Investors Add Cash, but VC Firms Absent Just One Traditional Venture Capital Group Receives State Funding, Which Is Concern

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20160104-NEWS--1-NAT-CCI-CL_-- 12/30/2015 2:17 PM Page 1

VOL. 37, NO. 1 JANUARY 4 - 10, 2016

GOLF: Membership drive 35th Anniversary Business of Life Solon club tries to avoid shutting down P. 2 Source Lunch Anthony Margida dishes on HEALTH CARE: Biometrics the Akron tech scene Hospitals get better grip on records P. 17 P. 2

EDUCATION: Enrollment ACE Report Colleges adjust as prep numbers drop Area experiences slight jobs drop P. 4 CLEVELAND BUSINESS P. 6 Investors add cash, but VC firms absent Just one traditional venture capital group receives state funding, which is concern

BY CHUCK SODER of the Ohio Third Frontier program. And JumpStart itself did extremely [email protected] well: It received $12.5 million that it @Chuck Soder will use to invest in high-tech startups via three separate funds. The list of tech investors that re- Still, Northeast Ohio needs a few ceived loans from the state of Ohio more conventional venture capital last month is telling. firms, given that they tend to make Only one classic venture capital somewhat larger investments, Leach firm made the cut. And that firm — said. NCT Ventures of Columbus — got in He posed a question, referring to by the skin of its teeth. all 20 applicants: “Who is the classic, Instead, almost all of the $60 mil- pure Series A venture investor that lion went to economic development invests in a broad range of technolo- organizations, groups of individual gies and companies that are pre-rev- “angel” investors and other organi- enue? Pretty slim.” Predictions 2016 zations that don’t fit the mold of a Here are a few insights that can be traditional venture capital. gleaned from the list of applicants as A Cavs title? Will the new hotels be ready for the RNC? And that’s not a good sign for well as the analysis that the state startups companies in Ohio, accord- used to pick the winners. We look at those topics, plus ask area leaders for their ing to Ray Leach, CEO of JumpStart, First off, JumpStart dominated. a Cleveland nonprofit that works The proposal for JumpStart’s Ever- forecasts for the year — Pages 11-15 with local entrepreneurs. green Fund was ranked first out of 20 Granted, he said the money will that were submitted. Proposals for still do a lot to spark the state’s high- two new JumpStart funds also were tech economy, which is the purpose SEE INVESTORS, PAGE 19 ‘Brutal’ times for shale likely will continue But experts say Utica remains the best play in the industry, and region can help pick up the slack in 2016 BY DAN SHINGLER It’s a slowdown that could last Bennett, executive vice president of people to realize it’s not a market the point that some wells are not at- well into this year, if not longer. But the Ohio Oil and Gas Association in correction — it’s the current state of tractive to drillers. The industry is [email protected] with three years of drilling under an interview in December. “And the economy and an attack on the cutting back, including in Ohio, @DanShingler their belts, leaders of the oil and gas 2016 is going to be a continuation of domestic oil and gas industry in the where the number of active shale industry say they’ve learned enough 2015,” he predicted. U.S.” drilling rigs dropped from about 50 Ohio’s Utica shale play had a about Ohio’s shale play to know it “When (the slump) came, in 2015, Bennett and other industry ex- to fewer than 20 in 2015. tough year in 2015, as low oil and gas will be profitable even when other there was a lot of uncertainty in the perts say low oil and gas prices, re- So what’s to like about Ohio’s oil prices forced drillers to cut back shale plays are not, and drilling here air,” Bennett said. “Was this a mar- sulting from production in the Mid- and gas prospects? The Utica is the their operations and the number of eventually will gain pace again. ket correction or was this something dle East as well as in other parts of best, most efficient and most working rigs in the state plummeted. “It’s brutal,” summed up Shawn larger? It took about six months for the U.S., have driven prices down to SEE SHALE, PAGE 10

Business of Life — Fitness Orangetheory is spreading the word locally — Page 16 20160104-NEWS--2-NAT-CCI-CL_-- 12/30/2015 11:18 AM Page 1

PAGE 2 z JANUARY 4 - 10, 2016 z CRAIN’S CLEVELAND BUSINESS Accurate health records are at their fingertips Northeast Ohio hospitals join growing number of facilities using biometrics to register patients, track medication BY LYDIA COUTRE help ensure patients receive the correct medications, said Donald [email protected] Reichert, vice president and chief @LydiaCoutre information officer for Metro- Health. Each floor with in-patient With one touch, Akron General rooms has a unit for dispensing patients now can be connected to medications, where nurses and their electronic health records us- Hawthorne Valley Golf Club is a scenic course located at 27840 Aurora Road in Solon. (Contributed photo) other providers must go through a ing a fingerprint scanner. series of security measures, includ- In November, Akron General being a fingerprint scan. gan installing SafeChx, a patient A thumb print and password identification technology, logs users into a screen that shows throughout its major registration only the patients on that floor. The Solon golf club aims areas. system links to a patient’s records, The fingerprint scanners aim to including any drug order from the prevent medical identify fraud, im- doctor. Once a medication is se- prove patient outcomes and elimi- lected, a drawer — divided into a nate duplicate records, which can series of individual compartments to stay the course be created with misspellings or ty- — will open. Only the door con- pos. Up to 10% of all medical taining what was ordered opens. records are duplicates, according to In a patient’s room, the bar- Hawthorne Valley will close if it doesn’t reach 300 members CrossChx, a Columbus-based com- codes on the single-dose medica- pany offering health care identity BY KEVIN KLEPS nior housing and commercial real done in June and July has resulted in tion packet and on the patient’s software including SafeChx. estate. Golf isn’t how he made his a 20% year-over-year drop in rounds wrist are scanned into the comput- “We want to make sure that we [email protected] money, which is a good thing, since played in 2015. er to ensure a match. Alerts will don’t have duplicate medical @KevinKleps he said it’s difficult to do so because The GM said that the number of flash on the screen if the drug or its of the proliferation of courses in rounds at the club was very consis- records either, because that also dosage weren’t ordered. The website for Hawthorne Valley Northeast Ohio, especially near tent in the four years prior. “This slows down the treatment of the pa- These measures, starting with a Golf Club in Solon proclaims the Hawthorne Valley’s headquarters at year, you saw a significant dropoff,” tient,” said Stacy Ickes, director of fingerprint scan, help prevent hu- Donald Ross-designed course to be 27840 Aurora Road. Zeman said. patient access for Akron General. man error and identify any inten- “one of the area’s best-kept secrets.” “Guys are getting a good deal (at And even though the weather was CrossChx, founded in 2012, of- tional abuses, Reichert said. Some- Bob Zeman, the club’s general $2,500), I felt,” he said. “I’m giving unseasonably mild for much of the fers SafeChx to hospitals at no cost, one overriding the alerts or manager for the last nine years, is them another chance to come in fall, Zeman said that, from his expe- including installation, training and repeatedly entering barcodes trying to change that. The message and be like a country club.” rience, once October arrives, many support. Since the state of Ohio manually instead of scanning is simple: Hawthorne Valley needs Zeman, the club’s GM, said Northeast Ohio golfers “put their provided funding for the pilot, could send up red flags. to increase its membership to 300, Hawthorne Valley’s membership clubs away and they’re not playing CrossChx has grown through ven- Similar measures are in place for or it will close its doors. reached 175 in 2013. But to trim ex- again (until the following spring).” ture capital investments and rev- breast milk and blood. Zeman said the club, which was penses, the club closed the locker Rzepka, who ended a successful enue earned from premium appli- “I think it improves certainly the private until 2009 and has been room in 2015, and membership 24-year run as a commissioner of cations, according to Brad Mascho, safety,” Reichert said. “If we’re ad- semi-private the last six years, is dropped to about 100. the Cleveland Metroparks at the co-founder and president of Cross- ministering drugs or blood, (we’re) about halfway to its membership “In the general scheme of things, close of 2010, said Hawthorne Valley Chx. making sure that we’re dealing with goal. Hawthorne Valley is asking it did work because we cut a lot of la- is an attractive piece of land for po- Ickes said there have been a few the right patient and giving them $2,500, a price that includes unlim- bor out,” Zeman said. “We did cut tential buyers. instances where the scanners the right medications or whatever ited golf at the 90-year-old club, plus some costs. But we also lost some In 2008, Solon residents approved could not read a fingerprint, but that the physicians ordered, and we a private locker and use of the club’s members.” a plan by TransCon Builders to build the vast majority of patients have make sure that it’s safe.” showers and workout facility. Mem- Zeman said Hawthorne Valley has a senior housing development on opted into the technology and had bers would also have the option of since regained many of the cus- the Hawthorne Valley grounds by a no problems. paying for 30 rounds and dividing tomers it lost. And the club has a 4,556 to 3,606 margin. The rezoning SafeChx has been collecting sev- Indexing data them between friends and family. group of longtime members who are issue, however, was defeated in eral hundred new fingerprint IDs a A source who didn’t want to be attempting to drum up support. MetroHealth hasn’t gotten to Ward 5, where the development day at Akron General. Once pa- the point of using patient biomet- identified because he works for a One, Geoffrey Shapiro, an attorney would have been located, which tients are enrolled, which takes rics for identification. prominent Northeast Ohio golf at Shapiro, Shapiro & Shapiro Co. nixed the idea. about 30 seconds, they can use the LPA in Warrensville Heights, said he’s “Not that we couldn’t — I’m course said what Hawthorne Valley “Can I sell it? Yes,” the 84-year-old technology immediately. Each day, telling the guys he golfs with what “a sure we could — but we have not is offering is a “phenomenal deal” — Rzepka said. “But instead of selling a couple dozen returning patients one he believed would make it diffi- gem” Hawthorne Valley is. moved in that direction,” Reichert it, they want me to develop it. I’m at use their fingerprint to check in. cult to turn a profit. “I don’t understand why it’s not said. a point, I don’t want to develop it. Staff still check patients’ names Well, that’s because Fred Rzepka, a more popular than it is,” Shapiro MetroHealth’s IT department is “Someone will come buy it,” he and birthdays like always — and longtime Hawthorne Valley member said. “It’s a really hard model to run. testing retinal scanners for comput- added. “It’s 200 acres in a great loca- can continue to use that for those who bought the club in 2000, isn’t To run it and make money, it’s very ers, which he sees as the direction tion, right off the Metroparks trail. who can’t or don’t want to use trying to make money on the course. difficult. (Rzepka) put a lot of mon- I’m trying to do the best I can to biometric technology is headed. Re- Even if the club gets to its goal of 300 ey into it.” their fingerprint — but SafeChx ichert said he’s looking to test prod- keep it open.” helps them do a better job at in- members, “It’s an amount I’ll still If the membership goal isn’t met, ucts as more information is avail- lose money with,” Rzepka said. stantly identifying patients. able about the benefits of biometric Rainy days Rzepka said he’ll turn the property “It reduces the risk of fraudulent Rzepka said he wants to be at or over to his family. technology in health care. claims and medical errors due to very close to 300 members by the end Hawthorne Valley was closed for “Chances are if nothing happens, At Akron General, patients large- misidentification,” Ickes said. of January. If not, he will close the 11 days in June because of flooding, it will stay for the grandkids,” he ly have accepted the new scanners, club, which Zeman said has 30 full- Zeman said. The month, according said. “It’s the largest piece of private- Ickes said. She wants to see as time staffers during the golf season. to the National Weather Service, was ly owned land in Solon.” Cutting the error rate many patients register their finger- “It’s not going to be making any the third-wettest on record at Cleve- Peggy Weil Dorfman, Solon’s eco- prints in the system as possible, money,” Rzepka said. “I’ve been los- land Hopkins International Airport, nomic development manager, said While some other area hospitals not only for ease of records during ing money since I bought it.” with rain falling on all but nine days. Hawthorne Valley hasn’t contacted have embraced biometric technol- registration, but also for times “That’s really a peak month for the city about a potential close. As a ogy, they’ve kept it on the employ- when they may not be able to iden- Course is ‘a gem’ us,” Zeman said. “Then we were result, Solon has “no official com- ee end rather than expanding it to tify themselves. closed six days in early July. When ment at this time,” she said. all patients. “So if something would happen Rzepka and his brother, Peter, es- you lose those peak days, you can’t Rzepka hopes it doesn’t get to that For several years, MetroHealth that then they would come back tablished TransCon Builders in make those up.” point. has been using biometric technol- and be unresponsive, all we need 1972. The Cleveland company owns Hawthorne Valley had a “great “I tried to do the best I can,” he ogy to prevent medical errors. to do is try their right index finger,” and manages apartment units, se- fall,” Zeman said, but the damage said. Employee fingerprint scanners Ickes said. 20160104-NEWS--3-NAT-CCI-CL_-- 12/30/2015 2:36 PM Page 1

