprofits. Information is supplied by the organizations. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all feedback and will include omitted information or clarifications in coming issues.

(1) The Pro Football Hall of Fame declined to be included in this list. E.J. Thomas Hall in Akron did not respond to requests for data. (2) Full-time equivalent, as of March 31, 2017 (3) Does not include full-time permanent employees (4) The increase in attendance is largely due to the installation of the Murch Canopy Walk and Kalberer Emergent Tower in September 2015. (5) Performing arts events only; increase was due to large shows that sold well and seven performances of Cirque du Soleil. (6) The museum attributes this increase to the Violins of Hope project, the Operation Finale exhibit, media coverage and local partnerships. (7) Opened to public in 2005

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List: Local cultural attractions see bump in attendance By CHUCK SODER csoder@crain.com @ChuckSoder

Participants are shown at a hackathon hosted by Lumos earlier this month at the Fintech 71 space in Columbus. The accelerator is a shared asset, and hackathons are one way to spur tech innovation. (JobsOhio)

FINTECH

CONTINUED FROM PAGE 1

Banks and financial service companies, which comprise the second-largest private-sector industry in Ohio, are seeing continuous evolution of internal systems, customer-facing services and payment methods. As a result, there’s surging demand for fintech to improve client experiences and make the companies more efficient. First Federal Lakewood president and CEO Tom Fraser said his bank was supportive of the accelerator because of the greater benefit to the state in terms of drawing jobs and innovation. He acknowledged the positive impacts it could have on competing banks but added that there’s a motivation to be in line for new fintech systems and services that will spawn from the incubator. “If we can help spur other companies to be successful in Northeast Ohio, we are all for that. So this is a natural fit,” Fraser said. “But we are optimistic it will produce useful technologies for our customers and our businesses. It’s a way to differentiate ourselves and be out in the forefront of delivering services to our customers.” Is such an accelerator something Ohio would’ve seen even a few years ago, when fintech companies were seen more as industry disruptors than partners? Probably not. Is it something a $1.6-billion asset mutual bank would’ve flocked to then? Unlikely. But one thing certain today is that the need for fintech by these companies is critical to their futures. “If you’re not learning from the successes of the technology industry has had more broadly, especially when the (venture capital) community is signaling to everyone that this is a place where they’re seeing the next levels of successes, you ignore that at your own peril,” said Ken Gavrity, head of KeyBank’s commercial payments group and a Fintech 71 board member.

The fintech surge Total funding for U.S. fintech companies and deal activity was $12.8 billion in 2016, and a record $27 billion in 2015, according to KPMG’s “The Pulse of Fintech” report. And while the total funding dropped last year, 2016 still marked the third-strongest year on record for fintech investment overall and the second-highest year for fintech investments by venture capital firms. Brian Hughes, co-leader of KPMG’s Enterprise Innovative Startups Network, said in the report that 2017 would be a “pivotal” year for fintech, with more mergers and acquisitions and IPOs expected.

The surge is because the financial services industry had been rather slow to adapt in the digital landscape. Banking is changing rapidly, and the popularity of mobile and digital banking options coupled with services from competing, online-only banks is pushing the industry’s hunger for fintech, which is really the only lens through which the banking industry innovates today. “These are major changes those companies can’t ignore anymore,” Armstead said. Valentina Isakina, managing director of financial services for JobsOhio, sees a lot of similarities in how technology is reshaping the finance sector with how it decimated a slow-to-react business model at Blockbuster Video. The lesson is that those who don’t evolve are doomed to obsolescence. “And it’s interesting because years ago, the discussion globally was how banks were being disrupted by fintech,” she said. “Now the relationship is more about collaboration.” Besides supporting the financial services industry, the accelerator is designed to capitalize on fintech’s massive investments by drawing startups to the state while positioning Ohio and its largest cities as fintech innovators. That’s an auspicious goal, considering these accelerators are most common on the coasts in states like New York and California, where the overwhelming majority of fintech investments tend to gravitate. Fintech 71 has garnered some West Coast partner interest from Silicon Valley Bank, which is another backer of the program. “Long term, we want to have a massive incubation hub, with the right talent pool and job base, wherever that resides in Ohio,” Armstead said. “Columbus, Cleveland, Cincinnati, all could be major posts. And all are primed to take part in the veryearly-stage foundation of what we’re trying to create here.” The investor interest in fintech is supported by the clear demand for the systems they’re creating. According to PwC’s 2017 global fintech report “Redrawing the Lines: Fintech’s Growing Influence on Financial Services,” 82% of finance companies surveyed anticipate increasing partnerships with the sector (which could be a relationship through an accelerator like Fintech 71) in the next year; 77% expect blockchain (a focus for fintech companies) to be part of their production systems by 2020; and 20% are expecting a return on investment on fintech-related projects.

