VOL. 38, NO. 39
SEPTEMBER 25 - OCTOBER 1, 2017
Source Lunch
Akron RPM units are prepared to help when disaster strikes. Page 23
Judy Ghazoul Hilow, Malachi House executive director Page 27 SPORTS BUSINESS
Fantasy’s reality is debated in state By KEVIN KLEPS kkleps@crain.com @KevinKleps
By early 2018, the fantasy sports industry could be legal in Ohio, and thus be exempt from state gambling laws. It’s a development that would be welcomed by two of the titans of daily fantasy sports — DraftKings and FanDuel. And for Northeast Ohio resident Kevin Day, whose Fantasy Football Calculator doesn’t fit the pay-to-play model that state legislators are seeking to regulate, it could be a sign of things to come. Day’s website, which he developed as a Case Western Reserve University engineering student 11 years ago, focuses primarily on fantasy football mock drafts. But he told state senators in a letter that was included in a Senate Finance Committee hearing on Wednesday, Sept. 19, that he hopes to expand his software and content to customers who compete in paid fantasy contests, and would “like the freedom” to run fantasy contests as his business grows. “This legislation lets me build out tools around the contests and leaves the option open down the line (to host contests),” Day told Crain’s. The bill, which would result in the Ohio Casino Control Commission overseeing and licensing the for-profit fantasy sports industry, passed the state House by an overwhelming margin in May. It’s now in the hands of the Senate, whose recent proponent hearing included letters of support from top executives of the Cincinnati Reds and Columbus Crew. Rep. Jonathan Dever, R-Madeira, one of the sponsors of House Bill 132, said that, unlike gambling, fantasy sports falls into a bit of a “gray” area in which it was never properly defined by the state. SEE SPORTS, PAGE 21
CLEVELAND BUSINESS
The List Largest grantmaking foundations Page 20
REAL ESTATE
Downtown is feeling more like home By STAN BULLARD sbullard@crain.com @CrainRltywriter
Construction workers, using a tower crane recently perched on the 10-story parking garage at 515 Euclid Ave., are starting the skyward climb that will produce the 28-story Beacon apartments.
Scheduled to open by 2019, the $94 million project by Cleveland-based Stark Enterprises will add 187 luxury rentals to the city. The Beacon is one of 17 projects in a pipeline that the Downtown Cleveland Alliance nonprofit estimates could lift the central city past a goal of 20,000 residents by 2020. With 1,000 units hitting the market this year, the nonprofit that fosters downtown development and
oversees marketing, safety and maintenance matters celebrated the city’s Downtown Days to mark the downtown population reaching an estimated 15,000. The more than doubling from 6,484 residents in the 1990 U.S. Census, a count that exempts the downtown jail population, was something to celebrate. But DCA said it’s focused on what’s left to be done. “It’s critically important to keep up
the momentum through continuing to work with our public and private partners,” said Michael Deemer, DCA executive vice president for business development. That means continuing to woo lenders to aid projects, lobby for legislative measures and incentives to aid projects and continued planning efforts. SEE DOWNTOWN, PAGE 26
SMALL BUSINESS
Hub 55 aims to turn its namesake into a destination
Siblings Natasha Pogrebinsky, left, and Alex Pogrebinsky stand in the future dining room of the Lake Shore Bank building on the corner of East 55th Street and St. Clair Avenue that will soon be renovated into a restaurant, distillery and offices. (Tim Harrison for Crain’s)
Small Business report Bookstores turn the page: Independents reinvent the industry. Page 13 Finding their way: LogicJunction’s health care wayfinding app Page 14 Tax Tips: Reappraisal appeals Page 15
Entire contents © 2017 by Crain Communications Inc.
East 55th has its challenges, but optimism abounds By MARK OPREA clbfreelancer@crain.com
“They don’t make ’em like this anymore,” Alex Pogrebinsky said as he walked into a defunct, 112-year-old bank building on East 55th Street and St. Clair Avenue one afternoon in August. Above him were vaulted ceilings with electrical wires jutting out; around him, lime-green walls fronted by neoclassical yellow columns. “Cleveland has a history of taking down old buildings,” he added. “This? It would be a crime. Instead, we’re going to restore this baby to its former glory.” Pogrebinsky, the 34-year-old gener-
al manager at East Side eatery-complex Hub 55, is referring to the latest phase of expansion for him and owner Rick Semersky’s business venture. Since March 2015, Hub 55 gradually has become what Pogrebinsky dubs an “island in a desert,” a singular refuge for beer lovers in a neighborhood formerly untouched by the big-brewery concept. With Hub 55’s coming-of-age moment — a slivovitz and vodka distillery, a “New European” restaurant and a grocery store — come November, Pogrebinsky and crew hope the area will become a beacon for like-minded followers. The Hub 55 complex is growing despite its surrounding setbacks: high
crime, over 400 vacant homes and 48% of the residents in the St. Clair-Superior neighborhood living below the poverty line. Four people in the vicinity having been shot, including an 8-year-old boy, since May alone, according to media reports. Which begs the question: Can Hub 55 attract the clientele it wants? “Sure, it’s gotten a bad reputation because of its people, because of the economy, because of people investing in other locations,” Pogrebinksy said. “Bad neighborhoods are usually bad for those entrenched in that sort of life. But for most people? It’s just their neighborhood.” SEE HUB 55, PAGE 18
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TECH MATTERS The special relationship between tech, product management teams
Why good product management is so important to a tech company
istorically, the waterfall method for developing software went something like this: A product development team would write up a specific set of product requirements. They gave those instructions to the technical team, who designed the software accordingly. The project underwent several iterations of testing. Then, it was deployed to the market. Now, software is more complex. Problems and solutions are no longer beginning and end points — they are fluid and overlap. The sophistication of software development in the speed-driven information age means the product management and technical teams must be more synchronized than ever before. Since the technical team is responsible for building the software, the product management team must have a solid grasp of the problem they are trying to solve so they can define what needs to be built or enhanced and whether a proposed solution will solve that problem. A strong relationship between the teams is essential in an agile software development world, where cross-functional, self-driven teams work together, and being swift and nimble in response to change is protocol. “The relationship has to be 100% seamless and supportive. Alignment is critical,” said Ike Herman, executive vice president and chief product officer at OEC, a Richfieldbased company that makes ecommerce software for automotive dealerships. A couple years ago, OEC adopted Agile and Pragmatic Marketing training to deepen the product management and technical team partnership. Pragmatic Marketing training provides a standard language for product teams to figure out how to build and sell products that people will buy. Big-bang releases are no longer necessary. Instead, improvements are incremental, which minimizes risk and improves functionality more frequently. “We work cross-functionally and collaboratively in sprints,” Herman said. “Teams self-manage.” Common team workspaces, stand-up meetings and a bottom-up approach to problemsolving help foster connections and build trust. By completing Pragmatic Marketing
The product manager is the ambassador between multiple teams within a company, including business, user experience and tech. The success of a tech company relies on this individual and his or her team. Mike Belsito, founder of Product Collective, a Cleveland-based product management networking organization that connects product people all over the world, offers four key reasons that illustrate how and why product management is integral Belsito to a tech company.
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CALENDAR OF
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training and assimilating that framework into operations, companies like OEC are able to better understand their customers by isolating problems and going deep into understanding them, said Sarah Truman, OEC’s enterprise product director. “The product team are experts in the market, so we figure out the problem. The technical team figures out the solution, and we work on design together,” Truman said. “The end solution is better.”
Strongsville-based Foundation Software has experienced more alignment between its technical and product teams since that construction accounting software company began building a project management team. Within the last three years, the company went from zero to eight project managers, and is looking to hire more as that company’s sequential year-over-year employee and revenue growth continues, said Fred Ode, founder, CEO and chairman. “We’re putting out a much better quality product,” Ode said.
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THEORY OF EVOLUTION Unlike project managers, product managers aren’t solely focused on starting and completing a product. They are focused on the evolution and why a product should be built or enhanced. No good product is ever complete unless it’s discontinued. “The product always needs to evolve so it doesn’t become stale,” Belsito said.
2
DON’T VS. DO A product manager focuses on why a product should not be built. “Product people are inundated with ideas, from the customer’s to the company’s and even their own,” he said. “It’s easy to list the reasons for why a product should be developed. It’s much harder to turn a good idea down.” Highly skilled product managers choose not to move forward with a lot of great ideas.
3
ABILITY TO INTERPRET A savvy product manager is able to translate a customer’s pain points. “It’s not enough to ask what a customer wants,” Belsito explained. “Let’s say I’m using a new (customer relationship management) system, and it takes 20 minutes to load every new sales lead, and I’m getting hundreds of leads. I’ll need to hire lots of people who can do data entry. Or, I may propose to a product manager a system that cuts my entry time in half.” A forward-thinking product manager figures out how to leap from problem to answer, and systemically solve the problem by, perhaps, developing a software product that immediately imports all sales leads into a program and eliminates data entry time altogether.
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DEEPLY EMBEDDED Product managers must know how to seamlessly toggle between all different departments and functions within a company. “One minute, a product manager is standing shoulder to shoulder with designers evaluating the user experience, and then the next minute she is pitching the idea to the (company’s) board. This requires a very unique skillset,” Belsito said.
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BizConCLE 2017: 7 a.m. to 6:15 p.m., Cleveland Public Auditorium, 500 Lakeside Ave., Cleveland. Join Greater Cleveland Partnership and COSE in this education and networking experience geared toward small- and middle-market company CEOs, C-Suite leaders, entrepreneurs and employees. Info: jumpstartinc.org/events/ bizconcle-2017/
Startup Weekend Cleveland: LaunchHouse, 675 Alpha Drive, Suite E, Highland Heights. This event invites budding entrepreneurs to pitch ideas, form teams and start companies over the course of 54 hours. Top teams get the chance to present their idea to judges and potential investors. Info: communities.techstars.com/usa/ cleveland/startup-weekend/10658
Cleveland Medical Hackathon: Global Center for Health Innovation, 1 St. Clair Ave. NE, Cleveland. The Hackathon invites innovators to identify challenges and develop technological solutions that address population health, precision medicine, public health and the opioid crisis. Info: clevelandmedicalhackathon.com
Medical Innovation Summit: Huntington Convention Center, 300 Lakeside Ave., Cleveland. More than 2,500 health care industry leaders will convene to discuss investable technologies for genomics and precision medicine. Info: medical innovationsummit.cvent.com
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By JEREMY NOBILE
Accounting mergers
jnobile@crain.com @JeremyNobile
Some noteworthy mergers in this market’s accounting sector in recent years include the following:
Feeding its hunger for a greater slice of the Northeast Ohio market, New Philadelphia-based accounting and advisory firm Rea & Associates is acquiring Cleveland’s Walthall CPAs. Financial terms of the deal were not disclosed. Walthall is slated to merge into Rea on Nov. 1. The combined practice will have a total staff of about 300 people and 13 offices in northern and central Ohio. Walthall managing partner Richard Lash said the firm, founded in 1944, tossed around ideas about a potential combination with Rea executives several years ago. But it was in early 2016 when they began discussing a deal in earnest. Lash said the chance to offer more to legacy Walthall clients and staff alike — all employees are being offered jobs, he said — combined with adding to the Rea footprint, made the move compelling. Having similar cultures, though, helped seal the deal. Lash said the firm, which has kept relatively steady in size in recent years with about 50 employees, nearly 40 of them CPAs, has been approached about an acquisition numerous times over the past decade. For Rea, which was founded in 1938 and already has small offices in Wooster and Mentor, the deal gives the firm a foothold in Cleveland and injects an “incredible” talent base into their operations in the crowded Northeast Ohio market, said Rea CEO Don McIntosh. He said Rea has had eyes on Cleveland for the past 10 years. And it has been inching closer, having acquired Friel & Associates in Mentor in November 2016. Their last deal prior to that spread the firm’s footprint west with the absorption of M.A. Hoops & Associates in Lima in September 2014. “Breaking into a market like Cleveland from scratch is an unbelievable task, and we’ve seen some firms try to come to Cleveland with no success,” McIntosh said. “It’s not an easy territory to get in. So it was critical that we find someone who is highly respected in the industry in that marketplace that people believe in and trust for us to make the splash we want to make.” Of Walthall’s four locations — in
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However, Lash also noted how Walthall has grown through the years by acquiring smaller, boutique firms. That’s something he’ll look to replicate in this market for Rea. “It will be my role here as president of the Northern region to go talk to firms with a deeper bench and a whole variety of different services to provide,” Lash said, “and to go out to some of the firms out there to see if they want to talk to us as a new, combined firm.” McIntosh said Rea already is vetting other potential acquisitions as part of the firm's M&A strategy. Some targets, he indicated, could branch the firm outside Ohio. He declined to get into more details but emphasized that Rea’s top priority is its home state. “At the end of the day, we want to work very hard at being a dominant firm in the markets we are located in now,” McIntosh said. “We do that by continuing to grow, bringing in great talent and servicing the heck out of our clients.”