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PAGE 4 z JANUARY 4 - 10, 2016 z CRAIN’S CLEVELAND BUSINESS THE COYNE TEAM 94 SALE & LEASE Colleges widen nets 75$16$&7,216,1 during tough times Drop in high school grads has forced institutions to improvise

BY RACHEL ABBEY MCCAFFERTY gan said — a combination of a lack RECRUIT COUNT SLIPS in retention and in smaller class [email protected] Ohio is expected to lose a signifi- sizes in the upper classes. The reten- @ramccafferty cant amount of possible students tion piece started to turn around in from its traditional higher education the first year of selective admission With a declining number of local in 2014, Swegan said. TERRY COYNE, SIOR, CCIM KRISTY HULL, SIOR, CCIM MIKE PLASPOHL,Visit MBA recruitment pool in upcoming years. 6)ZLWK6)ODERIÀFHVICE CHAIRMAN MANAGING DIRECTOR DIRECTOR TerryCoyne.com students graduating from high According to a 2012 report from VLWXDWHGRQDFUHV school and an improving economy, the Western Interstate Commission 216.453.3001 216.453.3055 216.453.3025 Or Call Terry at [email protected] [email protected] [email protected] Northeast Ohio’s colleges and uni- for Higher Education, the state is Sticking around IRRWFOHDUZLWKGRFNV versities are refining their recruiting expected to see its high school Retention is an important compo- strategies. graduate population drop by 5% to ([SDQGDEOHE\6)SELECTED AMONG OVER $50 MILLION nent to total enrollment. At Baldwin 19 YEARS OF SUCCESSFUL 15% from the 2008-2009 school year CRAIN’S CLEVELAND BUSINESS’ OF INVESTMENT SALES “It’s never been this competitive,” Wallace University in Berea, it’s one SERVICE TO CLIENTS (DV\DFFHVVWR,DQG,“FORTY UNDER 40” IN THE PAST 12 MONTHS said Timothy Bryan, chief of staff to the 2019-2020 year. of the four factors that vice president The most recent figures the state and vice president for enrollment for enrollment management Scott has for 2015 enrollment are the and marketing at Malone University preliminary 15th-day headcount for the Schulz cited as part of the school’s in Canton. enrollment strategy. Enrollment Visit 1350 Euclid Avenue, Suite 300 public colleges and universities in TerryCoyne.com Cleveland, Ohio 44115 The number of high school gradu- Ohio. Private schools were not rose from 3,987 in fall 2014 to 4,017 ates was expected to plateau starting included. in fall 2015. in the 2013-2014 school year through According to these numbers, The other factors are the school’s the 2019-2020 year, after decades of university main campuses saw a use of data predictive modeling to growth and a few years of decline, ac- 0.63% increase in enrollment, from help identify students who will be a cording to a 2012 report from the 283,705 in fall 2014 to 285,480 in fall good fit, the messaging around its Western Interstate Commission for 2015. Regional campuses, on the unique brand and the new programs Higher Education. And that’s just na- other hand, saw a drop of 2.78%, from it offers, many of which are in health 45,413 in fall 2014 to 44,150 in fall REFINANCETODAY tionally. Ohio was expected to see care. high school graduate population 2015. Walsh University in North Canton — Rachel Abbey McCafferty losses of about 5% to 15% from the has been increasing its academic of- 2008-2009 school year to 2019-2020. ferings based on what needs need But tuition revenue is what Bryan Michigan or Indiana. In Northeast met. 440.526.8700 called the “lifeblood” of an institu- Ohio, the university looked to grow Teresa Griffin, vice president for tion, so schools like Malone have interest outside the inner-ring sub- marketing and communications, said [email protected] been taking a variety of steps to urbs, Spademan said. Walsh has added 14 new undergrad- reach more students. The university Spademan said the number of uate majors in the past two years, in- www.cbscuso.com WITH has targeted areas out of state where freshmen at the college had almost cluding Spanish for health care, and is it’s historically seen interest, like doubled from about 950 in fall 2009 increasing the number of certificates western Pennsylvania, and buying to about 1,800 in fall 2015. But total it offers on the graduate side. CBS more names at the beginning of the enrollment dropped just a bit in the The school has revamped its web- process. The school also focused past year, from 17,345 in fall 2014 to site to be more responsive, in- more on its identity as a Christian 17,260 in fall 2015. creased the number of campus visit school, reaching out to churches At the University of Akron, expand- days it offers and moved to a test op- Commercial Real Estate Financing • SBA Loans - 7(a), 504 and youth groups. ing its horizons has meant moving tional model to become more acces- Machinery & Equipment Loans • Construction Loans And it has created more personal- beyond the primary focus areas of sible. Walsh saw a slight drop in en- Business Lines of Credit • No Prepayment Penalty ized ways to get students on campus Ohio and Pennsylvania to include rollment from fall 2014 to fall 2015, for a visit, like a behind-the-scenes states like Michigan, Indiana, Illinois from 2,957 students to 2,899, but theater event, a chess tournament and New York, said Lauri Thorpe, the Griffin said inquiries and applica- CALL and academic summer camps. From school’s associate vice president for tions are both up this year. Dec. 15, 2014, to Dec. 15, 2015, the enrollment management. The school college increased significantly its ap- JONATHAN Providing Commercial Loan also has streamlined the admission Establishing an identity plications, visits — and its admis- Financing in Partnership with process, providing certainty to par- sions, to 664 students from 433. ents and students by letting them At the region’s small private Area Credit Unions SM Mokri “You’ve got to make your net know decisions about admission and schools, finding a way to stand out is wider,” Bryan said. financial aid earlier.There was a 2.7% critical. That’s certainly an approach the drop in total enrollment between fall “We can’t be everything to every- state’s public universities are taking. 2014 and fall 2015, from 25,865 to one,” said Lindajean Heller Western, 25,177, Thorpe said. But, she said, the vice president for enrollment for Hi- ram College. Shopping season entering freshman class rose 3.6%, to 4,278. Hiram doesn’t do much with mass College recruiting is going Youngstown State University has mailings and email, but instead fo- through a “period of disruption,” seen a similar trajectory in recent cuses on a targeted approach. It buys said Rob A. Spademan, associate years. When Gary Swegan, associate names after the ACT and SAT so it vice president of university market- vice president for enrollment plan- can contact students who would be a ing and communications for Cleve- ning and management, came to the good fit and recently started offering land State University. That’s due to school in November 2013, the uni- small on-campus events for athletic the stagnant number of high school versity had seen three straight years and academic groups. Western said grads, to the student debt conversa- of enrollment declines. the college recently revamped its ad- tion and to the digital revolution, The university brought in an out- mittance approach to better fit the which has led to more out-of-state side company for direct recruitment standards of a moderately selective advertising. Students can “shop marketing, which helped widen the college, instead of trying to compete around” more easily now than ever, application pool, Swegan said. After with state institutions. and universities are realizing they that, Youngstown State saw a 90% She wasn’t sure the environment have to look at students as cus- increase in applications. was more competitive now, but with tomers, Spademan said. “We’re getting it turned around so many small liberal arts colleges Cleveland State set out to grow its here,” Swegan said. nearby, the school has always had to pool of potential applicants about But in terms of enrollment, make differentiation a priority. En- six or seven years ago, recruiting stu- Youngstown State is still down. It rollment rose from 980 in 2014 to dents who were of a similar back- dropped from 13,381 in 2013 to 1,100 in 2015. ground to its existing students (first- about 12,551 in 2014 and 12,471 in “We’ve sort of always had to keep generation students from inner-ring 2015. A large portion of that was a our eye on the ball and know who suburbs) in farther-flung regions like drop in continuing students, Swe- our students are,” Western said.

Volume 37, Number 1 Crain’s Cleveland Business (ISSN 0197-2375) is published Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For sub- 2016 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and scription information and delivery concerns send correspondence to Audience Devel- at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address opment Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michi- changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, gan, 48207-9911, or email to [email protected], or call Detroit, Michigan 48207-2912. 1-877-824-9373. 877-824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or REPRINT INFORMATION: 212-210-0750 fax 313-446-6777. 20160104-NEWS--5-NAT-CCI-CL_-- 12/29/2015 2:39 PM Page 1

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Region has first job drop since July Employment in the seven-county is indicating further economic activ- Cleveland metro was 3.7%, according Cleveland-Akron metropolitan area ity and job growth, but perhaps at a to ODJFS, down from 5% in Novem- is being projected to dip ever-so- slower pace,” Kleinhenz said. ber 2104, while the two-county Akron slightly in November. The estimated The regional economy continues metro had an unemployment rate of TWO GREAT COMPANIES, decline — 1,400 jobs or 0.1% of the to lag the national economy. Private 4.6%, down from 5.3% a year ago. employment in an economy of near- employment nationally rose by 2.1% Regional employment is expected COMING TOGETHER AS ONE. ly 1.2 million jobs — reflects an an- over the last 12 months, according to to continue to grow, though slowly. nual slowdown in the manufactur- current employment data compiled Economists at PNC Financial Ser- 216.861.7200 HANNACRE.COM ing, or goods-producing, sector, by the federal Bureau of Labor Sta- vices Group, parent of PNC Bank, according to the latest Ahola Crain’s tistics. found optimism in October when Employment (ACE) Report. The two sub-metro areas in the the company surveyed small and The decline is the first drop since region are performing similarly, middle market business owners in July and reflects an estimated in- though Cleveland is doing narrowly Ohio. crease of 834 jobs in service employ- better than the Akron metropolitan Because of optimism about the ment that is offset by a loss of 2,233 area. outlook for their own businesses jobs in goods-related businesses. Estimates by the Ohio Depart- and for the local economy, 19% of Year-over-year, though, employment of Jobs and Family Services business owners surveyed said they ment is up, according to the ACE (ODJFS), which analyzes the BLS planned to hire in the months numbers, with a modest gain of data, found that the number of peo- ahead, compared with only 10% 5,427 since November 2014, a 0.58% ple employed grew by 0.018% over who had plans to hire six months seasonally adjusted increase. the last year in its Akron metro area, earlier. “The region in recent history regis- which includes Portage and Summit In addition, 36% of those employ- ters softer employment gains for the counties. Employment in the five- ers — PNC did not disclose the size goods-related sector, typically in the county Cleveland metro grew of its sample — said they expected to later months of the year, and we are 0.019% from November 2014 to No- increase employees’ pay, up from not overly concerned about the con- vember 2015. The ACE estimates 26% who were planning pay raises in tractionary reading (for November) cover only private sector employ- the spring. Of those planning raises, as the region remains in expansion ment; the BLS data include all non- 59% said they planned to give raises territory,” said economist Jack Klein- farm employment, including the of 3% or more during the next six henz, who compiles the ACE data. government workforce. months. “The recent trend of performance Similarly, unemployment for the — Jay Miller

CNB Financial to buy Lake National Bank

Lake National Bank of Mentor has pay $22.50 per share in cash, or total assets and $14.1 million in agreed to be acquired for nearly $25 $24.75 million in aggregate. Lake shareholders’ equity as of Sept. 30. million by Clearfield, Pa.-based CNB National Bank, which was founded The transaction is expected to Financial Corp. (NASDAQ: CCNE), in 2005 by the late Lake County busi- close in the third quarter of 2016, the parent of CNB Bank. nessman and philanthropist Jerome CNB said. It’s expected to be accre- In a news release, CNB said it will T. Osborne Sr., had $152.2 million in tive to CNB’s earnings “in the first full year of operations,” according to the company’s news release. After the deal is complete, CNB will have more than $2.5 billion in assets and Weatherhead 40 offices in central and western Pennsylvania and northern and central Ohio. Lake National will operate as part of the ERIEBANK division of CNB, according to the release. CNB said in the release that “it is anticipated that customer-facing “ Having taken almost all the personnel at Lake National Bank will strategy and design components be largely unaffected, and of the Executive [Education] ERIEBANK plans to grow its business origination effort in Lake County fol- program at Weatherhead, I am lowing closing and integration of the grateful to have had a range of transaction.” offerings that suitably coalesced Andrew Meinhold, president and into the Competitive Strategy CEO of Lake National, will continue through Business Model Design with CNB in the ERIEBANK division and Innovation program.” after the deal is complete. Lake Na- tional board members Jerome T. Os- – Maurice Apprey, borne III and Lance F. Osborne will University of Virginia join the advisory board of ERIEBANK. In addition, Joseph T. Svete, chairman of Lake National; Richard T. Flenner Jr., vice chairman; and Richard J. Kessler, a direc- WHAT YOU LEARN IN A SINGLE DAY CAN CHANGE EVERYTHING. tor, will launch the ERIEBANK OH Visit weatherhead.case.edu/executive-education to view Advisory Board. the 2016 schedule — more than 70 programs are available! Lake National operates two offices, both in Mentor. 20160104-NEWS--7-NAT-CCI-CL_-- 12/29/2015 2:36 PM Page 1

