Port financing partnership brings millions in investment to distressed neighborhoods
Eight years ago the Port of Cleveland became the first port in the nation to be a sponsor of New Markets Tax Credits, bringing catalytic dollars and development projects to distressed local communities. Since then Steelyard Commons, Playhouse Square, Miceli Dairy Products Co., and others have collectively leveraged nearly $95 million in tax credit financing by working with a fund created by the Port and Ariel Ventures, a specialized public-private financial advisory company in Cleveland.
“The availability of New Markets Tax Credits was instrumental in moving forward on our expansion,” said Joseph D. Miceli, CEO of Miceli Dairy, a local cheese manufacturer with a national presence. “In fact, the tax credits served as a catalyst to finalizing the best possible financial package for our project.”
Miceli Dairy used New Market Tax Credits (NMTCs) obtained through the Port-Ariel partnership to expand its main production facility on East 90th Street in Cleveland. The $18 million project resulted in the creation of 50 new jobs and the adaptive reuse of 12 acres adjacent to Miceli’s original site. A second phase slated to begin this year will include more warehouse space and innovative technology that turns cheese by-products into energy used to power the facility.
All told the $95 million in NMTCs provided by the Port-Ariel partnership have generated hundreds of millions in private investment in local projects. The partnership – known as the Northeast Ohio Development Fund (NEODF) – fits well with the Port’s mission.
“The Port’s goal in this partnership is to facilitate creative economic development financing for unique projects in the region,” said Brent Leslie, the Port’s chief financial officer. “An added benefit is that our partnership with Ariel allows us to expand our product offering to companies beyond our traditional bond financing programs.”
Steelyard Commons was the first project to benefit from the partnership, using $32 million in NMTCs as the cornerstone of a $125 million investment that transformed a 125-acre brownfield into nearly a nearly 750,000 square-foot retail complex supporting an estimated 1,100 local jobs and $40 million in annual payroll.
“The NMTC program was indispensable to the financing for Steelyard Commons,” said Mitchell C. Schneider, president of First Interstate Properties, Ltd., which developed Steelyard Commons. “ The Port Authority has been a terrific partner and we believe that the allocation to this project was exactly the kind of development that the NMTC program was designed to promote.”
The federal government introduced the NMTC program in 2000 as part of the Community Renewal Tax Relief Act, Leslie said. Administered by the U.S. Treasury Department, the program spurs revitalization efforts in low-income and impoverished communities. To date, the NMTC program has awarded more than $36.5 billion in NMTC allocations across the country.
Each year, the Treasury Department awards an allotment of NMTCs to certified entities called “Community Development Entities” or CDEs. “Those CDEs can then raise dollars from private investors, who in turn can use the credits to reduce their tax burden over a seven-year period,” said Leslie. The Northeast Ohio Development Fund is a CDE.
For a project to benefit from the tax credits, it must be in a low-income census tract as defined by the poverty and unemployment levels. “These are areas where the private market would normally not invest because the risk is high and the rate of return is too weak to make the deals work,” explained Ariel partner Radhika Reddy. “The rents are just not high enough to obtain the required financing for the project, and tax credits fill in that gap to make the numbers work.” Reddy founded Ariel, a female-and minority-owned business in 2001, and then partnered with the Port in 2003 to form NEODF.
With the inception of the NMTC program, the Port and Ariel saw an opportunity to do something creative to spur economic development in distressed, low income, areas of Cuyahoga County. “The Port has a track record of economic development financing and facilitating complex development projects, and an ability to use its bonding authority to raise private capital for the projects,” said Reddy. “We saw them as a perfect partner for this work.”
Other projects that have received tax credits through the Port-Ariel partnership NMTCs include: Playhouse Square’s renovation of both the historic Allen Theater and the Middough Building; Corvalis Development’s mixed-use redevelopment of the Gospel Press building; the Geis Companies’ rehabilitation of the 7000 Euclid building in Cleveland as a healthcare technology incubator; and The Benjamin Rose Institute on Aging’s new home.
“We see this as a fantastic example of an innovative public-private partnership that has had a huge impact on the community,” Reddy said.
Cleveland’s salt mine: marking 50 years in ideal location under Lake Erie
Cleveland’s salt mine is both a feat of engineering and a hidden gem. Located 1,800 feet below Lake Erie, the mine is comprised of giant excavated tunnels 20-feet high, 45-feet wide extend four miles out from the shoreline. That’s where Cargill Deicing Technology extracts rock salt from a basin more than 300 million years old so that modern-day drivers can safely maneuver winter roads. Thanks to ancient geology, man-made transportation systems, and consumer demand, Cargill’s location in the heart of the city is ideal for mining salt.
“Just begin with the fact that it sits on one of the largest salt basins in the entire world, and you can see why Cleveland is a great place to mine,” said Richard Maxfield, president of Cargill Deicing Technology, which has owned and operated the mine since 1997, and doubled production since that time. “But that is one factor of many that attracted us to this mine.”
