Crain's Detroit Business, January 9, 2023, issue

‘Angel of Jazz’

BY SHERRI WELCH

In 2005, when the Detroit Jazz Festival was in danger of folding, Carhartt heiress, entrepreneur and philanthropist Gretchen Valade committed $10 million to ensure it would continue. She followed the initial gift with another $5 million the next year to accommodate the larger-than-expected budget and quietly made subsequent gifts adding up to tens of millions of dollars in the ensuing years to back the free jazz festival, one of the largest in the country, said Chris Collins, president and artistic director of the Detroit Jazz Festival Foundation.

e “Angel of Jazz,” as Collins calls her, died Dec. 30 at the age of 97 after decades of supporting the festival. And Valade planned to continue doing so.

e Gretchen C. Valade Endowment for the Arts, a nonpro t established in 2005 to direct donations to the jazz festival and other causes, “has relayed to

me that the Detroit Jazz Festival was her top priority to preserve,” Collins said.

Her intent and that of the endowment chaired by her son Mark Valade is to continue the level of annual support she has been providing to the festival moving forward, he said.

e family declined comment Tuesday.

NEW PLAYBOOK

Physicians take risks, reap rewards in new program.

Funding for District projects moves forward

BY KIRK PINHO

A nancing committee has set the stage for billionaires Stephen Ross and the Ilitch family to receive more than $50 million in public funding for a series of envisioned downtown Detroit developments.

e Downtown Development Authority Finance Committee signed o late last week on some $23.7 million in DDA loans for three residential projects and $31.5 million for road and other infrastructure improvements around the District Detroit area, the massive swath of

largely Ilitch-controlled property that has been the subject of development talk for years but which generally remains surface parking lots and boarded-up buildings, although some progress has been

These tech trends will dominate in 2023

Cybersecurity, layo s on horizon this year

BY NICK MANES

As businesses plan for a new year, one thing seems perennially certain: Technology will bring new opportunities, and new threats.

A look at a few items sure to dominate the tech business practices and news cycle in 2023:

Cybersecurity

Ask a C-suite executive of nearly any business what’s keeping them up at night and cybersecurity is

likely to be near the top of their list.

Experts largely agree that the increasing threat posed to businesses, consumers and largely everyone else means that risk management and risk mitigation are far more important than actually trying to stop cyberattacks.

Given that reality, having some cybersecurity core competency is increasingly becoming a requirement to be in business within any supply chain, according to Ra aele Mautone, founder and CEO of AaDya Security, a Detroit-based cybersecurity startup focused on services for small and midsize businesses.

CASINO OUTLOOK

The economy, online betting and Lions have impact.

Gretchen Valade’s support for jazz festival to continue after her death

“WITHOUT GRETCHEN, THE JAZZ FESTIVAL PROBABLY WOULD NOT EXIST TODAY.”

—Vincent Paul, president and artistic director, Music Hall Center for Performing Arts

To save the nancially distressed Detroit Jazz Festival, in 2005-06 Gretchen Valade and a new management team established the nonpro t Detroit Jazz Festival Foundation to run it. | DETROIT JAZZ FESTIVAL VIA FACEBOOK

Gretchen Valade

CARHARTT

$50M in new public funding would go to Ilitch, Ross projects

A rendering of residential development envisioned near the Detroit Center for Innovation. COURTESY OF RELATED COS

senior vice president and general manager of the $1.7 billion consumer foods business at e J.M. Smucker Co. in Orrville, Ohio, where she worked for three decades. Her experience there included stewardship of the Smucker’s jam and Jif peanut butter brands.

has since hit its goal and increased the maximum o ering to $1.235 million.

` CHAZZANO COFFEE ROASTERS OPENS IN BERKLEY

POLITICS & POLICY

Stabenow will not run for re-election in 2024

` Fourth-term Sen. Debbie Stabenow of Michigan will not run for re-election in 2024, capping a 50-year political career that has spanned local, state and federal o ces and saw her become the state’s rst and only female senator.

`

CLEMENT ELECTED CHIEF JUSTICE OF STATE HIGH COURT

THE NEWS: e seven-member Michigan Supreme Court unanimously elected Elizabeth Clement as chief justice for the next two years. An appointee of Gov. Rick Snyder in 2017, she won reelection in 2018 and has been temporarily serving as chief since Nov. 21 following Chief Justice Bridget McCormack’s announcement that she would resign from the bench after the November general election.

WHY IT MATTERS: Clement, 45, will keep leading the court despite Democrats’ 4-3 edge. Justice Kyra Harris Bolden, a Democrat, was sworn in last week after being appointed by Gov. Gretchen Whitmer to ll the McCormack vacancy.

` HUDSONVILLE ICE CREAM TAPS SMUCKER’S EXEC AS CEO

THE NEWS: Holland-based ice cream company Hudsonville Ice Cream has appointed Tina Floyd as CEO, e ective Feb. 13. Floyd most recently was

WHY IT MATTERS: Floyd will replace current CEO and co-owner Denny Ellens, who will continue with the company as a board member following the transition. e Ellens family in 2003 acquired Hudsonville Ice Cream, which was founded in 1895, moving its headquarters and production to Holland.

` EASTERN MARKET BREWING RELEASES NON-ALCOHOLIC BEERS

THE NEWS: Eastern Market Brewing Co. announced the launch of its non-alcoholic beer line. Non-alcoholic grapefruit sour and tangerine sour drinks are now available at 70 metro Detroit retailers, including Busch’s, Total Wine and several independent retailers, according to an EMBC spokesperson.

WHY IT MATTERS: EMBC, established in 2017, last month announced a Series A funding round for three initiatives: growing self-distribution, expanding its recently opened self-service taproom and kicking o a project to build out its agship location. e company

THE NEWS: A little less than six months after the move was announced, Chazzano Co ee Roasters is now open in its new home in Berkley. Owner Frank Lanzkron-Tamarazo opened the new 2,350-square-foot space at 2725 12 Mile Road after moving from his longtime leased space in Ferndale.

WHY IT MATTERS: Lanzkron-Tamarazo purchased the building for $325,000 and planned to put $150,000 into improvements, including adding a second roaster and indoor seating. He also planned to expand hours.

` JAFFE AND TAFT LAW FIRMS CLOSE ON MERGER DEAL

THE NEWS: South eld-based Ja e Raitt Heuer & Weiss PC has combined with Taft Stettinius & Hollister LLP, nalizing a merger deal announced in September. e merger creates a Midwest law rm with more than 800 attorneys across a dozen o ces and about $525 million in revenue.

WHY IT MATTERS: e combined rm has 120 attorneys in Michigan with plans to expand, according to a spokesperson. Ja e will be rebranded to Taft gradually in the Michigan market.

“Inspired by a new generation of leaders, I have decided to pass the torch in the U.S. Senate,” she said in a statement ursday. e 72-year-old Democrat rst announced her decision in an interview with e Detroit News. Her retirement at the end of her term means the battleground state will have an open Senate seat race in 2024 coinciding with the presidential election.