NEO consolidation continues McIntosh
Lash
Amherst, Cleveland, Mentor and Wooster — the latter two will merge into nearby Walthall offices. The combined firm’s Mentor, Amherst and Cleveland (Independence) offices will be branded as Walthall Rea. Rea had $33.9 million in revenue 2016, according to data provided to Crain’s, and Walthall logged $8.5 million that year. Meanwhile, with Rea’s presence in the state expanding, the firm is divvying operations into regions. Lash will become regional president for Rea’s Northeast Ohio region, which will comprise offices in Amherst, Cleveland, Medina and Mentor. The other locations, including the Wooster office, will fall into the firm’s East Central region, which will be overseen by Rea’s current director of manufacturing services, Kyle Stemple. Rea has developed niches in sectors including manufacturing, government and health care, and it has a strong consulting business that’s largely considered the financial lifeline in the evolving business model for accounting-based service firms. Courting new and existing clients with those new services will be a major focus for Lash.
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The Rea and Walthall combination is one of the larger mergers in the accounting industry to happen in 2017. However, it follows a trail of several notable deals that have hit the market in the past few years. Allan Koltin, CEO of Koltin Consulting Group Inc. in Chicago, an adviser on mergers and acquisitions in the accounting sector, said firms both inside and outside Ohio are seeing opportunity in this market and are vetting firms to roll up here. “There continues to be about a half-dozen firms fixated both in and out of the state wanting to come to the Greater Cleveland market,” Koltin said. “Some of these are firms significant already in Columbus and Cleveland, as well as Indiana. I think you’re going to see more consolidation going on.” He added that the pulse among many firms is they’re more interested in growing through acquisitions right now than firms are willing sell. Those most likely to entertain a merger are ones without clear succession plan in place — which is a prevailing trend in an industry ripe with aging ranks. “So it’s a seller’s market today because, in my perspective, there are more firms that want to be in Cleveland than there are firms willing to entertain an upstream merger,” he said.
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Although the patient is a simulated projection, the user of a new tool at MetroHealth can feel the resistance of skin and then bone as they pierce a virtual needle into the body. The “needle” tool is part of new virtual reality technology for surgeons to practice complex operations in a 3-D environment. MetroHealth is the exclusive testing site for MissionRehearsal, created by Chicago-based ImmersiveTouch, Inc. The technology takes a specific patient’s imaging from CT scans, MRIs and angiograms and reconstructs it in a 3-D model that allows a surgeon to create a detailed plan in virtual surgical reality. This can be key for unusual or complex cases in which a surgeon would have less specific experience than a more routine case, said Dr. Ben Roitberg, chair of neurosurgery at MetroHealth. The technology also can be used to expand the teaching libraries. “The ability to do rapid virtualiza-
tion and have highly interactive, much more advanced simulation allows for not only … the experienced surgeon to prepare for a particular case but for that experience to be then transferred more easily to trainees at a more advanced level than is currently possible,” said Roitberg, who has worked with ImmersiveTouch to develop virtual reality simulations since 2007, long before he joined MetroHealth in 2016. About 45 institutions in the country have ImmersiveTouch’s technology. Dozens, including Cleveland Clinic, are using it to train residents with procedural modules and generic cases. But MetroHealth is the only site that has the next generation of that technology, which it is helping to develop and test. The old model helped in teaching students, but the time it took to virtualize patients’ imaging made using it in surgery preparation completely unrealistic, Roitberg said. “I’ve worked with a number of simulation programs, but this has been, from my perspective, the most advanced and the best for where I see the future should be going,” he said. The idea is to be able to have a pa-
tient get a scan and see the virtualization in the same appointment, said Patrick Kania, biomedical visualization manager for ImmersiveTouch. “The doctor can consult with the patient before the patient goes home,” he said. “So we would be able to educate the patient enough and then be able to build a little bit more complexity in for the doctors to practice.” Surgeons can show the details and surgical path of a procedure to a patient using a virtual reality headset, iPad or desktop monitor. The ability to show patients 3-D images and explain what a doctor is doing is a huge benefit, Roitberg said. In cases where he is able to show a patient the 3-D reconstruction of their pathology, the patients “responded to this amazingly,” he said. “We are the first company in the nation to integrate surgical training, planning and patient education in a virtual environment with haptic technology,” said Pat Banerjee, CEO of ImmersiveTouch, in a statement. “This allows your hand to feel the resistance of a surgery and be able to tell the difference between skin, muscle and bone.” SEE SURGERY, PAGE 26
CRAIN’S CLEVELAND BUSINESS
SplashLink provides free service after Harvey hits By CHUCK SODER
Three days after Huricane Harvey hit Texas, SplashLink’s ECHO Emergency Notification and Response System was live. (Splashlink.com)
csoder@crain.com @ChuckSoder
As Hurricane Harvey blasted its way toward Texas, SplashLink CEO Ebie Holst starting thinking about an idea that had spent the past three years stuck on the drawing board. Back in 2014, after a toxic Lake Erie algae bloom contaminated Toledo’s drinking water, the Beachwood company starting drafting plans for an online tool that could be used to solve particularly urgent water problems. Something that could help organizations find water purifiers, pumps, generators and all sorts of other water-related products and services as fast as possible. But developing that tool wasn’t a major priority — until Harvey started heading for Houston. On Aug. 25, the day the hurricane made landfall in Texas, Holst got in touch with a Texas nonprofit that has relationships with major water users throughout the state. It was clear they were going to need help. The next day, she pulled the project off the back burner. Holst figured SplashLink could get the tool up and running quickly. After all, players in the water industry were already using SplashLink.com to bid on projects, find grants and otherwise solve day-to-day problems.
She was right: Three days later, following what Holst described as an “all hands on deck” effort, SplashLink’s ECHO Emergency Notification and Response System was live. Since then, the Texas nonprofit, Accelerate H2O, has been sending utilities and all sorts of private companies with water-related problems to SplashLink.com. Though SplashLink users typically pay subscription fees, the company, which has 19 employees, is giving free ECHO access to anyone affected by Hurricane Harvey, Hurricane Irma and Hurricane Maria, as well as the earthquakes that have recently struck Mexico. ECHO already is helping some organizations solve problems, Holst said. She noted that a major Texas utility used ECHO to find portable water purifiers. One week later, the utility received about a dozen of them. The ECHO tool allowed the utility to search for vendors anonymously to help it avoid being overwhelmed by companies looking to drum up Harvey-related business. It also gives
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users a way to ask vendors follow-up questions and otherwise vet them anonymously, according to Holst, who would not go into detail about how the system works for proprietary reasons. She said that organizations affected by Harvey and all the other recent hurricanes and earthquakes could end up using the tool for an extended period of time, given how much damage those disasters have caused. “We’re anticipating this to be a fairly long process,” she said. The decision to develop the tool and make it freely available during these disasters was easy, according to cofounder Jason Wuliger, who noted that he has cousins in Florida who were forced to evacuate as Hurricane Irma approached. It felt way better than watching the situation from afar and wishing they could help, said Wuliger, who joined the company in 2013 as its second employee. “We didn’t have to wish. We were actually able to do it,” he said.
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Manufacturing takes another hit in August Crain’s Employment Report Crain’s Cleveland Business has partnered with local economist Jack Kleinhenz to provide monthly data — and clarity — about a key factor in business decisionmaking: the size of Northeast Ohio’s workforce.
Seasonally adjusted employment numbers, Northeast Ohio MARCH: 1,176,199 APRIL: 1,176,394 MAY: 1,173,196 JUNE: 1,167,333 JULY: 1,174,100 AUGUST: 1,173,564 1,155,000
1,160,000
1,165,000
1,170,000
1,175,000
By JAY MILLER jmiller@crain.com @JayMiller
It’s unfortunate to have to say, but the steady decline in manufacturing jobs might be eased in the short term by the hurricanes that hit Texas, Florida and the Caribbean in recent weeks. But the respite would only be short term, as the long-term outlook is for manufacturing jobs to continue to decline. Employment dropped ever so slightly in Northeast Ohio in August, according to the Crain’s Employment Report (CER), with payrolls at area businesses dropping by 536 in a universe of 1.17 million private industry jobs in the region’s seven counties.
Those lost jobs came from the goods-producing sector, specifically from manufacturing firms, which showed a loss of 751 jobs, offsetting a gain of 215 jobs in the service sectors. Those lost jobs, said Jack Kleinhenz, the Cleveland Heights economist who created the Crain’s employment model, are likely attributable to slowing vehicle sales that impact firms along the auto industry supply chain. That shortterm decline might be reversed, Kleinhenz is beginning to suspect, if the late-summer weather mayhem spurs demand to replace vehicles damaged by hurricanes. “So much of our manufacturing is auto-related, so it’s likely that (a significant need for replacement vehicles) would help local supply-chain
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businesses and assembly plants,” Kleinhenz said. Despite occasional months of growth, or at least stability, the number of jobs in the goods-producing sector has been declining since July 2015, according to CER data. The total is down 4.6% since, and the losses are forecast to continue for the foreseeable future. “What we should be continuing to see is slight declines in manufacturing employment, but with continued productivity gains through automation,” said Jacob Duritsky, vice president of strategy and research at Team Northeast Ohio, the regional business attraction nonprofit. “Our long-term projection is showing employment in manufacturing declining another 20,000 jobs over the next 10 years.” The Bureau of Labor Market Information of the Ohio Department of Job and Family Services recently forecast that employment in the seven-county area will grow by 5.3% from 2014 and 2024. But jobs in manufacturing, the largest portion of the goods-producing sector, will decline by 4.4%, or about 7,200 jobs, during that same timeframe. That sour job picture comes despite expected growth for manufacturing businesses in Northeast Ohio. Global Trade, a media brand focusing on domestic and global business expansion, earlier this month reported that manufacturing output in Ohio “has come roaring back since the recession, now standing at 20% above pre-2009 levels, thanks primarily to investments in technology made by the Ohio manufacturing sector.” Similarly, the ISM Manufacturing Index showed increased activity in August with comments from panel members reflecting expanding business conditions, “with new orders, production, employment, backlog and exports all growing in August,” the report stated. The Institute of Supply Management surveys business conditions at 300 manufacturing firms monthly. That jobless growth is the result of strong gains in productivity and because of automation. Manufacturing productivity increased 92% from 1990 to 2015 and, Team NEO forecast last year, it's expected to increase another 75% by 2025 for the 18-county area including Cleveland, Akron, Canton and Youngstown that Team NEO serves. More broadly, Cleveland Federal Reserve Bank economist Joel Elvery, writing in his August “Cleveland Metro Mix” report, observed that “all of the indicators except building permits show that Cleveland’s growth continues to be weaker than that of Ohio and the nation.” He noted that employment in Northeast Ohio grew more slowly in 2016 than in 2015 in the Cleveland metro area, in Ohio, and in the nation. “The slowdown in employment growth is consistent with the belief that the nation’s economy is at or near full employment,” he wrote. The employment bright spots Elvery found were in the leisure and hospitality, and the business and professional services sectors. Leisure and hospitality was the fastest-growing sector of the regional economy, adding 2,050 jobs in 2016. That was a 2.1% increase in employment, keeping pace with that sector’s employment growth nationwide. Business and professional services employment rose by 2,367 jobs, or 1.7%, in Northeast Ohio, outpacing that sector’s growth nationally by 0.5 percentage points.
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PA G E 10
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CRAIN’S CLEVELAND BUSINESS
Opinion From the Editor
Right on, spelling defenders say
Editorial
Flying right Iceland probably isn’t on your list of travel destinations. But if could be — and if you can afford it, maybe it should be, since those who have visited rave about the place — thanks to some deft work by the people who run Cleveland Hopkins International Airport. You’ll have not one but two options to fly from Hopkins to Iceland’s capital of Reykjavik starting in May 2018, as both Icelandair and WOW air will offer low-fare, four-days-per-week service. Even more significantly, travelers will be able to use the airlines to connect to nearly two dozen European cities, including Berlin, London and Paris. As Crain’s government reporter Jay Miller noted in a story about the airlines’ plans, bringing broader service between Cleveland and Europe “has been an ongoing effort” of Hopkins’ business development executives in recent years. Fortunately, the tide is turning for both foreign and domestic service, as the addition of service by carriers such as Frontier Airlines gives Cleveland travelers more options. (Frontier last week announced it would add service next April to Austin, Texas, marking its 19th destination from Hopkins.) Passenger traffic at Hopkins was up 12.7% in July over the like month in 2016, to 892,398 passengers from 791,995. It was the fifth consecutive month in which 2017 passenger traffic exceeded that of 2016. Even more notable about the July increase is this: July 2016 was the month Cleveland hosted the Republican National Convention, which brought thousands of travelers to town by air. For the first seven months of 2017, Hopkins has handled 5,230,927 passengers, a 6.7% increase from 4,900,412 in the like period a year ago. There’s still work to be done. But it’s getting done, as the passenger data show, and that’s critical for Cleveland. Hopkins is getting close to returning to the pace of 2013 — the year before United Airlines ended its hub operation here — when nearly 9.1 million passengers used the airport. Quality air service is critical to business development. Attracting a megaproject like Amazon HQ2 to Cleveland is probably a long shot, but more modest expansions of existing busi-
nesses are made easier when companies know they can get people in and out of town easily.