This year marks the 50th anniversary of the opening of the mine. But the salt basin itself is ancient. Formed more than 300 million years ago, it extends through parts of four states, explained Chris Gill, the Cleveland mine’s superintendent. “As the Appalachian Mountains formed, they cut off a section of the Atlantic, which evaporated and left behind massive salt deposits,” said Gill. “Over the millennia, normal buildup of soil and rock covered the salt, and those layers, in turn, were eventually covered by the glaciers which melted to form the Great Lakes.”
The mine’s location also has more contemporary advantages. It’s in the heart of the industrial snow belt, and unlike most other mines around the country, has ready access to three major forms of transport — boat, truck, and rail. That means Cargill and its employees can serve more markets. “We ship over a million tons by each mode annually,” Gill said. “This is possibly the most cost effective mine in the U.S.” All told the mine produces about four million tons of rock salt annually.
The Cleveland salt serves markets from Duluth, Minnesota to Montreal, Canada, with government users making up about 80 percent of the customer base. The rest are private contractors.
Travelling from the above-ground facilities on Whiskey Island to the active mining areas is an adventure for the uninitiated. Two elevator shafts provide access to the mine, one for workers and equipment, the other for salt to be hauled out. A five-minute ride down a shaft twice the height of Cleveland’s Key Tower takes workers down to a honeycomb of giant tunnels mine where they board “people mover” trucks for a 20-minute, four-mile ride out to the current work area. The mine is organized in a “room and pillar system” that leaves central pillars of salt to hold up the structure. Each room is 40 by 40 feet, and five mining units run simultaneously round the clock to open 40 acres of new mine annually.
Workers drill holes in un-mined areas then place explosives and blast salt free while also opening up new areas for excavation. Dump trucks then transport the salt back to the cargo shaft to be carried to the surface. “Our engineers and geologists perform ongoing seismic tests as we move out to ensure our workers’ safety,” Maxfield said.
Once brought to the surface, the salt is loaded on boats capable of carrying 15,000 tons each (about 7,500 full snowplow trucks worth). The vessels dock directly at the mine site during the May-to-December shipping season. Those ships then transport the salt to some of Cargill’s 80 terminals across North America. Salt is also loaded directly on rail cars to service additional markets.
Cargill is the largest outbound shipper along the Cuyahoga River ship channel. “We ship out 80 to 90 boats a year, with 10 of those heading up river to provide stockpiles loaded into trucks for local market, so we appreciate a strong partner in the Port,” said Gill. Those local stockpiles provide up to 200,000 tons (roughly 8,000 trucks full) of salt a day during the height of the winter deicing season, and Cargill provided half a million tons of salt for Ohio users in 2012.
Cargill Deicing Technology is a subsidiary of Minnesota-based Cargill International, the world’s largest privately held company. Cargill’s salt operations are headquartered in Cleveland, with 80 employees at its North Olmsted offices and 200 at the Cleveland mine. Another 400 are employed at mines in Louisiana and New York. “Cleveland is also a great place for a mine because of its accessibility to a high quality labor force,” said Maxfield. “In more remote mines, it’s difficult to attract this type of workforce.”
With 50 years under its belt, the Cleveland mine has many more to go. Maxfield estimates the mine’s useful life could extend another 75 to 100 years. “We look forward to our Cleveland mine being a top producer for generations to come,” he said.
FAST FACTS
- The Cleveland mine is part of a large salt formation known as the Salina Group that runs below parts of the Great Lakes region.
- The depth at which salt is found in the Salina Group varies from 800 feet to more than 6,000 feet.
- Lake Erie’s waters have an average depth of 50 feet above the Cleveland mine.
- Layers of shale, limestone, sandstone, and dolemite separate the mine from the lake.
- The layer of limestone at roughly 1,200 feet makes the mine a stable setting for excavation and provides an impervious cap that keeps from moisture seeping into the mine.
- A total of three salt layers exist below Lake Erie, the first unsuitable for mining, the second currently being excavated, and the third and lowest layer reserved for future use under Cargill’s 80-year lease with The State of Ohio.
Great Lakes vessel operators providing crews more onboard amenities for healthy living
Life aboard a Great Lakes vessel can be solitary and sometimes sedentary for crews, who spend two months at a stretch on the water and away from home. But some ship operators are providing innovative options to keep their crews happy and healthy. The Interlake Steamship Co. of Middleburg Heights has brought aboard treadmills, fitness trainers, and hi-definition televisions. Avon Lake-based Grand River Navigation Co. gives stewards additional meal-prep training so crews can enjoy a more healthy selection of fresh foods. And Fednav of Montreal has installed gymnasiums on vessels. “There were no gymnasiums 25 years ago when I was sailing,” said Tom Paterson, a company senior vice president.
Companies say the focus on healthy options is good for workers and makes solid business sense. “We recognize that our officers and crews work hard and sometimes long hours to ensure that we continue to operate our vessels safely, efficiently, and to our customers’ satisfaction,” said Mark Rohn, Grand River’s president. “We believe they should be rewarded for their commitment to our business and personal sacrifices, and that is why we continue to focus on making their off time a little more comfortable.”