‘Unlike anything in the U.S.’ Supporting the Fintech 71 accelerator is JobsOhio, the state’s nonprofit economic development corporation. Its daily operations will be overseen by Co-

lumbus technology accelerator Lumos. Companies from across the world will apply to work in the accelerator from May 15-June 15, with an inaugural class of 12 companies starting work on Sept. 10 in a 15,000-squarefoot space in Columbus just across from the state capitol. Finalist teams will be awarded $100,000 stipends. The accelerator should produce two graduate classes a year. Partnering companies can kick in money to support the incubator — Armstead declined to say how much has been promised or invested so far or what individual companies are kicking in — and serve as mentors and collaborators with the startups. There’s no mandate for the startups to stay in Ohio, but the idea is that if the companies grow and build their platform here, they’re likely to hang around. And as the companies grow, the nonprofit can hold some of the equity, Armstead said, with that group potentially able to hold up to 6% stake in one of the excelling startups. In addition to other companies partnering with the accelerator over time, that model feeds money into the program that can be recycled. If those companies are highly successful, that would reduce the program’s dependency on the private sector for support. “It’s meant to be a self-sustaining model and shared asset,” Armstead said. “That’s unlike anything in the U.S. right now, let alone what I’m familiar with on a global basis.” Armstead and Isakina said there aren’t hard numbers yet on how many jobs Fintech 71 might create, and no way of really knowing how many companies could be successful or what impact they'll have for the industries they’re supporting. But there are high hopes. “Think of five years down the road. While we can’t predict how successful this will be, it could be graduating 20-plus companies from the program per year,” Isakina said. “And that could be very, very interesting.” As the fintech landscape here develops, that could funnel more investment and venture capital here. In fact, Isakina said there’s already interest in a follow-on fund in the private sector to invest further in these startups as they grow and mature. But that’s probably at least six months down the road, she said. “Venture capital invests in great ideas and great companies, and every place anywhere in the country, including Ohio, can benefit from more venture capital in order to create wealth, jobs and opportunities,” said Ray Leach, CEO of Cleveland nonprofit and venture development group JumpStart Inc. “So, yes, having a fintech accelerator headquartered in Ohio is a great thing.”

The 35 nonprofits on the full digital version of this year’s Cultural Attractions list saw attendance grow by 2.5% on average in 2016. The biggest attraction on the list, Playhouse Square, helped boost that number: Its theaters attracted more than 1.04 million visitors in 2016, an increase of 71,000, or 7.4%. The Holden Arboretum saw an even bigger increase: The arboretum — which bills itself as an “outdoor, living museum” — saw attendance grow by a whopping 79% in 2016, which equates to more than 78,000 new visitors. Why? In September 2015, the arboretum installed two structures that let guests look down on the forest from great heights: the Murch Canopy Walk and Kalberer Emergent Tower. Sure, a few organizations saw declines. For instance, the Cleveland Metroparks Zoo (No. 2 on the list) and the Cleveland Museum of Art (No. 3) both saw attendance drop by about 6% (attendance at the museum is still up compared to 2014, judging by the list we published two years ago, which didn’t include the zoo). But only one organization that would’ve made the top 30 in 2015 suffered a sharp drop: The Children’s Museum of Cleveland temporarily shut down most operations in January 2016 to make way for the One University Circle apartment tower. It plans to reopen in late 2017 in Midtown.

Then again, we couldn’t get attendance figures for the University of Akron’s E.J. Thomas Hall, which has gone through some hard times: The university laid off all E.J. Thomas employees in 2015; it’s now managed by Akron Civic Theater (which saw its own attendance grow by 15.4%). While gathering data, we also asked our cultural institutions what trends are affecting them. Both the Museum of Contemporary Art Cleveland and the Cleveland Play House said they have taken initiatives or altered programming in response to today’s political climate. The Maltz Museum said that political issues/ anti-Semitic incidents “have brought greater attention” to the museum. The election also boosted attendance at the McKinley Presidential Library & Museum. Speaking of politics: 12 nonprofits told us what percent of their funding comes from national arts and humanities endowments that the Trump Administration wants to eliminate. The average was 0.35%. (Caveat: They weren’t asked specifically to include or exclude NEA/NEH money that flows through the Ohio Arts Council.) Who’s the largest employer on the list? The Cleveland Museum of Art, with 332 permanent employees, plus 50 seasonal ones. And a quick shoutout to Northeast Ohio’s many nature centers. They weren’t included in the list, though in some ways they can be considered cultural attractions. And they attract plenty of visitors: For instance, 493,114 people attended nature centers run by the Cleveland Metroparks in 2016.

