insights for business & life developing success · 2013. 8. 12. · introducing a new mobile...

business Cleveland-Cuyahoga County Port authority

strategy Foreign exChange: What you need to knoW

plus:

suCCessJim Wymer turned WxZ develoPment into a PreFerred develoPer

InsIghts for busIness & lIfe

mattersvolume 2, issue 3

developing

Jim Wymer, CEO of WXZ Development

Keep your business moving forward. By doing

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To l e a r n mor e, c on T a c T : Susie Winter at 330-252-8231or [email protected]

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This product is compatible with the following: iPhone 3GS, 4, 4S & 5; iPad – All models; iPod – 3rd generation and higher; Android – Samsung Galaxy Nexus, S2, S3, LG Enlighten, HTC Incredible 2, Droid 3












To l e a r n mor e, c on T a c T : Joann Fulton at 440-953-3619or [email protected].




meritmatters • 3

volume 2, issue 3

matters

14 6

table of contents

CoverWxZ development focuses on multi-family properties

Briefs ................................................................. 5 events, highlights and attractions

ask the expert ..................................................11 merchant services: Protecting your company from fraud

Personal Finance .............................................12 rewards: Cash vs. points

People Profile ..................................................13 get to know sandy Pierce

investments .....................................................20 is the u.s. economy headed for recession? how new tax legislation could affect you and your business

Community ......................................................22 College now helps students prepare for higher education

Business mattersCleveland-Cuyahoga County Port authority drives economic growth

Ask the expertForeign exchange: What you need to know

10












To l e a r n mor e, c on T a c T : Susie Winter at 330-252-8231or [email protected]















To l e a r n mor e, c on T a c T : Joann Fulton at 440-953-3619or [email protected].




4 • meritmatters

First Word >>>

Sean RichaRdSon

Cleveland has a strong history of businesses planting roots and continuing to thrive and expand in the community through the years and decades. this longevity has led to a close-knit business community that works together to ensure the city grows, develops and, ultimately, succeeds.

in this issue of MeritMatters, we feature one such success story, WxZ development, a commercial and residential real estate development firm co-founded by Jim Wymer and xenophon Zapis in 1991. after making its way through the recession, the company has a new project, hazel8, an upscale, 59-unit rental project in university Circle that is well underway.

We also explore the Cleveland-Cuyahoga County Port authority, which opened in 1968 and saw 11.5 million tons of bulk commodities move through its docks last year. We talk to lee Friedman, Ceo of College now, an educational

assistance organization that aids 22,000 traditional and adult students each year and provides 1,500 scholarships.

in this issue, we also present advice from Firstmerit experts on everything from fighting fraud to what you need to know about dealing in foreign currency, and discuss how new tax legislation may affect you and your business.

as you read this edition of MeritMatters, we hope you not only learn about some of the great people, businesses and organizations within Cleveland, but also take away information to help your own business grow and succeed.

sean richardsonPresident and Ceo,northCoast regionFirstmerit Bank

volume 2, issue 3

PuBlishermiChael marZeC

mAnAging editortodd shryoCk

ContriButing editorsBrooke n. Bates, erik Cassano, danielle toth

Art direCtorstaCy viCkroy

ProduCtion mAnAgerandrea Jager

ProjeCt mAnAgerangela vannuCCi

Cover Photo: JeFF doWnie

iF you Would like to reCeive Future

issues oF meritmatters, email us at

[email protected].

meritmAtters is PuBlished By

sBn interACtive, 835 sharon drive,

suite 200, Westlake, oh 44145,

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meritmatters is solely intended for general information purposes. it is not intended to provide – nor should it be used in lieu of – financial, accounting, legal or other pro-fessional advice. it does not constitute a recommendation to buy or sell any security or adopt any investment strategy. the publisher assumes no liability for readers’ use of the information contained herein. the informa-tion was obtained from sources believed to be reliable, but such information is not guaranteed as to its accuracy. readers should seek professional assistance with regard to specific matters. all opinions expressed in meritmatters are those of the authors or sources and do not necessarily reflect the views of Firstmerit Bank or Firstmerit Corp.

securities and insurance products are:not FdiC insured. may lose value. no bank guarantee. not a deposit. not insured by any federal or state government agency.

matters

Nurturing and growing the roots of success

meritmatters • 5

>>> BrieFs

Cleveland events, highlights and attraCtions

tall shIps festIvalJuly 3–74 p.m. parade and 7 p.m. opening ceremonies July 3; 9:30 a.m. to 6 p.m. July 4- 7$14 day of event; $12 in advance; $11 seniors, military, rotarians and groups of 10 or more; $8 children ages 6 to 14; free to children 5 and youngerPort of Cleveland / 101 erieside ave.(216) 391-1141 / www.clevelandtallships.comthe rotary Club of Cleveland hosts 10 to 12 replica historic vessels in celebration of its 100th anniversary. visitors can board the ships, meet the crew and learn about Cleveland’s maritime history. Festival also includes exhibits, marketplace and family entertainment.

rock ‘n’ roll cleveland half Marathonoct. 5 / 8 a.m. to noon / Freestarting line: rock and roll hall of Fame and museumeast 9th street and erieside avenueFinish line: West superior avenue and West 3rd street(858) 450-6510http://runrocknroll.competitor.com/clevelandthe course runs along lake erie, past tower City and other iconic landmarks, for 13.1 miles. visit the website to register or come out to watch.