On Interlake vessels, crews of 14 to 23 members live and labor on the ships, typically spending 60 days on and 30 off during work seasons lasting from March to January. It’s a 24-7 work lifestyle on ships that carry iron ore, coal, and stone to customers in Cleveland and throughout the Great Lakes. And those ships don’t stop moving unless bad weather intervenes. When not on duty, crewmembers have ample free time, but no way off a vessel unless it is docked.
Interlake strives to make the work life more enjoyable by making the living spaces more inviting. “The company has been investing heavily in improving our quarters, taking them down to bare steel and rebuilding them entirely,” said Jayson Toth, the company’s assistant operations manager. This includes upgraded lighting, fixtures, and flat-screen HD satellite televisions. “We say we’re bringing the rooms up to hotel standards,” Toth said. The ships also offer Wi-Fi, which helps morale by keeping the crew keep in touch with loved ones while on the lakes.
In addition, Interlake in the last few years has launched a wellness program to help crewmembers improve their health. That program begins with the ship stewards, who have been trained in healthy-food preparation. “They now offer more healthy options — salmon rather than red meat, for example,” Toth said.
In years past, what emerged from the galley was often fried food, said Jeremy Mock, Captain of the Dorothy Ann, a 700-foot articulated tug/barge in Interlake’s fleet. Crews have always looked forward to meals as a way to break up the monotony, he said, but now “we’ve all noticed the upgrades to food options, and appreciate it.” The 14-year Interlake veteran also praised Interlake for bringing a nutritionist on board to work with crewmembers. “Having that service right on board makes it that much easier to live a healthy lifestyle,” said Mock.
Interlake also has been investing in new fitness equipment, including treadmills, elliptical machines, and free weights. It also has brought professional trainers on short voyages to work with the crews, who are taking advantage. “Everyone’s curious and we have a pretty young crew that’s into fitness, so they enjoy getting tips from a pro,” Mock said. “But even some of our veterans have gotten inspired to make fitness part of their daily routine — it helps pass the time in a healthy way.”
Given the ships’ layout and limited space, full-fledged workout rooms are not an option. “So we just fit in the equipment wherever we can,” said Toth. “Usually we try to set fitness equipment up in one general area, but you might find a crew member running on a stray treadmill in a lounge.” And no need to worry about stability – the ships are made to sail smoothly, so runners are not normally affected by the waves. While some workout equipment was always available onboard, the recent focus on fitness is new, which Toth attributes to management’s desire to make options for a healthier lifestyle available aboard ship.
For Rohn of Grand River, assisting with the purchase of fitness equipment and providing healthy meals are part of his company’s broader focus on improved safety and living standards for workers. “We recognize that our success and ability to realize positive growth is primarily a result of their commitments and efforts in operating and maintaining our vessels to a high standard,” he said.
Toth agrees. “Our crews are great, so it’s the right thing to do, plus it also makes business sense, because a healthy crew is more efficient,” he said. “Our company has made it to 100 years, so the least we can do is help our people live healthier lifestyles so they can hopefully make it that long as well.”
I’ve long been intrigued by the notion that just “six degrees of separation” connects each of us to anyone else, and I’m sure that fewer than six degrees separate our Port from every resident of Cuyahoga County. We connect with people in ways they recognize, and in ways they may not.
They connect to the Port when they visit the Rock and Roll Hall of Fame and Museum or the Cleveland Clinic (we’ve issued project financing bonds for both), when they row on the Cuyahoga River (we’re removing hazardous floating debris from the channel), and when they buy a car made from locally produced steel (the iron ore likely came through our Port).
As we continue to secure more cargo, launch new environmental initiatives, and develop more financing opportunities, our connections to residents grow even closer and stronger.
Consider our outlook and projects for 2013:
- The new international shipping season is off to a strong start.
- We’re moving ahead with new and important projects to protect and enhance the Cuyahoga River ship channel and its shoreline.
- As a catalyst for economic development we are securing private dollars to help turn important projects into reality, including Cuyahoga County’s new headquarters in downtown Cleveland.
- We’re pleased to be the title sponsor for the Port of Cleveland 2013 Tall Ships Festival, a wonderful community event organized by the Rotary Club of Cleveland.
Our international shipping season began April 1. Since then we’ve had more than 38,000 tons of cargo come through the Port. Overall we expect this month’s volume to exceed April 2012’s tonnage level, and we’re optimistic for cargo activity through the rest of the year.
What’s important isn’t just the raw numbers. Increased cargo signifies that manufacturers need more supplies and see a value proposition in using our Port facilities. Both facts are good for our community.
We are continuing to pursue more business activity, and I’m pleased to report that our increase in international cargo during the 2012 shipping season earned the Port a prestigious Robert J. Lewis Pacesetter Award from the Saint Lawrence Seaway Development Corporation, an agency of the U.S. Department of Transportation. It was the Port’s 11th Pacesetter award, and our third in as many years.
