For-Profit Chancellor in Hot Water Accrediting Body Watching Closely Amid Questions Over Leadership, Recruiting Practices

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Vol. 31, No. 32 $1.50/AUGUST 16 - 22, 2010

INSIDE A SCHOOL’S FALL FROM GRACE For-profit Chancellor in hot water Accrediting body watching closely amid questions over leadership, recruiting practices

By SHANNON MORTLAND “(Losing accreditation) ... might make problems for investors because Instead, Chancellor reported only 422 students [email protected] as of April 2010, prior to spring commence- (Chancellor) couldn’t attract students.” ment, according to the Higher Learning hancellor University has existed – Robert Appleson, vice president of accreditation relations, Higher Learning Commission Commission in Chicago, which accredits quietly at Chester Avenue and East Chancellor. Catherine Nita, Chancellor’s 40th Street since it transformed from Calif., bought Chancellor in September 2008 14%, increased full-time faculty to 26 from 16 executive director of human resources, would financially downtrodden Myers for $5.25 million. The purchase followed years and created 30 online courses. Mr. Clifford not disclose current enrollment. CUniversity two years ago. of financial struggles for Myers University, also convinced former General Electric Co. Who’s at the helm? But behind the blue and silver façade, which had failed to close deals with multiple CEO Jack Welch to invest $2 million into what the for-profit school has been plagued by a buyers. is now the Jack Welch Management Institute, Mr. Clifford declined to speak to Crain’s for revolving door of executives, has resorted to Initially, Significant Partners, headed by the online MBA program launched this year at this story, as did several other Chancellor unconventional recruiting practices such as Michael Clifford, had grand plans to build Chancellor. employees. Mr. Clifford’s public relations hitting up homeless shelters to build enroll- Chancellor into a sizable school that offered Shaun Redgate, Chancellor’s chief representative, Holt Hackney, confirmed that ment and is fighting to maintain its accredi- classes in person and online. And, by all measures, operating officer, told Crain’s for a story that “Michael is no longer on the board” at Chan- tation. It’s a far cry from the high hopes once Chancellor seemed to be off to a good start. ran in May 2009 that the goal was to reach cellor, “opting instead to focus on some of his touted by Chancellor’s new owners. Significant Partners reduced undergraduate 1,050 students by fall 2010, which would philanthropic ventures.” Significant Partners LLC of Solana Beach, tuition by 30% and lowered graduate tuition by allow Chancellor to break even. See CHANCELLOR Page 16 Foundation gift Private equity firm allows Rock Hall takes control of Fairmount Minerals to establish its Buyout of Chardon outfit made possible by loosened credit market

first endowment By DAN SHINGLER [email protected]

$5M from N.Y. anniversary concerts New York private equity firm American Securities Capital Partners has taken control of Chardon-based helps solidify future in Cleveland Fairmount Minerals in a leveraged buyout financed largely with $700 million in debt that likely could not By SCOTT SUTTELL have been raised last year. [email protected] “Fairmount was at a point in our history where, for several reasons, we thought it was time to bring an ere’s something you probably didn’t investor into the company,” Fairmount chief financial get for your birthday: $5 million. And officer Jenniffer Deckard said. “We started talking to Am your party almost certainly didn’t Securities last year. … We felt they were a great cultural feature music legends such as U2, fit.” HMick Jagger and Bruce Springsteen. See FAIRMOUNT Page 17 But the Rock and Roll Hall of Fame and Museum Inc., which on Sept. 2 celebrates 15 years in business along Cleveland’s lakefront, finds itself in INSIDE something of a privileged position as a teenager. The New York-based Rock and Roll Hall of Colleges unveil posh Fame Foundation, formed 10 years prior to the new athletic digs museum’s opening, is making a $5 million gift to The facilities, including at Akron the Rock Hall to establish the institution’s first KEVIN MAZUR/WIREIMAGE.COM and Kent State (right), help schools significant endowment. The money comes from Last fall’s concerts at Madison Square Garden (featuring Aretha Franklin generate excitement among alumni proceeds from the Rock Hall’s 25th anniversary and Annie Lennox) will help establish a new endowment for the Rock and — and help recruiting. Page 3 See ENDOWMENT Page 17 Roll Hall of Fame and Museum.

SPECIAL SECTION 32 6 FINANCE

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2 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 16-22, 2010 COMING NEXT WEEK TAKE A NUMBER Claim denials were by far the most common complaint of Ohio insurance con- Cooking for (hundreds of) sumers in 2009, according to statistics from the Ohio Department of Insurance. your closest friends Nearly one-third of 5,453 complaints to the department last year related to claim denials. The health insurance category drew the most complaints. 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 How do caterers at large events develop a Most frequent complaints Percentage Phone: (216) 522-1383 Fax: (216) 694-4264 diverse, delicious menu while also making it Claim denials 30.9% relatively easy to produce? How do they have www.crainscleveland.com Claim settlement/payment delays 17.5 it all ready at the same time? In our meeting Publisher/editorial director: Unsatisfactory settlement/offer 13.0 Brian D. Tucker ([email protected]) and event planner section, we ask some area Editor: Policy cancellation/non-renewal 5.3 Mark Dodosh ([email protected]) chefs and caterers for their secrets. Managing editor: Complaints by coverage Percentage Scott Suttell ([email protected]) REGULAR FEATURES Sections editor: Health/accident 40.5% Amy Ann Stoessel ([email protected]) Assistant editors: Best of the Blogs ...... 19 List: Downtown office Auto 23.9 Joel Hammond ([email protected]) Big Issue...... 9 buildings...... 14-15 Sports Homeowner/renter 16.0 Kathy Carr ([email protected]) Classified...... 18 Personal View ...... 8 Marketing and food Life and annuity 14.1 Editorial ...... 8 Reporters’ Notebook ....19 Senior reporter: Other 5.5 Stan Bullard ([email protected]) Going Places...... 7 Tax Liens ...... 18 Real estate and construction Reporters: Shannon Mortland ([email protected]) Health care and education Jay Miller ([email protected]) Government Chuck Soder ([email protected]) Technology Dan Shingler ([email protected]) Manufacturing Research editor: Deborah W. Hillyer ([email protected]) Cartoonist/illustrator: Rich Williams Marketing/Events manager: Christian Hendricks ([email protected]) Advertising sales director: Mike Malley ([email protected]) Account executives: Adam Mandell ([email protected]) Dirk Kruger ([email protected]) Nicole Mastrangelo ([email protected]) Dawn Donegan ([email protected]) Business development manager & classified advertising: Genny Donley ([email protected]) Office coordinator: Toni Coleman ([email protected]) Production manager: Craig L. Mackey ([email protected]) Production assistant/video editor: Steven Bennett ([email protected]) Graphic designer: Kristen Wilson ([email protected]) Billing: Susan Jaranowski, 313-446-6024 ([email protected]) Credit: Todd Masura, 313-446-6097 ([email protected]) Circulation manager: Erin Miller ([email protected]) Customer service manager: Brenda Johnson-Brantley (bjohnson-brantley@ crain.com) 1-877-824-9373

Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing Kathy Henry: Corporate circulation/audience development director G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $1.50. Allow 4 weeks for change of address. Send all subscription correspondence to Circulation De- partment, Crain’s Cleveland Business, 1155 Gratiot Av- enue, Detroit, Michigan 48207-2912. 1-877-824-9373 or FAX (313) 446-6777. Reprints: Call 1-800-290-5460 Ext. 136

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AUGUST 16-22, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

THE WEEK IN QUOTES Arcade readied for sheriff’s sale “If (the Rock Hall) is but one conclusion, being that (the) unresolved. Heavy interest possible as other downtown plaintiff is entitled to judgment,” Minneapolis-based US Bank, as going to be on the Judge Russo wrote. Bank of America the trustee of a $6 million bond projects take root and Hyatt brand remains holds a $14 million mortgage on the issue that is supported by tax-incre- level of a significant building, which has a 293-room hotel ment financing and helped finance cultural organization, By STAN BULLARD hotel market. and two floors of retail space. The improvements to the Arcade by [email protected] Cuyahoga County Common bank’s loan originally was for $33 Related Midwest and Hyatt, has an endowment is Pleas Judge Nancy Margaret Russo million but was reduced through asked the court to order the property’s critical. It’s something The Hyatt Regency Cleveland at on July 27 issued a foreclosure decree payments and modifications over next owners to continue to make the Arcade, a premier downtown in a case filed by Bank of America the years. service payments on the bonds. that hopefully can be landmark, stands to undergo a after property owner Arcade LLC — Judge Russo ordered the parties Local governments aid real estate sheriff’s foreclosure sale that will a joint venture of real estate devel- to provide documentation to the projects with tax-increment financing added to over time to put its ownership in play just as the oper Related Midwest Co. and sheriff by Sept. 27 to ready the prop- (TIF) by allowing developers to use help keep the museum promise of a planned medical mart, Hyatt Hotels Corp, both of Chicago erty at 401 Euclid Ave. for a later a portion of future tax proceeds from convention center and casino hikes — defaulted on a loan in April 2009. foreclosure sale. those projects to cover payments on at the top of its game.” interest in the city’s long-languishing “Reasonable minds can come to However, one big issue remains See ARCADE Page 17 — Joel Peresman, president and CEO, Rock and Roll Hall of Fame Foundation. Page One INSIGHT

“We could lose half of the funding for the AN ATHLETIC community in one year.We’ll be faced ‘ARMS RACE’ with serious conse- MAC schools see posh new, upgraded quences. People could die if we make those facilities as ticket to growth cuts.” By JOEL HAMMOND [email protected] — William Denihan, CEO, Alcohol, Drug Addiction and Mental Health Services Board of hether it was before the Cuyahoga County. Page 4 crippling recession hit or during the worst of it, “I think there is a well-heeled alumni have continuedW donating to their alma maters’ perception that PHOTOS COURTESY OF KENT STATE UNIVERSITY/UNIVERSITY OF TOLEDO ATHLETIC COMMUNICATIONS athletic departments — and those community banks, or Upgrades at Kent State’s Dix Stadium included aesthetic improvements, such as a new schools are taking advantage. smaller banks, were entryway, and a new scoreboard. The University of Toledo, meanwhile, in February opened the doors to its $9 million Fetterman Training Center. Sparkling new athletic facilities and largely exempt from multimillion-dollar renovations have the bill. … We believe popped up across the country, including on the campuses of that’s absolutely INSIDE: Photos of other untrue.” several members of the new athletic projects at Cleveland-based Mid- Mid-American Conference — Michael Van Buskirk, campuses. Page 10 president, Ohio Bankers League. American Conference, Page 11 Akron and Kent State among them. Akron opened InfoCision Stadium last September, while Kent State two years “A holding company ago completed a $10 million renovation is just an extra to Dix Stadium that included a new expense unless you scoreboard and aesthetic improvements need it. … We figure it throughout the 41-year-old stadium. would be $600,000 to And it appears, despite calls for reducing $800,000 in additional often-outlandish spending in college annual expenses.” athletics, that a majority of these projects are being paid for without dipping into — Bill Valerian, chairman and CEO, Liberty Bank in Beachwood. See RACE Page 10 Page 11 Cleveland music exec who beat Sony still tangled in litigation By JAY MILLER Mr. Webster died from cancer in [email protected] Claims lawyer in Meat Loaf album case failed to protect him from partners March 2009; at the time, he was president-elect of the Cleveland Steve Popovich won the admira- Cleveland International back in the parent of Cleveland International. from his minority business partners Metropolitan Bar Association. tion of many in the music industry in days of vinyl but whose recordings Mr. Popovich’s latest lawsuit, in Cleveland Entertainment Inc., in Robert Dubyak, a partner in the 2005 when he and his Cleveland continue to sell to this day. filed July 22 in Cuyahoga County which Mr. Popovich was majority current firm, told Crain’s that the International Records won a $5.1 Now Mr. Popovich, who’s living Common Pleas Court, charges the shareholder and president. present firm and its lawyers have no million verdict in federal district in Murfreesboro, Tenn., is contending late David Webster and the firm now The lawsuit contends that if Mr. liability for what transpired. He said court in Cleveland against industry in court that a mishandling of the called Webster Dubyak & Weyls Webster and his firm had handled the Sony case was tried before he or giant Sony Music Entertainment Inc. legal action against Sony will cost Co. LPA with negligence in their the case against Sony properly, Mr. any of the practice’s current lawyers Sony had failed to credit Mr. him more than $2 million because conduct of Mr. Popovich’s litigation Popovich could have avoided a came to the firm. Popovich’s record label when it of a judgment awarded to his former against Sony. In his complaint, Mr. $1.8 million payout and $500,000 in But Mr. Dubyak still came to Mr. issued compact discs by Meat Loaf, business partners in Cleveland Popovich argues his former lawyers legal fees for an upfront cost of as Webster’s defense. a recording artist who had signed with Entertainment Inc., which was the failed to protect him from claims little as $100. See SONY Page 6 20100816-NEWS--4-NAT-CCI-CL_-- 8/13/2010 11:14 AM Page 1

4 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 16-22, 2010 Mental health agencies fear ’11 cuts

