Issue: July/August 2012
2012 Team NEO: Business Retention (more than 300 employees)
A coalition of state and local leaders came together to keep American Greetings’ headquarters in Cuyahoga County.
It was the news that no one in Northeast Ohio wanted to hear. The formal announcement came in January 2010, but the buzz began months earlier. American Greetings was considering moving out of its long-term headquarters in Brooklyn.
About 1,750 of the card makers’ 18,000 employees work there, making it the city’s largest employer and a source of nearly $3 million in annual income tax revenues.
Ironically, it was Brooklyn’s May 2009 income tax hike from 2 to 2.5 percent that spurred the company to launch a yearlong analysis of their existing home. Executives examined a number of factors before making the decision to start shopping for something new.
The company has 1.6 million-square-feet of available space in Brooklyn, some of which is no longer needed. Renovations and upgrades to its aging property would be complicated and costly. Attracting creative talent in its image-driven industry would be much easier with the lure of modern, creative studios in a more vibrant and upscale setting.
|Winner: Greater Cleveland Partnership
Project: Retention of American Greetings
The race was on. Suitors from half a dozen states came in with deals designed to woo the company away from Northeast Ohio. Neighboring suburbs from Beachwood to Independence presented their most promising sites and preferential tax packages to the company.
“It’s so much easier for a state and municipality to put together unbelievable resources if you’re bringing a new company in,” says Deb Janik, senior vice president for real estate and business development for the Greater Cleveland Partnership. “When you’re the host state, it’s really tough to compete.”
Janik and her team reached out to the company and provided detailed information about various tax credits and abatements available through local municipalities. They worked with two governors’ administrations to advocate for every possible incentive from the state.
“We fought tooth and nail to keep them here,” she says, adding that the business activity surrounding new headquarter buildings typically creates an economic ripple effect that generates $9 to $11 for every dollar of investment.
Losing American Greetings to another state was not something newly elected Gov. John Kasich wanted on his watch. He made keeping the company in Ohio a top priority during his first 100 days in office.
“We had cooperation and alignment from the grassroots to the state level,” Janik says. “And we had a corporate leadership and board [at American Greetings] that were committed to this community.”
Ultimately, the state restructured its job retention tax credit parameters on American Greetings’ behalf and offered an incentives package worth up to $93.5 million over 15 years.
By early March 2011, American Greetings announced it was staying in Ohio. Two months later, company officials confirmed that they had chosen a 13-acre site for its new headquarters in Westlake’s Crocker Park.
The city’s close proximity to the airport, to the urban core and to the Cleveland Metroparks, as well as great housing, made it an attractive choice for any corporate headquarters. The vibrancy and variety of stores at Crocker Park were especially attractive to American Greetings.
“We believe this [location] will create an energy and synergy that will inspire our associates,” says American Greetings CEO Zev Weiss.
Tax increment financing that allows the company to use a percentage of its property taxes for infrastructure and site improvements — in a city whose income tax is 1 percentage point lower than Brooklyn’s — were positive factors as well.
“That was the beginning of our work when they chose us,” says Westlake Mayor Dennis Clough.
American Greetings unveiled initial plans for its new Creative Studios in May. The five-story, 655,000-square-foot building will be an open square with a 30,000-square-foot courtyard for employees. About 50 percent of its first floor will be devoted to leased retail space. Initial groundbreaking is anticipated for early 2013. The company expects to move to its new headquarters in mid-2014.
“We’ll be happy when they move in,” says Clough.
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