2013 cleveland labor day oktoberfestaug. 30–sept. 25 p.m. to midnight aug. 30; noon to midnight aug. 31 and sept. 1; noon to 9 p.m. sept. 2$10 adults; free to children 12 and youngerCuyahoga County Fairgrounds / 164 eastland road(440) 364-4991www.clevelandoktoberfest.comthe 2013 Cleveland labor day oktoberfest features four days of authentic german food, beer and entertainment, musicians, dance groups, exhibits, shopping and more.

dIsney’s the lIon kIngJuly 9–aug. 4 / various times / $20-$130Playhousesquare / 1519 euclid ave. (216) 241-6000www.artsinohio.com/event/disneys-the-lion-king-2this tony award-winning musical returns to Cleveland with outstanding visuals and songs, including elton John and tim rice’s oscar-winning “Can you Feel the love tonight” and “Circle of life.”

natIonal senIor gaMes July 19–aug. 1 / 8 a.m. to 5 p.m. / Freevarious venues(225) 766-6800 / www.nsga.comthe largest multisport event in the world for athletes ages 50 and older, the national senior games will bring more than 14,000 participants from across the united states to compete in 19 sports.

Business matters >>>

Seaway to Cleveland when they could just stop at coastal ports and truck it from there?

The answer is that companies can save time and money, and help the environment by traveling further on water and a shorter distance on land. And once cargo is in Cleveland, it’s within an eight-hour drive of half of all U.S. households, businesses and manufacturing plants. With those benefits, Friedman hopes to draw more business directly from Europe, positioning Cleveland to compete as a container port. But maritime growth will have to counteract decreasing demand.

“While the Great Lakes market has gotten smaller, our share has actually gotten bigger,” Friedman says. “We’re competing in this market effectively, but the market itself isn’t very dynamic.”

eConomiC develoPmentThe port is looking more aggressively beyond the Great Lakes for opportunity. In essence, it wants to launch regularly scheduled service to Europe. Today, its service to Europe is unscheduled, and many vessels can’t accept manufactured exports because those vessels are used for grain exports instead.

Until this scheduled service is a reality, the Port Authority is relying on innovation. To increase its relevance and provide more benefits to the community, its leaders had to think beyond the docks.

Friedman’s predecessor, Gary Failor, led the port down a new path when he brought an initiative with him from the Toledo-Lucas County Port Authority. Cleveland was brim-ming with excitement since winning a competition to house the Rock and Roll Hall of Fame in 1986. But when it was time to break ground in 1993, people were still wondering how

a Port – and more

When people hear the word port, they most likely think of ships. But when you hear about the Cleveland-Cuyahoga County Port Authority, you should also think sounds of

nature and music, with projects such as the Rock and Roll Hall of Fame and Museum.

“Port authorities straddle the public and private sectors,” says William Friedman, president and CEO of the Port Authority since 2010. “Technically, we’re a public agency, but we’re a lot different than what you would think of as government. We really operate more like a business.” Although the organization was set up through an agreement between the city of Cleveland and Cuyahoga County in 1968, it operates independently on its own $7 million bud-get. The 18 employees work for the port, not the city or the county, but the mayor appoints six board members and the county executive appoints three.

The port’s main business still centers on ships. About 11.5 million tons of bulk commodities, including steel, iron ore and limestone, moved through Cleveland Harbor last year, and about 18,000 jobs rely on the port’s maritime operations, which generate approximately $1.8 billion in annual economic activity.

Maritime activity helped fuel the growth of Cleveland from the city’s earliest days. Shipping operations began at the port in 1825, and the completion of a canal to the Ohio River solidified the city’s status as a harbor well-positioned for shipbuilders, oil and steel refineries and cargo transport. Back in its heyday, the port — whose maritime facilities are on the Lake Erie shoreline — may have seen 1,000 ships a year. Today, it’s more like 100.

“A lot has changed,” Friedman says. “Once shippers around the globe began using containers, all of that cargo started to get concentrated through the big container ports on the East and West coasts. Not only that, we quit making a lot of consumer goods in this country. All of that post-industrial dislocation of workers and jobs and investment to other regions hurt our port, so we’re trying to figure out how to be more relevant to companies in Northeast Ohio.”

Maritime transport is still relevant in Cleveland, as the economic impact numbers testify. But Friedman is fighting to attract more attention from overseas. Why would ships from China or Europe maneuver through the St. Lawrence continued on page 8

6 • meritmatters

How the Cleveland-Cuyahoga County Port Authority makes waves beyond shipping By Brooke n. Bates

“While the great lakes market has gotten smaller, our share has aCtually gotten Bigger.”

– William FriEDman, prEsiDEnt anD CEO, ClEvElanD-CuyahOga COunty pOrt authOrity

meritmatters • 7

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8 • meritmatters

to finance it. That’s when the port tapped into its economic development potential, as only a handful of ports have done.

“Unlike a bank, we don’t loan money, and this is misunderstood,” Friedman says. “We connect a borrower — almost always someone looking for capital for real estate development projects — with somebody who wants to lend or invest in the project. We do that through the municipal bond market, which is where, typically, cities, states and government entities are borrowing for their own purposes.”

Since the port’s Development Finance Group was created, it has issued nearly $2 billion in bonds to help more than 70 local enterprises invest in expansion. The results include the expansion of the Cleveland Museum of Art, a Cleveland Clinic research facility and the Flats East Bank Project. By partnering with FirstMerit Bank, the port is also able to offer credit enhancement to borrowers of $10 million or less.

“FirstMerit is our key banking partner now that it has provided a letter of credit to us, which is part of a system of reserves behind our bond fund program,” Friedman says, explaining that FirstMerit provides a safety net to back smaller projects.

green thinking The development financing Friedman received has changed Cleveland both visually and economically. It’s exciting because the port’s new strategic direction has contributed a different type of green to the local landscape.