Cuyahoga County would receive less is about the only option Murtis Taylor New formula used to state money because its population has to stretch its resources further. has declined. “It’s getting tight,” he said. “For the divvy up funds could The U.S. Census Bureau estimated last 10 years, everybody has been hurt Cuyahoga County Cuyahoga County’s population at moving to be as efficient as possible.” 1.2 million in April 2009, down 8.5% Murtis Taylor received $2 million from 1.39 million in 2000. Mean- from the ADAMHS board in the fiscal By SHANNON MORTLAND while, the ADAMHS board served year that began July 1, down from [email protected] 48,449 people in Cuyahoga County $2.8 million in the fiscal year that with a mental illness or addiction in began a year earlier, Mr. Custard said. William Denihan feels as if local the fiscal year that ended June 30, In response, he is hiring only mental health care providers dodged 2009, which is 5.7% higher than the those who directly serve patients a nuclear bomb, but fears another is 45,816 served in the fiscal 2008. and is implementing new technology on the way. To prepare for what Mr. Denihan to save money in the long run. Though the state chose not to alter believes is an inevitable state budget “We recognize we have got to the way it allocates money for mental hit, he has begun reducing the survive in the immediate time, but health services in the fiscal year that ADAMHS board’s budget and is we’re trying to figure out how to began July 1, it is considering big advising the nonprofit agencies his become more efficient,” Mr. Custard changes for the fiscal year beginning office works with to do the same. said. “It’s going to be through com- July 1, 2011, which also marks the In July 2009, the Cuyahoga County puter technology and we’re trying start of the state’s biennium budget, Mental Health Board and the Alcohol to implement that in record speeds.” said Mr. Denihan, CEO of the Alcohol, and Drug Addiction Services Board Drug Addiction and Mental Health of Cuyahoga County merged to Systemic problems Services Board of Cuyahoga County, create the ADAMHS board. That union In the meantime, the mental or ADAMHS. resulted in the elimination of 30 health system is failing, Mr. Denihan “We could lose half of the funding positions and a savings of $2.5 million. said. The county’s 34 intake offices for the community in one year. We’ll In addition, the ADAMHS board for new patients were closed more be faced with serious consequences,” moved into the United Bank Building than they were open last year, so he said. “People could die if we make at 2012 W. 25th St. in Cleveland, patients have nowhere to go but those cuts.” which saved $400,000 a year in rent. hospital emergency rooms, he said. The state could cut its support for Mr. Denihan said he’ll continue With state support down and local mental health services by as much to reduce his budget and not all support flat at best, the ADAMHS as 40%, which would affect people programs will survive the process. board has no money to treat those without private insurance or Medic- “We have to continue to reprioritize with mild and moderate mental aid coverage, said Lovell Custard, to become far more cost-effective at illnesses, so those people will sink president and CEO of Murtis Taylor what we do,” he said. into a more dire mental state and Human Services System, which pro- will remain there longer than others vides mental health services to about Shared sacrifice who receive treatment, he said. 6,000 people in Cuyahoga County. Local nonprofits that provide That trend became evident as Although the Ohio Department of mental health and addiction services accessibility to services declined while Mental Health can’t say how much also will need to make changes if foreclosures soared, credit was hard the budget for mental health services they want to continue to receive to get, money was tight and jobs may be reduced, Mr. Denihan said county support, Mr. Denihan said. were lost — all of which led to higher it’s a foregone conclusion cuts will be “There are still a high number of depression and suicide rates, Mr. made because the state is staring at a (nonprofit) agencies out there,” he Denihan said. budget hole of an estimated $5 billion said. “Many programs will have to He is using such statistics to urge to $8 billion in the next biennium. consider consolidation and merging.” legislators to retain mental health At issue is the formula used to Mr. Custard said Murtis Taylor support as they try to plug the hole NORTHEAST OHIO REGIONAL SEWER DISTRICT provide state support for mental health currently partners with other agen- in the state budget. He hopes legis- services. If overhauled, the formula cies to refer patients, and he hopes lators eventually will hear his pleas SMALL BUSINESS likely would hinge largely on popu- to find more such partners. Its budget because the mental health safety ENTERPRISE PROGRAM lation, Mr. Denihan said, which means already is constricted, so partnering net is tattered. ■ Avon trash hauler adds East 37th space By DAN SHINGLER tainers and revenue that Mr. Cooper at the Cleveland Clinic and at various [email protected] expects will grow to $3 million this rehabs around Cleveland, where he year from $2 million in 2009. He sees his business growing fastest. Between Cuyahoga County’s plans manages it all like an air traffic “And that cycle is going to really to build a medical merchandise mart controller, with each day’s pickup hit in about two years now, with the and ongoing demolition and rehab and delivery requests spread out on medical mart and all the other work, Mike Cooper figures it’s time his desk, schedules on his computer development,” he predicts. Here’s the sign to bring his trash-hauling company and a phone constantly to his ear so Rick Josie, Mr. Cooper’s old boss to the big city. that he can talk to both customers at both Karas Trucking and BFI, you’re looking for. Cooper Disposal, of Avon, plans and on-the-road drivers. said he’s not surprised to see his to expand into new digs on East 37th Cooper Disposal doesn’t take former top sales rep do well. Street and will begin operations cans from in front of houses and “I had 12 reps, and I wished every there in November, Mr. Cooper does little work with the kinds of one of them was Mike Cooper,” Mr. We’re expanding our small-business opportunities said. The company bought the land dumpsters people see behind Josie said. to provide economic beneﬁts for the region and and will begin construction in restaurants and other small estab- Mr. Cooper said he’ll keep the September, he said. lishments. Its bread and butter is Avon facility open in order to have help local companies grow! Mr. Cooper has been building his hauling boxes that are from 10 two hubs from which to operate. In If your company is a small construction or business in Avon since he quit a six- cubic yards to 40 cubic yards in size the meantime, he said, he’s thinking engineering company or a provider of goods or figure job at a large waste manage- — the kind that can be left at a up new sources of revenue. A trash ment company in 2006, cashed in construction or demolition site, sorting facility at the new operation professional services, we invite you to apply for our his 401(k) and bought a huge Volvo filled with materials by builders and will be one, because it will generate SBE program. Learn more about the program: garbage truck that he didn’t know then hauled away and replaced on recyclable materials he can sell. how to drive, but somehow got to demand. Another might be to sell advertising SBE Certiﬁcation Workshop—Lorain County his driveway alone. About 75% of Mr. Cooper’s busi- space on his trash containers, “My neighbors thought I was ness comes from the construction which often sit in high-traffic areas Thursday, Aug 26 | 3-5 p.m. nuts,” Mr. Cooper said. market, which he said he’s pene- alongside big projects. Spitzer Conference Center, Room 118 He now has 12 employees, six trated in spite of a general slowdown “They’re huge. It would be like a Lorain County Community College trucks, 180 commercial trash con- in that sector. He has picked up work giant billboard. Why not?” he said. ■ 1005 Abbe Road North, Elyria, OH 44035

Volume 31, Number 32 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH REGISTER & LEARN MORE: 44113-1230. Copyright © 2010 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $1.50. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824- neorsd.org/sbe 9373. REPRINT INFORMATION: 800-290-5460 Ext. 136 20100816-NEWS--5-NAT-CCI-CL_-- 8/13/2010 11:37 AM Page 1

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6 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 16-22, 2010 Nonprofit expands offerings for disabled By SHANNON MORTLAND As a result, Koinonia expanded As the population ages and the [email protected] the offerings of its adult day support prevalence of autism increases, the Mission and vocational services center in county’s Board of Developmental After nearly four decades of quietly Brooklyn Heights. It added autism Disabilities has seen an increased providing services for the develop- services and personalized vocational need for various services, said Lula Soar! mentally disabled, Koinonia Homes Inc. programs, as well as services to care Holt Robertson, a spokeswoman for is expanding its operations in a big way. for people in small settings. The the county board. In the last two years, the nonprofit vocational programs focus on what Specifically, as people with devel- Insightful has acquired nine existing group Koinonia’s clients can do well, such opmental disabilities get older, their homes and opened one and has as make jewelry, answer phones or parents no longer can care for them, legal solutions doubled its employee roster to more do janitorial work, and help those so they need places to live. The county than 500, said Diane Beastrom, presi- people enhance their skills so they board contracts with Koinonia to that help your dent and CEO of Koinonia, which is can get jobs, Ms. Beastrom said. run some of the county’s group based in Independence. Koinonia “Our hope is that a number of homes and to provide residential also expects its revenue to climb to a folks will get experience and create a services, Ms. Holt Robertson said. business soar. projected $23.6 million this year résumé and then become employed In all, Koinonia now operates 21 from $13.6 million in 2008. by one of the companies in our group homes — including one that Last summer, Koinonia hired area,” she said. opened in July in Strongsville — and Cleveland operations management The changes have been fruitful. provides services at 43 other loca- firm Applied Technology Systems The center in Brooklyn Heights now tions throughout Cuyahoga County. Inc. to further develop its leadership serves 130 people, up from 35 two Koinonia will continue to explore team — from employees to board years ago, Ms. Beastrom said. the needs of Cuyahoga County’s Attorneys on a Mission® members, Ms. Beastrom said. Koinonia also has been reaching developmentally disabled and will Your mission is our mission. We never lose sight of it. Koinonia leaders then worked with out to more businesses in the area consider expanding to meet them, the nonprofit’s employees and the to create partnerships in which they she said. The organization hopes to Cuyahoga County Board of Develop- could volunteer or help provide raise more private funds through mental Disabilities to determine the special programming for the non- increased marketing and expansion county’s needs, she said. profit’s clients. of its board, Ms. Beastrom said. ■

A business advisory and advocacy law firmTM victory, Samuel Lederman and Stan- 600 Superior Avenue, East, Suite 2100, Cleveland, OH 44114 Sony: Suit stems from royalties ford Snyder, two New York-area men, 216.348.5400 sued Mr. Popovich for a share of the Carl J. Grassi Shawn M. Riley Sony money. Messrs. Lederman and continued from PAGE 3 view of the matter. President Cleveland Managing Member Snyder had invested in Cleveland “It is unfortunate that the legacy “He feels severely wronged, is all I Entertainment in 1977, with Mr. Chicago • Cleveland • Columbus • Detroit • West Palm Beach of a great lawyer like David Webster can say,” said G. Timothy Marshall. Popovich owning a 51% interest, Mr. www.mcdonaldhopkins.com is so casually tarnished after his death Lederman 20% and Mr. Snyder 29%. by a former client for whom Dave Singing a different tune The company stopped doing business UPCOMING ROUNDTABLE achieved nothing less than an extra- Mr. Popovich, who grew up in in 1983 and formally was dissolved ordinary result,” Mr. Dubyak said in Lake County, has had a long career in 1991, according to court filings. an e-mailed statement. Mr. Dubyak’s in the music business in Cleveland, Protecting and Perfecting Security Mr. Popovich, through Mr. Webster, statement added that those named New York and eventually Nashville. argued in the case filed by the two Interests in your Collateral in the suit “plan to pursue claims He had his first success at divisions men that he alone retained the rights against Mr. Popovich for bringing of CBS Records, which later was Thursday, August 26, 2010 • 11:30 a.m. – 1:30 p.m. to the Cleveland International name the suit and for fees owed to Mr. bought by Sony, and later for Poly- Call 216.348.5400 or visit www.mcdonaldhopkins.com and record label. Mr. Popovich’s Webster’s estate.” gram Records in Nashville. When he motion also argued that Messrs. Led- Mr. Popovich’s attorney in the wasn’t working in those two music erman and Snyder never sought to current case took issue with that capitals, Mr. Popovich would return intervene in the logo suit and never to Cleveland to run various iterations claimed any interest in Mr. Popovich’s of Cleveland International. lawsuit. (The pair had been involved The current legal battle traces in the earlier suit over royalties.) back to 1977 and the release of Meat Messrs. Lederman and Snyder Loaf’s first album, “Bat Out of Hell,” argued that as shareholders of Cleve- by Cleveland International through land Entertainment, they were entitled Epic Records, which would become to part of the Sony money and that Mr. a Sony subsidiary. That vinyl record, Popovich had abandoned his fidu- No. 343 on Rolling Stone magazine’s ciary responsibilities to Cleveland top 500 albums of all time, became a Entertainment shareholders. surprise hit. A jury found in favor of Messrs. Mr. Popovich has been at odds Lederman and Snyder and awarded with Sony since the mid-1990s over the pair $1.81 million. royalties owed him from the Meat Loaf recordings. In 1998 Sony settled $100 vs. $1.8 million the royalty lawsuit by paying Mr. Popovich $6.7 million in back royalties In his current lawsuit against the and advances on future royalties. A late Mr. Webster and his law firm, second lawsuit over royalties was Mr. Popovich said the Lederman/ filed in 2006 by Mr. Popovich and Snyder lawsuit also cost him dismissed in 2009. $500,000 in legal fees. The most recent lawsuit is the His complaint contends that the direct result of a 2005 verdict against lawyers never advised Mr. Popovich Sony in a lawsuit Mr. Popovich brought that he might have a fiduciary against the recording giant because responsibility to his former partners. it had left Cleveland International’s It also says that “the gravest act of logo off a number of Meat Loaf CDs. negligence exhibited by the (Webster In settling the earlier royalty lawsuit, lawyers) was that none of (the lawyers) Mr. Popovich and Sony agreed to approached Lederman and/or Snyder include a Cleveland International to obtain a release of their rights in Records logo on CDs derived from regard to the Logo Litigation.” four Meat Loaf master recordings, Worse, Mr. Popovich’s lawsuit according to some of the lawsuits. states, lawyers for Messrs. Lederman Sony didn’t add the logo for more and Snyder had told Mr. Popovich’s than a year and later said the absence new lawyer that had the Webster of the Cleveland International logo lawyers asked the New York men was inadvertent. whether they wanted to participate However, a jury awarded Mr. in the lawsuit or instead would sign Popovich $5.1 million because of the releases giving Mr. Popovich the omission; the amount grew to $5.8 right to pursue a claim for himself, million when interest was added in “their legal counsel informed 2008 after a Sony appeal was rejected Popovich’s legal counsel in the Led- by the U.S. Sixth Circuit in Cincinnati. erman Lawsuit that they would have But the lawsuits didn’t end there. signed any release for about Fifty In 2006, after the district court Dollars!” ■ 20100816-NEWS--7-NAT-CCI-CL_-- 8/12/2010 1:07 PM Page 1

AUGUST 16-22, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 7

GOING PLACES JOB CHANGES to vice president of sales, engineered products group; David Marlar to ARCHITECTURE general manager, Truseal. DOMOKUR ARCHITECTS: Lucas MARKETING W. Kraft to project architect. We understand that one SOOY+CO: Bob Slatt to multimedia McRill Freeman Kornblut EDUCATION and web designer. size does not ¿ t all. SAINT IGNATIUS HIGH SCHOOL: NONPROFIT Gerald Skoch to vice president and chief mission officer; Keith Mokris CONSTRUCTION EMPLOYERS to alumni director; Lisa Metro to ASSOCIATION: Tim Linville to director of communications; Rory executive vice president. We know this much is true: small clients become big Hennessy to dean of students; Ryan LAKEWOOD SENIOR CITIZENS clients and big clients still have small needs. Franzinger to assistant to the dean INC.: Curt Brosky to president, CEO. of students. NORTHCOAST CONFLICT SOLU- Ryland Webley Brabham So we approach every opportunity - large or small - as if TIONS: Joyce A. Banjac to vice FINANCIAL SERVICE president, chief strategist for our reputation is on the line. Because it is. PLANTE & MORAN PLLC: Matt organizational markets. Nobles to associate. Contact Jones Lang LaSalle today. We’re the one SS&G: Scott McRill to director, REAL ESTATE company that ¿ ts all your real estate needs. transaction advisory services group. CB RICHARD ELLIS: Kelly Moody WALTHALL, DRAKE & WALLACE: to investment specialist. Janice Canfield, Judy Mondry and For real estate services: Paul Weisinger to senior managers; SERVICE Davies Linville Moody Lauren Van Camp to in charge; INFOCISION: Dave Hamrick to Robert J. Roe Eric Schmidt and Brian Ditz to chief financial officer. Outstanding New Member Award. Managing Director level II. WINGSPAN CARE GROUP: Beth OHIO SOCIETY OF PROFESSIONAL + 1 216 861 7171 Cohen Pollack to director of ENGINEERS: Thomas E. Mosure LEGAL organizational advancement. (MS Consultants Inc.) received the BUCKINGHAM, DOOLITTLE & 2010 President’s Award. www.us.joneslanglasalle.com/cleveland BURROUGHS LLP: Barry Y. TECHNOLOGY © 2010 Jones Lang LaSalle IP, Inc. All rights reserved. Freeman to partner. ATNETPLUS INC.: Antony Cannon Send information for Going Places to COWDEN & HUMPHREY CO. LPA: and Dave Bullard to IT specialists; [email protected]. Russell D. Kornblut to partner and Angela Provencal to administrative managing partner, Florida. assistant. KOHRMAN JACKSON & KRANTZ PLL: Susan O. Scheutzow to BOARDS partner and chair, health care 8_11_10_We fit all sizes submission.indd 1 8/11/2010 8:33:00 AM practice group. CLEVELAND PLAY HOUSE: MEYERS, ROMAN, FRIEDBERG & Sandra Kiely Kolb to chair; Walter LEWIS: Rachel L. Steinlage to Kalberer and Alec Pendleton to associate. vice chairs. OTT & ASSOCIATES CO. LPA: NATIONAL ASSOCIATION OF Justin M. Ritch to associate. WOMEN BUSINESS OWNERS: Marguerite I. Harkness to TAFT STETTINIUS & HOLLISTER president; Barbara Blake to LLP: Joshua M. Ryland to partner. immediate past president; Mary Cilia to president elect; Jennifer MANUFACTURING Corso, Elaine Deiderich, Liz BRENNAN INDUSTRIES: Ted Radivoyevitch and Pam Ryan to Moyer to vice president, national and vice presidents. international sales; Bill Jarrell to NORTHERN OHIO SOCIETY FOR vice president, marketing and HEALTHCARE ENGINEERING: procurement; Jeff Worobel to John D’Angelo (Cleveland Clinic) to director of finance. president; Jeff Disrud to program DIEBOLD INC.: David J. Kennedy vice chair; Ron Snodgrass to to director, regional security. treasurer; Bill Rundle, Jennifer EATON CORP.: Gareth Webley to Stull and Angela Timperio to vice president, IT security and chief committee chairs. information security officer. GOLDSMITH & EGGLETON INC.: AWARDS Jeff Brabham to director, global LAKEWOOD CHAMBER OF COM- sales; Eric Davies to director, MERCE: Scott Duennes (Cornucopia manufacturing operations. Inc./Nature’s Bin) received the 2010 QUANEX BUILDING PRODUCTS Business Person of the Year Award; CORP.: August J. Coppola to Diane Helbig (Seize This Day senior vice president; Pete Donoghue Coaching) received the 2010