Along the Cuyahoga River we are moving ahead with three projects to both safeguard the ship channel for commercial and industrial users, and improve its environmental quality for recreational users, shoreline visitors and wildlife.
First, our two work boats – Flotsam and Jetsam – will soon be in the water for their first full season, removing floating debris from the river and Lake Erie’s downtown shoreline. If you work in the downtown or Flats area – or are visiting the Rock Hall, the Great Lakes Science Center, or other lakefront attractions, I hope you’ll catch a view of the two boats in action.
This spring we’re also moving forward with two initiatives focused on protecting the structural integrity of the ship channel. We’ll soon do what we believe is the first comprehensive above-water and below-water assessment of the 13 miles of bulkheads that line the channel. We already know that visible conditions of the steel-sheet bulkheads range from excellent to poor – and that in some stretches there are no bulkheads at all to preserve a stable vertical edge and provide barrier protection between land and water.
While the Port does not control this riverfront property, we are performing the analysis under an agreement with the City of Cleveland and as part of our role as a steward of Cleveland Harbor.
We’re also taking a lead role to develop options for stabilizing Franklin Hill, a 30-acre riverfront site near Cleveland’s West Side Market that is slowly collapsing and threatening the viability of the ship channel. We hope to soon hire an engineering firm to identify potential solutions, and the costs involved, to stabilize the hillside.
In downtown Cleveland we are watching with excitement as work progresses on the County’s new headquarters. The project will give the County a modern facility, revitalize an older business district in downtown Cleveland, and serve as an anchor for surrounding mixed-use redevelopment. The Port recently issued $75.5 million in bonds, which were purchased by private investors, to help pay for the construction.
Finally, I’d like to encourage you to climb aboard the ships from around the world that will visit Cleveland for the Tall Ships Festival, which begins with the Parade of Sail on July 3 and continues through July 7. The Festival is a terrific event and we look forward to welcoming tens of thousands of people to the waterfront to visit the ships, and learn more about our rich maritime history and the important role shipping continues to play along the Great Lakes and across the globe. For more about the Festival visit: www.clevelandtallships.com
As always I invite you to contact me with any questions or comments. And please encourage your colleagues and friends to subscribe to our eNewsletter (sign up at www.portofcleveland.com); follow us on Twitter (@portofcleveland), like us on Facebook (facebook.com/ThePortofCleveland), and join our online conversation on The Civic Commons (theciviccommons.com).
The Port of Cleveland ended 2012 with cargo moves that clearly demonstrated the importance of our recently expanded on-dock rail system. During the final weeks of the year we moved about 15,000 tons of cargo on more than 160 rail cars – more than double the number of rail cars we saw in all of 2011. The cargo was destined for customers outside Ohio, who saw first hand that we can provide cost-effective and efficient connections to locations beyond our borders. This new rail capacity helped us increase international cargo by 5 percent in 2012, on top of a 12 percent increase in 2011.
In 2013 we plan to continue our push to both grow and diversify our cargo base. On our agenda this year is marketing initiative to develop a service between our port and Northern Europe that would give customers something we don’t currently have: “liner” service in which a vessel makes regularly scheduled trips every month. This way, manufacturers could rely on our port to transport cargo just as travelers can depend on airlines to provide regularly scheduled service between a pair of cities. What we currently have is more akin to chartered airline service. Liner service would provide one more way for us to offer competitive costs and services to attract customers. We’ll update this effort as the year progresses.
I also want to share information with you about our 2013 operating and capital budgets, which help to explain our plans and approach for the year.
On the revenue side – in addition to our work to improve the maritime business – we intend to attract more users to our Foreign-Trade Zone and development finance programs – indeed we already have new FTZ and financing projects in the pipeline.
As a result, operating revenues are expected to increase 18 percent in 2013. This will position us to target more resources to implementing initiatives in our Strategic Action Plan without significantly increasing overall operating expenditures.
For example, as we wrote in our November eNewsletter, the Port is leading local efforts to develop sustainable solutions for handling sediment dredged annually from the Cuyahoga River to keep the ship channel fully navigable. We also are moving forward to secure geotechnical, environmental and civil engineering services to develop potential solutions for stabilizing Franklin Hill, a roughly 30-acre site that is slowing sliding into the river. And we are installing another trail at the Cleveland Lakefront Nature Preserve, which the Port manages.
I’ve been asked how we can move forward on these kinds of projects in the wake of losing our levy issue on the November ballot. The answer is simple: Our proposal to increase our millage was not to fund Port operating expenses. Instead we had pledged to use levy proceeds for critical river infrastructure as well as public access to the riverfront and lakeshore.
Despite our levy loss, I want to assure you that our objectives remain unchanged – and that is to deploy the Port’s resources and capabilities to help make the region more competitive. We will continue to market our maritime and financing services. And we will continue to seek funding for infrastructure solutions to safeguard the river for commerce and other uses.
As always please contact me with any questions or comments. And please encourage your colleagues and friends to subscribe to our eNewsletter (sign up at www.portofcleveland.com); follow us on Twitter (@portofcleveland), like us on Facebook (facebook.com/ThePortofCleveland), and join our online conversation on The Civic Commons (theciviccommons.com).