CRAIN’S CLEVELAND BUSINESS z JANUARY 4 - 10, 2016 z PAGE 7 Boston Heights bringing in big retail

BY MARY ETHRIDGE in its headquarters by 2016. turn lanes, traffic signals and other The two tenants that will anchor safety improvements to handle in- [email protected] the Marketplace — a retail center creased traffic, especially from currently under construction by Pet- trucks. ros Development Corp. on the site of Most of the money for the widen- For decades, there have been two the former Boston Hills Country ing came from state grants, low-in- primary reasons to visit the village of Club — are heavy hitters. terest loans and the retailers, Goncy Boston Heights in northern Summit Bass Pro Shops — a supplier of said. County: to commune with nature or outdoor gear for fishing, hunting, Robert Cooper, president of the to merge onto the Ohio Turnpike. camping and golfing — is the na- Akron office of CBRE, said Boston But a year from now, the village th Heights is an appealing place to will be a magnet for a whole new tion’s 98 -largest private company, large retailers because there isn’t breed of driven wildlife: shoppers according to Forbes magazine. It has much room left in prime markets for and those who serve them. 94 retail stores in the United States expansion. Between the new Arhaus Furni- and Canada, with estimated sales of Boston Heights’ proximity to ture headquarters and the emerging $43 billion. Cleveland and Akron, as well as the Marketplace development — which Arhaus Furniture soon will move into its $43 million headquarters in Bass Pro operates two Ohio improved roads in the area, make it has inked deals with Bass Pro Shops Boston Heights. (Contributed rendering) stores: outside Toledo and in the ideal. and Costco Wholesale as anchors — Cincinnati area. “The location is excellent now this 6.9-square mile village is taking fort; at least 11 new Arhaus stores lived in Boston Heights for more Costco Wholesale, operator of that the expressway and roads have on a new vibe. are planned for 2016. From 2010 than 30 years. members-only warehouse stores However, village officials say through 2014, Arhaus opened two to “I didn’t bargain for all this when that sell everything from groceries to been improved. At the same time they’ve worked hard to make sure four stores a year, according to Fur- I moved here. I didn’t want all this,” tires, will locate its fourth Northeast the housing growth in northern Boston Heights doesn’t lose its bu- niture Today, a trade magazine said Kuchar, who sued the village Ohio store in the new development. Summit County has also been sig- colic charm. based in North Carolina. This year, over its plans but later dropped the Costco has nearly 700 stores world- nificant. It all increases the appeal “We need the businesses here so it opened eight new stores, includ- suit for fear of hurting his hometown wide and approximately 81 million for these retailers,” Cooper said. we can maintain what we enjoy ing its first in Arizona and Southern financially. Now that he sees how members. He added that the retail areas of about living here,” said Bill Goncy, California. they’ve designed the new develop- Marketplace developer Sam Pet- nearby Hudson and Peninsula, mayor of the village of nearly 1,300 The Arhaus complex includes a ments, he’s at relative peace with it. ros said an additional five retailers which focus on charm rather than residents. “To preserve everything 650,000-square-foot distribution “The community needs the are to be housed in outbuildings size, enhance the mix. else, we need to have a tax base.” center and a 120,000-square-foot, progress. I think it’s going to be all within the shopping center. Tenants “There will be a synergy there they Homeworks Inc., which does two-story office building. The office right,” said Kuchar. “I still think it’s for those spaces have not been all will benefit from,” said Cooper. business as Arhaus Furniture, al- building is low slung on purpose so going to be a zoo there at that place firmed up, but will likely include a “This is a big plus for our area in all ready has begun the months-long that it is nearly invisible behind the on weekends, but I can live with it.” restaurant, Petros said. kinds of ways. They’ve done this the process of moving to its new $43 mounded landscaping that sur- Boston Heights mayor Bill Goncy Bass Pro and Costco both de- right way in a well-traveled market, million headquarters and distribu- rounds it. The company wanted to said the others in town who objected clined to name an opening date for and I think it will be a great thing for tion operation on East Hines Hill help maintain the quiet feel of the seemed to have quieted down, too. their Boston Heights locations, but our region.” Road in Boston Heights from Wal- village for the sake of residents. “Everyone has calmed down. Goncy said he expects Bass Pro to Goncy said that as much as he’d ton Hills. “Change is hard for everyone. We They see how carefully we’ve open in the fall of 2016 and Costco like to keep things the same as “We just outgrew the space (in understand that,” said Teed. “We worked to make the landscape at- by next Christmas. they’ve always been in Boston Walton Hills), and there was no way plan to be there for a long, long time. tractive and how we’ve directed the The Marketplace is located near Heights, the community can’t thrive to expand,” said Greg Teed, chief fi- We want to be good neighbors.” traffic so there’s minimum disrup- the junction of the Ohio Turnpike without businesses. nancial officer of the 30-year-old Several village residents objected tion,” he said. and state Route 8, and is easily ac- “Everyone wanted to keep the golf Arhaus, which is known for its in- to the new developments when cessible from nearby Interstate 271. course just as it was — we’d all love house designed and globally plans emerged a few years ago. that — but we have to move for- Retail heavy hitters On Dec. 4, village officials cut the sourced furnishings. None was as vocal as Edward ribbon on the $1.8 million widening ward,” he said. “This was a long time Arhaus is making the move in the Kuchar Sr., owner of Plastic Process Arhaus, which has 61 stores, said of Hines Hill from a two-lane road to in the planning, and we’ve worked midst of a beefed-up expansion ef- Equipment in Macedonia who has it plans to add about 200 employees a three- and four-lane road with very hard to get it just right.”

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PAGE 8 z JANUARY 4 - 10, 2016 z CRAIN’S CLEVELAND BUSINESS Opinion

From the Editor Predicting a year of plenty for NEO

“Porkapoolza” has become an annual New Year’s Day tradition in our home. On Jan. 1, we celebrate the new year with a handful of close friends. We gather around our dining room table, which is laden with pork tenderloin, pork roast and succulent Cleveland- made kielbasa and sauerkraut. The plethora of pork is a reflection of my father’s German roots. Tradition says that if you start the new year eating pork, you’ll be rolling in money all year. You wish each other as much wealth and good luck as the number of cabbage shreds in the sauerkraut. But aside from the superstitious traditions, it’s just a great way to kick off another year with friends, food and a lot of fun. The fun part of “porkapoolza” comes after dinner, when we push back from the table and make our New Year’s predictions. We begin with a thorough review of the past year’s prognostications, many of them purpose- ly preposterous. Just take a look at a few forecasts made on Jan. 1, 2015: “Johnny Manziel gets a DUI with a hook- er in the car.” (close) “Hillary does NOT run for president.” (nope) “Browns no playoffs.” (no- brainer) “Lakewood Hospital closes.” (in the works) “Bruce Jenner gets a sex change.” (yes) Elizabeth Then we launch into the new year. Many McIntyre guesses are personal for those around the table — who will (or won’t) run a 10K, who will change Editorial jobs, whose business will grow and by how much. Laughs are plentiful. Sports, politics and celebrities are often mentioned. Amid all the laughter, we pause occasionally to reflect. And at times, melancholy sets in. After almost an hour, when silliness has overtaken seriousness, we tuck away the new year’s list in the tiny drawer hidden under the dining room table, where it will sit until we pull it out next Jan. 1. A needed spark In this week’s issue of Crain’s, we offer 2016 predictions that are guaranteed to be more informed than what’s offered during our Downtown Cleveland’s resurgence got a boost in mid-De- developers. annual “porkapoolza.” cember when the state announced the Union Trust Building Individual tax credits awarded by the state are normally Our writers share reported accounts of what will likely be the at 925 Euclid Ave., better known as the former Huntington capped at $5 million — with no more than $60 million in tax biggest stories in 2016: The Cleveland Cavaliers’ pursuit of an NBA Building, would receive a $25 million tax credit. credits given out each fiscal year. In 2014, the state upped the championship, the Cleveland schools system’s efforts to renew a tax levy, and the serious investment Northeast Ohio is making in As tax credits go, that’s a whale. ante when it created the catalytic program, which allows a its infrastructure as it prepares for the Republican National Con- credit of up to $25 million for a single large project during And the fact that it swam upstream to Cleveland (Cincin- vention. nati got the last such grant), means Cleveland can eliminate each state biennium. Our reporters also talked to business and civic leaders to find out a white elephant in the downtown core and keep the city’s Take a look around downtown Cleveland. Much of what’s what they see happening in 2016. You’ll find their insights in this redevelopment rolling. happened post-recession involves repurposing landmark issue to be informed, optimistic and realistic. Some developers expressed dissatisfaction when the Ohio buildings into mixed-use developments. And that’s exactly as it should be in this first week of 2016. This new year is full of hope and will be unlike any we’ve seen in Cleve- Historic Preservation Tax Credit Program awarded the grant The Cleveland Trust rotunda, vacant for decades, re- opened in 2015 as a Heinen’s, a much-needed full-service land in a long time. Our region will be in the national spotlight for to 925 Euclid Ave. over the historic May Co. building, which the Republican presidential nominating convention. Are we going grocery store in the central city. also needs to be redeveloped and needs the financial help to too far out onto a limb if we predict a contested convention? Our The downtown Heinen’s is part of The 9 hotel and apart- make that happen Cavaliers will, we confidently predict, return to the NBA Finals — ment complex that also breathed new life into the historic We understand why developers who are invested finan- and this year come away champions. Ameritrust tower, which was on the brink of demolition. cially and emotionally in other real estate projects would be Another prediction: Northeast Ohio will shine when the lights The Higbee building was reborn as the Horseshoe Casino are on. Months of RNC preparations will be finished on time. Even dissatisfied. It’s a very competitive business. in 2012. better, the infrastructure left behind — such as a pedestrian-friend- But let’s look at this from Cleveland’s point of view: We It took years for these projects to attain financing once the ly Public Square — will pay dividends for years to come. landed a valuable tax credit that will bring huge benefits. The right developer came along with the right vision for the pro- It’s important, too, to pause to reflect, and to confront reality. state calls it a “catalytic award” because it is an investment Our region’s ills will still be present once the delegates and the me- ject. that can transform. dia spotlight leave town — and will still need to be addressed. At- The former Huntington Building may soon join the ranks It’s a win. tention must be paid to the systemic problems that continue to ail of the reborn thanks to the tax credit. our region: An economy that, while growing, still lags statewide The General Assembly created the historic preservation tax And so, too, one day, will the May Co. building. We urge and national trends; an educated workforce that must meet man- credit program in 2006. the developers behind that project to continue with patience ufacturers’ needs; and a collaborative framework that brings har- Between 2007 and 2014, $482.3 million in tax credits were and persistence. mony between safety forces and all those they serve and protect. approved for 238 projects. Those credits are projected to The May Co. property is a valuable piece of real estate that And I’d like to leave you with a wish for the new year. Like our stimulate more than $3 billion in private funding and feder- will only become more valuable once Public Square’s preposterous prognosticators around the New Year’s Day dinner table, I wish you have reason to smile, to laugh easily and to enjoy al tax credits, according to the state. That translates to every makeover is complete. the people around you. That shouldn’t be hard. In Northeast Ohio, dollar in tax credit attracting an average $6.20 in private in- It will become a jewel once more. 2016 is going to be a great year. vestment. A massive state tax credit may not be the catalyst for that, No wonder such credits are so sought after by but Cleveland’s hopefully relentless renaissance will be. McIntyre also is acting publisher of Crain’s Cleveland Business.

