American Greetings to stay in Ohio, with state aid; company undecided on headquarters site (video)

The state has assembled $18.5 million in grants and loans for the company, which also could receive as much as $75 million in refundable tax credits over 15 years. But American Greetings still has not decided whether it will renovate its Brooklyn headquarters or move elsewhere in the region. Watch video

with Alison Grant and Michelle Jarboe

American Greetings Corp. has decided to keep its world headquarters in Northeast Ohio, a move that drew praise from local leaders but also touched off a potential bidding war among communities that want to attract the Fortune 1000 employer.

The 105-year-old greeting card maker rejected the possibility of moving to Illinois but said Monday that it has not decided whether to remain in Brooklyn or move to another suburb.

Ohio will provide a package of grants, loans and tax rebates worth a potential $93.5 million over 15 years to keep American Greetings here. Some of the incentives will come through tax reform legislation Gov. John Kasich signed into law Monday at American Greetings' headquarters.

"This is great news for both American Greetings, Northeast Ohio and the state, and marks another step forward in Ohio's effort to create a jobs-friendly environment and overhaul how we work with companies to help them thrive and grow," Kasich said

The company's chief executive, Zev Weiss, thanked Kasich and Ohio State Sen. Tom Patton, a Republican from Strongsville, for putting the package together, but Weiss did not tell 300-some employees in the company's courtyard what they most wanted to know: where the company's new headquarters will be.

Weiss also would not say when the company would make that decision or what criteria it is considering. He confirmed that five cities previously identified as finalists -- Brooklyn, Brecksville, Beachwood, Independence and Westlake -- are possibilities, but he didn't close the door to additional suitors.

Asked whether the company would remain in Cuyahoga County, spokeswoman Patrice Sadd said "not necessarily."

Brooklyn Mayor Richard Balbier had a mixed reaction.

"I'm happy that they decided to stay in Northeast Ohio, but I'd be happier if they were staying in Brooklyn," Balbier said.

American Greetings' site search forces communities to compete against one another unfairly, he said.

Because no one knows what other cities have offered, American Greetings "holds all the cards," Balbier said.

American Greetings told employees in January 2010 that it might move its headquarters, situated in Brooklyn for 53 years.

The decision was prompted by Brooklyn's decision to raise its income tax rate from 2 percent to 2.5 percent. But American Greetings also has been weighing the costs of a new or renovated facility; employee recruitment challenges; changes in the greeting card industry; and ways to create an attractive office environment for a creative workforce.

The company said in November that it had narrowed the possibilities to the five Cleveland-area cities and two sites in Illinois.

Former Gov. Ted Strickland and Ohio Department of Development officials began talking to American Greetings executives last year about loans, grants and tax credits, and the package was finalized after Kasich took office.

The incentives include a refundable job retention tax credit under House Bill 58, passed last week and signed by the governor Monday, a day before his first State of the State address.

The credit, proposed by Patton, could be worth up to $5 million per year for American Greetings over 15 years, if the company increases employment substantially.

Companies eligible for the credit must have at least 1,000 employees, agree to make $25 million in capital improvements over three consecutive years and received a written offer in 2010 from another state.

American Greetings also will get a $15 million, low-interest state loan, a $2.5 million grant to help with construction costs and a $1 million grant for infrastructure improvements.

In exchange, American Greetings must keep the equivalent of 1,750 full-time jobs at its headquarters. The company has nearly 2,000 workers in Brooklyn, but that includes part-time employees.

Advocates of a regional approach to economic development were thrilled that American Greetings will stay in the area. But they said competitive courting of the company could hurt the region's economy.

"We are pitted against ourselves," said Hudson Mayor William Currin, who is active with the Regional Prosperity Initiative, a 4-year-old group dedicated to regional land-use planning, revenue sharing and cooperation among cities.

The group says current practices create an unhealthy competition among municipalities and communities for job growth and economic development.

"Unfortunately, it has become a beauty contest," said Alec Pacella, senior vice president of NAI Daus, a commercial real estate brokerage in Beachwood.

"Most companies want to get [headquarters selections] over as quickly as possible, because it's a distraction," Pacella said, but American Greetings can take its time because it owns its land and buildings in Brooklyn.

Gus Chan, The Plain DealerOhio Gov. John Kasich greets American Greetings executive Morry Weiss before a press conference today. Kasich signed legislation that would help keep American Greetings in Northeast Ohio.

Richfield Mayor Michael Lyons said Northeast Ohio's mayors are widely dissatisfied with companies that play one community against others. But Lyons and others said American Greetings is no different from other companies trying to find the sweetest tax breaks.

"They're just making the bargaining and site selection process a little more transparent than it normally is," said Edward "Ned" Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. "This goes on all the time."

Cuyahoga County Executive Ed FitzGerald released a statement saying he was pleased American Greetings is staying in Northeast Ohio, but added, "We need to stop competing against each other and start competing against the world."

Terry Coyne, an executive vice president of the Grubb & Ellis real estate brokerage in Cleveland, said American Greetings' headquarters are dated and badly in need of renovation, compared with rival Hallmark Cards Inc.'s modern headquarters in Kansas City, Mo.

"I would say based on the sites they're looking at, they're looking to start building from scratch," he said. "I would think that now the local competition begins."

Plain Dealer News Researcher Jo Ellen Corrigan contributed to this story.