UPDATED: The greeting card company could renovate its current headquarters in Brooklyn or could move elsewhere in Northeast Ohio or out of state. After considering more than 15 sites in Ohio and properties in three other states, American Greetings has narrowed its list to Brooklyn, Beachwood, Brecksville, Independence, Westlake and two locations in the Chicago area.
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View full sizeAmerican Greetings is considering seven locations for its world headquarters, now in Brooklyn.BROOKLYN, Ohio -- American Greetings Corp. is considering seven sites for its corporate headquarters, pitting Ohio against Illinois and spurring a potential competition among Cleveland's suburbs.
The publicly held greeting card company, based in Brooklyn, hopes to make a decision by the end of its fiscal year, in February 2011. American Greetings has not decided to leave its 2,000-employee headquarters for another site. But company officials said Friday that they could leave the state or build new headquarters in another suburb.
A conversation sparked by a local income-tax hike has become a full-blown analysis of the company's real estate needs in a competitive, changing industry.
In January, American Greetings told employees that the company was considering a move, prompted by Brooklyn's decision to raise its income-tax rate from 2 percent to 2.5 percent. On Friday, the company said local tax rates are a factor, but so are changes in the card industry, including the growth of the company's electronic greetings business; employee recruitment; the costs of a new or renovated facility; moving expenses; and the company's desire for offices that better fit an evolving business with a large creative shop.
If this was just about taxes, officials said, American Greetings would have moved six months ago.
The statements represented American Greetings' first detailed explanation of what it is considering. For the most part, the company has declined for months to discuss the issue in any depth.
"Competitive businesses that wish to remain successful must adjust and position themselves for the future, and that's what American Greetings is doing by conducting an exhaustive examination of our workplace needs," Brian McGrath, the company's senior vice president of human resources, said in a written statement.
That examination has involved more than 15 sites in Ohio -- including downtown Cleveland -- and properties in three other states. The company said it has narrowed that list to seven choices: Staying in Brooklyn; building in Beachwood, Brecksville, Independence or Westlake; or moving to the Chicago area. Catherine Kilbane, the company's general counsel, declined to share details about the other sites American Greetings has considered.
The Chicago sites involve existing buildings, a less costly option than constructing a headquarters from scratch. American Greetings did not identify the specific sites and would not elaborate on its interest in Chicago. In 2009, the company acquired Recycled Paper Greetings Inc., a former rival that is still based in the city.
Illinois put a "significant" offer in writing to entice the company, said Steve Strnisha, a financial consultant working with American Greetings. A spokeswoman with the Illinois Department of Commerce and Economic Opportunity said, "It's not our practice to comment on pending business deals."
American Greetings does not have a written offer from Ohio, Strnisha said, but the company has talked with the administration of Gov. Ted Strickland and recently met with incoming Gov. John Kasich. The Ohio Department of Development is working with the company but cannot release information about the discussions, a spokeswoman said Friday.
American Greetings is considering these sites:
Brooklyn: American Greetings owns its headquarters, more than 1 million square feet off Tiedeman Road. The company has spent millions of dollars to improve the 1950s-vintage building, which is too large and would require major reinvestments. Brooklyn raised its income tax from 2 percent to 2.5 percent, but the city is fighting to keep its largest employer.
Beachwood: The company could build at Chagrin Highlands, near the new headquarters of Fortune 500 Eaton Corp. northwest of Harvard and Richmond roads. Voters recently approved an income-tax hike from 1.5 percent to 2 percent. But Beachwood showed a willingness to use incentives when it offered an income-tax cut to Eaton.
Brecksville: More than 100 acres are available near Interstate 77 and Miller Road, and the Louis Stokes Cleveland VA Medical Center is leaving its campus. The local income tax is 2 percent.
Independence: American Greetings is looking at roughly 30 acres owned by Duke Realty, off Rockside Road near Oak Tree Boulevard. Independence has a 2 percent income-tax rate. The city historically has not offered incentives, but officials are considering the possibility.
Westlake: The company could build a headquarters on an undeveloped portion of the Crocker Park site, at Crocker Road and Detroit Avenue. The Weiss family, which leads American greetings, has a minority stake in the property. Westlake's income tax is 1.5 percent.
Chicago: American Greetings is looking at two Chicago-area sites, which involve existing buildings. Recycled Paper Greetings, which American Greetings bought in 2009, is based in Chicago. An existing building would be less costly than new construction, but the company would be moving away from its longtime roots and 2,000-person workforce in Northeast Ohio. Illinois has put an offer in writing to attract American Greetings.
"We're encouraged that the very good conversations that we've had to date with the current administration appear to be continuing with Gov. Kasich," Strnisha said. "We're pleased that this transition is occurring very smoothly and hopefully leading to a productive outcome."
Though losing a Fortune 1000 company to another state would be a huge blow, Brooklyn Mayor Richard Balbier deplored the list of Northeast Ohio communities that are vying for the city's largest employer, with a local annual payroll of more than $150 million.
"We're an inner-ring suburb and it looks like we're competing with some of the wealthiest cities in the county," he said. "So we've got our work cut out for us. We think we made a very fair offer, and hopefully they'll accept it, but you can see our competition is pretty tough."
Balbier would not elaborate on what Brooklyn is offering the company. It's clear that any American Greetings project, whether it's a renovation of the company's 1950s-vintage headquarters, a new building or an out-of-state move, would involve a public-private partnership. And as Beachwood showed by offering an income tax break to Eaton Corp., which is moving there from Cleveland, even communities that typically eschew incentives are willing to make exceptions.
In Beachwood, American Greetings is considering a site near the future Eaton headquarters, north of Harvard Road and west of Richmond Road. The property, in the Chagrin Highlands community, is owned by the city of Cleveland and subject to a tax-splitting agreement between Cleveland and Beachwood. A spokesman for the Richard E. Jacobs Group, the site developer, referred all questions to American Greetings.
In Brecksville, the company is looking at properties around the Interstate 77 interchange and Miller Road, near the Louis Stokes Cleveland VA Medical Center property - which the VA is leaving as part of a consolidation in University Circle. The potential site in Westlake is an undeveloped piece of Crocker Park, an investment where the Weiss family, which runs American Greetings, holds a minority stake. Kilbane said that ownership interest will not affect the company's decision, which a committee of independent directors is making.
A representative of Crocker Park developer Stark Enterprises declined to comment. The mayors of Westlake, Brecksville and Beachwood did not return phone calls.
In Independence, American Greetings is looking at about 30 acres owned by Duke Realty, off Rockside Road near Oak Tree Boulevard. The city is toying with the idea of deal-sweeteners, said Ron White, the community and economic development director.
"We have never offered an incentive package to attract a business to our city," he said. "For a candidate like this, though, you start asking if there was ever a time when you would, what would be the criteria?"
But keeping a major company in Ohio matters more than jostling between Cleveland suburbs, White said.
"That's the biggest threat," he said. "If American Greetings is looking outside the state to pull this headquarters group to a different location, then we certainly have to band together to prevent that from ever happening."