At age 24, she won election to the Ingham County Board of Commissioners in 1974 after helping to save a local nursing home from closure. She served in the state Legislature from 1979 through 1994. She was elected to the U.S. House in 1996 and the Senate in 2000, defeating an incumbent. She won re-election three times.

Republicans, who have held a Senate seat in Michigan just once in 44 years, are already planning ahead in the race.

“We are going to aggressively target this seat in 2024. is could be the rst of many Senate Democrats who decide to retire rather than lose,” said Mike Berg, spokesperson for the National Republican Senatorial Committee.

U.S. Sen. Debbie Stabenow speaks at Gov. Gretchen Whitmer’s inauguration ceremony on Jan. 1. | DALE G. YOUNG/CRAIN’S DETROIT BUSINESS

Online betting, the economy and the

Lions

Detroit’s casinos see impact to bottom line

KURT NAGL

Mobile betting may be on the rise, but for the three casinos in Detroit, not all business is equal.

Internet and sports betting gains in 2022 have helped o set a revenue slump — but only partially, according to gures from the Michigan Gaming Control Board.

Remote betting is up signi cantly from last year at MGM Grand Detroit, MotorCity Casino Hotel and Hollywood Casino at Greektown (formerly Greektown Casino-Hotel). Adjusted gross receipts for online bets at all of the casinos totaled $890.7 million through November, up 30 percent from all of last year. (Michigan launched internet betting Jan. 22, 2021.)

However, total gaming revenue at the three Detroit properties is pacing to be down or stagnant from last year, when casinos took in a total of $1.26 billion and were still dealing with capacity constraints and other restrictions. It is well shy of the $1.45 billion collected in 2019, pre-pandemic.

Lower revenue also translates to fewer funds for the state and city of Detroit, too.

e three casinos paid $93 million in taxes through November to the state, down from $102.6 million in 2021 and $117.8 million in pre-pandemic 2019. Taxes paid to the city are $142.2 million through November, down from $160.8 million last year and $184.2 million in 2019.

As the Detroit market fails to fully rebound, the U.S. gaming industry writ large is looking at a record year. In the rst 10 months of 2022, commercial gaming revenue totaled $49.85 billion, up 15 percent from the same period last year, according to the American Gaming Association.

In Detroit, people have not returned to casinos or downtown like in the pre-pandemic days, and that has hurt business beyond slots and tables, said Marvin Beatty, chief community o cer for Hollywood Casino at Greektown. Internet bets don’t ll hotel rooms or dinner reservations, he added.

“Without question, whenever you lose the ability to touch people, you do lose the opportunity to expand and grow the other o erings,” Beatty said. “I think every business downtown is looking for ways to get people back to a situation where they can engage them.”

Matt Buckley, president of MGM Resorts Midwest Group, said he is expecting a “modest increase” in visitors and revenue in 2023 on the hope of conventions and business travel rebounding.

A NEW RECIPE FOR SUCCESS

About six months after commemorating 25 years in business, popular Detroit-based Avalon International Breads is making a big change.

Avalon on Sunday closed its agship 2,000-square-foot location at 422 W. Willis St. in Midtown to prepare for a move into the nearby Jolly Pumpkin restaurant and bar at 411 W. Can eld St. And it intends to sell

its 50,000-square-foot bakehouse building at 4732 Bellevue Ave. on Detroit’s east side, which opened in 2012.

Avalon’s new location will open in February, according to a news release, and will feature some of its baked goods, additional indoor dining space, new food options and a weekend brunch.

Avalon owner Jackie Victor said the COVID-19 pandemic played a

role in the decision, saying in the release that she and other entrepreneurs were forced to rethink their business models, nd opportunities to share resources and create unique experiences for customers.

Victor announced the move Tuesday night in posts on Avalon’s website and social media accounts. Employees were made aware of the plans earlier in the day, Victor told Crain’s.

“While we leave our rst home of more than 25 years with both sadness and gratitude, we look forward to building a sustainable model combining the resources and strengths of both businesses,” said Victor, who started Avalon in June 1997 in what was then called the Cass Corridor with then-business partner Ann Perrault.

Detroiter takes o with detachable-wheel luggage

Startup nds space in the air travel market

seat, an idea began to take off for Davis.

Stephen Davis loves nothing more than traveling on a budget, something that high carry-on baggage fees were putting a damper on.

“Being a frequent budget airline passenger, to save costs, I could not believe when they started actually charging me to roll my own bag to my flight and lift it up into the overhead bin,” the 38-year-old Detroit native said. “Since under-seat bags are still free, I tried to find a bag that size that would still hold everything I needed to carry.”

After watching a travel companion try to force all their belongings in a backpack under the airplane

“I searched high and low for a sophisticated luggage-style bag that was small enough to qualify as a personal item,” he said. “I couldn’t find a suitable alternative bag.”

So, he made his own.

Some airlines, like Southwest, Frontier and Spirit Airlines charge between $30 and $65 each way for carry-on bags.

Davis has been saving people from baggage fees since February with his Take OFF luggage brand. The thing that sets his bag apart: easily-removable wheels that allow the luggage to fit under the seat without issue.

Jackie Victor inside the agship location of Avalon International Breads on Willis Street in Midtown Detroit in June. NIC ANTAYA/CRAIN’S DETROIT BUSINESS

JAY DAVIS

Beatty

DARLENE A. WHITE | SPECIAL TO CRAIN'S DETROIT BUSINESS

Avalon closes Midtown shop, to sell bakehouse, move to Jolly Pumpkin

Stephen Davis poses with his Take OFF luggage bag. |TAKE OFF / FACEBOOK

Former Lelli’s Inn site in Detroit sold to VA for Fisher House project

e site of a former iconic Detroit restaurant has been sold to become new housing for veterans’ families visiting loved ones while they are receiving medical care.

e U.S. Department of Veterans A airs late last month bought a 1.27-acre site that had been home to Lelli’s Inn, which served Northern Italian cuisine for more than six decades at that location, said Terence Edmondson, president of Detroit-based Exclusive Realty, which was the brokerage rm on the deal.

CoStar Group Inc., a Washington, D.C.-based real estate information service, says the purchase price was $3.3 million. e property, situated at Woodward Avenue and Bethune Street, sits immediately north of the Penske Tech Center for the QLine streetcar that runs between downtown and the New Center area.

Edmondson said in an email that the VA intends to convert the site into a Zachary and Elizabeth M. Fisher House development following the sale, which he described as a “relatively easy process” after he reached out to gauge the department’s interest.

Kate Melcher, executive director of Fisher House Michigan, an organization that’s been raising money to build Fisher Houses in the state that are built and furnished by the Rockville, Md.-based Fisher House Foundation Inc. nonpro t, said the Detroit spot is expected to be 20 suites constructed in a $10 million project.

She said $3 million has been raised so far, and she expects fundraising — now that a prime Woodward site in the city has been secured — for the remaining $7 million to be brisk, allowing for construction to begin this year.

When completed, the project would be donated back to the VA.

Serving a need

Melcher said that’s because the Fisher House Foundation founder Zachary Fisher, a prominent New York City residential and commercial developer with Fisher Brothers, understands his limitations.

“ ey know construction really well, but they know they’re not inn-

keepers,” Melcher said. “ ey also didn’t want to get involved with HIPAA and everything else involved.”