ACTING PUBLISHER AND EDITOR: Elizabeth McIntyre WRITE US: Crain’s welcomes responses from readers. Letters should be as brief SOUND OFF: Send a Personal ([email protected]) as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 View for the opinion page to West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing [email protected]. Please MANAGING EDITOR: Scott Suttell ([email protected]) [email protected]. Please include your complete name and city from which include a telephone number for CLEVELAND BUSINESS you are writing, and a telephone number for fact-checking purposes. verification purposes. 20160104-NEWS--9-NAT-CCI-CL_-- 12/29/2015 2:37 PM Page 1

CRAIN’S CLEVELAND BUSINESS z JANUARY 4 - 10, 2016 z PAGE 9

Web Talk Readers are Re: Fate of Lakewood Hospital optimistic Dear Save Lakewood Hospital, it is now time to fold up shop, stop these ridiculously desperate measures and begin to participate in the process of creating Our Community, something new in Lakewood. on economy The experts, the mayor, the council, the voters of Our Priority. Lakewood, and the courts have all spoken, and the BY SCOTT SUTTELL verdict was not yours. During this process, you had the right to dissent, but the issue didn’t go your way. That’s [email protected] the way democracy works. @ssuttell Time to move on. Your Law Firm — Jim Ryan More than half of the respondents to an unsci- entific Crain’s Cleveland Business online survey say The need for many in-patient facilities in the suburbs has they expect the national economy to improve in drastically changed. The local folks will really benefit by 2016, though the outlook was more mixed for the an up-to-date family care and 24/7/365 emergency economy in Northeast Ohio. facility with full outpatient care. Respondents were bullish about the short- and If the folks in Lakewood were to keep status quo, who long-term implications of Cleveland hosting the would cover the millions of dollars the facility is losing Republican National Convention in July, and they and will continue to lose every year? Not only that, but expect health care to carry the flag as Northeast the city gets rid of a piece of real estate that is costing Ohio’s strongest economic sector next year. more millions and in return gets a great redevelopment Crain’s in December asked readers to complete parcel. an 11-question survey about economic issues. Looking at Lakewood, everyone should be cheering for Eighty-three readers responded. Among the high- the opportunity of new development. Change can be lights: good! — Neil Dick ● 56% of respondents described their outlook for the national economy as “positive” or Re: Patent ruling gets technical “somewhat positive,” while just 18% said they were “negative” or “somewhat nega- It is unfortunate that software should be subjected to an tive.” arbitrarily higher standard than other innovative subject ● Asked how the regional economy will per- matter, but I would not write software patents off just form compared with the U.S. economy, yet. though, 43% said “poorly” or “somewhat The DDR Holdings case and other post-Alice Corp. poorly,” compared with 35% who said v. CLS Bank International court rulings give us some Northeast Ohio would be “better” or “some- very useful guidance regarding how to couch a software what better” than the country as a whole. invention in terms that the USPTO and the courts will ● Within Ohio, respondents think Cleveland find palatable. is holding up just fine, as 37% predicted John Biernacki, an intellectual property attorney and Northeast Ohio’s economy would perform partner at Jones Day in Cleveland, is exactly right in “better” or “somewhat better” than other suggesting that special care should be taken to explain parts of the state, while another 35% expect it precisely why a software invention is a specific solution will perform about the same as other regions. to a technical problem. I think that in many software ● 49% said health care would be Northeast cases, the real problem underlying validity is a lack of Ohio’s strongest economic sector in 2016, particularity in describing how the computer code is followed by financial services (28%), manu- structured to solve the problem at hand. facturing (12%) and real estate (11%). Time will tell, but going forward I believe that greater ● Respondents are looking forward to the Re- particularity in describing and claiming software inven- publican Party’s four-day nominating con- tions will prove to be critical to a successful strategy. vention in Cleveland from July 18-21. Asked — Dominic Frisina about the short-term economic benefits of the convention, 93% expected it to have a FREE GIFT FOR NEW CUSTOMERS Re: Oberlin College and Bill Cosby “positive” or “somewhat positive” effect on the Northeast Ohio economy. And long-term, Q Banners, Posters, Vehicle Wraps The first college to accept a woman should have been 72% expect “positive” or “somewhat posi- Wall Graphics and other Signage among the first to revoke a Cosby honorary degree. tive” benefits from the convention. — Tom Leland Q Direct Mail Marketing Respondents were able to leave some comments Since 1999 Q as part of the survey. Here are a few of them: Website Creation Re: East End Residences in Akron or Enhancement ● “The region needs to keep working its way Q Digital Publications Love the energy and vision that (East End developer) toward a knowledge-based, white-collar IRG has brought to our area! We in North Canton are economy. This has been and will continue “The Name Q Mobile Friendly Apps and also benefiting from an IRG project in the Hoover to be a slow process.” You Can Trust!” Website Conversions building. ● “Cleveland will mismanage the Republi- Q Free Online Company Store — Dan can convention. I believe it will be a fiasco.” for Ordering of Business Cards ● “FLEXIBLE. ONE SOURCE. (25 employees or over) As a longtime resident of Akron, it does my heart good “The Cleveland multifamily residential Q to see things finally looking up for the East Market market, specifically downtown and Univer- UNLIMITED RESOURCES.” Promotional Products sity Circle, will become overbuilt in the next stretch of Akron beyond Summa and the University of Q Print Services Akron. 36 months unless there is significant growth Hopefully this really is only the beginning of a wave of in jobs. The bubble will burst in 2018/2019.” ● new investment that will help to revitalize a long “Ecological degradation should be of “Call Joe Thomas Group neglected corridor of town, as well as the east side greater concern! … Northeast Ohio is well 440-268-0881 neighborhoods whose fate and fortunes have been tied positioned ecologically. Let’s build sustain- to Market Street since before the Rubber Capital era. ability and resilience by understanding/uti- A Certiﬁed Minority-Owned Business, That’s me!” independently owned & operated Kudos to Stuart Lichter and Akron city officials for lizing nature’s patterns and systems.” finding common ground and the means to make this happen. Results of the survey will be highlighted during www.ProformaJoeThomasGroup.com | www.JoeThomasGroup.com — AkronRonin the Feb. 3 Crain’s Economic Outlook event at the Cleveland InterContinental Hotel. Information on Proforma Joe Thomas Group is a franchisee of Proforma and is not affiliated with any other Proforma franchisees the event is at tinyurl.com/jg3sccb. 20160104-NEWS--10-NAT-CCI-CL_-- 12/29/2015 4:30 PM Page 1

PAGE 10 z JANUARY 4 - 10, 2016 z CRAIN’S CLEVELAND BUSINESS SHALE CONTINUED FROM PAGE 1 energy sector by The Wall Street for up to18 months,” Salitza said of years. Those terms will expire in more than 500 wells that were not profitable shale gas play in the na- Journal. the Utica’s well results. “You’ll cer- many cases this year, so drillers online yet. … A good number of tion, observers and participants say. tainly see a retrenchment in other probably will abandon some leases them are still looking for gathering basins, outside of the Utica in Ohio.” in the least-productive areas. lines,” said Jeff Dick, chair of the Ge- Ohio, along with Pennsylvania, Tough choices ahead might become the OPEC of U.S. nat- Dingmann, though, predicts that ological and Environmental Science some drillers, including some in the department at Youngstown State ural gas — a threat to producers in While acknowledging the indus- Waiting for price to be right other parts of the country. The two try’s tough times overall, the three Utica, might face bankruptcy. University, and himself a landowner states’ Utica and Marcellus shale had good things to say about the Drillers with leases or pipeline com- While the pace of drilling will no with active oil and gas leases on his plays are sufficiently prolific that Utica shale play. mitments might have to drill, even if doubt be slower in the first half of property. they sell their gas at a loss, he said, Dick said he has seen a slowdown they can satisfy the nation’s natural The Utica is helping drillers such 2016 than it’s been for the last cou- and some don’t have the balance in activity, both in the shale fields gas needs all by themselves, drillers as Moore to combat low commodity ple of years, Ohio probably will fare sheets to withstand such a situation and in the industry’s hiring prac- say. prices by allowing them to drill better than most other oil and gas for long. Also, he expects credit to tices. He said he knows of at least And it’s so much cheaper to drill faster and cheaper than in other producing states. The slump might tighten for the weakest drillers, es- one Ph.D. candidate who is looking in the Utica, and its wells are so shale plays, and with better results be worse than was feared, thanks to pecially if production and cash flow for a part-time teaching position be- much more productive than the a mild winter in much of the nation, from wells that are the best-produc- drops as they slow down their cause there are not jobs in the oil wells in other gas plays, that the Uti- but eventually prices will rise. ing in the nation. drilling programs. and gas industry itself at the mo- ca likely will cause other shale plays “The pressures that we see in this “It’s really going to be interesting In the Utica, in particular, prices ment — something that would not to lose more capital, drilling activity, rock, especially in the southeastern to see what banks do. In the last stand to rise more than in other have happened a year or two ago. jobs and resource production. part of the play, is very different,” quarter, production was still high shale plays because there are still Dingmann, Bennett and others “Efficiencies and the prolific rock Moore said. “That’s what’s allowing enough that they didn’t have to give pipelines being built and brought don’t see the situation improving work together,” said Michael Moore, us to produce these wells flat (with it much serious thought,” Ding- online in Ohio. Drillers here have until at least the second half of 2016 CEO of Oklahoma-based Gulfport little to no drop off in production) mann said. But that will change in had to find a way to at least break — and even then drilling might Energy. for such a long period of time. … It’s the spring, when the slowdown in even, while selling their gas for far come back more slowly than it be- Moore spoke in December at the been phenomenal.” drilling finally begins to affect pro- less than it fetches in other parts of gan. But everyone agrees on one 2015-2016 “Shale Update” confer- Salitza agreed with Moore’s pre- duction levels and causes some cash the U.S. Now, they have their costs thing: The Utica is too big and too ence held by the McDonald Hopkins diction that production from the crunches, he said. low, their drilling programs efficient productive to ignore for long. law firm in Cleveland. Also speaking Utica, and also from the Marcellus, Drillers will have to make some and can benefit the most from any Oil and gas companies may come at the event were Jay Salitza, manag- could shut down drilling in other tough choices in the coming year increase in prices. and go, but the gas will remain and ing director of oil and gas invest- shale plays, because the Utica’s about where to send their few re- Many Ohio drillers already have eventually will be brought to the sur- ment banking for KeyBanc Capital wells have defied the odds in terms maining rigs, which crews they can spent the money to drill their wells, face. Markets, and Neal Dingmann, man- of production. afford to keep and even which so their investment has been made “In the long run, these are proven aging director of Sun Trust Robin- “A decline curve with no decline acreage they can keep under lease. and they are looking for a pipeline to (well) results, and proven results al- son Humphrey, who was named a in the first year is unheard of. … Some leases require drillers to pro- get their gas to market. ways get produced when the price is “Best on the Street” analyst for the You’re getting the same production duce oil and gas in three or five “The last time I looked, there were right,” Dick said.

