Autos are driving rapid loan growth - Crain's Cleveland

By CHUCK [email protected]

A measly eight students took thefirst entrepreneurship course BobChalfant taught at the University ofAkron in the spring of 2009, shortlyafter a popular professor stoppedteaching the subject.

To say the program has bouncedback would be an understatement:Since the start of 2013, Mr. Chalfanthas taught a total of 265 studentsabout the ins and outs of starting abusiness.

By MICHELLE PARK [email protected]

Consumers are driving a rate ofauto loan growth that hasn’t beenseen in years at several financial in-stitutions in Northeast Ohio, and

given the average age of light vehi-cles on the road (a record 11.4years), area lenders expect the rideto continue.

Columbus-based HuntingtonBank enjoyed a record quarter inoriginations in indirect auto lend-

ing, the industry’s term for whenborrowers secure financing from alender through a dealership. Thebank’s originations totaled $1.2 bil-lion in the third quarter of 2013, up10% from the year-ago period andnearly 19% from the third quarter

of 2011.Nick Stanutz, director for auto fi-

nance for Huntington, says therecord is the result of the thirdquarter of the year always being thepeak sales period for car dealers,and increases from a year ago in thesale of new and used cars.

Auto loan growth also has accel-erated in 2013 at Firefighters Com-munity Credit Union in Cleveland.

Its auto loan balance in this year’sthird quarter was 13.6% higherthan the year-ago quarter. That’s agreatly improved performance overthe 3.3% increase Firefightersrecorded in the third quarter of2012 over the like quarter in 2011,and the 7.5% decrease it saw in thethird quarter of 2011 versus thethird quarter of 2010.

$2.00/NOVEMBER 11 - 17 2013Vol. 34, No. 45 Entire contents © 2013 by Crain Communications Inc.

07447083781

745

NEW

SPAP

ER

Obamacare’s impactSome Northeast Ohio free clinics

are reinventing themselves as morepeople become insured. PAGE 3

INSIDE

Estate PlanningSPECIAL ADVERTISING SECTION

section starts after page 18

See GROWTH Page 7

See AMBITIONS Page 45

See RTA Page 44

JANET CENTURY

After several years of declining ridership, the Greater Cleveland Regional Transit Authority’s numbers are on the rise.

Autos are driving rapid loan growthAs vehicles on the road reach a record age, many financialinstitutions are reaping the benefits of a 2013 buying jump

INSIDE: A look at the undergraduateenrollment numbers for entrepreneurship classes at eightNortheast Ohio universities. Page 45

RTA RIDING WAVEOF MOMENTUM

Increase in ridership is above national norm,sparking more ambitious plans for region

By JAY [email protected]

Joe Calabrese’s eyes sparkle when he relates a recentconversation he had with the head of a large localemployer.

The company wanted to move some downtown em-ployees to a suburban office building, but the boss wasgetting resistance, especially from younger employees.

“They told him, ‘We don’t want to go; there’s no goodpublic transit,’ ” said Mr. Calabrese, general manager ofthe Greater Cleveland Regional Transit Authority.

Collegesget bumpfrom bigambitionsEntrepreneurshipprograms at areauniversities aregaining popularity

20131111-NEWS--1-NAT-CCI-CL_-- 11/8/2013 4:28 PM Page 1

When an employer group chooses Delta Dental, its employees

gain access to the largest selection of individually contracted

dentists nationwide. This results in more people getting the

dental care they need from the dentists they prefer. You can

count on a larger network to drive more value overall. Our

dual network delivers higher network utilization rates, greater

balance billing protection for members and industry-leading

effective discounts. And that’s sure to make everyone smile.

Dental is all we do.

And we do it better. www.deltadentaloh.com/overallvalue

Delta Dental delivers big on smiles and even bigger on savings

22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM NOVEMBER 11 - 17, 2013

REGULAR FEATURESClassified ....................46Editorial ......................10From the Publisher ......10Going Places ...............14

Milestones...................47Personal View..............11Reporters’ Notebook....47Talk on the Web ...........10

COMING NEXT WEEK

Crain’s takes its annual lookat some of the most promising and prominent people in Northeast Ohio business circles with the FortyUnder 40 section. This year’shonorees include Stella Paparizos Dilik, right.

Notable faces in familiar places

Audit Bureauof Circulation

Subscriptions: In Ohio: 1 year - $64, 2 year - $110.Outside Ohio: 1 year - $110, 2 year - $195. Single copy,$2.00. Allow 4 weeks for change of address. Forsubscription information and delivery concerns sendcorrespondence to Audience Development Department,Crain’s Cleveland Business, 1155 Gratiot Avenue,Detroit, Michigan, 48207-9911, or email to [email protected], or call 877-824-9373(in the U.S. and Canada) or (313) 446-0450 (all otherlocations), or fax 313-446-6777.Reprints: Call 1-800-290-5460 Ext. 125

Keith E. Crain: ChairmanRance Crain: PresidentMerrilee Crain: SecretaryMary Kay Crain: TreasurerWilliam A. Morrow: Executive vice president/operationsChris Crain: Executive Vice President, Director ofStrategic OperationsBrian D. Tucker: Vice presidentDave Kamis: Vice president/production & manufacturingMary Kramer: Group publisherG.D. Crain Jr. Founder (1885-1973)Mrs. G.D. Crain Jr. Chairman (1911-1996)

Crain Communications Inc.

700 W. St. Clair Ave., Suite 310,Cleveland, OH 44113-1230Phone: (216) 522-1383Fax: (216) 694-4264www.crainscleveland.comPublisher/editorial director:Brian D. Tucker ([email protected])Associate publisher/editorial:John Campanelli ([email protected])Editor:Mark Dodosh ([email protected])Managing editor:Scott Suttell ([email protected])Sections editor: Amy Ann Stoessel ([email protected])Assistant editor: Kevin Kleps ([email protected])SportsSenior reporter: Stan Bullard ([email protected])Real estate and constructionReporters: Jay Miller ([email protected])GovernmentChuck Soder ([email protected])TechnologyDan Shingler ([email protected])Energy, steel and automotiveTim Magaw ([email protected])Health care and educationMichelle Park ([email protected])FinanceRachel Abbey McCafferty([email protected])Manufacturing and energyResearch editor: Deborah W. Hillyer ([email protected])

Cartoonist/illustrator: Rich Williams

Events manager:Jessica Snyder ([email protected])Special events coordinator:Kim Hill ([email protected])

Marketing strategist :Michelle Sustar ([email protected])

Advertising director:Nicole Mastrangelo ([email protected])Senior account executive: Adam Mandell ([email protected])Account executives: Dawn Donegan ([email protected])Andy Hollander ([email protected])Lindsie Bowman ([email protected])John Banks ([email protected])

Office coordinator:Denise Donaldson ([email protected])

Digital strategy and developmentmanager:Stephen Herron ([email protected])

Web/Print production director: Craig L. Mackey ([email protected])Production assistant/video editor: Steven Bennett ([email protected])

Billing: Susan Jaranowski, 313-446-6024([email protected])Credit:Todd Masura, 313-446-6097([email protected])

TREADING WATERMedian weekly earnings of the nation’s 105.5 million full-time wage and

salary workers were $771 in the third quarter of 2013, according to federalgovernment data. That figure was 1.7% higher than a year earlier — but theConsumer Price Index in the past year has gained 1.6%. Among the major occupational groups, people employed in management, professional and related occupations had the highest median weekly earnings —$1,338 for menand $962 for women. Men and women employed in service jobs earned theleast, $562 and $447, respectively. Here’s how the data break down by various characteristics:

All workers $771Men $847 Women $698Less than high school diploma $479High school graduate, no college $659Some college or associate degree $747Bachelor’s degree only $1,101Advanced degree $1,365

■ Source: U.S. Bureau of Labor Statistics; www.bls.gov

Weekly median wagesThird quarter, 2013Category


By CHUCK [email protected]

You get one guess: What is thenew slogan used by Marc’s grocerystores?

Is it a) Low, Low Prices, b) Fun forYour Money, or c) Fresh Savings,Smart Living?

Take your time. Got it? OK, pen-cils down.

If you guessed “c,” congratula-tions. But don’t feel bad if you got it

wrong. A lot of people did, accord-ing to data Marc’s compiled fromone of the first interactive televisioncommercials to air in Greater Cleve-land.

Marc’s is one of several local or-ganizations that have run TV com-mercials that allow viewers to an-swer questions or get moreinformation by pushing buttons onthe remote control.

Several pay TV providers thatserve Northeast Ohio — includingCox Communications, AT&T U-verse, Dish Network and DirecTV —offer this type of technology to ad-vertisers, most of which promotenational brands.

By KEVIN [email protected]

Riddell, the football equipmentmaker that operates its largest plantin Elyria, has served as the officialhelmet of the NFL since 1989. Butthat relationship is about to end,which has Elyria officials con-

cerned about the potential impactof the change on one of the city’slargest employers.

As concussions and the after-math of brain injuries suffered byhundreds of retired NFL playershave become a mammoth concernfor a league that in the past seem-ingly could do no wrong, Riddell

has found itself under duress fromlawsuits and accusations that itmade false claims about the safetyof its products. Now, just aroundthe corner, is the conclusion of thecompany’s exclusive designation asthe NFL’s helmet provider once Su-per Bowl XLVIII ends next Feb. 2.

The latter development might

seem alarming for a company thathas cherished the exposure provid-ed by its 24-year partnership withthe most powerful sports league onthe planet.

Riddell, however, says it will bebusiness as usual next year for itselfand its 140,000-square-foot Elyriaoperation at 669 Sugar Lane, whereit continues to churn out helmets— as many as 4,000 a day — andshoulder pads.

NOVEMBER 11 - 17, 2013 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES

See FREE Page 44

See ADS Page 8

See RIDDELL Page 43

JANET CENTURY

Free Medical Clinic of Greater Cleveland executive director Danny Williams is shown in front of a door decorated with anankh, an ancient Egyptian symbol of life.

Riddell’s future is heady topic for Elyria

DIAMOND IMAGES

Following Super Bowl XLVIII on Feb. 2,Riddell’s name no longer will be displayed on the front of NFL helmets.

City officials are concerned about company’s outlook followingexpiration of NFL deal, but helmet maker remains optimistic

“There’s a whole newdemographic of ridersnow. It’s not just thenecessity riders butnow it’s the riders whoride by choice, the people who are nowinvesting and movingto cities.”— John McGovern, chairman of RTA’s Citizen Advisory Board.Page One

“From our perspective,it’s more about fit andopportunity,” he said.“You want to be in abuilding with marquee tenants, andthat’s where we willbe.”— Stephen Zashin, co-managingpartner, Zashin & Rich Co. Page 4

“You can’t just show upon a corner and expectpeople to come. … Youhave to get the wordout and create a following … there’s alot of work involved indoing a mobile business, but it’s worthit.”— Michelle Schenker, co-owner,B. Lux Boutique, Hudson. Page 15

“When I was younger, Iwanted to be a detective and I wantedto be a librarian. I seetranslation as theamalgam of the twoprofessions. I’m a really good researcher.I’ve gotten good atfinding the perfectterm.”— Jill Sommer, a German-to-English translatorin Cleveland Heights. Page 15

These ads getyou involvedInteractive approachto buying airtime isgaining attention ofNE Ohio businesses

INSIDE: Take a look at Marc’s interactive advertisement. Page 8

COSTS OF BEING FREESome local clinics are forced

to reinvent themselves as morepeople have health insurance

By TIMOTHY [email protected]

With the looming expansion of health carecoverage under the Affordable Care Act,Northeast Ohio’s free clinics are grapplingwith whether to retool fundamentally the

way they do business and accept patients with insur-ance, or to stick with what they know best: providinghealth care only for the uninsured.


By STAN [email protected]

Cleveland law firm Zashin & RichCo. has leased the last full flooravailable at Ernst & Young Tower inthe Flats East Bank Neighborhood.

Zashin & Rich, which focuses onrepresenting employers in work-place law and individuals in familylaw, will hike the size of its officesby 50% when it moves next June tothe fourth floor of the office build-ing on Main Avenue in downtownCleveland.

The firm will exit a 14,000-square-foot office at 55 PublicSquare for the new, 21,000-square-foot office because its 25 lawyersand 20 staffers had long ago “over-whelmed” the available space, saidStephen Zashin, co-managing part-ner and head of the firm’s employ-ment and labor practice group.

Mr. Zashin said the expanded of-fice space will ensure the firm hasroom to continue its growth forsome time —accommodating atleast another 14 lawyers — and willgive it a chance to embrace a moreeffective office layout and newtechnology.

The new office will have eightconference rooms compared withfour in the current space, and thefirm will shed the last remnant of itslaw library with the move, Mr. Za-shin said. The added conferencerooms are needed for client meet-ings because offices of individualZashin & Rich attorneys will nothave doors, he said, which gives thespace a variation on popular open-office designs.

Moving from 55 Public Square,which many firms prize because ofits proximity to the CuyahogaCounty Justice Center and federalcourts, was not an issue because somuch of the firm’s practice takes itto locations around the country. Itcould have moved to the suburbsbut decided to stay downtown be-cause “we’re a Cleveland firm,” Mr.Zashin said.

However, Mr. Zashin said themove to the Flats from PublicSquare is a plus in terms of parking.He said the firm will not miss in-creased rates for parking and com-petition for parking spaces sincethe Horseshoe Casino Clevelandopened.

“Parking is a challenge therenow,” Mr. Zashin said of its currentspace, and the new office will bemore accessible for clients and of-fer more visibility for the firm.

The firm’s workplace and em-ployment practice representsclients from publicly traded nation-al corporations to small businessesin matters ranging from discrimina-tion and harassment complaints toworkers’ compensation. The firm’sdomestic relations practice —which includes divorce representa-tion for high net-worth individuals— is headed by Mr. Zashin’s broth-er, Andrew, and the two co-managethe firm.

The lease is a milestone for Ernst& Young Tower, which opened lastspring.

Adam Fishman, a principal atFairmount Properties, which co-developed Flats East Bank withWolstein Group, said in a news re-

lease that the lease takes the build-ing’s last full floor of availablespace. With it, the 23-story buildingis 91% leased, he said.

Stephen Zashin declined to dis-close how much the firm’s rent willbe.

“From our perspective, it’s moreabout fit and opportunity,” he said.“You want to be in a building withmarquee tenants, and that’s wherewe will be.”

Cleveland-based Vocon will de-sign the office with a “Cleveland-centric” theme to support localbusinesses and the city rather thanhire one of the out-of-town archi-tects it interviewed, Mr. Zashinsaid.

Zashin & Rich has grown from sixlawyers when it expanded its prac-tice to include employment law in1996, Mr. Zashin said. It also hastwo lawyers in a Columbus office itopened in 1998. ■


1350 Euclid Ave, Suite 300

Cleveland, Ohio 44115

Valley View Rd

Lan

S Ch

N Chinaberry

53.73 ACRES53.73 ACRES

INDUSTRIAL LANDFOR SALE - 53+ ACRES8864 VALLEY VIEW ROAD, MACEDONIA, OHIO

For more information contact our licensedreal estate salespersons:David Hollister 216.453.3089 [email protected] Terry Coyne 216.453.3001 [email protected]

VisitTerryCoyne.com

available for rail-siding

access

Crushed Limestone

Zashin & Rich move marksbig milestone for E&Y TowerCleveland law firmwill occupy the lastfull floor availableat building in Flats

DAN SHINGLER

The 23-story Ernst & Young Tower in the Flats East Bank Neighborhood is 91%leased.

Register for free e-mail alerts and receive:

■ The Morning Roundup: The day’s business newsfrom Ohio’s daily papers

■ Breaking news alerts■ Daily headlines: Crain’s-produced news and blogitems from the day■ Dealmaker Alert: A weekly guide on M&A trends andrecent transactions in Ohio. Published Wednesday.

■ Health Care Report: A weekly guide to keep readers on top of changes in the health care industry.Published Tuesday.■ Real Estate Report: A weekly guide to real estatenews. Published Monday.■ Small Business Report: A weekly guide to smallbusiness news. Published Thursday.■ Shale and Energy Report: A weekly guide to theenergy industry. Published Friday.

GET DAILY NEWS ALERTS FROM CRAIN’S!

SIGN UP NOW AT:CrainsCleveland.com/register



*Applications subject to credit approval. The 2.99% rate applies to new or used vehicles & equipment loans up to 80% LTV and terms up to 36 months for credit qualified applicants. Disclosed rate reflects 0.50% discountbased on automatic monthly payments from a U.S. Bank Business Checking account. Standard fees apply. Advertised rate is as of October 1, 2013 and subject to change without notice. Some restrictions may apply. Depositproducts offered by U.S. Bank National Association. Member FDIC. ©2013 U.S. Bank

branch usbank.com/smallbusiness

If your business needs a forklift,you need a loan from US.

U.S. Bank works hard to tailor the right solutions for your business. With thehelp of a trusted U.S. Bank Business Banking specialist, you can manage yourcash flow, payments, and loans for future growth. Straight business talk thatspeaks to your business, so more business owners like you can get what theyneed to move forward.

Call Jerry ArchambaultBusiness Banking 216.623.5975

APR*%2.99

RATES AS LOW AS

QUICK LOAN

CFBank transforms from ‘no loans’ to growth leaderBy MICHELLE PARK [email protected]

A Northeast Ohio bank that in re-cent years had stopped seeking tomake loans has roared back on thescene.

In sharp contrast to the past cou-ple years when CFBank’s total loansdeclined 21% each year as the banktried to improve its capital ratios,CFBank has grown net total loans bynearly 40% in the last 12 months.That performance makes it the far-and-away leader in nonacquisition-related loan growth in NortheastOhio during that period, accordingto SNL Financial data.

The next-best internal loangrowth during that period — 8.85%— was posted by Hometown Bank inKent, the data show.

Much of CFBank’s loan growth isdriven by commercial real estate andcommercial and industrial loans, areflection of how its executives —among them, CEO Timothy T. O’Delland president Thad Perry — areworking to transform CFBank from atraditional thrift to a commercialbank. The institution’s loan growtheclipses the bankers’ projections of15% to 18% annualized growth inearning assets, Mr. Perry noted.

“There was a three-year period oftime that CFBank was doing noloans,” Mr. Perry said. “They (ourcompetitors) are not used to seeingus.”

The executives, who took the helmof the bank in late August 2012 fol-lowing a hard-fought effort to raise$22.5 million in capital by its parentcompany, Central Federal Corp.,plan to accelerate that growth. Andtheir plans, they say, will requirethem to contemplate raising morecapital in 2014.

They are working to secure a 10-year lease in Eton Chagrin Boulevardto open a loan production office inJanuary, which would be the bank’sfirst physical location so near toCleveland, and they could open asimilar office in Cincinnati in thefirst half of 2014.

“We’re trying to get our nameout,” Mr. Perry said. “Everyoneknows who Huntington is, and FifthThird. This is a game-changer righthere.”

The leadership also has doubledin less than six months CFBank’sstaff in Columbus to 34 people, andit’s gearing up to move the bank’smain office in Fairlawn. Mr. Perrysaid the bank accepted a “very fair”unsolicited offer for that buildingfrom Westfield Bank, which intendsto install a drive-up ATM and nightdrop at the branch and open in Jan-uary 2014.

Don’t get crazyCFBank may be delivering on its

growth plans, but bank regulatorshave reason to watch the companyclosely, said Kevin T. Jacques, whofor 14 years worked for the U.S. De-partment of the Treasury and is theBoynton D. Murch Chair in Financeat Baldwin Wallace University.

“As a former regulator, that kind ofgrowth catches my eye,” he said.

In addition, he said, CFBank haslost money for a few years, and its to-tal equity capital has dropped 5%since Dec. 31, 2012.

“The purpose of equity capital isto absorb unexpected losses that thebank encounters,” Dr. Jacques said.“What you’ve got here is a bankthat’s dramatically increased its loanportfolio, it’s currently losing money

and has been for years, and it actu-ally has less equity capital availableto absorb losses.

“Now, if the underwriting stan-dards are good — and this is whatexaminers should be paying atten-tion to — and the appropriate riskmanagement systems are in place,then regulators will say, ‘OK,’ andthey’ll breathe easier,” Dr. Jacquessaid. “We (at the Treasury) used totalk about banks like this a lot.Sometimes they work out well.Sometimes they don’t.”

The company has invested itscapital in growth and positioningthe bank for future growth, butcontinues to have a “cushion of

capital,” Mr. O’Dell said.CFBank hasn’t turned an annual

operational profit since 2008, butMr. Perry says it’s now “close tobreaking even operationally.” Thebank and its holding company re-main under regulatory cease-and-desist orders dated May 25, 2011,and Mr. O’Dell declined to specu-late when those may be lifted.

Messers. O’Dell and Perry saythey are not winning business withlow pricing, but instead becausetheir bank’s decision-makers makethemselves available to clients.And, Mr. Perry noted, they aren’tlending money to startups, but to“proven businessmen.”

“All loans carry risk,” Mr. O’Dellsaid. “We have a team here that hasa lot of experience making com-mercial real estate and C&I loans.We feel very good about the qualityof the loan growth.”

“We’re not going to do thingscrazy,” Mr. Perry added. “Everyweek, we pass on quite a number ofloans that clearly we could do, butthey don’t meet our criteria.”

Profits in the pipeline?Fred Cummings said he isn’t sur-

prised by or concerned about CF-Bank’s rapid loan growth. Thehedge fund Mr. Cummings leads,Elizabeth Park Capital Manage-

ment in Pepper Pike, owns a “smallposition” in the company.

“This is what we expected,” Mr.Cummings said. “But we do want tosee them get to profitability as soonas possible. You don’t want themlosing money and therefore reduc-ing their equity capital. You want tosee their equity capital grow.

“This is consistent with whatthey told potential investors whenthey were raising capital,” Mr.Cummings said of the company’shiring “experienced people” andgrowing loans. “They said, ‘Wehave a pretty good pipeline.’They’re doing what they saidthey’re going to do.” ■



A new way toA new way to

collaborate @

Join our online community for collaborationJoin our online community for collaboration

businessadvocate.mcdonaldhopkins.com

McDonald Hopkins LLC

Carl J. Grassi, President Shawn M. Riley, Cleveland Managing Member

r West Palm Beach

Gregory B. WestMichael J. Occhionero216-861-7200www.ostendorf-morris.com

SALE OR LEASE - 10574 RAVENNA ROAD, TWINSBURG

GGGGGGGGrrreeeaaaaattttttt OOOOwwwnnneeerrr///UUUUssseeerrr OOOppppppppppppppppppppppppppppppppppppppppppppppppooorrrrttttuuunnniiitttyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy

• 8,300 Total SF - .77 AC• 750 - 6,800 SF Available• Monument Signage

• Built in 1965 & 1986• Close Proximity to I-480,

Rts. 82 and 91

www.cbscuso.com

Providing Commercial Loan Financing in Partnership with Area Credit Unions SM

Aggressive Financing for Businesses and Investors

Loans up to $7,500,000Up to 10 Year Terms

Low Fixed Rates20-25 Year Amortization

Jonathan Mokri * 440.526.8700 * [email protected]

Connect to us:

The Power of Collaboration

Sequestration continues tosqueeze local manufacturersDefense, aerospace sectors still copingwith year-end cuts, shrinking militaryBy RACHEL ABBEY [email protected]

It hasn’t attracted the same head-lines as the government shutdownearlier this fall, but the federal bud-get sequester implemented in Marchquietly has been chipping away atsales of manufacturers and distribu-tors in the defense and aerospacesupply sectors.

Northeast Ohio companies saythey have been taking steps to with-stand the decrease in spending thisyear. Among them is OGS Industriesin Akron, a metal fabrication andstamping shop serving the aero-space and defense markets that hasbecome more aggressive on thecommercial side of its business whileworking to cut costs.

Likewise, Fredon Corp. in Mentor,a job shop that makes parts for missiles among its other work, hascut personnel in recent months.

For many vendors and the compa-nies they supply, it could be difficultto detangle the effects of sequestra-tion — across-the-board cuts thataim to trim more than $1 trillionfrom the federal budget over adecade — and general decreases indefense spending.

Dan Stohr, spokesman for theAerospace Industries Association inArlington, Va., said with two warswinding down, decreases in the defense budget already were on thehorizon; the sequester compoundsthe situation.

“Our primes (prime contractors)are very actively looking for ways tomake their operations leaner andmore efficient,” Mr. Stohr said.

Locked in on cutsAmong the companies looking to

get leaner is Lockheed Martin Corp.,the big defense contractor with aplant in Akron that employs about500 people. Last Wednesday, Nov. 6,the company informed nearly 600employees, including 16 in Akron,that they would lose their jobs as ofNov. 20.

In an email to Crain’s, Keith D. Little, a senior manager of media relations and public affairs for Lock-heed Martin, cited “continued uncertain program funding, delaysin contract awards and an extremelycompetitive market” as reasons forthe job cuts.

The company apparently hadbeen contemplating more drasticmeasures in Akron.

The Post-Standard in Syracuse,N.Y., on Oct. 31 published a storyabout a confidential consolidationplan — now reportedly tabled —from Lockheed Martin that suppos-edly would have shut down its Akronplant.

Mr. Little would not comment onthat plan or even confirm whether itexisted. He said the company hasmany contingency and crisis plansand provided via email the followingstatement about the Akron plant:

“Given the current sequestrationenvironment we have to look acrossour business and determine whatactions are required to maintain ourcompetitiveness and the health ofour business and restructuring is

one of the options we consider, butno decisions have been taken. In themeantime, Lockheed Martin opera-tions in Akron continue to work insupport of our customers and ourcountry.”

Trickle-down effectMr. Stohr of the Aerospace Indus-

tries Association, which representsabout 380 member companies, saidwhile the large companies eitherhave made or are planning cuts, it’sthe small suppliers that are hit “firstand hardest” by the sequester. Thesmaller members of the supply chaintend to have less diverse portfoliosand a tighter cash flow, Mr. Stohrsaid.

Roger Sustar, CEO of Fredon, saidFortune 500 companies have been

receiving less money in governmentcontracts as a result of the sequester.In turn, are asking their suppliers tolower prices for the next three years.

Orders this year at the precisionmachining company are downabout 10%, Mr. Sustar said, and salesstarted to decline last April. About15% of Fredon’s sales are in the de-fense industry, and 44% are in aero-space, including commercial air-craft, he said.

Fredon has let four or five peoplego in recent months, Mr. Sustar said.Because orders are down, the com-pany wanted to become a little moreefficient, he said. Employment at theplant is now at 81.

Michael Heil, president and CEOof the Ohio Aerospace Institute, saidresearch and development activitiesand the acquisition of new weaponssystems have been bearing the bruntof the sequestration cuts. Defensesuppliers had been doing wellthroughout the recession as the de-fense budget grew, he said, but sig-nificant downsizing was expected asthe country scales down from its re-cent wars.

“Sequestration makes it worse,”Mr. Heil said, noting that manufac-turers’ concerns about lower spendinglevels will continue into 2014.

Aiming for new opportunitiesFor some companies, the specific

effects of the sequester are hard topinpoint.

Gary Swanson was hesitant toplace blame for a slow 2013 specifi-cally on sequestration. But military-related sales have dropped this year

for Thermotion LLC in Mentor,which makes actuators and heatcontrol valves for vehicle platforms.

Mr. Swanson, the company’spresident and CEO, said Thermotionsaw a military contract come to anatural end this year, and a refit ofHumvees is expected to begin soon.He said sequestration may havesped the end of the first contract andpushed back the second project, buthe can’t know for sure.

He also doesn’t know if it’s hold-ing up the introduction of a Humveereplacement platform that couldmean business for Thermotion.

Defense likely will make up 10% to15% of the company’s sales this year,Mr. Swanson said, down from about30% a few years ago. With militarysales down and its commercial busi-ness flat, Thermotion is looking at adrop in sales this year of about one-third from sales in 2012, he said.

Diversification a mustRob Stohlman, vice president of

sales for Service Stampings Inc. inWilloughby, said he has seen a slightdip in the company’s military busi-ness, but that his company is diver-sified enough to weather it.

The 46-year-old short-run stamp-ing company always has prided itselfon a diverse customer base, he said.Together, the military and aerospacesectors make up only 10% to 12% of the company’s overall business,and even that is just because his customers also serve a variety ofmarkets.

“It’s really about diversification,”Mr. Stohlman said.

Thomas Bader, vice president ofOGS Industries in Akron, said thecontract job shop has survived bybecoming aggressive on the com-mercial side of the business.

Mr. Bader said OGS aims to keepany single customer from accountingfor more than 15% of its business. Ithas been shrinking its share of directgovernment work over the past threedecades, to about 4% today from15% in the 1980s, but it still serves alot of customers that work in the defense and aerospace sectors, Mr.Bader said.

To cut costs, OGS is consolidatingthe physical locations of some of itssubsidiaries; there are five total, hesaid, three of which will soon sharespace. The consolidation is not duedirectly to government cuts, as OGShas a continuous improvement plan,Mr. Bader said, but when companieshave higher sales, there is less needto cut spending. He noted that 2012was a good year for the company —but 2013 isn’t.

“The economy is not as robust aseveryone wants it to be,” he said. ■

Sustar

“Our primes (prime contractors) are very actively looking for waysto make their operationsleaner and more efficient.” – Dan Stohr, spokesman, Aerospace Industries Association

Heil

BIG CUTS

The bomb went off: Thefederal government approved a so-called sequestration bill that calledfor $1.2 billion in automatic, across-the-board spending cuts over 10years. The bill was meant to be atime bomb that would force Con-gress and the president to come upwith a compromise for how to holddown the federal deficit. But Con-gress and the administration haveyet to deal with the problem, andthe first of the staged sequestrationcuts have done into effect.


“When we built the budget in2013, we did not plan for as muchnew car lending as what we’ve expe-rienced,” said Ben Laurendeau, Fire-fighters president and CEO. “Thebalances are just getting back towhere they were a couple years ago.”

While the trend of declining con-sumer debt continued into the sec-ond quarter of 2013, the Federal Re-serve Bank of Cleveland reported inresearch dated Oct. 17 that twocomponents of overall debt rose na-tionwide from the first quarter to thesecond: auto loans (by nearly 7% to$800 billion in loans outstanding)and student loans (by less than 1%to $994 billion in loans outstanding).

Although the share of auto loansaccounted for by Ohio creditunions declined as other lendersreturned to the market, the OhioCredit Union League’s second-quarter summary reveals that as ofJune 30, the overall auto loan port-folio of Ohio credit unions was up13% from 12 months before.

“While our piece of the pie maybe shrinking, there’s more filling inthe pie,” said Patrick Harris, direc-tor of public affairs for the league.“I think there are two reasons forthat. One, people sat on their cur-rent car for a long time … not hav-ing the confidence to go out andbuy. Now, people are feeling moreconfident.”