The Federal Satsuki docked at the Port of Cleveland in December, one of nine new ships that Fednav Limited of Montreal is building to serve the trade between the Great Lakes and Europe.
“I believe in Cleveland, I believe in the Midwest and I really believe in this system,” said Fednav President and co-CEO Paul Pathy as he marked the Satsuki’s maiden voyage to Cleveland and the United States during a shipboard ceremony. “These are just not words,” he added, “because we are standing on a major investment that backs up what I am saying.”
During the December 12, 2012 ceremony onboard the Federal Satsuki, Pathy was joined by William D. Friedman Port of Cleveland President & CEO, and Craig Middlebrook, Acting Administrator of the Saint Lawrence Seaway Development Corporation.
Excerpts from their prepared remarks follow.
Click here to see the video.
Paul Pathy:
Good morning. My name is Paul Pathy. I am President and co-CEO of Fednav Limited in Montreal and Chairman of Federal Marine Terminals, which operates here at the Port of Cleveland. The ship we are on is the Federal Satsuki. It was delivered in May of 2012 and is one of nine new vessels we have ordered. These ships not only represent the latest technological advancements for our company and the industry, but also a way of going forward with a commitment to this industry and to the region. We also have six more vessels of this type that will be delivered in the next few years. Our commitment remains ongoing and we believe in the future of the Seaway.
I believe in Cleveland, I believe in the Midwest and, I really believe in this system. These are just not words, because we are standing on a major investment that backs up what I am saying. Three vessels have been delivered and there are six more on the way. We are already in discussions for the next set of fleets after that. We will be in Cleveland, the St. Lawrence Seaway, and in the Midwest, and I hope today’s events stands for and represents our commitment to that system. I believe the Seaway is not what it was on an industrial level, but I think it will come back, although the mix and types of cargoes may be different from cargoes like steel and grain. The world changes and evolves, but this system is a valuable part of this country’s economy. And that won’t change, particularly given that big ports in other parts of the country are too congested. This investment that we are standing on today and that we will be standing on increasingly in the future represents the importance of the Seaway and its infrastructure..
Environmentally, we are using the latest technology. For example, this ship will burn about 12 percent less fuel. This ship also represents a partnership that not only benefits the environment, but is good for business. We are committed to both and that is how we are looking at things going forward – how we can make the environment better and still make ourselves competitive. Again, thank you for being here today. We’re happy to have so many distinguished guests on board, the media of course, as well as our customers, partners, and friends.
William D. Friedman:
It’s always a treat for me to come aboard a ship, meet the captain and crew and marvel at the technology, some time-tested, some brand new, that makes ocean trade possible.
But today is extra special because we are celebrating both the Satsuki’s maiden visit and Fednav’s ongoing fleet renewal to serve the trade between here and Europe and other parts of the world.
The importance of Fednav’s longstanding position as the leading ocean carrier serving this system just can’t be overstated.
I will say flatly that this ship and Fednav’s service to our Port is Ohio’s most critical and significant international transportation connection.
Why, because it is the most direct, most cost-effective, most fuel-efficient, lowest carbon footprint, and safest link to Europe and other markets for Ohio companies.
This is why I believe the Great Lakes/Seaway route to the world is more relevant and a higher value proposition than ever before.
So, thank you to Fednav, the Pathy family and to the captain and crew of this fine ship.
We salute you for linking our port and North America’s heartland to the world.
Craig Middlebrook:
This is such a significant story and development on so many levels. On one level, there is the private investment story represented most forcefully by Fednav, the largest international carrier on the Great Lakes Seaway System. Their commitment over the life and history of the Seaway has been unparalleled over the 52 years since the Seaway opened.
Standing on this brand new vessel today, the Federal Satsuki, President Pathy has mentioned that there are eight additional new ships that will come to the System. Several ships are already here, but overall nine new ships are coming. The size of that investment, and what that means for not only their belief in the current potential of the Great Lakes Seaway System, the Port of Cleveland, and other ports in Ohio, but more importantly, what that means about the future, is significant. At that level, we have not seen that type of investment and frankly this vote of confidence in a long, long time. That type of massive investment is unparalleled. It is very exciting to be here today to share, acknowledge, and publicly celebrate Fednav’s investment and achievement here.
Edgewater Marina slated for complete reconstruction following Hurricane Sandy damage
Hurricane Sandy devastated Cleveland’s Edgewater Marina last October, demolishing dozens of boats, and necessitating a complete reconstruction of the facility. Now, with $1.6 million in funds allocated for initial repairs, the aim is to reopen a fully modernized marina in time for boating season.
Planning is underway for the upgrade, which will include all new docks. “At the very least, it will be a state of the art facility,” said Joe Anderson, CEO of FDL Marine Management Services, the company that operates the marina for the state. “What we had in place was really 1960s technology.”
The Ohio Department of Natural Resources – which owns the marina — has engaged the architecture and engineering firm SmithGroup JJR to help develop a plan based on the characteristics of the local boating community and competing marinas.