“It’s funny how things cycle,” Friedman says. “Now we’re in an era where fuel prices are really high and people are concerned about greenhouse gas emissions and being sustainable. It gives us an opening because shipping by water emits less greenhouse gas, burns less fuel and is very cost effective. So we’re trying to position ourselves as a green and sustainable alternative.”

That goes beyond ships. For the port to really be green, it aimed to clean up Cleveland Harbor through a series of infrastructure improvements. Annual dredging of the Cuyahoga River cleaned out the contaminated sediment that contributed to the infamous burning river in 1969. Over the years, the sediment dredged to maintain the depth

continued from page 6 of the river was placed in confined disposal sites, one of which was used from 1979 until 1999.

Then nature began to take over. Plants grew through the dredge material, greening the area, where birds, butterflies and other critters began to dwell. In February 2012, the port opened the area as the Cleveland Lakefront Nature Preserve, spanning 88 acres along the shore. Over time, researchers and others have identified more than 280 types of birds, 16 kinds of mammals, 29 species of butterflies and 35 native plant and tree species, and Ohio Audubon has named it an Important Bird Area at the intersection of migratory flight routes.

Nature is also taking over less enjoyably at places such as the edge of Ohio City, where Franklin Hill is slowly sliding into the river. The port plans to hire engineers to assess options for stabilizing the eroding area and restoring waterfront access.

“We’re involved with a lot of environmental restoration and environmental projects,” Friedman says. “We want to be at the forefront of bringing Cleveland to the leading edge of being a green city. We’ve got to make Cleveland the kind of place people increasingly want to live, with access to the waterfront, environmental restoration of the waterfront and places on the waterfront where there’s something to do.”

That big-picture economic revival of Cleveland as a healthy industrial hub is the port’s extended vision, and the port’s 2011 Strategic Action Plan set three goals to get there: “Creating opportunities for job growth and business expansion, developing civic assets by solving critical infrastructure challenges and managing the port to maximize economic, environmental and community benefits.”

That’s a big mission in an increasingly challenging market, but Friedman sails on toward a greener, more economically vibrant Cleveland harbor.

“It’s not as glamorous as maybe health care or software startups, but we need to be competitive,” he says. “We’re trying to look for market opportunities that would benefit companies here locally, help drive down their transportation costs and help them be more competitive. That’s what my job is: Trying to develop the best ways to steer this ship.” u

For more information: www.portofcleveland.com

William Friedman talking with matt Welsh, Operations manager

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To l e a r n Mor e, C on T a C T : Chris Pilkington at 800-237-6384 or [email protected] Frank Pak at 216-694-5674or [email protected].


P e r s o n a l B u s I n e s s C o M M e r C I a l P r I VaT e B a n K

“Why should I consider doing business in anything besides

U.S. dollars?”Chris Pilkington says it’s a question

clients often ask his department at FirstMerit Bank.

“If you can increase sales or profit margins, or decrease costs on the purchasing side, you should seriously consider delving into the foreign exchange market,” says Pilkington, the sales manager for FirstMerit’s foreign exchange department.

The decision to venture into the foreign exchange market is usually driven by geography. Your company may produce goods entirely within the United States, but sell into Canada, Mexico, Central America,

“We generally enter into two types of contracts with companies — spot contracts and forward contracts.”

Spot contracts allow for conversion at the present value of the currency involved, while forward contracts allow businesses to lock in an exchange rate for a future date, usually up to one year. This operates on the same principle as a fixed-rate home mortgage, giving the business a level of security in knowing there won’t be fluctuations in the exchange rate over the life of the contract.

“A lot of the transactions we do are spot, but companies that have the ability to fore-cast their cash flows accurately like to book contracts that allow them to budget around that locked-in exchange rate. It means they don’t have to change the price of their products when exchange rates fluctuate.”

Businesses often negotiate spot contracts for smaller amounts of money or one-off transactions that don’t require longer-term risk management.

“If I’m running a business and I have to make an international purchase for the equivalent of $25,000 U.S. dollars, is that significant to my business from a financial standpoint?” Deininger says. “If not, you are probably not going to enter into a forward contract. You just do it at spot. It’s about how much risk is involved.”

“The key is to stay tuned to what is going on regarding the exchange market. Those of us who deal with the market every day can assist companies in monitoring rates and can tell clients whether conditions are becoming favorable or unfavorable. Once you understand the market and how prices change, you can determine how much risk you want to take on and what the best options are.” u

For more information, contact Chris Pilkington at [email protected] or Tom Deininger at [email protected].

Europe or Asia, meaning you have sales in U.S. dollars and receipts in another nation’s currency. You can try to find buyers who are willing to do business in U.S. dollars, but sometimes that isn’t an option. That’s where it pays to be knowledgeable about the issues and practices surrounding foreign currency exchange.

As with any transaction, dealing in foreign exchange comes with a level of risk. Tom Deininger, FirstMerit’s manager of Foreign Exchange trading suggests partnering with a financial institution to help your business through the process.

“The risk comes from fluctuations in value of the dollar versus other major currencies,” Deininger says.

chris pilkington

Sales Manager, FirstMerit

International Division

BeyonD DollarS

aSk The exPerT >>>

What you need to know about dealing in foreign currency

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tom Deininger

Manager, Foreign exchange

Trading

10 • MeritMatters

MeritMatters • 11

Fraud is a crime that hides in the shadows. The perpetrators often go to great

lengths to cover their tracks, and businesses may not realize what they are up against, making it difficult for them to fight it and protect their assets.