And two, Mr. Harris said, interestrates remain low, so “even for thosewith lower (credit) scores, there aregreat deals to be had.”

Lenders get in gearIn what is the second straight

month of double-digit percentagesales gains for auto dealers in the 21counties served by the GreaterCleveland Automobile Dealers As-sociation, dealerships sold 19,508new vehicles in October, a 12.7%increase from 17,314 sold in Octo-ber 2012, the association reportedlast Friday, Nov. 8.

Association president Louis A.Vitantonio called the pace of sales“certainly good news for both fran-chised new vehicle dealers and ouroverall economy.”

Loan data make it clear it’s alsogood news for lenders.

According to Equifax’s recentNational Consumer Credit TrendsReport, the total number of autoloans outstanding in August —more than 61 million — reached a57-month high.

And, when it comes to capturingtheir share of those loans, local fi-nancial institutions aren’t idling.

Firefighters Community, whichlast quarter saw its volume of autoloans split roughly in half betweendirect and indirect auto lending, inMay 2012 raised the amount it willpay dealers for securing loans forthe credit union to 3% of a dealfrom 2%, Mr. Laurendeau said.

“That made us a little more com-petitive and allowed us to win a fewmore of those deals,” he said. “Wewere hungry for loan growth.”

The credit union also has reas-signed a staff member to work ex-clusively on underwriting autoloans because indirect lending re-

quires quick turnaround, Mr. Lau-rendeau said. That move occurredat about the same time that Fire-fighters initiated a contractual rela-tionship with an outside vendor todo underwriting for its membersoutside regular business hours.

Other lenders have continued hir-ing staff and opening physical loca-tions to cast a wider net for autoloan business.

Huntington roughly 60 days agohired a salesperson to add Iowa asthe 16th state in which it lends forauto purchases, said Mr. Stanutz,who also is a senior executive vicepresident. He attributes the bank’sauto lending success to technologyit invested in a decade ago to makeits processes fast, and he expects tobuild e-signature capabilities intothat process eventually.

RBS Citizens, which has grownits indirect auto loan originationsacross its 38-state footprint and inOhio, replaced in recent monthstechnology it uses to serve dealer-ships, said Brendan Coughlin, pres-ident of auto and education fi-nance. The “very material” capitalinvestment in the system enablesthe bank to provide better cus-tomer service, he said.

“I expect the competition to con-tinue to be intense for the foresee-able future,” Mr. Coughlin said.

Wary regulators lurkAccording to the third-quarter

report of LNB Bancorp Inc., theparent of Lorain National Bank, in-direct auto loans rose by 5.6% com-pared to the year-ago period. It is

growth LNB said mainly is due toloans generated by new dealer rep-resentatives in new markets withinthe states in which the companyoriginated loans.

LNB originates “high-qualityauto loans, defined as credit scoresgreater than 750, in Ohio, Ken-tucky, Indiana, Georgia, North Car-olina, Pennsylvania, and Ten-nessee,” according to thecompany’s third-quarter filing.

Quality is on bankers’ minds, asregulators are peering under thehood as auto lending accelerates.

The Federal Reserve Board asked“special questions” about subprimeauto lending in its October 2013 Se-nior Loan Officer Opinion Survey onBank Lending Practices. It foundthat only 10 of 95 respondents indi-cated they had originated such high-er-risk loans over the past year.

Meanwhile, the Consumer Fi-nancial Protection Bureau haswarned lenders that they are re-sponsible for unlawful, discrimina-tory pricing by dealerships throughwhich they do indirect lending. Atleast one — Ally Financial Inc. —has revealed it was told it didn’ttake adequate steps to prevent autodealers from violating laws againstdiscrimination in lending.

While local institutions say theystop short of subprime auto lend-ing, they report competitors are do-ing it. They also say they’re seeingan extension of loan terms tolengths of up to 84 months in orderto lower customers’ payments andmake loans more affordable.

The latter trend isn’t a real worryto Cindy Balser because cars arebuilt differently and last longer to-day, said the group manager forKeyBank’s consumer credit prod-

ucts, including auto lending.Cleveland-based KeyBank has

enjoyed multiyear growth in directauto loans: So far in 2013, the bankhas experienced 13% more origina-tions than it did in all of 2012. In2012, auto loan volume was up 30%from 2011, when loan volume rose33% from 2010, executives say.

KeyBank stopped doing indirectauto lending several years ago.

Deposit-hungry FightfightersLeasing is the form of auto fi-

nancing Bob Laughton haswatched grow most in the last year,albeit slightly, said the director of fi-nancial services for The CollectionAuto Group, a chain of 24 dealer-ship franchises based in NorthOlmsted.“Manufacturers, in gener-al, I believe would prefer that youlease,” Mr. Laughton said. “You getmore repeat business that way.They (customers) are more apt tocome in sooner.”

Collection Auto Group is on pacefor a record year in terms of unitssold, Mr. Laughton said, thoughmuch of that growth is driven byacquisitions that added locations,including in Akron a few weeks agoand in Fort Mitchell, Ky., lastmonth.In an interesting twist, loangrowth at Firefighters CommunityCredit Union — both in homemortgages and auto loans — isspurring an effort that hasn’t beennecessary in a long time.

The credit union embarked onits first campaign in three years toacquire more deposits, Mr. Lauren-deau said, because its loan growththis year of 6% has outpaced de-posit growth of less than 2%.

“I couldn’t tell you the last timewe ran a CD promo,” he said. ■


continued from PAGE 1

Growth: Auto loans outstanding are up


Chylla, a partner at the AdcomGroup in Cleveland, which workedwith the Clinic on its commercial. Itwouldn’t be hard to let viewersplace orders via the remote, he said.After all, pay TV providers alreadyhave viewer addresses, and they of-ten have their credit card numbers,too.

“In the future, I could see themgoing in that direction where TV be-comes a real direct response medi-um. … That’s where I could see thetrue value and that’s how we wouldsell this technology to some of ourclients,” Mr. Chylla said.

The Clinic’s interactive ads,which aired in October, asked view-ers to watch a video designed to getthem to feel the emotional ups anddowns that patients and health careproviders go through at the hospi-tal. A version of that video has morethan a million views on YouTube.

Ms. Chylla would not say howmany people clicked through to thevideo in Time Warner Cable’s OnDemand video library. He sees theinteractive ad as an experiment de-signed to engage the viewer, he said,adding that Adcom “would definite-ly explore” using the technologywith other clients.

The health reform videoHealthSpan promoted through in-teractive ads in September got moreviews than any of the other healthcare-related videos the companyhas created for Time Warner Ca-ble’s On Demand library.

That’s partly because the tech-nology made it easier for viewers toget the video panel discussion, ac-cording to Audra Kessler, director ofmarketing communications for thehealth care services provider. Mostof the other videos were promotedin commercials that told viewers tocheck out channel 497, “Health onDemand.”

The video itself might have beenmore appealing, too: The companyran another interactive ad last yearthat didn’t get nearly as manyclicks, said Ms. Kessler, who would-n’t say how many people watchedthe video.

The technology gives HealthSpan“measurable insight” regardingwhat consumers find interesting,she said. It also helps the companystand out.

“It’s a way we differentiate ourbrand in a noisy, cluttered market-place,” she said.

Ready for a contest?Marc’s asked viewers whether

they could identify its new slogan.They couldn’t — at first.

When the discount retailer ran itsfirst interactive campaign in July2012, viewers chose the correct slo-gan only one-third of the time,which wasn’t impressive consider-ing that they had three choices. Butduring a second interactive ad cam-paign that aired a few months later,nearly half the responses came backcorrect, according to Marc’s mar-keting director Day Armelli.

The technique gave Marc’s hardevidence that viewers were graspingthe new “Fresh Savings, Smart Liv-ing” slogan, Ms. Armelli said. It alsoshowed viewers on some channelspay more attention to commercials.For instance, the interactive ads re-ceived a bigger response on Come-dy Central than they did on theFood Network. Ms. Armelli’s theoryis that people are more likely towatch the Food Network passively.

“The success of the program real-ly depends on the engagement ofthe audience,” she said.

Marc’s could use the technologyagain at some point, Ms. Armellisaid, noting that the pop quiz for-mat could serve various purposes.

“It could be a fun thing. It couldbe a contest,” she said.

It’ll cost youTime Warner Cable’s advertisers

must pay a fee to make their com-mercials interactive, said MichaelBrandt, director of integrated mediafor Adcom. Neither the cable com-pany nor Adcom would providemore detailed pricing information.

Connecting the commercial to alonger video increases the cost. Notonly must advertisers produce thatvideo, but, at least for those workingwith Time Warner Cable, they alsomust pay to house the video in thecable company’s On Demand videolibrary, Mr. Brandt said.

Small businesses might not beable to afford it, he noted.

“There are hard costs associatedwith running this type of cam-paign,” he said. ■

Last year, however, Time WarnerCable Media started selling interac-tive ads that specifically targetviewers who use its digital cableservice in Northeast Ohio. Sincethen, the cable company’s advertis-ing arm has sold interactive ads toabout a dozen local organizations,including Marc’s, the Ohio Lottery,the Cleveland Clinic and the Ohiooperations of health care servicesprovider Kaiser Permanente, whichis now called HealthSpan.

Both Marc’s, which operatesmore than 60 stores in Ohio, andthe Ohio Lottery used interactiveads to ask viewers questions, allow-ing the organizations to gauge theeffectiveness of their marketing ef-forts.

The Clinic ad encouraged view-ers to push a button to watch alonger video about empathy that al-ready is wildly popular onYouTube. Likewise, the HealthSpanspot directed viewers to a video thatfeatured doctors discussing howthe health reform bill often de-scribed as Obamacare would affectthe health care industry.

Nationwide, experiments withinteractive commercials startedseveral years ago.

As early as 2008, a few companieshad run interactive ads allowingviewers to order brochures,coupons and even buy products,according to a USA Today storypublished at the time.

Separating from the crowd

Expect their use in marketing toaccelerate as federal regulators cre-ate more defined rules related to in-teractive ads, according to Loren


5605WestLakeRd.HowardHanna.com

Waterwood Estate is the largest privately owned lakefront property in

home and grounds have both commercial and residential development potential. Contact Greg or Wendy for a truly unique touring experience!

Waterwood5605 West Lake Road Vermilion, Ohio 44089

1 5 6 A c r e s

P o t e n t i a l C o m m e r c i a l D e v e l o p m e n t

R e s i d e n t i a l P r o p e r t y

2 , 3 0 0 f e e t o f P r i v a t e B e a c h F r o n t

For more information on exclusive Homes of Distinction, contact:Greg Willis – Mobile: 216-389-9715 – Email: [email protected]

Wendy LaForce Zambo – Mobile: 440-361-0606 – Email: [email protected]

Ads: Viewers likely will be able to make orders via their remote continued from PAGE 3

CONTRIBUTED PHOTO

Marc’s is using its interactive ads to ask viewers questions.

“In the future, I could seethem going in that direction where TVbecomes a real direct response medium. ...That’s where I could seethe true value and that’show we would sell thistechnology to some ofour clients.” – Loren Chylla, partner, AdcomGroup

WHAT THEY’RE SAYINGABOUT INTERACTIVE ADS

“It’s a way we differentiate our brand in a noisy, cluttered marketplace.” – Audra Kessler, director of marketing communications,HealthSpan

“There are hard costs associated with runningthis type of campaign.” – Michael Brandt, director of integrated media, Adcom Group


By CHRIS SWEENEYRubber & Plastics News

Demand for products with longer life, few-er leaks and less weight drives Parker Han-nifin Corp.’s Engineered Materials Group tofocus on innovative products.

Andy Ross, the group president, said a slug-gish world economy with slow or almost nogrowth puts a greater emphasis on marketshare and innovation.

Through his first year leading the business,he is pleased with the progress it has made.

“I was building from a position ofstrength,” Mr. Ross said. “We have a cultureof continuous improvement regardless ofhow we perform. We’re constantly looking fornew ways to innovate.”

Mr. Ross had a number of goals when hetook over the group in June 2012. He wantsParker to be the safest place to work in theworld, gain market share, implement and ex-ecute new strategies for success, recruit talentand develop employees for long-term suc-cess.

He also wants each of the 10 divisions with-in the Engineered Materials Group to be thebest in its industry — the Chomerics, Com-posite Sealing Systems, Engineered PolymerSystems, Engineered Seals, Integrated SealingSystems, Medical Systems, O-Ring, O-Ring(Europe), Packing (Europe) and TechSeal

divisions.The group changed its name from Seal

Group to Engineered Materials Group in July.The rationale was to open up business oppor-tunities for the other types of products — be-yond seals and gaskets — the group offers.

“We’re so much more than seals from aproduct standpoint,” Mr. Ross said. “We tooka step back and looked at who we are andwhat we want to be. Our material science de-velops and markets materials to meet cus-tomer needs. We want to continue to leverageour material science capital to meet the needsof the customer.”

Prepared for the jobMr. Ross said nothing about his new role

has surprised him.That’s probably because he has been in the

industry for 24 years, starting his career withW.S. Shamban. He joined Parker nine yearslater in 1998 as a product manager for the En-gineered Materials Group. He eventually be-came national sales manager, then vice pres-ident of sales and marketing.

He was promoted to general manager forthe Integrated Sealing Systems Division, andin 2007 was appointed general manager of

the Hydraulic Valve Division — one of Park-er’s largest industrial operations.

Mr. Ross switched gears in 2011 and be-came vice president of operations for the Hy-draulics Group before a slew of retirementsput his current position in play a year later.

“Parker doesn’t like to grow in silos,” Mr.Ross said. “We like to give our people cross-departmental experience.”

It didn’t take Mr. Ross long to assimilateagain with the group with which he has spentmost of his time. Nor did it take him long todrive new strategies — to be No. 1 in cus-tomer service and achieve profitable growth.To accomplish those goals, the group strivesfor 95% or better on-time delivery, 15% oper-ating income and 20% or better market share.

Mr. Ross cited a strong distributor networkas a critical element to the company’s growth.Parker has more than 300 distributors globally.

“Our distribution is second to none,” Mr.Ross said. “We have a lot of companies whoenvy it and try to replicate or infiltrate it.”

Parker’s global presence provides many di-verse opportunities for employees, some-thing Mr. Ross says the company leveragesevery time it tries to attract new talent. Hesaid the wealth of opportunities for employ-ees worldwide is a strength Parker uses tokeep its employees challenged and focused.

“The people are the business’ strength,”Mr. Ross said. “We have lots of talented, ex-perienced and hardworking people who workaround collective goals. Our people are by farthe best in the business. We do everything wecan to empower people to make the best decisions possible.” ■

(Chris Sweeney is a reporter with Rubber &Plastics News, a sister publication of Crain’sCleveland Business.)


CHRIS SWEENEY

Andy Ross assumed his position as the group president of Parker Hannifin Corp.’s Engineered Materials Group in June 2012.

Parker Hannifin sealing its place among industry’s ‘best’Group president settinglofty goals for company,which must always find‘new ways to innovate’

20131111-NEWS--9-NAT-CCI-CL_-- 11/8/2013 8:33 AM Page 1

Re: Nov. 5 election results■ I just cannot afford to live in Cuya-

hoga County anymore.As of last night (Nov. 5), my taxes went

up another $500 a year. My salary justcan’t keep up with the rate at which tax-es are being raised.

My wife and I decided that we are go-ing to start looking to leave this county,sooner rather than later. Thanks to all thepoliticos and tax-hungry entities that justtaxed me out of my county. — Jon Ortiz

■ We are the highest taxed county inthe state already.

People are voting with their feet andleaving this area. We must start thinkingabout lowering the cost of living inNortheast Ohio, not continually increas-ing it if we want to reverse the trend ofpeople leaving. — Ed Oliveros

Re: Cleveland SkyLift■ I truly hope that Jon Stahl’s propos-

al for the downtown Cleveland SkyLift

comes to fruition.Cleveland would benefit from work-

able out of the box ideas such is this. Thecity needs to start doing things that arenot yet common elsewhere, instead ofcoming late to the party or not at all. —Ron Edwards

Re: Renewable energy■ Actually, a rigorous study by the Na-

tional Renewable Energy Lab concluded:“Renewable electricity generation fromtechnologies that are commerciallyavailable today, in combination with amore flexible electric system, is morethan adequate to supply 80% of total U.S.electricity generation in 2050 whilemeeting electricity demand on an hourlybasis in every region of the country.”

The subsidies for the energy industry

are common because they create socialgoods: jobs, increased tax base andpower, and they are common in fossilfuel and nuclear as well.

So tell me, dear readers, what’syour bet on which Washingtonmechanism will implode first —the Republicans’ tea par-

ty faction or the president’s em-battled health care initiative?

Last week, Health and Hu-man Services director KathleenSebelius was dragged beforecongressional committees totake the heat for the woefullitany of problems with thewebsite intended to help peoplepursue insurance options un-der the Affordable Care Act.

As we know all too well, the websitelaunch was a ridiculous failure, some-thing that only the public sector couldpull off so spectacularly. How can Yahoo,Google, Facebook and Twitter operatewith such efficiency while serving somany more people on the web?

Why, when it was clear this site wasn’tgoing to work, didn’t they pull the plugand delay the rollout? My only conclu-sion, and it appears to be a commontheme in this administration, is that theydidn’t want to deal with the politicalbacklash from their Republican critics

about delaying yet another element ofthe program.

Well, that worked out pretty well, now,didn’t it? Instead of the week orso of talking points that the op-ponents would have lobbedagainst the Affordable Care Act,now the administration hasbeen hearing it for five weeks,with no end in sight. Worse yet,some Democrats are joiningthe chorus, and the president’sjob approval fell to an all-timelow of 42%, according to a WallStreet Journal/NBC News poll.

We should have seen this coming,when the rules and regulations that ac-companied the act ended up at morethan 20,000 pages. How on Earth couldthis have been made any tougher?

In the meantime, the Grand Old Partyhas seemed to lose patience with its ul-tra-conservative tea party group. Afterthe debt showdown and the governmentshutdown were blamed on the tea partyfolks, Republican Party leaders begancircling their wagons. They know theyhave a serious issue after a deeply con-servative Republican lost the governor-

ship of Virginia, and they’re very worriedabout a handful of Senate races nextyear.

The Republicans know that in order towin back the White House, they must re-create their party and win more womenand minority voters. That just will nothappen if they allow the tea party radi-cals to continue their march to self-de-struction.

On the flip side, the White House andthe supporters of its Affordable Care Act(such as those hospitals that finally stooda chance at being paid for some of theenormous amount of services they pro-vide the poor) are wondering what’s go-ing to happen. Simultaneously, hospitalsare consolidating like crazy and will con-tinue to shed thousands of jobs, the kindof well-paying professional positionsthat every community needs in thisweek-kneed recovery of ours.

The president and his team have anenormous amount of work to do to savethe Affordable Care Act and its credibili-ty. The Republicans, meanwhile, mustfight their own fires set by their rebel rel-atives. Where this dance stops is any-body’s guess. ■


Ballot bloatD

espite concerns among civic leaders thatCuyahoga County might suffer from levyfatigue and reject one or more of threecountywide tax issues on last week’s bal-

lot, voters passed all three by big margins. For that,county residents deserve an big — make that enor-mous — round of applause.

Now, local leaders must work to develop a coordi-nated approach to bringing future tax issues beforethe public so they can avoid multiple proposedlevies on a single ballot.

It’s hard to convince voters to impose one tax onthemselves, much less three. And, in communitiesin Cuyahoga County where a city and/or its schooldistrict also had a levy on the ballot, voters wereasked to pass four or five tax issues at the same time.

The competing appeals for taxpayer support frommultiple public bodies not only dilutes the mes-sages of each group, but also risks property ownerssaying “to heck with them all.”

It is remarkable, then, that the tax issues forCleveland Metroparks and the Cleveland-CuyahogaCounty Port Authority as well as the CuyahogaCounty health and human services levy all passed,with their margins of victory ranging from 9% to39%. It is an especially surprising outcome becausethe levies for the Metroparks and the county’shealth and human services operations both weretax increases.

Joe Roman, president and CEO of the GreaterCleveland Partnership, said his chamber of com-merce group supported the campaigns of all threelevies — as well as a successful levy campaign forthe Cleveland Public Library — because “they areconnected with our agenda.” However, as Mr. Ro-man was quick to acknowledge last week, “We got alittle lucky.”

Mr. Roman shares our belief that local govern-ments and county agencies that depend on taxlevies for all or part of their operating revenue couldbenefit from the creation of a comprehensive, long-term schedule for levy issues. He talks of building “adecade-long calendar” for levies that would helpminimize the number of taxing bodies asking votersfor money at any one time.

“It is in everybody’s best interest not to be depen-dent on being fortunate,” Mr. Roman said.

There is no formal movement yet toward conven-ing civic leaders and public officials in CuyahogaCounty in order to come up with a plan for rollingout tax issues in a more orderly fashion. If such talksever materialize, participants might want to look inCincinnati’s direction at Hamilton County’s TaxLevy Review Committee. It is charged by the coun-ty’s board of commissioners with studying each levyrequest and advising the commission on whichcountywide levies should appear on the ballot, theappropriate revenue a levy should generate, and theappropriate duration of each levy.

Cuyahoga County doesn’t need to pattern itselfprecisely after Hamilton County. However, we’dagree with Mr. Roman that “without a morethoughtful process of how we approach voters (withlevy issues), we will lose things we shouldn’t lose.”Creating a mechanism for that thoughtful processto occur could yield more success at the ballot boxfor all taxing authorities.

FROM THE PUBLISHER

TALK ON THE WEB

BRIANTUCKER

D.C.’s sad merry-go-round ride continues

OPINION

PUBLISHER/EDITORIAL DIRECTOR:Brian D.Tucker ([email protected])

ASSOCIATE PUBLISHER/EDITORIAL:John Campanelli ([email protected])

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

POLL POSITIONSHow would you characterize your holiday spending plans

for this year?I’ll spend more than 2012.

I’ll spend about the same.

I’ll spend less.

16.0%

46.0%

38.0%

Vote in the poll each week at CrainsCleveland.com.

Reader responses to storiesand blogs that appeared on: www.crainscleveland.com

See WEB Page 11


By WILLIAM FRIEDMAN

The world is getting smaller,we are transitioning to aglobal economy, and theInternet is usually identi-

fied as the root cause. But when itcomes to connecting localeconomies to a worldwide market-place, one indispensible element isoften overlooked: water.

With the recent announcementof the Port of Cleveland’s newCleveland-Europe Express FreightService, a regular, non-stop cargoroute between Cleveland andNorthern Europe, we laid thegroundwork for using Cleveland’sconnection to water to build a clos-er connection between NortheastOhio’s manufacturing base and avast market for its goods.

By volume, 90% of the goodstraded throughout the world aretransported over water. Cargo linerservices travelling regular routestransport more than 60% of globaltrade. They carry more than $4 tril-lion in goods each year to and fromcities with navigable ports.

Despite being connected to theworld’s waterways by our lakes andthe St. Lawrence Seaway, for themost part, cities of the GreatLakes/Seaway basin have been onthe outside looking in at the systemof containerized maritime trade.

Without a doubt, our Great Lakesports play a huge role in our localeconomies. The Port of Clevelandand Cleveland Harbor alone see 26billion pounds of bulk cargo travelthrough their waters each year, sup-porting $1.8 billion in economic ac-tivity and 18,000 jobs. But the eco-nomic potential for containerizedcargo trade through our GreatLakes’ ports remains almost entire-ly unrealized.

The Great Lakes-St. LawrenceSeaway System has been signifi-cantly underutilized as a navigationroute for decades, especially con-sidering the size and economicstrength of our region, which has aneconomy that is larger than all butthree countries in the world.

As a result, instead of taking the

quicker, less expensive route ofshipping through the Great Lakesand the Seaway, Midwest manufac-turers ship overland by truck andtrain to ports on the East Coast. Thisadds days and additional costs totheir deliveries, making Midwestmanufacturers less competitivethan they could be and denies Mid-west cities the jobs and revenue thatwould be generated if these goodswere shipped through local ports.

This has been the status quo fordecades. With the introduction ofCleveland-Europe Express FreightService, we are beginning to movetoward a more competitive envi-ronment for Midwest manufactur-ing and cargo transportation.

Next spring, the Cleveland-Eu-rope Express will begin transportingcontainerized and break-bulk cargoon a regular non-stop route be-tween Cleveland and Northern Eu-rope through the St. Lawrence Sea-way — the H2O highway thatconnects the Great Lakes to theNorth Atlantic shipping lanes. It willestablish the Port of Cleveland asthe only port with scheduled inter-national container service in theGreat Lakes.

The Cleveland-Europe Expresswill shave days off of the time ittakes Midwest manufacturers toreach the European market. Andbecause it will be a regular service,manufacturers will be able to easilyintegrate the Cleveland-EuropeanExpress into their shipping sched-ules. It will increase the competi-tiveness of area companies, openup new opportunities, and createand support new maritime and re-lated jobs.

The Cleveland-Europe Expresswill carry between 250,000 to400,000 tons of cargo per year,which is a volume equal to approx-imately 10% to 15% of Ohio’s tradewith Europe and which will gener-ate an estimated 360 new jobs, $34.4million in new personal income,$16.6 million in business revenue,


SALT • SALT • SALT• Water Softener • Industrial • Food

• Ice Melt • Sea Salt

Call For Pricing!!Minimum Delivery: 1Pallet

1-800-547-1538Salt Distributors Since 1966

Interested in leasing the best views in Cleveland? Contact: Kayce Kasten - 216.839.2008

HannaChartwell.com

1301 E. Ninth St. Cleveland, OH

Smart space. Views included.

LIFELIFE&Galleria Tower

Furnished -- Priced far below market -- One story buildingFormer PNC/National City Comptroller BuildingOffice Ceilings 9 ft. - Bottom of Deck 18’9” (1) Dock

CALL 216-469-6170 [email protected]

Office 28,300 Sq. Ft.Close to Airport, I-480 & I-71

Mr. Friedman is president and CEO of the Cleveland-Cuyahoga CountyPort Authority.

Finally, our low natural gas pricesare not sustainable and will rise sig-nificantly in the near future. Ensur-ing a blended portfolio of cleanerand more renewable power genera-tion and efficiency makes sense andgives manufacturers predictability inpower pricing.

SB 58 will set the state back andslow our economy. — John Colm ofWIRE-Net

Re: Downtown office shuffle

■ Cleveland is not use to this typeof checkerboard moving that othercities see.

The good part will come when italso involves other entities movingdowntown — a very big trend inmany cities. Let’s help downtowncontinue to grow by supportingthese happenings. — Neil Dick

Re: New John Carrollchair in business ethics

■ They should have established achair in GOVERNMENT ethics! — Kenneth Lapine


Web

PERSONAL VIEW

Bridging the gap via water

and $3.34 million in state and localgovernment revenue.

At this level of tonnage, the Cleve-land-Europe Express will not, by it-self, tear down the barriers keepingMidwest ports from participatingmore fully in the enormous globalcontainerized cargo economy. But itwill provide proof-of-concept for acontainerized cargo market in theGreat Lakes.

Once the Cleveland-Europe Ex-press proves to be successful, otherswill begin to see that there is moneyto be made tapping into even a tinyportion of the $4 trillion container-ized cargo market. Others will in-evitably get into the business and themarket for containerized cargo de-livery in the Great Lakes will start togrow. And, gradually, the GreatLakes-Seaway basin will grow a baseof stakeholders interested instrengthening and supporting thisindustry.

The first step toward this beginsthis spring in Cleveland. The mean-ing of the words we think best de-scribe the introduction of this ser-vice has been diluted by over-useand exaggeration, but in this case,we mean them literally: the Cleve-land Europe Express is both ground-breaking and game-changing.

Creating a new market is a daunt-ing proposition, but in this case, giv-en the potential return, the effort iswell worth the risk. It is our hope thatregional businesses, governmentsand communities support the Cleve-land-Europe Express, not just for theservice it will provide, but also forwhat it means for our area in thelong run. It is our further hope thatothers quickly choose to emulate theCleveland-Europe Express and helpus grow this new industry in theGreat Lakes. ■

By volume, 90% of thegoods traded throughoutthe world are transportedover water.


■ Nolan Beck, a third-yeargraphic design student at theCleveland Institute of Art who re-cently launched a creativestudio called Matter, creat-ed a partial vehiclewrap design for AveryDennison that was dig-itally printed and in-stalled on a 2014Jaguar F-Type convert-ible displayed at the re-cent Specialty GraphicImaging Association Expo inOrlando, Fla.

The SGIA Expo provides graphicsinstallers and professionals the op-portunity to see the full spectrum ofimaging technologies and applica-tions for the screen, digital, graph-ic and garment businesses, accord-ing to an Avery Dennison newsrelease.

Mr. Beck’s design “highlights our‘Film It – Imagine what you can do’campaign perfectly,” said Joel Ross,senior manager of global marketingcommunications at Avery Denni-son Graphics Solutions. He added,“With Nolan’s creativity, the colorgamut and excellent print perfor-mance of the film is ideally show-cased.”

In the release, Mr. Beck said,“The opportunity to work with aFortune 500 company like AveryDennison, while in school, is in-

credible.” He said that after gradu-ating from the Cleveland Instituteof Art, he’d like to work “at a smallstudio doing branding work.”

His new Matter studio special-izes in corporate and personalbranding.

■ The Union Club of Clevelandsaid it was awarded the

“Distinguished Emer-ald Club of the World”award, as determined

by the annual Distin-guished Clubs of the

World award programconducted by Board-Room magazine, a

trade publication that cov-ers private clubs.

The Distinguished Clubs awardprogram “uses a club-specific rat-ing system based on an extensiveevaluation process that distills andmeasures a club’s member experi-ence,” according to the UnionClub.

“Our staff’s delivery of person-able and professional service to ourmembers is second nature forthem” said Union Club generalmanager Claudio Caviglia in astatement. “Our members are sospirited about their club and havefun making it their own. We alsohave over 140 members serving on14 committees that have trans-formed the club to what it is today.”

The Union Club was establishedin 1872.

■ Energy Focus Inc. of Solon

said it has created an advisoryboard to be comprised of leadingexperts in government and com-mercial markets.

The board will “help us penetratesignificant market segments bybringing key industry insights andconnections to critical decision-making networks to Energy Focusas we grow our LED retrofit busi-nesses,” said James Tu, Energy Fo-cus executive chairman, in a state-ment.

The first member of the board isRear Admiral Kendell Pease, whoserved 30 years in the U.S. Navyand spent 15 years with GeneralDynamics as the company’s vicepresident of government relations.

“His vast wealth of experience

and understanding of Navy andgovernment contracting proce-dures will be invaluable in our ini-tiative to expedite LED adoptionthroughout the military fleet,” Mr.Tu said.