That plan should be completed soon. “Then we can proceed confidently knowing what capacity we should have for boat slips and the appropriate facilities to accompany them,” said Rodger Norcross, chief of ODNR’s Division of Watercraft.
Anderson said, for example, that the renovated marina will include floating docks that naturally rise and fall with changing water levels, an improvement that will make it much easier to board vessels. That compares to the fixed docks that were in place before the storm and which were more susceptible to damage from winter ice. The entire facility will also meet requirements of federal disabilities law and modern building codes.
“We understand that the governor’s office has indicated that we should be ready to welcome boaters back this year,” Anderson said. “Even though the storm was tragic, and a lot of people lost boats, we are looking forward to the future here.”
Anderson was on site when the storm pounded the marina, which sits just a few miles west of Downtown Cleveland and is part of the state’s parks system. “For Cleveland, this was a major, major weather event,” with winds nearing 70 miles per hour and waves over 20 feet high, said Anderson.
The Lake Erie boating season ends in October, and many owners still had their vessels in the water. “When the storm hit, we called in all of our staff and purchased thousands of dollars in rope lines to try to tie down the remaining boats,” said Anderson, who described having to walk backwards through walls of wind. “But the lines were just snapping from the sheer force of the storm—there was not much we could do, really.”
As things got worse, some boat owners also came on scene to try to save their beloved boats. “It was so dangerous by that point that I had to call our staff in—we could not allow anyone out there,” explained Anderson. “It was sad because people were desperate to save their boats, but the storm was just too intense.”
ODNR’s Norcross said the damage at the marina was precipitated by massive waves that breached the breakwall and dumped parts of the wall’s east end into the lake. “Once that happened, the marina was highly vulnerable, the waves surged through, and the entire area was overwhelmed,” Norcross said.
Following the storm, divers were sent in to identify sunken boats and make arrangements for salvage, which is now complete. Anderson described the scene as “what you might imagine if a bomb had gone off underwater.” The combination of waves and wind had sunk or damaged more than 30 boats beyond repair.
“Some boats were ripped up so badly, it’s been difficult to identify them,” said Norcross. “We are still working with park officers and FDL to sort things out.” Current cleanup efforts are focused on removing remaining debris and repairing the breakwall, all of which should be complete by spring, according to Norcross.
Dollars for the reconstruction will come from the Federal Emergency Management Agency (FEMA) and the Division of Watercraft’s Waterway Safety fund, which exclusively relies on taxes and fees associated with boating. “We have a user-pay, user-benefit approach,” said Norcross. “And Ohioans are very passionate about being on the water—we have the ninth most registered boats among U.S. states, and one in four people boat annually.”
Both Norcross and Anderson also appreciate that the Port of Cleveland quickly deployed its two new workboats — Flotsam and Jetsam — to remove the remains of boats broken up during the storm. “The Port’s workboats played a predominant role in cleaning up a lot of the floating debris in the storm aftermath,” said Norcross.
Anderson also is hopeful that the marina will be open for business at the start of the boating season in May, as are his excited customers. “We have a very active boaters club here,” said Anderson. “We hope everyone comes back, and expect some new boaters to join the crew as well.”
Cleveland Museum of Art’s expansion project relies on diverse construction team 
The Cleveland Museum of Art’s $350 million expansion and renovation is a showcase – not only for innovative architecture and design, but for the museum’s commitment to diversity. The museum’s inclusion plan for the construction project resulted in millions of dollars of work going to minority business enterprises (MBEs) and female business enterprises (FBEs). Throughout the project, more than 65 MBEs and FBEs performed services.
“Our mission states that CMA exists ‘for the benefit of all the people forever,’ and one way the museum’s leadership has shown its commitment to this principle is by structuring efforts to increase diversity in and around the museum,” said Sharon Reaves, the museum’s director of human resources. “Minority representation through MBE and FBE contractors, subs, and suppliers during our expansion is a clear example of this commitment.”
The Port of Cleveland shares that commitment to inclusion, and also helped to finance the expansion by providing more than $160 million in bonds.
The results of the museum’s inclusion efforts are clear and tangible. Consider the story of AKA Construction Management Team, Inc., an MBE/ FBE business. Owned and operated by Ariane Kirkpatrick. The AKA Team provided safety and site maintenance, emergency cleanups, and final cleaning. The museum’s expansion was the company’s first contract, said Kirkpatrick, who had previously been involved in a similar family business. “It was a mammoth project to kick off a business, but it really set The AKA Team on the path to success,” she said.
The three employees (including Kirkpatrick) that The AKA Team had when the museum work began in November 2009 grew in three years to 16 full-time and 20 part-time employees. “I really credit the museum job with kick-starting my business and helping me make key connections,” Kirkpatrick said.
To achieve its agenda for inclusion, the museum established a diversity advisory group and set clear goals for contractors to meet. For example, during the second phase of the expansion – which included demolition of outdated structures and construction of new administrative offices, the West Wing of galleries, and a central atrium – the museum aimed to have MBEs perform 20 percent of all subcontracts, and FBEs 7 percent. It then exceeded both goals by 3 percent and 5 percent, respectively.