Waiting for Cordray Ohio Democrats hoping that former Attorney General Richard Cordray will return to the state and give them a marquee name in the 2018 gubernatorial race might be setting themselves up for disappointment. Reuters reported recently that “doubts are growing” that Cordray, the current head of the Consumer Financial Protection Bureau, will leave his post to run for Ohio governor. The news service said a “lackluster Labor Day speech sparked anxiety over his campaign appeal,” according to “some party insiders.” One speech, good or bad, means little and has nothing to do with a decision to run for governor. But Cordray, whose term at CFPB ends in July 2018 (unless Republicans push him out before that), will need to decide shortly if he’s making the race. To date, Cordray has been coy about his intentions, which probably is an irritation to some in his own party and has prompted Republicans to set up a website, www.nocommentcordray.com, that poses questions such as “why won’t Cordray comment on his political ambitions?” and “what is he hiding?” (Cordray does seem to have a talent for getting under Republicans’ skin.) It’s way too early to have any genuine interest in the 2018 gubernatorial race beyond this: Ohio voters would be better served by having a competitive two-party system, rather than one in which a sickly Democratic Party can’t field competitive candidates, as was the case in the 2014 gubernatorial race and last year’s U.S. Senate race. To date, the announced Democrats in the race lag significantly behind their Republican counterparts in fundraising, due in some measure to uncertainty about whether Cordray will jump in. He’d do his party, and all voters, a favor by giving a clear indication of his intentions. The sooner, the better.
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My go-to reference tools surround me at work like sentinels, always ready to guard against an invasion of poor grammar or style, among them the Associated Press Stylebook, the Merriam-Webster dictionary and my beloved college textbook, Strunk and White’s “The Elements of Style.” I still turn to them, many decades into my career, even though I sometimes foolishly ignore their wisdom. A few weeks ago, I asked in a column whether spelling and grammar matter in the Twitter age. I’m heartened to say many of you responded with a full throated “YES.” I especially enjoyed hearing from two eagle-eyed readers who pointed out a typo in one of the stories in the print issue in which the column ran: We mistook the Elizabeth word “worth” for “world.” I knew I was testMcIntyre ing the grammar gods when I wrote that column. I was just grateful the typo wasn’t in my screed. I only wish I was as lucky in an earlier column. Another reader let me know about a boneheaded mistake — a “glaring error,” she rightfully said — I made when I extolled the “fruited planes” in a column several months ago. I’ve hung my head in shame since I received that email, imagining a flight taking off from Hopkins bearing mangoes and pineapples. Even my desktop sentinels couldn’t save me from that one. The problem today, as I said in that column, is that too many people wouldn’t feel shame about a mistake like that. Their attitude is that spelling and grammar no longer matter. Well, it does. And many of our readers said so: “Beyond misspellings, I’m also horrified by rampant malapropism,” wrote Michael Bennett, vice president of external affairs at the Cleveland Leadership Center. “I’m aghast when I read about a person flaunting the law by running a red light (instead of flouting it), or starting a new exercise regime (instead of regimen) or engaging in a sorted (vs. sordid) affair.” Jan Leach, former editor of the Akron Beacon Journal and an associate professor at Kent State University, shared several language mistakes from the classroom. Her favorite: “A student had written about the pope being ‘inflatable’ instead of ‘infallible.’ This one almost had me falling out of my chair because I pictured the pope as one of those wavy things you see at car dealerships.” Jack Wollitz, senior director for digital content at Innis Maggiore in Canton, wrote about how he ended up in the doghouse after correcting his spouse’s text: “My wife grabbed my phone to respond to a text from a mutual friend. I read her text. She’s not as careful as I am, so I reminded her that the words and punctuation (or lack thereof ) that she texted reflect back on me. ‘I have to be careful about my brand,’ I said with a smile. The smile didn’t work.” Ken Peterson, supply chain manager at Energy Focus in Solon, said he worries about the “dumbing down” of America: “I’ve had the opportunity to travel to many parts of the world during my career, and I can tell you from firsthand observations that the importance of knowing how to spell isn’t lost on other countries, especially in China. In those places ‘close enough’ is not good enough. I read communications daily from college-educated people who don’t know the difference between their and there.” Charles Klass of Cleveland did his part to make sure his daughter knows the difference. “I used to drive my daughter crazy during her school years, correcting her grammar. The funny thing is that she then started correcting her friends,” he wrote. “They would laugh about it, but I was thrilled that she got the message.” Did you hear that, defenders of proper grammar, spelling and usage? There is reason to hope!
Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes. Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.
CRAIN’S CLEVELAND BUSINESS
Web Talk Re: Great Lakes Brewing in the Flats? I love the idea of Great Lakes Brewing Co. and Fred Geis teaming up for a potential development in the Scranton Peninsula. We have two great companies that each have contributed to our beloved city. As much pride as it would bring us to have Amazon at that location, my opinion is that it should go to GLB. They should rank higher on our priority list. They are "family," which comes higher than strangers. — Mike Straub
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Letter to the Editor NEO needs affordable mortgages A recent analysis of mortgage data by Bloomberg, highlighted in a story on the Crain’s Cleveland Business website, confirmed what we in Greater Cleveland already knew — our housing stock has yet to recover from the mortgage and housing crisis. The Cleveland area now has the dubious distinction of being ranked No. 1 in the share of homeowners whose loans are higher than the property’s market value by 25% or more. In Cleveland, 22% of all loans are in underwater mortgages — an indication that borrowers owe more on their homes than they are worth. Underwater mortgages stall the housing market and consequently have a negative impact on the economic stability of many communities. The region has done an admirable job with home demolition, land banking, fixed distressed properties and foreclosure prevention. Sadly, taxpayers are bearing the brunt of paying for these services. Yet the situation would be far worse if not for those interventions. What’s critical now and into the future are safe and affordable mortgage options to facilitate a healthy housing market. South Euclid is a wonderful bedroom community that benefits from first-time homeowners. As a result of the access to a 30-year fixed mortgage, homeowners in South Euclid are able to build wealth for their families. A robust secondary mortgage market is important for communities like South Euclid. We are fortunate to have Sen. Sherrod Brown, D-Cleveland, championing access and affordability on the Senate Banking Committee. Georgine Welo, Mayor, South Euclid
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SMALL BUSINESS
Writing a new chapter Loganberry Books in Cleveland’s Larchmere neighborhood has been a favorite of East Side bibliophiles since 1994. (Photographs by McKinley Wiley for Crain’s)
The expected demise of Northeast Ohio booksellers in the era of Amazon and e-readers hasn’t quite hit home — and many are even encouraged by what they see in the market By BETH THOMAS HERTZ clbfreelancer@crain.com
Independent bookstores were an endangered species a decade ago as competition from Amazon and bigbox chains forced many to shutter, but that trend appears to be reversing itself across the country — and Northeast Ohio is no exception. Several local independent bookstores have opened in the area in recent years and at least one long-time local favorite invested in a major expansion. And while long-term success is anything but guaranteed, local shop owners are encouraged by what they’re seeing. “People have been reporting the death of bookstores for the last 10 years, when it has not been true for the last five,” said Harriett Logan, owner of Loganberry Books in Cleveland’s East Side Larchmere neighborhood since 1994. Among the independent bookstores opening in recent years are The Bookshop in Lakewood, which sells used books, in 2014 and The Book Store & Handmade Marketplace, which sells new books and works by local artists in downtown Medina, in November. Appletree Books in Cleveland Heights underwent renovations last year that doubled its space and the offbeat Guide to Kulchur reopened at West 52nd Street and Lorain Avenue as a nonprofit entity this July, after closing
its location in 2015 at West 59th Street and Detroit Avenue Also, Visible Voice Books in Tremont reopens this month next to Crust pizza after a three-year hiatus. The new location on Professor Avenue — described in a recent news release as an “urban literary retreat” — offers double the space and a more visible storefront. The new shop boasts a 26-
car parking lot, and the additional square footage allows the bookstore to integrate a new cafe with seasonal wines and beer. “These past three years I have been making lists of books and lists of what I could do to refocus and strengthen the store,” Visible Voice owner Mike Ferrante said in the release announcing the reopening, officially slated for
Sept. 27. “The idea of reopening was never really out of mind for very long. For better or for worse, I would not be the person I am now if it was not for all the reading I have done throughout my life. Literature widens your world view and opens you up to understanding the struggles, motivations and will of others.” Other area stores, such as Logan-
Loganberry owner Harriett Logan describes her shop as a serious bookstore in a setting with ambiance .
berry and Horizontal Books, which sells last season’s bestsellers at large discounts on West 25th Street, report strong sales as well. The White Plains, N.Y-based American Booksellers Association (ABA), a trade association for independent stores, reports that its membership has grown for the past seven years in a row — from 1,651 locations in 2009 to 2,321 today. In addition, the association reports steady sales gains over the last several years. For all of 2016, sales at independent bookstores rose just under 5% over the previous year. “We’ve gone through a period of growth and we think it will continue,” said ABA CEO Oren Teicher. He attributes the resurgence of independent bookstores to several factors: the rise of “buy local” movements; the reduced cost of technology allowing small players to operate more efficiently and reach more customers; and increased recognition by publishers that consumers “discover” books they didn’t know they wanted in stores, not online, which has motivated them to help small stores find ways to be more profitable. Bookstore owners also tend to be an entrepreneurial group, willing to adjust to whatever challenge the market throws at them in each new chapter of their existence, he added. “When you put all of those factors together, it equals a formula for success,” Teicher said. SEE BOOKSTORES, PAGE 16
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CRAIN’S CLEVELAND BUSINESS
SMALL BUSINESS Adviser: David Campanella
Succession planning can’t be a last-minute decision If you are a small business owner and don’t have a succession plan in place unfortunately you’re in the majority, and it’s probably not where you want to be. As a wealth manager for U.S. Bank, I’m acutely aware of the fact more small business owners could use a succession plan. For example, I witnessed one partnership that didn’t set up a sales agreement between two business partners. One of the partners unexpectedly passed away and the surviving business partner ended up going into business with the spouse of the deceased partner. This wasn’t planned by the original partner, and it didn’t protect his original investment. A lot of important decisions had to be made quickly, and now he had this new person to bring up to speed on everything that was going on. The unanticipated arrangement also didn’t serve the surviving spouse, who may have preferred a liquidity event. Of course each case is different,
Campanella is market leader for Cleveland and Columbus with U.S. Bank Private Wealth Management
but this example illustrates the need for you, as a small business owner, to join the third of Ohio small businesses that already have an exit plan. When U.S. Bank surveyed more than 200 Ohio small business owners earlier this year, we found that only 33% have an exit strategy or succession plan in place. It’s on par with the average across all of U.S. Bank’s 25-state footprint (31%), yet still demonstrates a need for owners to look at the future of their companies after they plan to move on or the future of their families and partners if they pass away unexpectedly. An updated succession plan can
be an invaluable tool to make an ownership transition as successful as possible. Even if you plan to own the company until you die, a transition plan will help your heirs or successor navigate more smoothly. The Ohio small business owners surveyed who already have succession plans, are considering a wide-ranging options for their companies. According to our survey, 37% plan to sell their business to a family member, 16% plan to dissolve the business, and another 16% expect they will transfer to new ownership other than family. The rest will either sell to an employee or friend or haven’t decided what to do yet. Transferring to a family member, although most common, is hardly without risk. Over the next 15 years, 4.5 million businesses will be transferring ownership representing $10 trillion of wealth in the United States, according to Forbes. Only 30% of all family-owned businesses survive into the second generation, and for those that do survive, the survival
rate drops to single digits by the fourth generation. Fortunately, there are strategies that can help smooth the transitions and allow business owners to realize the power of possible. One key step is to find a good group of trusted advisers that could include a CPA, an M&A adviser, a business coach, a business advisory board (or board of directors), a business attorney, a private equity company adviser, an investment banker, a commercial banker and a wealth management team. Succession plans often include naming a successor, a valuation of the business and its assets, an outline of the preferred timing for a transition, and ideally, a description of why the transition is necessary. Answering “why” is important because it helps the owner move to her or his next stage. It has been my experience in working with business owners that buyer’s remorse often sets in immediately after the liquidation event or transition period ends. The Exit Planning Institute did a
“State of Readiness Survey” and found only 4% of small business sellers had a “life after business” plan. To maximize the success of a transition and minimize remorse, I often recommend clients sequence their exit over two years if possible. The first year the owner physically leaves the business for two months with the successor running the show. This is a test run both for the successor and the exiting owner. In the second year, the owner leaves the business for six months, enabling all stakeholders to feel comfortable with the new successor and allowing the original owner to evaluate his or her retirement goals. These could include recreation, travel, community involvement, charitable activities or even starting another business. No matter where you are in the lifecycle of your small business, it’s important to begin planning today for your eventual exit by working closely with your advisers to align your business succession and retirement plans.