Timken to invest $50M in steel unit

Timken Co. plans ON THE WEB Story from investments in to invest about $50 www.CrainsCleveland.com. Canton “have million in its steel the goal of operations in Canton. both meeting demand and continuing Slated to begin this year, the to improve the long-term competi- investment covers the installation of tiveness of our operations.” a new intermediate finishing line at The company did not say how the Timken’s Gambrinus Steel Plant and investments would affect employment expansion of the steel lay-down levels at the two operations. Higher standards make better lawyers.® yard at the Harrison Steel Plant’s Timken’s utilization capacity fell small-bar mill. to an all-time low of 25% in 2009, Vorys, Sater, Seymour and Pease LLP Timken said its Steel Group has the company previously said, and it Cleveland 216.479.6100 Akron 330.208.1000 had a “significant increase in has been working to increase that www.vorys.com demand across all markets, and number and cut lead times for cus- 2010 sales are expected to tomers. Timken had increased its increase by 70% to 80% compared utilization to 75% of capacity as of to 2009.” Sal Miraglia, president- early August and was still ramping steel for Timken, said the planned up further, it said. — Dan Shingler 20100816-NEWS--8-NAT-CCI-CL_-- 8/12/2010 2:58 PM Page 1

8 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 16-22, 2010

PUBLISHER/EDITORIAL DIRECTOR: Brian D.Tucker ([email protected]) EDITOR: Mark Dodosh ([email protected]) MANAGING EDITOR: Scott Suttell ([email protected]) OPINION Not likely tuart Garson, chairman of Cuyahoga County’s Democratic Party, is wasting his breath in calling for county commissioner Jimmy Dimora and county auditor Frank Russo to Sresign. They haven’t put the public first for the last two years, so why should they do so now with only five months to go in their jobs? It’s not as though Messrs. Dimora and Russo haven’t heard this plea before in the two years since their homes and county offices were raided as part of a federal public corruption investigation in Cuya- FROM THE PUBLISHER hoga County. Heck, we used this space 14 months ago to urge Mr. Dimora to resign because of the cloud his presence was casting over the operations The president reaps what he’s sown of county government. No dice. ords can be powerful, as against “fat-cat bankers” and the “reckless” Sanders, who’s working overtime to remake Now comes Mr. Garson, who last week said the President Barack Obama actions of, first, Wall Street, and more the troubled district, recently took a nearly ongoing investigation centering on his two fellow showed in his campaign for recently, BP, after its disastrous oil spill. unprecedented step when he yanked the Democrats “compromised the public’s trust in the White House. Trouble is, A recent Associated Press story quoted principal and entire teaching staff from asW another eloquent Democrat learned in Verizon CEO Ivan Seidenberg, who’s the woefully underperforming Andrew J. these officeholders and their effectiveness to carry out the duties of these offices.” Of course, Mr. the Oval Office, they also can come back chairman of the Business Roundtable, Rickoff Elementary School. The only to haunt you. saying the president has created “an problem is that the school’s staff — pro- Garson as party chairman also would like to see the Ah, who could forget Bill Clinton’s increasingly hostile environment for tected by its union — has been scattered duo disappear from their public roles because of the memorable line, “It depends on investment and job creation.” around the district to spread its members’ stigma they could attach to Democrats who are what your definition of ‘is’ is.” BRIAN The head of the U.S. Chamber underperformance to other buildings. running for county offices this fall. So now we have Mr. Obama TUCKER of Commerce decried a “cumu- What a shame. Across Cleveland there We doubt Mr. Garson will get his wish. The — staring at a potential slew of lative job-killing impact of over- are examples of schools run by devoted change in the form of county government that voters losses in the coming midterm regulation” from the adminis- administrators and teachers who are enacted last November will put an end to the jobs of elections — scrambling to win tration. And Forbes publisher proving they can take average (and often Messrs. Dimora and Russo shortly after the elections back support from business Steve Forbes said: “The truth challenged) students and help them this fall. Why should they quit cashing their county leaders. Many, including former is that not even the Franklin progress academically. But they’re not paychecks and building their pension benefits now donors, aren’t inclined to help. Roosevelt administration was doing it in union-dominated public school Instead, some are just plain as hostile and ignorant about buildings. They’re doing it in schools with the finish line so near? angry. Angry about health care free enterprise as this adminis- in which the staffs care more about Besides, it doesn’t seem to be in the makeup of “reform” that was shoved down tration is.” academic progress than how many days either man to take the honorable course of stepping American voters’ throats. Angry about The president has worsened his situa- off they get in their next contract or how aside so they no longer taint the public’s perception the massive deficit we’re piling on top of tion by his appointments. Not a single soon they can get out and into the of how the business of government is done in the troubling deficits left behind by former corporate executive is among comfortable world of retirement. Cuyahoga County. If anything, Mr. Dimora has been President Bush and his wars. his Cabinet members. This is not In a perfect world, Dr. Sanders could defiant in his insistence that he has no intention of But what business leaders might be what America needs at a time of grave implement his entire turnaround plan, leaving his job one day sooner than he must. most angry about are the tirades Mr. economic challenges. but that would require a cooperative Obama launched while wooing the left- * * * * union rather than one dominated by an So, Mr. Garson, hang in there. And let’s all hope ■ that voters choose candidates for county executive most bloc of his party. The president railed CLEVELAND SCHOOLS CEO EUGENE “us-versus-them” mentality. and county council based on qualifications and not party affiliation so that Cuyahoga County can get past this ugly period of corruption and self-serving PERSONAL VIEW leadership in the halls of government. Be first Region ahead of tech race; keep up pace By SCOT ROURKE Mr. Rourke is president and CEO of and fastest private communications e’re still not sold on casinos as economic OneCommunity, a nonprofit organization networks in the world, to serve as the development tools. However, Ohio voters ack in the days when change dedicated to accelerating the region’s use foundation for Cleveland’s potential decided otherwise last fall when they could take generations and of information technology. resurgence for innovation and transfor- geographic location and natural approved the creation of casinos in mation — a high-speed, regional, fiber- resources largely determined a away from the notion that physical optic broadband array run by nonprofit Cleveland,W Cincinnati, Columbus and Toledo. So, if Bcommunity’s economic potential, Cleve- assets and blue-collar skill sets will fuel OneCommunity. we’re going to do it, let’s do it right — and let’s do it land was among the wealthiest and most our competitiveness. We need to align our In February, we launched a $13 first to gain an edge on those other towns. entrepreneurial communities in the resources around the skills that lend to million construction project that creates The local powers that be apparently are of the world. Needless to say, we have lost that the manufacture and distribution of very 200 jobs and expands connection to 22 same mind, based on last Thursday’s announcement edge. different products — information and counties across Northeast Ohio as part of by Harrah’s Entertainment Inc. and Dan Gilbert’s But even in an era when technology knowledge. It is these new skills, and the a national pilot project that will link Rock Gaming that they’re exploring the opening as facilitates change seemingly overnight, ability of business and government to more than 100 hospitals on a single, early as next year of a temporary casino in the Higbee Northeast Ohio has tremendous resources adapt and innovate with the latest tech- high-capacity, community network. This Building downtown. The two companies said and a terrific opportunity to reinvent nology tools, that will drive job creation. enables the sharing of electronic medical itself as a leader in the 21st-century The good news is that Northeast Ohio records and images across health systems they’re considering that possibility in response “to knowledge economy. has a key advantage. In fact, the region is to improve health care services and reduce the encouragement of city and regional leadership.” To compete in an economy powered many years ahead of its U.S. peers and costs. That means specialists from the To which we say, “Go for it.” by high-speed Internet, known as broad- much of the world. Since 2003, we have Cleveland Clinic or Summa Health will band, we have to migrate our systems been quietly building one of the largest See VIEW Page 9 20100816-NEWS--9-NAT-CCI-CL_-- 8/12/2010 3:40 PM Page 1

AUGUST 16-22, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 9

THE BIG ISSUE “ Everybody here Are there days when you would like to emulate Steven Slater, the JetBlue flight attendant who cursed deals with customers a passenger and fled the plane by going down the emergency slide? at some level. So everybody gets training.” Mark Trushel President Mantaline Corp 135 employees

ROBERT BLOMQUIST ANNE MCCAFFERTY LINDA HENNESSY TRAVIS EVANS Mayor, Olmsted Falls Cleveland Westlake Cleveland No, I can’t say I would. At I can’t say I (would). I don’t Of course; who wouldn’t? No, I’m just not that type the end of your career, it’s have that kind of stressful Everybody has frustra- of person. I’m pretty more a summary of what career, but I can under- tions. reserved and I keep you’ve done throughout stand (Slater’s actions) everything to myself. INTERESTED? CALL TODAY, 440 575-7000 the years. I can’t say I working in that line of ~OR~ FOR MORE FROM OTHER COMPANIES VISIT would make a statement business. WWW.SALESCONCEPTSINC.COM like that. SELL MORE.

➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com. FDA clears Thermedx’s surgical fluid

By SHANNON MORTLAND welcoming new health care devices, pilot program in which they will get [email protected] Mr. Kurowksi said — in the coming the Fluid Management System for weeks. Thermedx also has contracted free and will report their experiences Solon medical device maker with distributors on the East and back to Thermedx, Mr. Kurowski Thermedx LLC has received U.S. West coasts, as well as in Europe, he said. Food and Drug Administration said. Dr. Marcus Tower, chairman of clearance for its fluid warming The Fluid Management System obstetrics and gynecology at Hill- machine and has begun marketing will be launched at the Association crest and a member of the Ther- the device in the United States and for Perioperative Practice conference medx medical advisory board, said Europe. in England in October, Mr. Kurowski Hillcrest will begin testing the Fluid The 37-5 Fluid Management said. Thermedx will begin marketing Management System over the next System warms fluids that go into the device in Denmark, Holland, three to four months. He has high the body during surgery in about 15 Norway and Sweden in the first expectations for the machine seconds, said John Kurowski, a quarter of next year and in Germany because, in the past, fluids could be registered nurse and vice president next summer, he said. too hot or too cold for patients, and of sales and marketing for Thermedx. The Fluid Management System there was not a good way to monitor Previous methods of warming has been received well by local constantly temperatures of the fluids such as saline included hospitals, Mr. Kurowski said. fluids. putting them in a blanket warmer “I haven’t had a door closed on “This provides us with the capa- for up to 30 minutes, he said. me yet,” he said. “There is a lot of bility of monitoring the tempera- The 3-year-old, 12-employee focus on temperature management ture of fluids we irrigate the patient company has hired a sales rep in as it relates to patient outcomes.” with,” Dr. Tower said. “If the fluids Atlanta and will hire salespeople in Cleveland Clinic’s Hillcrest Hos- are not right, the patient can become Cleveland, Dallas and Tampa — all pital is among those medical hypothermic very quickly” and of which have track records of centers that will participate in a could go into heart failure. ■

View: Cleveland can be world tech leader continued from PAGE 8 Korea and Australia. Fortunately, we in Northeast be able to see rural patients via As a primer on the urgency of our Ohio have a digital platform for two-way video, while wireless devices opportunity, we recently spoke with collaboration and innovation that instantly send readings and images Mayor Maeng of Seoul, South Korea, is almost unparalleled. We have an for diagnosis and treatment. We’re considered the world’s most digital amazing leapfrog opportunity in poised to lead the world in adapting city. Citizens can access literally front of us. We need to rally, to to and adopting “telemedicine.” hundreds of government services embrace our leadership position in In March, a coalition led by for their families or businesses online, this arena and launch an offensive. OneCommunity was awarded $18.7 with just a TV remote control (no It’s essential that we work together million over two years for a national computer needed). With this incred- to further develop a regional vision pilot project aimed at reducing the ible digital infrastructure in place, for collaboration and sharing of “digital divide.” The grant creates Seoul is now aligning its educational resources leveraging our platform more than 100 direct jobs and will and innovation systems to leverage to make the Cleveland area a world build capacity to train and equip this platform so it can become a leader leader, as we were a century ago citizens in Cleveland, Akron, 10 in a global, knowledge-based economy. during the second Industrial Revo- rural counties in Ohio and cities in They’re not there yet, but we lution. But the question remains, three other states. This will enable should be very afraid. Our kids are can we adapt our culture and skills, 26,000 households that successfully going to compete for jobs with kids align our resources, and apply our complete the program to access from South Korea and other digitally unparalleled work ethic to lead the better jobs, education, health care advanced regions. Their collective information revolution? and government services. tools and skills are bringing talents Time will tell, but we have no Leaders from dozens of countries and innovations here to compete excuses. Unlike our peers across have visited Cleveland to learn in our very own marketplace. The the country, we have nothing for more about our collaborative and United States — widely regarded as which to wait. Our moment is here. innovative approach. In turn, we’ve having one of the slowest and most Let’s take the lead on broadband as visited and advised numerous U.S. expensive broadband infrastruc- a community imperative and make cities, not to mention governments tures of the industrialized world — the choice to compete and become worldwide, including China, South is at a great disadvantage. a global leader again. ■ 20100816-NEWS--10-NAT-CCI-CL_-- 8/12/2010 1:07 PM Page 1