CRAIN’S BLOGS Get the latest from our editors and reporters, including: ■ Editor’s Choice: Managing editor Scott Suttell rounds up news and views about business, and stories of interest in Northeast Ohio. ■ Sports Biz: Assistant editor Kevin Kleps writes about the Browns, Cavaliers, Indians and Congratulations to much more. ■ Real Estate: Senior reporter Stan Bullard keeps you up to date on housing, development Avi Greenbaum & and construction trends, plus plenty of other happenings. ■ Food and Restaurants: Freelancer Lee Chilcote writes about Northeast Ohio’s bustling, Steve Michael and excellent, food scene. www.CrainsCleveland.com/section/voices

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CRAIN’S CLEVELAND BUSINESS z JANUARY 4 - 10, 2016 z PAGE 11 Focus

PREDICTIONS 2016 NEO LEADERS BREAK OUT THEIR CRYSTAL BALLS - P. 14 ISTOCK

New hotels say they’ll A Cavs title would be Levy renewal is huge ‘absolutely’ be ready best kind of ‘mayhem’ part of Cleveland Plan

BY STAN BULLARD BY KEVIN KLEPS BY RACHEL ABBEY MCCAFFERTY

Carpenters, carpet-layers and wallpaper hangers will be A month before politicians, media and thousands of Later this year, voters in Cleveland will decide sweating along with civic leaders and politicos the next six other visitors descend on Cleveland for the 2016 Repub- whether they want to keep paying for a 15-mill levy that months as downtown Cleveland makes ready for the Re- lican National Convention, the Cavaliers, if all goes ac- makes up a sizable portion of the Cleveland Metropoli- publican National Convention. cording to plan, will be playing in their second consecu- tan School District’s budget. Construction projects big and little will need to be tive NBA Finals. Clevelanders first approved this levy with 57% of the wrapped up before July, ranging from the essential ones at That might not leave a lot of extra time for city and vote in November 2012 — the same year the district un- Hilton Cleveland Convention Center and the renovation county leaders to organize a parade, but it would be a veiled radical plans to improve the academic perfor- of Public Square to getting tenants into normally empty heck of a problem to have. mance of the schools and to change how they’re run. storefronts, a few of which have been vacant for years. “If you were downtown when the Cavs were in the This time around, the campaign’s success likely won’t Opening those projects will add extra excitement to the championship (last June), just being around that atmos- rely on what the district says it can do with the funds, preparations. Many, such as the $272 million Cuyahoga phere, it’s amazing to see how great that was and think but instead, what progress it has made on the plan over County-owned hotel, would have been civic extravagan- how much it would be amplified if the Cavs won the the last four years. zas in their own right. However, the deadline also ups the championship,” said David Gilbert, who has added 2016 Today, the levy dollars make up about 10% of the op- ante for contractors to bring jobs in on time because it Host Committee president and CEO duties to his lead- erating budget for the schools, according to district CEO takes weeks to get new hotels operating — and downtown ership roles at Destination Cleveland and the Greater Eric Gordon, and its loss would certainly affect the class- Cleveland will be gaining three. Cleveland Sports Commission. room. And he’s not the only one who believes it’s criti- The biggest of the bunch — and the linchpin of Cleve- The Golden State Warriors, who defeated the Cavs in cal. land’s successful bid for the GOP fest — is the 600-room six games in the 2015 NBA Finals, are the prohibitive fa- “The renewal of the levy is going to make or break the hotel at 300 E. Lakeside Ave. Ask Martin Burgwinkle, a vorites to repeat as champions late this spring. But if any future of the Cleveland Plan,” said Helen Williams, pro- Turner Construction project executive on the Hilton job, team is going to knock off Golden State, oddsmakers say gram director for education for the Cleveland Founda- whether construction will be finished on schedule by April it’s the Cavs, who are practically a slam-dunk choice to tion. 1 and he answers with a word: “Absolutely.” represent the Eastern Conference in the NBA Finals. Those involved in the Cleveland Transformation Al- Burgwinkle delivered the forecast after he and Jason Another extended playoff run would be a welcome liance, like Williams and the others who spoke to Jones, general manager of Turner’s Cleveland office, took sight for Sean O’Donnell, the general manager at Flan- Crain’s, said the district must share the successes it’s a show-me approach when queried about whether the nery’s Pub, located on 323 Prospect Ave. — a few Kevin seen so far in order to get voter buy-in. structure will be ready. Love outlet passes from Quicken Loans Arena. The 2015 The alliance was created to help monitor the plan’s They provided Crain’s Cleveland Business a tour of the Finals were “mayhem” for restaurants and bars near the progress and its board includes representatives from the project, beginning at its 32nd-floor rooftop bar and going arena, O’Donnell said. district, the city and charter schools, as well as commu- downstairs to its basement to provide a clear indication “It’s was St. Paddy’s Day, Indians opening day for nity organizations like the Cleveland Foundation and SEE HOTELS, PAGE 12 SEE CAVS, PAGE 13 SEE LEVY, PAGE 15 20160104-NEWS--12-NAT-CCI-CL_-- 12/29/2015 3:09 PM Page 1

PAGE 12 z JANUARY 4 - 10, 2016 z CRAIN’S CLEVELAND BUSINESS PREDICTIONS 2016 HOTELS CONTINUED FROM PAGE 11 Others in the pipeline RNC. removing electrical and water lines so, he is confident contractors on how far along the project is. Burg- Drury acquired the Cleveland from the property to allow contrac- Public Square will meet the June 1 Construction workers in Decem- winkle estimates construction will school board’s building — and set tors to set to work on a $3 million delivery date with a functioning ber were sealing seams in the metal be 90% complete early in January. the $40 million project — before the lakefront restaurant, the first phase public space. Much of the work was roof atop the Drury Plaza Hotel, In mid-December, open studs Hilton was planned or the city won in a lakefront development by planned in 2015 so as much finish which Herb Wedemeier, senior vice were apparent in sections of the the convention. Cleveland-based Cumberland De- work as possible could be put in president and general counsel of 32nd-floor, but boxes of electrical “Getting the RNC is consistent velopment and Dallas-based Tram- place before winter set in, such as Drury Southwest Inc., is confident components — a kit for each room with everything we’ve experienced mell Crow. planting trees and pouring concrete. will open well before the Republican — were visible as electrical workers in Cleveland,” Wedemeier said. Cumberland president Dick Pace “Our contractors ran double convention. The hotel is in the for- installed wiring. On floors below, the “The news just keeps coming out in said the two-story restaurant will crews all summer,” said Paris, refer- mer Cleveland Board of Education wallboard was in place and tables a positive vein.” take shape by June. That will allow a ring to two-shift daily operations. administrative offices at 1380 E. for installing wallpaper were at the Another hotelier confident a new yet-to-be-named restaurateur to Even though weather was pleas- Sixth St. ready. On the 17th floor, carpet was take the helm in time to be ready for ant the first week of winter, the going in, a last step before furniture the Republican convention. schedule was set so that, Paris said, arrives during the spring. “It’s a beehive over there. It’s “We want it in place for the inter- “We’re not counting on a great win- Asked if the record warm days in national coverage of downtown ter.” For example, plans call for steel November and unnaturally pleasant Cleveland,” Pace said of the rush to for a one-story café to go in this win- December weather were helping going well.” deliver the property. ter. things along, Burgwinkle said, “It’s a Herb Wedemeier, senior vice president and general counsel, Plans for a four-story building The city’s biggest construction year late.” nearby — three stories of apart- project — the $500 million replace- Much of the building is now but- Drury Southwest Inc. ments and a floor of office, retail and ment of the Innerbelt Bridge — is toned-up for weather, which wasn’t parking spaces — are less certain. too massive to allow it to be moved the case during snowy December “It’s a beehive over there,” Wede- property will be ready is Adam Gur- He had planned to have the mixed- up for the Republican convention 2014 as the tower’s concrete forms meier said from Drury’s Cape Gi- giolo, general manager of The Kimp- use building underway by the Re- and remains scheduled for comple- climbed skyward from the ground. rardeau, Mo., headquarters. “It’s go- ton Schofield Hotel, 2000 E. Ninth publican convention, but soil sam- tion in fall 2016. However, contrac- Weather was so tough last year, ing well.” St. Although the inn was originally to ples recently showed the building tors and the Ohio Department of Turner and its partners on the job — While restored windows are still open in 2015 as part of the epically will need more foundation work Transportation finished redoing the Ozanne Construction and Van going in at some parts of the land- slow redo of an office building as 122 than originally planned. He, Tram- Ontario and East Ninth Street ac- Auken Akins Architects — had to re- mark building in December, he said, hotel rooms and apartments, Gurgi- mell Crow, their team and the city cesses to the new George Voinovich jigger their plans. They moved up crews are installing carpet in other olo said doors will open at the end of plan to huddle to decide by the end Bridge this year to ensure a pleasant work in the six-story podium at the rooms. Laborers were unloading February. of 2015 whether to delay launching look for downtown’s southern side. bottom of the building which hous- doors from a semi on the building’s “The construction company is the mixed-use building until after Some planting went in early in es the hotel’s lobby and banquet Rockwell Avenue side in December. working nonstop floor by floor to get the convention. that process, according to ODOT rooms. Then workers made up lost Wedemeier said the doors were tak- us ready; carpet and wall coverings spokeswoman Jocelynn Clemings. time through the summer. en off site to be refinished. are going in,” Gurgiolo said. He ex- She said contractors and state offi- The result: The massive banquet Although Drury’s website says the pects furniture to arrive by late Jan- The city’s centerpiece cials were reviewing schedules and rooms were clad in carpet and property will be available July 30, uary. Kimpton has hired top execu- planting windows for various per- awash in light in mid-December. Wedemeier said the hotel chain will tives for the property and will be Although a $5 million funding gap manent plantings to see if more can Some were waiting for just windows “not miss the big party.” That date is fully staffed this winter. He is certain loomed in December for one of the be put in early yet still meet criteria and furnishings. A wavy-shaped to give sales personnel something to the hotel will be full by the time RNC most watched projects downtown for maximum growth and hardiness. ceiling is going in at the grand ball- aim for after the convention, he said. begins. — the $50 million updating of Pub- “This is an important gateway room. Look for the 180-room hotel to open The hospitality project with the lic Square — Jeremy Paris, executive into our city and we felt that this was However, the Hilton is not the by late April, he said, which will give most work stretching ahead of it is director of the Group Plan Commis- worthwhile, especially given con- only hotel that contractors are rush- hotel workers time to work out the set at North Coast Harbor, where sion, said steps are underway to cerns regarding increased traffic and ing to finish. bugs at the new property before utility crews in late December were close the gap with state funds. Even buses at the RNC,” Clemings said.

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CRAIN’S CLEVELAND BUSINESS z JANUARY 4 - 10, 2016 z PAGE 13

CAVS CONTINUED FROM PAGE 11 “There’s a regional effect and a city effect,” every (NBA Finals) game,” the Flannery’s GM Rosentraub said. “The more events that take said. “It was crazy.” place at the arena, the more money it makes O’Donnell said Cavs home games provide a for Cleveland. When people say, ‘What’s the business bump of about 50% for weeknight effect on the region?’ That’s going to be quite home games during the regular season. On the small. For the city of Cleveland, that’s quite weekends, it’s about a 30% increase. substantial.” “During the Finals, it’s a 120% jump,” he The buzz created by a team with an interna- said. “The Finals are insane.” tional following, led by one of the most popu- The first three playoff rounds weren’t too lar athletes in the world, can also turn into ex- bad, either. tra bucks. “You have to also factor in the extent to which this vibrancy that the arena contributes Full house to the confidence level to invest in down- The Cavs’ 2015 postseason run consisted of town,” Rosentraub said. “That matters a great 10 home games over a 59-day span in April, deal to Cleveland. We’re really in a mode that May and June. we’re making sure we’re stabilizing the fi- In that three-month period, Cuyahoga nances of the central city (in a region).” County sales tax receipts jumped 5.1% year- Michael Symon, whose collection of B Spots over-year. In 2014, county sales tax revenue include stands at FirstEnergy Stadium and The dropped slightly, 0.2%, compared to April, Q, told Crain’s that any restaurateur who is May and June 2013. basing his or her business on being in close Cleveland hotels experienced an even larg- proximity to a sports team is “not going to be er numbers bump. in business long.” According to data provided by STR, which Symon said that even if there are 60,000 peo- tracks supply and demand for the hotel indus- ple downtown for an event, “you can only put a try, Cleveland occupancy rates had year-over- couple hundred people in your restaurant. You have to look at those nights as gravy.” year increases of 5.8%, 3.4% and 3.5% last April, The Cavs hosted 10 playoff games in 2015, including three in the NBA Finals. (Kevin Kleps) May and June, respectively. The demand for In the Cavs’ case, there are more helpings, rooms jumped between 5% and 9.9% in each of downtown at all the watch parties throughout and playoff games in 2014-15 was almost thanks to the drawn-out nature of the NBA the three postseason months, and hotel rev- the county.” 340,000 above the total for 41 regular-season postseason. enue was up at least 11.5% in each month. Budish added that he was “especially look- contests in 2013-14, when the club was 33-49. The organization’s winning ways also bring On June 9 and 11, when the Cavs played ing forward to a victory parade” in 2016. a spiritual lift to a region that, as Destination their first NBA Finals home games in eight If any team is poised to end Cleveland’s Cleveland’s Gilbert says, takes the successes years, hotel revenue increased 25.7% and 58% championship drought, now in its 52nd year, ‘Substantial’ city effect and failures of its sports teams “very” person- year-over-year, and the occupancy rate it’s the Cavs. Even without a title, LeBron Mark Rosentraub, a former Cleveland State ally. And the expectation that the Cavs have jumped 23.6% for Game 4, a contest the Cavs James and his star-studded cast are giving the professor and dean, and current chair of the de- been set up to be championship contenders entered with a 2-1 series lead. During the city coffers a needed jolt. partment of sports management at the Univer- for at least the next few years adds to the hope, eight-day span that covered the three Finals During the 2014-15 NBA season, the Cavs sity of Michigan, shares the view of many econ- just as it does the bottom line and the wide- matchups the Cavs hosted at The Q, the city’s handed over $9.9 million in admissions taxes omists that the economic impact of sports angle TV shots of a bustling downtown. hotels had year-over-year revenue increases for all of the games, concerts and family shows teams is overstated because any money spent “There’s no doubt that when you look at ranging from 9.3% to 58%. at The Q. In 2013-14, the city’s admissions tax in or around an arena is an expense that other- major sports teams and their affiliations with “The better the Cavaliers, the better (finan- revenue from The Q was $4.7 million. wise would have been targeted for other enter- a city, there is an inference of a city being a cially) we do as a region,” Cuyahoga County Attendance at the arena for James’ return tainment venues. But he believes a champi- major city when it has a major sports team,” Executive Armond Budish said. “But it also season was up 18.7%. The 1.05 million fans who onship-caliber team such as the Cavs can Gilbert said. “Winning a championship ab- means community pride and excitement for attended the Cavs’ 51 sold-out regular season provide a major boost to a city’s bottom line. solutely amplifies that.”