“What made the difference was persistence and dedication to meeting our goals combined with upfront and clear communication of those expectations to our contractors,” said Ed Bauer, CMA’s treasurer. “We had regular meetings with our contractors to track their progress on inclusion and kept pushing them to meet goals, and we ended up exceeding them.” Bauer also praised the two construction managers, Panzica Construction Co. and Gilbane Inc., for embracing the museum’s inclusion agenda and working hand-in-hand with the museum to make it happen.
Bauer cited the museum’s decision to engage a diversity consultant, APB & Associates, as another factor in the success of its inclusion efforts. APB helped the museum discover smaller, well qualified MBEs and FBEs. “We knew the major players, but APB was able to get us to that next level of entrepreneurs,” said Bauer. “We also did a number of outreach meetings to help broaden our reach and get the word out that CMA was pushing to be inclusive, and that resulted in a greater pool of subcontractors coming forward.”
The AKA Team’s Kirkpatrick appreciated that she was regularly invited to project manager and contractor progress meetings, and always made sure to attend. “I was able to leverage the relationships I established on that job into a half dozen others,” she said. “It was important for getting the job at hand done well, but it was also an unbeatable networking opportunity,” she explained.
The museum’s commitment and successful inclusion efforts went beyond awarding contracts. “There was a high number of minority and female union tradespeople working on the project as well, not just owning the businesses” said Andre Bryan, president of APB. “And many workers came from neighborhoods surrounding the museum.”
The Port has similar inclusion goals of having 20 percent of eligible construction contracts on any project awarded to certified MBEs and FBEs, resulting in more than $128 million in work going to such firms currently engaged on projects.
“Our partners in Port financed projects, such as the borrower and their contractors, have demonstrated a strong commitment to inclusion that has routinely exceeded expectations,” said Brent Leslie, the Port’s chief financial officer. “The Port is currently working to enhance our inclusion policy to further accelerate opportunities for minority and female owned businesses.”
Kirkpatrick was proud to have been part of the project, and appreciated the museum’s diversity efforts. “It was great for business, but it was also a special project to work on,” she said. “I grew up nearby, and my mother took my sister and me to art lessons there, so the museum has always been a part of me. I’m proud that now I can say I helped make it an even more beautiful place to enjoy.”
In 2012 the Port of Cleveland achieved a series of important accomplishments that included key investments to improve our maritime facilities, opening more space for public access to the waterfront, and better positioning our agency to serve the needs of the community’s shippers and citizens.
We are in a far better place than we were a few years ago – as most recently evidenced by the advancements we made this year across our three key areas of work: maritime, development finance, and stewardship along the Cuyahoga River ship channel and downtown Lake Erie shoreline.
Before highlighting our key accomplishments, I want to first encourage you to read the stories in this eNewsletter about engaging people and companies who are making a difference in our community. What connects them all is very good work that in one way or another touches or is touched by our waterways.
For the Port it’s been a busy year. Our key actions during 2012 included the following:
Maritime:
- Launched the new rail loop at the Port to provide better and more efficient service and improve access to markets throughout North America. The loop was the Port’s largest construction project in a decade.
- Right-sized the Port’s terminal facilities and returned leased property north of Browns Stadium to the City of Cleveland to expand the area available for lakefront development.
- We expect that, based on our tonnage projections for the rest of the year, international cargo volume will be up again this year compared to 2011. Tonnage was also up last year compared to 2010. The increase is the result of our prime location, efficient facilities, productive labor, competitive rates and a post-recession increase in demand for products such as steel and industrial equipment that come through our Port.
Development Finance:
- Provided more financing dollars for local projects. We’ve now provided nearly $2 billion (in private investor dollars, not public dollars) since our program began in 1993.
- Entered a partnership with the Ohio Department of Transportation to build a new maintenance facility for the agency in Euclid. ODOT had turned to the Port because we were well positioned to build the facility quickly and cost-effectively.
- Received an upgraded rating from Standard & Poor’s for the bonds issued through our Common Bond Fund program. The upgrade will help the Port provide more attractive financing to a growing number of enterprises across the region. We also recently secured a new Letter of Credit, which further strengthens the program.
Infrastructure & Stewardship:
- Opened the Cleveland Lakefront Nature Preserve, a unique 88-acre urban wildlife habitant that in its first 10 months saw nearly 16,000 visits by people from 39 states and 13 countries.
- Built and deployed two custom-made vessels to remove floating debris from the river’s 6.5 mile ship channel and from 5 miles of Lake Erie’s shoreline. In their first six weeks working in tandem, the boats – Flotsam and Jetsam – removed 42 tons of debris, more than half of it collected from Edgewater Marina after boats were destroyed by the winds and waves associated with Hurricane Sandy.
- Took on certain key harbor services on behalf of the City of Cleveland to prevent obstructions and preserve adequate retaining walls along the riverfront.