10 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 16-22, 2010 Cleveland plans to market big Flats parcel Continuity of Ind., opened an 86,000-square-foot care at heart After cleanup, site could solve city’s lack of warehouse nearby on 17 acres on industrial space to lure potential employers Independence Avenue. The city has secured a $5 million of doctor’s Job Ready Sites grant from the state By JAY MILLER hoga County Port Authority find a to clean up the property, which [email protected] place for river dredgings, a problem ArcelorMittal is donating after the at-home plan that has become a heavy burden for city reimburses the company $1 The city of Cleveland for years the port operator. million for some cleanup costs has struggled to compete for new “We’re excited to get started,” already undertaken. By SHANNON MORTLAND plants and warehouses because it said Tracey Nichols, the city’s director Acquiring the property has the [email protected] didn’t have a big, ready-to-use indus- of economic development. “We’re added benefit of taking pressure off trial site to offer new or expanding expecting to be able to put 300,000 the Port Authority to find a dump Psychiatry patients often fall businesses. square feet of commercial/industrial site for material that is dredged from through the health care cracks and It has taken a step to change that property onto the market.” the Cuyahoga River bottom to keep fail to follow up with their physi- situation. Ms. Nichols said it will take a year the shipping channel clear. The city cians, but a local The city last month won control for contractors to clean up environ- will need at least 300,000 cubic yards doctor is launching of a 54-acre site in the Flats that it mental hazards and fill the site. She of material to fill and cover the Flats a home health plans to clean up environmentally said such a large piece of land will property. That’s at least a year of care company that and make available to show devel- help keep companies already in river dredging material. will bring psychi- opers, real estate brokers and site Cleveland that need to expand from The lower Flats in the last several The city has three other properties atry and health selectors. The acreage on the east fleeing for distant suburbs. years have attracted two steel ware- it is redeveloping for its industrial care services to side of the Cuyahoga River once had Joseph Martanovic, an industrial houses that wanted to be near the land bank. Two are on the West Side. the patient. a coke oven on it that fed the real estate broker with the Colliers steel mill. In 2005 Heidtman Steel One is the 22-acre former Midland Dr. Rakesh Ranjan ArcelorMittal steel mill, but could Ostendorf Morris real estate brokerage, Products Inc. of Toledo built a Steel plant, and the other, called the Ranjan, who owns be home to a large plant or ware- agreed. 270,000-square-foot service center Trinity site after a building that had a psychiatry practice and a drug- house or could be broken up into “This is great for the city,” Mr. on what is now Heidtman Parkway been on the property, is 5.6 acres. testing firm called Charak Clinical parcels for an industrial park. Martanovic said. “There’s a dearth near the ArcelorMittal plant. Then in The city also is marketing three acres Research Center in Garfield Heights, The plan for the cleanup also of industrial sites in Cuyahoga 2009, Steel Warehouse Inc., a steel in the Flats that once housed a city- has launched Spectrum Home should help the Cleveland-Cuya- County and less in Cleveland.” distributor based in South Bend, owned asphalt plant. ■ Health Care. The company provides in-home health care and psychiatric services in Cuyahoga, Lake, Medina and Summit counties. Dr. Ranjan already has hired 15 nurses, home health aides, social Race: Coaches rave about facilities’ impact in recruiting workers, and physical, occupational and speech therapists to take care of continued from PAGE 3 thing started. existing clients who are on a waiting general funds or asking students to Mark Rosentraub, who chairs the list to receive in-home services. He bear more of the cost. sport management department at said he expects to hire up to 30 more Kent’s upgrades were paid for by the University of Michigan said home health aides, nurses and sales- private support and did not impact athletic revenues are tertiary when it people by the end of the year as the the university’s budget, while Akron comes to projects such as these; new business ramps up. benefited from a combined $15 instead, it’s philanthropic commit- According to Dr. Ranjan, the Visiting million from Akron-based InfoCision ments, and student attraction and Nurse Association of Ohio currently and Summa Health System and has retention that truly make investments is the only organization that provides no immediate plans to charge students worthwhile. home health and psychiatry services an additional fee. Kent State coach Doug Martin, in Greater Cleveland. Because some “Our members are being finan- entering his seventh year at the patients who receive health or cially prudent in doing these upgrades. helm, said he’s already seen the former psychiatric care in a hospital but They’re raising dollars and investing affected by Dix Stadium’s facelift. don’t receive in-home follow up care them back into programs,” said MAC “We notice a difference in recruiting, fail to adhere to their doctors’ orders, commissioner Jon Steinbrecher. but we have to catch up to others still,” their condition worsens once at “There’s no doubt they’re coming to PHOTOS COURTESY BOWLING GREEN/AKRON ATHLETIC COMMUNICATIONS Mr. Martin said. “But it’s been very home and they wind up back in the the realization that you have to make ABOVE: Bowling Green’s Sebo Center closed off the north end zone at Doyt L. Perry obvious to the administration the hospital, Dr. Ranjan said. your program attractive to prospec- Stadium. BELOW: Akron played its first game in InfoCision Stadium in September. effects the upgrades have had, and “There is no continuity of care tive student athletes, to the fans.” Both facilities have been credited in assisting recruiting at the respective schools. former players and other alumni see and that’s where most patients fall Other MAC schools have joined or what’s there now and are pleased.” through the cracks,” he said. are joining the parade: And though those athletic rev- Indeed, there is more need for ■ Toledo in February opened its enues aren’t always goal No. 1, those joint home health and psychiatry new Fetterman Training Center, a $9 better players attracted by updated services than currently can be million indoor facility used by its facilities every so often can lead the handled in Northeast Ohio, said football, track, basketball and golf little guy to the promised land. John Nisky, a clinical supervisor for teams; Look no further than Boise State, Cenpatico, the behavioral health ■ Bowling Green’s $36 million which reportedly took home about arm of the Buckeye Community Stroh Center, a new home for its $3.5 million — after splitting with Health Plan, which coordinates care basketball and volleyball teams and five other nonautomatic-qualifying for Ohio’s Medicaid enrollees and other general uses, will open next conferences and its own conference others who are on similar govern- fall, four years after the school opened members — by advancing to the ment-sponsored health plans. its Sebo Center, an $11.6 million 2007 Fiesta Bowl. Cenpatico serves the aged, blind facility in its football stadium’s north The Broncos, after another solid and disabled in eight Northeast Ohio end zone that serves strength and season last year in which they again counties, Mr. Nisky said. About a conditioning, treatment and rehab, played in the Fiesta Bowl, likely will third of his clients have mental and academic training needs; and be in the top five in preseason polls, health issues and many lack the ability ■ Ball State, in Muncie, Ind., and setting them up for another big-money to have someone work with them Northern Illinois, in De Kalb, Ill., in run. after they leave the hospital to make 2007 completed $13 million and $14 By comparison, Northern Illinois sure they follow the doctor’s orders million projects, respectively. in his second year at Toledo after a and third in MAC recruiting over reportedly lost $740,000 total on its so they can better control their Toledo paid for its new facility spell on Ohio State’s staff, each said the last three years; Akron was last three bowl trips, to San Diego; symptoms. through private donations and the respective universities’ plans second in 2009, and Toledo has Shreveport, La.; and Toronto, respec- Mr. Nisky said Cenpatico will con- kicked in some money from its capital played major roles in their decisions ranked first, fourth and second. tively. The losses stem from travel tinue to work with the Visiting Nurse projects budget; BG’s Sebo Center was to accept positions at those schools. “It’s an arms race,” said Rick costs and ticket guarantees; the Association for home health and funded fully through private dona- “I talk to friends in college foot- Chryst, the former commissioner of latter is required by bowls, as schools psychiatry services. It also will start tions, though the Stroh Center — ball and they tell me you can drop the MAC and now of counsel in must buy a certain amount of referring patients to Spectrum. after $14 million in private donations (InfoCision Stadium) in a (South- Walter & Haverfield’s sports law tickets, then take a loss on whatever “We hope to maintain an individual — will need $16 million in student eastern Conference) city and it practice group. “(Recruits) can tell portion of them they don’t sell. within the community, keep them fees once it opens. would fit right in,” said Mr. Ianello, pretty quickly if something is tired “That’s speculative, but certainly living in their homes, keep them plays a part in the decisions,” Mr. One thing leads to another a former assistant at Notre Dame. or fresh.” living with their families,” he said. “It’s a lot different than the Rubber Better facilities mean better recruits, Rosentraub said. “But generally, Dr. Ranjan said he is in talks with Coaches polled July 30 at the Bowl, for sure.” and better recruits often lead to a these facility decisions are made other health care providers, nursing MAC’s annual media day at Ford Many of the schools with new better team, more exposure for the in the school’s best interest; these homes and insurers to refer patients Field in Detroit sang the facilities’ digs have seen jumps in recruiting. school and more enthusiasm from institutions are not run by people to Spectrum and to his clinical prac- praises. Rob Ianello, Akron’s first- According to leading evaluator alumni — and potentially more who got there by making huge tice, which opened an office in Men- year head coach, and Tim Beckman, Rivals, Kent has ranked third, first donations, which got this whole mistakes.” ■ tor on Aug. 2. ■ 20100816-NEWS--11-NAT-CCI-CL_-- 8/12/2010 1:08 PM Page 1

AUGUST 16-22, 2010 CRAIN’S CLEVELAND BUSINESS 11

INSIDE 13 ADVISER: PROPOSED RULE FOR REPORTING REVENUE OPENS EYES. FINANCE SMALLBANKS, BIGBURDENS Despite perceptions, little guys are expecting impact from banking reform

By JAY MILLER [email protected]

ccording to Michael Van Buskirk, president of the Ohio Bankers League, the recently passed banking reform legislation will generate 100 pages of newA regulations for each worker of the average community bank in Ohio. He said the average small bank in this state has 40 employees, and he expects the new Dodd-Frank Wall Street Reform and Consumer Protection Act, passed last month by Congress and signed into law by President Barack Obama, to generate at least 4,000 pages of new regulations. So, not surprisingly, he scoffs at the notion by some that the new law won’t affect the average small bank. “I think there is a perception that community banks, or smaller banks, were largely exempt from the bill,” he said. “We believe that’s absolutely untrue.” He’s especially bugged because, he said, “When you consider these guys had no role in causing the problem, this is a huge burden they are going to be addressing.” Mr. Van Buskirk also complained that the bill created some loopholes that will allow some small bank competitors, such as auto dealers who make car loans, to avoid the same level of regulation as the banks face. The community banks are exempt from See SMALL Page 13

“When you consider (small banks) had no role in causing the problem, this is a huge burden they are going to be addressing.” – Michael Van Buskirk president, Ohio Bankers League

Bank holding companies sometimes seen as not worth trouble

doesn’t have any desire to bring in those ends, Mr. Valerian said. Grady, a regulatory specialist who Additional opportunities afforded by parent the extra regulator that would Traditionally, holding companies advises small banks across the come with a holding company. have been seen as vehicles that country on such matters. don’t always outweigh another regulator, costs Nor does he see a need to keep were useful in buying, starting up the extra set of books, to track two or capitalizing banks and other Strong points By DAN SHINGLER expansion. sets of earnings and to maintain financial subsidiaries. The thing investors must [email protected] “A holding company is just an two boards that would almost Investors buy stock in the remember, especially today, Mr. extra expense unless you need it,” certainly have the same people on holding company, which uses at Grady warns, is that regulators will ank holding companies said Bill Valerian, chairman and them — all of which cost money. least some of that money to serve expect the holding company to used to be the norm when CEO of Liberty Bank in Beachwood. That’s because Liberty just as capital for the bank or thrift serve as an ongoing “source of structuring even a small “We figure it would be $600,000 to wants to do traditional banking subsidiary. Unlike a stand-alone strength” to the bank or banks that regional bank, but in light $800,000 in additional annual and has no plans to get into bank, a holding company can buy it owns. Banks can still upstream Bof recent regulations — and the expenses.” sidelines such as insurance or to its own stock, so investors can turn their excess earnings to the holding fortunes of some holding companies Mr. Valerian said his bank is embark on an aggressive acquisi- to it as a buyer if they need to company — but the holding and their directors — they’re often doing very well as a stand-alone tion strategy. A holding company, liquidate their holdings. company’s obligation does not becoming seen more as an unnec- nationally chartered commercial which can own more than just And that’s still a good reason to end there or with its initial capital- essary burden than a shield against bank — no holding company, banks, would afford such opportu- form a holding company, said ization of the bank it owns. liabilities or the key to growth and thank you very much — and he nities, but Liberty is not pursuing Rocky River attorney Francis X. See HOLDING Page 13 20100816-NEWS--12-NAT-CCI-CL_-- 8/12/2010 2:24 PM Page 1