FINALS PROVIDE FLURRY OF HOTEL ACTIVITY The Cavs hosted three ■ June 9: The occupancy rate jumped 8.5% NBA Finals games in year-over-year, the average daily rate was up 14.1% 2015. On all three days, and the revenue increased 25.7%. hotels in the Cleveland ■ June 11: The occupancy rate was up 23.6%, the market saw significant average daily rate increased 25.9% and the revenue increases in revenue and shot up 58%. rates. The breakdown, ■ June 16: The occupancy rate actually dropped 0.1%, according to data but the average daily rate and revenue increased provided by STR: 13.1% and 15%, respectively.

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PAGE 14 z JANUARY 4 - 10, 2016 z CRAIN’S CLEVELAND BUSINESS PREDICTIONS 2016

ON BANKING ON HEALTH CARE “There’s a saying: if you don’t like change “2016 cost increases will be greater you’re going to hate extinction. The world than 2015 across all insurance products, is changing so rapidly and the mega-trend especially for exchange products. of 2016 — as we’ve Technology seen the past integration several years — will (wearable devices, be the impact of EMR, telehealth) will technology on be a major focus of banking. There has 2016. Retail care will been a seismic shift continue expansion in preferences in in many forms how people do (in-store clinic, direct business and client medical plans, expectations. employer on-site clinics). Northeast Ohio Technology enables a pace of change and regional competition intensifies between a pace of business that is unprecedented, health systems, especially in Summit at least in my career. In the new year, County. Large population health networks you’re going to continue seeing banks (Midwest Health Collaborative, Health become more mindful, nimble and Innovations Ohio, Advanced Health Select proactive to meet this fast evolving client Network) will move from theory to expectation.” operations and gain contracts.” — Beth Mooney, chairman and CEO, — Dr. Akram Boutros , president and KeyCorp CEO, The MetroHealth System ON HOSPITALITY ON CLEVELAND “2016 will be a strong year for the “The new Public Square prior to the hospitality industry in Northeast Ohio — Republican National Convention will be a with July (and the RNC) obviously being our ‘wow!’ moment that will measurably biggest growth opportunity in rates. I think change people’s the RNC will put Cleveland in a new light for perceptions of ISTOCK other organizations and events that are downtown otherwise looking at bigger cities for their Cleveland. Not only programs. If Cleveland pulls off the RNC will it be in the well — and I think it will — it will open the international door for more organizations to hold spotlight during the conventions in Cleveland, and that will be a boost for several segments of the RNC and be a draw Local leaders look ahead at the economy — not just hotels — but restau- for tourists, this rants, retail and transportation as well.” revitalized and — Ivy Arndt, director of sales, Hyatt vibrant public space Place Cleveland/Westlake/Crocker Park will bring people people, places, themes and things from the neighborhoods and the suburbs downtown, where they will discover even ON PHILANTHROPY more of what our great city has to offer. It will be a turning point.” that could shape the new year “I think probably we’re looking for surprises. I think that the foundation — or — Teresa Metcalf Beasley, partner, it’s not really a foundation — but what Calfee, Halter & Griswold Mark Zuckerberg formed, the idea of investing all of his Facebook earnings in development, is committed to helping to identify effective “I’m hoping that Cleveland’s downtown ON THE ECONOMY this kind of charitable giving, but in his own population will get closer to 15,000 by the policies and best practices for strengthening and “The dollar is going to quit rising (gaining value in relation way. I think we’re looking for those kind of end of 2016. A few more apartment increasing access to education and training.” to other currencies) and may even decline in 2016. And if surprises where people decide maybe the properties opening up will help us get — Loretta Mester, president and CEO, that happens, that means the Ohio economy is going to do old ways aren’t the best way to do it. there. That will help national retailers step Federal Reserve Bank of Cleveland quite well because of the exchange rate effect.” Maybe we need to innovate and do it the up and do more than talk about setting up way that would have the most effect.” — Raj Aggarwal, board of directors, Ancora Securities; shop in the city. I think the RNC will bring ON ENERGY — David Holmes, Cleveland Lead, former dean of the University of Akron’s more excitement to our city. I think we’ll be “I’m hopeful for a cold winter and hopefully OPEC will Foundation Center College of Business Administration feeling good about ourselves in August. It take their foot off the gas a little bit (so oil and gas prices will take some more work in the trenches can come up). But I think 2016 is going to be more a ON POLICY “As long as the level (of job creation) continues at this beyond that to enhance our business well continuation of 2015. When 2015 began, there was a lot of pace, it will be a positive for household formations and for “In 2016 the Ohio General Assembly and downtown, but many important things are uncertainty in the air. Was this (falling price environment) a our industry.” He added that it would also be a positive for Gov. John Kasich will reverse their thinking in the marching phase now.” market correction or was this something larger? It took the company’s partners in the construction business if that and restore the top rate on the income tax about six months for people to realize it’s not a market — Jennifer Coleman, senior program were the case. so that Ohio can match what other states correction, it’s the current state of the economy and an are doing and enroll more of our 4-year-olds officer for the arts, — John Morikis, CEO, Sherwin-WWilliams Co. The Gund Foundation; founder, attack on the domestic oil and gas industry in the U.S.” in public preschool, help more of our low-income families with childcare costs CityProwl.com “I expect labor market conditions to continue to improve — Shawn Bennett, executive vice president, and do much more from the state level to in 2016, both in the nation and in our region. My Ohio Oil & Gas Association “Steve Schimoler (owner of Crop Bistro) support mass transit.” assessment reflects trends gleaned from economic — Amy Hanauer, executive director, Policy will start a cooking show called ‘Steve’s Full statistical reports and information gathered from business Matters Ohio of CROP,’ which will become a national contacts in the region, including our bank and branch ON HEALTH CARE sensation.” boards of directors and advisory councils, whose members “In Cleveland, I think you might see more physician group “A coalition of development and interest — Nikki DiFilippo, president, Via Vera generously share their insights with us. While I expect acquisition, more physician integration. You might see groups will push for new brownfield Group, a tech marketing firm. She was in continued improvement in the coming year, there are more consolidation of what I’ll call the ancillary provider legislation in 2016 to expand brownfield the audience when a pilot for the show was longer-term challenges facing the labor market in the market — the diagnostic providers, the ambulatory surgical redevelopment opportunities beyond just recorded. region and in the nation. We face the challenge of ensuring centers, the independent labs and things of that nature job creation. However, the Kasich adminis- that people can gain the necessary skills to enter and that are around town. Or the large physician super groups tration will expand existing brownfield “I just believe that the RNC, downtown remain productive members of the modern labor force, to that are out there, the 30 and 40 member physician groups programs that will reduce the need for new and community development, the raise our standards of living and make us more competitive that provide services in communities around town.” legislation.” unabashed commitment to public in the global economy. Although monetary policy is not the — Joseph Koncelik, former director, Ohio education and training individuals for tool for addressing this important issue, the Federal — Matt Albers, partner, Environmental Protection Agency; meaningful jobs will serve as the Reserve, through its role in promoting community Vorys, Sater, Seymour and Pease attorney, Tucker Ellis foundation for our future.” — Alex Johnson, president, Cuyahoga Community College

“A successful Republican presidential ON REAL ESTATE ON SPORTS convention will boost the Greater “By the end of 2016, I expect Cleveland to have five “We’re going to be able to play golf all 12 months this Cleveland Partnership’s effort to ensure apparel-based retailers announce their interest in golf season. And golf course revenue is going to be up that the renaissance in our region is opening stores in downtown Cleveland. There will also across Northeast Ohio because of all the political dollars market-based and sustainable for a long be another real estate development announced that coming in (from the Republican National Convention) in time to come, spurring continued will rival the Flats East Bank’s second phase in size. 2016.” investments in the Warehouse District, the There is going to be a change from the old guard and — Jimmy Hanlin, TV and radio personality, and owner of NuCLEus project in Gateway, Phase 3 of Forest City Enterprises Inc. being the go-to developer three Ohio golf courses (Hanlin may or may not have been the Flats redevelopment, lakefront downtown. There is going to be a race between the new laughing when he made his first prediction.) development and continued housing breed of developers — Geis, Asher and others — to put development downtown along with up projects in the city. I also think, because of a very “I predict that in the sports industry, ticket inventory game-changing neighborhood projects like tight Class A office market, there will be substantial management, pricing strategies and the sales process will MetroHealth’s transformation and interest from tenants in ground-up construction in the become a lot more sophisticated, thanks to the Opportunity Corridor.” city.” advancements of technology and data and analytic tools.” — Joe Roman, president and CEO, — Dionna Widder (left), vice president of ticket sales Greater Cleveland Partnership — Rico Pietro, principal, Cushman & Wakefield CRESCO and service, Cleveland Cavaliers 20160104-NEWS--15-NAT-CCI-CL_-- 12/30/2015 11:20 AM Page 1

CRAIN’S CLEVELAND BUSINESS z JANUARY 4 - 10, 2016 z PAGE 15

LEVY CONTINUED FROM PAGE 11 the first time in “decades,” the ing the fact that the number of stu- may not always see eye-to-eye, but Also, another factor that could the Greater Cleveland Partnership. scorecard said. dents in failing schools fell by 11% they agree on the levy renewal’s im- make passage more difficult is the The foundational goals of “Cleve- “The district is delivering, and it’s from the 2010-2011 school year to portance. It’s “critical,” said union state’s revolving door of school eval- land’s Plan for Transforming not easy,” said Williams, of the the 2013-2014 one. The alliance is president David J. Quolke. uations. The measures on which Schools,” which took a round of Cleveland Foundation. measuring schools based on perfor- The passage of the levy in 2012 schools are rated have changed mul- contract negotiations and some In order to pass the renewal, the mance index measures, value-added gave teachers the resources and sta- tiple times since the levy passed, so state legislation to get fully in place, district will have to communicate scores that show whether students bility they needed, Quolke said, and it makes it hard to have an apples- are to ensure that all students in the these sorts of successes, Williams made appropriate year-to-year the early test score results have been to-apples comparison year-over- city can attend a high-quality school said. It needs to continue to imple- growth and four-year graduation validating. The progress is never as year, Gordon said. and that all neighborhoods have a ment the plan and carry out the rates when applicable. fast as one would like, he said, but Piet van Lier, director of school variety of these high-quality schools promises it made to the community. But not all of the indicators were there have been gains. quality, policy and communications to offer. To help achieve this, CMSD It also needs to stay aligned with ex- positive. For example, the number But Quolke also sees areas where for the alliance, said these changes started moving away from a tradi- ternal partners, like those in the of students in high-performing he thinks the promises of the Cleve- have made it difficult to get a consis- tional district model and toward a Cleveland Transformation Alliance. schools also fell by 11% during that land Plan have so far fallen short. He tent measure through which to portfolio model, made up of district time.“While significant progress has hasn’t seen enough investment in watch for improvement. The al- schools and charter schools, and be- been made in developing district the so-called investment schools liance’s measure creates some con- gan giving better performing schools “The district is and community infrastructure to that are targeted for improvement or sistency, but still relies on state tests. more autonomy in hiring and bud- support the portfolio strategy, and enough empowerment of teachers And when those change, the overall geting. delivering, and while the quality of Cleveland’s port- and staff. rigor can change, as well, which van The Cleveland Plan is showing folio of schools is growing, the over- “Morale is about as low as I’ve Lier said also makes tracking some “real evidence of success,” all performance of public schools in ever seen it in the Cleveland progress difficult. though there’s a long way to go, Gor- it’s not easy.” the city is not improving fast schools,” he said. And there’s one less tangible factor don said. enough,” the report said. And he said that’s a problem if the the district may have to overcome: Helen Williams district wants to pass a levy, consid- namely, how much improvement is Program director for education, ering the voters “pulled the lever” enough to be acceptable? For exam- Signs of success Challenges ahead because they saw a unified district ple, Gordon said, though the gradua- Cleveland Foundation At the end of the plan’s first six The Cleveland Teachers Union is team. The union knows it needs the tion rate has risen about 12% since years, the district hopes to have another important partner in the renewal levy to pass, but the support 2011, whether that increase is large tripled the number of students in Williams has worked in this space plan and in the levy. The union and from the union may not be as enthu- enough is up for debate. high-performing district and charter for many years, and often she said the district administration (which siastic as the last time around, “‘Is it enough?’ is going to be the schools. And it wants to have com- plans get made and put on a shelf. have begun contract negotiations) Quolke said. big question,” Gordon said. pletely gotten rid of its failing This plan has made big changes in schools. A recent scorecard from the its first three years of implementa- district suggested that some tion, including moving to more progress has been made on that school-based budgeting, reshaping front. the human resources function to fo- As of the 2014-2015 school year, cus more on talent recruitment and 10 failing schools had been closed or development and helping families replaced and the number of stu- learn about their enrollment op- dents in mid- to high-performing tions. seats had increased by 19%. The A June report from the transfor- numbers for this school year also mation alliance also pointed to HEALTH CARE found that enrollment increased for some indicators of success, includ- HEROES