A Fisher House property already exists in Ann Arbor, on Fuller Court, serving those at the VA Ann Arbor Medical Center (or another Veterans Health Administration-approved hospital) and providing families of those receiving care there with free lodging during that period.

Melcher said the secretary of Veterans A airs approved the Detroit VA to receive a Fisher House several years back. Since the John D. Dingell Department of Veterans A airs Medical Center on John R Street is landlocked, the VA “had to go out into the community and look for commercial property,” rather than build on its existing location.

With 20 suites, it would be among the larger locations in the Fisher House portfolio.

“It’s enough to handle the need, but not so much that you see a stranger at breakfast,” Melcher said. “But the Ann Arbor Fisher House is one of the busiest in the nation, and we saw that as a bellwether of how busy Detroit is going to be. We actually thought about building two houses on that parcel, but we can’t quite t two full Fisher Houses there.”

Tony Garczynski Development Inc., based in Poway, Calif., north of San Diego, is the general contractor; Carl Zarrello out of New York is the architect; and Revision Design LLC in Dallas is the interior designer.

Bill Browning, director of volunteer and community relations for the Detroit VA, said the agency began looking for properties for the Fisher House several years ago, and had been working with the Detroit Land Bank Authority and the city to nd an appropriate site, but none came to fruition. He said the Woodward site “checked all the boxes” that the Fisher House Foundation had for a new property, including size (an acre or

more) and location (within a ve or 10 minute drive of the VA hospital).

“It’s going to be a big win for getting the patients and their families together,” Browning said.

A bit of history

ere are currently more than 90 Fisher House properties in the U.S. and elsewhere with about 1,300 rooms. ey run between 5,000 and 16,800 square feet and typically o er between seven and 21 suites, accommodating between 16 and 42 family members, according to a fact sheet on the foundation’s website.

e foundation’s most recent annual report, spanning from Jan. 1, 2021 to Dec. 31, 2021, says it had $55.4 million in total support and revenue in that period, along with $30.4 million in expenses.

Lelli’s, which opened in 1939, was heavily damaged in a Valentine’s Day re in 2000 and had to be torn down, Crain’s reported in October 2000.

An Auburn Hills outpost, which opened in 1996 on Opdyke Road north of Featherstone Road, became the restaurant’s agship location after that.

Danny Raskin, the late Detroit Jewish News columnist for nearly eight decades, wrote in May 2021, two months before he died, that Lelli’s was “located in a building that could probably be described as horribly wonderful or wonderfully horrible.”

“ e walls were stippled green, the ceiling was quite low and the place was a mass of arches, little alcoves and tiny rooms … But, Lelli’s had a lot more charm and atmosphere than most newer, more modern places,” Raskin wrote.

Some outlets peg the restaurant as the birthplace of zip sauce, Detroit’s iconic steakhouse condiment.

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

The former site of Lelli’s Inn at Woodward Avenue and Bethune has been sold to the U.S. Department of Veterans A airs for a new Fisher House project with 20 suites.| KIRK PINHO/CRAIN’S DETROIT BUSINESS

An artist’s rendering of the Fisher House project in Detroit expected to be built at Woodward Avenue and Bethune in the city’s North End neighborhood. | FISHER HOUSE MICHIGAN

Kirk PINHO

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Gretchen Valade and the power of a passion

Detroit’s “Angel of Jazz” is gone, but her legacy and passion won’t fade anytime soon.

Born into the old-money wealth of the Carhartt family, Gretchen Valade found her passion in music. And she projected that passion in a way that will endure for Detroit long past her Dec. 30 death at 97 years old.

A pianist, singer and composer herself, Valade’s passion for one of America’s signature musical inventions led to both philanthropy and entrepreneurship at a time in her life when most folks would be resting on their laurels.

The list is long.

One of Detroit’s signature events, the free, open-air Detroit Jazz Festival, still exists largely because of Valade’s support, which included a $15 million rescue pledge in 2005-2006 and continuing support since then as the festival has worked to diversify its funding.

At age 74, Valade co-founded a recording label, Mack Avenue Records. The label has grown over time and has an impressive record of Grammy nominations and wins. And Valade’s Dirty Dog Jazz Cafe in Grosse Pointe Farms has long been an intimate jewel of the east side — and a place where musicians always could get a meal on the house and where Valade herself was a regular.

As Crain’s Sherri Welch writes on Page 1, Valade’s support will not end with her passing. Her Gretchen C. Valade Endow -

ment for the Arts is expected to continue annual support for the Jazz Festival — which will still need support from the rest of the community.

“Without Gretchen, the jazz festival probably would not exist today,” Music Hall Director Vincent Paul said. “She tried to keep a low profile, out of modesty, too, but so that others would continue to contribute to the jazz festival.”

And more is on the horizon. A $9.5 million gift to Wayne State University will result early next year in a new jazz center that will include a 120-seat club, a 360-seat performance space and more, along with endowed academic positions in jazz and scholarships.

It’s not an understatement to say that Valade’s support has helped Detroit remain and grow as a national center for the quintessentially American art form.

And she did all this while chairing and remaining close to the family business, a 125-year-old workwear maker that in recent years somehow became cool.

Maybe that’s not a coincidence.

Sure, Valade was born into advantages the vast majority of people can’t imagine. But many people have money. Not many people get the word “angel” used in their remembrance.

As 2023 starts up and the new year fuels plans and dreams, Valade’s life offers deep lessons on a life well-lived and leaving a legacy born of passion.

We should all strive to do so well at dancing to the music that moves us.

Now’s the time to cut taxes for hardworking families

This year marks the beginning of a new policy direction for Michigan. With the new legislative session about to begin, our top priority should be clear: Michigan working families need a big tax cut now.

As an incoming member of the Legislature, I believe we must start by expanding the state’s Earned Income Tax Credit from the current six percent match of the federal credit to a 30 percent match.

Candidates from both parties, myself included, campaigned on helping working Michigan families deal with high in ation. I’ve talked with thousands of families, many of which are struggling to a ord necessities like food and gas while being hit with skyrocketing heating bills this winter.

Many in Lansing will face pressure to fund a series of targeted programs to address speci c needs. But that won’t solve the problem. What workers need most is income, not programs. We need to trust Michiganders to do what is best for themselves, and their families, with their hard-earned dollars.

e EITC is by far the best way to help working families pay the bills. Expanding Michigan’s EITC to 30 percent provides more than 700,000 working households raising nearly one million children an extra $460 million annually — an additional $600 a year per household on average.

Spending state funds on a big working families tax credit has huge advantages over increasing funding for programs. First and foremost, it allows families to make decisions over how their tax cut will be used, based on their unique needs. A working family tax credit is also far easier to apply for and receive than other income-based programs

and will help far more families than most programs can.

Nearly six in 10 Michigan jobs pay less than what is required for a family of three to be considered middle class. e pandemic made clear that these lower-wage workers live paycheck to paycheck not because they are irresponsibly buying “unnecessary” luxuries, but because they are in low-wage jobs that leave them struggling to pay for necessities. e reality is that most of those struggling economically are hard-working Michiganders who get up every day and work to earn a living.