As you know 2012 was also marked by the defeat of the Port’s levy in the November election. In the coming months we will work to both gain a better understanding of what specific factors led citizens to vote the way they did and to evaluate our options for how best to move forward. But I want to assure you that we remain committed to solving the infrastructure challenges that threaten the Cuyahoga River ship channel and the wide range of companies and citizens who depend on it. We will have more to say on our role in addressing those challenges in the coming months.
As always please contact me with any questions or comments. And please encourage your colleagues and friends to subscribe to our eNewsletter (sign up at www.portofcleveland.com); follow us on Twitter (@portofcleveland), like us on Facebook (facebook.com/ThePortofCleveland), and join our online conversation on The Civic Commons (theciviccommons.com).
Steel made in Cleveland has a global reach 
This winter when you see distinctive yellow-colored plows clearing snow-covered parking lots and driveways consider this: Chances are those plows – manufactured in Cleveland and made with hometown steel – are also on the job in Europe, China, and Australia. In this final installment of our Follow the Freight series, join us on visits to Universal Steel Company – which plays a critical role in the steel market – and snowplow maker Meyer Products, a company that’s both an American pioneer and a global exporter.
Located on Cleveland’s East Side, Meyer specializes in snow and ice-control equipment and ships to customers around the United States and in 23 countries across five continents. The company has expanded its reach with one innovation after another. But they all stem back to a eureka moment in 1926 that launched the company. That’s when Edward B. Meyer affixed a wooden board to his Buick so he could clear snow from his driveway.
“Meyer actually created America’s first steel snow plow for use on automobiles,” said Mike Moeller, vice president of manufacturing operations. “And our company is happy to use materials made locally to create products used here in Cleveland and around the world.”
That local sourcing begins at ArcelorMittal Cleveland, where iron ore shipped from other Great Lakes states travels through the Port of Cleveland and up the Cuyahoga River to the company’s integrated steelmaking facility. There, it is transformed with other raw materials into steel.
ArcelorMittal produces nearly three million tons of steel annually and then ships it – mainly in the form of large coils – to manufacturers who use it to make a range of goods, from automobiles to appliances. Close to 45 percent of the steel is shipped to Ohio businesses, with the remainder mainly going to neighboring states such as West Virginia, Kentucky, and Indiana. ArcelorMittal steel is also used to produce goods across the United States, as well as in Mexico and Canada.
The largest portion is purchased by facilities known as service centers. These businesses play a key role in the steel market by transforming large standardized coils and other steel products into various shapes and smaller orders to meet manufacturers’ unique needs and specifications.
Universal Steel Company, a service center in Cleveland, buys coils of steel from ArcelorMittal and other suppliers. Once uncoiled, the steel is flattened by rolling pins, and then much of it is run through a stretching machine with powerful grippers that clamp down on one section at a time, and “pull the steel like a piece of taffy to remove stress and flatten it further,” said Rich Williams, Universal’s president and chief operating officer. After that, members of Universal’s 60-plus workforce cut the steel to length to customer specifications.
About half the shipments leaving Universal are destined for Ohio manufacturers. The company’s customers make a wide range of products including large agricultural machinery, electronic transformers affixed to utility poles, locomotive engine cars, storage tanks, material handling equipment, and large commercial trucks. “Most customers buy in the form of sheets comparable in size to a sheet of drywall, just a lot heavier and definitely more durable,” Williams said.
Meyer is one of Universal’s steady customers, making a variety of snowplows – some weighing nearly a ton – from thousands of tons of steel annually, much of it produced by ArcelorMittal and finished by Universal. It has a workforce of more than 100.
“Steel is essential to every plow we manufacture,” said Moeller. Machines equipped with large pressing pins create the distinctive curve of the moldboard that forms the plow shovel, while computer-controlled lasers cut a single sheet into dozens of curved brackets, known as “ribs” that support and help attach the moldboards to vehicles. These parts and others are all welded together by hand or with robots to create the plows, most of which are painted with Meyer’s signature yellow hue.
Buyers of Meyer products range from municipalities to homeowners. The company recently developed its first product made specifically for people who want to hitch a plow to their pick-up or SUV to perform DIY plows of their driveways. But most of Meyer’s plows are sold to companies that provide snow-removal services to clear parking lots and driveways. “If you see a yellow plow out on the streets, chances are it’s one of ours,” said Moeller.
And if you see a giant freighter wending its way up the Cuyahoga River to ArcelorMittal Cleveland, chances are the iron ore it carries will eventually end up in a consumer product that will make someone’s life a little easier – whether a car owner or washing machine user in Northeast Ohio, or someone plowing snow in Qingzhou, China.
For more information on ArcelorMittal, visit www.arcelormittal.com
For more information on Universal Steel Company, visit www.univsteel.com
For more information on Meyer Products, visit www.meyerproducts.com
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The Federal Satsuki docked at the Port of Cleveland in December, one of nine new ships that Fednav Limited of Montreal is building to serve the trade between the Great Lakes and Europe.