“Ninety-nine percent of the time, clients either don’t realize it or don’t adequately address it,” says Michelle Thompson, vice president of fraud risk with FirstMerit’s Merchant Bankcard Division.

Most business fraud involves misuse of credit or debit cards through internal fraud, external fraud and data security fraud. Although fraud occurs more often than you might realize, there are steps you can take to help protect your business.

InTernal FrauDOne of the most common forms of internal fraud is embezzlement involving credit cards, in which an employee trusted with the use of a company credit card account processes a return for a purchase that was never made and pockets the money.

“We don’t want business owners to become overly cynical and suspicious, but so many times, when this type of fraud happens, we see the embezzlement coming from a tenured employee who was trusted with the books,” Thompson says. “I’ve seen countless bookkeepers and accountants, or other employees with opportunity and motive, make this attempt.”

addresses,” she says. “If you see addresses in New York, New Jersey and Florida, while there are plenty of legitimate businesses in those states, you should be cautious. They are some of the most common states criminals will use to transport items out of the country.”

DaTa SeCurITy FrauDIf you don’t take adequate steps to ensure your firewall and encryption software are effective, you run the risk of hackers, or those with other means of getting into your databases, stealing card numbers off your hard drives.

“They can steal the 16-digit card numbers right out from under you if you’re storing them in an unsecure location,” Brindza says.

Data thieves can also take advantage of system vulnerabilities during a transition such as when a card authorization is in progress between the merchant and bank.

“Make absolutely sure you have high security standards in place for protecting data and that you’re monitoring everyone to be sure they’re following the standards,” Brindza says. u

For more information, contact Michelle Thompson at [email protected] or Susie Brindza at [email protected].

To discourage internal fraud, it is important to have a second person review transactions. Second, password-protect all company bankcard accounts and closely monitor who has access.

“Password protection is certainly a best practice,” says Susie Brindza, director of FirstMerit’s Merchant Bankcard Division. “But we also encourage having that second set of eyes so people know they’re being monitored.”

exTernal FrauDExternal fraud often strikes in the form of illegitimate orders or payments by parties who have illegally obtained someone else’s credit card information.

If the billing and shipping addresses don’t match, that could signify a fraudulent order.

“Typically, you want those addresses to be the same,” Thompson says. “It doesn’t always mean it’s a bad transaction — I could ship a gift to someone who lives out of state and bill it to myself and there is no problem, but you should look closer if the bill-to and ship-to addresses don’t match.”

A credit card authorization request only verifies the credit card number is legitimate and there are sufficient funds or a line of credit to process the purchase. An authori-zation does not check names or addresses for matches, a fact Thompson says is important for merchants to remember.

“Pay extra attention to shipping

FIghTIng FrauD

aSk The exPerT>>>

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How to protect your business

michellethompson

Vice President, Fraud risk with FirstMerit’s Merchant

Bankcard Division

“PaSSworD ProTeCTIon IS CerTaInly a BeST PraCTICe.”

susiebrinDza

Director, FirstMerit’s Merchant Bankcard Division

When it comes to choosing a customer rewards program, value is in the eye of the beholder. Some consumers prefer cash back when selecting a debit or credit card, while

others would rather accumulate points toward a compli-mentary shopping spree at their favorite retailer.

Because consumers face difficult choices, we asked Julie Tutkovics, executive vice president and chief marketing officer of FirstMerit Bank, to compare the pros and cons of points versus cash when choosing a rewards program.

What should consumers consider when evaluating rewards programs?Start by identifying your goal. Do you want to take your family on a free vacation every year or earn extra cash for the holidays? Once you know your end game, find the most advantageous program by examining your annual expendi-tures. For instance, a card that offers more cash back for gas and groceries could yield the best return on some of your biggest expenses, while frequent business travelers could earn free airline tickets for a family vacation by aligning reward points with membership in a frequent-flier program.

What are the pros and cons of a cash back program?Generally speaking, cash is king because it gives you the most control over how you spend your rewards. You can spend the money on anything, including any airline or hotel, with no restrictions or blackout dates. In addition, you earn cash back on every dollar you spend, and the rewards don’t expire or diminish over time. You can even use the funds to reduce the balance on your credit card or splurge on something special. There aren’t any specific cons with cash back, but points may be more lucrative based on your spending habits.

What are the pluses and minuses of a points program?Points programs offer the greatest value if you have an affinity for a specific airline or retailer, or if you enjoy the additional perks. Road warriors might be swayed by express check-in at the airport, the idea of no bag-check fees or free upgrades and travel insurance. Potential negatives include the inability to progress up the rewards scale if you don’t spend enough money, inflexibility and the fact the issuer may raise the number of points needed for rewards over time. Although consumers often get bonus points for signing up or making an initial purchase, you have to factor in fees or spending requirements when calculating the true cost of those rewards.

How can consumers be sure they’re getting the best deal?Read the program rules carefully so you understand the financial impact of fees, spending caps or any limitations on collecting your rewards. Maximize your return by looking for synergies between your credit or debit card and other loyalty programs that might yield discounts, as well as cash back on significant purchases. Remember, your goals, buying habits and the program rules play equal roles in determining which rewards program offers the greatest value, so always read the fine print. u

For more information on customer reward programs, call (888) 554-4362 or visit your nearest FirstMerit Bank branch.