12 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 16-22, 2010 FINANCE Credit mismatch hurts spending Hometown boy leads Akron Consumer scores are GOING DOWN bank’s charge into Chicago FICO scores over the past 2½ years indicate an increase in consumer credit risk, down, while lenders’ according to an analysis of data from Equifax. FirstMerit’s Greig cut his teeth in Windy City Score April 2010 April 2009 April 2008 standards are higher By STEVE DANIELS mentored Mr. Greig in his 300-499 6.9% 7.4% 7.2% Crain’s Chicago Business early days at American By CHUCK SODER 500-549 9.0 8.7 8.2 National, Mr. Greig isn’t a [email protected] aul Greig is elbowing consummate networker 550-599 9.6 9.1 8.7 back into the and charmer. He can be f consumer spending is consid- 600-649 9.5 9.5 9.6 Chicago banking blunt and irascible. ered a weapon in the battle market, by way of “He’s classic Midwest, against recession, then North- 650-699 11.9 12.0 12.0 PNortheast Ohio. no pretense,” said Stanley east Ohio and the rest of the 700-749 15.7 15.9 16.0 Four years after leaving Greig Calderon, one of Mr. Icountry are fighting with some town to become CEO of Greig’s former bosses at wounded soldiers. 750-799 19.5 19.4 19.6 Akron-based FirstMerit Corp., the Bank One and the man who Consumers’ credit scores have 800-850 17.9 18.2 18.7 longtime Chicago banker outbid a assigned Mr. Greig the job of turning dropped during each of the past host of far larger banks and private around Bank One’s underperforming two years, a trend that could limit SOURCE: WWW.BANKINGANALYTICSBLOG.FICO.COM equity investors in May for Wisconsin franchise in 1999. Mr. consumer spending and, therefore, Midwest Bank & Trust Co., a failed Greig improved results, Mr. Calderon slow the economy’s recovery. consumers. people make more money, they lender in the Chicago suburb of says, not through a brilliant strategy Several financial experts in The changes amount to “the first should be able to raise their credit Melrose Park. Midwest’s 26 local but by setting and enforcing higher Northeast Ohio say they are seeing meaningful decrease in distribution scores further, Ms. Oliver said. branches, along with two smaller standards. more people with reduced credit in about 20 years,” said John John Martin would go only so far acquisitions, made FirstMerit the At FirstMerit, Mr. Greig is scores, referred to as “the credit-score Ulzheimer, president of consumer as to say he thinks credit scores are Chicago area’s 14th-biggest bank by turning the financial crisis to his wounded” by Jay Seaton, area education for Credit.com. Reduced stabilizing. The CEO of Emerald deposits. advantage by snapping up president for the nonprofit scores and increased lending standards Group Credit Union Inc. in Garfield Now the former college basketball distressed Chicago-area banks. Consumer Credit Counseling Service. already are resulting in fewer large Heights said his organization over player must prove he can compete In less than a year, FirstMerit has For Mr. Seaton’s part, he’s seeing purchases and increased interest the past few years has been seeing in his hometown. Chicago is the amassed $4 billion in Chicago-area an increase in the number of people rates for consumers who do get loans. reduced credit scores among its nation’s most fragmented and hotly assets, more than one-quarter of who show up to the financial educa- He doesn’t expect scores to swing members, who all live, work, study contested banking market. its $14.5 billion total. tion seminars he hosts locally, saying back up anytime soon because it can or worship in Cuyahoga County. In Nobody knows this better than With 54 Chicago-area branches, their credit scores have been hurt by take time for people to rebuild them. rare cases, the credit union has had Mr. Greig, 54, a veteran of Chicago’s Mr. Greig’s challenge is to recruit a the economic downturn. At the same And they’ll need jobs to do that. to reduce or even cancel lines of American National Bank, the training local lending team and build from time, lenders are requiring higher “You can’t pay your way out of credit, he said. ground for many bank CEOs. the base he’s bought. credit scores to get loans, said Mr. debt if you’re not employed or you’re Reduced lending hurts the non- Before taking over FirstMerit, he And unlike in Northeast Ohio, Seaton, whose organization is part of underemployed,” Mr. Ulzheimer said. profit credit union’s income, Mr. ran the Chicago-area operations of where FirstMerit has touted its the Columbus-based Apprisen family Martin said. He added that lower Ripple effect Charter One, a unit of Royal Bank hometown roots to pry business of financial companies. scores hurt the economy as a whole of Scotland PLC. from rivals such as the former That mismatch is driving Low scores reduce people’s ability not only because some borrowers Mr. Greig grew up in Chicago’s National City Corp., which was consumers to put off big purchases to buy homes and cars or to get can’t get loans, but also because others Montclare neighborhood, attending gobbled up by Pittsburgh-based so they can repair their credit first. money to start or expand a business, wind up with higher interest rates — Luther North High School on the PNC Financial Services Group Inc. “The words that are most common said Lisa Oliver, president of Key- and less money in their wallets. city’s Northwest Side. His father — Mr. Greig’s bank is the outsider in right now: ‘I’m waiting,’” Mr. Seaton Bank’s Cleveland District. She added “It’s going to reduce the disposable was a shoe buyer for Sears Roebuck a market flush with local competitors. said. that banks also consider other factors income people have,” Mr. Martin said. & Co., and he describes his Another bank? In April, 17.9% of the U.S. popu- before lending money, such as a Jim Axner, director of mortgage upbringing as middle class. lation had FICO credit scores above person’s income and whether the lending for Howard Hanna, said the “Just like every other kid, I “Does Chicago really need 800, down from 18.2% in 2009 and loan is backed by adequate collateral. residential real estate services played a lot of sandlot baseball,” another bank? I certainly don’t 18.7% in 2008, according to statistics In response to the recession, company hasn’t felt a big impact he said. At Wheaton College, he think so,” said John Rodis, an from Fair Isaac Corp. of Minneapolis, KeyBank over the last two years has because of the drop in credit scores. played two years of basketball. analyst at Howe Barnes Hoefer & which issues the scores. Conversely, “made the appropriate adjustments” However, he noted that Howard The hoops bug bit the 6-foot-6- Arnett Inc. in St. Louis. the number of people with bad in terms of how strict the bank is Hanna, which is based in Pittsburgh inch Mr. Greig hard. Until three But, like others, Mr. Rodis said scores is up: 25.5% of the population when evaluating credit scores, Ms. and has offices in Cleveland, follows years ago, he says, he played Mr. Greig’s familiarity with Chicago in April had scores below 600, Oliver said. However, she expects lending guidelines set by Freddie pickup and league basketball four helps put investors’ minds at ease. compared to 25.2% in 2009 and more people will be able to meet Mac and Fannie Mae. times a week, only giving it up after FirstMerit’s stock is trading at 24.1% in 2008. increased standards over time: She Those standards have risen to the “too many charley horses.” more than twice its tangible book Generally, scores above 720 are thinks credit scores are inching up. point where someone with a FICO “I was afraid that worse was to value, giving it a clear advantage considered good, according to San That would be good news for the score of 620 might have a hard time come,” he said. over its Chicago peers, which trade Francisco-based Credit.com, which economy. Credit can fuel purchases, getting a home loan. at no more than 1.3 times tangible provides financial information to which can help create jobs. As “A few years ago we had a home ‘Never been shy’ book value. Unlike most Chicago for that score. Today we do not,” After college he joined American banks, FirstMerit stayed profitable Mr. Axner said. National in 1978 and stayed as the through the crisis, taking advantage Northeast Ohio’s car dealers bank was acquired by First Chicago of a loan cleanup Mr. Greig oversaw Is your business bank aren’t feeling much impact from the Corp., then by Bank One Corp. and just before the housing collapse. drop in credit scores either, said Lou by JPMorgan Chase & Co. Also, FirstMerit repaid its federal Vitantonio, president of the Greater Those who know Mr. Greig describe bailout funds within months, while UP TO PAR? Cleveland Automobile Dealers’ him as intense and tenacious. all of Chicago’s midsize banks continue to hold theirs. / iÊ `ìwi`Ê >}Ê «>ÞÊ>ÃÃV>ÌiÃÊ Association. Dealers are sheltered “He’s never been shy about With Chicago the growth engine are MASTERSÊ>ÌÊ iÀV>Ê>V}° somewhat because cars cost less pushing people on the basketball than homes and because consumers court,” said longtime friend Ted for FirstMerit and Mr. Greig’s Fast Greens ... Êì>ÞÃÊÊ}iÌÌ}ÊÞÕÀÊ«ÀiVÌÃÊ can opt for less expensive cars if they Koenig, who runs Chicago-based personal connections to the city, vÕì`Ê>`Ê`>ÀÃÊyÜ}t can’t get a loan or a good interest non-bank lender Monroe Capital many wonder whether he will move rate for more expensive models. LLC. Whether it’s in the gym or in the 165-year-old bank to his home- Clean Fairways ... yiÝLi]Êv>ÀÊ>ÊVÀÌiÀ>t “It’s just affecting the ability of the business, winning “matters to town. But “as you drive into Akron, consumer to get the absolute high- him,” Mr. Koenig said. the FirstMerit name is everywhere,” No Traps ... ÊÌÀVÃ]Êv>ÃiÊÃÌ>ÀÌÃÊÀÊÜ>ÃÌi`ÊÌit est-tier rate,” Mr. Vitantonio said. The Midwest Bank deal was a said Terry McEvoy, an analyst at Oppenheimer & Co. in New York. “It The upside classic example. With more than $3 >ÊÕÃÊÌ`>ÞÊvÀÊ>ÊiÊvÊ Ài`Ì]Ê,i>Ê ÃÌ>ÌiÊ billion in assets and a solid deposit would be very difficult for them to >V}]Ê >«Ì>Ê«ÀÛiiÌÊ>ÊÀÊ So who might benefit from reduced franchise, Midwest was the most really pick up and move.” iÀV >ÌÊ >«ÌÕÀiÊVVÕÌ°Ê iÊÛiÀÊÌÊ>ÊL>Ê credit scores? Maybe so-called highly coveted of the more than 20 For his part, Mr. Greig said: “It Ì >ÌÊÃÊvÀi`Þ]ÊÃ>viÊ>`Êì`V>Ìi`ÊÌÊÞÕÀÊvÕÌÕÀi° payday lenders, who lend freely but Chicago-area banks that have failed would be unlikely in the immediate charge particularly high interest rates, in the last 18 months. In the Federal future to move the headquarters to said Mr. Ulzheimer of Credit.com. Deposit Insurance Corp.’s auction, Chicago.” But the real beneficiaries might Mr. Greig left nothing to chance, What about the intermediate or The Middlefield be the people who need to learn a stomping seven other contenders by longer-term future? Banking Company few hard lessons. offering a 2.7% premium to the “I couldn’t comment.” ■ www.middlefieldbank.com “The silver lining of the credit bank’s assets. >Ê"vwViÊÊnnnnä££ÈÈÈÊUÊ7iÃÌÊÊ{{äÈÎÓ£ÈÈÈ crunch is people will start realizing, ‘I Unlike Chicago banking deans Steve Daniels is a senior reporter with >À`ÊÊ{{äÓnÈ£ÓÓÓÊUÊ>ÀÀiÌÌÃÛiÊÊÎÎäxÓÇÓ£Ó£ Crain’s Chicago Business, a sister >ÌÕ>ÊÊÎÎäÓÇ{änn£ÊUÊ"ÀÜiÊÊ{{ä{ÎÇÇÓää messed up, and I messed up big. I’m John McKinnon of Wintrust iÜLÕÀÞÊÊ{{äxÈ{ÇäääÊUÊ ÀÌ>`ÊÊÎÎäÈÎÇÎÓän the one that they’re talking about on Financial Corp. and Norman Bobins publication of Crain’s Cleveland the news every night,’” he said. ■ of PrivateBank, both of whom Business. 20100816-NEWS--13-NAT-CCI-CL_-- 8/12/2010 1:09 PM Page 1

AUGUST 16-22, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 13 FINANCE Construction industry Small: Compliance costs surely will rise continued from PAGE 11 anybody’s interest has been strengthen financial institutions. watches potential impact some of the act’s more stringent served,” he said. The Sarbanes-Oxley Act of 2002 requirements on calculating First Federal of Lakewood is taking created tighter financial and invested capital. However, they a wait-and-see approach, since the reporting controls on all public still will have to contend with the legislation is new and enabling companies and accounting firms. of revenue reporting rule regulations created by the new regulations have yet to be written. “We constantly have to address Bureau of Consumer Financial But it expects higher costs. the regulations to make sure every- onstruction contractors AARONCOOK Protection, such as potential new “We’re not certain exactly how thing we’re doing is compliant,” soon could face a dramatic limits on debit card fees. (the legislation) is going to play she said. At least those new rules, though, out — it’s 2,000 pages — but we change in how they are Cost of doing business allowed to book revenue in will be enforced on the smaller anticipate increased compliance Ctheir financial statements. The banks by their current regulators, and administrative costs,” said Daniel E. Klimas, president and proposed accounting rule would such as the Federal Deposit Insur- Thomas Fraser, the bank’s execu- chief executive officer of LNB affect many industries, but perhaps ance Corp., not the new consumer tive vice president and chief lending Bancorp Inc. and Lorain National none more so than the construction bureau. The larger banks will have officer. “We haven’t reacted yet, Bank, also is concerned about industry that has used the current a new set of consumer bureau and we’re going to watch the rule- higher compliance costs, and he method for decades. ADVISER regulators going over their books making process. expects the new law to affect his The rule could have implications as well as the usual bank examiners. “The issues and consequences bank’s debit card fees income. will be worked out over the next “The one that will have the most for how contracts are written and Wait and see priced, how banking and bonding be accounted for as separate profit six to 18 months,” he said. immediate impact is the charges credit decisions are made, and how centers. A performance obligation Still, small banks may be over- Eloise L. Mackus, interim CEO of on fees for debit cards,” he said. performance is measured. is considered distinct if it can be whelmed by the new consumer CFBank of Fairlawn, which has four “That’s certainly a source of The change — proposed by the sold separately, or if it has a distinct finance rules and could be forced banking offices, said she, too, wor- income for us.” Financial Accounting Standards function and profit margin. to merge. Mr. Van Buskirk said he ries about added costs of regulation. Mr. Klimas said fees are a larger Board and the International For example, a contractor might knows of one bank in Eastern Ohio “Our greatest concern, as it was part of the revenue of many smaller Accounting Standards Board — has determine that site preparation and that has six employees and now with TARP and Sarbanes-Oxley, is banks and that debit card fee income drawn plenty of criticism from the site finishing are distinct performance will have to pour over and comply that there is a disproportionate accounts for between 5% and 10% construction industry. Among the obligations separate from other with the same thousands of pages negative impact on smaller insti- of his bank’s fee income. “We’re criticism is that the proposal is too construction services. The contractor of new regulations that larger, tutions,” she said. “There may be evaluating all consumer products broad and does not adequately would need to allocate to each well-staffed banks do. unintended consequences for to make up lost revenue,” he said, address the unique aspects of the performance obligation its stand- “Bigger banks have the scale to small institutions that cannot though he added that Lorain construction industry. Some argue alone selling price. have specialists, (regulatory) afford the regulatory burden.” National hasn’t yet decided on any that the costs simply outweigh any However, in the absence of a compliance departments, inter- She said the regulations that changes in fees, such as eliminating benefits from the proposed rule. stand-alone selling price, a contractor nally,” he said, while small banks, came with the Troubled Asset or reducing free checking accounts. Others fear that the new rule must estimate the value of each which have survived and avoided Relief Program, or TARP, turned He also is concerned that could lead to manipulation of performance obligation. In doing so, the problems of larger banks out to be much more onerous than figuring out how new regulations revenue and less consistency in the contractor would assign profit because of their intimate knowl- anyone expected and probably will affect the bank’s operation and financial statements. to each performance obligation, edge of their home communities, would have affected how financial making sure that the bank properly Currently, contractors utilize the which may or may not be represen- may be overwhelmed and could institutions would have viewed complies will be expensive. percentage-of-completion method tative of the economic reality. This lose their autonomy. participating in the program. “We have a relatively small staff, of revenue recognition. This could result in revenue recognition “It’s hard to believe that by forcing Central Federal Corp., CFBank’s and we don’t have a large compli- method recognizes revenue based that differs significantly from the (smaller banks) to sell to somebody holding company, took a $7 ance group,” he said. “So we may on a percentage of the contract current rule. bigger because they can’t cope million loan from TARP, which have to outsource (some of the price. Generally, the percentage is It would be difficult for auditors with the regulatory tidal wave, was enacted in 2008 to help work) or hire some more folks.” ■ calculated based on the contract and users of financial statements to costs incurred to date as a proportion challenge the contractor’s estimate. of the estimated total contract cost. Furthermore, because most projects This is commonly known as the extend beyond one accounting Might it some day form a holding cost-to-cost method of calculating period, this creates an opportunity Holding: Strength may disappear company? Perhaps, but it would percent complete. The current rule to move profit from one period to probably require something like a is simple, cost-effective and well another. continued from PAGE 11 billion in assets, a strong capital base very attractive acquisition of another understood by the industry and its For instance, a contractor could If the holding company fails to and was in fact a source of strength bank that required it to raise more stakeholders. allocate more profit to performance support its bank, the holding — as well as a willing buyer for capital, Mr. Duncan said. Although the proposed rule obligations that are satisfied in a company itself can become liable minority shareholders in the bank’s Right now, things are relatively continues to allow the cost-to-cost particular accounting period. — as witnessed just this summer first few years of operation. quiet in the banking arena. Mergers method, it suggests that other Consequently, this might entice a when regulators went after bankrupt “Unfortunately, their (banking and acquisitions don’t happen as methods more accurately depict contractor to manage contract profit AmTrust Financial Corp., the and loan) concentrations were in often as they used to. The Internet contract performance. One such in such a way to comply with bank former parent of AmTrust Bank. places like Michigan and Las Vegas, has made it more difficult for banks method calculates the percentage of and bonding credit requirements. Regulators seized the bank at the which were not good places to be,” to get into insurance or other finan- completion based on the contractor’s To the extent that contractors end of 2009 and this summer took Mr. Duncan said. cial products with the assurance their customers will buy them. survey of the goods and services continue to utilize the cost-to-cost action to collect more than $500 Holding companies on hold installed to date. method and account for contracts as million from the holding company, And, as Mr. Duncan pointed out, By using this method, a contractor a single profit center, the proposed outside of its bankruptcy proceedings, Now, Ohio Commerce is a stand- there are a slew of new regulations would need to estimate the value of rule might not have a significant claiming that the holding company alone state-chartered bank, with no most bankers have yet to understand. the goods and services transferred impact on revenue recognition. failed to serve as a “source of plans of forming a holding company “I think holding company to the customer and record this However, the proposed rule strength” for the bank it owned. as it sticks to its basic business of arrangements, like a lot of things in amount as revenue. provides much more latitude to “You’ll see that on every enforce- taking deposits and working hard to our industry, are just on hold right ■ Whereas the cost-to-cost method contractors who choose the new ment action or written agreement make good loans, said Mr. Duncan. now,” Mr. Duncan said. is relatively easy to recalculate and method of accounting. Again, this between a bank and its regulators corroborate, the revenue recognized could lead to less consistency and today,” Mr. Grady said. “Every under this method would be difficult comparability of financial informa- single one says, ‘The holding to challenge by auditors and users tion and could provide a vehicle for company shall serve as a source of of the financial statements. contractors to manage earnings. strength to the subsidiary bank.’” In fact, under this method, it The accounting boards have not Some banks are even trying to get #ONGRATULATIONS would not be uncommon for two yet announced when the proposed out from beneath holding company Melanie Turner similar contractors to draw different rule will take effect. There may be parents when those arrangements no conclusions as to the percentage of further revisions based on public longer provide the bank with the Ohio Title Corp completion. This could result in comments, which are being taken required source of strength. For Thanks you for your outstanding talent less consistency and comparability until Oct. 22. At this juncture, it is instance, Ohio Commerce Bank in and contribution overseeing residential of financial statements throughout difficult to determine if contractors Beachwood bought out its holding and REO transactions. the industry. will choose to change their company, Capital Bancorp, last In addition, under the proposed accounting method. December. What had been a source -ELANIE4URNER With Mel’s knowledge of conventional, rule, contractors have more flexibility One thing that appears certain is of strength became a parent !SSISTANT6ICE0RESIDENT FHA, VA and construction financing our in determining a profit center. change is coming soon, as the final company that itself was struggling — Closing Associates are guided to the Under the current rule, the entire standard is scheduled to be issued with bad loans from some of its other highest standard of settlement services. contract is generally accounted for in 2011. ■ more than 50 bank subsidiaries, as a single profit center. Mr. Duncan said. This includes any change orders Mr. Cook is a senior manager with the “They were just the opposite when Statewide Title and Settlement Services Since 1973 that modify the original contract. The regional accounting and business we started,” he said, noting that Independently Owned proposed rule allows for distinct consulting firm Meaden & Moore, when Ohio Commerce began opera- Middleburg Heights 440.886.6141 and Operated contract performance obligations to headquartered in Cleveland. tions in 2006, Capital Bancorp had $5 www.ohiotitlecorp.com Woodmere Village 216.360.9099 20100816-NEWS--14-NAT-CCI-CL_-- 8/12/20101:30PMPage1 1 4