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PAGE 16 z JANUARY 4 - 10, 2016 z CRAIN’S CLEVELAND BUSINESS Business of Life

FITNESS: A California touch in the Midwest Crain’s occasional look at interesting happenings in Northeast Ohio. Tell us your story: [email protected] Orangetheory makes most of an hour

BY CHUCK SODER

When Stephanie and Kurt Altenburger moved to North- east Ohio in 2010, they had a mission: They were going to take the fitness culture they knew from California and in- ject it into this region. They just weren’t sure how they were going to do it — until they heard about Orangetheory. The Altenburgers quickly fell in love with the high-in- tensity workout craze, which has exploded in popularity over the past few years. Now, they’re on a quest to spread Orangetheory throughout Northeast Ohio. On Dec. 4, they opened the region’s first Orangetheory Fitness Studio in Rocky River. And more are on the way. As area developers for Orangetheory, the Altenburgers have sold five other franchises that will open in this region over the next two years. One of those studios, on Belden Village Street just north of Canton, is about to start selling mem- berships. Other franchisees are in the process of negotiating leases in Strongsville, Fairlawn, Beachwood and Solon. But the Altenburgers won’t sell franchises to just any- one. They’re looking for people who are just as passionate about fitness as they are. Kurt, who graduated from Berea High School, is a body- builder. Stephanie, who grew up near San Jose, Calif., par- ticipates in figure competitions. “We live it every single day, from the moment we get up to the moment we go to bed,” she said. They’ve both dreamed about opening some sort of fitness-related business for years. So what was it about Or- angetheory that made them pull the trigger? For one, it gets results. Partly because it’s hard to be lazy: Everyone wears a heart rate monitor, and that rate is displayed on a screen for everyone to see. So if you’re taking it easy, your little square on the screen will turn green or even blue, if you’re really phoning it in. Too much of that and the instructor will ask you to push harder — to get into the orange zone. If you’re really going all out, your “We live it every single day, from the square will turn red. moment we get up to the moment But it’s not supposed to be orange and red all the time. The hour-long workout involves short bursts of intense ex- we go to bed.” ercise followed by periods of more moderate activity. For instance, someone who’s fairly physically fit will start off with — Stephanie Altenburger a relaxed jog on the treadmill, but when the instructor tells the class to start pushing, they’ll pick up the pace. They’ll eventually reach a full run before slowing down again. And then they’ll head over to the floor, where they’ll work out with a rowing machine, weights, a medicine ball and other equipment. No two workouts are the same. The workout is designed to build lean muscle and burn calories long after the hour is over. Granted, intense workouts have come under scrutiny in recent years for causing injuries. Though Orangetheory has- n’t received as much criticism as other workouts like Cross- Fit, injuries can happen. Thus, instructors are encouraged to make sure participants use proper form and avoid spend- ing too much time in the red zone. Plus, the workout is designed to be low impact, and it can be altered if needed. Kurt Altenburger said he also likes Orangetheory because it’s fun. The studio is decorated with orange high- lights, even in the bathroom. In the dimly lit workout area, upbeat music pumps over the speakers. “There are not many workouts where you can go, ‘Holy crap, I didn’t realize it was an hour,’ ” he said. Tessa Shagovac felt the same way the first time she tried Orangetheory. Thus, she and local restaurant owner Bob- by George licensed the right to open a studio in Strongsville. Top, Orangetheory customers have their heart rates Until then, she has to get her fix, so she’s working out at displayed on a screen as they work out. Stephanie and the studio in Rocky River. “People become obsessed with Orangetheory. … Kurt Altenburger, above, opened the region’s first There’s a wait list for almost every single class here,” she Orangetheory location in Rocky River on Dec. 4. said. (McKinley Wiley photos) 20160104-NEWS--17-NAT-CCI-CL_-- 12/30/2015 1:31 PM Page 1

CRAIN’S CLEVELAND BUSINESS z JANUARY 4 - 10, 2016 z PAGE 17 BUSINESS OF LIFE Source Lunch

Akron is a special place for Anthony Margida, CEO of the Akron Global Business Accelerator. As an Akron native, “you have this attachment to (the city) that’s almost involuntary,” said Margida, who followed his career away from his hometown but returned about 15 years ago.

Margida is steering the accelerator during a time of ever-increasing focus on entrepreneurship as an economic catalyst.

The College of Wooster and University of Akron grad loves what he does at the Akron Accelerator, which enters 2016 with an eye on expanding Anthony Margida programs and growth. — Sue Walton TECHNOLOGY

What makes the Akron Your education (bachelor’s and How does the tech startup Accelerator different from doctorate degrees in chemistry) scene in Northeast Ohio look other regional incubators? indicates that you might have these days? FIVE THINGS: The Accelerator has a storied been on a different career path I am extremely optimistic about history. It was the first and is the at one point. What attracted the scene in Northeast Ohio. IN THE COUNTRY you to work with a technology longest-running incubator Whether your company or idea is in Margida and his wife, business incubator? software, energy, advanced member of the National Business Andrea, live on a 78-acre Incubator Association and has I have been on a few different materials, biomedical or another won state and national awards. career paths. I spent my first 18 field, there has never been more farm in eastern Stark The support our tech startups professional years in the silicones, resources and support. Startup County. receive is top-notch. But what adhesives and elastomers founders can find free expert really sets the program apart is industries in technology develop- advice from entrepreneurs-in-resi- ON THE RUN ment and commercialization for dence, receive low-cost work our ecosystem. Within the Inspired by his children, who 250,000 square feet of space we some larger corporations. I was space, learn from customer-devel- occupy in the former B.F. Goodrich drawn to new-business develop- opment programs like iCore, join are both runners, Margida factory, there are more than 30 ment and played lead roles in accelerator programs and tap into competed in a half-marathon tech startup companies, free launching the magnetorheological several, yet limited, avenues for in 2014 and with his resource services, the Bit Factory fluid business at Lord Corp. and grants and equity investment. daughter completed the full the global footwear adhesive While there still is not an over- software accelerator, graduate Akron Marathon in 2015. companies that serve as models business at H.B. Fuller. I frequently abundance of investment capital, opportunity is on the rise. of success, a software boot camp worked with only a handful of LUNCH SPOT people to develop these new and the accelerator’s signature GIVING BACK business segments. Out of What’s the status of the Bits Nuevo Modern Mexican Technology Company The Margida family founded necessity, I performed marketing, and Atoms Innovation Center? & Tequila Bar, Acceleration program. More than manufacturing and business and operates the nonprofit 54 E. Mill St., Akron 350 people work in the We are on track for a 2017 open- administration tasks. It was this Valentine Project ing in downtown Akron. We will accelerator building each day — part of my career that instilled a offer a state-of-the-art maker (thevalentineproject.org), all with a passion to create (or passion for creating new space, AkronMakes, and a progres- which spreads cheer to The meal assist in creating) something. businesses. sive and collaborative co-working children with cancer by Puerco burrito and space, AkronWorks, along with a sending gift boxes on chicken quesadillas, both How has the Bit Factory, the Akron Accelerator’s Silicon Valley-style number of programs with our part- Valentine’s Day. with Spanish brown rice software accelerator, tailored its program to this area? ners, which include the University and black beans. Plus of Akron, Stark State College, the chips and house salsa. Unlike the standard model for software accelerators — a brief but Software Guild and a number of FAVORITE STOPS intense experience for several companies — the Bit Factory has several private companies with proven ex- Rubber City Shakespeare differentiating features. First, selected companies’ programs are perience in product development, Company, the Actors Summit custom-designed for their needs so each client company’s experience The vibe prototyping and manufacturing. Of Theater and RubberDucks will consider the business’ stage of development, industry served and course, business development Updated, modern twists entrepreneur’s experience. Second, our mentors work closely with the support will be available through games at Canal Park on classic Mexican food clients and are instrumental in creating and implementing the plan. Men- our Akron Accelerator team. The in an upscale yet tors are also software programmers, so they can understand the product Bits and Atoms Innovation Center SCREEN TIME comfortable space. being developed. Third, the program duration is based on reaching success will provide community-accessible Margida and his wife prefer points and not limited to industry time standards of 90 to 120 days. resources, business consultation Finally, no client company receives a check upon admission. Tenacity and a space designed for collabo- to watch indie films on The bill must be demonstrated, milestones set and a budget developed to reach ration of talented individuals who Netflix. those goals before a $20,000 to $40,000 investment will be made. aspire to create. $24.44 + tip 20160104-NEWS--18-NAT-CCI-CL_-- 12/29/2015 2:40 PM Page 1

PAGE 18 z JANUARY 4 - 10, 2016 z CRAIN’S CLEVELAND BUSINESS

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Kevin Samuels focuses on commercial Andrew Bengtson has a wide range of Kathleen brings more than 27 years as financing, including representing banks, experience in commercial real estate a CFO and business owner to her clients equity sponsors, and companies in senior transactions, including joint venture at FocusCFO. She provides small and and subordinated debt facilities. He has formation, real estate finance, real estate medium sized Ohio businesses with experience in financing transactions, fund sponsor formation, and acquisition flexible, onsite CFO services: sound including leverage finance transactions and syndicated, multi- and disposition of hotels, shopping centers, apartments, and financial management, forward-thinking insights and tools, and bank credit facilities; foreign currency facilities; asset-based office buildings located throughout the United States. A proactive financial strategies to improve internal cash flow, financing; and acquisition-related facilities. He is a member of member of the State Bar of Ohio and the State Bar of Texas, reduce business risk, and increase the health of small/medium- the Ohio bar, and holds a J.D. from Case Western Reserve Mr. Bengtson holds a J.D. and an M.B.A. from the University of size businesses. Kathleen received her MBA from the Kellogg University and a B.S. from Wake Forest University. Michigan, and a B.A. and a B.S. from the University of Kansas. School of Management and is a Certified Exit Planning Advisor.