PerSonal FInanCe >>>

CaSh VerSuS PoInTS How to choose the best customer rewards program

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julie Tutkovics, executive Vice President and

Chief Marketing officer of

FirstMerit Bank

12 • MeritMatters

meritmatters • 13

We are excited to welcome Sandy Pierce to FirstMerit. She brings 30 years of experience in banking to

her new role as vice chairman of FirstMerit Corp. overseeing companywide consumer banking, wealth management services and marketing. She is also chairman and CEO of FirstMerit Michigan. She’s passionate about helping businesses throughout the Midwest succeed, and she’s making local business owners a top priority.

What drew you to join FirstMerit?I’ve been in the banking industry since I started as a part-time teller while I was still in college in 1978. I’ve known FirstMerit’s Chairman, President and CEO Paul Greig for many years as a colleague with prior banks. Paul joined FirstMerit more than seven years ago and has grown the bank organically, as well as through strategic acquisitions, to expand our presence in the Midwest. The acquisition of Citizens Republic brings FirstMerit to my home state. As a result, the state of Michigan and its residents, including those who own and operate businesses, will have a new source of capital and a renewed commitment from a very strong financial institution. The strategic direction of our leadership and the work ethic of our team have made us successful in surrounding states, and I am confident we will create a success story here in Michigan, as well. As a lifelong Michi-gan resident who was born and raised in Detroit, the impact FirstMerit will have on this state and its communities is compelling. For all of these reasons, I am honored to be a part of the FirstMerit leadership team.

What do you see as the biggest task you need to tackle?When we acquired Citizens Republic, we acquired a bank that has very similar char-acteristics and values in terms of how we respect the customer, the community and our employees. There are very few product

get to knoW sandy PierCeMidwest banker, Midwest focused

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PeoPle ProFile>>>

on the sidehistory: i was born and raised in detroit. i am the youngest of 10 children, and was fortunate to be the only one able to attend college due to the support of my older siblings and parents. my grades and financial status enabled me the opportunity to receive academic scholarships and financial grants. i attended Wayne state university, where i received a bachelor’s degree in marketing and a master’s degree in finance. When i’m relaxing, i like to spend time with my adult daughters, their husbands, my two grandchildren, my teenage son and my husband of 34 years, tom. We entertain nearly every weekend, which we thoroughly enjoy. i love to bake. i love to travel, and someday, i hope to be good enough at golf to say i love golf, too, but i’m not there yet.

People would be surprised to know: i grew up in an apartment above my parents’ tavern on Chene street in detroit.

if i wasn’t in banking: i’d be a surgeon. i was pre-med for two of my four years as an undergrad.

sandy Pierce, vice Chairman,

Firstmerit

gaps, which makes the transition much less disruptive for our customers. Our focus for the remainder of this year is to ensure the integration of the two organizations is as smooth and seamless as possible. There are hundreds of our team members working tirelessly to make that happen.

How will you define success in your new role?Success in this organization, to me, is deepen-ing the relationships we have and gaining new relationships so that we are the preferred bank for every household and business in the markets we serve. Success is expanding our market presence by delighting custom-ers, embracing our team and generating an extraordinary return for our shareholders.

What do you want the people of Ohio to know?My goal is to spend time getting to know our team and customers in Ohio. This is the home of our headquarters and we are proud of the long history and the impact of FirstMerit in this great state. Our local focus, and skilled and talented staff, have positioned FirstMerit as a leader in the banking industry. There is still much opportunity in front of us in Ohio. I’m excited to be a part of it. u

14 • meritmatters

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Jim Wymer calls Hazel8 one of his firm’s signature projects, and it’s in a signature location, as well — Cleveland’s University Circle.

Nestled into frontage on Hazel Drive, just off East Boulevard by the Cleveland Institute of Music, Hazel8 is one of the latest residential development projects for WXZ Development Inc. The Fairview Park-based firm is led by Wymer, co-founder and CEO, who started the firm with his father-in-law, Xenophon Zapis, in 1991.

By erik Cassano

developing

suCCess

meritmatters • 15

Jim Wymer, Co-founder and CEO of WXZ Development

16 • meritmatters

“We have recently been very focused in the multi-family rental housing market, and Hazel8 is one of our most recent successes,” Wymer says. “It’s an upscale, 59-unit rental project, right in University Circle, in close proximity to the Cleveland Clinic, University Hospitals, Severance Hall, Case Western Reserve University and the Cleveland Museum of Art.”

Hazel8 is a significant project for WXZ, not only because of its size, but because of its position in one of the region’s primary job-creation environments. Wymer expects to attract both professionals seeking a permanent residence and those seeking short-term housing.

“It’s located in a place where there are people constantly moving into the area,” he says. “We have medical residents, educators, nurses and other professionals who are working at the institutions in and around University Circle. Many of them are looking for temporary housing of one to three years, and the supply of that type of housing is limited. Hazel8 addresses that need, and it gives residents the added benefit of a private entrance to each unit, along with access to an attached garage. It’s a complex with no long corridors and no parking decks.”

Hazel8 is just one of the projects that illustrates the ground WXZ has covered in 22 years. The company has gone through a number of phases and faced complex chal-lenges along the way, but thanks to Wymer, his staff and the help of external partners, his vision for WXZ has become a reality.

handling the eConomyOver the span of more than two decades, WXZ has endured a number of economic peaks and valleys, none more severe than the historic recession that hammered

nearly every business starting in late 2008.WXZ felt the shockwaves as the real

estate collapse caused the market for new commercial and residential projects to dwindle. But Wymer was able to keep his firm on strong financial footing, thanks to a strong capital base and strong relationships with lenders.