Key Tower Anthony J. 200 Public Tower at Huntington CRAIN’S CLEVELANDBUSINESS 2 Celebrezze Square Erieview Building A CLOSER LOOK AT DOWNTOWN REAL ESTATE Rentable 1 4 11 3 building area: Federal Building Rentable Rentable Rentable The recession and big moves by some of downtown Cleveland’s largest tenants have 1,322,917 Rentable building area: building area: building area: changed the real estate landscape. sq. ft. building area: 1,270,204 703,205 sq. ft. 1,292,748 1,462,628 sq. ft. sq. ft. Here, a closer look at the largest buildings, ranked by rentable building area. For full sq. ft. details on each building, and the full list, see Page 15. Penton Eaton ● North Point Media 12 Center PNC 15 Center 8 Tower and Building Rentable 10 Office Complex Rentable building area: Rentable 614,850 sq. ft. Carl B. Landmark Public Higbee Terminal Rentable building area: building area: Stokes U.S. Office Square Tech 7 Building 13 Tower building area: 575,000 sq. ft. 789,491 sq. ft. 9 Courthouse 6 Towers 5 Center Rentable Rentable 820,795 sq. ft. ● Rentable Rentable Rentable building area: building area: 1100 building area: building area: building area: 872,000 sq. ft. 585,000 sq. ft. ● Superior 800,000 sq. ft. 900,000 932,000 sq. ft. ● 14 ● Ave. (not pictured) ● ● Rentable ● building area: 576,086 sq. ft.

● ● WWW.CRAINSCLEVELAND.COM

9 7 5 6 EILPHOTO BYFOCALPLANEPHOTOGRAPHY,LLC AERIAL UUT16-22,2010 AUGUST 20100816-NEWS--15-NAT-CCI-CL_-- 8/13/2010 11:15 AM Page 1

AUGUST 16-22, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 15 DOWNTOWN CLEVELAND OFFICE BUILDINGS RANKED BY RENTABLE BUILDING AREA

Rent per Year built Name Rentable Square feet square foot Building Primary leasing Rank Address building area available % leased ($) Tenants height Owner company Anthony J. Celebrezze Federal Building The Defense Finance and Accounting 1966 U.S. General Services 1 1240 E. Ninth St. , Cleveland 44114 1,462,628 0 100.0 NA Service, Cleveland Site, federal offices NA U.S. Government Administration Jacobs Real Estate Key Tower KeyCorp, Thompson Hine LLP, Deloitte 1991 Wells Real Estate Funds Services LLC 2 127 Public Square, Cleveland 44115 1,322,917 99,231 95.3 27.00-29.00 LLP 947 Norcross, Ga. (440) 808-7492 Cleveland

Huntington Building Huntington National Bank, Ernst & 3 1,292,748 335,049 85.7 12.00-16.00 Young, Porter, Wright, Morris & Arthur, 1924 Optima International LLC Hines Interests 925 Euclid Ave., Cleveland 44115 Tucker Ellis & West LLP 289 Miami Beach Houston

200 Public Square Cliffs Natural Resources, McKinsey & Harbor Group International Grubb & Ellis Co. 4 1,270,204 220,376 90.7 23.00-25.00 Co., PricewaterhouseCoopers LLP, 1985 LLC (216) 861-3040 200 Public Square, Cleveland 44114 Management Recruiters International 658 Norfolk, Va. Cleveland

Public Square Tech Center Grubb & Ellis Co. 5 932,000 441,000 52.7 18.00-21.00 Cadillac Ranch 1931 Morgan Reed Group (216) 861-3040 158-218 Euclid Ave., Cleveland 44114 NA Miami Cleveland

Landmark Office Towers Sherwin-Williams Breen & Co. 6 900,000 0 100.0 NA Sherwin-Williams Co. 1931 Development (216) 902-8150 101 W. Prospect Ave., Cleveland 44115 NA Cleveland Cleveland

Higbee Building CB Richard Ellis Inc. 7 872,000 435,273 50.1 18.00-21.00 Key Bank, Greater Cleveland 1931 Forest Bay Tower City LLC (216) 687-1800 100 Public Square, Cleveland 44113 Partnership, Positively Cleveland 195 Cleveland Cleveland NorthPoint Tower and Office Complex(1) Jones Day, Oglebay Norton, Kaiser 1980; 1990 CommonWealth REIT REIT Management & 8 901-1001 Lakeside Ave. E., Cleveland 44114 820,795 109,530 87.1 18.50-24.00 Permanente, Towers Watson 285 Newton, Mass. Research

Carl B. Stokes U.S. Courthouse Federal and district courts, Clerk of the 9 800,000 0 100.0 NA U. S. District Court, U. S. Attorney, 2002 U.S. General Services U.S. General Services 801 Superior Ave., Cleveland 44113 Probation Services 430 Administration Administration PNC Center 1980 PNC Realty Services 10 1900 E. Ninth St., Cleveland 44114 789,491 0 100.0 NA PNC, Baker & Hostetler LLP 410 Pittsburgh NA

Tower at Erieview Chartwell Group LLC 11 703,205 253,052 72.3 13.50-22.50 Dollar Bank, Barnes Group, Walter & 1964 Minshall Development Co. (216) 360-0009 1301 E. Ninth St., Cleveland 44114 Haverfield LLP, Weston, Hurd LLP 529 Bethesda, Md. Cleveland

Eaton Center CB Richard Ellis Inc. 12 614,850 131,883 94.0 13.50-17.50 Eaton Corp., Hyatt Legal Plans Inc., 1983 Sovereign Group LLC (216) 687-1800 1111 Superior Ave., Cleveland 44114 Brown Gibbons Lang & Co. 356 New York Cleveland

Terminal Tower Forest City Enterprises Inc., CB Richard Ellis Inc. 13 585,000 97,631 83.3 15.00-22.00 Morgenthaler Ventures, Riverside, Falls 1930 Forest City Enterprises Inc. (216) 687-1800 50 Public Square, Cleveland 44113 Communications 708 Cleveland Cleveland

1100 Superior Ave. American Landmark CB Richard Ellis Inc. 14 576,086 133,583 79.3 11.00-19.95 First American Title Insurance Co., 1972 Properties Ltd. (216) 687-1800 1100 Superior Ave. E., Cleveland 44114 Littler Mendelson PC 280 Skokie, Ill. Cleveland

Penton Media Building CB Richard Ellis Inc. 15 575,000 52,891 93.8 15.50-19.00 Penton Media, Chartis 1972 KBS Realty Advisors (216) 687-1800 1300 E. Ninth St., Cleveland 44114 270 Newport Beach, Calif. Cleveland

One Cleveland Center Sammy's Catering, Internal Revenue Optima Management Group Optima Management 16 541,505 144,089 79.0 8.00-22.00 Service, Kohrman, Jackson Krantz PLL, 1983 LLC Group LLC 1375 E. Ninth St., Cleveland 44114 KPMG 450 Miami Beach Miami Beach

Fifth Third Center Fifth Third Bank, McDonald Hopkins CB Richard Ellis Inc. 17 508,397 86,169 88.2 19.00-22.00 LLC, UBS Financial Services, Brouse 1992 Behringer Harvard (216) 687-1800 600 Superior Ave. E., Cleveland 44114 McDowell, Buckley King 446 Addison, Texas Cleveland

IMG Center IMG Worldwide Inc., MAI Wealth Breen & Co. 18 506,656 26,919 94.7 12.00-17.00 Advisors LLC, Oswald Cos., Chicago 1965 Manchester Realty LLC (216) 902-8150 1360 E. Ninth St., Cleveland 44114 Title NA Cleveland Cleveland

Key Bank Center Grubb & Ellis Co. 19 475,600 139,204 84.7 18.00 KeyCorp, Calfee Halter & Griswold 1969 LNR Partners LLC (216) 861-3040 800 Superior Ave., Cleveland 44114 305 Miami Beach Cleveland Jones Lang LaSalle 45 Erieview Plaza 1983 Inland American Real Estate Americas Inc. 20 45 Erieview Plaza, Cleveland 44114 463,992 213,943 NA 17.00-19.00 AT&T 253 Trust (216) 861-7171 Oak Brook, Ill. Cleveland Jones Lang LaSalle Frank J. Lausche State Office Building Ohio Lottery Commission, Adult Parole 1979 Ohio Building Authority Americas Inc. 21 615 W. Superior Ave, Cleveland 44113 456,610 0 100.0 NA Authority, Bureau of Workers' 204 Columbus (216) 861-7171 Compensation Cleveland

Hanna Building Turner Construction, The Cleveland PlayhouseSquare Real 22 437,060 145,396 77.9 13.00-15.50 Foundation, Great Lakes Publishing, 1921 PSC Hanna Building Estate Service 1400-1422 Euclid Ave., Cleveland 44115 Moscarino & Treu, United Agencies 194 Cleveland Cleveland

M.K. Ferguson Building - Tower City Center CB Richard Ellis Inc. 23 434,491 69,637 84.0 15.50-18.00 JPMorgan Chase & Co., Quicken Loans 1934 Forest City Enterprises Inc. (216) 687-1800 1500 W. Third St., Cleveland 44115 Inc., Squire Sanders & Dempsey LLP NA Cleveland Cleveland Ameritrust Tower 1971 Cuyahoga County Cuyahoga County 24 900 Euclid Ave., Cleveland 44115 428,400 428,400 0.0 NA NA 383 Cleveland Cleveland

55 Public Square Computer Task Group, Climaco, Optima 55 Public Square Optima Management 25 423,821 107,576 82.0 16.00-18.00 Mansour, Gavin, Gerlack & Manos, 1958 LLC Group LLC 55 Public Square, Cleveland 44113 Polytech Inc., Zashin and Rich LPA 300 Miami Beach Miami Beach

Halle Building Grant Thornton LLP, Council for CB Richard Ellis Inc. 26 383,000 196,545 65.0 15.50-18.00 Economic Opportunities in Greater 1910 Forest City Enterprises Inc. (216) 687-1800 1228 Euclid Ave., Cleveland 44115 Cleveland, Michael Baker Jr. Inc., NA Cleveland Cleveland Medical Mutual Building 1910 BentleyForbes 27 2060 E. Ninth St., Cleveland 44115 381,000 0 100.0 NA Medical Mutual NA Los Angeles NA

Standard Building Brotherhood of Locomotive Chartwell Group LLC 28 350,000 111,387 69.8 10.50-14.50 NA 1925 Engineers and Trainmen (216) 360-0009 1370 Ontario St., Cleveland 44113 NA Cleveland Cleveland

1717 E. Ninth St. Building Grubb & Ellis Co. 29 346,500 266,666 23.0 23.00 NA 1958 Sovereign Partners LLC (216) 861-3040 1717 E. Ninth St., Cleveland 44114 275 New York City Cleveland AmTrust Bank Ohio Savings Bank Ohio Savings Bank, Boyd Watterson, 1975 Federal Deposit Insurance 30 1801 E. Ninth St., Cleveland 44114 333,592 39,405 88.2 17.50 Gries Financial, Pearne & Gordon LLP, 250 Corp. NA Northwestern Mutual Financial Network Washington D.C.