In a statement, Mr. Pease calledEnergy Focus’ LED technology “animportant element in fosteringgood economics for the Navy, andit’s also equally important as astrategic factor in elevating fleetreadiness upon which we all rely.”

■ ERC, the Employers ResourceCouncil, has moved its offices to387 Golf View Lane, Suite 100, inHighland Heights, from MayfieldVillage.

The new office is off the Bishop

Road exit on Interstate 90 and over-looks the 9th fairway of theStonewater Golf Course.

The new space holds ERC’s of-fices, training center and HR li-brary. It keeps “the colorful, vibrantatmosphere that ERC is knownfor,” the organization said, and thetechnology enhancements “make iteasy for staff and guests to stay con-nected and work more efficiently.”

Pat Perry, president of ERC, saidin a statement, “We believe ournew offices and training center willallow us to provide an improved ex-perience for our guests, training at-tendees and ERC employees.”

■ Caruso’s Coffee, a family-owned wholesale coffee roastingcompany in Brecksville, said it re-cently received SQF Series 2 third-party audit certification.

The company said the SQF certi-fication “ensures our productsmeet global food safety initiativesthat provide assurances our cof-fees, processes and service complywith regulatory, international andscientifically proven standards forsafety and traceability.”

In addition to its focus on safety,SQF “allows suppliers like Caruso’sCoffee to demonstrate their excel-lence in adhering to the highestquality standards of preparation,processing and handling,” thecompany said.

Send submissions for Bright Spots tomanaging editor Scott Suttell [email protected].


Global Innovation Leadership

Wednesday, Nov. 20, 2013

6:30 p.m.

Reception immediately following

Kent State University Hotel and Conference Center

This event is FREE and open to the public.

MICHAEL D. SOLOMON SPEAKER SERIES

with Joakim Wincent, Ph.D.Wednesday, Nov. 20, 2013 6:30 p.m.Kent State University Hotel and Conference CenterThis event is free and open to the public

Learn how small firms can use entrepreneurial practices to remain at the forefront of innovation from visiting leading Swedish researcher Joakim Wincent, Ph.D., the newly appointed Bridgestone Chair of International Marketingat the College of Business Administration.

From Kent, the World.

To register or for more information, contact:Center for Entrepreneurship and Business Innovation College of Business Administration330-672-9430 [email protected] www.kent.edu/cebi

Global Innovation Leadership

Kent State University is committed to attaining excellence through the recruitment and retention of a diverse student

body and workforce. Kent State University, Kent State and KSU are registered trademarks and may not be used without permission. 13-2750

Joakim Wincent, Ph.D.

BRIGHT SPOTSBright Spots is a periodic feature

in Crain’s highlighting positive business developments in the region.

To submit information, email ScottSuttell at [email protected].

CONTRIBUTED PHOTO

Nolan Beck, a student at the Cleveland Institute of Art, designed this vehiclewrap for Avery Dennison.



TAX LIENSThe Internal Revenue Service filed taxliens against the following businessesin the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federalgovernment. The lien is a public noticeto creditors that the government has aclaim against a company’s property.Liens reported here are $5,000 andhigher. Dates listed are the dates thedocuments were filed in theRecorder’s Office.

LIENS FILED

Complete Home Health Services Inc.25000 Euclid Ave., Suite 206, EuclidID: 34-1965686Date filed: Oct. 1, 2013Type: Employer’s withholding, unemploymentAmount: $14,730

Custom Health Care Professionals5247 Wilson Mills Blvd., Suite 125,ClevelandID: 34-1875479Date filed: Oct. 1, 2013Type: Employer’s withholding, unemploymentAmount: $12,623

Pro Construction Co.P.O. Box 81294, ClevelandID: 34-1643463Date filed: Oct. 1, 2013Type: Employer’s withholding, unemploymentAmount: $11,264

Home Corporation of Ohio Inc.3401 Enterprise Parkway, Suite 341,BeachwoodID: 26-1758056Date filed: Oct. 1, 2013Type: Employer’s withholding, corporate incomeAmount: $7,599

Ohio Therapy Services LLC4635 Richmond Road, Suite 102,ClevelandID: 45-2892419Date filed: Oct. 1, 2013Type: Employer’s withholding, partnership incomeAmount: $6,531

LIENS RELEASED

Platinum Plumbing Inc.5914 Ridge Road, ParmaID: 52-2385110Date filed: June 26, 2013Date released: Oct. 1, 2013Type: Employer’s withholdingAmount: $30,564

Precision Pump Inc.2500 W. 3rd St., ClevelandID: 34-1712054Date filed: Jan. 24, 2008Date released: Oct. 1, 2013Type: Employer’s withholdingAmount: $83,010

R J Evans & Assoc Inc.31035 Cannon Road, SolonID: 34-1163720Date filed: July 20, 2009Date released: Oct. 1, 2013Type: Employer’s withholdingAmount: $10,155

RJL Waterfront Holdings I Ltd1148 Main Ave., ClevelandID: 32-0035888Date filed: Sept. 7, 2011Date released: Oct. 1, 2013Type: Employer’s withholdingAmount: $27,504

Rybak & Associates Inc.21821 Libby Road, Suite 102, BedfordID: 03-0514289Date filed: July 9, 2013Date released: Oct. 1, 2013Type: Employer’s withholding, unemploymentAmount: $22,074

Steelastic stays in Akron, has more room to growBy CHRIS SWEENEYRubber & Plastics News

Steelastic Co. is building a newheadquarters in Akron, relocatingseven miles from its current loca-tion in a move centered ongrowth.

“The main reason was for ourgrowth and anticipated additionalgrowth,” said Steelastic presidentPaul LaMantia. “It’s going to dou-ble our assembly space, which willallow us to respond to our cus-tomers quicker.

“We will also have more effectiveassembly space than we currentlydo,” Mr. LaMantia said. “We’ll alsoquadruple our space for engineer-

ing and development for new products.”

Steelastic will share the newbuilding at the Ascot IndustrialPark with another Heico Cos. sub-sidiary, RMS Equipment LLC. Thetwo companies currently arespread out over four buildings.

Steelastic has set a target com-pletion date for the building of ear-ly in the third quarter of 2014.

The entire manufacturing area ofthe new building will be undercrane, said Armand Massery, Stee-lastic continuous improvementmanager.

At present, two of the threebuildings Steelastic is using do nothave cranes, while the other uses

just one crane. The headquarterswill have four that also will be ableto handle more weight, Mr.Massery said.

The new headquarters will in-clude expanded lab and develop-ment areas, which Mr. LaMantiasaid will be used to continue to dif-ferentiate and add to the compa-ny’s product line.

The company is spending multi-ple millions of dollars on the newheadquarters. Mr. LaMantia saidSteelastic and RMS Equipment willmake the investment through par-ent firm Heico.

Steelastic is committed to re-maining in Akron.

“We considered other sites in the

Akron area,” Mr. LaMantia said.“Akron brings the expertise in thearea, machine-building experience,tire and rubber experience, theUniversity of Akron, and we want-ed to maintain our current workforce.”

David Pelligra and Architects Inc.is designing the new building. Mr.Massery said the company has alongstanding partnership with thearchitect firm, and Steelastic used itfor previous growth initiatives with-in its current operation. ■

(Chris Sweeney is a reporter withRubber & Plastics News, a sisterpublication of Crain’s ClevelandBusiness.)



Colliers International in ClevelandWelcomes Michael Weiss

The Cleveland office of Colliers International is pleased to welcome Michael Weiss to their organization as a Senior Associate in the Retail Services Group. He will specialize in tenant and landlord representation for retail users. Michael comes to Colliers with over 8 years of experience in many facets of the commercial real estate industry, including investments, site selection, build-to-suit, land acquisition, and lease negotiations. He has worked with many local and national retailers, including Little Caesar’s Pizza, Beef `O’ Brady’s, and AAMCO Transmissions, as well as national developer The Hutton Company. Michael is also active in ICSC and is pursuing his CCIM designation.

Michael WeissSenior AssociateRetail Services Group

Main +1 216 239 5060Dir +1 216 239 [email protected]

GOING PLACESJOB CHANGES

ARCHITECTUREKACZMAR ARCHITECTS INC.:Christine Mason Raymond to principal.

FINANCIAL SERVICEGE CAPITAL, CORPORATE FINANCE: Joe McMullin to seniorvice president, equipment finance.PACKER THOMAS: Mark J.Patrick to principal. SEQUOIA FINANCIAL GROUP LLC:Russell Moenich to managing director, Asset Management Department.WESTERN RESERVE PARTNERS:Robert J. McConville to analyst.

HEALTH CAREST. JOHN MEDICAL CENTER:Amy Wing to human resources manager. UH CASE MEDICAL CENTER:Mukesh K. Jain, M.D., to scientificdirector, Harrington Discovery Institute. WILLCARE: Corrine Tanski to director, patient services.

LEGALLITTLER MENDELSON: Allen F.

Boseman to associate. ROETZEL: Jim Schuster to partner. SEELEY, SAVIDGE, EBERT & GOURASH LPA: Christine C. Covey to associate. SYNENBERG & ASSOCIATES LLC:Nadeen Nassar to associate. TUCKER ELLIS LLP: MichaelCostello, Megan Miller, PeterReed and Charissa Walker to associates.

MANUFACTURINGCLASSIC DIAGNOSTIC IMAGING:

Jeremy Brechtelsbauer to directorof business development. OLYMPIC STEEL INC.: JohnHoward to director, operational excellence; Zachary Siegal to general manager and Matthew Kapusta to purchasing manager,Cleveland.RPM INTERNATIONAL INC.: Edward W. Moore to senior vicepresident, general counsel, chiefcompliance officer and secretary. TIMKEN CO.: Joseph E. Farkas tonational sales manager, Interlubeproduct line.

MARKETINGHITCHCOCK FLEMING & ASSOCIATES INC.: JonasFortenberry to senior account manager; Dawn Burdecki to integrated media specialist; AngelaDublikar to account manager;Alyssa Trowbridge and Jude Anderson to project coordinators;Caitlin Kelley to research coordinator. TRIAD/NEXT LEVEL: JoshWilliams to manager, office logistics.

MEDIABABCOX MEDIA INC.: Doug Kaufman to publisher and EdSunkin to editor, Engine Builder;Doug Kaufman to publisher andBrendan Baker to content director,Speedville.com.

NONPROFITAMERICAN RED CROSS, SUMMITAND PORTAGE COUNTY CHAPTER: Joe Kuzma to executivedirector; Rachel D’Attoma andDanielle McCoy to major gift officers.

NATIONAL ASSOCIATION OF COLLEGE STORES: ElizabethMcIntyre to vice president, communications and public relations; Donald Moser to vice president,member concierge services. OHIO GUIDESTONE: Dana Ness tocorporate and business giving officer. ONECOMMUNITY: Jane Passantino to chief marketing officer. PROJECT EVERGREEN: JudithMatsko to development director.

STAFFINGDIRECT RECRUITERS: JordanFreireich to ITand researchspecialist.

GABLESSEARCHGROUP INC.:Kellie Ritenourto recruiter and account executive.

Send information for Going Places to [email protected].

Wing Boseman Nassar Costello Miller Reed Walker Moore

Fortenberry Burdecki Dublikar Trowbridge Anderson Kelley Williams Matsko

Freireich

■ Crain’s on Twitter: @CrainsCleveland■ Crain’s on Facebook: Facebook.com/CrainsCleveland■ Crain’s on LinkedIn: linkedin.com/company/crain’s-cleveland-business■ Crain’s daily e-newsletters: CrainsCleveland.com/register

Newsletter schedule■ Weekdays: Morning Roundup and daily headlines; Mondays: Real Estate Report; Tuesdays: Health Care Report; Wednesdays: DealmakerAlert; Thursdays: Small Business Report; Fridays: Shale and Energy Report

STAY CONNECTED


By JENNIFER [email protected]

Bookmobiles, bloodmobilesand food trucks may havedone it first, but doingbusiness on the road is a

trend that’s spreading beyondbooks, blood and burritos.

The desires of business ownersfor flexibility and consumers forconvenience are fueling a wholenew fleet of on-the-road business-es, from vet clinics and doggroomers to boutique owners andparty planners.

As owner of Strongsville-basedMobile Vet Services, Nicki Gambit-ta is one such business owner.

She’s a veterinarian who workedin emergency clinics and did housecalls for 17 years. But with four kidsin middle school and one in highschool, she wanted to regain morecontrol over her schedule.

“Working emergency allowed me

to be home during the day, but Iwould sometimes have to work allnight,” Dr. Gambitta said. “This wasa great way to be more flexible.”

From a 21-foot custom-outfittedvehicle, Dr. Gambitta can performa surprisingly broad range of vet-erinary services right in a client’sdriveway. She can do surgery, givevaccines, perform dental cleaningsunder anesthesia and euthanizeanimals.

The business requires efficientuse of space; a panel dividing theclinic from the cab rotates to

become a scale, and the single seatdoubles as trash can. A crate forrecovering dogs tucks under acounter, and another for cats fitsin a hood above the cab.

Dr. Gambitta can even drive herkids to activities while a post-opdog recovers in the back.

SMALL BUSINESSI N S I D E

NOVEMBER 11 - 17, 2013 CRAIN’S CLEVELAND BUSINESS 15

18 TAX TIPS: IRSGIVES OWNERSOF MULTIPLEENTITIES RELIEF.

JENNIFER KEIRN

Nicki Gambitta is the owner of Strongsville-based Mobile Vet Services. She offers a broad range of services that can be done in a client’s driveway.

MAKING THE MOVE HAS ITS BENEFITS

Mobile businesses offer added flexibilityand convenience, but do have challenges

See MOVE Page 17 See JOBS Page 16

Time magazine in 2012 highlighted trends in mobile businesses, listing what it called “10 Offbeat Mobile Businesses.”

■ Farmers market■ Day spa■ Pet grooming■ ATM ■ DNA testing■ Karaoke bar■ Boutiques■ Cigar lounge■ Mammograms■ Roller skate rental

Source: Time.com, Sept. 20,2012; tinyurl.com/bg6kjpq

ON THE MOVE

“I would sometimes have towork all night. This was agreat way to be moreflexible.”

– Nicki Gambitta, on transitioningfrom working as a veterinarian

in emergency clinics to owning herown mobile business

There isno simpleway to dotheir jobsCompanies thattranslate materialsto other languagescross ‘boundaries’ By SHARON [email protected]

M ario Morelos smiles as heexplains foreign languagetranslation.

“You give me 500 words of Eng-lish and you get back 600 words inSpanish,” he said.

Mr. Morelos is the managing di-rector of Localingua, a Kent multi-language translation agency that heco-founded in 2006.

Explaining word expansion ispart of client education; addressingother aspects further helps clientsunderstand linguistics and thecomplexities of translation.

When an unusually fast transla-tion turnaround is requested, par-ticularly for a large document, Mr.Morelos will ask, “How long did ittake you to produce the manual?”

“You have to help them under-stand translation is a humanprocess that takes time,” he said.

Translating is an ancient profes-sion, having served people, speak-ing different languages, who inter-act in life and trade, particularly incountries with several languages.

“There has always been a need tohelp people cross those linguisticboundaries,” said DorotheeRacette, president of the AmericanTranslators Association.

The American Translators Asso-ciation, based in Alexandria, Va.,was founded in 1959 and serves10,500 members.

Although membership repre-sents 90 foreign countries, Ms.Racette said the majority are U.S.members; 70% to 80% are indepen-dent contractors.

To own or not to ownThe Northeast Ohio chapter of

the American Translators Associa-tion was founded in 1977 and has115 members, said Jill R. Sommer,membership chair and four-termpast president. Ms. Sommer hasbeen a German-to-English transla-tor since 1997. She is based inCleveland Heights with clients pri-marily being translation agenciesthat are subcontracting services.

INSIDE: Kent State is one of fewerthan 15 institutions in the U.S. to offermaster’s and doctorate-level degreesin translation. Page 16


Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. The Middlefield Banking Company is not a registered broker/dealer and is not affiliated with LPL Financial.

Not a Bank DepositNot Insured by Any Federal Government AgencyNot FDIC Insured Not Bank Guaranteed May Lose Value

www.middlefieldbank.com • 888-801-166615985 E. High Street • Middlefield, OH 44062

The Middlefield Banking Company

Located at

If you want to: • Maximize your income

• Prepare for your future

• Pay the minimum

allowable tax

• Have control over your wishes at the end of life

• Make sure your loved ones are well taken care of

You need a PLAN.

Planning

This is the time of year to get your finances in order. By setting strategies in place now, you can be better positioned in the coming year. Let Tom Hart, Financial Consultant with LPL Financial and The Middlefield Banking Company show you how. The things you do today can pay off in your future.

Largest national staffing firm headquartered in North East Ohio. Call today to see how we can help

you improve your overall staffing experience.

www.nescoresource.com www.talentalley.com

Mentor440-974-3391

Cuyahoga Falls330-926-9680

Independence216-328-8168

Middleburg Hts.440-243-8790

Elyria440-324-2880

Norwalk419-663-1166

16 CRAIN’S CLEVELAND BUSINESS SMALL BUSINESS NOVEMBER 11 - 17, 2013

Mr. Morelos, who was born andraised in Mexico City, was a free-lance translator, then an in-housesales manager for a Wisconsintranslation agency. Ultimately, hesaid he wanted to own his ownbusiness, and did so using $30,000personal savings. A laptop com-puter and language software toolswere acquired and attending in-dustry conferences for education,trade shows and networkingevents followed.

Today, Localingua includesAnne-Clarence Roy, co-founderand production director; and twopart-time employees. The firm an-nually draws from up to 20 subcon-tractors; the most common lan-guage pairings offered with Englishare Arabic, Chinese, French, Ger-man, Italian, Portuguese, Russianand Spanish, he said.

Client translation deliverableshave included marketing materi-als, technical manuals and medicalarticles; local clients include KentState University and the ClevelandClinic. Mr. Morelos declined todiscuss gross revenues.

By comparison, Ms. Sommeropted against agency ownershipdespite an opportunity to do so.With ownership, she said, shewould be marketing not translat-ing. Her passion is translating.

“When I was younger, I wantedto be a detective and I wanted tobe a librarian,” she said. “I seetranslation as the amalgam of thetwo professions. I’m a really goodresearcher. I’ve gotten good atfinding the perfect term.”

At a project’s onset, Ms. Sommerconfirms the to-be-translated doc-ument’s purpose and target audi-ence. Will the document be exclu-sively for internal use, she asks.Ms. Sommer’s industry specializa-tions include medical translation.Accordingly, she will confirm if thereadership is comprised of physi-cians or lay people.

“If I see the term ‘dispnoe’ in a(German) text, I need to know theaudience in order to use the properterm,” she said. “I would use ‘dysp-nea’ if the document were directedat medical personnel, but ‘short-

ness of breath’ if it is in a patientconsent form for a clinical trial.”

Specialty servicesTranslating for the specific ter-

minology of doctors or other pro-fessionals is referred to as higherregister translation; translating fora magazine article, for example, islower register translation. Beingknowledgeable about an industry’sunique “language,” purpose andchanging practices is why transla-tors specialize.

Specialization represents onemeasure of quality when evaluatinga firm or independent contractor.

In the U.S. industry, translatingin one’s native tongue is anotherpreferred standard. But nativespeaking ability alone is notenough. That’s why the neighbor

born in the United States and seem-ingly gifted in Spanish should not besought out to translate a Spanishtechnical article into English.

“English has been your languagefor life, but if I give you an article onlimnology, you can’t summarize it.… It’s (limnology) the study of freshwater,” said Francoise Massardier-Kenney, director of the Institute forApplied Linguistics, a research andtraining unit affiliated with the De-partment of Modern and ClassicalLanguage Studies at Kent State Uni-versity.

For that matter, while it mayseem convenient, hold off on usingthe Russian-born co-worker totranslate a vendor’s Russian corre-spondence into English.

“The competencies associatedwith (professional) translation arecomplex and multiple,” Dr. Mas-sardier-Kenney said.

Cynthia Hazelton, co-owner ofTransConnect Translation, special-izes in legal and commercial trans-lation. Translation from French toEnglish is done by Ms. Hazelton;English to French translation by herbusiness partner Marianne Reiner,who was born and raised in France.

Their 2009 business start wasfunded from personal finances to-taling $20,000; Ms. Hazelton wouldnot disclose gross revenues.

The two attorneys, one workingin Pepper Pike, the other in SanDiego, formed the business follow-ing careers as independent contrac-tors. Previously, Ms. Hazeltontaught high school French for 30years, the last 20 in the BeachwoodCity School District.

TransConnect’s website pro-motes “translation for lawyers bylawyers.”

Going with the flowMs. Hazelton has translated court

rulings, criminal depositions and ar-ticles of incorporation. Her clientsinclude law firms and internationalcorporations.

Accordingly, she became an ex-pert on cattle feed while translatingcontracts for a French additivescompany, and in the know regardinghair-cutting scissors associated witha Paris-based company’s contracttranslation needs.

“Every day is completely differentand every job is different,” she said.“You have to go with the flow. Youcan’t panic and say, ‘I’ve never donethis before.’ ” ■

Jobs: Determining the target audienceis crucial for multi-language businessescontinued from PAGE 15

SHARON SCHNALL

Mario Morelos is the co-founder of Localingua, a multi-language translationagency in Kent.

Cynthia Hazelton taught highschool French for 30 years. Shehad graduate degrees in French lit-erature and law and an undergradu-ate degree in education with aFrench major and Spanish minor.

In 2004, close to her retiringfrom teaching and becoming aFrench-to-English translator, sheearned yet another graduate degree— this time, in French translationfrom the Institute for Applied Lin-guistics at Kent State University.

Today, she is the co-owner ofTransConnect Translation and anadjunct instructor at the institute.

With a French connection, fourdecades and counting, what morecould translation studies offer?

“There’s really an art and a sci-ence to translation,” Ms. Hazeltonsaid. “The first thing I got was …research technique. That’s whatpeople don’t understand: you don’tjust take a dictionary and start look-ing up words.”

Foreign language proficiency andtranslation are two different pur-suits, two different acumens.

“All you’ve had experience with(as a foreign language student) istypical texts in the humanities. It’svery unlikely that this is the typicaltext you will translate (as a transla-tor),” said Francoise Massardier-Kenney, the institute’s director.

“The curriculum overlap betweena traditional language degree and atranslation degree is minimal,maybe 10 percent,” she said. “Thetranslation students will have to be-come familiar with databases thathave nothing to do with the litera-ture of the humanities.”

Founded in 1988, Kent State’stranslation program is among theoldest in the country, said DorotheeRacette, president of the AmericanTranslators Association. It is theonly dedicated translation programin Ohio. About 100 students are

enrolled in the undergraduate language program that offersFrench, German, Russian and Spanish translation.

At the master’s and doctorate lev-els, in the United States, just under15 institutions offer translation de-grees of which Kent State is one,Dr. Massardier-Kenney said.

This year’s 27-student doctoratepopulation represents the followingcountries: Bosnia, China, France, In-donesia, Italy, Jordan, Libya, Moroc-co, Russia, Saudi Arabia, Spain andthe United States.

The master of arts translationprogram, with more than 50 stu-dents, includes studies in French,German, Japanese, Russian andSpanish; a separate three-year com-bination graduate translation/MBAdegree also is offered.

Earlier this school year, the insti-tute announced a master of arts inArabic translation will be offered be-ginning August 2014. This will bethe first full master of arts in Arabictranslation offered in the UnitedStates, Dr. Massardier-Kenney said.

Citing website resources, includ-ing a CIA fact book, she said Arabicis spoken by 293 million to 452 mil-lion people worldwide.

“Arabic is a strategic language,”she said. “There are more Arabicspeakers in the world than Englishspeakers. There is a great need fortrained Arabic translators.”

And, will there be more language-specific changes, to follow Arabic’sdebut, adding Chinese to the insti-tute’s language portfolio, perhaps?Better to wait and concentrate onmaking the latest change a suc-cess, Dr. Massardier-Kenney said.

“We add a language; we see howit works,” she said. “We give it fouror five years. It’s not good to over-expand. We want to be the best;sometimes being the best meansbeing smaller.” — Sharon Schnall

THE ‘ART AND SCIENCE’ OF TEACHING TRANSLATION

“English has been yourlanguage for life, but if Igive you an article onlimnology (the study offresh water), you can’tsummarize it.”

– Francoise Massardier-Kenneydirector, Institute for Applied

Linguistics, Kent State University


Contact MetroHealth today at 216-778-7362,or email [email protected]

Visit metrohealth.org/select for more information.

MetroHealth Select offers self-funded employersan innovative, health network option with:

Quality healthcare Expert physicians Significant savings 17 convenient locations

Wellness services

JENNIFER KEIRNDr. Nicki Gambitta said roughly 35 clients are from her neighborhood, many of whom saw her vehicle in the driveway.

Move: Logistics can bethe ‘whole business’

“I went from working in a23,000-square-foot clinic to this,”she said. “But I love it. I’ve neverhad so much fun being a vet.”

Free from brick and mortarFlexibility’s not the only perk;

the economics can work in favor ofmobile businesses, says ScottBeskid.

Mr. Beskid is a former socialworker and full-time dad whobought into the GameTruck fran-chise last year, a traveling arcadeused to host kids’ birthday partiesat clients’ houses.

“When you put it all together —employees, gas, insurance — it’scheaper than (other franchises),”he said. “We aren’t paying rent; wedidn’t have to build out a space.We store our equipment ingarages, and that’s all we have topay for.”

It’s also business and brandingall in one.

Both Dr. Gambitta and Jen Sulli-van, owner of Jen’s Mobile Groom-ing, said they’ve received callsfrom new clients driving right be-hind or next to them on the roadasking for appointments.

Of the 100 or so houses in Dr.Gambitta’s neighborhood, she said35 are clients, many of whom sim-ply saw her vehicle in the driveway.

When Ms. Sullivan promotes herbusiness at farmers’ markets andother summer events, there’s noneed for booth space and signage— her truck says it all.

“The advertising on my truckpays for itself,” said Ms. Sullivan,who opened her mobile dog salon

in 2012.

Going to where the business isMichelle Schenker and Lia Kalin

are co-owners of the successful B.Lux Boutique in Hudson, but arealways brainstorming new ideas togrow their business.

“We thought, wouldn’t it be socool if we could go to our cus-tomers, and bring our business tothem in a different sort of way?”Ms. Schenker said.

Taking a page from successfulfood trucks, they loaded up a trail-er with merchandise and createdan outdoor mobile boutique atthree of this summer’s Pop Up Par-ty at the Plaza events in down-town’s Perk Plaza.

“It was a totally different clien-tele who maybe wouldn’t come tothe store,” Ms. Kalin said. “It madepeople say, ‘maybe we shouldmake a trip to Hudson.’ ”

Going mobile also brought morepeople who were ready to shoprather than browse, the twowomen said.

Of course, a mobile businesscarries some challenges a station-ary one doesn’t.

“Our whole business is logistics,”


GameTruck’s Mr. Beskid said. “Youhave to deal with climate and traf-fic. You have to make sure youdon’t break down. Without thattruck, you have no business.”

Ms. Schenker and Ms. Kalin said

they put about eight hours ofpreparations into each event,which only lasts a few hours. Pro-motion on social media is a bigpart of that preparation.

“You can’t just show up on a

corner and expect people tocome,” Ms. Schenker said. “Youhave to get the word out and cre-ate a following … there’s a lot ofwork involved in doing a mobilebusiness, but it’s worth it.” ■

“You have to deal withclimate and traffic. Youhave to make sure youdon’t break down. Withoutthat truck, you have nobusiness.”

– Scott Beskidowner of a GameTruck franchise

NOVEMBER 11 - 17, 2013 SMALL BUSINESS CRAIN’S CLEVELAND BUSINESS 1177


The Internal Revenue Ser-vice has delivered a tax-payer-friendly decision forS corporations that allows

business owners managing morethan one entity to maximize de-preciation on capital expendi-tures.

Many tax practitioners have op-erated under the premise that abusiness owner with multiplebusiness entities operating as Scorporations could apply depreci-ation caps to each entity individu-ally, even though they might needto group those entities for othertax purposes. Now the IRS has af-firmed that position, giving tax-payers an added measure of com-fort that certain depreciationdeductions won’t be challengedwhen the return is examined.

The issue arises because of taxtreatment of “controlled groups,”or corporations that are operatingas separate or closely related busi-ness units but under commonownership. The IRS requires suchentities, even if incorporated sepa-

rately, to be treated as a single en-tity for many tax purposes, espe-cially for determining the tax lia-bility on the group’s taxableincome.

The idea is to prevent businessowners from breaking up a largebusiness into several smaller onessolely for the purpose of reducingtaxable income. The larger busi-ness unit might have taxable in-come that would put the companyinto a higher tax bracket. The IRSis determined to assure that abusiness owner isn’t separatingbusiness operations into separatelegal entities purely for the pur-

pose of settling into a lower taxbracket.

As an example, consider a fami-ly-owned enterprise that is in-volved in multiple different, butperhaps somewhat related busi-ness activities. It might centeraround a construction business,but also include excavating, truck-ing, equipment rental or any num-ber of activities.

There could be legitimate busi-ness reasons to incorporate thoseactivities as separate businessunits. However, if they meet cer-tain ownership criteria and mightbe defined as a parent-subsidiarygroup, a brother-sister group or acombined group, they will betreated as a single taxpayer.

For the purposes of applying de-preciation rules, historically theIRS has not been entirely straight-forward on whether it would treatsuch a combined group as a singletaxpayer. Under Section 179 of theInternal Revenue Code, there arelimitations on how much a singlebusiness entity can deduct in the

The Premier Pre-Thanksgiving Business Networking Event in NEO!

Monday, November 18 | 6:30pm - 9:30pmRock and Roll Hall of Fame & Museum

Ticket Price Includes:($75/single and $700/group of 10)

Open bar & beer exclusively provided by Fat Head’s Brewery

Full access to the Rock & Roll Hall of Fame and Museum

Complimentary valet service courtesy of M.V.P. valet parking

Food specialties from Executive Caterers at Landerhaven

The opportunity to win an iPad mini courtesy of Ohio.net

Beverage sponsor:Co-Presented by:

Presented by: Venue sponsor: Community businesspartner:

Valet sponsor:

Supported by:

18 CRAIN’S CLEVELAND BUSINESS SMALL BUSINESS NOVEMBER 11 - 17, 2013

It’s welcome news for owners of multiple entities

PETERDEMARCO

TAX TIPS

IRS decision allows enterprises with more than one businessto apply depreciation on capital expenditures individually

first year a capital asset is put intoservice.

Many taxpayers and tax practi-tioners have operated under theassumption that the limitations, asthey apply to S corporations, couldbe applied to each individual busi-ness within a “brother-sister” con-trolled group. The limitations oftenare adjusted through tax incentivesto encourage business owners toinvest in capital and equipment,but assume in a given tax year thelimitation is set at $500,000.