Susan K. Prewitt ADVERTISING & MARKETING Diana Englehardt Partner, Employee Benefits & Jess Melton Principal Executive Compensation FocusCFO Associate Strategist, Brand Experience Jones Day shark&minnow Diana brings to FocusCFO more than 21 Susan Prewitt advises companies on their years experience in banking industry, 13 executive compensation and employee shark&minnow named Jessica Melton as of which were CFO positions. She provides benefit programs, including matters that Associate Strategist, Brand Experience. small and medium sized Ohio businesses arise in connection with corporate Melton most recently served as the Events with flexible, onsite CFO services: sound transactions. She assists clients with negotiating employment, & PR Coordinator for JumpStart, Inc. financial management, forward-thinking insights and tools, and change in control, and retention agreements; bonus plans; Previously Melton held roles at both The proactive financial strategies to improve internal cash flow, equity compensation programs; and deferred compensation Foundation Center & BVU: The Center for Nonprofit Excellence. reduce business risk, and increase the health of small/medium- arrangements. A member of the Ohio bar, she holds a J.D. Melton graduated with honors from The Ohio State University & size businesses. from the University of Akron and a B.B.A. from Kent State holds a MA in Library & Information Science from Kent State University. University. Skip Vermilya Justin E. Herdman Brittany Neish Principal FocusCFO Partner, Investigations & White Collar Associate Strategist, Social Influence Crime shark&minnow Skip has more than 30 years diverse Jones Day business, finance, administration, and shark&minnow has named Brittany Neish accounting experience providing CFO Justin Herdman is a trial attorney and Associate Strategist, Social Influence. services for mid-sized companies to former federal prosecutor. He represents Neish worked previously for Microsoft larger, global organizations. He provides businesses and individuals involved in where she led outreach and public small and medium sized Ohio businesses with flexible, onsite high-stakes commercial, product liability, relations efforts around their launch in CFO services: sound financial management, forward-thinking and consumer fraud litigation, as well as corporate criminal Northeast Ohio. Prior to this experience, Neish worked in insights and tools, and proactive financial strategies to improve litigation and government investigations. He has tried numerous media, having begun her career with Great Lakes Publishing. internal cash flow, reduce business risk, and increase the cases in state and federal courts in New York and Ohio, and is Neish graduated from Kent State University where she earned health of small/medium-size businesses. a member of the bar in both those states. Mr. Herdman holds a her BA in Communication Studies. J.D. from Harvard University and a B.A. from Ohio University. David Gouttiere Bradley W. Harrison PROFESSIONAL SERVICES Principal Jeff Semple FocusCFO Partner, Business & Tort Litigation Area President | Canton/Mid-Ohio region Jones Day David brings more than 20 years in senior FocusCFO financial management and 13 years in Bradley Harrison represents clients in consulting to his work with FocusCFO. product liability and complex civil litigation Jeff runs the Canton/Mid-Ohio region of He provides small and medium sized in courts throughout the United States. FocusCFO's statewide operations, Ohio businesses with flexible, onsite Mr. Harrison devotes his practice to the managing a team of CFOs who provide CFO services: sound financial management, forward-thinking defense of companies in product liability small and medium sized Ohio businesses insights and tools, and proactive financial strategies to improve actions. He defends companies in class actions and multidis- with flexible, onsite CFO services: sound internal cash flow, reduce business risk, and increase the trict litigation. He is a member of the Ohio and Florida bar financial management, forward-thinking insights and tools, and health of small/medium-size businesses. associations, and the U.S. District Court for the Northern proactive financial strategies to improve internal cash flow, District of Ohio. He holds a J.D. from Case Western Reserve reduce business risk, and increase the health of small/medium- University and a B.A. from Kent State University. size businesses. 20160104-NEWS--19-NAT-CCI-CL_-- 12/30/2015 2:16 PM Page 1

CRAIN’S CLEVELAND BUSINESS z JANUARY 4 - 10, 2016 z PAGE 19 INVESTORS CONTINUED FROM PAGE 1 growing Cleveland software compa- in the top five. The state’s analysis — HOW THEY STACK UP nies: OnShift and StreamLink. CLEVELAND BUSINESS which was conducted by an innova- The following tech investment funds Those funds have other money to tion-focused consulting firm in received funding from the Ohio Third invest. Can the same be said about Valley Growth Ventures in Columbus called the Urban Venture Frontier program last month. They are 700 W. St. Clair Ave., Suite 310, Youngstown? Jim Cossler, CEO of Group — noted that JumpStart has ranked according to the score they Cleveland, OH 44113-11230 received from an evaluator hired by the Youngstown Business Incuba- achieved 12 “successful exits.” It also Phone: (216) 522-11383 the state. Funds based in Northeast tor, wouldn’t say whether the new www.crainscleveland.com said the 76 companies in its portfo- Ohio appear in bold. fund would be able to start making lio have raised a total of $783 million investments without the $3 million Acting publisher/editor Elizabeth McIntyre Office coordinator Denise Donaldson in follow-on funding from other in- ■ JumpStart Evergreen Fund: $5M Third Frontier loan it had sought. He Managing editor Scott Suttell Web editor Damon Sims vestors. ■ CincyTech Fund IV: $10M cited regulations that limit what in- Sections editor Tim Magaw Digital strategy director Nancy Hanus Those exits include all liquidity ■ JumpStart Tech Inclusion Fund: $5M vestment funds can say publicly Associate Sue Walton events, but JumpStart clearly made editor/Akron Audience ■ Rev1 Fund (Columbus): $8M about raising money. development director Eric Cedo decent money on some of them. For Assistant editor Kevin Kleps ■ JumpStart NEXT Fund: $2.5M Production director Craig L. Mackey instance, one of those exits occurred Senior reporter Stan Bullard Production assistant/ ■ Cleveland Clinic Bio Validation Fund in June, when Medtronic bought Bueller? … Bueller? Real estate/construction video editor Steven Bennett VII Plus: $2.5M Reporters Jay Miller CardioInsight, a Cleveland-based Billing Lana Semaan ■ OTAF Fund V/Rev1 Angel Fund: Many venture capital firms that Government medical device company, in a $93 used to be active in Ohio didn’t even Credit Todd Masura million deal. But Leach suggests that $2.5M Chuck Soder apply for funding. One notable ab- CRAIN COMMUNICATIONS INC. ■ Rev1 Life Sciences Fund: $2.75M Technology the fund’s biggest success is yet to sence was Early Stage Partners of come, noting that JumpStart holds a ■ Launch Den Capital Fund: $3M Dan Shingler Chairman Keith E. Crain Cleveland — which had filed a letter Energy/steel/auto/Akron President Rance Crain substantial stake in CoverMyMeds, ■ Queen City Angels First Fund V: $5M of intent stating that it planned to Rachel McCafferty Treasurer Mary Kay Crain a pharmacy technology company ■ NCT Ventures Project #3: $6.25M apply. Manufacturing/education CIO Anthony DiPonio that has a few dozen employees in Why didn’t it do so? Jeremy Nobile, Finance CFO Thomas Stevens Group publisher Mary Kramer Northeast Ohio and many more in Recommended but not funded: Lydia Coutré, Health care It wasn’t an option: The firm had- Exec. VP/operations William A. Morrow Columbus. The company told Mutual Capital Partners Fund III, Valley n’t yet raised the matching dollars it Research editor Deborah W. Hillyer Exec. VP/director of Crain’s that it generated about $100 Growth Ventures, North Coast Angels would need to apply for Third Fron- Art director Rebecca R. Markovitz strategic operations Chris Crain million in sales this year. Fund IIIb, North Coast Venture Fund tier money, according to general Cartoonist Rich Williams Exec. VP/director There’s also good news for local partner Jim Petras. However, he be- Events manager Jessica Rasmussen of corporate Not recommended: Akron operations KC Crain medical entrepreneurs. lieves Early Stage should be able to Events coordinator Kim Hill BioInvestments Fund II, OneCommunity VP of production For one, there’s a new investor in close on a new chunk of funding by Marketing strategist Michelle Sustar town. The state awarded $3 million Broadband Innovation Fund, IKOVE and manufacturing Dave Kamis the middle of next year. After all, the Managing editor, custom to a new fund created by Randy Startup Nursery Fund, Northeast Ohio * * * Student Venture Fund, OCEAN Capital firm made good money when two and special projects Amy Ann Stoessel G.D. Crain Jr., Founder (1885-1973) Theken, who sold three spinal tech- Fund II. local companies in its portfolio, TOA Mrs. G.D. Crain Jr., Chairman (1911-1996) Advertising director Nicole Mastrangelo nology companies for $200 million — Chuck Soder Technologies and Simbionix, where Senior account exec. Dawn Donegan * * * in 2008. He’s in the process of creat- acquired in mid-2014. Reprints: 212-210-0750 Account executives Lindsie Bowman ing the LaunchDen business incu- Krista Bora [email protected] Raising money for venture capital John Banks bator for orthopedic technology lake narrowly missed getting money, funds in Ohio is harder than it used Customer service and subscriptions Laura Kulber Mintz 877-824-9373 companies and other businesses mainly because it plans to make a to be, Leach said. Many Ohio-based that could benefit by being housed small number of larger investments. funds previously raised cash from alongside the new companies he’s And North Coast Angel Fund fell the Ohio Capital Fund, a taxpayer- building in Akron. short because of its “notably poor backed “fund of funds” that finished Plus, entrepreneurs who don’t exit performance,” Urban Venture making investments a few years ago STAY CONNECTED work at the Cleveland Clinic may ac- Group wrote. That same criticism and was never renewed. Plus, some FACEBOOK: TWITTER: @CrainsCleveland tually be able to raise money from hurt the score of a newer venture firms used to raise cash from banks Facebook.com/CrainsCleveland the Clinic’s venture fund now: The fund run by the same people. — which is now illegal because of INSTAGRAM: fund, which received $10 million in North Coast has only had one suc- regulations contained in the Dodd- LINKEDIN: instagram.com/crainscleveland Third Frontier money, plans to start cessful exit — it generated a 400% Frank Wall Street Reform and Con- linkedin.com/company/ considering ideas that come from return when it sold its stake in a sumer Protection Act of 2010. crain’s-cleveland-business people who aren’t Clinic employees. Columbus-based e-commerce com- The recession also made fundrais- pany called zNode. But managing ing harder for venture capital firms, director Todd Federman told Crain’s especially newer firms in the Mid- NEWSLETTER SCHEDULE Falling short that more are on the way. He listed west that were still trying to prove A few other local tech investors re- several companies in the portfolio that they could generate returns in a WEEKDAYS: Morning Roundup and daily EVERY OTHER WEDNESDAY: ceived decent evaluations from Ur- that he believes are doing well, in- timely fashion. Northeast Ohio is headlines Manufacturing Report ban Venture Group but didn’t score cluding Assurex Health, a Cincin- still feeling those effects, Leach said. MONDAYS: Real Estate Report and Sports THURSDAYS: Small Business Report high enough to get funding. nati-based biotech company with “It’s going to impact us for at least Business Report FRIDAYS: Weekly Webcast Mutual Capital Partners of West- about 400 employees, and two fast- a decade,” he said. TUESDAYS: Health Care Report CrainsCleveland.com/register

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2016 AWARD PROGRAMS’ NOMINATION DEADLINES We are currently accepting nominations for the following Crain’s Awards Programs: HEALTH CARE HEROES WEEK OF MARCH 14, 2016 8PSMESFOPXOFEGPSHSPVOECSFBLJOHNFEJDBMSFTFBSDIBOEUSFBUNFOU /PSUIFBTU0IJPşTEJTUJOHVJTIFE IFBMUIDBSFBOEXFMMOFTTQSPGFTTJPOBMTBSFIPOPSFECZUIFJSQFFSTBOECVTJOFTTDPNNVOJUZ NOMINATION DEADLINE: JAN 8, 2016 CIO OF THE YEAR AWARDS APRIL 14, 2016 $SBJOşTIPOPSTUIFTUBOEPVUDIJFGJOGPSNBUJPOPƍDFSTXIPMFBEUIFUFDIOPMPHZTUSBUFHJFTBOEWJTJPOPG /PSUIFBTU0IJPşTCVTJOFTTFT JOTUJUVUJPOTBOEOPOQSPƋUT NOMINATION DEADLINE: FEB 1, 2016 WOMEN OF NOTE SUMMIT & AWARDS MAY 25, 2016 $SBJOşTIPOPSTUIFEFEJDBUJPOBOEBDIJFWFNFOUTPG/PSUIFBTU0IJPşTUPQGFNBMFCVTJOFTTMFBEFSTXIP FOSJDIPVSSFHJPOXJUIUIFJSQSPGFTTJPOBMUBMFOUTBOEVOJRVFQFSTQFDUJWFT NOMINATION DEADLINE: FEB. 12, 2016 ARCHER AWARDS AUGUST 11, 2016 "USJCVUFUP/PSUIFBTU0IJPşTMFBEJOHIVNBOSFTPVSDFTQSPGFTTJPOBMTXIPBSFCVJMEJOHDPNQBOJFTXJUI UIFCFTUQFPQMF UBMFOU EFWFMPQNFOUBOEDVMUVSF NOMINATION DEADLINE: APRIL 15, 2016

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