Skylight Office Tower Ulmer & Berne LLP, Capgemini, CB Richard Ellis Inc. 31 314,899 77,256 76.4 19.00-23.00 Skylight Financial Group, Hard Rock 1991 Forest City Enterprises Inc. (216) 687-1800 1660 W. Second St., Cleveland 44113 Cafe NA Cleveland Cleveland Source: CoStar Property, www.costar.com. Additional information from web sources and leasing companies. Crain's Cleveland Business does not independently verify the RESEARCHED BY Deborah W. Hillyer information and there is no guarantee these listings are complete or accurate. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) 901 Lakeside is 100% leased. Square feet available and % leased is for 1001 Lakeside. 20100816-NEWS--16-NAT-CCI-CL_-- 8/13/2010 3:31 PM Page 1

16 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 16-22, 2010 Chancellor: Progress report due Dec. 1

continued from PAGE 1 revoked, the commission stated. Metropolitan Ministry president In addition, George Kidd is no A show-cause order is more serious and CEO Carol Fredrich attended longer Chancellor’s president, Mr. than a probation order, which an informational meeting last fall at Redgate resigned last March and is Chancellor was placed on last year, Chancellor, which was interested in now vice president of Light University said Robert Appleson, vice presi- recruiting the homeless, said Megan in Forest, Va., and former Chancellor dent of accreditation relations at Billow, director of communications CEO Ronald Kennedy resigned in the Higher Learning Commission. at the ministry. However, Ms. May 2009 after six months on the “With probation, they’re really Fredrick had a bad feeling about the job. finding the institution in danger of effort and asked Chancellor not to Last November, Chancellor hired not meeting criteria of accreditation,” contact her again, Ms. Billow said. a new CEO, Bob Barker, who was Mr. Appleson said. “With a show-cause “We advocate for people who are founder of EDU Interactive in San order, the finding is the institution repressed and hurting,” but do not Diego, Calif., and Barker Educa- may not now be meeting criteria. condone “any behavior that perpet- tional Services of Scottsdale, Ariz., “It’s a very difficult situation,” uates unemployment, homelessness both of which are education mar- Mr. Appleson added. “Show-cause and poverty,” Ms. Billow said. keting firms. He also is no longer has very definite issues … than had Brian Davis, executive director of with Chancellor, as confirmed by a been raised with probation.” the Northeast Ohio Coalition for woman who answered the main the Homeless, said he had similar switchboard at Chancellor. Big money in the balance experiences with the University of Robert Daugherty, who is listed Without accreditation, students Phoenix, the most recent of which as Chancellor’s interim president on would not be eligible for federal was last March. The University of the Higher Learning Commission’s student aid. That development could Phoenix, which also is a for-profit web site, last week declined comment be devastating for Chancellor school with locations in Northeast about the school except to refer to because 71% of its students received Ohio, “claimed they were going to himself as a consultant to Chancellor. federal grants and 71% secured set up computer classes for the Mr. Daugherty is chairman and federal loans in the 2008-2009 school general population if they were managing partner of Knowledge year, which is the most recent infor- allowed to come in and make a Investment Partners in Cleveland, mation available from the National pitch for the University of Phoenix,” which describes itself on its web Center for Education Statistics in Mr. Davis said. site as an investment management the U.S. Department of Education. The University of Phoenix was firm for institutional investors and A loss of accreditation also would permitted to talk to the coalition’s high net worth individuals. mean many college credits earned clients, but the computer classes Other members of the adminis- by Chancellor students wouldn’t never materialized, Mr. Davis said. trative team also were let go in transfer to other universities. In “They definitely recruited people, recent months, though Ms. Nita would addition, employers are less likely unfortunately, but those guys never not comment on those departures, to hire graduates of an unaccredited completed one semester and they’ve saying the board of directors would college, Mr. Appleson said. still got the loans,” Mr. Davis said. issue a statement when any Losing accreditation “wouldn’t In its defense, the University of changes in leadership are made. cause the school to close, but it Phoenix responded with an e-mailed Chancellor board member Gavin might make problems for investors statement that read: “University of Gray, an executive at investment because (Chancellor) couldn’t attract Phoenix does not condone the firm Selected Interests in Austin, students,” Mr. Appleson said. recruitment of residents from Texas, did not return two phone Accreditation isn’t easy to attain, homeless shelters or transitional calls from Crain’s. His secretary said said Kevin Kinser, an associate housing, which would violate he is on vacation and could not professor of educational adminis- multiple provisions of our code of return calls until Aug. 23. tration and policy studies who also business conduct and ethics as well The question remains as to who studies for-profit universities at the as enrollment policies, resulting is steering the ship at Chancellor. University at Albany, State Univer- in disciplinary action up to and sities of New York. including termination. University of Accreditation at risk “They can’t simply move over to Phoenix is committed to providing The Higher Learning Commis- another accrediting agency because access to a quality education, while sion has questions about leadership they’ve been determined ineligible better identifying and enrolling as well. The commission last Feb. by one agency,” Mr. Kinser said, only those students who have a rea- 25 issued to Chancellor a “Show- who added, “That could really put a sonable chance of success in our Cause Order,” which means Chan- crimp on the business plan.” rigorous degree programs.” cellor might not meet criteria for Last October, the Ohio Board of accreditation — a critical stamp of Regents told Chancellor to comply Suitor in the wings? approval if schools expect to attract with state standards such as Mr. Joseph said he will not allow the tuition dollars of students who demonstrating faculty credentials, Chancellor officials to speak to his rely on financial aid from the using standardized placement tests residents in the future. He relies on government. and developing a capital equipment Cuyahoga Community College, Specifically, the commission replacement and financing plan. which he said comes in each week questioned whether Chancellor The regents ruled that Chancellor to help the homeless overcome pre- meets accreditation criteria related met all state standards and the school vious, unpaid college loans, apply to board governance, finances and was granted provisional authoriza- for grants and enroll in nonprofit assessment of student learning. tion for its degree programs. However, colleges or vocational schools. The show-cause order stated Chancellor must submit progress Despite its problems, Chancellor Chancellor’s “governance and reports to the regents in September might live on. administrative structures (must) 2010, 2011 and 2012 to sustain its David Lee, chancellor at the for- promote effective leadership and program authorization. profit University of Northern Virginia, support collaborative processes said he and his partners would enter- that enable the organization to Hitting up the homeless tain taking Chancellor off the hands fulfill its mission.” Accreditation issues haven’t of its investors if the school main- The order also challenged Chan- stopped Chancellor from recruiting tained its accreditation. cellor on whether its financial students, sometimes in unconven- UNVA Properties Inc., an invest- resources were sufficient to support tional ways. In September 2009, ment group associated with the its programs and “for maintaining Chancellor approached local home- University of Northern Virginia, and strengthening their quality in less shelters to recruit the homeless, entered into an agreement in 2007 the future.” Finally, the commis- who are eligible for federal student to buy Myers University, but the sion said Chancellor must demon- loans and grants. deal fell through. While Mr. Lee said strate student learning and teaching Chip Joseph, executive director he and his partners at UNVA lost about effectiveness, clearly outline its of Y-Haven homeless shelter, said $2.5 million in that deal, Chancellor goals for student achievement and Chancellor officials came to Y-Haven still is an attractive option. must be able to assess educational last fall and promised to provide “Sure, we’re interested, but how programs effectively. free group workshops to the home- interested depends on what’s going Chancellor must submit a show- less in exchange for being able to on,” Mr. Lee said. “UNVA is prof- cause report to the commission by talk to them about enrolling in itable, and we do have resources.” Dec. 1. The commission then will classes at Chancellor. As for Mr. Welch, the iconic send a team to the university to “They came and spoke to a large former head of General Electric, it investigate and will decide by meeting of our residents. A couple isn’t known what he thinks of the February if Chancellor is worthy of were interested in what they had to goings on at Chancellor. Mr. accreditation. If Chancellor does offer, (but) I don’t think they actually Welch’s secretary said last week he not submit a show-cause report by took the bait,” Mr. Joseph said. is on vacation and could not be Dec. 1, its accreditation will be At Chancellor’s request, Lutheran reached for comment. ■ 20100816-NEWS--17-NAT-CCI-CL_-- 8/13/2010 2:30 PM Page 1

AUGUST 16-22, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 17 Endowment: Foundation backing ‘a huge difference’ continued from PAGE 1 instrumental in helping the Rock something that hopefully can be needs, an $8 million gift toward a from admissions and store sales. concerts last fall at Madison Square Hall secure funds to guarantee the added to over time to help keep the $35 million capital campaign, and “Our earned revenues are first in Garden in New York, which featured museum would be built in Cleveland. museum at the top of its game.” $1 million to develop a long-term class,” Mr. Kenyon said. Nonetheless, rock ’n’ roll royalty — U2 and Messrs. “People are united by the love of Endowments, on the most basic digital strategy and to redesign the he said the museum’s long-term Jagger and Springsteen only were this music,” Mr. Stewart said. “We level, protect institutions because Rock Hall’s web site, RockHall.com. goal is to reduce gradually the some of the big names on the pro- have honed a business model that they provide a cushion for the “It has just made a huge differ- earned income percentage and to gram — performing over two nights. enables us to fulfill the mission of proverbial rainy day when revenues ence here,” Mr. Stewart said of the increase the percentage from the Terry Stewart, president and educating fans and scholars about fall sharply. (And you might have stepped-up financial backing for contributed side, while at the same CEO of the Rock Hall, said the the history of the music.” noticed that in the last couple the museum from the foundation. time pushing total revenues higher. endowment gives the museum the years, it has been pretty rainy.) Brian Kenyon, chief financial That’s a worthwhile goal, Prof. ability to focus on raising long-term Game-changer David C. Hammack, the Hiram officer at the Rock Hall, said the Hammack said, so the museum funds that will secure the institu- An important part of making the C. Haydn professor of history at three-year, $35 million capital cam- isn’t living “hand to mouth” in relying tion’s future in Cleveland. museum’s business model sustainable Case Western Reserve University paign is about $1.5 million from quite as heavily on admissions. But “It’s another layer of financial is the creation of the endowment. who has written extensively about completion. It’s that campaign that he said the popular nature of the art security, a tranche of dollars … to Joel Peresman, president and foundations and the U.S. nonprofit is paying for the library and archives form the Rock Hall celebrates help us get things done here,” he CEO of the Rock Hall Foundation, sector, said an endowment provides at Tri-C and the museum redesign. makes it easier to sustain a model said. said 100% of the net proceeds from “a degree of stability” for institu- Mr. Kenyon said the redesign, which that leans on earned income. Indeed, “getting things done” at the Madison Square Garden shows tions such as the Rock Hall. begins this fall, will be structured in The Rock Hall reported 2009 the Rock Hall these days encom- were set aside to create the endow- Assuming annual investment such a way that the museum remains attendance hit 477,800, an increase passes many elements. Chief among ment. The $5 million contribution gains of 5%, a $5 million endow- open throughout the project. of 8.5% from 2008. Mr. Stewart them, Mr. Stewart said, are: could rise, he said, as the founda- ment would provide the Rock Hall attributed the rise in part to a down ■ opening to the public (in May tion reaps additional revenue from with an additional $250,000 a year, Foot in the door economy that kept people close 2011) its library and archives on the international broadcast license fees Prof. Hammack said. The Rock Hall The museum’s business model is to home, but also to improved campus of Cuyahoga Community from the shows and from sales of a in 2009 had operating expenses of based on what Rock Hall officials marketing efforts that drew visitors College; DVD that will be released in late $21.9 million, so $250,000 is a fairly call “door, store and more” revenues from outside the region and to ■ completing a major redesign of September. That DVD will include modest amount, though Prof. that fund operations. interest stoked by the 2009 Rock Hall the museum to improve signage the four-hour HBO broadcast plus Hammack said it would enable Mr. Kenyon said 70% to 80% of induction in Cleveland. and to guide visitors in a more 90 minutes of bonus material, Mr. Rock Hall officials to be “more Rock Hall revenues come in the Mr. Peresman said the museum chronological fashion through the Peresman said. strategic in thinking about the type form of earned income from the is in “a strong position” as it turns history of rock music; The shows were a high-profile of exhibits they do and the types of “door” — admissions to the museum 15 years old but needs to keep ■ expanding distance-learning marketing event for the Rock Hall educational programs they offer.” — and the “store” — sales at the innovating to fulfill its mission. and other educational programs; that will have an impact on the In addition to providing the museum store. The rest falls in the “Even in good economic times, and museum for years to come, Mr. funds for the endowment, the “more” category of contributed in- people think carefully about how to ■ staging a 15th anniversary cele- Peresman said. foundation in the past five years come such as grants, sponsorships spend their money,” he said. “We bration Sept. 2-5 that will include “If (the Rock Hall) is going to be has contributed more than $13 and memberships. It’s an unusual have a rare asset here and need to a tribute to U.S. Sen. George on the level of a significant cultural million to the museum in Cleveland, mix in the museum world, where keep giving them a good experi- Voinovich, who as mayor of Cleve- organization, an endowment is Mr. Peresman said. Included in that institutions typically don’t generate ence so they continue to find value land and governor of Ohio was critical,” Mr. Peresman said. “It’s money is annual support for capital such a high percentage of revenue in what we do.” ■

Fairmount: Investments now diversified Arcade: Lender may hold property continued from PAGE 3 to come in the mail,” said James continued from PAGE 1 In the meantime, the transaction majority shareholder. Beachwood- TIF-related debt. Judge Russo told Herron, deputy director of Cuyahoga Ms. Deckard said American accomplishes two other goals. It based Kirtland Capital Corp. held a Crain’s she intends to decide the TIF County’s economic development Securities paid an undisclosed allows the company to diversify the 51% stake in Fairmount from 1996 issue prior to the still-unscheduled office. “We are so subordinate it’s amount for its equity stake in Fair- holdings of its employee pension to 2003, said Kirtland CEO John sheriff’s sale. A court-approved unlikely there will be anything left.” mount. To make the deal work, plan and to provide some liquidity Nestor. Mr Nestor said Fairmount preliminary judgment indicates US Bond insurance would protect Fairmount borrowed $700 million for its long-term investors. was a great investment for Kirtland, Bank would recoup missed TIF pay- investors who bought the TIF that was used primarily to buy The pension plan holds Fairmount and Ms. Deckard said the experience ments, but doesn’t speak to future bonds, Mr. Herron said. shares from existing shareholders, stock as well as other investments. helped give Fairmount the confi- payments. Asset management leaving American Securities with As the value of Fairmount stock dence to work with another well- A US Bank filing in the case a controlling 51% stake in the went up, it came to represent a respected private equity firm such argues that the judge must require Michael Sturges, owner of Sturges company. Fairmount has fewer greater percentage of the plan’s as American Securities. the future owner of the property to Advisors, a real estate consultancy than 200 shareholders, and many of holdings, according to Fairmount Mr. Nestor said he was happy to continue TIF payments or it would in Rocky River, said financial hair- them have been invested in the CEO Chuck Fowler. The new cash see some of Fairmount’s other damage the ability of local govern- cuts for lenders are likely in the company for 30 years, she said. will allow Fairmount to liquidate shareholders benefit from the deal. ments in Ohio to use TIF in the future. foreclosure sale because bidders The transaction was the talk of some of that stock and diversify the American Securities did not com- “This will have serious economic figure to be bottom fishers interested investment banking circles after it plan’s investments. ment on the reasons for its investment. repercussions beyond this case,” in the hotel only if they can buy it at closed Aug. 5. The deal happened Fairmount could have cashed However, in an e-mailed statement, Cleveland attorney James Grove a substantial discount. with the help of 13 banks and out some of its longtime investors American Securities managing wrote in a court filing for US Bank. However, Mr. Sturges said Bank “dozens” of private investors — and on its own, but that would have director Matthew LeBaron said his of America has shown a tendency to probably could not have been put meant using debt and other financial firm “is pleased to have acquired a Check’s not coming retain ownership of properties it together last year, when financing resources that would be better put majority interest in Fairmount The TIF issue notwithstanding, recoups if offers do not meet its for buyers such as American Secu- toward its ongoing expansion, Ms. Minerals, and to partner with the Judge Russo’s partial disposition of desires. He said many veterans of rities was nonexistent, Ms. Deckard Deckard said. Some of the company’s company’s management team to the case indicates the prized Hyatt prior downturns do not want to sell told Crain’s. In addition to the $700 chief markets, in particular the oil support the continued growth of Regency will remain in place. at a discount today to see the prop- million, Fairmount obtained a new and gas exploration market, its the business.” Hyatt Hotels spokeswoman erties gain in value later. $75 million line of credit simultane- largest, have been growing rapidly Ms. Deckard said Fairmount like- Laurie Cole said Hyatt intends to The Hyatt will be attractive ously, Ms. Decker said. this year. As a result, Fairmount has wise is pleased that American Secu- continue operating the hotel under because of its luxury brand, Mr. Moody’s Investors Service gave been investing heavily in the United rities makes investments for as long its long-term management agreement. Sturges said. The Arcade’s location Fairmount a B1 credit rating and a States, Mexico and China to take as 25 years instead of the five- to She said the court decision on the will become more valuable if the stable rating outlook before the advantage of higher demand for its seven-year investment cycles of ownership would make no change medical mart, convention center deal closed. Ms. Deckard said the sand, which is used in fracturing most private equity firms and that in its day-to-day operations for and casino become realities at near- company’s debt level as a portion of techniques that help extract hydro- it’s fully supportive of Fairmount guest and employees. She declined by sites, he said. its balance sheet has been higher in carbons from oil and gas wells. continuing its contributions to to comment on the company standing The makeover of the Arcade a the past and that Fairmount was When the company saw a chance organizations in Northeast Ohio. to lose its 50% stake in the real decade ago from stores and offices “very comfortable” with the new to better its existing shareholders, Fairmount runs a foundation estate when a sheriff’s sale occurs. to the hotel-retail complex made debt taken on. its employee stock plan and its through which it funnels several Curt Bailey, president of Related much-needed structural repairs to Fairmount provides specialized capital expansion strategies all at million dollars each year to various Midwest, a unit of Related Cos. in the 120-year-old indoor shopping sand to oil and gas producers, once, it took advantage of it. nonprofits, Ms. Deckard said. New York, did not return three calls center, which was called “a crystal foundries and other industrial users. “Those three significant capital “Supporting the local community, by Crain’s deadline last week. palace” when it opened in 1890. It had 2009 revenues of $400 million needs, all coming at the same time, especially in Geauga County, is very Given the severity of the recession Observers maintain it was a worthy in a “down” year, and has always combined with what we felt was a important to us,” Ms. Deckard said. and the weakness of the national deal despite the problems today. been profitable, Ms. Deckard said. lot of available money in the invest- The deal will have no effect on and local hotel industry, it is unlikely “I’m not happy to lose $2 million ment arena looking for good assets,” Fairmount’s more than 500 em- the property would sell for enough of the taxpayer’s money, but you Three birds with one stone made the transaction compelling, ployees, including the approxi- money to cover all the parties that have to go back and remember this The deal with American Securities Ms. Deckard said. mately 100 who work in Chardon. hold debt against the $50 million was a civic project,” Cuyahoga gives Fairmount a new partner and “We will not expect any changes project. That debt includes a $2 County’s Mr. Herron said. source of additional capital if it In its comfort zone as a result of this transaction, other million Cuyahoga County loan and Judge Russo added, “Everyone needs it for its ongoing capital This is not the first time Fairmount than some augmented capabili- a $1 million city of Cleveland loan. working on this case agrees it is one expansion plans, Ms. Deckard said. has had a private equity firm as a ties,” Ms. Deckard said. ■ “I’m not waiting for our $2 million of the city’s greatest assets.” ■ 20100816-NEWS--18-NAT-CCI-CL_-- 8/13/2010 11:30 AM Page 1