If the limitation were applied toan entire controlled group, itwould mean all the units withinthe group could deduct no morethan $500,000 in capital expendi-tures in the first year such assetswere put into service. But if thelimitation is applied to each indi-vidual entity within the group, itdramatically increases the poten-tial deduction, producing a signifi-cant tax benefit.

In the case of the group of S cor-porations operating around a con-struction business, suppose thebusiness wanted to expand andpurchase new equipment acrossthe enterprise. It means each indi-vidual entity could invest in capitalexpenditures to the maximumamount allowed under Section 179limits and deduct far more of theamount in the first year that equip-ment is put into service. Thatwould enable the group of compa-nies to dramatically reduce theirtaxable income in that year.

As is common with tax rules, thespecific provisions around whatconstitutes a controlled group canbe complex. It is based on percent-ages of stock or voting power that agiven shareholder or group ofshareholders might have in relatedbusinesses. When multiple busi-ness entities are controlled by mul-tiple shareholders, the equationcan become quite complicated.

The good news for S corporationowners is that the IRS has taken aposition on depreciation limita-tions that encourages businessowners to invest and reduce theirtaxable income. ■

Peter A. DeMarco is vice presidentand director of tax services for theregional accounting ad businessconsulting firm of Meaden & Moore,headquartered in Cleveland.

‘DO BLOW DRY BAR27540 Chagrin Blvd.Orange Village 44122www.doblowdrybar.com

Bennett Rubin, Lina Feuerman andMelissa Gottlieb have opened ’DoBlow Dry Bar, a blow dry bar thatsticks strictly to styling. Customerscan consult, seven days a week, witha stylist and receive a wash, condi-tioning and style, all included. No ap-pointments are necessary, but areaccepted. The blow dry bar format,initially focused on the coasts, is be-coming one of the fastest-growingsegments of the salon industry. Ms.Feuerman, who serves as president,has a managing cosmetologist li-cense, more than 30 years of experi-ence in the beauty/salon industry andmanaged her own salon. Mr. Rubin,CEO, is a senior sales and marketingexecutive with experience in numer-ous markets and channels of distribu-tion, while Ms. Gottlieb works as di-rector of business [email protected]

BLUE SKY EVENTS 1799 Akron Peninsula Road,Suite 320Akron 44313 www.blueskyevents7.com

Blue Sky Events, headed by Bob Sim-mons, CEO and president, createsand operates business-to-consumerand business-to-business events. Thecompany’s in-depth, turn-key, liveevent experience connects buyerswith sellers in a controlled settingconducive to professional and per-sonal contact. Blue Sky Events pro-duces original content, ensuring at-tendees receive relevant and reliableinformation. Blue Sky Events will own

and operate its first series of events,Parenting Expo, www.parentingex-po.com, which focuses on the needsof parents. The new Parenting Expoevents roll out to five Midwest citiesin 2014: Pittsburgh, Cleveland,Columbus, Cincinnati and Indianapo-lis. The goal of the 2014 ParentingExpo is to help attendees becomebetter and more informed parents.Through professional speakers, ex-hibitors and networking, parents willhave an opportunity to receive up-to-date information on what’s importantto them right now — from prenatalcare to raising teens. Phone 330-777-1030Fax [email protected]

BASKETS BY JEN LLC 28549 Stonegate CircleWestlake 44145www.bbjen.com

After making and donating gift bas-kets for 10 years, Jennifer Cirincionehas formed Baskets by Jen LLC, mak-ing baskets for fundraisers, silentauctions, corporate gifts and person-al gifts. All baskets are made basedon a theme, and if desired, can bedesigned based on items provided bythe customer. [email protected]

To submit information about anew business, opened within thepast six months, send the followinginformation for publication toCrain’s Cleveland Business sectionseditor Amy Ann Stoessel at [email protected]: business name; ad-dress; city and ZIP; website address;brief description of the business;business phone number; businessfax number; and business e-mail.

GRANDOPENINGS

The IRS is determined to assure that a businessowner isn’t separatingbusiness operations intoseparate legal entitiespurely for the purpose of settling into a lower taxbracket.


E-2 NOVEMBER 11-17, 2013 ESTATE PLANNING Advertisement

Crain’s Cleveland Business Custom Publishing

216.791.8000 www.benrose.org

To learn how your char i tab le g i f t can impact our miss ion , ca l l 21 6 . 373 .1 608 or e -mai laconnors@benrose .org

A nat ional ly recognized leader address ing the most impor tant i ssues of ag ing through ser v ice, research and advocacy.

TABLEOFCONTENTS PRESIDENT’S LETTER

Proper planning ensures financial legacy lives on

TRENDSNo matter the size of your estate, proper planning will ensure your wealth is protected for future generations and charities of your choice. E-5 to E-6.

Business climateFrom fulfilling philanthropic and financial goals to encountering sudden wealth, consider how cur-rent economic conditions factor into your estate planning. E-3 to E-6

Succession planningHow does your business influence your estate plan? Establish a contingency plan and understand how gift tax planning impacts the sale of a business. Make sure you know how your valuables and other personal assets affect the value of your estate. E-7 to E-8

Arts and collectiblesDon’t overlook this important asset class. E-9

By BETh kORTh

The Estate Planning Council of Cleve-land, in conjunction with Crain’s Cleve-

land Business, is pleased to present the annual Estate Planning Section. It is the council’s goal to offer the community valuable infor-mation related to financial, retirement, insurance, busi-ness succession, education, estate planning and charitable planning. The articles and com-mentary on the pages that follow have been provided by some of Northeast Ohio’s most experienced professionals in these fields.

Estate planning is one of the most overlooked areas of personal financial management. It is esti-mated that more than 120 million Americans do not have up-to-date estate plans to protect themselves or their families in the event of sickness, accident or untimely death. This can result in wasted dollars and hours of hardship, which can be materially minimized with advanced planning and action.

The financial world in which we live continues to change. Uncer-tainty looms about the permanency of the current estate and gift tax laws and domestic and internation-al economic performance. Nonethe-less, the need for preservation of assets built over a lifetime for the benefit of family, heirs or charities is ongoing.

kORTh

Evaluating how your personal objectives for leaving a legacy have been affected by the change in laws

and market conditions should include consult-ing with professionals to advise you on the methods, techniques and documents available to meet your goals. If you have concerns regarding the transition of a family-owned business, planning for retirement, creating a legacy for your family, or

fulfilling philanthropic goals, the articles in this section will address these issues and the benefits of receiving comprehensive tax and estate planning advice as part of the planning process.

The Estate Planning Council of Cleveland is composed of a diverse array of more than 400 professionals working in the Greater Cleveland area, including attorneys, accoun-tants, bankers and trust officers, financial planners, insurance agents, appraisers and representatives from charitable organizations. Our members are available to provide you with thoughtful, tax-effective and value-based planning. Our Council’s web site (www.epccleveland.org) can be a useful resource to locate profes-sionals to assist you with all of your planning needs.

We are pleased to be able to share the insights and commentary of our members and other area practitioners with you in this annual publication. We hope that you will find the information in-sightful, helpful and valuable. n

The need for preservation of assets built over a lifetime for the benefit of family, heirs or charities is ongoing.

Special considerationsEstate planning experts weigh in on how special needs, citizenship, education and elderly caregivers impact planning. E-10 to E-11

Gifts and asset protectionProtecting your financial legacy for your family requires diligence in choosing beneficiaries, trustees and the right financial vehicles. E-12 to E-19

Charitable givingPhilanthropic contributions offer both financial and personal benefits. E-20 to E-23


Advertisement ESTATE PLANNING NOVEMBER 11-17, 2013 E-3

BUSINESS CLIMATE

How estate planning can help you reach philanthropic, financial goalsBy JOSEPh P. kOvALChECk JR.

Proper estate planning not only supports the cur-rent and future financial possibilities for you and

your family but also allows you to transfer your wealth according to your wishes, and can help reduce unnecessary taxes and expenses.

Whether your goal is to develop a philanthropic legacy for your family or simply to support your community, tax-favored programs create ongoing opportunities to transfer family assets to public and private charities. One com-mon technique is to currently establish a charitable remainder

trust (CRT). The benefit of a CRT is that you will continue to receive an annual income from the trust during your lifetime and, upon your death, the charity re-ceives the assets

remaining in the trust. You also receive a current income tax deduc-tion in the year the trust is funded.

Another technique is to establish a private family foundation that is typically managed by family members. The family (through a Board of Directors) retains control over the gifted assets and annually makes contributions to charities of their choosing.

The family’s philanthropic legacy continues as younger generations are encouraged to participate in both the management of the foun-dation as well as researching and recommending charities worthy of the foundation’s annual gifts. A private foundation can be estab-lished during your lifetime or upon your death.

Gifting is also an important component to any estate plan. Gift-ing allows you to reduce the size of your taxable estate by transferring wealth to your family members as well as charities. Gifts to family are subject to the rules of lifetime gifting. However, outright gifts to charities have no limits. Charitable gifts made while you are alive receive a current tax deduction (with certain deductibility limita-tions). Charitable gifts made at your death reduce your taxable estate dollar for dollar.

It is important to consider your goals and objectives when establish-ing your estate plan. Most charitable trusts are irrevocable when funded; however, many aspects of your estate plan can be modified as circumstanc-es change throughout your lifetime. n

Mr. Kovalcheck Jr., CPA CFP, is chief operating officer/account manager for M+N Advisory Ser-vices LLC. Contact him at 216- 363-6489 or email [email protected].

kOvALChECk

Show your grit: Hire a financial advisor By DOUG MAThEy

A s associate direc-tor of the Motiva-tion Science Cen-ter at Columbia

Business School, Dr. Heidi Grant Halvorson has more than a passing interest in the qualities that lead to “success.” After assessing the nine most significant traits, even she confessed that she found the results surpris-ing. No. 1? It’s not how focused, well-informed or dedicated you are. It’s having enough grit.

MAThEy

The second-most helpful trait is knowing exactly how far you have

left to go. This aligns well with advice from former brokerage bank president Sallie Krawcheck. In a recent article, “The 5 Real Reasons to Hire a Finan-cial Advisor,” she advises against seeking an advisor to help you try to beat the markets. The better rea-sons are to help you:

1) Ask and answer difficult questions2) have a plan in place3) Understand your risks

4) Stick to your plan (there’s that grit again)5) know your own biases

“This is a biggie,” she writes about biases. “Many of us think we don’t really have any … which is exactly the point.”

To help on that front, let’s touch on a highly susceptible bias known as recency — the tendency to give recent experience more weight than it deserves in our decision-making. We are thrilled at how well recent markets have rewarded those who have stayed the course through some remarkably risk-exhibiting markets. But we would be remiss in our advice

if we did not remind you that recent returns, fantastic or foul, are but blips on the radar screen guiding you toward your goals — the ones for which we’ve put your plans in place. The true measure of success is whether you achieve your goals, not a quarter’s or a year’s returns. So enjoy the recent market gains. But hang on to that grit. n

Mr. Mathey is president of BCG Wealth Advisors and part of the BCG Legacy Advisors team. Con-tact him at 330-572-8050 or email [email protected].



INDEPENDENCE BEGINS WITH A CAPITAL “G”. Since our founding by the Pew Family in 1956, we’ve remained client-focused, financially sound, and proudly independent. As a privately-held trust company with over $22 billion under management, we’re in a position of strength and we never struggle with competing priorities.

www.glenmede.com Glenmede’s services are best suited for those with $3 million or more to invest.

To learn more, please contact Linda Olejko at 216-514-7876 or [email protected]

3421 Ridgewood Road, Suite 225 Fairlawn, OH 44333

Phone (330) 665-2376

308 N. 21st Street, Suite 650 St. Louis, MO 63103 Phone (314) 667-4978

A Strong Foundation Inspires a Balanced Life Insurance ApproachSpecialized & innovative life insurance solutions for a�uent families & business owners.

Access to exclusive proprietary life insurance products that are generally lower in cost than retail products.

Proud to serve Northeast Ohio & the long-term needs of our clients & the advisory community.

BUSINESS CLIMATE

Sudden wealth requires immediate focus on futureBy MATThEw S. OLvER

Whether you came into a large inheri-tance, sold a

business, leased your gas rights for a significant sum of money, or picked the right numbers in your state’s lottery, you will have very significant finan-cial decisions to make.

Whatever the specifics, the financial challenge of achieving sudden wealth is generally the same: You now have a substantial amount of money that must be managed carefully to help you pro-tect your wealth, provide income for your lifestyle, and achieve your legacy objectives. Take time to evaluate your financial position and consider how your new wealth will affect your goals and your life before making any significant financial decisions.

One area of your financial life you should re-evaluate is your estate plan. Your will and trust(s) determine how your worldly pos-sessions will be distributed after

your death. You’ll want to make sure your current documents

accurately reflect your wishes and account for all of your assets.

If your newfound wealth is significant, you should meet with your trusted advisor and estate plan-ning attorney as soon as possible.

New documents may be warranted as a simple codi-

cil to the will and amendment(s) to a trust may be inadequate. Make sure to destroy any old documents if this occurs.

Carefully consider whether the beneficiaries of your estate are ca-pable of managing the inheritance on their own. Trusts can assure continuity of your interest and keep money in the family and away from creditors.

In other words, a trust can make sure beneficiaries receive what you want, when you want, and how you want, even after you have passed away. It can contain provisions requiring beneficiaries to be more financially responsible with their inheritance than they

may have otherwise been. Your estate planning attorney can write a document appropriate for your situation.

In addition, your financial team should make estate tax projections to assess the amount of federal and state estate tax likely to be assessed on your death and discuss strategies to minimize these taxes with you.

Estate planning is much more than just the efficient transfer of assets at death. It’s about carrying out your wishes and carrying on your values; it’s about minimiz-ing the short-term burden and maximizing the long-term positive impact on your heirs.

Making sure your documents are up-to-date with your wishes and that your assets are titled appro-priately are just two ways to help make sure you are a good steward of your new wealth and leave a positive legacy for your family. n

Mr. Olver, CFP, is senior vice presi-dent & wealth advisor for Spero-Smith Investment Advisers, Inc. Contact him at 216-464-6266 or email [email protected].

OLvER

An investment portfolio checkup By ChARLES J. AvARELLO

The best investors ignore the conventional Wall Street blabber about stock picking, market timing,

and beating the market. They know investing is not a game. The returns you seek are actually there for the taking. You just need a disciplined approach and a long-term view. Investing is about getting your fair share of the capital market returns, proportionate to the risk you decide to take. Be simple, strategic, and process-oriented. Focus on the controllable and reliable variables – and, most importantly, your own behavior as an investor.

Do you have an investment port-folio or an investment collection? You should have a top-down strat-egy expressed as a certain target percentage for equity exposure and an allocation plan using a small number of distinctive asset classes

and styles.Do you manage your portfolio’s

tax profile? You should deliber-ately locate certain assets among your taxable and retirement accounts, avoid short-term gains, and harvest tax losses whenever

they appear. Managing tax attributes is a particularly reliable way to add value and, oddly, still a well-kept secret.

Do you use index funds for basic exposure to each asset class? You should have a great deal of skepti-cism about active manage-ment. If you are mindful

of manager risk, tax burdens, expense ratios and the sales cul-ture, then the benefits of indexing become crystal clear.

Do you pay extra-close attention to costs? Costs are entirely control-lable and, unlike most other things we buy, higher cost for investment products does not mean higher quality. Quite the opposite is true.

Do you follow a structured

process of monitoring exposures and rebalancing back to your targets at some predetermined intervals? Reversion to the mean is the single most reliable function of the investment world. Rebalancing takes advantage of this, forcing a buy-low, sell-high discipline and trumping the emotions that argue for the opposite.

Finally and most importantly, do you recognize the potential self-harm you can do by your own behavior? Humans are simply not pre-wired to be good long-term investors. We misjudge opportu-nity and risk in both good times and bad. We’re vulnerable to sales pitches and crowd following. The reliable solution is to follow these concepts and to believe that it is the investor that matters much more than the investments. n

Mr. Avarello, CPA, CFP, is senior manager for Fairway Wealth Management, LLC. Contact him at 216-573-7200 or email [email protected].

AvARELLO



Calfee, Halter & Griswold LLP

The Calfee Building1405 East Sixth Street, Cleveland, Ohio 44114Calfee.com

Marcia [email protected]

Cheryl D’[email protected]

Jean [email protected]

Fran Mitchell [email protected]

Maureen [email protected]

Sophisticated estate, gift and generation-skipping planning Comprehensive probate and trust administration Business succession planning strategies Probate litigation Asset protection planning, including the Ohio Legacy Trust

The attorneys of Calfee’s Estate and Succession Planning practice can help youmake some of the most important decisions of your life.

We provide experienced counsel for high net worth individuals and families:

Marcia Wexberg Cheryl D’Amico Jean Hillman Fran Mitchell Schaul Maureen Beaver

BUSINESS CLIMATE

Sudden wealth requires immediate focus on future

Low interest rates are impacting life insuranceBy ChRISTINE MILLEN and RAyMOND NASh

Unique challenges exist for life insurance policyhold-ers as the pressure of low interest rates and

tighter reserve requirements have changed the landscape for competi-tive life insurance policies.

Due to continued low interest rates, insurance carriers have re-duced crediting and dividend rates for in-force universal life and whole life policies in an effort to reach targeted profits. Generally, there is a lag of several years between the interest rate environment and insurance carrier investment port-folios because of bond durations inside these portfolios. However, crediting and dividend rates for policies must ultimately reflect asset returns.

When life insurance policies are acquired, products are often ana-lyzed assuming certain non-guar-anteed features, such as crediting rates and dividend rates, will hold true indefinitely. The more aggres-sive the assumptions, the better policies look on the surface (lower illustrated premiums, larger death benefits, higher cash values, etc.).

Since current crediting and

dividend rates for policies issued in 2000 and later are substantially less than originally illustrated, unforeseen premium increases, reduced death benefits and even unexpected policy lapses have occurred. These unplanned policy changes can greatly affect business planning, overall estate plans and annual gift tax planning.

The effect of low interest rates accelerated for no-lapse guarantee universal life (NLG-UL) products due to NAIC Actuarial Guideline 38 (AG 38), which requires insur-ers to increase reserves on both new products and some in-force policies. As rates have gone down, some policyholders have gravitated toward NLG-UL products for pric-ing stability, since this product offering can provide a guaranteed death benefit.

It is important for policyhold-ers to remember that guarantees

MILLEN NASh

Why estate planning is still necessary By MISSIA vASELANEy

The federal gift and estate tax exemption currently is $5.25 million per person ($10.5 million for married

couples). Individuals with “smaller” estates might wonder whether they need to do any estate planning. With the federal exemption so high and the repeal of the Ohio estate tax, clients are now free to plan their estates without having the “tax tail wag the dog.”

There are many reasons to do estate planning, even when avoiding estate taxes is not a concern:

n Many people want to avoid probate, especially if they own real estate in other states and would have to go through probate in mul-tiple jurisdictions.

n One of the most important reasons clients do estate planning is to have their assets distributed to their heirs at appropriate ages. Without a proper estate plan, many assets pass to heirs at age 18, when most children are too immature to handle the receipt of assets while they are grieving the

vASELANEy

loss of a parent. It may derail plans to go to college and may make the child subject to potential predators.

n Even clients with relatively modest estates may desire to leave their children a legacy that is

protected from creditors and divorce, and to ensure the assets remain in their family bloodline.

n It is imperative that clients with children from outside the current mar-riage prepare a proper estate plan to handle the needs of the surviving spouse as well as to ensure

that assets pass to the client’s chil-dren, either at his or her death or the surviving spouse’s death. With the increased exemption, leaving assets to a spouse to obtain the marital deduction and defer taxes until the second death is no longer a primary concern. Clients are free to leave a larger portion of their es-tate to their children at their death and not make them wait until the death of the surviving spouse. n

Ms. Vaselaney is a partner with Taft Stettinius & Hollister LLP. Contact her at 216-706-3956 or [email protected].

are subject to the claims paying ability of the insurance carrier. To mitigate this risk, NLG-UL prod-ucts should be acquired through carriers with strong financials. Additionally, for large NLG-UL acquisitions, diversification among carriers can help lessen the risk.

While recent increases in fixed income rates have reduced the spread between rates for newly issued bonds and seasoned bond portfolios, current crediting and dividend rates for life insurance policies are unlikely to increase in the short-term. However, the reduced spread lessens the likeli-hood that crediting and dividend rates will continue to trend toward guaranteed minimums.

Given the complex nature of policies and correlation to financial markets, the health of a life insur-ance portfolio should be evaluated on at least an annual basis by policy owners and their advisors. This means measuring policy perfor-mance, assessing carrier financial strength, and verifying that the portfolio is correctly structured to address current and future plan-ning needs. n

Ms. Williams Millen is director of case management for Cornerstone Consulting Group. Contact her at 330-665-2376 or email [email protected]. Mr. Nash is president of Corner-stone Consulting Group. Email him at rnash@cornerstone consultinggroup.net.



Gifts to University Hospitals

continue the legacy of giving from

generation to generation – by enabling

us to live our mission every day:

To Heal – enhancing patient care,

experience and access

To Teach – training future generations

of physicians and scientists

To Discover – accelerating medical

innovations and clinical research

And with your support, we’ll continue to provide the

same high-quality care that we have for nearly 150 years.

Join the many who are making a difference. To learn more, contact

our gift planning team at 216-983-2200 or visit UHGiving.org.

Your legacy helps create a healthier community.

www.zinnerco.com

If you want top dollar when selling your business,you need a formal business succession plan.

We’re experts in helping business owners develop their most effective succession plan. We know from experience that today’s planning moves can reap big rewards in the future.

business,plan

ITPAYS TO

PLAN

.com

75YEARS29125 Chagrin Blvd. Cleveland, OH 44122(216)831-0733 [email protected]

BUSINESS CLIMATE

Beyond performance: wealth preservation

imperative that policies remain current and that coverage ad-equately protects against un-foreseen events. For example, insurance coverage may need to be updated if real estate is transferred to a limited liability company, if a new household employee is hired or if the insured decides to join a board. The outside agent must be apprised of any related activities.

On this continuum is the need to ensure the proper registration and titling of assets.

Proper titling of assetsThe legal titling of an asset

can affect a client in many ways, including personal liability expo-sure. For example, asset protection can be secured by establishing a particular type of entity, such as an S corporation, a limited partner-ship or a limited liability company. Many states offer “tenancy by the entirety” — a form of concurrent spousal ownership that provides favorable asset protection benefits.

In counseling clients through the ownership structuring process, we remain cognizant of the potential implications for other areas of the family’s wealth preservation efforts. n

Ms. Olejko, CFP® is a Managing Director of Glenmede. Please con-tact her at 216-514-7876 or [email protected].

By LINDA M. OLEJkO

It is no surprise that investors often gravitate to portfolio performance as the primary means to protect and grow

assets. Yet from our experience, there are four critical strategies of equal, if not greater, importance:

protect assets, control consump-tion, minimize taxes and prepare for transition.

On the most basic level, wealth preserva-tion begins as a need to ensure an individual

or couple has sufficient assets to maintain their lifestyle. For many, a longer-term objective is to pre-serve wealth across generations of family members and for charitable endeavors. Here, we delve into just one of the critical strategies, the need to protect assets.

Periodic insurance reviewPreserving wealth requires the

pursuit of a disciplined strategy that can protect assets from unforeseen or difficult-to-forecast events.

This begins with an analysis of the insurance needs. Periodic review of personal, business and property insurance coverage is fundamental groundwork. It is

OLEJkO

Guide to your estate plan checkupBy SUNNy MASTERS

Before meeting with the professional who will as-sist you in creating your estate plan, take time

to gather all pertinent personal and financial information. This will help to ensure that the process is efficient and that your wishes for distributing your assets are followed exactly.

Any life change can trig-ger the need for a revisited or new estate plan: mar-riage or divorce (yours or your children’s or grand-children’s), the death of a spouse, selling a home or business, moving to a new state, or retirement. Estate plans are living documents that should be flexible enough to meet your needs and offer you peace of mind wherever you are in your journey through life.

Estate plans can also reach beyond the financial and help you focus on the personal legacy you wish to leave. Consider benefiting

your family by offering them your personal history as part of your ethical will. Make your end-of-life wishes known by creating a living will and advance directives. Avoid probate by making the individuals and charities who are most mean-

ingful direct beneficiaries to property such as insur-ance policies and invest-ments.

The following checklist will help you track what you have and what docu-mentation you need.

Information about you, your family

n Personal information for you, your spouse or significant other, and your children and stepchildren

Information about your assets, including monetary value and ownership

n Primary residence

n Other real estaten Checking accountsn Savings accounts n CDs/Money Market

accounts n Stocksn Taxable bonds and

tax-exempt bondsn Mutual funds n Business interests n Pensions/profit sharing n IRA, 401K, 403(b) n Other investment vehiclesn Collections or items of

value such as antiques, jewelry or art

n Automobilesn Life insurance policy

information/copies of policy n Beneficiary information

(primary, secondary; if a charity is your beneficiary, obtain its tax ID number)

n Other

MASTERS

See ChECkUP Page E-23

Plan to meet periodically with your financial advisor to ensure your plan matches your wishes.



YOUR CHOICES DON’T HAVE TO END.

Illness can make you lose control. Hospice of the Western Reserve gives it back. As Northern Ohio’s most experienced and most referred

hospice provider, we offer more options to personalize care. Through specialized, quality care for a variety of illnesses, we can help you live

your life. Discover why the hospice of choice is Hospice of the Western Reserve.

Visit HospiceOfChoice.org.

Choose the hospice of choice.

855.852.5050 HospiceOfChoice.org

SUCCESSION PLANNING

Gift tax planning before business sale closesRisk, uncertainty increase if you wait until process begins

ing period for a private company investment may last years or even decades, these discounts are often significant. If the pro-rata value of one share of stock is $100, it may only be worth $65 after considering valuation discounts. As an eventual transaction becomes more likely, the valuation discounts decline. At the time of sale the share would be worth $100.

A similar relationship can be observed in public markets when an acquisition offer is made for a publicly traded company at a pre-mium to its trading price. Follow-

ing the acquisition announcement and prior to the deal closing, the stock price will rise but not to the full premium. Why? Investors rec-ognize that there is risk that a deal will not close. To compensate for this risk, investors will purchase shares at a discount to the offered premium price (a merger-arbitrage discount).

Sales of private companies are similarly risky. Deals can fail to close or change materially due to a number of issues, including: the buyer’s inability to secure financ-ing, disagreement on key deal

terms; declining financial perfor-mance of the seller; and issues uncovered during due diligence. If a public acquisition fails to close, the investor still holds a market-able security. However, if a private company transaction falls through, the investor is left with an illiquid asset.

The presence of merger-arbitrage discounts in public markets sug-gests that shares in closely held businesses about to be sold should also reflect a discounted price. An appraisal of private company stock should analyze the value of a share

hAUPTMAN

By ROBERT A. hAUPTMAN

While there are signifi-cant benefits to gifting shares of closely held businesses, such

planning is often the last thing on an entrepreneur’s mind. The long

holding periods associated with private com-panies present business owners with the oppor-tunity to transfer these illiquid investments at discounted val-ues to minimize taxes while pro-

viding heirs with an appreciated asset when the sale of the business ultimately closes. What about situ-ations where the business owner has yet to make gifts and the holding period is shortened due to a pending sale? Has the window of opportunity for gifting stock at discounted values closed?

In traditional gift tax planning, a business owner will transfer shares of company stock long before a sale is anticipated. An ap-praisal of the company’s stock will account for the inability to easily sell this asset through valuation discounts. Because the hold-

The long holding periods with private companies present business owners the opportunity to transfer illiquid investments at discounted values.if a transaction occurs vs. remains private, evaluate the likelihood of each outcome, and account for the risk of the transaction failing to close. Discounts will be larger in situations with substantial risk of a failed transaction and where there is a significant valuation differential between the “deal” and “no deal” scenarios. While it is always advisable to gift shares prior to pursuing the sale of a closely held business, given the risks of the sale process, there is still opportunity to take advantage of discounted gifting prior to the transaction closing. n

Mr. Hauptman, CFA, is director of valuation & financial opinions for Stout Risius Ross, Inc. Contact him at 216-373-2997 or email [email protected].



The Best Lawyers in America ©

© 2013

SUCCESSION PLANNING

Can you direct me to the nearest exit?Begin with a team, successors and a valuationBy ANDREw whITEhAIR

Seventy-eight million Baby Boomers are closing in on retirement. For business owners considering their

retirement, this demographic shift could flood the market, meaning only the best po-sitioned business-es will sell. If you are among the 67% of business owners without a formal succession plan, where do you start to en-sure you receive

top dollar for your business? While assembling a succession

plan may seem daunting, small steps can make a huge difference in ensur-ing a successful exit. Kick start your

succession plan with the following:

Build your team of advisors

Your CPA, attorney and financial advisor all provide different insights and can help determine the amount of core retirement capital needed, provide tax minimization strategies, and suggest deal-structuring alterna-tives. They can guide you through the tough decisions and discussions needed to build a successful plan.

Obtain a business valuation

Most owners who have poured their life’s energy into their business tend to overestimate its worth. In many cases, the business providing the funds for retirement is the

owner’s primary asset. An impartial valuation can provide a baseline for a retirement sufficiency analysis and can identify areas of improvement that can make your business more valuable and more likely to sell.

Identify potential successors

No one can accurately predict future market conditions. As a result, many business owners may look to a family member or key employee as a potential exit strategy. However, it is important to ascertain early in the planning process whether the potential successor has both the desire and capability to lead your business. Identifying your successor now also gives you plenty of time to share your expertise and groom them to take over the business.

Small steps now can reap huge benefits later, so consult with your advisor today. n

Mr. Whitehair, CPA, is tax manager for Zinner & Co. Contact him at 216-831-0733 or email [email protected].

whITEhAIR

Protect your business by implementing a contingency planBy BRyAN P. kOEPP and JAMES PERRINE

A business contingency plan is imperative because it helps protect the owner’s personal wealth, but it

also offers protection from the unexpected. The owner should consider three key elements to maximize the value of planning: a “busi-ness will,” the execution of a buy-sell agreement, and access to liquidity through personal resources.

A business will is created through an array of direc-tives that state a business owner’s wishes and inten-tions regarding future deci-sions if an unexpected event were to occur. An owner’s estate plan should have flexibility to account for changes to both the busi-ness and the federal and/or state estate, gift or personal and corporate income tax legislation. An equally im-portant factor in creating a business will is the assignment of decision-making power if a contingency were to occur. The use of clear corporate by-laws and/or board resolutions may help prevent conflict regarding decision-making control. As part of the business will, a formal succes-sion plan should be considered to verify that all key management and vital production positions in the company remain filled.