“We have been able to stay financially strong and have a good capital base and strong relationships with vendors, and that has allowed us to be flexible and stay light on our feet,” he says. “Particularly in a down economy, it’s important, because it has helped us be able to move quickly when we’re able to seek out new opportunities.”

Although projects such as Hazel8 are signature projects upon which the firm can build and maintain its reputation, the recession helped reinforce one of the firm’s overarching values — that every project is an investment of resources, so every completed project is an accomplishment.

“Even the most simple auto parts store, when that store is constructed and opens for business, it’s an accomplishment,” Wymer says. “There is no easy project, no easy building. Every project poses its own individual challenges.”

It’s that appreciation of the complexity and importance of each project that has helped WXZ build the client relationships that have allowed it to weather the recession and other fluctuations in the marketplace.

“Our calling card is that we’re persistent,” Wymer says. “We’ve stuck it out through various recessions, we see the vision through to completion and we work closely with our partners. Those are the major keys to our strong reputation.”

Working With a Banking PartnerWXZ’s persistence has been aided by its

“there is no easy ProJeCt,

no easy Building.

every ProJeCt Poses

its oWn individual

Challenges.”– Jim WymEr

CO-FOunDEr anD CEO, WXZ DEvElOpmEnt

meritmatters • 17

relationship with FirstMerit Bank, which Wymer calls his “go-to bank.”

At a time when real estate financing was becoming increasingly difficult to obtain, Wymer leveraged his relationship with FirstMerit to continue developing projects and keep his firm on strong footing.

WXZ has partnered with FirstMerit for nearly six years.

The other WXZ projects FirstMerit has financed include a Rite Aid store in Sylvania, Ohio, and a new Lyndhurst, Ohio, branch for a competing bank — when not even the competing bank would offer financing.

“They entered the financial downturn and banking crisis with flexibility on their side of the equation,” Wymer says. “I think that, in turn, allowed them to enter the real estate market in a bigger way. At a time when other lenders were shutting their doors and unwilling or unable to make meaningful investments in these types of projects, FirstMerit was able to provide a viable answer. Because of that, they’ve been critical

to our success — particularly in the University Circle area and the Hazel8 project.”

FirstMerit was involved in the Hazel8 project from its start, when University Circle Inc. asked WXZ to join a bidding process and submit a plan for the Hazel8 site.

“We were requested to join a bidding process through a request for proposal issued by University Circle Inc.,” Wymer says. “We presented our vision for what, at the time, was a surface parking lot.”

Although the firm had strong financial backing from FirstMerit and a detailed vision for the property, Wymer still faced a number of challenges throughout the process of submitting and winning the bid.

“We had to convince the stakeholders that this type of rental project — a dense rental project — was good for this lo-cation,” he says. “We had to convince everyone that our vision of constructing a unique, upscale rental property was a worthy use of a very good location.”

Through a series of meetings, the development of renderings and floor plans,

and FirstMerit’s continued financial backing, WXZ convinced the property’s stakeholders the firm’s vision was viable and was ultimately awarded the project.

the right PeoPleThe final — and perhaps most important — ingredient in WXZ’s longstanding success has been its people. Over its life, Wymer has made it a point to hire motivated, qualified, visionary people who can help turn concepts into reality.

He says there is no secret to finding qualified people; it’s simply a matter of persistence and diligence.

“You simply have to keep your eyes open at all times,” he says. “You have to keep your eyes open whether you’re presently looking for a job to be filled or not. You’re always on the lookout for people who are qualified, competent and performing at a high level, because that’s the key to how you’re going to deliver on what you promise. You need a staff full of people who have the skill sets and experience to deliver.”

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hazel8 apartments – a WXZ development project

18 • meritmatters

Wymer and his staff keep their talent radar up at trade shows and other industry activities, stay active in trade organizations and keep aware of what others in the industry are doing.

Once you’ve hired the best and brightest people you can find, you have to treat them well and offer the best possible financial compensation.

“You always want to demonstrate how

much you appreciate what they bring to the company,” Wymer says. “That goes to treating them fairly, recognizing their accomplishments and rewarding them financially. That is how you not only build but maintain a talented staff that never takes its eye off the ball.” u

For more information: www.wxzdevelopment.com

“you’re alWays on the

lookout For PeoPle Who

are qualiFied, ComPetent and PerForming at a

high level.”– Jim WymEr

CO-FOunDEr anD CEO, WXZ DEvElOpmEnt

Jim Wymer with David swindell, president of WXZ Construction, llC

meritmatters • 19

Fast FaCts: WxZ develoPment• Founded: 1991

• Founding partners: xenophon Zapis and Jim Wymer

• Business: real estate development with a focus on retail, multi-family residential, single-family residential, senior housing and mixed-use developments

• services provided: site selection, land development, architectural and engineering services, general construction, financial forecasting and management capabilities

• WxZ is the preferred retail developer for advance auto Parts, rite aid and sherwin-Williams, with projects spanning several states.

• WxZ has been involved in the development and sale of more than 13,000 residential units and is presently working on multi-family, rental, for-sale and senior housing communities in ohio, north Carolina, south Carolina and Florida.

• For-sale and rental residential communities include: Beachcliff row in rocky river; the hamlets east and West in rocky river; Circle 118 in Cleveland; glen laurel residential in laurel Park, n.C.; and hazel8 and university view in Cleveland’s university Circle neighborhood.

• senior communities include: naples senior housing in naples, Fla., and glen laurel senior housing in laurel Park, n.C.