Importantly, EITC is also pro-work. By pegging the credit to a percentage of earnings, the EITC is explicitly designed to encourage greater participation in the workforce, incentivizing people to work, and work more. During a time when many employers are having di culty lling available jobs, increasing the EITC may be just what is needed to push those still on the sidelines back to work.

By supporting Michigan workers, a boosted EITC would also support our local economies. Research indicates that families mostly use the EITC to pay for necessities, home repairs, vehicle maintenance, which turns their additional income into support for local businesses.

e EITC supports households, workers, employers, and local economies. It’s no wonder then that a big expansion of the state’s EITC has garnered bipartisan support and support from nearly 100 organizations including more than six Chambers of Commerce and other community and civic organizations from across the state — an unprecedented cross-sector, cross-ideology coalition.

As we continue to recover from the pandemic, too many hard-working Michiganders are struggling, too many employers are still looking for workers and too many local economies are still nding their feet. Increasing Michigan’s EITC to 30 percent is the best way to address all three of these problems, and ensure we are building an economy that bene ts all Michiganders.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com Please include your complete name, city from which you are writing and a phone number for fact-checking purposes.

Sound o : Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.

SEN. KRISTEN MCDONALD RIVET

Sen. Kristen McDonald Rivet represents the 35th Senate District, which includes parts of Bay, Midland, and Saginaw counties.

Three generations of Carhartt (from left): Gretchen (Carhartt) Valade; son Mark, who’s CEO and chairman of Carhartt Inc.; and his daughter, Gretchen, who works at the company in marketing. | CARHARTT. INC.

‘Automotive country club’ construction begins

Construction has begun on a new $60 million automotive country club in Howell.

e rst phase of the 273-acre Motorsports Gateway Howell — located north of I-96 and east of Highway D-19 — is expected to include a 2.2mile driving track, clubhouse, rentable garages for members, garage condos for sale and a nature trail, according to a press release, with completion of a portion of the driving track in the summer.

One-hundred fty memberships are being o ered in 2023. Membership comes with access to the clubhouse, food and beverage service, lounge access, meeting and event space, a tness center and locker rooms, driving simulators and more, the release says.

e roughly 1,200-square-foot garage condos will be completed after the driving track opens. Northville-based Proper Real Estate Group, a division of Coldwell Banker Weir Manuel, is responsible for selling the garage condos to buyers.

Crain’s reported in June that the starting prices for the condos is about $409,000.

In summer 2022, the Howell City Council greenlit a lease-to-own agreement requiring father-and-son developers Jordan and Mark Dick to put $2.5 million into the property before granting the option to buy it for another $3 million, Crain’s reported at the time.

Jordan Dick said 15 of the units have been pre-sold to founding owners.

Detroit-based Sachse Construction is the general contractor for the project. Atwell LLC is the engineering consultant, UK-based Driven International is designing the track and the garage condos will be designed by Northville-based Inform Studio.

Other components include an automotive innovation park with light industrial and other types of space for OEMs and other users, plus a public entertainment component with things like hotel, restaurant, retail and entertainment space, Jordan Dick said.

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

KIRK PINHO

A rendering shows an east perspective of the Automotive Country Club being developed in Howell by Motorsports Gateway. The rst phase of the 273-acre project is expected to include a 2.2-mile driving track, clubhouse, rentable garages for members, garage condos for sale and a nature trail. | MOTORSPORTS GATEWAY

Rendering of the condominium balconies intended for the Automotive Country Club being developed in Howell by Motorsports Gateway. | MOTORSPORTS GATEWAY

‘PLAYBOOK FOR SUCCESS’

BY` DUSTIN WALSH

In an age of spiraling costs, doctors are increasingly willing to bet their bottom line on their performance.

Last month, six physician groups inked full-risk reimbursement deals with Blue Cross Blue Shield of Michigan for the care of patients under its Medicare Advantage PPO and Blue Care Network Medicare Advantage plans, the state’s largest health insurer. e contracts cover 670 primary care physicians in the state with 55,000 members under their care.

A full-risk arrangement puts nancial liability on the physicians’ organization in exchange for a larger potential reimbursement for high-quality care. When physicians meet outcome and cost goals for each patient, they get paid more by insurance companies.

“Ultimately, it’s not just a nancial model, but a program to help the primary care community to care for their attributed populations,” said Todd Van Tol, BCBSM’s executive vice president of health care value. “It gets everyone aimed the same way — on cost, quality and experience, not just volumes.”

E ectively, the old fee-for-service model still exists but there is a nancial reward for exceeding quality metrics and doing so without adding costs. But if those goals are not met, the physicians group is responsible for any added costs at the end of the year.

For BCBSM, these contracts hold greater potential to control their reimbursements by eliminating extra tests on the healthy and increased focus on higher-risk patients. And the model has enough upside that large providers — with a big enough population to balance the nancial risk — are adopting the model.

One of the physician groups that signed on with BCBSM, Bingham Farms-based United Physicians, manages the care of more than 33,000 Medicare Advantage patients in the state across roughly 1,800 doctors. Approximately 23,000 of those patients will be covered under the full-risk plan with BCBSM, Michael Williams, physician, president and CEO of United Physicians, told Crain’s.

“We know there’s going to be a greater push across health care for nancial performance, and we would rather write our own play-

book for success,” Williams said. “We know if we build the right partnerships, execute the plan, we’re going to do very well.”

How does it work?

A full-risk contract requires a large fund e ectively in escrow to ensure a practice can pay the downside risk if it misses metrics under the BCBSM contract. United Physicians had to bring on a partner to hold the bag.

Dr. Michael Williams, president and CEO of United Physicians, reviews documents with Clinical Manager Elizabeth Hanson at their o ce in the WellPointe Medical Center in Rochester Hills.

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Blue Cross unveils push that lets physicians take risk, reap rewards

—Todd Van Tol, executive vice president of health care value, Blue Cross Blue Shield of Michigan

In May, United Physicians inked a deal with Texas-based Agilon Health to boost outcomes and pro t margins, putting the large independent practice in position to succeed under a full-risk contract.

“We don’t have a pot of money laying around,” Williams said. “It’s nearly impossible for an independent physicians organization to take on a full-risk contract without a partner.”

BCBSM is aware of the need of these organizations to partner, but it’s less about the money needed and more about positioning these practices for success with technology investments, said Van Tol.

“Independent physician practices generally don’t have the nancial balance sheet to take on substantial downside risk,” said Van Tol. “But the nancial support is only a small component of what these enablement organizations are providing to the practices. ey bring capital to invest in the types of capabilities to treat these populations.”

Williams said Agilon has invested in the practice and altered the cadence of patient visits to improve outcomes, and therefore better the chances the practice gets the most cut of the savings generated under the BCBSM contract.

United Physicians doctors are now seeing vulnerable patients every six or 12 weeks instead of every six months and healthier patients are being seen less often, using fewer resources as well as improving systems so doctors have more insight into patient care outside of their o ces.

e other ve physicians’ groups in the ve-year contracts with BCBSM are: Ann Arbor-based HVPA by Village MD; Rochester-based MedNetOne Health Solutions; Sylvan Lake-based Oakland Physician Network Services; Midland-based Great Lakes Physician Organization PC; and Grand Rapids-based Answer Health.