Beachwood firm helps patients find their way By DOUGLAS J. GUTH clbfreelancer@crain.com
The 600-bed Los Angeles County + USC Medical Center is one of the largest public hospitals in the country, serving 500,000 patients annually on a sprawling 44-building campus. While an impressive setup, it’s not the easiest to navigate for people new to the enormous complex, said assistant administrator Terence McNeal. “Some folks coming off public transportation barely make it to appointments, or they’re hassling to find a parking space and look up to see this massive campus,” McNeal said. To solve this dilemma, LAC + USC Medical Center became one of nearly two dozen U.S. hospital systems to embrace location and positioning technologies from LogicJunction, a Beachwood-based software company that optimizes indoor navigation for its health care clients via mobile app, web and kiosk-based wayfinding. At LAC + USC, patients who access a dedicated URL are given detailed printable directions, including the closest available parking spot and a step-by-step walkthrough for the building they’re visiting. On-site kiosks offer further navigation instructions that may either be printed or loaded directly into a visitor’s smartphone. “LogicJunction gave us an opportunity to speak the same language as our end users,” McNeal said. Headquartered in the Commerce Park industrial center, LogicJunction is continuing to meet a rising demand to bring outdoor GPS functionality indoors. In creating their web solution, CEO and founder Mark Jowell, alongside COO Mike Drozda
and CTO Srivishnu Pasumarthy, had to determine how to harness satellite global positioning technology from inside a building. LogicJunction teamed up with Finland tech startup IndoorAtlas to use a facility’s magnetic footprint, coupled with sensors inside smartphones, to track a person’s position indoors. A downloadable app gives users turn-byturn directions with accuracy of three to five feet, company officials said. Elevators, bathrooms and other floor-specific landmarks are tracked from floor to floor, while a blue dot guides visitors along an animated path that plots the best route to their destination. Losing your way is no problem, as the app automatically reroutes guests who go off track or are unable to enter an area closed for maintenance. App-based wayfinding is bolstered upon arrival by customized directions from kiosks or on-site volunteers. “During the implementation process, we walk the hallways with a smartphone to capture ‘fingerprints’ which include the building’s geomagnetic signature, along with ambient WiFi access points and Bluetooth signals,” Drozda said. “The info is pushed to the cloud and used to precisely locate an app user anywhere indoors.” In May, Sarasota Memorial Hospital in Florida launched a customized version of the app to help patients chart a path through its 1.5 million square-foot facility. Among the app’s 1,500 users are workers from outpatient facilities who arrived on campus during Hurricane Irma, said vice president of strategy Peter Taylor. “They were able to get to places (in the hospital) they never had been before,” Taylor said. “They just down-
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SMALL BUSINESS Tax Tips: Carl Grassi
New property tax appeals process takes hold Local businesses and residents may be aware that 2018 is a reappraisal year in Cuyahoga County for real property taxation. Every six years, the Cuyahoga County fiscal officer must reappraise every property in the county. Property values are expected to rise for next year’s reappraisal, which could lead to more taxpayers contesting their property values. Taxpayers contesting their property values may find opportunities to meet informally with their county auditor or fiscal officer to discuss valuation issues. However, business taxpayers usually must file formal complaints with their county board of revision in order to see meaningful adjustments to their property values. Filing a complaint allows taxpayers to schedule a hearing and present recent appraisals or sales data to contest their property values. Following the hearing, the board of revision issues a decision, which taxpayers may contest through appellate review if necessary. Traditionally, taxpayers typically contest
Grassi is chairman of McDonald Hopkins LLC.
board of revision decisions by appeal to the Ohio Board of Tax Appeals (BTA) in Columbus. Taxpayers then have a right to appeal a BTA determination to either the Ohio Supreme Court or to the county court of appeals where the real property is situated. The vast majority of taxpayers appealing BTA decisions take the Supreme Court route. Thus, since 1939, the Ohio Supreme Court has acted as one, uniform court of last resort for Ohio tax issues across the State. But an ancillary “rider” provision tucked away in Ohio’s biennial budget bill for fiscal years 2018 and 2019 fundamentally changes that uniform tax appeal procedure. The budget bill
“This new procedure matters because it could lead to confusion and inconsistent tax treatment if two courts of appeals addressing similar issues reach different conclusions.” eliminates the longstanding appeal right from the BTA to the Ohio Supreme Court. Beginning Sept. 29, 2017, when the budget bill takes effect, appeals from the BTA may be made only to one of 12 county courts of appeal (where the realty is located). The loser at the court of appeals may still appeal to the Supreme Court, but the Supreme Court may accept or deny each case at its discretion. This new procedure matters be-
cause it could lead to confusion and inconsistent tax treatment if two courts of appeals addressing similar issues reach different conclusions. Court of appeals decisions in tax appeals do not have binding force beyond the court’s district. Even if a court of appeals rules on an issue, county auditors and other tax administrators are not bound to apply the law beyond the district. For issues where courts of appeal diverge, the application of Ohio tax laws could depend on the arbitrary distinction of where in the state the taxpayer is located. A business taxpayer with multiple locations across the state could even experience inconsistent treatment within the same business. The new procedure does allow for appeals from the BTA to the Supreme Court in some circumstances, though it is not clear exactly when or how the procedure will work. The Ohio Supreme Court is currently working on rules to implement the new appeal process and iron out lingering questions. Still, much remains to be seen
Your business. Your community bank.
LogicJunction’s smartphone app helps patient navigate hospital campuses across the United States. (Contributed photo)
loaded the app and it took them where they needed to go.” A campus that averages 10,000 visitors daily needed an intuitive direction-finding system to compliment what was already in place, he said. “Wayfinding is a constant challenge and there’s no silver bullet,” Taylor said. “You can never beat an in-person greeter, but in combination with kiosks and our signage, this (app) has made a significant difference.” Locally, LogicJunction has worked with Cleveland Clinic to digitally map the hospital system’s rooms, amenities and services onto a comprehensive wayfinding platform. The company has installed over 20 implementations nationwide, typically health care facilities with 200-plus beds, said CEO Jowell. LogicJunction, which moved its headquarters to Cleveland from Atlanta in 2005, transitioned into health care wayfinding after originally operating in the medical simulation and training space. In 2009, the company deployed a series of “virtual assistant” kiosks to provide wayfinding and hospital information to visitors
of Lake Health. Work on multi-platform versions of this technology began in 2012, with turn-by-turn apps released for iOS and Android in 2015. “Apparently there was a huge gap in the market,” Jowell said. “When people get lost in big buildings, especially hospitals, it has a negative effect on patient satisfaction and hospital workflow.” LogicJunction has doubled its client base each year since introducing the online wayfinding tool. The company envisions its services integrated into college campuses, corporate offices and other spaces. McNeal of LAC + USC Medical Center is glad LogicJunction’s early focus has been in health care. About 30% to 35% of the system’s visitor base uses the high-tech service, reflecting an industry necessity for topflight patient care above all else. “You can have a big new building and a great campus, but you have to stay at the level of the actual user,” McNeal said. “People have to come here even when they don’t want to, so that’s where the attention is going to be.”
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as to how the new procedure will work in practice. Officially, the reasons for this major change remain unknown. The Ohio General Assembly changed the law at the 11th hour in the budget process without holding any legislative hearings. Some practitioners attribute the change to the Ohio Supreme Court itself, an institution that may have been frustrated with using its limited resources for tax appeals that it views as mundane. Regardless, business taxpayers should be aware of the new process heading into the sexennial reappraisal in Cuyahoga County next year. Property values are expected to rise, and tax valuation issues take on a new dynamic for decision-makers including the Cuyahoga County fiscal officer now that taxpayers no longer have a right to appellate review in the Ohio Supreme Court. Taxpayers also have new tactical decisions to make with respect to their appeal rights and they should consult with legal counsel to achieve the best outcome.
PA G E 16
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CRAIN’S CLEVELAND BUSINESS
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SMALL BUSINESS
BOOKSTORES CONTINUED FROM PAGE 13
The Book Store & Handmade Marketplace opened in Berea in 2015, but when its lease was canceled last year as its building was sold, a planned second location in downtown Medina became the sole site. The shop sells new books as well as artwork and crafts made by local artisans —and business is booming, said owner Melissa Malone. “We offer something that’s unique and crafty, kind of like ‘bookstore meets Etsy.’ You can’t really find stuff that we provide anywhere else,â€? she said. Malone estimates that 70% to 80% of her customers are new each month. One way she works to attract them is by hosting speaker series. Also, this is the third year she is sponsoring a Harry Potter Fun Run and Walk. More than 1,000 participants are expected at the Oct. 8 event, she said. Still, opening a bookstore is hardly an easy path toward quick success. Take Colin Brown, who opened The Bookshop in Lakewood, on Madison Avenue, in 2014. He said business has been growing since he opened shop, albeit slowly. His decision to launch his business stemmed at least in part from that observation that there are not many independent brick-and-mortar booksellers on the West Side in recent years. “I largely haven’t been found by the greater community here yet. I’m on a growth swing just because I’m tiny and there’s no real competition anywhere nearby,â€? he said. “Every year I do a little bit more than the previous year and I keep slowly pushing uphill and eventually I’ll be able to afford help.â€? He acquires his used book inventory by accepting items for store credit through the front door, as well as hitting estates sales, library sales and the like. He doesn’t have a cafĂŠ in the store
Visible Voice in Tremont reopens this month after a three-year hiatus. (Contributed photo)
and he doesn’t host events, primarily because his space is very small and does not have plumbing for a restroom on the main floor. He hopes to move to a larger space, and add newer titles and more amenities in the future, but finding an affordable location that meets his needs has proved challenging. Leaving the city isn’t an option since he “baked that into the name of the store,� he said. As for Appletree Books — a staple in Cleveland Heights since 1975 — owner Lynn Quintrell decided to take a plunge and expand last summer when the longtime tanning salon adjacent to her store closed. When she bought Appletree in 2014, after working there for eight years, it quickly became apparent to her that she needed more room to host events and to have a nicer children’s section. She scouted out larger venues during 2015, but when her landlord let her know in January 2016 that the adjacent space was opening up, she decided to go for it.
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CRAIN’S CLEVELAND BUSINESS
“It was a risk but I knew I’d regret it if I didn’t do it,� said Quintrell, who said she was constantly rearranging the tightly packed space to make it work. Renovations took from July to November but were complete in time for the holiday season, she said. The expansion took the store from 900 square feet to nearly 2000. It allows her to host events, and the additional wall space lets her highlight the work of local artists. She’s particularly pleased with the expanded children’s space and its offerings. However, she said it’s too early to say whether the investment will pay off financially. “The jury’s still out,� Quintrell said. “This Christmas season will tell.� For Logan, her business model remains focused on its core — being a serious bookstore that sells new books in a setting with ambiance. She exclusively sold used books when she started but that shifted over the years.