• WxZ Construction is a general contractor established by the principals of WxZ development in 2006. the company acts as general contractor on all WxZ projects, building on the parent firm’s status as a preferred developer by expanding the firm’s in-house project development and construction capabilities.

hazel8 apartments – a WXZ development project

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20 • MeritMatters

Q: The media is full of commentaries that indicate the United States is once again headed for a recession. Do you agree? A: I’d take it a step further and note that many people seem to think we haven’t even exited the Great Recession. We strongly disagree with that position, as GDP has been hitting new record highs since Q1 2012. We do agree the economy is growing very slowly and has also been volatile. The combination of this slow pace and volatility in quarterly growth makes the economy feel recession-like.

Reviewing the recent data, we see that Q3 2012 GDP was up 3.1 percent, but Q4 was much lower, up only 0.4 percent. The decline was largely due to uncertainties that arose from the national elections and the extreme partisan bickering that followed. With businesses, consumers and investors alike worried about tax rates and government fiscal austerity, it is no surprise that GDP slowed. Our 2013 economic forecast came down to one simple phrase: It all hinges on Washington.

Q: Why was the outlook so dependent on what was taking place in the nation’s capitol?A: The economy thrives on certainty. If we feel we under-stand the forces that impact the returns on spending and investing decisions, human nature means more spending and investing will take place. When people get very worried, they may postpone the decisions that turn into economic growth.

Entering 2013, our out-of-consensus perspective was that compromises on budget deficits, taxes, the debt ceiling, etc., would be reached and the economy would continue to muddle along at a rate of 2 to 2.5 percent this year. We were pleasantly surprised by the turn of events, as political leaders averted the big worries or at least postponed them. So far this year, the fiscal cliff was turned into a mere slope, the debt ceiling debate was postponed, a government shutdown was averted and budgets were proposed. We’re not optimistic enough to call this a new era of good feelings, but it’s been a positive for the economy and for financial markets.

IS The u.S. eConoMy heaDeD For a reCeSSIon?

InVeSTMenTS >>>

Q: Does that mean it is all clear for economic growth this year?A: If all clear means “no recession,” our answer is yes. If it means sustained GDP of 2.5 to 3 percent, Washington still matters a lot. So far, Washington has really only kicked the can down the road. To become a positive factor, it would need to agree on the major long-term deficit issue — entitlement reform. Uncertainties would also be reduced if a reasonable immigration bill and additional tweaks to the Affordable Care Act (Obamacare), such as the proposed repeal of the 2.3 percent medical device tax, are passed.

Over the past few years, we have seen a sharp recovery in consumer net worth and new records in corporate profits. If these feed into better confidence, and thus faster employment and consumer income growth, positive economic surprises could result.

Q: Have you changed your forecast for the economy?A: No. Our optimistic economic stance has been appropriate over the past three years, as we relied on our Expansion Sig-nals and Recession Signals Checklists. The RSC reading sits at a benign 1 of 10, so we will stick to our forecast of muddle-through growth in GDP of 2 to 2.5 percent for 2013. u

For more information, contact Bob leggett at [email protected].

Bob leggett, Senior Investment Strategist, FirstMerit PrivateBank

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MeritMatters • 21

The changes for tax year 2013 are already in place,

but many individuals are still struggling to figure out what the new laws and regulations mean for their investments, estate plans, and businesses, says Steve Foster, a vice president and client adviser at FirstMerit. “With the 2012 tax season behind us, we’re spending a lot of time

helping clients understand the significant changes that are taking place for 2013, how they may be affected, and the planning opportunities available to them,” he says.

Will anything change for taxpayers in 2013?The American Taxpayer Relief Act of 2013, signed into law on Jan. 2, averted the tax increases that would have resulted from the expiration of 2001 tax laws known as EGTRAA, or the Bush-era tax cuts. However, there are changes that will affect all wage earners, while others will impact only those taxpayers in the highest bracket. There are also a number of tax deductions, credits, incentives and tax treatments that were extended and will be a benefit to business owners.

What is the change that will affect all wage earners?The act did not include an extension of the Social Security payroll tax reduction that began in 2011. As a result, the tax rate for the wage earner reverted from 4.2 percent to 6.2 percent, so in 2013, taxpayers are taking home 2 percent less than they did in the previous two years.

What are some of the other significant provisions of the act?While the income tax brackets enacted in 2001 — ranging from 10 to 35 percent — are now permanent, a new 39.6 percent income tax bracket has been added for high-income earners. In addition, those in that higher tax bracket — singles with taxable income over $400,000 and joint filers with taxable income in excess of $450,000 — will now have capital gains and qualified dividends taxed at 20 percent, compared to 15 percent previously. Other changes include reinstated phase-outs of personal exemptions, new limits on

itemized deductions and increased adjusted gross income limitations for deducting medical expenses. In summary, it will primarily be the higher income earners who will feel the pain of both higher tax rates and reduced tax deductions.

What provisions could positively affect taxpayers?In addition to maintaining existing income tax rates for the majority of taxpayers, numerous credits and exemptions were also extended or made permanent, including the alternative minimum tax exemption amount, which has been perma-nently patched and will be indexed for inflation. Additionally, the child tax credit was also made permanent, as well as a number of tax incentives pertaining to higher education.

In addition, the estate tax exemption remains at $5 million per person and $10 million per married couple and will be indexed for inflation. The exemption amount also remains portable to spouses, who previously had to use it or lose it. The downside is that the top estate and gift tax rate will increase from 35 to 40 percent. Lastly, the act extended the provision allowing tax-free distributions from individual retirement accounts directly to public charities through 2013.

How does the act affect business owners?The act extended a number of tax deductions for businesses that were set to expire, including the enhanced code Section 179 business expensing and 50 percent bonus depreciation on qualified property. Both provisions allow businesses to take larger deductions now rather than waiting until future years.