Upon launch of the new programs on Jan. 1, approximately 30 percent of BCBSM’s total Medicare Advantage members are now being seen by a doctor under a full-risk contract, the Detroit-based insurer said in a news release.

“ ese newest agreements are robust and demonstrate our collective leadership in advancing value-based payment models that improve quality and safety, avoid redundancy, and contribute to an improved patient experience,” Daniel Loepp, president and CEO of BCBSM, said in the release. “Physician organizations are willing to enter these arrangements because they know it will enable us to achieve our mutual goal of better, more affordable health care.”

Covering the cost

Blue Cross launched a plan it called “Blueprint for A ordability” in 2019 with seven organizations on a partial risk-sharing reimbursement plan for Medicare Advantage patients. at total has grown to 22 and covers around 50 percent of all in-state commercial and Medicare Advantage members by BCBSM.

e insurer says the use of these risk-sharing programs has lowered health care spending by $70 million, along with improving quality metrics in breast cancer and colorectal

screenings, pediatric immunizations and diabetes control.

It’s unclear who received those cost savings.

Medicare Advantage plans have been one of the fastest-growing segments of private health insurance — a privatization of public health bene ts that has been highly pro table for insurance companies.

Medicare Advantage is a federal program that allows private insurers to sell plans tied to Medicare, the federally paid insurance program for people 65 or older. Typically, Medicare Advantage plans include not just inpatient and outpatient coverage, like traditional Medicare, but also include prescription coverage and other wraparound bene ts.

It’s one of the fastest growing segments of private insurers and as margins have dwindled — BCBSM reported a $374 million operating loss in 2021 — payers are pushing more downside risk onto providers.

More than 40 percent of Medicare bene ciaries were enrolled in a private Medicare Advantage plan by the end of 2020, according to research by the Kaiser Family Foundation. In 2019, about 38 percent of Medicare recipients in Michigan were enrolled in a Medicare Advantage plan.

Reimbursements have continued to grow away from the traditional fee-for-service model, particularly in insurer-sponsored Medicare Advantage plans.

In 2020, 29.3 percent of all Medicare Advantage payments went to a physicians group in some sort of shared-risk contract with an insurer, up from 28.6 percent a year earlier, according to data from the Health Care Payment Learning & Action Network’s Alternative Payment Model report. It’s expected these risk-based contracts will overtake traditional fee-for-service models in the coming years.

e progress has been much slower in the commercial insurance market, with just 10.8 percent of payments involved in a risk-based contract in 2020, according to the report.

e Medicare population simply has more room to see better results, leading to quicker adoption over the commercial market, Van Tol told Crain’s.

“(Centers for Medicaid and Medicare Services) has pushed this consistently with their adoption and promotion of alternative-payment models,” Van Tol said. “Plus there are unique qualities to the Medicare

Advantage population. ey typically have a higher spend per patient, so there’s more opportunity for improvement with a greater prevalence of chronic conditions.”

But as the physicians’ groups move forward with full-risk contracts in the Medicare Advantage population, they will naturally be more equipped to enact the practices with their commercial patients, Van Tol said.

“We do see the commercial population coming along as well, it just lags behind Medicare Advantage,” Van Tol said. “ e capabilities that are built inside these practices to support their Medicare Advantage members will accrue bene t for how they care for and treat their commercial patients.”

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

How does a risk-based reimbursement

model work?

In a risk-based reimbursement model, the doctor’s o ce takes on nancial reward and risk for their budgeting e ciency, which ultimately is linked to patient outcomes. Healthier patients require fewer expensive treatments.

Insurers analyze the cost of treating a population of individuals based on previous years’ reimbursements and expected treatments.

Insurers then create a pot of money, or an allowance, for treating that population of patients based on what Medicare pays out on those services.

REWARD

If doctors e ectively treat their Medicare Advantage population while coming in under the budgeted allowance, they keep a percentage of the savings.

SOURCE: CRAIN’S REPORTING

RISK

But they also carry the downside risk if they go over the allowance in treating that population, they payback a percentage of the overages to the insurer.

Financial challenges? We’re here for you!

Last month, six physician groups inked full-risk reimbursement deals with Blue Cross Blue Shield of Michigan for the care of patients under its Medicare Advantage PPO and Blue Care Network Medicare Advantage plans, the state’s largest health insurer. | BLUE CROSS BLUE SHIELD OF MICHIGAN

5 things to watch in health care in 2023

DUSTIN WALSH

e health care industry sustained its rst-ever recession of the modern era in 2022. Margins evaporated under the pressure of rising labor costs and record in ation amid the slow-moving apparatus of reimbursement.

But the industry was between a gallstone and tooth enamel with no low-hanging fruit for cost-cutting. Short-sta ed from pandemic burnout, the industry struggled to cut jobs, the rst and easiest place to save on costs. Corewell Health, now the state’s largest health system after merging Spectrum and Beaumont, cut 400 jobs after its Southeast Michigan unit (Corewell East, formerly Beaumont) reported a loss of $100 million during the rst half of 2022. Sparrow Health in Lansing said it would cut “hundreds” of non-patient care jobs after it lost $90 million in the rst half of 2022.

Michigan’s hospitals are already back in Lansing asking for another bailout — they received millions under federal pandemic funding. e state is sitting on $750 million in unallocated American Rescue Plan Act funding and about a $3 billion budget surplus in the general fund.

But even with a one-time infusion from taxpayers, the nancial model for health care may not get xed any time soon. In ation will slow and labor costs will stop rising, but it’s unlikely they’ll go in reverse.

So 2023 is set to be a pivotal moment in health care operations and here are the ve emerging trends to watch:

Consolidation

When margins shrink, businesses gobble up competitors and bolt on operations in an attempt to maintain bottom lines. It’s as sure as the setting

sun. Spectrum and Beaumont already merged into Corewell, which was a play to rapidly grow Corewell’s integrated insurer Priority. e insurer has much higher margins and can buoy any nancial oundering from the care side. And squeaking in before the end of the year, Michigan Medicine has said it will purchase Sparrow Health, the struggling health system in Lansing. Expect further consolidation in the new year as smaller standalone emergency rooms, hospitals, nursing homes and service providers struggle to make ends meet as larger competitors carve out markets on the map. Venture capital will also likely play a growing role in the health care space with dry powder waiting in the wings for a good deal on a distressed company. Look for the PE market to expedite consolidation by piecemealing entities together to cut costs and build a return on investment.

Value-based care continues its ascent

e industry can’t stop talking about value-based care — a model that allows providers to get higher reimbursement for better outcomes.

Look for insurers to roll out full-riskbased contracting with physicians’ o ces. Under this model, the providers receive higher reimbursement for better outcomes, but must pay back insurers for services if the patient didn’t improve. In fact, it’s already begun with Blue Cross Blue Shield of Michigan inking full-risk reimbursement deals with six major physician groups under its Medicare Advantage PPO and Blue Care Network Medicare Advantage plans. Supporters claim it’s a worthy alternative to the fee-for-service model that’s plagued the industry for generations. But, in reality, value-based care is de-

signed to cut costs out of the system. In order to do that, an entity in that value chain must sacri ce revenue. Is that going to be margin-strapped health systems? Insurers? Pharmaceutical companies? ese questions will be explored and debated in 2023.