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PA G E 17
Lawyers who are creative
“Repeat traffic is much greater with new books than it is with old and used books. That’s a good thing for any retailer,� she said. She typically discounts best sellers by 20% but she knows she can’t compete with Amazon on price alone, as it sometimes sells popular books below cost. Fortunately, she sees Amazon doing less of that now than in the past, as it has driven other players out of the market and is itself moving into other directions, such as groceries. She firmly believes there is room in the market today for venues like hers that let customers touch and experience a book before buying. Horizontal Books, located in the heart of Ohio City’s business district, lets customers do just that, and makes it easier for them to try something new as it sells books that were best sellers several months ago at big discounts. “We are like a TJ Maxx for books,� said owner David Kallevig. His business started out as an online-only operation but he added the storefront in 2009 because he knows some customers prefer to browse, especially when they aren’t searching for a specific title. Internet sales continue to comprise the largest part of the business, but Kallevig said the retail side of the business has increased each year, especially as the neighborhood around it has improved. “We may not have a specific bestseller that someone is looking for but honestly we are OK with that because we will have three or four others in that subject that we can sell you for the price of the one you are looking for,� Kallevig said “That’s the niche we have carved out for ourselves.�
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PA G E 18
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CRAIN’S CLEVELAND BUSINESS
SMALL BUSINESS
HUB 55
CONTINUED FROM PAGE 1
East 55th’s great barrier grief
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Before the 1980s, the St. Clair neighborhood surrounding the corner where Hub 55’s brewery churns its hops was primarily home to a swath of Slovenian and other Eastern European immigrants and their descendants. They opened banks, restaurants and funeral homes — some that are still in operation today, including Sterle’s Country House, a 60-year-old Slovenian restaurant turned recently into an event center, which Semersky has owned since 2011. “Few people also know,� Semersky said, “that this used to be the mecca of breweries in Cleveland.� Semersky looked to his own Slovenian roots — his grandmother grew up a few blocks away — and opened Goldhorn Brewery in 2016 with a conscious understanding of how to ease into the market: Don’t sell beer at Ohio City prices (all pilsners and IPAs are $5 to $6 a glass at Goldhorn), but keep products hearty, a philosophy that will stem into Hub 55’s grocery store and its made-to-drink liquors. In July, he hired Pogrebinsky and his sister, Natasha, two former owners of a Russian restaurant in Queens, N.Y., to bolster Hub 55’s mission. Pogrebinsky, who has taken many politicians and CDC reps on tours of Hub 55 since his start, is smitten with its progress. “I can see this being one of the major destinations in Cleveland,� he said, walking around the bank’s foyer, a soon-to-be spacious dining area. “I want people to come here and spend their entire day. And for the neighborhood, too. I’m talking jobs and taxes.� With an institution so fertile for St. Clair, newcomers driving up East 55th may wonder why any recent infrastructural improvement here is lacking, solely at the whims of Semersky. Walkable may be the last word used to describe it. Michael Fleming, executive director of the St. Clair Superior Development Corp., believes East 55th’s progress itself stems from a physical design flaw — not enough foot traffic and not enough wealth in the environs to support it. For Hub 55 to rightfully succeed, he said, it would require a boost from street modifications itself: added crosswalks, accessible parking, bike lanes. A study Fleming orchestrated earlier this year affirmed that the neighborhood surrounding Hub 55 alone couldn’t sustain it. “An architect once told me, ‘If you want a walkable street, design a road your grandmother could cross,’� he said. Fleming turned to the Midway Project, which hopes to ultimately turn thoroughfares in Cleveland into pretty four-lane boulevards with dedicated bike lanes, and added, “I think the city’s intention is to create some magic. And if East 55th had a Midway, too? Who knows.� But if 55th demands a facelift to draw in outsiders, then it must prove its worth to a number of parties. For one, East 55th is a barrier between two East Side wards — 7 and 10 — spearheaded by two councilmen, T.J. Dow and Jeffrey Johnson, respectfully, who historically have had different agendas when it comes to the street as a whole. For Johnson, preserving the bank building as a historic landmark was key to his policy; for Dow, Hough to the east demands more of his attention. (Dow couldn’t be reached by Crain’s by deadline.) Although Johnson says the two are “not in conflict� over the street they
Above: Lake Shore Bank later served as a library and a community center. Left: Goldhorn Brewery opened in 2016.
Cafe 55 is the complex’s casual eatery and marketplace. (Photographs by Tim Harrison for Crain’s)
share, it’s inevitable that any grand renovation to East 55th — a Midway-style streetscape, for example — would require a three-pronged handshake among them and Fleming, now that Hub 55 has stretched its legs into both wards. But for any major infrastructure improvements, Johnson asserts that City Hall must begin paying attention to an overlooked — and, he said, underfunded — part of the East Side. “Maybe if our neighborhood was named ‘Ohio City’?� Johnson said. “But hey, even Tremont looked like (East 55th) initially. There were prostitutes. There was crime. The Beachland Ballroom in Waterloo was an ‘island’. The question is how to solidify what’s going on now.�
A destination for all As November’s election season slides into the fore, Semersky and the Pogrebinskys are prepping for their biggest year ever. Alex Pogrebinsky is putting the finishing touches on Hub 55’s still-unnamed 3,500-square-foot lounge, while Natasha Pogrebinsky composes the restaurant’s New European menu: a melange of French, Russian and Polish. “Why not be adventurous?� she said. “A burger or a schnitzel — I mean, why not? I don’t like to underestimate this neighborhood.� Regarding surrounding residents themselves, Hub 55 is seen as a step in the right direction, not trite gentrification, especially alongside Saint Martin de Porres High School’s $26.5 million renovation (phase one will be done in
January). Despite Goldhorn’s “island� status, and unpredictable future, longtime business folk are piqued. “I’ve seen this place when it’s up; I’ve seen this place when it’s down,� said Mike Hutchins, a 60-year-old owner of miscellaneous wares shop Second 2 Home on St. Clair Avenue and East 61st Street. “And I know we need something to draw the people in. I mean, we could use a developer, like University Circle. And it’d be nice to have a Marc’s.� Hutchins, who was one of the first African-Americans to open up shop on St. Clair in 1985, said the neighborhood’s crime has never been a deterrent for him or any of his fellow shop owners (teenagers once broke into his store, stole TVs). And neither, he said, should it be for Hub 55 patrons. “There’s crime everywhere,� he said. “Why should that be keeping me from getting something to eat?� As far as converting East 55th into a streetscape of sorts, Alex Pogrebinsky himself isn’t thinking too far down the road. He’s sold on the premise that Hub 55’s authenticity — its pastured eggs, its house-made whiskey and “simple� Russia-influenced foods — will alone foster the block as a destination despite any overarching political tug-of-war or crime statistics. An island, he hopes, that can grow into an archipelago. “It’s not that we wanted to create a fortress,� he said of Hub 55’s birth. “To have a streetscape, that’s one of our goals. Really, location is specific for us. I mean, if we wanted to do this somewhere else in Cleveland, then we would have done it.�
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S E P T E M B E R 2 5 - O C T O B E R 1, 2 017 |
CRAIN’S CLEVELAND BUSINESS
THE LIST
Largest Grantmaking Foundations Ranked by Amount of 2016 Grants THIS YEAR FOUNDATION
2016 2016 2015 2016 LARGEST ASSETS GRANTS GRANTS (MILLIONS) (MILLIONS) (MILLIONS) GRANT ($)
2016 SMALLEST GRANT ($)
FOUNDED/ TOP EXECUTIVE STAFF TITLE
LARGEST GRANTS
1
Cleveland Foundation 1422 Euclid Ave., Suite 1300, Cleveland (216) 861-3810/www.clevelandfoundation.org
$93.6
$95.0
$2,140.1
5,000,000
1,000
Cleveland Neighborhood Progress; University Hospitals Case Medical Center; CWRU; CSU Foundation
1914 72
Ronald B. Richard, president, CEO
2
The George Gund Foundation 45 Prospect Ave. West, Suite 1845, Cleveland (216) 241-3114/www.gundfoundation.org
$22.5
$31.8
$527.7
3,600,000
1,400
Cleveland Neighborhood Progress; Foundation Fighting Blindness; Cleveland Museum of Natural History; Cleveland Metropolitan School District
1952 12
David T. Abbott, executive director
3
KeyBank Foundation 127 Public Square, Cleveland (216) 689-7397/www.key.com/foundation
$15.6
$13.0
$4.5
1,000,000
500
Community Foundation for Greater Buffalo; Cuyahoga County Office of Early Childhood, Inc.; KSU Foundation; Pathstone Corporation
1969 6
Margot James Copeland, chair
4
Stark Community Foundation 400 Market Ave. N, Suite 200, Canton (330) 454-3426/www.starkcf.org
$13.2
$8.5
$239.3
2,835,992
100
United Way of Greater Stark County, Inc.,; John H. and Evelyn L. Ashton Preservation Association
1963 13
Mark J. Samolczyk, president
5
Akron Community Foundation 345 W. Cedar St., Akron (330) 376-8522/www.akroncf.org
$11.4
$9.7
$201.7
238,000
32
Interval Brotherhood Home; Direction Home Akron Canton Area Agency on Aging; Akron Urban League; Dev. Fund of the Western Reserve
1955 15
John T. Petures Jr., president, CEO
6
Eaton Charitable Fund 1000 Eaton Blvd., Cleveland (440) 523-5000/www.eaton.com
$9.2
$9.1
NA
888,000
25
United Way; Cleveland Museum of Natural History; University Hospitals; Salvation Army
1953 1
Taras G. Szmagala Jr., senior VP, Public & Community Affairs
7
Nordson Corporation Foundation 28601 Clemens Road, Westlake (440) 892-1580/www.nordson.com
$8.7
$8.6
$24.1
510,000
1,000
Second Harvest Food Bank; College Now; Invent Now; Tech Corp
1988 6
Cecilia H. Render, executive director
8
Saint Luke's Foundation of Cleveland 11327 Shaker Boulevard, Suite 600W, Cleveland (216) 431-8010/www.saintlukesfoundation.org
$8.5
$9.0
$167.5
1,050,000
750
Greater Cleveland Food Bank; Legal Aid Society of Cleveland; The Food Trust
1997 10
Anne C. Goodman, president, CEO
9
Char and Chuck Fowler Family Foundation 5885 Landerbrook C/O Cornerstone Family Offices, Mayfield Hts. (216) 906-4578/www.fowlerfamilyfdn.org
$7.5
$4.1
$35.3
2,300,000
1,000
Case Western Reserve University; LAND Studio; Cleveland Museum of Art; University Hospitals
2003 1
Holley Fowler Martens, president
10
Mt. Sinai Health Care Foundation Allen Med. Library Bldg., 11000 Euclid Ave., Cleveland (216) 421-5500/www.mtsinaifoundation.org
$7.2
$6.1
$140.2
1,637,636
150
CWRU School of Medicine; Cuyahoga County Invest In Children/UPK Behavioral Health Initiative; Jewish Federation of Cleveland
1994 5
Mitchell Balk, president
11
Burton D. Morgan Foundation 22 Aurora St., Hudson (330) 655-1660/www.bdmorganfdn.org
$7.2
$5.3
$152.9
1,000,000
250
CWRU; BioEnterprise; Team NEO Foundation; Conservancy for Cuyahoga Valley National Park
1967 8
Deborah D. Hoover, president, CEO
12
Parker Hannifin Foundation 6035 Parkland Blvd., Cleveland (216) 896-3000/www.parker.com
$7.0
$6.0
NA
100,000
500
Community programs; educational institutions
1953 NA
Thomas L. Williams, chairman, CEO
13
The Kelvin & Eleanor Smith Foundation 30195 Chagrin Blvd., Suite 275, Cleveland (216) 591-9111/www.kesmithfoundation.org
$6.7
$7.6
$148.1
1,847,000
5,000
Hawken School; Case Western Reserve University; Playhouse Square; Cleveland Museum of Art
1955 2
Ellen Stirn Mavec, chairman, president
14
Nord Family Foundation 747 Milan Ave., Amherst (440) 984-3939/www.nordff.org
$6.5
$5.7
$143.9
750,000
50
Oberlin Center for the Arts; Mercy Foundation of Lorain County; Lorain County Free Clinic; Musical Arts Association (Cleveland)
1988 5
John Mullaney, executive director
15
The Youngstown Foundation P.O. Box 1162, Youngstown (330) 744-0320/www.youngstownfoundation.org
$6.2
$4.5
$103.3
1,000,000
1,000
Public Library of Youngstown; Potential Development; Compass Family and Community Services; YMCA
1918 2
Janice E. Strasfeld, executive director
16
GAR Foundation 277 E. Mill St., Akron (330) 576-2926/www.garfoundation.org
$6.2
$5.2
$151.1
333,333
27
Fund for Our Economic Future; Development Fund of the Western Reserve, Inc.; United Way of Summit County; Summit Education Initiative
1967 6
Christine Amer Mayer, president
17
Veale Foundation 30195 Chagrin Blvd., Pepper Pike (216) 255-3209
$6.1
$3.5
$130.5
5,000,000
3,000
Case Western Reserve University; Youth Opportunities Unlimited
1964 4
Patricia Wade, executive director
18
Community Foundation of Lorain County 9080 Leavitt Road, Elyria (440) 984-7390/www.peoplewhocare.org
$5.9
$8.2
$123.3
747,748
49
Mercy Foundation; Wellington Exempted Village School; Common Ground; Lorain Palace Civic Center
1980 11
Brian R. Frederick, president, CEO
19
FirstEnergy Foundation 76 S. Main St., Akron (330) 384-5780/www.firstenergycorp.com/community
$5.7
$5.6
$46.4
363,831
52
United Way of Summit County; Musical Arts Association; United Way of Westmoreland County; Choose New Jersey
1961 6
Dolores J. Lowery, president
20
In His Steps Foundation P.O. Box 11, Twinsburg (330) 528-1785/www.ihsfound.org
$5.1
$5.2
$27.9
420,000
50
Christian Broadcasting Network; Missio Kaleo; Youth For Christ; Cru
1998 2
Robert S. Cathcart, executive director
21
Community West Foundation 800 Sharon Drive, Suite C, Westlake 440-360-7370/www.communitywestfoundation.org
$4.7
$5.2
$99.8
486,000
NA
Fairview Hospital; Care Alliance Health Center; Greater Cleveland Foodbank; North Coast Health
1997 8
David T. Dombrowiak, president, CEO
22
The Kent H. Smith Charitable Trust 1375 E. Ninth St., Suite 900, Cleveland (216) 696-4200
$4.3
$4.2
NA
1,000,000
1,000
Case Western Reserve University; University Circle, Inc.; Group Plan Commission; Playhouse Square
2005 NA
Phillip A. Ranney, secretary, trustee
23
Case Alumni Foundation 10900 Euclid Ave., Cleveland (216) 231-4567/www.casealum.org
$4.1
$4.1
$63.6
1,179,589
500
Case School of Engineering; College of Arts & Sciences at Case Western Reserve University; Case Western Reserve University
2004 9
Stephen Zinram, executive director
24
Martha Holden Jennings Foundation 1228 Euclid Ave., Suite 710, Cleveland (216) 589-5700/www.mhjf.org
$3.5
$3.4
$63.8
65,000
436
Cleveland Clinic Foundation; Literacy Cooperative; YMCA Lake County; Great Lakes Museum of Science, Environment & Technology
1959 4
Daniel J. Keenan, executive director
25
The Stocker Foundation 1005 N. Abbe Road SP200, Elyria 4403664884/www.stockerfoundation.org
$3.3
$1.8
$45.3
400,000
75
Lorain County Imagination Library; Boys & Girls Clubs of Lorain County; Literacy Connects; Neighborhood Alliance
1979 2
Patricia O'Brien, executive director
26
The Lubrizol Foundation 29400 Lakeland Blvd., Wickliffe (440) 347-1797/www.lubrizol.com
$3.1
$4.5
$17.5
250,000
324
University Hospitals Center for Women and Children; United Way of Greater Cleveland; United Way of Lake County; Cleveland State University
1952 1
J. Mark Sutherland, president
27
Reinberger Foundation 30000 Chagrin Blvd., Suite 300, Cleveland (216) 292-2790/www.reinbergerfoundation.org
$3.0
$3.2
$68.5
250,000
3,000
Choices (Columbus); Conservancy for Cuyahoga Valley National Park; Cuyahoga Valley Scenic Railroad; The Children's Museum of Cleveland
1968 1
Karen R. Hooser, president
RESEARCHED BY CHUCK SODER AND CRAIG MACKEY
Want the full version of this list Ñ and every other Crain's list? Become a Data Member: CrainsCleveland.com/data The full digital list includes 37 Grantmaking Foundations as well as additional information and executive names. Information is supplied by the foundations. Send questions, corrections and suggestions to Chuck Soder: csoder@crain.com.