If a business has more than one owner, the creation and implemen-tation of a buy-sell agreement is considered one of the most important elements of the contingency plan. The purpose of a buy-sell agreement is to balance the continuation of own-ership in the business with the treat-ment of all parties involved (buyer

and seller). A buy-sell agreement may be structured based upon an “owner purchases from owner” meth-odology, known as a cross-purchase agreement. A buy-sell agreement may also be structured through the business itself (known as a redemp-tion agreement). The two types may

be mixed to form a hybrid agreement. The tax ramifi-cations and maintenance for each of these options vary and should be considered by each party’s attorneys and tax advisors to confirm that the proper buy-sell structure is chosen.

One of the biggest issues a business owner may face, if an unforeseen circum-

stance occurs, is future access to liquidity. Most businesses utilize some form of commercial loan or line of credit to maintain operations, inventory, or for expansion purposes. An unforeseen circumstance, such as death of an owner, may threaten access to

these funds. A planning technique to consider is an Emergency Liquid-ity Trust (ELT) that is funded with life insurance and, at the death of the insured, provides income and principal to its beneficiaries.

A comprehensive business contingency plan takes foresight and coordination from the business owner and their trusted attorneys and advisors. With proper planning it should help protect the owner’s beneficiaries during a crisis. n

Messrs. Koepp, JD, CFP and Perrine, CFP are senior wealth planners for PNC Wealth Management. Contact Mr. Koepp at 404-495-6417 or email [email protected] and Mr. Per-rine at 216-222-8170 or email [email protected].

The material presented in this article is of a general nature and does not constitute the provision by PNC of investment, legal, tax or accounting advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. Opinions expressed herein are subject to change without notice. The information was obtained from sources deemed reliable. Such information is not guaranteed as to its ac-curacy. You should seek the advice of an investment professional to tailor a financial plan to your particular needs. For more information, please contact PNC at 1-888-762-6226.

The PNC Financial Services Group, Inc. (“PNC”) uses the names PNC Wealth Management®, Hawthorn, PNC Family Wealth® and PNC Institutional Investments® to provide investment and wealth management, fidu-ciary services, FDIC-insured banking products and services and lending of funds through its subsidiary, PNC Bank, National Association, which is a Member FDIC, and uses the names PNC Wealth Management® and Hawthorn, PNC Family Wealth® to provide certain fiduciary and agency services through its subsidiary, PNC Delaware Trust Company. Brokerage and advisory products and services are offered through PNC Investments LLC, a registered broker-dealer and investment adviser and member of FINRA and SIPC. Insurance products and advice may be provided by PNC Insurance Services, LLC, a licensed insurance agency affiliate of PNC, or by licensed insurance agencies that are not affiliated with PNC; in either case a licensed insurance affiliate will receive compensation if you choose to purchase insurance through these programs.

kOEPP

PERRINE



Legacy Robert* Family is a top priority for me. Which is why we want to know

that the decisions we make now will ensure a bright future for us, our

children and our grandchildren. Tom, our FirstMerit Client Advisor,

understands our aspirations and helped us develop a long-term

investment plan. He also helps us manage our day-to-day banking

needs so we can focus on what’s important. We have peace of mind

knowing our legacy will live on, exactly as we want it to.

Follow the latest market trends @firstmerit_mkt

Member FDIC1920_FM13

*Robert reflects a composite of clients with whom we’ve worked; he does not represent any one person.

TO L E A R N MOR E A B O U TF I R S T M E R I T P R I VA T E B A N K , C ON T A C T : Tom Anderson, Senior Vice President, at 877-478-2495 or [email protected].

Investments and Insurance Products are:

Not FDIC Insured • • • •May Lose

ValueNot Bank

GuaranteedNot A

DepositNot Insured By Any Federal Or

State Government Agency

ARTS AND COLLECTIBLES

Re-appraising valuables an important planning stepBy LORIE hART

No one likes surprises when it comes to their money and assets. You (and

clients) want to know where you stand financially at any given mo-ment. Most of us check our bank accounts, stock portfolios, invest-ments and insur-ance policies on a regular basis. But what about that dusty personal property appraisal for your artwork or collectibles that’s tucked away in the back of your filing cabinet (at least that’s where you think you put it)?

Here’s an all too common scenar-io: A loved one passes away and the trustee/heir is handling the estate. He/she finds said dusty appraisal while cleaning out personal files and learns that his/her loved one had an insurance policy for a collec-tion of bronze sculptures, artwork and silver. The appraised value of the collection is $500,000. Wow! But wait … the appraisal is from 1998 and is for insurance coverage. The values are a snapshot of the marketplace and condition of the items 15 years ago when Furbies, Y2K and swing dancing were all the rage! Those things are long past, so why would anyone assume that a 1998 appraisal is still accurate? Unfortunately many people do.

How often should your artwork and collectibles be appraised? The short answer is at least every five years. Why?

Markets fluctuate. If you have an appraisal prior to 2009, you should seriously consider updat-ing your information. The market crash of 2008 drastically affected the art market as well as all other markets. The fine art market has mostly recovered, however, certain collectibles, such as antique furni-ture, are still recovering. There are always exceptions, but those are reserved for the best of the best in the collecting world.

Accurate insurance coverage. If you have a scheduled fine arts insurance policy, you should re-appraise every three to five years. You want to make sure the value on the schedule is not below the appraised value.

Estate planning. Current ap-praisals are essential so that own-ers can plan for donation, estate tax and distribution and make adjustments to their plan to reflect the updated values.

Review and update your apprais-als periodically and you won’t be surprised, which is a good thing. n

Ms. Hart, ISA AM, is co-owner of L&L Estate Liquidation & Appraisal Services, LLC, in Solon. Contact her at (216) 470-7002 or email [email protected].

Are you overlooking an important asset class?By JAMES CORCORAN

An up-to-date estate plan must take into ac-count high value personal property

assets whenever appro-priate. As an asset class, personal property spans a wide range of high value items and collections from fine art to firearms, from books to vintage automo-biles plus jewelry and wine. As estate planners and wealth managers we may be less focused

on this asset class, which is often neglected during estate planning. The value of such property may be

a significant portion of the total value of an estate.

Certain categories of high value personal property have escalated in value over the past five years, some by as much as 100% to 300%. This in-crease reflects an increas-ingly global marketplace and an enthusiasm for

prestige collectibles, coupled with a desire to hold high value tangibles

as a currency hedge.An estate plan must include

an up-to-date fair market value appraisal for these assets. Fair market value appraisals preformed by certified fine art appraisers who are members of the AAA, ASA, or ISA provide the planning profes-sional with the appropriate values for estate planning purposes. Fair market value, as defined by the IRS, is generally not the same as insurance replacement value.

For estate planning purposes, it is inappropriate and misleading to use insurance replacement appraisal val-

ues. This is not to discount the value of an updated insurance appraisal, which can be prepared concurrently with the fair market value appraisal at cost savings to the client..

It’s time to delve into your clients’ high value personal property, get an updated fair market value appraisal, and update their estate plans with this valuable information included. n

Mr. Corcoran, JD, AAA, ASA, ISA, is founder of Corcoran Appraisal Group. Contact him at 216-767-0770 or [email protected].

CORCORAN

hART



Our mission is to foster faith-based stewardship in the community for the spiritual, educational and charitable needs of all.

You’ve been blessed with many gifts.What will you give in return?

Consider a legacy gift to bene�t the ministries of your Church.To learn how your generosity can make a di�erence in the Catholic Diocese of Cleveland, call the Catholic Community Foundation at 216-696-6525, ext. 4200 or go to planwithcatholiccommunity.org.

SPECIAL NEEDS ESTATE PLANNING

INTERNATIONAL ESTATE PLANNING

successor caregivers and advocates, and access to important funding sources.

Individuals with disabilities may be eligible for valuable public ben-efits that provide a wide range of care, services and income supports. They may qualify for Medicaid, Medicare, Supplemental Security Income (SSI), and/or Social Secu-rity Disability Income (SSDI) at different points in their lives. SSI and SSDI provide monthly income benefits meant to cover the cost of basic room and board expenses. Medicaid and Medicare benefits

include health care coverage, but the various Medicaid programs also provide group home living arrangements and other vital services that allow people with disabilities to remain a part of their communities and avoid costly institutionalization. All four programs require participants to meet a common definition of dis-ability, but Medicaid and SSI also require participants to have very little in terms of income and assets.

Special needs estate planning utilizes various types of Medicaid

Consider options for disabled loved onesLISA MONTONI GARvIN

Parents and other fam-ily members who care for loved ones with special needs worry about many

things, including providing for that individual after they no longer can. Public benefits programs are avail-able to address basic care needs, but families often wish to make funds available that add to quality of life. A special needs estate-plan-ning attorney can assist families in creating a structure of legal docu-ments that address concerns about

caregivers may also complete a letter of intent that identifies details about the disabled indi-vidual’s history of medical care, therapies, preferences and housing concerns so successor caregivers better understand current and future care needs.

Parents and other family mem-bers may always worry about a loved one with a disability, but appropriate and correct special needs estate planning may help allay some of that worry. n

Ms. Garvin is an attorney in the Cleveland office of Hickman & Lowder Co., L.P.A. Contact her at 216-861-0360 or via email at [email protected].

Citizenship, residency impact estate taxesBy JAMES SPALLINO JR.

When a client comes to you with “internation-al issues,” a threshold determination that

you must make is the client’s citi-zenship, residency and domicile.

U.S. citizens and noncitizens that are resident in the United States (resident aliens) are subject to U.S. gift tax on all transfers of

property wherever situated. U.S. citizens and resident aliens are subject to U.S. estate tax on world-wide assets.

Noncitizens that are not resi-dents in the United States (non-

SPALLINO

and SSI exempt special needs trusts that permit family members to set aside funds that may be used to supplement, but not replace, public benefits and greatly enhance that individual’s quality of life.

The property held in a special-needs trust maybe used for the benefit of the disabled individual, but is not countable toward Medicaid and SSI financial eligibility.

Planning may also include docu-ments nominating successor guard-ians for an adult disabled child, if a guardian is necessary. Current

resident aliens) are subject to U.S. gift tax only on transfers of U.S. real prop-erty and tangible personal property located in the U.S. Intangible property is specifically excluded by statute (with exceptions for certain expatriates). Nonresident aliens are subject to U.S. estate tax on property situated in the U.S.

Thus, the issue of situs of prop-erty will control U.S. gift and es-tate tax consequences for nonresi-dent aliens. Determining situs of real property and tangible personal property for purposes of gifts made by a nonresident alien is pretty straightforward. The property is either in the United States or it is not.

For U.S. estate tax purposes, §2104 of the In-ternal Revenue Code sets forth the rules for prop-erty that is deemed to be situated within the United States for the estate of a nonresi-dent alien, and thus subject to U.S. estate tax. The rules for property that is deemed to be situated out-side the United States can be found

in §2105 of the Code. Estate tax treaties can change

these situs rules. Transfers of prop-erty to a noncitizen spouse, either during life or at death, have special rules. No gift tax marital deduction is available for lifetime transfers to a noncitizen spouse. Instead,

there is an enhanced annual exclu-sion available for such transfers. In 2013, this amount is $143,000. An estate tax marital deduction is available only if the property is transferred to a qualified domestic trust (QDOT). Estate tax will be

due on certain principal distributions from a QDOT to a noncitizen surviving spouse.

Foreign trusts present their own unique set of issues, one of which is the reporting requirements. Transfers to a foreign trust and distributions from a foreign trust must be reported on Form 3520.

A foreign grantor trust must file Form 3520-A.

Planning using non-U.S. situs assets and entities can be an effective way to reduce the U.S. estate tax liability for a nonresi-dent alien. n

Mr. Spallino Jr. is a partner with Squire Sanders (US) LLP. Contact him at 216-479-8424 or email [email protected].



Estate Planning.Ever-changing laws and circumstances

require an experienced trusted advisor.

Whether you’re concerned about a potential tax impact, maximizing opportunities,

minimizing risks, or are uncertain where to begin, Ulmer & Berne LLP is ready to assist.

Our experienced attorneys simplify the important process of protecting your assets.

Estate Planning | Wills & TrustsSuccession Planning | Probate & Trust Litigation

Asset Protection Planning

ulmer.com

Building partnerships for a better tomorrow

Today we honor our prestigious

Allied Partners in Philanthropy society.

Your support helps maintain Cleveland Clinic

as a world leader in healthcare.

216.445.8980 | [email protected]

216.444.CARE | clevelandclinic.org

Primary caregivers provide a significant amount of practical

assistance – coordinating medical appointments and care, scheduling outings or providing financial support. The primary caregiver may be a spouse, an adult child or even a relative, neighbor or friend who is providing comprehensive assistance to make sure older adults get the care they need.

Developing a good relationship with the caregiver can help an at-torney ensure that he or she is pro-viding the best results for the client. Working as a team will help ensure that everyone is on the same page should a crisis arise or in the case of significant decline over time.

In the case of dementia, a person loses cognitive capacity over time and the rate of decline varies from

person to person. During early stage dementia, an individual’s ability to make sound decisions even about complex legal matters may remain for a long period of time. He or she may be in denial about the dementia diagnosis, in which case the involvement of the primary caregiver can help an attorney get a clearer picture of current and future needs.

Alternatively, some people who receive a diagnosis of dementia gain a sense of urgency to put their affairs in order before they lose the capacity to do so. They may want the caregiver involved in plan-ning personal financial affairs, in personal care that may be needed in the future, and deciding or estab-lishing long-term care preferences. The caregiver can also provide

FUNDING EDUCATION

Maximizing education savingsBy BETh kORTh

If paying for a child’s or grand-child’s college education is a cause of worry or stress in your financial life, then you

are not alone. However, there are planning opportunities available to help you meet the chal-lenges of college funding. All families, regardless of income, should complete the Free Application for Federal Student Aid (FAF-SA) to ensure they can take advantage of all potential college funding opportuni-ties. Other strategies may include the following:

529 plans529 college savings plans let you

save money for college in a tax-de-ferred investment account. These investment plans don’t guarantee a return and you may lose money. The total amount you can contrib-ute to a 529 plan is generally high, with limits of $300,000 and higher.

Permanent life insur-ance with cash value

Since this asset is not included on the FAFSA, some families may purchase permanent life insurance with cash value as a strategy to decrease “included” assets, provide

By ANNE-MARIE E. CONNORS

An attorney is a trusted re-source for clients, offering expertise on the myriad legal issues arising

throughout a client’s lifespan.As clients age, issues may arise

that may not be specifically legal in nature, but can impact decision making, financial planning and other considerations. Wills, trusts and other estate planning mechanisms may need to be reevaluated as a person ages, especially if he or she experiences chronic health issues or develops dementia. Planning for long-term care needs, protecting entitlement benefits or considering a housing transition may move to the forefront of legal needs.

Older adults often have a care-giver. Even if someone is cognitive-ly intact, a caregiver can provide help with day-to-day activities that enable seniors to remain at home and retain their independence.

ADvISING CAREGIvERS

Elderly caregivers play key role

tax-free distributions of cash value for education costs and fund educa-tion costs in the event of the death of the insured.

Account ownershipThere are significant benefits

to having assets in the parents’ names rather than the student’s

name since the FAFSA needs analysis assumes less of the parents’ assets are available to fund education.

GrandparentsGrandparents often

choose to fund a grand-child’s education. They can

contribute to 529 plans, open 529 plans in their own name or pay tuition directly to the school. This allows grandparents to reduce their taxable estate while financially assisting a child and providing for a grandchild.

While the cost of a college educa-tion can seem overwhelming, plan-ning ahead with a team of advisors allows you to define your goals, consider all options and implement a strategy to reach your goals. n

Ms. Korth is a senior financial planner with Key Private Bank. Contact her at 216-689-7160 or email Beth_M_Korth@ KeyBank.com.

CONNORS

kORTh

Developing a good relationship with the caregiver can help an attorney ensure he or she is providing the best results for the client.

See INPUT Page E-18



THE ART OF PROBLEM SOLVING

Providing creative legal solutions for tax & wealth matters

Estate and Wealth Management Planning | Business and

Individual Taxation | Counseling and Succession Planning for

Closely Owned Businesses | Asset Protection Planning | Retirement Plan Implementation and Compliance | Probate and

Trust Administration | IRS and Tax Court Controversies

The Tax & Wealth Attorneys of

Cleveland | 216.781.1212 | walterhav.com

Henry Spain, ChFC, CLUSteven Berman, CFP®

30100 Chagrin Blvd. #200Pepper Pike OH 44124www.spainberman.com

216-378-2722

You’re likely to get a second opinion fora Medical DiagnosisIt’s never too late for a second opinionon your Investment PlanThe financial advice you receive comes with:• Personalized financial strategies with a broad range of investment

choices• Support from our talented force of market analysts, investment

planning specialists and portfolio managers

Wells Fargo Advisors, LLC, Member SIPC

The Personal Property Appraisal Experts

• Estates • Charitable Donations • Insurance• Insurance Claims • Sales Consultations • Estate Planning

James Corcoran JD, AAA, ASA, ISA

37 years of Certified and IRS Qualified Appraisals.Fine Art, Antiques, Books, Firearms, Collectables

216-767-077012610 Larchmere Blvd. • Cleveland, Ohio 44120

www.corcoranagi.com • [email protected]

CORCORANAPPRAISAL GROUP

GIFTS AND ASSET PROTECTION

Deciding to give: beginning the processBy CARRIE ROSkO

One of the most exciting decisions in a financial plan is choosing how and when to make personal

and charitable gifts. Thoughtful planning can ultimately serve to create a meaning-ful legacy and bring peace of mind to you and your loved ones.

Begin the process by assembling a listing of all your assets. Then give care-ful consideration to the ultimate distribution of your assets upon passing. There are three baskets to choose from: family, charity or taxes.

Generally people prefer to get as much as possible in the first two baskets. Family may involve chil-dren, nieces and nephews, cousins, or perhaps even family friends. Typically, charity works best for those that are already charitably inclined and have a passion for particular causes.

Generosity seems to be an inherited trait. Generosity com-bined with a cause that resonates within the family makes the giving process most meaningful.

when do you begin the process? Do you give during your lifetime or at death? Many families begin the process during life with the final distribution at death. Lifetime gifts have the benefit of removing the asset from your estate early on, thereby removing future growth from your estate.

One of the non-financial benefits to giving early is allowing you to see the enjoyment achieved, whether

it is helping a child purchase a house or start a business or seeing the benefits that your charitable donation is able to provide to others.

A lifetime gift can serve to teach responsi-bility gradually rather than overwhelming the recipient with a windfall. Finally, a lifetime gift may enable you to observe

how your gifts are used and may help determine how you want the remaining assets distributed at your passing, whether it is more appropriate for them to be distrib-uted outright or in trust.

If your gift is to a charity, it enables you to see if the charity is using the funds thoughtfully and wisely.

what assets do you give? Cash, of course, is always an option. Other good possibilities include stocks, real estate, or shares of a family business. Your financial advisor and estate planning attorney will help you determine what assets make the most sense for you and your family.

Overall, early planning provides you with the comfort and joy of knowing your beneficiaries are pro-vided for in the manner you desire. n

Ms. Rosko, CPA/PFS, MT is a partner and vice president of Cornerstone Family Office, LLC. Contact her at 440-460-0460 or [email protected].

ROSkO

Give careful consideration to the ultimate distribution of your assets upon passing. There are three baskets to choose from: family, charity or taxes.

Ohio legacy trusts offer flexibility By F. SCOTT B. GENEvA

Effective March 27, 2013, under the Ohio Manage-ment Modernization Act of 2012, Ohioans

are now able to put assets into trust of which they are beneficiaries and protect those same assets against their creditors. These “domestic asset protection trusts” have been popular using Delaware, Alaska and a few other states’ jurisdictions. Now with the Ohio legacy trust, Ohio has an ag-gressive domestic asset protection trust of its own. The details of the legacy trust and its administration are essential, but the law provides great flexibility.

Settlor requirementsTo create a valid Ohio legacy

trust, the settlor (the person creat-ing the trust) must be solvent at the time assets are transferred into the trust and must be projected to remain solvent into the future based upon expected income and expenses. The trust must be ir-

revocable with at least one trustee tied to Ohio. The settlor can be a beneficiary of the trust receiving distributions in the discretion of the trustee. Further, the settlor

can retain the power to instruct the trustee to make a distribution to oth-ers, and retain the power to veto distributions the trustee would otherwise make to others. Finally, the settlor can retain the power to remove and replace trustees.

Creditor requirementsAny creditor whose claim arises

after the time of the transfer has 18 months from the date of the transfer to contest the transfer if it should have known about the transfer, and no more than 36 months if it should not have known. A new optional filing with the county, similar to recording a deed, will allow the settlor to effectively notify every creditor of the transfer, limiting the time period for all to 18 months.

If the settlor makes a proper transfer into a valid trust and

GENEvA

does not violate the terms of the trust during its administration by exercising direct control over the trustee or even having an implied understanding with the trustee, the assets in the trust are pro-tected from all claims against the settlor, with only a few statutory exceptions.

Ohio legislators have taken significant steps to make Ohio one of the most debtor-friendly jurisdictions in the country. If your business opens you up to potential litigation, it is advisable to discuss with your attorney whether a legacy trust would be suitable for you. n

Mr. Geneva, Esq., is a partner with Meyers, Roman, Friedberg & Lewis. Contact him at 216-831-0042, ext. 123 or email [email protected].

The details of the legacy trust and its administration are essential, but the law provides flexibility.

THE ESTATE PLANNING COUNCIL OF CLEVELAND

PresidentBeth M. Korth

Vice PresidentJennifer A. Savage

SecretaryMichael T. Novak

TreasurerMichael W. Matile

Program ChairEmily Shacklett

Immediate Past PresidentMarie L. Monago



Family O�ce, W E A L T H A D V I S O R S

LLCFamily O�ce, Fa ily O�W E A L T H A D V I S O R S

LLC

More �an Just Advice.

Choosing the right trusteeBy LOUIS LAJOE

You’ve worked hard to build your wealth. Now you’re ready to set up a trust to pass it on to future

generations. One of the most important decisions you’ll need to make is about who will oversee the trust.

The role of trustee bears signifi-cant responsibility including stand-ing in a fiduciary role for the trust’s current and future beneficiaries, making prudent investment deci-sions, responsibility for distribu-tions and all of the administration requirements.

In addition to the trustee’s responsibilities, you also need to consider the personal time com-mitment. The administration of a trust, from evaluating beneficiary requests to reviewing investment options and maintaining account-ing records, can require a substan-tial commitment.

The choice of trustee is a per-sonal one and could be a family member, trusted friend, lawyer or bank. It is important to find the individual or organization with whom you are most comfortable and provides peace of mind that your assets are being managed in accordance with the direction provided in your trust.

Family trusteesIt is not unusual that grantors

select family members as a sign of honor or trust. While the inten-tion is good, it may actually turn out to be a burden since the family member would consider this an ob-ligation, even though they may not have the skill set or time to meet the needs of the beneficiaries. You’ll also want to consider someone who can deal fairly and diplomatically with competing interests, for exam-ple, meeting your trust’s directions for dealing with the requirements of the current beneficiaries and what your trust directs for protecting assets for future generations.

Corporate trusteesAnother consideration is choos-

ing a trustee who has the knowl-edge to successfully manage your trust. Consider choosing someone who is able to interpret trust docu-ments and terms, has an under-standing of the Ohio Trust Code, state and federal income tax codes and other applicable tax concerns. Corporate trustees offer all these advantages and more. A corpo-rate trustee is a company, such as a financial institution, that is authorized by law to manage trust property. Such companies have specialists who can offer expert

advice and planning to assist with every aspect of your finances, from investment management to private banking, trust and estate planning to retirement planning solutions.

Corporate trustees have experi-ence to manage the complex details of a trust including established processes and procedures; appro-priate levels of oversight to avoid mismanagement; account services; and will provide objectivity in the general oversight of the trust and in handling discretionary distribu-tions and beneficiary requests.

Trust advisorIf you are interested in the benefits

a corporate trustee provides, but still want a family member or trusted friend involved in the oversight, consider appointing that person a trust advisor to act along with the corporate trustee and give them the power to change corporate trustees, provide oversight to investment man-agement and/or provide approval on discretionary distributions. No matter who you choose, remember that the trustee is obligated to follow the grantor’s instructions, which are provided in the trust document. n

Mr. LaJoe is trust advisor and vice president of FirstMerit Bank. Con-tact him at 216-694-5656 or email [email protected].


Family member

Trust advisor

Corporate entity

It’s still a great time for a GRAT By PETER A. IGEL AND RENNIE C. RUTMAN

Estate planning techniques rarely permit a transfer of wealth with no estate, gift or income tax cost to

the transferor. One technique that does is a grantor retained annuity trust (GRAT).

A GRAT is an irrevocable trust into which assets are transferred by a person who wishes to make a gift. The grantor receives an annual payment from the GRAT for a term of years (annuity period). Assets remaining in the GRAT when the annuity period ends, after the annual payments are made to the grantor, are trans-ferred to the GRAT beneficiary.

The taxable value of the gift which is charged against the grantor’s lifetime gift tax exemption is determined at the time the as-sets are initially transferred to the GRAT, rather than when the assets are ultimately received by the beneficiary. This determina-tion is based on a projection of the

amount that will remain in the GRAT when the annuity period ends, after the annual payments are made to the grantor. The amount actually transferred to the GRAT beneficiary at the termination of the annuity period is disregarded.

The most important variable in the calculation of the taxable value of the gift is the “7520 Rate,” which is an interest rate tied to certain U.S. Treasury bonds. The 7520 Rate floats monthly and is published by the IRS. (The current 7520 Rate is 2.4%.) The lower the 7520 Rate, the lower the projected value remaining in the GRAT at the end of the annuity period, and thus, the lower the calculated tax-

able gift to the beneficiary. Here is the key: if the assets held in the GRAT actually appreciate at a rate greater than the 7520 Rate, the excess appreciation is transferred to the beneficiary, gift tax free.

Although 7520 Rates are slowly creeping up from their historic lows, they are still low and con-tinue to create an opportunity to transfer a significant amount of wealth at little to no tax cost. This is particularly tax efficient if the assets transferred to the GRAT are still suffering from some market depression. If the GRAT assets appreciate at a rate greater than 2.4%, the GRAT has been success-ful; if not, there has been no harm done, no tax paid, no exemption wasted. n

Mr. Igel is a partner in the Cleveland office of Tucker Ellis LLP. Contact him at 216-696-5084 or email [email protected]. Ms. Rutman is counsel in the Cleveland office of Tucker Ellis LLP. Contact her at 216-696-4749 or email [email protected].

RUTMANIGEL



Two Life agreements are available with the rate provided on request with both dates of birth.

American Heart AssociationAttn: Pamela D. LeonardP.O. Box 1544Fairmont, WV 26555

If you choose, your gift can be used here in our region. The American Heart Association programs empower thousands of individuals to reduce their risk of heart attack and stroke through movements like Heart Walk, Go Red For Women and Power To End Stroke.

In today’s economy, you may want to consider the advantages of aCharitable Gift Annuity with the American Heart Association.

Fixed Income for Life • Partially Tax-Free Income • Charitable Income TaxDeduction for Itemizers • Rates from 5.3% to 9.0% based on your age.

©2013, American Heart Association 9/13DS7313 PG 2013-2014 PL CGA Ad 10/13

Date(s) of Birth Phone

City/State/ZIP

Address

Name

Send this coupon today

or call 1-304-366-1604.

Fixed Income for You – A Gift for UsCharitable Gift Annuities

MY BENESCH MY TEAM

Cleveland | Columbus | Indianapolis | Philadelphia | Shanghai | White Plains | Wilmington | www.beneschlaw.com

Live for today. Plan for tomorrow.

Gary B. Bilchik, Partner

Business Succession Planning

& Wealth Management Practice

Licensed to practice law

in Ohio and Florida

Deviani M. Kuhar, Partner

Chair, Business Succession

Planning & Wealth

Management Practice


in Ohio

Scott E. Swartz, Of Counsel

Business Succession Planning

& Wealth Management Practice,


in Ohio

For all the time and effort you’ve put into building your wealth, you deserve peace of mind in return. The kind that comes from knowing your assets are protected, your wealth will be distributed as you wish, and your future is as secure as you can make it.

Whether you need to build an estate plan from scratch, or ensure your current plan is in sync with today’s rapidly changing laws, our attorneys can help. We have the specialized knowledge and experience to manage all aspects of your estate.

Have you considered how taxes will impact your wealth? Do you have a business succession plan in place? Are you sure that your assets have been aligned properly with your estate plan? Have you planned for charitable gifts…long-term care…incapacity?

We can assist in these areas and help you manage your assets in ways that will minimize the probate administration process.

Live for today…plan for tomorrow. Talk to us about how to get started.


Take heed as you set up IRAare named through a qualified

trust, they may split it into “subaccounts” for investment purposes, but the age of the oldest beneficiary determines the life expectancy for dis-tribution calculations for all. Naming a charity can save both estate and income tax.

If no named beneficiary exists, the estate is the ben-eficiary. All assets will need to be distributed by the end

of the fifth year after death.The use of primary and contin-

gent beneficiaries is important. Naming contingent beneficiaries protects against the demise of the primary beneficiary before the IRA owner. It also allows for the use of disclaimers of IRA accounts by primary beneficiaries to contingent beneficiaries if they so choose. This can allow for maximum flexibility.

Required distributions during lifetime are based on the age of the owner and beneficiary.

Naming a spouse 11 or more years younger than the owner can reduce the annual amounts. The spouse can disclaim the accounts to

the contingent beneficiaries at the owner’s death or roll the IRA into his/her own IRA to defer payouts. However, the spouse can also name new beneficiaries if the account is rolled over.

A trust can be used to name the beneficiaries in order to prevent this, which is important where children of an earlier marriage are the contingent beneficiaries.

For Roth IRAs, the RMD rules do not apply. However, proper beneficiary designations are very important, given the IRAs may be in existence for a long time if no RMDs are made.

The most important thing to remember is to make sure IRA beneficiary designations are made and kept updated. Circumstances change and elections should be kept current. The birth or death of an heir, marital changes, etc., can all have an impact on the proper naming of beneficiaries and choice of distribution method. n

Ms. Vitale, CPA, CFP, AEP is prin-cipal at Howard, Wershbale & Co. Contact her at [email protected].

vITALE

By MARy EILEEN vITALE

IRA beneficiary des-ignations provide a myriad of opportuni-ties including income

and estate planning com-bined with the desired dis-tribution of assets among heirs. Certain rules must be followed to reach the goals of an IRA owner; but with proper work up front, the desired results are attainable.

To obtain the benefits of plan-ning, two basic principles must be followed:

1 Beneficiaries must be named by the owner; and,

2 Beneficiaries must be named prior to the death or Required

Beginning Date (RMD) for maxi-mum planning effect.