18 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM AUGUST 16-22, 2010

Type: Employer’s withholding, ID: 34-1271717 ID/file date: 20-3870400/July 13, 2010 TAX LIENS unemployment Date filed: July 7, 2010 Type: Employer’s withholding, Amount: $122,561 Type: Employer’s withholding, unemployment The Internal Revenue Service filed tax LIENS FILED unemployment Amount: $61,209 liens against the following businesses Little Miracles Child Care and Amount: $89,027 Learning Center Inc. Viatical Escrow Services LLC in the Cuyahoga County Recorder’s Automatic Stamp Products Inc. 22683 Euclid Ave., Euclid Great Lakes Welding & Boiler Co. 1300 E. Ninth St., No. 1400, Cleveland Office. The IRS files a tax lien to 1822 Columbus Road, Cleveland ID: 34-1691019 5716 Brookpark Road, Cleveland ID/file date: 31-1522795/July 7, 2010 protect the interests of the federal ID: 34-0665901 Date filed: July 9, 2010 ID: 34-1244690 Type: Employer’s withholding government. The lien is a public Date filed: July 9, 2010 Type: Employer’s withholding Type: Employer’s withholding, Date filed: July 1, 2010 Amount: $49,696 notice to creditors that the govern- Amount: $327,117 unemployment Type: Employer’s withholding, failure ment has a claim against a company’s Amount: $110,541 to file complete return Medical Care Center LLC property. Liens reported here are PJO Inc. Amount: $86,813 1250 Superior Ave. E., Cleveland $5,000 and higher. Dates listed are 20800 Center Ridge Road, Rocky River Lassiter Corp. Financial ID/file date: 34-1905631/July 7, 2010 the dates the documents were filed in ID: 34-1923810 Bookkeeping Services Menber Corp., Pizza Pan Type: Employer’s withholding the Recorder’s Office. Date filed: July 7, 2010 3700 Kelley Ave., Cleveland 15240 Trails Landing, Strongsville Amount: $49,522

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AUGUST 16-22, 2010 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 19 THEINSIDER REPORTERS’ NOTEBOOK THEWEEK BEHIND THE NEWS WITH CRAIN’S WRITERS Forest City? Green space? The character of the space largely will be about the Inquisition, a tribunal that killed AUGUST 9 – 15 determined by what tenants sign on, Ms. thousands of non-Christians starting in the It makes perfect sense Ziegler said. The company surveyed more 1490s. Mr. Cardoza, as you might guess, The big story: Rock Gaming LLC, a company ■ Forest City Enterprises Inc. is planning a than 40 relevant companies and organiza- argues on the side of tolerance. headed by Cleveland Cavaliers owner Dan planet-friendly experiment with the old J tions, and 80% expressed interest, she said. Mr. Levin founded both Think-A-Move Gilbert, selected Harrah’s Entertainment Inc. as Crew store in Tower City Center. Various shops that sell green products and Milicom, sister companies in Beach- its partner in a joint venture The Cleveland-based real estate developer have popped up throughout the region over wood designing equipment for the military, that would develop and before the holiday season the past two years, partly driven by growing medical and telecommunications sectors. operate planned downtown aims to turn the two-story environmental awareness. He heads Levin & Associates law firm in casinos in Cleveland and retail space into a sustain- Tower City would be a great spot for such downtown Cleveland, holds a professorship Cincinnati. And the two ability hub tentatively called stores, Ms. Ziegler said, because it is easy to at Case Western Reserve University and has revealed that a temporary the Green Exchange. get to by bus, rapid train or foot. written three books on law. casino in Cleveland could be Forest City is just starting “It really makes sense to have something And a play. in place by as early as next to recruit tenants, which could like this down here,” she said. — Chuck “You can be a lot of things,” he said. — year in the former Higbee Gilbert include retailers selling Soder Chuck Soder Building, which is close to recycled and environmentally the planned development site of a permanent friendly goods, farmers ped- For this renaissance man, Lakewood seeks helping casino near the Cuyahoga River. The two com- dling fresh produce or even panies said proposed terms of their non-binding nonprofits spreading the the play’s now the thing hand for entrepreneurs joint venture agreement “contemplate Harrah’s FILE PHOTO/ word about sustainability ■ Joel Levin isn’t just an entrepreneur, a ■ The city of Lakewood is looking for some making a significant minority investment in the MARC GOLUB issues. Among those Forest lawyer, an academic or an author. help for its small businesses, so it is creating projects and serving as the day-to-day casino City is trying to lure are large retailers opening Like his hero, former Supreme Court an Entrepreneur-in-Residence program. manager in both cities.” smaller versions of their stores focused Justice Benjamin Cardoza, Mr. Levin doesn’t Nathan Kelly, Lakewood’s director of solely on “green” products, said Jill Ziegler, think people should be characterized so planning and development, said the city Powering down: FirstEnergy Corp. plans to program manager for sustainability initia- simply. After all, what’s to stop him from wants someone who can offer advice and reduce operations at some of its smaller power tives with Forest City. becoming, say, a playwright? help Lakewood’s small and home-based plants in a move that could result in a writeoff of “We’ve envisioned all sorts of possibilities,” A play written by the Cleveland Heights businesses find the financial resources to up to $287 million, or as much as 59 cents a Ms. Ziegler said. resident will debut at a small theater in grow. The city’s request for proposals says it share, in the third quarter. The Akron-based Though the location could change, Forest Sedona, Ariz., this September. will provide flexible hours, office space and a electric company said the reductions will take City prefers the J Crew space, which consists The play, “Marrano Justice,” focuses on “modest stipend” for the part-time position. place at three Northeast Ohio plants and one in of 8,000 square feet on two floors overlooking the professional and personal life of Mr. The western suburb is partnering with the Northwest Ohio due to lower demand for elec- the food court and could accommodate a Cardoza, a massively influential judge who Lakewood Chamber of Commerce, Pillars of tricity in the sluggish economy. FirstEnergy said street entrance. Forest City has created was both Hispanic and Jewish. However, Lakewood and Lakewood Alive to sponsor coal-fired plants in Ashtabula, Cleveland and sketches showing what the Green Exchange Mr. Levin does take a few artistic liberties: the program. Eastlake, and three of four units at a plant in might look like: A long sign made of recycled During the play, set in the 1920s and 1930s, Interested candidates should submit their Oregon, Ohio, near Toledo, will operate only on wood hangs over the entrance, and more Mr. Cardoza is visited by the long-dead résumés and proposals to the city by noon a limited basis. used wood beams line the ceiling. Recycled Tomás de Torquemada, a leader of the on Friday, Aug. 27. The RFP is available on- chain link fences separate each store. Spanish Inquisition. The two men argue line at www.onelakewood.com. — Jay Miller A call for change: Investor Umberto Fedeli has acquired a 5.2% stake in LNB Bancorp Inc., the parent of Lorain National Bank, where he hopes to bring change to a company he says is WHAT’S NEW BEST OF THE BLOGS at a “critical crossroads.” Among the possible changes envisioned by Mr. Fedeli: reducing the Excerpts from blog entries Taxpayers see red size of the company’s board and exploring a on CrainsCleveland.com. merger with another Northeast Ohio bank. Mr. over traffic cameras Fedeli, president and CEO of The Fedeli Group, ■ an insurance brokerage and consulting firm in Kennedy Center president Red-light traffic cameras are becoming a Independence, and a longtime investor in local is at their Beck and call hot political topic in Cleveland and else- where, according to an Aug. 8 story in The banks, disclosed his ownership of 383,500 shares ■ of LNB stock in a Securities and Exchange The Beck Center for the Arts in Lakewood New York Times. Commission filing. He acquired the shares for was one of the institutions mentioned in a Matt Brakey, a 29-year-old Republican an aggregate purchase price of $1.35 million. Washington Post story about the efforts of businessman seeking a spot on the Cuya- COMPANY: Duck-brand Duct Tape, Kennedy Center president Michael M. Kaiser hoga County Council, was among the politi- Public plans: Trucking company Panther Avon to help arts organizations nationwide. cians cited in the piece. He proclaimed his Expedited Services Inc. in Seville filed paperwork Mr. Kaiser recently completed a 15- opposition to the cameras at a recent rally. with the Securities and Exchange Commission PRODUCT: Zig-Zag Zebra, Spotted month, 50-state “Arts in Crisis” tour in which “There were lots of honks” at the inter- for a proposed initial public offering of its Leopard and other new tape he participated in forums with 11,000 artists, section where the rally was held, said Mr. common stock. Panther said it hasn’t determined arts administrators and board members. Brakey, a first-time candidate for office. the number of shares it plans to offer or the price patterns Some were at the Beck Center, which in “This issue really taps into the general range at which the stock would be sold. The spring 2009 was in danger of not making its dissatisfaction with government.” stock would be sold by Panther, and if the under- You’re not still using silver duct tape, are payroll and was facing weak ticket sales for The Times said outrage over the cameras writers exercise their over-allotment option, by you? If so, there’s a colorful new world out shows such as “Ma Rainey’s Black Bottom” “echoes the general concerns about certain selling stockholders. Panther only would there, and the people who make Duck-brand and “The Farnsworth Invention.” government that have fueled protest receive proceeds from stock sold by the company. duct tape are making it brighter. Lucinda Einhouse, president of the movements like the Tea Party. But the The company says its new designer tapes Beck Center, told The Post, “Every- protests also underscore the sting Cleaning up: Primus Capital Funds of May- offer a dash of inspiration for creative craft one in the region was uneasy about many Americans feel in these eco- field Heights and Great Hill Partners LLC of projects or some pizzazz to household repairs. the economy. Our organization had nomic times at having to pay fines Boston acquired SterilMed Inc., a Minnesota Making their debuts as the first animal no cash reserves.” Ms. Einhouse of $25, $50 or $100 for traffic in- company that cleans what otherwise would be prints in the Duck tape line are Zig-Zag Zebra “sent out an appeal for $150,000, fractions that, in some cases, they single-use medical devices. The two private and Spotted Leopard. If you want to channel saying if the money wasn’t raised, had no idea they committed.” equity firms said they invested in SterilMed your inner flower child, check out Cosmic Tie- the doors would close. It worked,” Mr. Brakey told the newspaper, because of its growth trajectory and because Dye, a bright mix of pink, orange and yellow. the newspaper reported. “It’s a huge pocketbook issue. I’ve its services help hospitals cut costs. SterilMed It joins the previously released Totally Tie- In a meeting in April 2009 with Mr. talked to people who can’t renew provides reprocessed devices and small equip- Dye, a meshing of cool blue, purple and pink Kaiser and the Kennedy Center staff, their driver’s license because they ment repair services to more than 1,700 health tones. she said, “They commended us for have all these tickets.” care facilities in North America. There are two other new color patterns. our honesty and transparency. One Nearly 550 local governments na- The flame-inspired Hot Rod Duck tape of the things that Michael Kaiser told us tionwide use traffic cameras, which Here to stay: The Mid-American Conference crackles with bursts of yellow and orange was the importance of the visibility aren’t very good at doing what announced an extension of its contract with fire. And the Digital Camo Duck tape offers a of the institution during a ... crisis.” they’re supposed to do. Quicken Loans Arena and will hold its men’s pixelated blend of neutral earth tone colors. So when Mr. Kaiser stopped in “A study of seven communities and women’s basketball tournaments at The Q These new patterns join more than 20 Cleveland again during his tour, The by the Federal Highway Administra- through 2017. The men’s tournament has been Duck brand colors and patterns. Post said, Ms. Einhouse was there, tion found that while broadside col- held at The Q/Gund Arena since 2000, the winner For information, visit www.DuckBrand.com. ready to heed other dictates, such as: lisions were reduced by 25% at intersec- receiving an automatic bid into the NCAA tour- If you have to make reductions, start in the tions with traffic lights that had a camera, nament. There was some doubt about the future Send new product information to managing back office, and promote what you do best. there was also a 15% increase in rear-end of the women’s tournament, but it too will con- editor Scott Suttell at [email protected]. “Right now we are doing ‘The Producers’ collisions, possibly caused by drivers tinue in Cleveland. and it is selling gangbusters,” Ms. Ein- slamming on their brakes at the sight of house said. the devices,” The Times reported. 20100816-NEWS--20-NAT-CCI-CL_-- 8/13/2010 1:54 PM Page 1