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ANALYSIS
List: Foundation giving is up slightly in the last decade By CHUCK SODER csoder@crain.com @ChuckSoder
The biggest foundations in Northeast Ohio are giving out way more money than they did a decade ago. The smaller ones, not so much. Overall, grantmaking by local foundations appears to have increased slightly, judging by data submitted for the Crain’s Largest Grantmaking Foundations list over the past decade. Thirty-one of the 37 foundations included on the full digital version of this year’s list also submitted data 10 years ago. They gave out more than $275 million in 2016, up 22% from $225 million in 2007. But inflation accounts for about 16% of that increase. The story changes, however, if you just look at the top 10 foundations that provided figures for both 2016 and 2007: Their giving increased by 37.5% over that period. That figure drops to 33% if you look at the top 20 foundations that gave us data for
both years. The total for the Cleveland Foundation — by far the largest foundation on the list — also grew by 33% over that period: It gave $93.6 million in grants in 2016, up from $70.1 million in 2007. Its biggest 2016 grant, for $5 million, went to Cleveland Neighborhood Progress. From 2015 to 2016, however, total giving remained fairly flat for the 37 foundations on the full list. They awarded $306.6 million in 2016, up from $302.4 in 2015. (Caveat: Not every local foundation submits data, and we exclude foundations that only give grants to one entity.) But there were plenty of ups and downs for individual foundations on the list. The Char and Chuck Fowler Family Foundation jumped to No. 9 from No. 23 last year. But it may not remain in the top 10: The foundation told Crain’s that it gave three particularly large onetime grants in 2016. It gave $7.5 million last year, up from $4.1 million in 2015. The Stark Community Foundation also admits that its 2016 total, $13.2
SPORTS
CONTINUED FROM PAGE 1
Legalizing the industry would accomplish that, Dever told Crain’s, and “make sure there are protections for consumers” who are competing in pay-to-play games such as daily fantasy sports. “The second piece is saying, ‘Hey, look, we recognize it, but we’re going to put some rules on it,’ ” Dever said. “We’re trying to do it in the least invasive way possible.” Dever is hopeful the legislation will make it to the floor of the Senate before Thanksgiving, and be enacted in the first quarter of 2018. He said he wants to encourage entrepreneurs such as Day “that they have a place in Ohio where they can operate safely and not have to worry about another attorney general coming in and changing the (state’s) position that it’s gambling, and coming after them.”
‘No barriers for entry’ Since April, six states have legalized fantasy sports, bringing the total to 16. As it’s currently written, the Ohio bill would require operators to pay a registration fee that maxes out at $30,000 for three years, along with a renewal fee of up to $30,000 for three years. Dever said the Casino Control Commission would decide “what would be a fair fee” based on the size of the operator. Heavyweights such as DraftKings and FanDuel — which have a combined 400,000 Ohioans competing in DFS — would pay the larger fees, and Day, should he decide to take the step, would be on the opposite end. That would put Ohio in line with such states as Missouri (a max of $10,000 annually) and Vermont (a $5,000 annual fee), and make it much friendlier than the likes of Delaware and Virginia, both of which have $50,000 annual fees for fantasy sports operators. Virginia was the first state to formally legalize the fantasy industry in 2016. A lot has changed since. “It sort of dawned on them that you have to look out for small companies,” Peter Schoenke, the chairman of the Fantasy Sports Trade Association, said of the states’ approach
Ads for DraftKings were omnipresent in 2015, including downtown Cleveland. (Kevin Kleps)
in the last 12-plus months. Schoenke, the president of RotoWire.com, said the FSTA prefers a registration fee that increases based on the size of the company. “We want a law that makes it legal and adds consistency for our profession,” he said. “Our members don’t mind if our industry pays for that cost. We just want the system to have no barriers for entry — so the smaller companies out there can continue to operate, and others can come in without paying a huge fee.”
Striking a winning balance There are 25 to 30 fantasy sports operators, most of which are small, in Ohio, Steve Brubaker, the executive director of the Small Businesses of Fantasy Sports Trade Association, said at the recent state Senate hearing. Al Ross owns one in Akron — fanDaction, a DFS company that in 2016 struck an endorsement deal with Pete Rose. But Ross shut down fanDaction a few months ago, and said he’s “talked to a couple people” about selling it. “There’s just no money in the industry,” said Ross, who founded fanDaction in 2014 with his son, Brian, and nephew Michael BenShimon. At one point, DraftKings and FanDuel were swimming in cash, each valued at more than $1 billion, but even the industry leaders have faced plenty of challenges as DFS came under scrutiny from legislators. A proposed merger of the two was called off in July, after drawing federal antitrust concerns. Still, interest in fantasy sports remains strong, with an estimated 59.3 million players in the U.S. and Canada, according to the FSTA. The number has gone up in each of the last six years, and
million, is unusually high. About $4 million was the result of a technicality: The foundation ended up dissolving a so-called supporting fund it ran for the United Way of Greater Stark County. So that fund gave about $4 million to the United Way — which then gave it back to a slightly different fund under the foundation’s umbrella. Still, the foundation did give $9.1 million in other grants last year — the most in its history. And do you see the big decreases posted by the George Gund Foundation and the Community Foundation of Lorain County? They both had big years in 2015 and returned to normal this year. Oh, and we tossed in an extra question this year. We asked the foundations whether they’re awarding more grants alongside other funders today, compared to three years ago. From six choices, 16 of 26 respondents picked “little or no change.” Seven picked “yes - modest increase,” and one picked “yes - significant increase.” Two picked “not sure.” No one said they’re doing fewer collaborative grants. is 17.8 million ahead of the 2014 figure. Ohio has one of the most robust tallies, with an estimated 1.9 million fantasy players, the FSTA said. Dever, one of the bill’s proponents, said it wouldn’t be a money-maker for the state — though the fantasy operators would be expected to pay all applicable federal and state taxes. The registration and renewal fees are designed to pay for the regulators to “implement the statute and nothing more,” Dever said. That’s likely encouraging news for Brubaker, who represents the FSTA’s small businesses. In his testimony before the Senate Finance Committee, Brubaker recommended that the Ohio Casino Control Commission “use a percentage of gross income — entry fees less winnings paid” — to set the licensing fees. Included in the minutes from the hearing were letters from Robert Castellini, the CEO of the Reds, and Andy Loughnane, the Crew’s president of business operations. “The future of fantasy sports is important to Major League Baseball and the Cincinnati Reds,” Castellini wrote. MLB has an exclusive partnership with DraftKings, plus an equity stake, and the NBA in 2014 agreed to a fouryear deal with FanDuel that included an equity stake. The Browns, Cavs and Indians haven’t taken a public stance on Ohio’s proposed fantasy sports legislation, though the Browns and Cavs have sponsorship deals with FanDuel. On the other end of the fantasy sports spectrum is Day, who is a vice president of engineering at an Akron startup. “People sometimes mistakenly think that the fantasy sports industry consists of only the two big companies that everyone’s heard of,” he wrote in his letter to the Ohio Senate. “There are many small businesses like mine that don’t provide contests, but contribute to the industry just the same.” This fight, however, has brought both big and small operators together. The industry has quite a few major backers in the state, and one, Dever, doesn’t even play fantasy sports. “This is a bill that strikes a balance between defining it and providing those protections,” the Republican from suburban Cincinnati said.
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Fresh produce grows big results for Vigeo By BETH THOMAS HERTZ clbfreelancer@crain.com
A downtown Akron company that was started in late 2014 by two young men who wanted to be part of the restaurant industry without giving up all of their nights and weekends has seen explosive growth in the demand for its fresh-grown basil, lettuce and microgreens. Vigeo Gardens, which grows its crops in an indoor, highly controlled, chemical-free environment in downtown Akron and delivers its products fresh to area restaurants, grocery stores and food distributors, had about $23,000 in sales the first year. In year two, sales were $250,000, and they are on pace to be at least $750,000 in 2017, said Vincent Peterson, the company’s chief executive officer. “We believe the facility could yield $2 million to $3 million in sales once it is fully operational,” said Jacob Craine, chief marketing officer. The huge growth is the result of matching good science with innovative ideas and hard work. Craine said he, Peterson and Mark Preston, chief operating officer, routinely put in 80 to 100 hours a week. This journey all started when Craine, 26, and Peterson, 25, friends since kindergarten, grew their first crop of microgreens in Craine’s basement in 2014. “Everyone thought we were crazy, but we had been working in the restaurant industry for a number of years and really enjoyed it, and wanted to find a way that we could stay in the industry without working the off-schedule from the rest of the world that most people in the restaurant industry do,“ Craine explained. Their initial idea was to develop a line of microgreens for people who were in particular need of the high-nutrient boost they provide, such as chemotherapy patients. “But we quickly found out that it takes a lot to get into the hospital market, so we switched gears for the
Vigeo Gardens principals, from left, Vincent Peterson, Mark Preston and Jacob Craine stand in front of some of the company’s hydroponic growing racks. The pinkish hue in the room comes from the red and blue lightbulbs used for growing. (Shane Wynn for Crain’s)
moment and have been focusing on the culinary industry, which is something that we knew,” he said. Initially, they called the company Plantscription, but changed it to Vigeo Gardens in 2015. Vigeo means to thrive in Latin, not just survive, Craine pointed out. “That’s kind of the motto of our company,” he said. To get out of Craine’s basement, the pair moved into the Akron Global Business Accelerator, where they connected with Preston, 27, who has an aerospace engineering degree from Ohio State University and experience in the hydroponics industry. His skills helped create their first vertical “rack,” a platform on which they grow their crops, in a 1,000-square-
foot space. The trio was then able to raise funding from a private investor and add five more racks, but they were still uncertain if their idea was scalable. Clearly it was, though, as six months later, in August 2016, they moved to even larger space — 6,000 square feet on the third floor of the accelerator that now holds 37 racks. This was funded through the same private investor as well as a bank loan. Craine estimates that the two steps represent a combined investment of about $400,000. Just over a year later, this expansion is now in the “finishing touches” phase. Most racks are operational, and the few remaining dormant ones are being activated as needed to
meet demand. Today, the company has six fulltime employees and several parttime workers, mostly farming jobs and one sales position, in addition to the three partners.