Three types of beneficiaries qualify: individuals, certain qualified trusts and charitable organizations.

If beneficiaries are directly named (individuals), they have the flexibility of splitting the IRA for determining the required distributions during their own lifetime. If beneficiaries

Legacy trust as an asset protection strategyBy SCOTT E. SwARTZ

There is heightened interest in Ohio regarding protect-ing wealth from future creditors, claims and

lawsuits. This is due in part to a significant change to the Ohio Trust Code. Ohio law now allows for legacy trusts, the codified term for what are commonly known as “domestic asset protection trusts.”

While there are many other techniques for protecting wealth, these self-created trusts merit consideration when engag-ing in estate and wealth planning.

There are other good reasons for looking at how to protect accumulated wealth. Continued develop-ments nationally should cause business owners and executives to wonder whether planning mea-sures are needed.

For example, a recent Wall Street Journal article detailed the plight of an entrepreneur and executive who was being sued personally by the U.S. Consumer Product Safety Commission for alleged deficiencies in an office toy that his corporation marketed to the public.

Elsewhere, the Second Circuit Court of Appeals held that the owner and CEO of a supermarket corporation was personally an “employer” under the Fair Labor Standards Act, and thus personally liable for violations of that federal law in a collective action by plain-tiff employees.

These cases demonstrate that as-set protection concerns are not lim-ited to the traditional individuals such as doctors and lawyers. Busi-ness owners and executives can experience a variety of situations where possible personal liability exists for corporate activity.

In Ohio, the new legacy trust

is one possible tool to study for protecting personal wealth.

The statute allows a person to create an irrevocable trust, transfer assets to that trust, be a beneficiary of future distributions

of income or principal, and prevent the trust assets from being subject to claims of the transferor’s creditors.

There are exceptions such as spousal support, alimony or a division of property upon divorce to a spouse who was married to the transferor on or before

the funding of the trust, and child support obligations.

In creating a legacy trust, the individual will have to take into account federal estate and gift tax laws. Good asset protection planning with a legacy trust might cause tax problems if not structured correctly.

The transferor will also have to get comfortable with losing unfettered control of the trust assets. Distribu-tions back to the transferor by the trustee must be in the discretion of the trustee, or the protective purpose is defeated.

There are many issues to work through, but with good planning the legacy trust law, along with other existing options, provides opportunities to minimize creditor risks to accumulated wealth. n

Mr. Swartz is of counsel with Benesch, Friedlander, Coplan & Aronoff LLP. Contact him at 216-363-4154 or email [email protected].

SwARTZ

Good asset protection planning with a legacy trust might cause tax problems if not structured correctly.



Tied up in your business?

Set yourself free with BCG Legacy Advisors.www.BCGcompany.com/Legacy

Call our advisors today (330) 864-6661

estate planning tax strategy succession planning

One law �rm for all estate planning legal needs

Estate planning, probate and trust administration

Tax planning for asset preservation and protection

Estate planning for charitable and philanthropic pursuits

Estate planning for unique family situations, includingsecond marriages and special needs bene�ciaries

Succession planning for closely-held businesses

Estates, trusts and �duciary litigation

200 Public Square / Suite 3500 / Cleveland, OH 44114(216) 241-2838 / www.taftlaw.com


Lifetime trusts ideal vehicle for heirsBenefits include flexibility, control and protection from creditorsBy MARCIA J. wExBERG and FRAN MITChELL SChAUL

A s estate planners, the plans that we establish for clients have shifted a great deal in recent years.

Apart from the tax-driven changes that are frequently in the news, we have witnessed other, more value-driven changes, prompted by our

clients’ desire to protect their heirs, their families and their wealth.

Even a dozen years ago, our cli-ent’s estate plans (after the death of both spouses) were focused primarily upon their children – how much the children would receive and when. The big discus-sions centered around the wisdom of choosing distribution ages of 25 and 30 versus 25, 30 and 35 – or

even 40. Occasionally, special circumstances (alcohol or drug dependence, for instance) would lead to an extended period of re-tention in trust, but this was rare. Lifetime trusts for children, except to protect the generation-skipping tax exemption, were simply not on most people’s radar screens.

How our world has changed! More and more we find our clients interested in a thoughtful ap-proach to plan-ning that provides control and flexibility for their children while at the same time protecting their inheritance from certain creditor claims. Physicians and others in risky professions worry about li-ability. Parents are acutely aware of the skyrocketing divorce rates – many of them having been touched by this experience. Increasingly, as we discuss estate-planning updates with clients, we talk about holding assets in long-term trusts for their children and grandchildren – trusts that may last for generations.

These long-term trusts – often referred to as “dynasty” trusts – offer many advantages. While

creditor (judgment) and divorce protection may provide the initial impetus, a properly drafted dynas-ty trust can also provide significant wealth-building and tax-planning opportunities for multiple genera-tions of family members.

But what about flexibility? Although clients want to protect

their children, they generally trust them. Were it not for creditor and divorce-protection concerns, many would leave their assets to their children outright, rather than in lifetime trusts. We are often asked whether the children can have access to the assets held in a lifetime trust, and whether they can have some say as to what hap-pens to those assets when they die.

The answer is a resounding “yes.” In fact, we can approximate the amount of flexibil-ity that came with the outright at 25-30-35 model, while still providing the desired level of protection.

Here are some of the approaches that have been most appealing to those who are creating lifetime trusts for their children:

n Allow the son or daughter to become the trustee of his or her own trust, often at the age when he or she would have received the last outright distribution under the old model. This provides them with substantial control over the trust assets, including the ability to make distributions to themselves and their children for health, sup-port, maintenance and education, as well as the ability to control the investment of trust assets.

n Where the parents want the child to have access beyond the stated (tax-driven) standard, a spe-cial trust advisor for distributions can be included. Although this has to be someone other than the child, and not “related or subordinate” to the child, this can provide virtu-ally unlimited access to the assets, should that be needed.

n Give the child the flexibility to

wExBERG SChAUL

alter the basic trust provisions set up by his or her parents. Giving them “testamentary power of appoint-ment” allows the child to alter the disposition to his or her children and grandchildren (and perhaps others) as circumstances warrant, and may also permit them to leave their spouse an income (or possibly larger) interest in the trust assets.

These same principles can be applied to beneficiaries in genera-tions below that of the children, in circumstances where clients want assets held in trust for multiple generations.

We find that children generally welcome the fact that they can be trustees, have substantial control, and still protect their inheritance from creditors. To the extent a child may encounter a subsequent divorce, this trust will generally provide some protection, although that varies from state to state as the divorce laws fol-low the state of residence of the child (or other trust beneficiary). Overall, however, it doesn’t get any better than having it in a lifetime trust set up by the parents. n

Ms. Wexberg is the chair of the Estate and Succession Planning practice group at Calfee, Halter & Griswold LLP. Contact her at 216-622-8858 or at [email protected]. Ms. Schaul is a senior counsel in the Estate and Succession Plan-ning Group. Contact her at 216- 622-8351 or at [email protected].

Give the child the flexibility to alter the basic trust provisions set up by his or her parents.



Mandel Building · 25701 Science Park Drive Cleveland, Ohio 44122 216.593.2900 · www.jewishcleveland.org


Outright gifts to minors miss the markConsider tuition programs and payments, trusts and giftsBy PATRICk TULLEy

Parents and grandparents are often interested in making gifts to minor children or grandchildren

to help pay college expenses or for other tax planning purposes.

Gifts to minors may be made outright to the minor or by one of several alterna-tive methods. An outright gift to a minor generally is unattractive to donors, both because minors lack the capacity to transact financial business and because many minors lack the knowledge and maturity to manage their financial affairs. The following are four common alternative methods to make gifts to minors.

Gifts in trustThe primary advantage of using

a trust to make gifts to minors is the ability to maintain control over the funds until such time as the donor believes that the minor is capable of managing his or her own financial affairs.

In addition to wanting to main-tain control, most donors want their contributions to the trust to qualify for the federal gift tax

ther the donor nor the beneficiary can direct any investments of the program. Qualified higher educa-tion expenses are limited to tuition, fees, books, supplies, and equip-ment (expenses of room and board can be included only under certain circumstances). A withdrawal for non-education purpose may be subject to income tax on the gains only and an additional 10% federal tax penalty on earnings. Beneficia-ries can be changed only to a new beneficiary within the same family.

Direct tuition paymentsIt’s important to keep in mind

that the direct payment of tuition is not considered to be a taxable gift, regardless of who makes the payment. This exemption is unlimited and is in addition to the annual gift tax exclusion.

Therefore, a donor is able to “give away” more than $14,000 per year (the amount of the an-nual federal gift tax exclusion) for a child’s or grandchild’s college education and not worry about gift taxes. The money used to pay the tuition also will not be part of the donor’s estate. n

Mr. Tulley is a partner with Ulmer & Berne LLP. Contact him at 216-583-7234 or email [email protected].

annual exclusion. The annual exclu-sion is a valuable wealth transfer opportunity that allows a donor to give $14,000 (twice that amount if married) to each of an unlimited number of donees, free of federal

gift tax. However, only a gift of a “present interest” qualifies for the annual ex-clusion, and there are only a couple of ways for a gift to a trust to qualify as a pres-ent interest for the purpose of the annual exclusion.

Contributions to a trust can qualify if certain condi-tions are met, the most sig-

nificant of which is that the minor must be able to withdraw all of the money in the trust when the minor turns 21. A contribution to a trust can also qualify for the annual exclusion if the beneficiary has the immediate right to withdraw from the trust an amount equal to the annual exclusion, even though the right of withdrawal may lapse if not exercised within a relatively short period of time (30-45 days).

Uniform Transfers to Minors Act

An alternative to gifts in trust

for minors is gifts to a custodian under the Uniform Transfers to Minors Act. Under the Act, the custodian (an adult acting for the minor) is responsible for invest-ing and applying the funds as needed for the minor’s education and support. There are advantages and disadvantages to UTMA gifts compared to a trust. A UTMA gift is simpler (and less expensive) be-cause there is no trust to prepare and no separate income tax returns to prepare. The biggest disadvantage of an UTMA gift is that the minor must get all of the property at age 21, regard-less of the minor’s maturity or ability to manage his or her own funds.

Qualified state tuition programs

The tax-deferred growth and po-tential tax-free withdrawals associ-ated with a qualified state tuition program (Section 529 plan) make it attractive to individuals who want to maximize the growth of their college savings. While other

plans offer this feature, Section 529 plans allow a parent or donor to remain in control of the assets indefinitely, even allowing them to close the plan and get their money back (albeit subject to penalties).

The advantages of a Section 529 plan include the following: Contri-butions qualify for the federal gift tax annual exclusion and are no longer part of the donor’s taxable

estate. In addition, if the contribution exceeds the

annual gift tax exclu-sion, the donor can elect to treat the gift as though made in equal installments over five

years. From an in-come tax perspec-tive, the account grows tax-free.

Withdrawals are free from federal and state income tax if used to pay for qualified higher

education expenses. Lastly, contri-butions may be eligible for a total or partial deduction on the donor’s state income tax return.

While the advantages are numerous, there are limitations to these state tuition programs: Nei-

TULLEy



Helping you build wealth begins with earning your trust. Our team of Relationship Managers offers expertise in banking, investments, and trust, as well as the personal service you’re looking for. For an integrated and objective approach to managing wealth, turn to Key Private Bank.

trust

go to key.com/kpbcall Gary Poth, Private Bank

Executive at 216-689-5607

Bank and trust products from KeyBank National Association, Member FDIC and Equal Housing Lender. Investment products are:

Key.com is a federally registered service mark of KeyCorp. ©2013 KeyCorp. KeyBank is Member FDIC. ADL1551 - 31193

Simple……Smart……Meaningful

Create a charitable legacy for business, family or both

Increase giving and tax benefits by leveraging stock, real estate

and closely held business interests

ALWAYS allow the trusted financial advisor to custody/manage

the charitable assets on their preferred investment platform

�

�

�

An AEF Donor Advised Fund can

CONTACT LAURA J.MALONE, CAP®

[email protected]

877-599-8903

Spero-Smith Investment Advisers:Because Money Doesn’t Come with Instructions

Get our financial planning guide for

sudden wealth at sperosmith.com

We want you to succeed.Wealth Management | Investment Strategy | Financial Planning

Spero-Smith Investment Advisers, Inc. | (216) 464-6266 | sperosmith.com

Having money doesn’t guarantee financial success. It’s easy to make mistakes – especially when you sell a business, lease your property’s mineral rights, or receive a sudden financial windfall.

Spero-Smith can help. We are a local, independent, fee-only, investment management company. Business owners and investors have trusted us for more than 40 years. Call us today.

ISA members are used to taking a closer look from every point of view. With the most comprehensive personal appraisal

Find your ISA appraiser today. www.isa-appraisers.org

A dierent perspective changes everything.

L&L ESTATE LIQUIDATION & APPRAISAL SERVICES, LLC


Tax relief not the only reason to use a trust By JOSEPh M. MENTREk

When Congress acted decisively in late 2010 and adopted sweeping estate tax law changes

that included an increase in the estate tax exemption amount to $5 million, many paused to consider what the future of estate planning would look like.

Such sweeping changes certainly underscore the necessity of carefully moni-toring your plan to ensure that it remains effective in carrying out your wishes. And whether you have a plan in place, or are consid-ering adopting a plan, you may ask whether it still makes sense to include a trust as part of that plan. Even if taxes may no longer be a driving force,there are non-tax reasons to consider.

Probate avoidanceProbate is the formal court-

supervised process of attending to the final affairs of a deceased individual. Transferring title of your assets to a trust prior to your passing will remove those assets from the probate process. The benefits of avoiding probate in-

clude eliminating the time and cost invested in the process. Perhaps more important, avoiding probate keeps your financial affairs private since the process, including the financial accountings, are a matter of public record. Furthermore, using a trust to own out-of-state real estate may help avoid an ancillary probate proceeding in a non-resident state.

Peace of mind in providing for your heirs

Careful selection of a trustee and consideration of the terms of your trust can effectively manage the payment of trust income and principal to trust

beneficiaries. A well-drafted trust can preserve capital and manage cash flow. This can be particularly important when you feel that your loved ones’ good intentions may require some oversight when it comes to making wise financial decisions.

Professional asset management

An institutional trustee will likely provide portfolio manage-ment as part of its service offering.

Alternatively, an individual trustee should have the ability to select and hire professional asset managers to the extent he or she does not possess the requisite skills, and where ben-eficiaries are not equipped to make such decisions on their own.

Control in special circumstances

A well-drafted trust allows you to control the “who, what, when, where, why and how” economic benefits are enjoyed by your friends or family.

A trust can be very helpful in avoiding conflict in second marriage or blended family situations, when your estate includes a closely held business, or when charity might be considered as an ultimate benefi-ciary. Likewise, a trust may prove valuable when your goal is to provide for your bloodline over the genera-tions. And a trust may be indispens-able when a beneficiary lacks mental capacity, or has special needs where you want to provide for an individual without affecting his or her abil-ity to continue government benefit programs.

Creditor protectionA well-drafted trust can protect

your heirs from the claims of their creditors, including a spouse in the event of divorce.

So, even in a world where taxes may no longer drive estate plan-ning for many individuals, use of trusts remains an important dis-cussion point as you develop your plan with your trusted advisors. n

Mr. Mentrek is vice president of Meaden & Moore, Ltd. Contact him at 216-241-3272 or email [email protected].

MENTREk

Input matterscontinued from Page E-11

perspective on balancing the pres-ervation of family assets with use of funds to maintain or enhance the client’s quality of life.

Involvement of the caregiver early in the planning and deci-sion process can smooth potential conflicts if the need for durable power of attorney for health care and/or finance arises, or in more extreme cases, conservatorship or guardianship.

Many law firms have a social worker on staff who can facilitate the development of teamwork among the attorney, the client and the primary caregiver.

The relationship between a client and attorney evolves over time. As a client ages, that relationship can be strengthened by involving the primary caregiver as a key member of the decision-making team. n

Ms. Connors is vice president of development for the Benjamin Rose Institute on Aging. Contact her at 216-373-1608 or email [email protected].



You don’t have to be a doctor to: 1. Save a premature newborn 2. Promote the study of cancer 3. Educate the next generation of doctors

Through their generosity, donors to MetroHealth do all that and more.

Leading the way to a healthier community and a healthier you

www.donate.metrohealth.org

To find out more about planned giving opportunities to benefit you and MetroHealth, contact Kate Brown

at [email protected] or 216-778-7509.

Let us help you meet your goals.

*Heisenberg’s Uncertainty Formula

What’s your plan for life’s uncertainties?


How ‘death puts’ aid in estate, investment planninghENRy A. SPAIN

I am often surprised by how few retirement plans utilize a corporate bond or brokered CD feature

known as the “Survivor Put Option” or less glamorously, the “death put.” This feature is available with some corporate bonds and nearly all brokered Certificates of Deposit. It provides the es-tate, trust or IRA beneficiary with the ability to cash the bond in

By ChAD MAkUCh

Irrevocable trusts are useful in estate planning to pro-vide substantial tax savings, creditor protection, and other

benefits. Of course, one downside of irrevocable trusts is that they gener-ally cannot be modified.

In recent years, however, 19 states (including Ohio) have adopted “decanting” statutes that provide a profoundly useful tool for modifying irrevocable trusts, and many other states recognize a common law right to decant.

Decanting allows trustees to “pour” assets from one trust (the decanting trust) into a second trust with different terms (the recipient trust).

The ability to modify the terms that govern the administration (and potentially distribution) of trust property through decanting is a valuable tool, especially where an irrevocable trust’s existing terms become antiquated or otherwise undesirable.

For example, depending upon applicable state law, trustees may decant a trust to: accommodate requests of beneficiaries, address changed circumstances, modernize or clarify trust terms, correct draft-ing errors, grant powers of appoint-ment, delegate functions among co-trustees, clarify or change

governing law, improve adminis-trative efficiencies by combining trusts, and/or achieve favorable tax treatment.

Decanting is permitted under the rationale that if a trustee has

the discretionary power to distribute (or retain) trust property to or for the benefit of one or more ben-eficiaries, then the trustee also should have the power to distribute such property in further trust for such beneficiaries.

Of course, a trustee’s power to modify trust terms through decanting

is not without limitation. Trustees still have a fiduciary obligation to carry out the grantor’s intent and to act in the best interest of all beneficiaries.

Thus, for example, a trustee gen-erally is prohibited from materially changing the interests of trust beneficiaries or adding new trust beneficiaries.

Moreover, even where a modi-fication is “permissible” through decanting under state law, a trustee must be mindful of state and federal tax laws that may be triggered by decanting (including, potentially, the loss of exemption from generation-skipping transfer taxes). n

Mr. Makuch is an associate with BakerHostetler. Contact him at 216-861-7535 or email [email protected].

Creditor protection By MARyANN C. FREMION

A re you are concerned with protecting assets from creditors at your death? If so, strategic titling

of assets and a revocable trust (also known as a living trust) may be useful tools.

Under Ohio law, most creditors may not sat-isfy debts with property from the decedent’s living trust except where the creditor files a lawsuit against the decedent before his or her death.

However, many living trusts con-tain a clause directing the trustee at your death to distribute property to your executor to pay your debts. A “pay up” clause means that if your probate estate is insolvent, creditors can satisfy estate debts from living trust property.

Why include a pay up clause? Many people feel that their debts should be paid no matter what, especially when those debts include charitable pledges or indebtedness to family members.

If your living trust does not have a pay up clause, you might want to con-sider keeping assets with potentially large liabilities out of your living trust. For example, if you own an interest in a private investment that is subject to a large capital call, you might keep such asset in your individual name That way, if at your death your pro-bate estate has insufficient assets with which to satisfy the capital call, the creditor will be unable to use living trust assets to satisfy such liability.

If you have questions, you should have a discussion with counsel regard-ing the terms of your living trust, type and title of your assets, current and potential liabilities, your wishes regarding your estate’s creditors, and your tolerance for debts consuming your assets that might otherwise go to your family or other beneficiaries. n

Ms. Fremion is an associate attorney with Spieth, Bell, McCurdy & Newell Co., L.P.A. Contact her at mfremion @spiethbell.com, 216-535-1049.

for its face value ($1,000) per bond or CD regardless of the current market value. So if a bond or CD holder dies

before maturity, the bond may be redeemed for the full face value even if the market value is significantly less.

It provides the estate, trust or IRA beneficiary with the ability to cash the bond in for its face value ($1,000) per bond or CD regardless of the current market value.

If a bond or CD holder dies before maturity, the bond may be redeemed for the full face value even if the market value is significantly less.

When constructing retirement income portfolios, this may aid in the selection process of longer-term securities for greater income while reducing interest rate risk for the estate beneficiaries or heirs. Longer-term yields or interest rates on longer-dated securities are significantly higher in today’s interest rate environment.

For example, hypothetically assume an A-rated corporate bond with this feature yields 5% with a 30-year maturity. The investor receives 5% on the original invest-ment and passes away in 2020. The bond or CD would have 20 years left

to maturity and heirs would have the choice to keep the investment or redeem it for its full face value.

There are a few administrative issues to consider and typically they are to leave the bond in the decedent’s IRA or account, notify the issuer, and provide all docu-mentation requested.

There may be other limitations, which include a restriction on the number of bonds which may “put” annually and a per estate limit of $200,000. These limits only apply to each bond. As with CDs, multiple issues may be purchased to increase the benefits of survivor put option securities. Diversifica-tion can help here, too.

Naturally, when discussing these investments, you should obtain a complete description of the valu-able bond and CD features before making a decision. n

Mr. Spain, CLU, ChFC, is senior vice president/investment officer for The Spain-Berman Financial Group of Wells Fargo Advisors. Contact him at [email protected].

Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and separate non-bank affiliate of Wells Fargo & Co.

New statutes allow you to modify irrevocable trustsFREMION

MAkUCh

SPAIN



Congratulations toM. Elizabeth Monihan

Spieth, Bell, McCurdy & Newell Co., LPAon receiving the

2013 Distinguished Estate Planner Awardfrom

THE ESTATE PLANNING COUNCIL OF CLEVELAND

Plan your gift today. Call 216-635-3217 or visitclevelandmetroparks.com/Endowment

Cleveland Metroparks Emerald Necklace Endowment Fund helps to preserve and protect over 23,000 acres of green space.

ESTATE PLANNING | TRUST & PROBATE ADMINISTR ATION | BUSINESS SUCCESSION PLANNING CHARITABLE GIVING | ASSET PROTECTION PL A NNING | PROBATE LITIGATION

PETER A. IGEL

SUSAN L. RACEY JEFFRY L. WEILER ROBERT S. FROST ERICA E. McGREGOR

RENNIE C. RUTMANBRENT E. CULHANE NICK D. SHOFAR

| | |

What legacy will you leave behind?

The Sound for the Centennial Campaign provides an opportunity for each and every member of this

Orchestra’s success.

children’s children always have access to an orchestra

ChARITABLE GIvING

The charitable disconnectBy LAURA J. MALONE

According to the IRS, more than 90% of high net worth (HNW) Americans give to charity. However,

a recent U.S. Trust study reveals several disconnects between HNW donors and advisors (wealth advi-sors, trust and estate attorneys, accountants) centering on the initia-tion and substance of dis-cussing charitable giving.

While most advisors (89%) say they discuss charitable giving with at least some of their clients, half of the HNW donors (51%) say that they were the one to initiate the conversation.

More than two-thirds (71%) of advisors raise char-itable discussions from a technical perspective, believing that the tax considerations or wealth structuring is the most important factor for cli-ents. However, many HNW donors

felt the need to encourage charitable giving by the next generation (30%), religious or spiritual motivations (23%), or giving back is an obliga-tion of wealth (22%) was equally important as the technical aspects. Meanwhile, when it comes to estate and income tax planning, 6% and 45% of HNW individuals, respectively, indicated tax policy changes were a factor in their charitable giving.

Only 14% of advisors are likely to raise the topic of chari-table giving with clients for the purpose of helping to instill charitable values among their children and grandchildren. However, nearly half (45%) of HNW donors feel it is important to involve children and grandchildren in discus-sions with their advisor

about charitable giving. Nearly all advisors and donors

can utilize a donor advised fund (DAF) to help alleviate some of these disconnects. While some DAFs can

grow to be as large as hundreds of millions of dollars, many get started for as little as $10,000. Often these vehicles are being used to help donors either explore or refine their charitable goals, values and inter-ests. Furthermore, they can provide a low maintenance way to involve children and grandchildren in discussions with the DAF creators and their trusted advisors about charitable giving.

DAFs can help donors and their trusted advisors create a more comprehensive and holistic approach to managing wealth and creating strategic tax and estate opportunities while reinforcing the donors chari-table goals and aspirations. They allow the charitable conversation to happen both early and often within any client/advisor relationship. n

Ms. Malone, CAP, is director of gift planning at American Endow-ment Foundation. Contact her at 877-599-8903 or email [email protected].

MALONE

Help others, earn income for lifeBy PAMELA D. LEONARD

A re you looking for secure sources of fixed in-come for now or future retirement? If you are

like many individuals who own appreciated assets, you are tired of living at the mercy of the fluctuat-ing stock and real estate markets. You recognize that if you sold your appreciated assets you would face a high capital gains tax.

There is a solution, a plan that provides you with fixed income for life, avoids capital gains tax, and will help others in the process.

A charitable gift annuity is a contract between you and the char-ity or organization of your choice. You transfer your appreciated as-sets to the chosen organization in exchange for fixed income for your life. The payout rate can be as high as 9% depending on your age, and a portion of your income stream

may be tax free. Best of all, you will receive a charitable deduction for the value of your future gift.

Details: A charitable gift annuity is a contract between you and the American Heart Association. In ex-change for a gift of cash or property, the Association agrees to make fixed payments to you for the remainder of your life.

Duration: You give cash or ap-preciated property to the American Heart Association. In exchange, the Association makes fixed pay-ments for the lifetime of you or you and another person.

Payout Rate: Your gift annuity payout rate is based on your age.

Taxation of Payments: A portion of your gift annuity payments could be tax free. The remaining amount of each payment is taxable at ordinary income tax rates and some portion could be taxed at capital gains rates.

Timing: A gift annuity contract can begin making payments immediately (current gift annuity) or you can begin receiving income at a future date (deferred gift annuity). n

Ms. Leonard is vice president of charitable estate planning at the American Heart Association. Contact her at 304-366-1604 or [email protected].

Benefits of a charitable gift annuity n You receive fixed payments for life.n A portion of each payment may be tax free.n Payout rates are based on your age at funding.n You will receive a federal income tax deduction.



Our private client and estate planning lawyers advise on the personal, financial and estate planning needs of clients in Ohio and around the world. In this highly personalized service area, our lawyers have the skills and experience to deftly handle complex and sensitive situations.

EXPERIENCED ESTATE PLANNERS

39 O�ces in 19 Countries squiresanders.com

ADVISORS TO INDIVIDUALS AND BUSINESSES ON MATTERS INVOLVING:

Angela G. Carlin

Karen A. Davey

Jerrold L. Goldstein

Samuel J. Lauricia III

Estate and Trust AdministrationEstate PlanningSuccession Planning

Guardianships AdoptionsProbate and Trust Litigation

The Tower at Erieview 1301 East 9th Street, Suite 1900

Cleveland, Ohio 44114-1862tel 216.241.6602 fax 216.621.8369

24100 Chagrin Boulevard, Suite 200 Beachwood, Ohio 44122

tel 216.241.6602 fax 216.621.8369

10 West Broad Street, Suite 2400 Columbus, Ohio 43215-3469

tel 614.280.0200 fax 614.280.0204

P R E S E R V E P R O T E C T R E S O L V E

Shawn W. Maestle

Joseph B. Swartz

Melanie R. Shaerban

Teresa G. Santin

Julius E. Trombetto

Gary W. Johnson

Eugene A. Kratus

6055 Rockside Woods Boulevard, Suite 330Independence, OH 44131-2317

tel: (216) 573-7200www.fairwaywealth.com

Contact Dan Gaugler or Mark Weiskind for an introduction.

Reliable Value for Private Wealth

ChARITABLE GIvING

Help others, earn income for life

Who is your planned giver? And, why are they giving? By kAREN J. kANNENBERG

Like a snowflake, the inten-tion of every charitable gift is unique. Whether it is a multimillion-dollar

charitable remainder trust or a $10 donation from a 12 year-old who wanted to share his birthday money, the donor is making a gift for a specific reason. And, the organization benefitting from

these gifts must ensure that the donor’s inten-tion for the gift is fulfilled, and that their wishes for recognition are documented and implemented accordingly.

The average planned gift is in process for approximately 18 months from the time the donor considers including a charitable organiza-tion in their estate plan until the time the documents are complete. During this time, donors and their advisors typically spend a great deal of time coordinating legal and financial details. And, hopefully that document includes specific information regarding the donor’s intended purpose for their gift, as well as the way they prefer to be recognized now and in the future.

Collaborating with donors and their advisors ensures the donors’ wishes are fulfilled. As Aristotle said: “To give away money is an easy matter and in any man’s power. But to decide to whom to give it and how large and when, and for what purpose and how, is neither in every man’s power nor an easy matter.”

However, through communica-tion and collaboration from the onset of planning any gift, the process can become more efficient and effective for all involved now and in the future. n

Ms. Kannenberg, CFRE, is manager of gift and donor development at the Cleveland Metroparks. Contact her at 216-635-3217 or [email protected].

wOLF

Donor advised funds can bring families togetherBy CAROL wOLF

Donor advised funds have historically provided individuals with a very effective tool for efficient

philanthropic grant making as well as maximizing tax advantages. Donors may not realize that a creating a do-nor advised fund can be the first step in philanthropic planning for the future by including family members in grant making decisions. Families may consult on current giving as well as using the fund as a source for gifts at death.

There are many benefits associ-ated with a donor advised fund. Donors may transfer appreciated securities to the fund, while retain-ing flexibility to make grant recom-mendations to different charitable organizations. Donations may stay in the donor advised fund and earn income, allowing the donor to make grant recommendations at a future date. Donors receive an immediate income tax deduction for the amount of the initial gift to the fund. There may be addi-tional tax savings if the donor uses appreciated securities or property to establish or augment the donor advised funds. Donors do not pay income tax on the income gener-ated by the fund.

Donor advised funds allow donors to make grant recommendations and access account balances anytime with online tools. This allows donors to have an accurate record of their philanthropic gifts for the current year as well as their giving history for past years. Donors may find this a helpful tool in response to the many requests they receive from charities. Dates and amounts of gifts are read-ily available.