Home-based care will expand

Every health care CEO in the state will wax ecstatic about “bringing health care to the people” by o ering more and more services in the home. We saw a big rise in these o erings during the pandemic, when hospitals were desperate for non-emergency room and intensive care unit reimbursement. Hospitals launched at-home vaccination services, physi-

cians expanded house calls for common procedures, etc. Even CVS acquired an in-home health care company for $8 billion last year. e pharmacy plans to enter 2.5 million homes in 2023. e local in-home care services launched had the benet of support from federal pandemic spending. So expanding those services will be a harder lift in 2023, but expect systems to double down and expand home-care o erings as they desperately look to stabilize margins.

Muscling out insurers

Coming out of the pandemic, massive employers started testing alternative ways to provide care to employees. Amazon launched its direct-primary care model in metro

Detroit for its thousands of employees in the region. Employees are encouraged to skip the insurer, schedule an appointment and get seen by an Amazon-contracted doctor at one of three locations. It’s unclear if the care model improves, but employees get convenience and Amazon saves a lot of coin by sidestepping the insurers. General Motors last year opened its open primary care clinic, sta ed by Henry Ford Medical Group, at its Warren Tech Center. Look for other employers to catch on and even possibly directly contract with a local health system to send all employees in the market.

The rise of rest

e health care industry su ered a hard lesson during and after the pandemic about its workforce. Employee burnout was the most talked about side-e ect of COVID-19. Nurses, clinical sta and support service workers quit en masse as the long hours, impossible situations and stress pushed them to the brink of madness. As wages rapidly rose from in ation in other elds, lower-wage health care workers found easier jobs with equal pay alluring. We’ve already seen health systems irt with new technologies to reduce workloads — Henry Ford is experimenting with virtual nurses, for example. In the new year, health care systems will implement shorter shifts than the typical 12-hour gauntlets and utilize new technologies and potentially policies to reduce stressful hours under those uorescent lights.

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

Spectrum’s Headquarters in Grand Rapids. | SPECTRUM

Beaumont’s South eld Headquarters | BEAUMONT HEALTH

CVS acquired an in-home health care company for $8 billion last year. The pharmacy plans to enter 2.5 million homes in 2023. BLOOMBERG.

Tribal gaming authority ordered to pay $89M for failed casino plan

KURT NAGL

Michigan’s largest tribal casino operator by number of gaming houses has been ordered to pay more than $88.9 million to developers in a case stemming from a pair of casinos that failed to launch in Southeast Michigan.

e order handed down Tuesday in Ingham County Circuit Court is the latest chapter in a legal battle between JLLJ Development LLC and Lansing Future Development II LLC, and the Kewadin Casinos Gaming Authority, which operates under the Sault Ste. Marie Tribe of Chippewa Indians.

e plans for new casinos near Detroit Metropolitan Airport and in Lansing were hatched more than a decade ago before falling apart and resulting in a volley of lawsuits and appeals for the past three years.

e investor group — led by Jerry Campbell, a nance executive based in Tampa, Fla.; Dennis Ibold, an Ohio-based attorney and real estate developer; and, at one point, former Big Boy owner Robert Liggett — gave the tribe $9 million to build the casinos.

e investment, for development and construction that never happened, was never returned, according to the court’s decision, delivered by Judge Joyce Draganchuk.

“It would be absurd to conclude that the very purpose that all these parties came together for could be thwarted by Kewadin and all parties would just walk away with Kewadin retaining all the funds,” Draganchuk said in the decision.

Since the lawsuit was rst led, the tribal gaming authority has argued it has sovereign immunity and is not bound by the court.

Andy Broder, an attorney at Bingham Farms-based Payne, Broder & Fossee PC who represents the developers, said he expects the tribe’s counsel to continue that argument.

“I’m expecting them to appeal until hell freezes over,” Broder said. “I’m hopeful that somewhere along the line, they might get rational and decide to try to sit down with us and work out a settlement and put this litigation aside.”

e tribe, through a spokesman, declined to comment on the case. Before relations went awry, there were promises of big pro ts for both sides.

Kewadin, which operates ve casinos in Michigan, wanted to expand its gaming portfolio and needed capital to seed the projects. It approached developers for investment up front in exchange for a share of revenue once the properties opened.

e tribal gaming authority executed promissory notes with JLLJ and Lansing Future as far back as 2010 and as recently as 2019, according to court records.

As part of the agreement, the gaming authority would acquire the property where the casinos would be built and satisfy the legal requirements to open them, namely placing the land in trust with the U.S. Department of Interior.

e latter never happened. e department denied the application, determining that the proposed casinos would fail to meet the requirement that the acquisition is “for consolidation or enhancement of tribal lands.” e plan died.

“Kewadin wouldn’t return the money and basically thumbed its proverbial nose at my clients and left us no choice but to le a lawsuit,” Broder said.

e circuit court determined that the gaming authority waived its sovereign immunity when it entered the contracts with the developers. e judgment called for damages for breach of contract and fraudulent misrepresentation.

e amount of damages, $88.9 million plus attorney fees, includes principal of the note, accrued interest and a share of lost pro ts of the casinos that never came to be. Some $60 million is for the unbuilt casino in Huron Township near the airport and $28.8 million is for the unbuilt casino in Lansing.

“ e contractual documents provide plainti s with full recourse to all remedies available under the law,” the order said.

Kewadin has repeatedly challenged the court’s jurisdiction and argued that it does not have to submit to its orders, Broder said. He expects the group to appeal the decision rst to the Michigan Court of Appeals.

“I expect it will appeal, and I expect it will appeal to every court that exists, state and federal,” Broder said.

Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

UM spino Evoq signs with biotech company for arthritis, lupus treatment

DUSTIN WALSH

Evoq erapeutics Inc., a pharmaceutical company spun o from the University of Michigan in 2016, could be set for a big payday.

e company announced Tuesday that it signed a licensing agreement with public biopharmaceutical company Gilead Sciences Inc. in a deal that could net the Ann Arbor-based startup as much as $658.5 million total in upfront, option exercise and milestone payments across all programs, as well as tiered royalties on product sales for its rheumatoid arthritis and lupus treatment technology.

Under the agreement, Gilead and Evoq will collaborate on clinical development and Gilead has exclusive rights to the technology, which uses what the company calls a nanodisc made up of a synthetic high-density lipoprotein — also called HDL, or the so-called good cholesterol — to deliver antigens to the immune system and trigger a response.

“Despite key advances over the past two decades, there remains signi cant unmet need for people living with in ammatory and autoimmune diseases,” Flavius Martin, executive vice president of research at Gilead, said in a news release.

FOOD & DRINK

“We are excited to collaborate with Evoq to further expand our autoimmune pipeline with the goal of addressing the needs of people living with these conditions.”

Evoq is also working on treatments for HIV, viral hepatitis, cancer and in ammation using the same technology.