Products Craine said that the primary thing that sets Vigeo’s products apart is that the company sells their basil and eight types of lettuce “live.” They are harvested in the morning and delivered to customers with the root structures still intact the same day. “It’s as fresh as you can get,” he said. They also grow about 20 types of microgreens.
He said such freshness is hard to obtain from other sources. “When you go to the grocery store and you buy lettuce that’s been packaged and shipped here from California, it’s at least a week to two weeks old,” he explained. Equally appealing to customers is the lack of chemicals on the crops, which is possible because they grow indoors. “We don’t do any spraying. Everything we grow is non-GMO,” he said. Another big advantage of being inside is that the company is able to produce the same consistency yearround, he said. The lack of the climate variables brings productivity advantages, too. By maximizing the efficiencies of their growing system, such as using custom LED lights designed by Preston and making their own nutrient solutions and strictly controlling the relative humidity of the room, they have been able to effectively cut three weeks off the growing cycle of basil and two weeks off the growth cycle of lettuce. This lets them produce a few extra cycles a year and provides them with four to five harvests per week. “We have been in business for twoand-a-half years, but we have had as many crop cycles as farmers that have been in business for 10 to 20 years,” Craine said. Vigeo’s client list includes about 35 to 40 restaurants in Northeast Ohio, including Dante Boccuzzi Akron, where Craine previously worked, and Jonathon Sawyer’s Trentina and Greenhouse Tavern, as well as several in Columbus. The company also sells to several major distributors, such as US Foods and Sirna & Sons, plus to all of the Mustard Seed stores, and 26 of the Heinen’s stores, including the four in Chicago. Vigeo also began a pilot program with Giant Eagle this month, with the goal of moving into all of the grocer’s Market District stores in the area. SEE VIGEO, PAGE 23
Davey working in the thick of a buggy treescape By DAN SHINGLER dshingler@crain.com @DanShingler
Kent-based Davey Expert Tree Co. is used to taking care of trees and treating their maladies. But few of the company’s employees, except for possibly some old-timers, have ever seen anything like what’s happening today. “It’s a once-in-a-generation event,” said Jim Zwack, general manager of the Davey Institute, where the company does the research and technical work that backs up much of what it does in the field. “This is on the same scale as Dutch elm disease — and, at the end, it’s going to be much bigger in scope,” Zwack said. He’s talking about the emerald ash borer, or EAB as it’s known to foresters, park managers and landscapers. It’s a beetle thought to have come to the U.S. from Asia in the 1990s, possibly by hitching a ride in wooden shipping containers from China. It was discovered in 2002 in Detroit, quickly spread to surrounding states
and is now raising holy hell with America’s white, green and black ash trees, which experts say it will likely all but wipe out. In Asia, the ash trees grew up with the bug and have developed defenses against it. The ash trees common in the U.S. have no such defenses, and the beetles are killing them by the hundreds of millions, Zwack said. Never heard of Dutch elm disease? That was the original nightmare on Elm Street and killed up to 250 million of the species, once one of the nation’s most popular urban trees that provided giant canopies shading many city neighborhoods. In forest and other natural environments of some parts of the country, ash trees are even more common than the elms once were. They make up about 10% of the trees in Ohio and up to twice that many in other states. There are 800 million of them in Minnesota, and in a few years, they’ll likely be extinct or nearly so, Zwack said. Some places, like Minneapolis, are simply telling residents to cut down the trees. It’s excruciating in a city where 20% of the trees are ash.
Ash trees can be identified by the diamond pattern of the bark. (Dan Shingler for Crain’s)
In an Aug. 21 report to the Minneapolis City Council and public, the city’s parks board told residents: “If you have an emerald ash tree, know EAB will kill it — soon.” The city, which has removed half of the 40,000 ash trees on city land, is advising residents to cut down even healthy, unaffected trees, because they will soon be dead and it likely will be more expensive to remove them then.
That’s true, and you may as well cut them down here, too, said Scott Heim, district manager of Davey’s Akron office, which oversees most of Summit County and parts of Portage County. The company recently decided not to send its climbers into dead ash trees, he said. It’s not worth the risk, especially to someone operating a chainsaw. In our region, Heim said, he’s busy doing ash tree removal, which accounts for about 20% of the work managed from his office. Five or six years ago, Davey was busy in Northeast Ohio treating trees to resist the beetles, he said, but not so much any more. If a tree hasn’t been treated already, it’s probably too late. The beetles have overrun the region at this point, he said. “We’re not really recommending treatment ... with the state of the ash trees and the quick decline, we don’t want to have people waste their money,” Heim said. It’s difficult to tell how much business Davey is getting from the disease. The employee-owned company doesn’t release its financials. It also doesn’t track how much of its busi-
ness is attributable to things such as EAB, Davey spokeswoman Jennifer Lennox said. But the company has, purposefully or not, bought its way into the path of EAB, especially in and around Chicago. There, fighting EAB is ongoing, Zwack said. In Chicagoland, some cities that jumped into action too late have already lost, or will lose, all of their trees. But one, Naperville, Ill., got in front of the disease in time to treat most of its elm trees, Zwack said. It’s usually a lot cheaper to treat a tree — a few hundred bucks — than it is to cut it down, he said. Davey’s been part of the work in Greater Chicago, largely thanks to its 2008 acquisition of the Care of Trees, an Illinois-based company with about $50 million in sales and more than 500 employees. But then Davey or any other tree company likely would have trouble avoiding EAB if they wanted to. “We are busy,” Zwack said. “I can look at the numbers and see growth in our applications … It varies and grows as the insect moves around. But this pest is in 31 states now.”
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AKRON
RPM units are ready to help people rebuild By DAN SHINGLER dshingler@crain.com @DanShingler
While no one wants to see others suffer from terrible hurricanes like the ones that have just slammed Texas, Florida and Puerto Rico — someone still has to sell the equipment and materials needed to clean up and repair the damage. That someone is often a unit of Medina-based RPM International Inc., whose subsidiaries make a wide range of products used to dry out and repair existing buildings or to construct new ones — from roofing materials, exterior building cladding and sealants, to dehumidifiers and other equipment used to dry out flooded structures. “When we have a storm like Harvey and then you add Irma on top of it, it significantly increases demand for our product. It’s multiple times our normal sales,” said John Ormsby, president of RPM subsidiary Legend Brands in Washington state, which makes industrial dehumidifiers and other products used to dry out buildings. Ormsby’s products are obviously in demand after a major storm. They are often among the first things to go into flood-damaged buildings. But the impact from these storms goes well beyond Legend Brands. Kevin Hocevar, a securities analyst at Northcoast Research who follows RPM and other building-material makers, said such companies typically have seen a boost in sales from major storms like Katrina, Andrew and Ike. And they likely will get a similar boost from Harvey, Irma and Maria. “It generally adds to the overall demand for their products,” said Hocevar, who estimated that most big national building-material makers will get a 2% to 6% boost in sales from a big storm, assuming they make a product that is used heavily in repair work, such as roofing materials. For regional companies, the impact can be far greater and boost sales by 10% or 15%, he said. RPM likely will get a boost, but Hocevar said it’s still too soon to say how much of one. The damage from Irma in Florida is still being assessed, and Maria was just leaving Puerto Rico, with untold devastation, when Hocevar spoke to Crain’s on Thursday, Sept. 21. RPM had yet to discuss the issue with analysts, he said.
VIGEO
CONTINUED FROM PAGE 22
Boccuzzi said he thinks there was a real need for a company like Vigeo in this area. He previously purchased such produce from an out-of-state company, but is happier with the greater freshness the local company can provide for his several area restaurants. “They produce a good quality, consistent product that lasts a long time since they are so close,” he said. He said he is glad to support his former employee, Craine, and finds Vigeo is willing to work with him on his product needs. “They are young people who work very hard,” he said. “I appreciate that today.” Craine said Vigeo’s future growth
Homes in Houston sit in floodwater after Hurricane Harvey. RPM’s Legend Brands subsidiary, which makes products to dry out buildings, expects to see a pickup in sales with the busy hurricane season. (Marcus Yam/Los Angeles Times via Getty Images)
Barry Slifstein, RPM spokesman and head of investor relations, said the company expects a boost but did not put a figure on it. “As they begin to assess the damage and begin the remediation/renovation/rebuild, etc., process, it should drive additional sales in both the residential and non-residential markets, and since many of our products are geared to the repair and maintenance arena, we would expect to be among the beneficiaries of that activity, which can begin fairly soon and extend for quite a while,” Slifstein said in email correspondence on Thursday, Sept. 14, just after Irma struck most of Florida. Sometimes, the impact on sales is tough to judge at first, and hurricanes often initially suppress sales because construction projects in a stricken area are halted until after the storm. That’s true for RPM subsidiaries that sell materials used in new construction and repair, such as Beachwood-based Tremco, which makes roofing materials, or Rhode Island-based Dryvit Systems, which makes materials to clad and insulate exterior walls on commercial structures. “Our business gets hit in the short terms because things actually slow down,” said Dryvit spokeswoman Barbara Catlow. But later, she said, the company usually gets a boost as previous construction projects resume and reconstruction and repair work begins. “You’re never really sure if you’ll end up making up that loss totally. I plans include a desire to refurbish old factories such as the one that houses the Akron accelerator into high-efficiency vertical farms. It also may build a greenhouse here to grow products that aren’t amenable to the indoor facility, such as tomatoes and peppers. It also wants to apply its technology to growing medical marijuana in a facility in Akron through another corporate entity it has created, Vita Est, LLC. That facility this month received a conditional use permit from Akron City Council that will allow it to proceed if the state grants it a license. “We believe our knowledge base on controlled agriculture is transferable to the production of high-quality medical marijuana,” Peterson said. Craine stressed that the companies would be completely separate, but the trio declined to comment further on the plans.
think we do, and we probably do get some additional business as well,” Catlow said. For some units, though, the impact is easily seen and felt ahead of time — and sometimes even anticipated. Ormsby, who likely runs the RPM
unit most quickly and directly impacted by major storms, said he spends a lot of time and resources each year coming up with long-term weather forecasts that he hopes help prepare his business for busy storm seasons. “We’re all weather nerds here,” Ormsby said. “We look at long-term forecast planning, and we get multiple data points for that. Then we get multiple data points for the upcoming season, which is particularly important to us. Then we also do our own trend analysis. … Our distributors will call us to get better insight into what we see coming.” He said, based on its data and forecasts, Legend Brands was already gearing up for a busy season, with its manufacturing capacity at the ready, before Harvey was even a blip on the radar. The challenge is to not build inventory and sit on it for years when storms don’t hit, while also being ready with products in busy years like this one. That means having a production system that can quickly be ramped up, because customers watch the weather, too, and the smart ones start
ordering equipment before the storm hits. “That’s what we do really, really well — we’re prepared for it. This is the business we’re in, and we’re able to ramp up very quickly to meet demand,” Ormsby said. The topic of selling into storm-affected areas can be a tricky one for companies like RPM. No one wants to be perceived as being happy about someone else’s misery, some PR people stress privately. Some RPM units, including Tremco, declined to comment on the issue. At the same time, the folks at these companies also realize that if they or someone like them were not making the supplies necessary to rebuild, things would be far worse in the disaster zones. For instance, the stuff that Legend Brands makes can be used to dry out buildings quickly, but if that type of product is not available, those same buildings might rot, mold and become unsalvageable. “Nobody here wants to see anyone’s lives upended, but we want to be ready to help. … If our products didn’t exist, then every home would be a total rebuild,” Ormsby said.
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COSO Media is pleased to bring on Nicole Leone as the Marketing Coordinator. Leone will handle all COSO Media & Virtual DataWorks Marketing while working closely with Matthew DeWees, President of both companies, to implement, execute, and manage marketing programs in addition to presenting recommendations and strategies for the company’s internal brands. Leone graduated from KSU with a B.A. in Fashion Merchandising & Marketing.
As Group President of the Welty Building Company Cleveland Office, Ed Paparone will be responsible for directing overall growth, operations, safety and market implementation strategies for Welty in Northeast Ohio. Ed is a lifetime resident of Northeast Ohio and has been an influencer in the Northeast Ohio construction industry for the past 38 years. He has successfully participated in the delivery of the region’s most significant projects through collaboration and partnership with his clients.
Scott Radcliff, AIA, ACHA, NCARB, LEED AP, a graduate of The Ohio State University and Clemson University, has been with Hasenstab Architects since 2009. He is a board-certified member of the American College of Healthcare Architects with more than 18 years of experience with healthcare design. Radcliff has managed a variety of projects for clients including Akron Children’s Hospital, Summa Health, Aultman Hospital and the Ohio Department of Mental Health & Addiction Services.
Annaka Whitehouse, CPA, joins Siegfried’s Cleveland Market as a Senior Associate. Her strength lies in her ability to bring fresh interpretations and forward-thinking enthusiasm to projects. Before beginning her career at Plante Moran, Whitehouse earned her MBA and Bachelor of Science in accounting from John Carroll University.