A family effortIn addition to the convenience of

grant making and the tax advan-tages, donors may use a donor advised fund as an effective way to introduce family members to the idea of philanthropy. Many donors include family members in the charitable discussion as advisors on fund distributions, demonstrating to them the donor’s personal values

and the importance of philanthro-py. It may be an effective tool for encouraging intergenerational dis-cussion of values and philanthropic priorities. Some donors allow their children to recommend grants of

a certain amount each year, and others gather at a family holiday dinner to make philanthropic choices together. Either way, the fund is a wonderful catalyst for family philanthropy. It is possible to use the donor advised fund as a “hybrid” family foundation that allows its advisors and des-

ignated family members to jointly recommend which charities they wish to support in any given year.

Create a philanthropic estate plan

A donor advised fund can be a valuable tool in creating a personal philanthropic estate plan. A donor may recommend philanthropic grants during the donor’s lifetime, and then make specific grant recom-mendations to the fund’s adminis-trator upon the donor’s death. This may liquidate the fund entirely, or create an endowment fund in the donor’s name. It is important for the donor to make his or her wishes known to the host organization for reference at the time of the donor’s death. At the Jewish Federation of Cleveland, the donor advisor has an option to name successor advisors for the fund, make specific recom-mendations for total distribution of the fund or allow the fund to sup-port the Federation’s Endowment Fund in perpetuity. Many times, donors leave bequests to their donor advised funds, giving their heirs as successor advisors, the privilege to make grants recommendations of their own choice or continue the grant making of the original donor.

Donor advised funds provide an excellent tool for current giving, but it is important to keep in mind that they are also an effective first step to creating a meaningful phil-anthropic plan that benefits both the donor and the community. n

Ms. Wolf is a senior development officer at the Jewish Federation of Cleveland. Contact her at 216-593-2805 or email [email protected].

Benefits of a donor advised fund

Donations earn income

Immediate income tax deductions

No income taxes on generated income

Philanthropic engagement

kANNENBERG



Business Advisors and Certified Public Accountants

Wealth Preservation. We Know, We Understand, We Can Help.

216.363.0100 | maloneynovotny.com

Providing Personalized Estate andBusiness Succession Planning as Part ofOur Full Complement of Legal Services

Phone: [email protected]

F. Scott B. Geneva, Group ChairPeter D. BrosseMario J. FazioLouis B. Geneva

ChARITABLE GIvING

Decidenow tohonorcharity

assets such as cash, taxable invest-ments, real estate to your heirs

as these assets do not generally have income tax consequences.

No estate taxAn estate tax is a tax

on the value of the assets in your estate at the time of death. If your estate is taxable, the amount of the bequest to the charity is re-

moved from your taxable estate, so no estate tax is paid on that asset.

SimplicityAsk the plan administrator for

a designation of beneficiary form, complete and return. This is a straightforward procedure with little complexity.

FlexibilityYou can name a charity to

receive all, or a percentage of, or a fixed dollar amount. The bequest can be modified at a future date with a modification of the desig-nation of beneficiary form. You

continue to control the account and can withdraw the designa-tion if funds are needed for living expenses.

Low costThere are few, if any, fees associ-

ated with the designation process. No lawyer fees to create a chari-table trust or annuity agreement, and no ongoing maintenance or trustee fees.

By simply designating your favorite charity or charities as a beneficiary of your deferred ac-count, it’s easy, low cost and tax free. Why not consider this option as part of your legacy planning as a testament to what you valued dur-ing your lifetime?

Send the charitable institution a copy of the designation form and it can monitor the account after your death for proper distribution. n

Mr. Grace is executive director of the Catholic Community Foundation. Contact him at 216-696-6525, ext. 5750, or email [email protected].

Life insurance is a versatile gifting tool the giver retains ownership of the policy. Although the face value of the policy is included in the gross estate, the estate will be entitled to an offsetting charitable estate-tax de-duction because of the gift.

If the original reasons for establishing the life insurance policy no longer are a concern, assigning the policy to charity, with all incidents of ownership, may be a good option. This would create an immediate income tax deduction for the fair-market value of the policy or the cost of the policy, whichever is less. Addition-al charitable income tax deductions are available for remaining pre-mium payments as they are made on the policy. Finally, by assigning the policy to the charity, the policy proceeds are removed from the gross estate, possibly generating savings on estate taxes.

Another way to make a charitable

gift with life insurance is to establish a new policy and transfer ownership

to the charity. Such a gift can be made by paying the policy in full with a one-time premium payment or by continuing to make gifts to the charity to cover the cost of the premium payments. As with an existing policy, a charitable deduction is available for the premium payment(s) as they are paid.

Making a gift with a life insurance policy is a wise investment in the future. Through a gift of life insurance, a more substantial gift may be possible because payments are made in installments. Additional-ly, proceeds are promptly paid to the charity without the time-consuming process of probate. n

Ms. Neal, Esq, is assistant director, gift planning for the Cleveland Clinic Foundation. Contact her at 216-444-5021 or email [email protected].

NEAL

Leave a legacywith a gift of adeferred asset By PATRICk J. GRACE

It is possible — and easy — to demon-strate your commit-ment to your favorite

charity or charities by making a meaningful financial donation that costs you nothing right now. How do you do this? There are several options.

If you own an IRA, 401K, tax-deferred annuity or other such deferred account among your other assets, by simply designating the charity or charities as a beneficiary of the deferred account, look what happens:

No income taxes paidIndividuals who would receive

distributions from the deferred ac-count will pay income taxes on the distribution.

The charity does not pay income tax on the distribution; and your estate does not pay any income taxes on the deferred asset gifted to charity. You leave your other

GRACE

By BRITTANy NEAL

The versatility of life insur-ance makes it an excellent asset to accomplish chari-table goals. Life insur-

ance provides protection against potential economic loss in the event of death or disability and can serve as a source of supplemental income during retirement. Additionally, life insurance can provide liquidity for paying state and federal estate costs. However, many people may not be aware that a life insurance policy also makes an excellent charitable gift that can be made at a very low cost.

There are a number of ways in which a life insurance policy can be used to make a meaningful gift. The easiest is to name the chari-table organization as beneficiary of the policy. Simply by complet-ing a change of beneficiary form with the insurance provider, a gift can be directed to charity, while

ESTATE PLANNING

TRUSTS AND TRUST ADMINISTRATION

FIDUCIARY REPRESENTATION

PROBATE AND ESTATE ADMINISTRATION

216-696-4700

CHARITABLE PLANNING AND GIVING

TAX LAW AND PLANNING

BUSINESS LAW

REAL ESTATE

Jim Bright Don Cairns Maryann Fremion Kyle Gee Jim Havach

Doug McCreery Lisa Monihan John Slivka Kim Stein Rick Taft Tal Young



STAND OUT IN THE NORTHEAST OHIO BUSINESS COMMUNITY

Year-round exposure with a single ad buy.

Book your ad today! Contact Michelle Sustar at 216-522-1383 or [email protected]

ChARITABLE GIvING

An endowed gift will last foreverBy kAREN L. GRECO

When a charitable organization impacts an

individual’s life, he or she may feel compelled to offer support. Support can mean giving of time, expertise or making a financial contribution.

One of the most lasting and sig-nificant contributions a donor can make to a charity is to establish an endowment. An endowment is permanent and for a particular

Information about your liabilities

n Primary mortgage n Other mortgages n Personal loans n Income taxesn Philanthropic pledges outstanding n Any debts or IOUs

Make copies of the following

n Current willsn Current and previous trust

agreements n Copies of gift tax returns filedn Pre- and postnuptial agreementsn Divorce decrees and/or

separation agreementsn Buy-sell and/or partnership agreementsn Pension/profit-sharing plans

or summariesn Corporate record books for

any business in which you have ownership

n Copies of any deeds to any real estate listed

Make sure the following are current

n Health care power of attorney and living will declaration for Ohio or your state of residence

n Organ donation enrollment

Also considern Creating an ethical willn Naming a favorite charity as

a beneficiary of your will, trust or qualified retirement plan

n Making hard copies of all your online accounts and passwords, including email, social media ac-counts and financial accounts

Each of us has a unique legacy to share. With good planning, we can pass it on.

Ms. Masters, MBA, is chief devel-opment officer for Hospice of the Western Reserve. For copies of “Courage in Conversation: A Per-sonal Guide,” and a list of links that will help in creating ethical wills, call 216-383-2222 or visit www.hospicewr.org. For general ques-tions or for palliative or hospice care referrals call 800-707-8922.

continued from Page E-6

Checkup ensures continuity

DisclaimerThe material presented in this special section is of a general nature and does not constitute investment, legal, tax or accounting advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. Opinions expressed herein are subject to change without notice. Seek the advice of an investment professional to tailor an estate plan to your needs.

GRECO

Crain’s on Twitter: @CrainsCleveland

Crain’s on Facebook: Facebook.com/CrainsCleveland

Crain’s on LinkedIn: linkedin.com/company/crain’s-cleveland-business

Be sure to register for our daily themed e-newsletters:

CrainsCleveland.com/register

Morning Roundup and daily headlines: weekdays

Real Estate Report: Mondays

Health Care Report: Tuesdays

Dealmaker Alert: Wednesdays

Small Business Report: Thursdays

Shale and Energy Report: Fridays

STAY CONNECTED WITH CRAIN’S

purpose. The donor makes a tax-deductible gift to the charity. The principal is invested by the charity and the income is used to provide a steady source of funds.

Preserving the principal allows the donor to make an impact today and for generations to come. When

additional donors make contri-butions to the endowment, the endowment grows and increases the income for the charity’s use.

Endowed funds are easily cus-

tomized to fit the donor’s philan-thropic objectives. An endowment can be created in the donor’s name, to memorialize a loved one, to honor someone who has impacted the donor’s life and to benefit a specific area within the charitable organization.

An endowment can be estab-lished now or at death. One of the

benefits of establishing a current endowment is to encourage ad-ditional contributions from family, friends and other individuals who support the charity. Another is to witness the impact made by the charity in the designated area of support. Most importantly is a feeling of fulfillment in making a positive difference.

Donors can fund an endowment at death by making a specific bequest or devise in their will or trust with instructions to purpose the endowed fund. This type of gift provides an estate tax charitable deduction.

As an example, donors who have made annual gifts to the charity of their choice can provide for an endowed fund at death. The in-come generated by the endowment will replace the annual gifts and continue their pattern of lifetime giving into perpetuity. n

Ms. Greco, Esq. is the senior gift planning office at University Hospi-tals. Contact her at 216-844-0420.


HIGHEST PAID HOSPITAL EXECUTIVESRANKED BY TOTAL COMPENSATION

Rank

NameTitleOrganization Address, phone, website

Totalcompensation

Basecompensation

Bonus andincentive Other

Retirementand otherdeferred

Nontaxablebenefits 990 filing year

1Delos M. "Toby" Cosgrove, M.D.(1)president, CEOCleveland Clinic

9500 Euclid Ave., Cleveland 44195(216) 444-2200www.clevelandclinic.org

2,564,214 2,107,300 0 256,120 187,336 13,458 2011

2Thomas F. Zenty III(2)CEOUniversity Hospitals

11100 Euclid Ave., Cleveland 44106(216) 844-1000www.uhhospitals.org

2,024,119 1,052,920 561,555 37,380 359,792 12,472 2011

3Thomas J. Strauss(3)president, CEOSumma Health System

525 E. Market St., Akron 44309(330) 375-3000www.summahealth.org

1,812,635 773,567 940,536 840 86,712 10,980 2011

4William H. Considinepresident, CEOChildren's Hospital Medical Center of Akron

One Perkins Square, Akron 44308(330) 543-1000www.akronchildrens.org

1,773,914 1,052,641 197,000 291,653 220,092 12,528 2011

5Joseph F. Hahn, M.D.(1)chief of staffCleveland Clinic


1,283,615 1,050,219 0 99,565 120,354 13,477 2011

6Fred C. Rothstein, M.D.(2)presidentUniversity Hospitals Case Medical Center


1,235,021 635,320 330,564 205,478 40,737 22,922 2011

7David L. Bronson, M.D.(1)president, Cleveland Clinic Regional HospitalsCleveland Clinic


1,227,337 697,191 0 75,280 441,809 13,057 2011

8Robert Harrigan(3)president, Summa HospitalsSumma Health System


1,077,551 555,736 445,636 1,620 63,374 11,185 2011

9Michael Nochomovitz, M.D.(2)presidentUniversity Hospitals Physician Services


1,074,069 603,233 276,300 141,941 40,853 11,742 2011

10Michael A. Szubski(2)CFOUniversity Hospitals Health System Inc.


1,020,294 585,430 249,190 3,136 156,995 25,543 2011

11Steven C. Glass(1)treasurer, CFOCleveland Clinic Foundation

9500 Euclid Ave., Cleveland 44195(216) 444-2200my.clevelandclinic.org

967,290 860,407 0 64,099 24,500 18,284 2011

12William Powel III(3)senior vice president, legal servicesSumma Health System


704,983 347,908 256,118 11,380 44,368 45,209 2011

13Dr. Thomas (Tim) L. Stoverpresident, CEOAkron General Health System

400 Wabash Ave., Akron 44307(330) 344-6000www.akrongeneral.org

651,260 496,100 0 74,141 62,873 18,146 2011

14Cynthia Moore-Hardypresident, CEOLake Hospital System Inc. DBA Lake Health

7590 Auburn Road, Concord 44077(440) 375-8100www.lakehealth.org

650,359 593,910 0 17,227 34,589 4,633 2011

15Edward Hills, D.D.S.(4)COOMetroHealth System

2500 MetroHealth Drive, Cleveland 44109(216) 778-7800www.metrohealth.org

576,701 467,901 108,800 0 0 0 2011

16Edward J. Roth IIIpresident, CEOAultman Health Foundation

2600 Sixth St. S.W., Canton 44710(330) 452-9911www.aultman.org

544,606 519,216 0 6,065 7,350 11,975 2011

17Alan J. Papapresident, COOAkron General Health System

400 Wabash Ave., Akron 44307(330) 344-6000www.akrongeneral.org

525,656 308,218 30,000 144,903 22,942 19,593 2011

18Norman Christopher, M.D.Noah Miller Chair, Dept. of PediatricsChildren's Hospital Medical Center of Akron


516,181 354,047 44,316 2,939 98,250 16,629 2011

19Shawn Lydenexecutive vice presidentChildren's Hospital Medical Center of Akron


515,746 476,519 0 7,826 14,700 16,701 2011

20Grace Wakulchikvice president of operations, COOAkron Children's Hospital


510,788 362,639 0 5,366 132,920 9,863 2011

21Thomas E. Cecconipresident, CEO, Mercy Medical CenterSisters of Charity Health System

2475 E. 22nd St., Cleveland 44115(216) 696-5560www.sistersofcharityhealth.org

485,497 418,879 13,950 0 41,628 11,040 2011

22Donald S. Sheldon, M.D.(5)president, CEOEMH Healthcare

630 E. River St., Elyria 44035(440) 329-7500www.emh-healthcare.org

449,840 362,131 0 65,769 14,700 7,240 2011

23Alfred J. Connors, M.D.(4)chief medical officerMetroHealth Medical Center

2500 MetroHealth Drive, Cleveland 44109(216) 778-7800www.metrohealth.org

428,931 408,331 0 20,600 0 0 2011

24Donald Koenig(6)executive vice president, operationsSt. Elizabeth Health Center

1044 Belmont Ave., Youngstown44501-1790(330) 746-7211www.hmpartners.org

415,928 305,186 51,292 1,564 42,852 15,034 2011

25Nicholas Kreatsoulaschief medical officerHumility of Mary Health Partners

1044 Belmont Ave., Youngstown 44501(330) 746-7211www.hmpartners.org

415,251 271,097 48,477 33,819 41,595 20,263 2011

26Orlando Alvarez Jr.sr. vp, strategy and business developmentSisters of Charity Health System


395,639 338,673 10,700 0 40,746 5,520 2011

27Michael P. Trainertreasurer, CFOChildren's Hospital Medical Center of Akron


389,833 353,766 0 2,265 17,150 16,652 2011

28Terrence G. Deispresident, CEOParma Community General Hospital

7007 Powers Blvd., Parma 44129(440) 743-3000www.parmahospital.org

341,266 296,622 0 10,262 8,308 26,074 2011

29David F. Perse, M.D.president, CEO, St. Vincent Charity Medical CenterSisters of Charity Health System


322,304 296,556 0 0 20,228 5,520 2011

Source: Form 990 SEC filings. Hospital and health system executives are included in this list but no more than 4 executives from one institution. Crain's Cleveland Business doesnot independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omittedinformation or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Information is from the ClevelandClinic Foundation Group Return 990. (2) Information is from the University Hospitals Health System Inc. Group Return 990. (3) Information is from the Summa Health SystemGroup Return. (4) Information is from The MetroHealth System. (5) Information from 990, EMH Regional Medical Center. (6) Information is from the Humility of Mary HealthPartners 990.

RESEARCHED BY Deborah W. Hillyer



Riddell: Company accounts for more than half of all helmet sales“The fact that there will not be an

official helmet of the NFL does nottranslate into diminished use of ourhelmets and other equipment,” Rid-dell said in a statement to Crain’sand other media outlets.

According to figures provided byRiddell, the company accounts formore than half of all the football hel-mets sold on an annual basis. It’s amarket that includes more than 3million youth football players andabout 1.3 million high school andcollege players.

The NFL’s 32 teams have 53-manrosters, plus practice squads that cancarry up to eight more players.That’s fewer than 2,000 athletes — anumber that pales in comparison toRiddell’s significant reach in theyouth, high school and college ranks.

Still, Riddell’s signature, most vis-ible deal was with the NFL. It’s a re-lationship that will continue, but inan unofficial capacity.

“NFL players have always beenable to choose which helmet andother equipment (such as shoulderpads and chin straps) they wear,”Erin Griffin, senior communicationsmanager at Riddell, said in an email.

Riddell said in 2012, the most re-cent season for which it has data,68% of the NFL’s players wore itshelmets.

“We expect similar usage of ourequipment to continue, but nowpeople won’t see a Riddell logo in an‘official helmet of the NFL’ capacity,”Ms. Griffin said.

Reassurance amid concernsRiddell’s Elyria plant was built in

1998 and has 260 full-time employ-ees, along with a seasonal work forceof about 175 more employees duringpeak periods.

Ted Pileski, Elyria’s finance direc-tor, said the city collected $155,000in income tax withholdings fromRiddell employees in 2012.

Asked about the company endingits official partnership with the NFL,Mr. Pileski said, “We’re always con-cerned with any potential loss of rev-enue. With the way things are thesedays, cities’ budgets are being cut,local government is being cut. Anylayoffs add to that. We’re definitelyconcerned.”

Riddell said there will be no lay-offs, and the company’s Ms. Griffinsaid the recent “undue speculation”about the plant’s fate has resulted inunnecessary worry.

“We do not anticipate any impacton our Elyria operations or other fa-cilities as a result of our NFL agree-ment expiring,” Riddell’s statementsaid. “We are proud of our continuingleadership as one of the largest em-ployers in Elyria and Lorain County.Our Elyria facility is and will continueto be a vital component of Riddell’ssustained industry leadership.”

Elyria Mayor Holly C. Brinda saidthe city has a “positive relationship”with Riddell.

“We’ve been watching this withinterest over time and believe thestatements (by the company) are ac-curate,” Mayor Brinda said.

In late October, both Mayor Brin-da and Mr. Pileski said they hadn’tbeen contacted by anyone at Riddellsince reports emerged that the com-pany and NFL were ending their ex-clusive partnership.

“I’ve been reassured through var-ious sources that this doesn’t appearto have a financial impact on our cityor the company,” Mayor Brinda said.“NFL players can still continue towear their helmets. The company’sstatements seem to be reassuring.”

Last Tuesday, Nov. 5, Ms. Griffin

told Crain’s that Riddell would“look into contacting” the city and“be sure that they have seen ourstatement on the matter.”

On the legal frontIn late August, the NFL agreed to

a $765 million settlement with for-

mer players who blame dementiaand other brain disorders on the vi-olent hits they suffered during theircareers.

Riddell also was sued by the re-tired NFL players who settled withthe league. The company, which isa subsidiary of Easton-Bell Sportsof Van Nuys, Calif., and the NFLwere in court-mediated talks withthe players this past summer, andonly the case against Riddelllingers.

More than four months beforethe NFL agreed to shell out a for-tune in a settlement that wouldcover all 18,000 former players, aColorado high school player wasawarded $11.5 million in a caseagainst Riddell and several highschool administrators.

Rhett Ridolfi suffered a concus-sion during a 2008 practice, whichled to severe brain damage andparalysis on his left side. The juryfound Riddell negligent, and thecompany was ordered to pay 27%of the verdict — $3.1 million.

Riddell is appealing the decision.

‘Another strong’ yearThough Riddell soon will not be

the official helmet of the NFL, thecompany has partnerships with amajority of the premier collegefootball programs in the country,including two-time defending na-tional champion Alabama andOhio State.

Riddell serves as the official hel-met for all 12 Big Ten programs and10 of the 13 football teams in the

Mid-American Conference.The company is also the official

helmet manufacturer for the Arenaand Canadian football leagues, andhas partnerships with AmericanYouth Football and USA Football.

All those relationship apparentlytranslate well into business for thecompany, which said in a statementthat it has “experienced anotherstrong financial year, which is due inpart to our Elyria operations.”

Those are welcome words toMayor Brinda, who said Elyriawants its “employers to behealthy.”

“They appear committed to stay-ing in Elyria,” she said, “and it ap-pears the market mix is such that the(NFL’s) decision will not have a neg-ative impact on their company.” ■

continued from PAGE 3 “I’ve been reassuredthrough various sourcesthat this doesn’t appearto have a financial impact on our city or the company.” – Holly C. Brinda, Elyria mayor,on Riddell’s soon-to-expire contract with the NFL


After years of declining ridership— the result of the recession andservice cutbacks — ridership is upand RTA is looking to grow evenmore. In an interview at RTA’sheadquarters in Cleveland’s Ware-house District, Mr. Calabrese laidout his plans for the future, whichinclude service extensions and therebuilding of older transit stations.

But he was most delighted thatmore people are riding buses andtrains. He said the Red Line rapid isleading the ridership spurt, largelybecause of an increase in workersriding downtown from the West Side.

Passenger counts also continue tobuild on the HealthLine, the innov-ative, $200 million bus/rapid transit,or BRT, that is celebrating its fifthanniversary this week. It carries pas-sengers along a Euclid Avenue thatwas rebuilt with dedicated transitlanes and middle-of-the-road stopsto move the articulated HealthLinevehicles more speedily along theirroute from Public Square to Univer-sity Circle and on to the east end ofthe Red Line.

The HealthLine carried 4.6 mil-lion riders in 2012, up 3% from2011. Ridership is approaching 4million riders for the first threequarters of 2013, up 5% from thelike period a year ago.

In April, the New York-based In-stitute for Transportation & Devel-opment Policy called the Health-Line the best example of the BRTconcept in the United States.

Mr. Calabrese now even canspeak kindly about the WaterfrontLine, the rapid transit spur openedin July 1996 that connects RTA’sTower City station to the Flats andthe Muny Parking lot at East NinthStreet and the Shoreway. He shutthe segment down a few years agobecause of a lack of ridership. Butit’s open again as Ernst & Young

Tower in the Flats fills with workers.

Along for the rideFor 2012, RTA ridership was up

4.3%, to 48.2 million passengersfrom 46.2 million in 2011, accord-ing to a tally by the American Pub-lic Transportation Association, orAPTA. The association reportedthat transit ridership nationwide in2012 was up 1.5% over 2011.

During the first nine months of2013, RTA ridership is up 2.2% overthe like period in 2012, helped bythe two-week-long National Seniorgames held in Cleveland this sum-mer, Mr. Calabrese said.

APTA attributes the rise nation-wide to higher gasoline prices and tochanging demographics — in partic-ular, a desire by younger people, so-called millennials, to abandon auto-mobiles. Mr. Calabrese also includesrising parking rates in downtownCleveland, work on the Inner BeltBridge that is disrupting rush-hourtraffic patterns, expanded availabili-ty of its free downtown trolleys andmore aggressive marketing as factorsboosting RTA’s ridership.

The recent successes have thetax-supported transit agency mov-ing ahead cautiously with expan-sion plans.

RTA is trying to replicate itsHealthLine success on the West Sidewith the $20 million “West Shore Ex-press,” which is replacing the 55route bus along Clifton Avenue andbeyond to Westlake. Work alreadyhas begun on the line, which willhave exclusive use of the curb laneduring rush hours. Traffic lights onClifton also will be reduced, andnew transit stations will be spaced atlonger intervals than current busstops. All the changes are meant toshorten commuting times.

RTA is rebuilding the University-Cedar rapid station, and it brokeground recently for a new Red Line

station on Mayfield Road in LittleItaly. The latter will replace an un-appealing and underused station atEast 120th Street and Euclid Avenue.

The public agency also is think-ing about extending either the RedLine rapid train or the HealthLineeast into Euclid.

Down the line …More broadly, a revival in the use

of public transportation is seen bysome as key in the revitalization ofCleveland and Northeast Ohio.

“There’s a whole new demo-graphic of riders now,” said JohnMcGovern, chairman of RTA’s Cit-izen Advisory Board. “It’s not justthe necessity riders, but now it’s theriders who ride by choice, the peo-ple who are now investing andmoving to cities.”

Mr. McGovern is one of a growingnumber of public transit advocateswho want to see greater investmentin buses and commuter rail lines.They believe reducing the numberof cars on highways can spur eco-nomic development in cities, reducevulnerability to oil price spikes andreduce environmental problems.Mr. McGovern and others alsowould like to see a truly regionaltransit system instead of the single-county systems that now operate inNortheast Ohio.

Last year, the National ResourceDefense Council, a Washington,D.C.-based environmental group,polled public attitudes towardtransportation and included a tar-geted survey of Cuyahoga County.It found that 76% of CuyahogaCounty respondents wanted in-creased local spending on publictransit, and 43% said they woulduse public transportation more of-ten if it was more convenient.

Mr. Calabrese would like to re-spond to those aspirations. InMarch, the RTA board commis-

sioned a $1.1 million study of thecorridor from the Stokes rapid sta-tion in East Cleveland to see if anextension off either the Red Line orthe HealthLine would make finan-cial sense. It could be anywherefrom five to seven years before thenew service could begin.

Ohio’s bias toward carsRTA’s problem — indeed, public

transit’s problem in Ohio generally— is financial. A 1% county salestax for transit covers about 70% ofRTA’s operating expenses, withfares covering most of the rest.

Nationwide, transit systems relyheavily on federal and state trans-portation grants for capital im-provements such as the West ShoreExpress and the new rapid transitstations under construction in thetraffic-heavy University Circle area.RTA had $33.6 million in federalgrants for capital spending in 2012.But state money is almost nonexis-tent — in 2012, only $779,000 of a$65.7 million capital budget fortransportation infrastructure andnew equipment. The state long hasfavored highways over transit.

“The state of Ohio has under-in-vested in public transportation fordecades,” said Amanda Woodrum,a researcher at the progressive Pol-

icy Matters Ohio think tank inCleveland who leads a statewidenetwork called Ohioans for Trans-portation Choice. “The way wefund our (public transit) system wehave little choice but to drive.”

A survey by the American PublicTransportation Association of statespending in 2008 calculated thatOhio spent $1.37 per capita onpublic transportation, ranking it41st among the 50 states. Neighbor-ing Indiana spent $8.72 per capita.

That attitude may be changing.Last week, the Ohio Department

of Transportation announced itwould begin to develop a strategyto improve public transportation.

“Our goal is to evaluate theunique transportation needs forcommunities statewide, whetherit’s a large city or a rural county,”said Marianne Freed, administratorof ODOT’s Office of Transit.

Mr. Calabrese said ODOT leaderswere swayed by the strong demandthey heard for public transit intown hall meetings held around thestate earlier this year.

“People in Ohio said, ‘We wantmore public transit,’ ” he said of atown hall meeting he attended. “Iwas surprised when we were downin Athens, Ohio, and people want-ed connectivity with other areas.” ■

Hordes of free clinics sprung upacross the country during the cultur-al upheaval of the late 1960s. They’refueled by private donations from in-dividuals, corporations and commu-nity foundations and, unlike tradi-tional hospitals, provide care to theuninsured with no threat of a bill.

But given that many of their pa-tients will be eligible for subsidizedcoverage on the insurance ex-changes or through Medicaid, clin-ics are concerned about how thelaw might impact the number ofpatients flocking through theirdoors. They’re also worried theirfundraising could take a hit ifdonors think everyone is coveredunder the new law.

As a result, some free clinic havere-imagined themselves. Amongthem is the Free Medical Clinic ofGreater Cleveland on UniversityCircle, which last year was desig-nated as a federally qualified healthcenter, making it eligible for Med-icaid and Medicare payments.

North Coast Health Ministry, afree clinic based in Lakewood, islooking to follow suit in early 2014.Others, such as free clinics in Lo-rain and Lake counties, will stickwith caring for just the uninsured.

Danny Williams, executive direc-tor of the Cleveland free clinic, saidits conversion “allows us to have re-sources to deal with the populationwe’re already dealing with and ex-pand staffing to absorb additional

patients.”Though the money is welcome,

the receipt of Medicaid andMedicare dollars won’t turn theseclinics into cash cows. Governmentpayers rarely cover the cost of pro-viding care. Plus, some clinics ex-pect that Obamacare won’t easetheir patient loads, which have bal-looned as people have lost theirjobs and benefits amid the eco-nomic turmoil of the last few years.

“Obamacare was never intendedto meet the total need,” said DebMiller, executive director of theOhio Association of Free Clinics, aColumbus-based advocacy group.“It was never intended to be uni-versal care. We tend to not hearthat. That was not a message thatwas heard very well.”

Gaps go unfilledDespite Obamacare’s unprece-

dented expansion of insurance cov-erage, roughly 630,000 people willremain uninsured in Ohio by 2020,according to an estimate by thenonpartisan Health Policy Instituteof Ohio. The estimate is based onfactors that are expected to includeundocumented immigrants who areineligible for coverage, people whoqualify but aren’t enrolled in Medic-aid, or those who are unable to af-ford coverage on the exchanges de-spite the generous subsidies.

The Congressional Budget Officeestimates that 31 million peoplenationwide will remain uninsured

by 2023. “This is not universal health

care,” said Johanna Henz, executivedirector of the Lake County FreeClinic. “This is health insurance re-form and not access to actual care.Our mission always has been to behere for people to provide care. Wesee the uninsured, and we’ve alwaysseen the underinsured.”

The Lake County clinic is a fairlysmall operation with six staff mem-bers, a $400,000 annual budget andan army of dedicated volunteers.Ms. Henz said the clinic weighedwhether to apply for the ability tobill Medicaid and Medicare but opt-ed to stick with its current model.

It would be difficult for a clinic ofits size to handle the administrativeburden of processing Medicaid andMedicare payments, according toMs. Henz. And it’s possible the rateof Medicaid reimbursements mightbe less than the voluntary dona-tions patients make.