Are there any other tax changes in 2013 that are not part of the act?Yes. In 2013 taxpayers may now be subject to an additional income and capital gains tax under the Patient Protection and Affordable Care Act (PPACA) — a.k.a. Obamacare. Under PPACA, there is an additional 3.8 percent surtax on capital gains, dividends and other investment income for certain taxpayers — singles with more than $200,000 in modified adjusted gross income and joint filers with more than $250,000 — which also includes trusts and estates. Therefore, the effective top rate on capital gains and dividends is now 23.8 percent. u

For more information, contact Steve Foster at [email protected] does not offer tax advice. Please consult your tax professional.

ManagIng wealThHow new tax legislation may affect you, your estate, and your business

InVeSTMenTS>>>

Steve Foster, Vice President

FirstMerit

22 • meritmatters

Jessica lanzo was preparing to apply to colleges, but she was at a standstill. as a first-generation college student, her parents didn’t have the

background to be able to help her with applying for a college education or affording it.

however, her school, James Ford rhodes high school, partners with College now greater Cleveland, an organization that provides students with guidance and access to funds to prepare for and then graduate from college.

“College now was there for me through everything,” says lanzo, who graduated from Case Western reserve university with a degree in mechanical engineering and works for Federal-mogul Corp. as a manufacturing engineer in smithville, tenn. “the advisor assigned to my high school was wonderful and helped me through each step. he made sure i understood how to apply for colleges and scholarships and which colleges and scholarships i should apply for.”

then he helped her understand the financial aid packages she had been offered.

“i would have been lost if not for the assistance that College now had to offer,” lanzo says.

the organization, formerly known as Cleveland scholarship Programs, has served the Cleveland community for 45 years and assists about 22,000 traditional and adult students each year. it provides about $2.5 million in scholarships annually, funding approximately 1,500 students.

College now serves high schools in the Cleveland metropolitan school district, as well as suburban and parochial schools, and has a downtown Cleveland resource Center that is free and open to the public.

“not every school has the internal capacity to provide college guidance and financial aid counseling,” says lee Friedman, Ceo of College now (pictured top left). “a lot of our population is first-generation students whose family members didn’t go to college, so they need additional help navigating the system. others lack the overall resources at home.”

the organization receives funding from a variety of sources, including government grants, local foundations,

corporations including Firstmerit Bank — sean richardson, president and Ceo of the northCoast region for Firstmerit Bank, is a trustee on the board — and individual donors. it also charges school districts a fee for its service contracts, although a few of the contracts are subsidized through grants.

a college education is extremely important in today’s economic environment, and the organization is doing everything it can to make sure today’s high school students are tomorrow’s college graduates, Friedman says.

“all of the research shows long-term income levels are directly related to educational attainment,” she says. “For those who don’t finish high school, the unemploy-ment rate is in the upper teens, but if you go to college, the rate is only 5 percent.”

in addition, society has changed, and with it, the kinds of jobs that are available to today’s youth.

“By 2018, more than 60 percent of jobs in northeast ohio will require at least a post-secondary, two-year degree,” Friedman says. “if you don’t have the credentials, the ability to find a good job with benefits will be much more difficult.”

Friedman says College now plans to continue on its current path of helping as many students as possible.

“ohio is 38th in educational attainment, but the seventh-largest state,” Friedman says. “our long-term economic vitality will suffer if we don’t change that quickly. We hope to broaden and deepen our services, and increase our effort in college completion so we can help more kids finish college.” u

For more information: www.collegenowgc.org or (216) 241-5587

the next level

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College Now lends a helping hand to students interested in higher education By danielle toth

Community >>>

Is this the yearyou stop talking

about retirement and start living it?

This is the year.How can we help?

At FirstMerit, you’ll have access to an entire team of financial professionals—experts in all

disciplines of managing wealth. From retirement and financial

planning to trust and estate, we can help you make the transition

from retirement thinking to retirement living.

T o l e a r n m o r e , stop by your local Firstmerit Branch or call David Jackson at 330-425-8175.

Securities offered through FirstMerit Financial Services, Inc. Member FINRA, SIPC; Advisory Services offered through FirstMerit Advisors, Inc.; Insurance products offered through FirstMerit Insurance Agency, Inc., affiliates of FirstMerit Bank, N.A.

Investments and Insurance Products are: Not FDIC

InsuredMay Lose

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1. Refer to MeritRewards Program Description for full details of the program, which can be found at any FirstMerit branch or firstmerit.com/meritrewards. 2. Minimum deposit of $100 is required to open a FirstMerit checking account. 3. Enrollment in a MeritRewards Plan is required. Activation bonus is based on activating certain services and meeting transaction requirements—$25 paid for activating one service, $75 for activating two services, or $150 for activating all three services. Each MeritRewards Plan is eligible for one Activation Bonus which will be paid within 30 days of the plan enrollment anniversary date. A MeritRewards Plan is defined as an account or accounts selected by the customer for pricing purposes. 4. To view official rules for Sounds of Summer Getaway go to firstmerit.com/getaway. No purchase necessary.

For more information, call 888-554-4362 or visit firstmerit.com/checking.

1600_FM13 Member FDIC

Snap your picture with our Sounds of Summer Car at any FirstMerit branch or Frozen Treat Truck. Next, upload your photo to FirstMerit’s Facebook® page and you’ll be

entered to win $1,000 towards your own Summer Getaway.

Enter for a chance to win $1,000 towards your Summer Getaway.

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