ACCOUNTING Stephen Mielnik, CPA Senior Associate
The Siegfried Group, LLP Stephen Mielnik, CPA, joins Siegfried’s Cleveland Market as a Senior Associate. Mielnik’s communication abilities, teamwork skills, and technical expertise allow him to continually deliver solutions. After graduating from Kent State University with a Bachelor of Science in accounting and a master’s degree, Mielnik began his career at Grant Thornton and then moved on to Moen.
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Downtown Cleveland residents, 1990-2020 Projected growth
2017: 15,000
20,000
15,000
10,000
1990: 6,484
5,000
1990
2000
2010
2020
Source: Downtown Cleveland Alliance
DOWNTOWN CONTINUED FROM PAGE 1
Long-term, DCA hopes to convince Ohio legislators to remove the current $60 million cap on the volume of state historic tax credits awarded annually. Current law means developers sometimes have to make it through multiple, twice-yearly award periods to land state approvals for credits because there are more projects than funds. Other states, such as Missouri and Texas, have no such caps on credits and reap more projects as a result, Deemer said. Moreover, he noted the Ohio State Historic Preservation tax credit works in tandem with the federal historic preservation tax credits, which may be targeted for elimination if federal tax reform surfaces in Washington, D.C., as promised this fall. On the planning side, Tom Yablonsky, DCA executive vice president and executive director of the Historic Warehouse District and Gateway District local development corporations, believes creation of an Erieview Historic District would aid redevelopment of aging skyscrapers to apartments or mixed-use structures. Such a historic district would make it easier for other buildings to secure preservation incentives for contributing to the area’s fabric. Ironically, the proposed historic district celebrates the Erieview urban renewal plan, which led to bulldozing blocks of old warehouses and small commercial buildings in an area from East Sixth Street to East 17th Street, between Lakeside and Chester avenues. Many sites remain parking lots today, though some yielded skyscrapers that are approaching age 50. The chief one among them is Tower at Erieview, already 50 and put up for sale by an owner that launched a bid to get it on the U.S. Register of Historic Places to secure federal and, possibly, state historic tax credits. Yablonsky also is considering trying to reconvene seminars to focus on how to restart development of forsale units downtown, much like seminars in the 1980s and 1990s set the groundwork for the first warehouse
SURGERY CONTINUED FROM PAGE 6
The platform is scalable for academic and community hospitals, meaning any health system with an operating room can use MissionRehearsal to improve surgical planning and patient education, which can mean lower costs and better outcomes, Banerjee said. In the roughly one month that MetroHealth has had the technology, it already has used it for one case and Roitberg is planning a multicenter
and garment-factory conversions to lofts in the city’s Warehouse District. DCA estimates more than 800 owner-occupied units are in downtown’s boundaries. One avenue DCA is exploring is for more historic loft projects to be converted to for-sale units after the federal credits expire. That process previously created four condo projects since the early 2000s, and units now are being offered for sale at a fifth, the American Book Bindery at 1104 Prospect Ave. However, recent rent run-ups will make most owners reluctant to sell their suites as condos — at least until the rental market softens. Meanwhile, efforts will continue to be made to strengthen the market to provide or maintain incentives for construction of apartment buildings. The gap between current rents and construction costs remains considerable, so multiple funding sources continue to be needed in Cleveland, unlike markets with higher rents. Stark’s The Beacon shows that challenge. While Stark landed a $65 million construction loan from Huntington Bank, it had another four lenders provide $29 million in capital. Among those is $5 million from Cleveland Development Advisors, a corporate-backed investment fund designed to provide patient capital and surmount such gaps for catalytic real estate developments. Ryan Sommers, managing director of financial services for Project Management Consultants and a consultant on The Beacon, said financing such buildings is still a challenge, but it’s getting easier. “We had five sources of capital in The Beacon,” Sommers said. “There were 18 sources of capital in the Flats at East Bank. That was just three years ago. If it weren’t for that gap, with occupancy at 97% in new project, you’d see tower cranes all over the Cleveland skyline.” The next big tests are Stark’s nuCLEus in the Gateway District and Playhouse Square Foundation’s Playhouse Square Tower in the theater district. Stark’s quest for funds for the skyscraper with 500 residential units, including some for-sale suites, along with office, hotel and retail space, is focused on winning approval from the city of collaboration to apply it. He said he sees it being used a couple of times a week by surgeons, but notes that the estimate includes only the applications he knows about. Other surgeons or experts might see other ways to use the technology. “When you’re doing another routine, minor operation that you’ve done 100 times, you probably don’t need to go and prepare, but many operations are special or unusual or require specific planning,” Roitberg said. “Being able to pre-do it on a virtual model of the patient is a safety and confidence component.”
A tower crane perched atop the 10-story parking garage at 515 Euclid Ave. signals the beginning of construction of the 28-story Beacon apartments, scheduled to open in 2019. (David Kordalski)
Downtown living projects According to the Downtown Cleveland Alliance, 17 projects currently underway or in the planning stages will bring 3,345 living units — enough to accommodate more than 5,000 new downtown residents — by 2020. Project name Zaremba Townhomes
Address Units Superior and E. 13th to E. 15th Streets 36
Residences at Halle
1228 Euclid Avenue
Bloch Building
1273 West 9th Street
The Beacon
515 Euclid Avenue
Harbor Verandas
East 9th Street
16
Prospect Yard
1937 Prospect Avenue East
42
Cleveland Athletic Club
1118 Euclid Avenue
177
Residences at Terminal Tower
50 Public Square
308
Playhouse Square Tower
1650 Euclid Avenue
319
925 Euclid Ave.
925 Euclid Avenue
683
nuCLEus
400-600 Huron/Prospect
500
May Company
150 Euclid Avenue
240
75 Public Square
75 Public Square
80
Worthington Yard
621 Johnson Court
89
The Standard
1370 Ontario Street
285
Liberty Textile
1277 West 6th Street
John Hartness Brown Building
1001-1115 Euclid Avenue
Cleveland and Cleveland Metropolitan School District for a tax increment financing package that includes property taxes for schools. The city typically does not offer the school portion of property tax collections to developers. At Playhouse Square, Art Falco, president, has told architects and contractors to push for a groundbreaking later this year for 319 apartments and street-level retail at 1650 Euclid Ave. for its Playhouse Square Tower. The nonprofit operator of the city’s
125 12 187
80 166
restored vaudeville and early film theaters is pursuing the $135 million project, Falco said, only after two real estate developers passed on the proposal because it provided inadequate returns for the risk involved. Being a nonprofit brings Playhouse Square advantages it believes will help it forge a deal. Playhouse Square’s tax-exempt status means it will eschew federal taxes on rental income in its downtown district. It also can pursue tax-exempt bonds prized by investors,
MetroHealth has had the 3-D technology for about a month. (Contributed)
he said, and take a lower rate of return than for-profit developers. Falco said Playhouse Square hopes to be able to loft its tower without asking for the school portion of property tax proceeds for its tax increment financing (TIF) component, as nuCLEus has done, or a loan from Cleveland Development Advisors. Even so, he added, “It’s hard to get all the financial pieces together.” At the same time, Falco said Playhouse Square is attracted by the rapid growth of downtown’s population. “To go from 9,000 residents to 15,000 in the space of a few years downtown is incredible,” he said. Recent projects are renting up well, but occupancy will bear watching as more units go onto the market. K&D Group’s Leader Building’s 200 suites are all leased at 526 E. Superior Ave. The Dalad Group has 35 suites leased as it starts the phased opening of Worthington Yards Oct. 1 at 725 Johnson Court in the Warehouse District, which will bring a total of 98 units to the market. The other key will be what happens in the market as more suites come on at unprecedented rates. Rob Vogt, managing partner of the Columbus-based housing feasibility consultancy VSI, believes rents may rise less in the future, in the 3% range, due to the number of suites bound for the market. “Absorption of product is probably going to be a bigger issue than actual rent levels,” Vogt wrote in an email. “If we can sustain current absorption levels and we don’t see any decline in rents, I think we will continue to see additional projects proposed.” That means keeping occupancy at 95%, which the market has done so far as downtown residences mushroomed. The training component also is a huge help for fellows and residents, who often rely on complex cases to enter the doors of their hospital to learn the nuances of certain procedures. “Certain things are just not common enough that you meet it frequently enough in a fellowship, and yet once you’ve graduated, you’re expected to be an expert,” Roitberg said. “If you can re-operate then on the expert’s case in virtual reality, you get a much better understanding of the real surgical anatomy.”
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Judy Ghazoul Hilow
Executive director, Malachi House With a background in accounting and fundraising development, Judy Ghazoul Hilow became executive director of Malachi House two years ago. ¶ Sept. 28 marks the 30th anniversary of the day the Ohio City nonprofit opened its doors to homeless people who are terminally ill. Malachi House, which was founded in an effort to preserve human dignity for the terminally ill, is not a hospice, but a home, its leaders say. ¶ “That is their home, because they, for some reason, do not have a home to go to,” Hilow said. “We teamed up with the hospice teams in the area to bring the residents to us. That’s who refers those residents to us … and then they team up with us and they come and support us internally.” ¶ Malachi House serves 15 individuals at a given time, and last year served a total of 128 residents. ¶ The nonprofit’s annual gala on Nov. 4 will celebrate three decades of service. It takes place at the Cleveland Museum of Art. — Lydia Coutré
Five things Family Husband and five kids
Hobbies Golf, biking and walking
Favorite book “The Prophet Book,” by Kahlil Gibran
Favorite spot in Northeast Ohio University Circle
Languages she speaks Arabic, English and a little bit of French
How did you first come to Malachi House? I came to be at Malachi House just as every other job I’ve ever had: I got a call. And so I received a call from a volunteer at Malachi House who said, “You know, I think that you may be able to help us at Malachi House. We’re looking for a new executive director, and we’d like you to interview with us.” I waited about a month before I even did anything about it. What were you thinking about, and what made you eventually reach out about the role? It was an experience I had with my own uncle, who was very ill, and he ended up being in hospice. And it was that experience with him that made me realize this is something I’m being called to do. Tell me about the work you do. We serve the homeless who are terminally ill. We are not hospice.
Lunch spot Banana Blossom 2800 Clinton Avenue, Cleveland
The meal Massaman curry with tofu and white rice for one; shrimp pineapple with cashews and brown rice for the other
The vibe The Thai restaurant is a “great neighbor” for Malachi House. “We can always rely on them for anything,” Hilow said. The cozy space offers a wide-ranging menu of Thai dishes.
The bill $24.44 with tip
I know hospice teams support you, so talk to me about the distinction. So let’s start from the beginning. It’s always easier to talk about something when you know how it begins. So St. Malachi Parish had an amazing pastor by the name of Father Paul Hritz. And he was seeing people die at his doorstep, people in abandoned cars dying in abandoned cars around the area here. He was seeing them under the bridges where there’s the homeless camps, where they still have homeless camps. They were dying in the camps there. And he had a call to serve those terminally ill who were in need and who were homeless. That’s how Malachi House came to be. From there, he got the four row houses that you see here donated, and that’s where the big transition took place, where he recruited one of his parishioners, Catherine “Kaki” O’Neill. She was able to, with a family, dedicate her life for 30 years this year to Malachi House. And that’s where it took off. They made a fantastic co-founding team. What has changed from 30 years ago about your work today? Really nothing. The key here is nothing’s changed technically because we still serve the same mission every single day.
“When I have a hard decision to make, you know what I say: Is it going to help or hinder the mission?” Have you seen growth? Oh, of course. In the past two years, there’s been exceptional growth in every area through re-evaluation and the support of the board and the guidance of Kaki. … In fundraising, we’ve increased 85%. In the clinical area, we’ve increased substantially because we have guidance from an admissions director. Our admissions are up, because of the great need. And we have increased our foundation awards. Where do you hope to see Malachi House go in the next 30 years? Here serving still for the next 30 years because of the foresight, the insight of Kaki O’Neill and Father Paul Hritz and her husband and her brother and this entire community. We could name a million people — foundations, individuals, corporations. ... Thirty years from now, because of their work, we will still be here. What keeps you passionate about the work? Oh, gosh. It’s easy. And I always tell people this: One minute, I’m looking at a spreadsheet or a budget, and the next minute, I’m holding someone’s hand that’s going to die right in front of me. How can you not go back to your desk and say, “Dear Lord, how blessed am I?” I have this beautiful family. I have this wonderful husband. I was raised in the most amazing community. I have every support system I could ever need. And what it does for me is it makes my daily decisions very, very, very easy because what do I do? When I have a hard decision to make, you know what I say: Is it going to help or hinder the mission? And that’s how I answer those questions. That’s how I make my decisions, upon the mission. That’s it. That’s how we do it. So I am one of the most blessed people you’ll ever imagine.
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