“Gilead has an incredible track record in therapeutic development and of delivering innovative medicines to people around the world. We look forward to working with the Gilead team to advance new treatment options for RA and lupus patients,” Evoq CEO William Brinkerho said in the release.

Brinkerho and his other co-founders have a long track record of startup success.

In 2005, Brinkerho co-founded Cerenis erapeutics in Ann Arbor. e company developed therapies to treat metabolic diseases, including one that raised levels of HDL. It raised $153 million in three venture-capital funding rounds and later moved to Laberge, France, where

it went public in 2015 on the Euronext Paris stock exchange in a public o ering of about $59 million.

Both Brinkerho and Cerenis’ other co-founder, Jean-Louis Dasseaux, previously worked in Ann Arbor at Esperion erapeutics Inc., with Brinkerho as vice president of business development in 2002-03. Esperion was founded in 1998 to develop a drug to boost HDL and was sold to P zer Inc., in 2004 for $1.3 billion. When P zer pulled out of Ann Arbor in 2008, Esperion founder Roger Newton bought back some molecules from P zer and launched a second Esperion, which went public in 2013.

After leaving Cerenis in 2011, Brinkerho joined AlphaCore erapeutics LLC as head of business development. He later became president and helped negotiate the sale of the company, which made an enzyme to drive cholesterol from the body, to MedImmune, a Gaithersburg, Md.-based division of London-based AstraZeneca.

Brinkerho then became a mentor-in-residence at UM’s o ce of technology transfer, where he helped vet the technology that would lead to Evoq.

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh

Hudson Cafe in downtown Detroit to close for remodel starting Jan. 22

JAY DAVIS

Downtown Detroit breakfast, lunch and brunch spot e Hudson Cafe will close later this month for “much-needed” renovations.

e cafe, at 1241 Woodward Ave., will close temporarily beginning Jan. 22, according to its social media posts Tuesday.

“ anks to over 11-plus years of your love and support, we will be shutting down brie y to make some much needed updates,” the post reads. “ e new space will be gorgeous and we’re hoping the new layout will allow us to decrease wait times and increase productivity in a modern and welcoming dining room.”

e remodel will cost $600,000$700,000, Hudson Cafe owner Tom Teknos said in an email Wednesday.

e work includes bringing in all new equipment, ooring, heating and cooling along with new booths, tables and bar area.

Teknos told Crain’s that he anticipates the work will take 10-12 weeks.

“We are de nitely excited for the remodel. We have been extremely fortunate to have been busy for so many years,” he said. “ e outpouring of love from the city and surrounding neighborhoods has been incredible.

ey are deserving of an updated dining experience.”

e approximately 35 sta ers at the Detroit restaurant will remain employed during the renovation, helping train workers at the upcoming Northville location. e new restaurant at Six Mile and Haggerty roads is slated

to open in mid-February and will have about 50 employees, Teknos said.

Hudson Cafe, which opened in 2011, is named after the J.L. Hudson department store that sat across the street from where the restaurant is. e store opened in 1911 and was demolished in 1988.

Dan Gilbert’s Bedrock LLC is building a mixed-use development on the site.

“When we rst opened in downtown Detroit, we took a big risk,” the face’s post reads. “Over the years, however, your love and support has not gone unnoticed. is renovation is a good problem to have, and it’s our turn to give back to you.

“Hope you are as excited as we are to experience the new and improved Hudson Cafe with all the favorites and smiling faces you have come accustomed to.”

e opening of the Northville location was announced in October. St.

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

The Sault tribe operates ve Kewadin casinos in Sault Ste. Marie and four other towns in Michigan’s Upper Peninsula. KEWADIN CASINOS

Clair Shores-based Olon Interior is handling design work for it while construction is being done by Birmingham-based Windy City Construction.

Brinkerho

The remodeled Hudson Cafe in Detroit will have a new bar area along with new equipment, HVAC, booths and tables. | TOM TEKNOS

“THE OUTPOURING OF LOVE FROM THE CITY AND SURROUNDING NEIGHBORHOODS HAS BEEN INCREDIBLE. THEY ARE DESERVING OF AN UPDATED DINING EXPERIENCE.”

—Tom Teknos, owner, Hudson Cafe

Michigan ranks 4th in top out-of-state moves, report nds

NICK MANES

Michigan saw plenty of moves last year, but most of them were heading for the border, according to a new report.

e 46th annual study from St. Louis-based moving company United Van Lines found that Michigan stood as the fourth-ranked state to see the most out-of-state moves, with 58 percent being residents leaving for greener pastures.

e only states seeing residents head for the border with more frequency were New Jersey, Illinois and New York.

And where were they going? Vermont and Oregon saw the most inbound moving trucks, with the Carolinas, Alabama and Washington, D.C., also seeing strong inbound migration, according to the report.

While Michigan’s population woes have been well documented — the state again lost a congressional

seat last year — the United Van Lines report notes that Americans are increasingly moving more for factors that go beyond simply getting out of a speci c place.

“Key factors like retirement, wanting to be closer to family and lifestyle changes in uenced by the pandemic along with current housing prices drove moving patterns in 2022,” Michael Stoll, economist and professor in the Department of Public Policy at the University of California, Los Angeles, said in a news release accompanying the report.

“ e United Van Lines study encompasses data that Americans are now moving from bigger to smaller cities, mostly in the South, some in the West, but even an increase of migration to the Northeast, which has not been typical. We’re also seeing younger Millennials migrating to vibrant, metropolitan economies, like Washington, D.C., and Portland, Oregon.”

Job transfers have decreased as a motive to move, thanks to gains in the ability to work remotely. One-inve interstate moves last year were due to retirement, the study found.

Top leaders in Michigan have made increasing the state’s population a priority.

Democratic Gov. Gretchen Whitmer, in an interview with Crain’s last October, said that in her now-second term, she plans to convene stakeholders to work on such a strategy.

“It needs to be bipartisan but not led by anyone who’s partisan,” she said, saying academics and business leaders should be at the table. “It needs to transcend my time as governor. It needs to transcend my successor’s time as governor. is is three, four administrations (that) are going to have to be focused on this.”

Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

Survey: Most small, midsize businesses expect recession this year

JAY DAVIS

e majority of small and midsize U.S. business leaders expect a recession this year, according to JPMorgan Chase’s 2023 Business Leaders Outlook survey.

Results of the survey released ursday found that 61 percent of small business operators and 65 percent of midsize businesses anticipate a recession in 2023.

In ation is a major factor in the survey ndings, which include responses from 1,799 SMB operators. About 91 percent of midsize businesses are experiencing challenges related to in ation, according to the survey. About 45 percent of small business operators surveyed list in ation as a major challenge going forward, up from 20 percent last year.

About 83 percent of midsize business owners and 68 percent of small businesses reported raising prices to combat in ation. Some 94 percent of small business owners said in ation has impacted their expenses, with 38 percent saying their expenses have increased by at least 11 percent. Wages and bene t costs, along with shipping and supply chain costs, are the biggest

GETTY IMAGES/ISTOCKPHOTO

factors for the increase in expenses, according to the report.