Ms. Henz expects volume of herfree clinic to remain steady or evenrise given that new Medicaid en-rollees might find it hard to find aMedicaid-certified provider in LakeCounty. She also expects to see pa-tients who typically wouldn’t fre-quent the free clinic but might not beable to afford the high deductibles orother out-of-pocket costs associatedwith many of the plans offered onthe Obamacare exchanges.

If anything, the onslaught ofObamacare has added a few wrin-

kles to the otherwise straightfor-ward way these clinics do business,according to Paul Baumgartner, ex-ecutive director of the LorainCounty Free Clinic.

As it’s now structured, Mr. Baum-gartner’s clinic steers Medicaid pa-tients to providers that accept thatform of coverage rather than pro-vide the care itself. However, withthe expansion of Medicaid eligibili-ty, the clinic in 2014 may providemedical care for those individualsuntil he or she can secure a providerthat accepts Medicaid patients.

“It’s one thing to give them an in-surance card, but it’s much differ-ent to give them timely access tothat care,” Mr. Baumgartner said.

Tweaking the modelThe Free Medical Clinic of Greater

Cleveland’s transition from a freeclinic to becoming a federally quali-fied community health center hasn’tbeen an easy haul. Under that mod-el, the clinic must charge its patientfees based on where they fall on ascale between 100% and 200% of thefederal poverty level. At present, theclinic is covering those fees with rev-enue from its modest endowment.

The state’s Medicaid expansionwill cover those who make up to138% of the federal poverty level andshould offer the clinic some relief,assuming the legal actions challeng-ing the expansion fall through.

“We’re in much better shapethan we would have been had we

not taken this important step,” Mr.Williams said.

North Coast Health Ministry’sintention to accept Medicare andMedicaid dollars in the future isdriven by its concern over a short-age of providers, according to LeeElmore, the organization’s execu-tive director. She said about 70% ofthe organization’s patients willqualify for Medicaid under the ex-pansion, but she’s unsure whetherall those people could find a Med-icaid-certified provider.

Also, as things stands, the clinicmust punt Medicare-eligible pa-tients from their rolls, and Ms. El-more said many of those patientswish to stick with the clinic.

“It’s important that our patientscan access affordable care, and wewant to help them in any way we can,”said Ms. Elmore, whose free clinic wasthe first in the state to be designated asa patient-centered medical home, al-lowing the clinic to track patient out-comes and quality metrics.

If there’s one thing the clinicswant to stress, it’s that the Afford-able Care Act doesn’t lessen theirrelevance.

“Free clinics are going to contin-ue to need the backing of the phil-anthropic community today just asmuch as we did in the past,” Mr.Baumgartner said. “Just becausethe (Affordable Care Act) is in placeand certainly is going to help a lotof people, free clinics are still goingto need that support.” ■




RTA: HealthLine has been big success

Free: Philanthropic support will remain crucial for clinics

JANET CENTURY

RTA’s HealthLine increased its ridership 3% in 2012.



“Who to Watchin Sustainability” Forum

Wednesday, Dec. 117am - 10am

Cleveland State University Student CenterPresented by:

Supported by:

CrainsCleveland.com/WhotoWatchFor event tickets and additional information

In partnership with:

Crain’s highlights the following individuals and groups for their commitment to sustainable

business practices in Northeast Ohio

Andrew BrickmanAbode Modern Lifestyle

Developers

Innerbelt Bridge project

Jon KaplanPearlWind

Nicole KoharikGOJO Industries

James “Deej” LincolnReclaimed Cleveland

Jenita McGowanCity of Cleveland

Joseph PaternitiKey Bank

Jerry SchillSchill Grounds Management Inc.

Westlake Reed Leskosky Hawken School Design Team

Jill ZieglerForest City Enterprises

or contact Kim Hill at [email protected] | 216-771-5182

Ambitions: Students might not start companies, but will be versatile Maybe it just took them a while to

figure out they liked his teachingstyle, Mr. Chalfant said with a laugh.But he doesn’t take all the credit:Demand for entrepreneurshipcourses continues to rise at collegesacross Northeast Ohio, according toinformation from schools through-out the region.

It has been nearly a decade sincelocal colleges started adding entre-preneurship courses, majors andminors. Even so, demand for thoseofferings still is on the rise, local of-ficials say.

During the 2011-2012 schoolyear, undergraduate students filleda total of 1,626 seats in entrepre-neurship courses at six area colleges— Baldwin Wallace University, JohnCarroll University, Ashland Univer-sity, Hiram College, Lake Erie Col-lege and Oberlin College. That totalwas up 28% from 1,272 two yearsearlier, according to the most recentdata reported to the Burton D. Mor-gan Foundation.

The foundation — which hashelped those schools expand theirentrepreneurship programs, start-ing in 2006 — may have played asmall role in boosting those statis-tics, said Deborah Hoover, presi-dent and CEO of the Hudson-basedorganization. It has continued toprovide those schools with grants tosupport entrepreneurship pro-grams, both inside and outside theclassroom.

But ongoing cultural changes arethe main reason students keep sign-ing up for entrepreneurship curric-ula, according to several people in-terviewed for this story.

The swing of thingsFor one, the recession has

pushed more students to thinkabout entrepreneurship as a viablecareer path, Ms. Hoover said, asmany jobs seem less secure thanthey once did.

Plus, students these days are lesslikely to dream about landing aplush corporate gig where they willspend their entire career climbingthe proverbial ladder.

“They’re not necessarily going tobe in the same job for 10, 20, 30years,” Ms. Hoover said.

Demand also is rising becauseentrepreneurship “is a huge part ofpopular culture right now,” accord-ing to Sergey Anokhin, director ofthe Center for Entrepreneurshipand Business Innovation at KentState University.

Facebook played a role in thatphenomenon. So did YouTube. AndTwitter. And Instagram. All of whichwere started by people who wererelatively young.

Kent State created a minor in en-trepreneurship in 2006 and added amajor in 2009, shortly after openingthe Center for Entrepreneurshipand Business Innovation.

Thus, enrollment in entrepre-neurship courses at the school hasexploded: Students filled 1,067 seatsin entrepreneurship courses duringthe 2012-2013 school year. That’sup 42% from 749 during the 2010-2011 school year. The year beforethat, enrollment stood at 323.

Dr. Anokhin says the growth ofentrepreneurship education shouldcontinue, especially now that it’sspreading beyond business depart-ments and weaving its way into oth-er courses.

“It’s a process that’s in full swingall across the nation,” he said.

Out of the think(box)That upswing is what Wendy Tor-

rance is seeing from her vantagepoint at the Ewing Marion Kauff-man Foundation, a Kansas City-based organization that financesprojects related to entrepreneur-ship and education across thecountry.

Nationwide, faculty membersand administrators keep addingnew entrepreneurship courses, andstudents keep signing up for them,Ms. Torrance said. That’s true at lib-eral arts colleges that have no busi-ness schools, as well as colleges thathave had entrepreneurial programsin place for years, she said, citinghow the University of Michigan thismonth said it would create an en-trepreneurship program, perhaps aminor, that will be open to studentsin all majors.

Michigan also plans to add moreextracurricular programs related toentrepreneurship — somethingmany Northeast Ohio schools aredoing, too.

Take Case Western Reserve Uni-versity. The school has seen enroll-ment in undergraduate entrepre-neurship courses fall from 195 eightyears ago to 120 during the lastschool year for two reasons: Thenumber of undergraduate businessstudents on campus dropped byabout 20% during that period, andmanagement majors no longermust take an intro to entrepreneur-ship course.

But last year the universityopened think[box], a lab where stu-dents can build prototypes with thehelp of a laser cutter, 3-D printersand other equipment. Plus, the uni-versity is one of four local collegesthat started coaching young entre-preneurs two years ago throughBlackstone LaunchPad, a programfinanced by the Blackstone Charita-ble Foundation and the MorganFoundation.

Learning by doingIt doesn’t hurt entrepreneurship

programs that there are more op-portunities for young entrepre-neurs in Northeast Ohio thesedays, according to Michael Gold-berg, who teaches three entrepre-neurship courses at Case WesternReserve.

For instance, on Mr. Goldberg’sadvice, a student in his entrepre-


neurial finance class joined theFlashStarts business accelerator inCleveland. That accelerator, whichprovides startups with capital andmentoring in exchange for equity,

started just this past summer. Andtwo similar programs that workwith a lot of young entrepreneurs —the LaunchHouse Accelerator andBizdom Cleveland — didn’t exist

three years ago.“A couple of years ago, I don’t

know where I would’ve sent him,”Mr. Goldberg said.

So, should colleges be puttingsuch a big emphasis on entrepre-neurship? Ms. Hoover, of the Mor-gan Foundation, says it’s warranted— as long as students are given thechance to learn by doing, which inmany cases involves actually start-ing a business.

“It’s great to learn about entre-preneurship in the classroom …but at the end of the day, a lot of thesolid learning comes from the expe-rience of it,” she said.

Many students who take coursesin the subject won’t go on to startcompanies, but they’ll learn skillsthat allow them to be nimble, re-gardless of the career path theyeventually pursue, Ms. Hoover said.

That’s why Kent State suggestedthat all of this year’s incomingfreshmen read “Who Owns the Ice-house?: Eight Life Lessons from anUnlikely Entrepreneur,” Dr.Anokhin said.

“We believe that if students em-brace those lessons they will be suc-cessful regardless of what careerpath they choose,” he said. ■

Volume 34, Number 45 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-bined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite310, Cleveland, OH 44113-1230. Copyright © 2013 by Crain Communications Inc. Periodicals postage paidat Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send addresschanges to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

PROGRAMS ARE GOOD FOR BUSINESSA look at undergraduate enrollment in entrepreneurship courses at Northeast

Ohio colleges and universities:

Ashland University 57 78 109

Baldwin Wallace University 116 124 259

Case Western Reserve University 195 155 120*

Hiram College 0 488 376

John Carroll University 37 287 483

Kent State University NA 23 921

Lake Erie College 0 87 93

Oberlin College 11 208 306

University of Akron 163 70 224

■ Note: *This figure applies to the 2012-13 academic year.■ Sources: Burton D. Morgan Foundation, Kent State, University of Akron, Case

Western

Institution 2005-06 2009-10 2011-12

“It’s great to learn aboutentrepreneurship in theclassroom ... but at theend of the day, a lot ofthe solid learning comesfrom the experience ofit.” – Deborah Hoover, president and CEO, Burton D. MorganFoundation



REAL ESTATEContact: Denise DonaldsonPhone: (216) 522-1383Fax: (216) 694-4264E-mail: [email protected]

Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card

AUCTIONS

FOR SALE

BUSINESSFOR SALE

INVESTMENTPROPERTY

FORRENT

REAL ESTATESERVICES

List your Industrial,commercial, luxury property

or Retail Space Here!CCrraaiinn’’ss CClleevveellaanndd BBuussiinneessss’’ ccllaassssiiffiieeddss wwiillll

hheellpp yyoouu ffiillll tthhaatt ssppaaccee..

CCoonnttaacctt DDeenniissee DDoonnaallddssoonn aatt221166..552222--11338833

CCrraaiinn’’ss EExxeeccuuttiivvee RReeccrruuiitteerr

ACCOUNT EXECUTIVECrain’s Cleveland Business is the premier source of businessnews across Northeast Ohio, producing a weekly, four-colornewspaper as well as a robust website and broad collection oftargeted e-newsletters. This manager must be a team playerand strategic thinker, as well as a hands-on developer and con-tent producer who will lead in the creation and execution of awide variety of web/digital products and projects.

To apply for this position please visit our website atwww.crain.com and search under the Careers section.

Business Opportunity for a Qualified Event Manager/Operator for aRestaurant/Party Center in Eastlake, Ohio to: Oversee all Operations;Develop/Preserve positive community/patron interactions; Manage fi-nances, PR; Plan and execute events; Maintain cleanliness ofinterior/exterior areas; Ensure well-trained, customer oriented staff,Ensure excellent food quality and service standards; Maintain equip-ment; Ensure overall legal compliance. Mail business proposal/qual-ifications/additional info requests to: [email protected]

Vice President of Communication and External AffairsSUMMARY: The Vice President of Communication and External Affairs willbe responsible for implementing and managing the governmental affairs,community outreach, and communication efforts of the Port of Cleveland.The core functions of this position are: developing and maintaining strongrelationships with federal, state and local elected and appointed officials,staff, trade organizations, local media, and all relevant external stakehold-er groups; managing public relations contractors; and overseeing and im-plementing the Port of Cleveland’s media, communications, and commu-nity outreach strategy. Application Deadline: November 30, 2013For complete posting please visit www.portofcleveland.com

Absolute AUCTIONMobile Home Park & Marina2.9 Ac. 21 Home Sites & HouseSandusky Bay, Marblehead Ohio

Dec. 5 @ 1 PMwww.8696Bayshore.com

[email protected]

Jack Bradley Realty Co.Port Clinton, Ohio

63,044 SF OFFICE BUILDINGSALE OR SUBLEASE

6060 PARKLAND BLVD., MAYFIELD HEIGHTS

216.360.0009 www.bidrosen.com • www.buddyBartonauctions.com216-990-1831 • 1-877-BID-ROSEN

Absolute AuctionNational Trade Show ManufacturerThursday, November 14 @ 10AM

4922 E. 49th St., Cuyahoga Hts. OH

Accepting Pre-Sale Offers Now!!Complete Inventory of Trade Show Displays/Custom

Cabinets, Woodworking & Design Centers, TowMotor, Partition/Walls, Pallet Racking, Carpet,

Reception Area, Moped (good Condition!!), Filing Cabi-nets, Air Cond. Units, Lumber, Crates, Hardware & Soft-

ware, w/Ofc. Furniture, display cases,SCRAP AND SO MUCH MORE!!

THISTHURSDAY

For Terms of Sale & Brochure, Please Call: 216-360-0009 ChartwellAuctions.com

Hanna Chartwell / Chartwell Auctions, LLCMichael Berland, Gordon Greene, Mac Biggar & Anna Maria Hamm, OH Auctioneers

CHARTWELL AUCTIONS | DEC 11NE OHIO MULTI-PROPERTY AUCTIONCOMMERCIAL, INDUSTRIAL, OFFICE, DEV. LAND & RESIDENTIAL

ALL PROPERTIES OFFERED REGARDLESS OF PRICE OR W/BELOW MARKET MINIMUM BIDS

Located on 1+ acre, former hardware store divisible for 2 units, room for expansion or redevelopment.On-Site Inspections: Wed. Nov. 20th & Tues., Nov. 26th, Dec. 4th from 1:00 -3:00pm

215 Richmond Rd., Richmond Hts., OH

6,700 SF Commercial/Retail

OFFERED ABSOLUTE, REGARDLESS OF PRICE!

Suggested Opening Bid: $20,000

1

4 All-brick, 3-story buildings, 80% occupied w/$80,896 NOI. Near University Circle & Case Western University. Value-added opportunity! On-Site Inspections: Tue: Nov. 19 & 26 & Dec. 3 / 2:00-4:00pm

1866 Forest Hills Blvd., E. Cleveland, OH

72 Unit Apartment Building

OFFERED WITH A PUBLISHED RESERVE OF ONLY $395,000

2 2,000 SF Completely renovated, 13 private offices, conference room, 4.5 baths and newly paved parking lot. Excellent for Medical/General Office or Retail.On-Site Inspections: Tue: Nov. 19 & 26 & Dec. 3 / 10:00am-12:00 Noon

1505 Kansas Avenue, Lorain, OH

Lorain Office Building5

Great industrial/warehouse facility with 2,600 SF office. High ceilings, clear span, heavy floor loads, 5 loading docks, 3 overhead doors and 80 car pkgOn-Site Inspections: Thursdays Nov. 21st & Dec. 5th, Tues. Nov. 26th, 10:00am-12:00 Noon

3940 Congress Parkway, Richfield, OH

50,341 SF Industrial/5.3 Acres



3

Ideal location in the heart of booming neighborhoods Tremont and Ohio City. 3-Story, 18,000 SF former Warehouse/Industrial building. Great redevelopment opportunity for Lofts/Apartments! Open Houses: Tuesdays Nov. 19th, 26th & Dec. 3rd 12 Noon - 2:00 PM

1900 Train Ave., Cleveland, OH

18,000 SF Fmr. Warehouse/Ind. Bldg.



4

INDUSTRIAL

COMMERCIAL OFFICE

52.28 Acre Strongsville Industrial Site Fronting Prospect Rd. to Foltz Pkwy. next to Strongsville Business & Technology Park. Similar Land Parcels Offered between $60K and $79K/Acre. All utilities to site.

52.28 Acres - Lender Directs Sale

TO BE SOLD AT OR ABOVE $495,000 UNDER $9,500/ACRE

6LAND

1) 18580 Prospect Rd., Strongsville, OH

3 bedrooms 1.5 baths 1,519 SF on 5+ acres. Currently rented $850/month

2)18270 Prospect Rd., Strongsville, OH

3 bedrooms 1 bath; 1,042 SF on 5+ acresCurrently rented $400/monthOpen House: Sat. Dec. 7 / 1:00 to 2:30pm

Lender Directs SaleStrongsville Homes

TO BE SOLD AT OR ABOVE $20,000

8

TO BE SOLD AT OR ABOVE $20,000

2 bedroom, 1 bath all-brick bungalowWith large attic for bonus room and full basement with fireplace & bar Detached garage and landscaped backyard. Open Houses: Saturdays Nov. 23rd, 30th & Dec. 7th 1:00pm-3:00pm

4414 Yorkshire Road, Parma, OH Single-Family Home - Parma7



RESIDENTIAL



FORT MYERS, FLORIDAREAL ESTATE

Golf course home, 55+, 2br/2bain NFM for $174,900Jeff Hathy, Realtor

Jones & Co. Realty239-322-6970

or [email protected]

FOR RENTNew Avenue District Townhomein Downtown Cleveland.3 level

3 Bedroom,3.5 bath,2 carattached garage. Hdwds, granite,

all appliances, move in ready.

216.571.9669

13% Cap AkronRetail Investment1947 W. Market Street

100% leasedCall Tom Fox for details

NAI Cummins 330.535.2661 [email protected]

RECEIVER DIRECTSIMMEDIATE SALEApproximately 4,000 sf

Industrial Flex Condo for sale$109,000. Newer building

in great condition.380 Solon Rd Bedford, OH.

Contact Receiver Jim Myers216-314-6159

Chesterland HorseProperty

Indoor arena and 2 barns.30 minutes to downtown

Cleveland

Janet Kramarz440-781-7660

Rich Piraino440-223-1777

[email protected]@howardhanna.com

CLASSIFIEDBUSINESS SERVICES

CC.. WW.. JJEENNNNIINNGGSS IINNDDUUSSTTRRIIAALL EEXXCCHHAANNGGEEGlobal Expansion ConsultingConstruction • Acquisitions

Exporting • Financing

((885555)) 770077--11994444

FLYNNENVIRONMENTAL

For Assessments(800) 690-9409

www.flynnenvironmental.com

Service Business in Stark CountyHighly-automated.

Profit $275.000. Ask $850K.Nutritional Supplements

High-end retail stores. Sales$525,000. Profit for owner-mgr.,

$140,000. Ask $279.9K.Seller financing available.

Don Dreisig, OwnerFuller & Associates, Inc.

(serving no. Ohio for 33 years)330-492-6294

SSuubbmmiitt yyoouurr bbuussiinneessssccaarrdd ttoo pprroommoottee

yyoouurr sseerrvviiccee..

To find out more,contact

Denise Donaldsonat 216.522.1383

To place your CCrraaiinn’’ss CClleevveellaanndd BBuussiinneessssExecutive Recruiter ad

Call Denise Donaldson at 216-522-1383For daily on-line

updates, sign up @CrainsCleveland.com/Daily

E-MAIL OR FAX US YOUR AD...E-MAIL: [email protected]

FAX: (216) 694-4264


Rooms with a view will be big at The Vue■ The four-story, 348-unit upscale apart-ment building that The NRP Group andMunsell Realty Advi-sors Inc. are develop-ing at Green Roadand Chagrin Boule-vard in Beachwoodnow has a name: TheVue.

Construction at theeight-acre site inBeachwood’s Com-merce Park began inthe spring. Move-insare set to begin insummer 2014.

David Heller, co-founder and principal of NRP Group, saidthe firm chose The Vue as the name becausethe development “affords residents withdramatic views of the region, includingdowntown Cleveland.”

Amenities will include a “resort-like” out-door heated pool; “secluded, lavishly land-scaped” gardens and relaxing courtyards; anart gallery; a fourth-floor private diningroom; a Wi-Fi lounge and conference room;a concierge desk; and a two-story fitnesscenter.

To live up to its name, The Vue will have“nearly 250,000 square feet of windows tomaximize the view in all four directions,” according to NRP Group.

“Our goal was to design a distinctive com-munity unlike any other property availablein Northeast Ohio,” Mr. Heller said.

One-, two-, and three-bedroom apart-ment units will be available, as well as 16penthouses, ranging in size from 727 squarefeet to nearly 2,000 square feet. NRP Groupsays many of the apartments feature patios

or balconies.Dogs are welcome,

too; The Vue willhave an enclosed,landscaped dog runand dog washingtubs in the under-ground garage.

“We did a lot ofresearch to deter-mine what peoplereally want,” Mr.Heller said.

— Scott Suttell

Hey, fourth placeisn’t bad, right?■ Gov. John Kasich’s press office works hardto make sure the governor and his programsreceive favorable news coverage.

So, when Site Selection magazine droppedOhio down two notches — to fourth fromsecond — in its annual ranking of states withthe best business climate, Connie Wehrkamp,Gov. Kasich’s deputy press secretary, wasquick with some media guidance.

“While some may choose to focus on theslight drop in ranking year-over-year, I hopeyou consider the following if you choose towrite on the topic …,” her email on ElectionDay stated, enumerating several story ideas.“No one has pushed harder than Gov. Kasich when it comes to embracing policies

to promote job growth in Ohio.”The news release then cited a Toledo

Blade story that quoted Mark Arend, aspokesman for Site Selection.

“It’s a matter of other states just accumu-lated more points. It’s not that Ohio did any-thing wrong,” he said. “Ohio did as well as itdid last year. It’s just that other states did alittle better.”

So that would mean that the ClevelandIndians should consider the team’s loss toTampa Bay in the American League wild-card playoffs as a victory. The Rays justscored more runs. — Jay Miller

Warehouse Districtwill be an open book■ Starting Thursday, Nov. 14, you’ll be ableto soak up a little culture and learn a littlehistory while you bar-hop in Cleveland’sWarehouse District. On that day, neighbor-hood leaders will unveil the first two of artistCorrie Slawson’s street installations that tellthe district’s story.

The public art is in the form of bookpages, with text written by Thomas Yablonsky,executive director of the Historic WarehouseDistrict Development Corp.

The first “chapter,” at the corner of WestSixth and St. Clair Avenue, will talk aboutthe architecture of the district. The second,at 1223 W. Sixth., delves into the neighbor-hood’s days as Cleveland’s garment district.

The first look at the two “pages” is set for4:30 p.m. Thursday. The artist will be onhand at a reception following the unveiling.

The installations are the last phase in thedistrict’s $1 million facelift. — Jay Miller

MILESTONESCOMPANY: Clark-Reliance Co.,StrongsvilleOCCASION: Its 50th anniversary

The company now known as Clark-Reliance, which makes measurements andcontrols in the instrumentation business, isentering the second halfof its first century.

Clark Manufacturingwas founded in 1908 and acquired by Harry Figgiein December 1962. Re-liance Gage and Columnwas founded in 1884 andacquired by Mr. Figgie inFebruary 1963, when heformed Clark-Reliance.The company now is run by president RickSolon and chairman Matthew Figgie.

Some of its key brand names that havebeen acquired over the years include Ander-son Separator, founded in 1888; Jerguson,founded in 1905; and Jacoby Tarbox, foundedin 1914.

COMPANY: Finkler & Co. CPAs,Middleburg HeightsOCCASION: Its 25th anniversary

Gregg Finkler founded his certified publicaccounting and business consulting firm in1988 with the goal of providing closely heldbusinesses in the region with the personal-ized attention of a local firm.

“We started the firm with a vision of notonly serving the accounting needs of ourclients, but also partnering with them toachieve their business goals,” said Mr. Fin-kler, the firm’s managing partner. “We wouldnot be here today without the confidence andtrust that our clients place in us.”

The nine-member firm serves a variety ofindustry sectors, including construction,manufacturing, medicine, real estate, retail,transportation and wholesale. It plans to addassociates this year.

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK NOVEMBER 4 - 10

The big story: Voters in Northeast Ohio sup-ported their elected officials in last Tuesday’selection, retaining incumbent candidates bysubstantial margins and approving all but ahandful of tax levies — including a number of taxincreases — that were on the ballot. ClevelandMayor Frank Jackson won a third term handily,capturing 66% of the vote against challenger KenLanci. Two Cuyahoga County tax increases — ahealth and human services levy and the ClevelandMetroparks levy — won, as did a Cleveland-Cuyahoga County Port Authority renewal levy.A Lake County Laketran transit renewal levypassed, as did a Lorain County Community Col-lege property tax increase, though the narrowmargin will trigger an automatic recount.

It’s getting ugly: Attorneys for Lawrence E.Mitchell, the Case Western Reserve Universitydean who last week took a leave of absence afterbeing sued by a professor for alleged retaliation,filed an emergency motionasking that a CuyahogaCounty judge “strike certainimmaterial, impertinent andscandalous allegations and materials” from complaintsfiled against Mr. Mitchell andthe university. They also assertthat Raymond Ku’s “irrele-vant and salacious allega-tions” are an outlet for the professor’s disappoint-ment about vying for, and losing, a deanshipposition that went to Mr. Mitchell, dean of theuniversity’s School of Law, and “to cover up anddistract from his unsatisfactory performance.”(Full story: tinyurl.com/ooojmns)

Keep hope alive: Empire Die Casting Co. ofMacedonia, which last month filed for Chapter11 bankruptcy protection, officially notified thestate that it will close and let 211 employees go,though an attorney representing the companysaid it is working to complete a sale of the busi-ness that would keep its doors open. AttorneyMarc Merklin said the filing is a legal require-ment that must go out whenever there is a possibility that a plant could close. At this time,he said it is just a remote possibility, and thecompany still expects that it will be bought by anentity that will continue to operate the plant.

Core work: Forest City Enterprises Inc. decided to take its Station Square urban retailcomplex in Pittsburgh off the market, but most ofits Tower City Center complex in the developer’shome town remains for sale. Forest Cityspokesman Jeff Linton confirmed the companyno longer is marketing Station Square as part ofits effort to sell its way out of smaller marketsand focus on large cities with high barriers to entry such as New York, Boston and Los Angeles.

Analyze this: The Cleveland Clinic and a localbiomedical company formed a business that aimsto create better ways to test whether someonehas cancer. The new business, Cleveland Diag-nostics, is developing tests that can detect cancerbased on structural changes of certain proteinbiomarkers in blood or other bodily fluids. Thespinoff company’s first targets will be prostate,breast and ovarian cancer. The operations ofAnalizaDx LLC of Cleveland will be folded intothe new company, said Arnon Chait, who ledAnalizaDx and now will lead the new company.

The swing of things: Serena and VenusWilliams soon might be competing in Cleveland.A best-of-five Fed Cup quarterfinal match betweenthe women’s tennis teams of the United Statesand Italy will be held Feb. 8 and 9, 2014, at PublicAuditorium, the United States Tennis Associa-tion announced. The two-day event will markthe first time the Fed Cup — the women’s versionof the Davis Cup — will be held in Ohio.


BEST OF THE BLOGSExcerpts from recent blog entries onCrainsCleveland.com.

Patience, please■ Not crazy about howObamacare is going sofar? Just give it sometime — like four or fiveyears.

“It’s an experimentthat we’ve never donebefore. So, unfortunately,I don’t think we can sayhow this is going to turnout,” the Cleveland Clinic’s CEO, Dr. TobyCosgrove, said recently on CNBC’s “SquawkBox.”

Obamacare is going to have unintendedconsequences that will need to be addressed,but imperfections will be changed overtime, according to Dr. Cosgrove.

“We know we need to take cost out of the(health)system. That’s what’s happeningright now,” Dr. Cosgrove said.

President Barack Obama has said that“bad apple” insurers are to blame for can-celed health plans, because their coveragedoesn’t meet the new standards of the law.

As Dr. Cosgrove sees it, “The law is goingto continue to be refined for the next four orfive years, just as Medicare was” after it wasrolled out in 1966. “This is probably as big asocial change that’s happened since theNew Deal came along, because it affects100% of the people in the United States andtheir health care and the cost of that.”

Welcome back■ There’s some Cleveland appreciation in anThe AtlanticCities.com story, for which writerNona Willis Aronowitz traveled across thecountry for six weeks “in search of the best,most affordable places for twentysomethingsto achieve their goals nowadays — whetherit’s to start a business, live off their art, havekids earlier, or just finally find a full-time job.”

One segment of the story, titled “TownsLuring Back Their Townies,” listed threecities as “prototypes:” Cleveland, Pittsburghand Albuquerque.

“Countless trend stories have been writtenabout young, ambitious people flocking toDetroit because it’s cheaper and in need offresh ideas,” Ms. Aronowitz wrote. “Butsmaller post-industrial cities like Clevelandand Pittsburgh (and its neighboring suburb,Braddock) aren’t under the same spotlight,and most of the young people taking advan-tage of their virtues are natives.”

She concluded, “They’ve been there (all)along, reasoning that the economy was tooprecarious for them to take a risk in a biggercity where (they) had far fewer connections.Or they’ve returned after college or a disap-pointing stint in a major metropolis, realizingthat they need their hometown just as muchas their hometown needs them.”

You won’t like us when we’re angry■ Stay away from the Crain’s ClevelandBusiness office when we’re holding an edi-torial board session with a local CEO.

A story from The Week listed the 10 profes-sions that attract the most psychopaths,drawn from research in a book called “TheWisdom of Psychopaths: What Saints, Spies,and Serial Killers Can Teach Us About Suc-cess.”

No. 1 on the list: CEOs.No. 6: Journalists.A combustible mix, we guess.Psychopathy, the magazine noted, is

“characterized by shallow emotions (in partic-ular reduced fear), stress tolerance, lackingempathy, coldheartedness, lacking guilt,egocentricity, superficial character, manip-ulativeness, irresponsibility, impulsivity,and antisocial behaviors such as parasiticlifestyle and criminality.”

Other psychopath professions: lawyer,surgeons, sales people and police officers.

M. Figgie

Cosgrove

CONTRIBUTED RENDERING

The Vue includes a courtyard and an art gallery.

Mitchell



Autos are driving rapid loan growth - Crain's Cleveland

Documents