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THE LIST

Cultural Attractions

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Source Lunch Teleangé Thomas Director of Foundation Center Midwest After several years at the Sisters of Charity Foundation of Cleveland, Teleangé Thomas took her philanthropy background to the Cleveland-based Midwest branch of the Foundation Center, a national nonprofit that provides data, information and insights about the state of philanthropy. ¶ She values philanthropy for its nimbleness and capacity to be a sort of leader in a community, depending on what it needs at a given time. So she was thrilled to find an opportunity to continue in that work in a different light, at the next level, where she can look at the field as a whole and the challenges it faces. ¶ “We’re in a time that there are a lot of unknowns and it is the emergence of a potential new normal, but we have some real lessons in history to sort of glean from,” said Thomas, who has been in her role for more than a year. “We have a pretty cooperative community where partnership is appreciated and valued. And I think we fundamentally as a community want to see all people in Cleveland succeed, and so I think we continue to work toward that.” — Lydia Coutré

Five things Hobbies Wine, travel, listening to music, and sports, including fast-pitch softball

Any hidden talents? “I am what I would call an amateur professional chef.”

Specialty in the kitchen? Orange ginger salmon

Favorite book? “The Giving Tree,” by Shel Silverstein

Top of your travel bucket list? Italy

Lunch spot Tastebuds 1400 East 30th Street

The meal A blue walnut salad and a traditional greek salad

The vibe Tucked inside an unassuming brick building that may lead you to believe your GPS has lied to you, Tastebuds is a hidden treasure. The bright, colorful counter-service restaurant offers large salads, soups, sandwiches and wraps to the many who flock to the lunch-only spot.

The bill $21.33

What is a day in the life at the Foundation Center? A day in the life at the Foundation Center right now is really rooted in being strategically responsive to our users. The way that we best serve them is through our ability to provide data, to provide insights and to provide knowledge tools. Also keeping a pulse on the context of the environment in which our work occurs. So that has both the hyper-local perspective, the regional perspective, as well as the national perspective. What do you consider the current pulse of Northeast Ohio’s philanthropy? I think from right now where I sit, the pulse of philanthropy in Northeast Ohio is a highly engaged sector, a thoughtful sector and a continuously collaborative sector. I think there’s always still room for growth with that, but I think continuously thinking about where are there opportunities to collaborate and coordinate efforts, particularly around some of these really big heavy subjects, like poverty, education, economic development, employment, workforce, what have you, housing. And I would also say the pulse right now is dynamic. I think there is a duality of learning quickly … and seeking that knowledge through multiple ways. The role of philanthropy is deepening in the sense that it’s just an affirming time in our history and our country that philanthropy as a sector is important, and so it’s a question of does that role continue to be the same as it has been historically? Does it broaden in some instances or does it deepen? What about this time affirms the need for philanthropy? I think it’s the duality of communities that have been dealing with salient issues for a long time — so poverty, education, etc. — and the new political climate that we find ourselves in. I think those are the two kind of dual forces that are showing up every day. So Cleveland as a community has been wrestling with poverty for how many decades? And there have been times when we’ve gotten real traction around

some strategies and opportunities, and then that either kind of stagnates or gets undone because of other factors like political shifts and changes. In a time where the importance and need is clear, what opportunities do nonprofits and foundations have? I think it gives a couple of opportunities. I think one really again is related to the notion of being strategically responsive. So not just reacting to the environment as a whole, but being very diligent and intentional about having a strategy and a pathway toward solution and resolution around some of these issues. I also think it creates an opportunity to think about how philanthropy and nonprofits partner differently. So not just thinking of a static kind of grantmaker, grantmaking relationship, but how we also learn from one another? How do we support each other in terms of innovation? And how do we begin to deepen opportunities for coordination across various (sectors). I don’t want to forget or omit the importance of the boards in all of this too — foundation and nonprofit boards. I think it’s also a real opportunity for them, too, to not only think about their sustainability but also their models and approach to how they do their work. Both in terms of kind of assessing it, but then also thinking in that innovation space as well. What barriers do you see in Northeast Ohio and Ohio’s philanthropic community? I think bandwidth is part of the challenge. So we are a very rich community when it comes to nonprofits. Not all nonprofits are equal in terms of capacity, staffing, budget, etc. If you’re just thinking in terms of the demand and supply construct, particularly around some of these big issues … that outweighs our bandwidth just a bit. However, I think again when we think about smarter innovation, coordination, collaboration, we would find ourselves, and we’re doing it in some instances, being able to deploy our resources more effectively to be able to meet the demand but begin to roll back the tide of the demand.

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