“In ation has been a challenging headwind impacting businesses of all sizes, across all industries,” Ginger Chambless, JPMorgan Chase commercial banking head of research, said in a news release. “While we have seen some encouraging signs that ination has started to moderate and should cool over 2023, businesses may still want to consider adjustments to strategies, pricing or product mixes to help weather the storm in the

near-term.”

Even with them predicting a recession, small business owners are more optimistic than midsize business operators.

Midsize businesses expressing optimism for the global economy declined to 8 percent from 34 percent last year, according to the report while those optimistic about the U.S. economy dropped to 22 percent from 50 percent early in 2022. Close to half of the small business owners surveyed said they’re optimistic about the na-

tional and global economies, at 49 percent and 45 percent, respectively.

Small and midsize business owners surveyed said they are con dent in their own companies, with 72 percent of small and 66 percent of midsize business owners expressing optimism about the coming year. About 69 percent of small business owners expect to see an increase in their revenue and sales this year, with 65 percent predicting stronger pro ts. Close to 63 percent of midsize business operators predict higher revenue and sales and 51 percent expect an increase in profits.

“Following the challenges of the last few years, it’s encouraging to see the resilience of small business owners and leaders,” Chase Business Banking CEO Ben Walter said in the release. “ e next economic cycle is always right around the corner, so our role is to help small business owners plan ahead so they can succeed in good times and bad.”

Any anxiety about a possible recession isn’t stopping hiring plans.

About 51 percent of small business owners said they anticipate hiring full-time employees, while 50 percent of midsize businesses surveyed

plan to increase sta . To entice prospective hires, 42 percent of small business owners and 67 percent of midsize businesses plan to increase wages.

“While businesses may be cautious in their economic outlooks, their actions display a focus on growth and investing in their employees,” John Simmons, JPMorgan Chase commercial banking head of middle market banking & specialized industries, said in the release. “Businesses are signaling that they’re practiced in being nimble and prepared for several di erent scenarios, which are keys to operating e ectively in today’s economy.”

e JPMorgan Chase Business Leaders Outlook survey was conducted online Nov. 14-22 for small businesses with annual revenues between $100,000 and $20 million. Midsize businesses, with annual revenue between $20 million and $500 million, were surveyed Nov. 29-Dec. 13. Between the two sectors, 1,799 business leaders in various industries across the U.S. participated in the survey.

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

CARING FOR KIDS

Working to make the biggest impact to help Michigan kids and their families

ABOUT THIS REPORT:

On this monthly radio program, The Children’s Foundation President & CEO Larry Burns talks to the community, government and business leaders about issues related to children’s health and wellness. This hour-long show typically airs at 7 p.m. the fourth Tuesday of each month on WJR 760AM. Here’s a summary of the show that aired on Dec. 27; listen to the entire episode, and archived episodes, at YourChildrensFoundation.org/caring-for-kids

Dave Coulter Oakland County Executive

LARRY BURNS: I’ve been impressed with your commitment to overall health for your citizens, but also increasing mental health capacity.

DAVE COULTER: It was a need before the pandemic, but COVID shined a light on how every family has been impacted in some way by mental health. We partner with our local mental health nonpro t providers because we don’t do direct service as a county.

Burns: The Foundation was instrumental in opening the Adolescent Addiction Recovery Center (AARC) in Troy, which is entirely funded by philanthropy. Do you have a sense that this is an issue with with young folks in Oakland County?

Coulter: Addiction is a disease and it can hit anybody and any family. e AARC is going to be a game anger. ere are not enough treatment centers, beds or people in this eld.

Burns: I saw recently that you were on a major business development trip for Oakland County.

Coulter: Oakland County is a major economic player in the state and it’s important to attract businesses and good paying jobs. I visited Sto holm, Sweden, and Muni , Germany, talking to companies in the advanced mobility space that are growing fast and want to be in the American market. I don’t have a speci c project to announce yet, but I’m sure that some of those companies are going to come and land here with us.

Burns: Unless you go there, it is hard to attract companies because they want to get a sense of you as a person. I commend you for taking the time and the energy to do that.

Coulter: Most folks in Europe don’t know Oakland County from Oakland, California, so they do need to meet you. To help them understand where we are, I brought up Eminem. It’s amazing how well-known Eminem is around the world. In a way, he’s an ambassador for Oakland County.

Burns: What do you hope to accomplish in the next 12 months?

Coulter: We’re going to continue to work on expanding health clinics where residents can go for vaccines or public health services. We call it Oakland Health 360 and it should be completed by the end of the year. Another big passion of mine is education. We know that young people need more than a high s ool diploma. We have an audacious goal of getting 80 percent of our adults in Oakland County a post secondary degree or certi cation by 2030. We call that Oakland80.

My main goal is to give our families and young people opportunities, and to make sure that everyone has the same opportunities. Almost a third of our population is foreign-born. We lean in to make sure that young people have the language and s ool skills they need to be successful. My ultimate goal is that everybody in Oakland County has the same opportunities as their God-given abilities allow them.

Andrew Stein

Incoming President & CEO, The Children’s Foundation

LARRY BURNS: Tell us about your background.

ANDREW STEIN: I grew up in the Detroit area, and like so many of my peers, I le a er college. I moved to Washington, D.C. and I spent a year working in the public s ools. at really inspired a passion for service, especially serving ildren. I went to law s ool with the goal to make a career out of out of nonpro t work serving kids. For the last 10 years, I was working with an organization called City Year, whi works in public s ools around the country. Seven years ago I moved ba to lead City Year’s work here in Detroit, serving about 7,000 students every day.

A year or two ago, I started to think about the next phase of my career. I wanted to continue to do something that made the lives of ildren better in our region, but on a larger scale. I have been an admirer of you and e Foundation, so when I saw that you were going to be taking the next step in your career, I thought, this is a place where I could do great work.

Burns: What are some of your thoughts for The Foundation?

Stein: I spent the last leg of my career in education and many of the social determinants of a young person’s educational outcomes are the same social determinants that a ect their health and wellness. I want to dig in and learn from other experts so that we can decide as a Foundation what the next 10 to 20 years should look like, what the greatest needs are and where this Foundation can have the maximum impact.

I’m getting to know our board members and our other trustees. I’m spending days at Children’s Hospital of Mi igan, getting to know the sta , needs and opportunities there. Seeing the work on a ground level will always motivate me.

Burns: How do you see The Foundation moving forward?

Stein: I’d say two things. One, if you’re reading this, and you have thoughts on how we can improve the health and wellness of ildren in our region, please rea out. I am interested in learning as mu as I can on this on this job so that we can be supportive and responsive to that community.

And then, to Larry, I want to thank you for the support you’ve shown me in this transition, but even more so, for the work that you’ve done in this community. You’re leaving e Foundation in a better spot than you found it and I hope that I can say the same when my time comes.

Burns: You’re stepping into a great situation with young board members, as well as experienced board members. You’re the ingredient that they needed to take us to the next step. I wish you the best of luck, Andrew.

Stein:  ank you.

LARRY BURNS: Tell us about the newly opened Adolescent Addiction Recovery Center (AARC).

DR. MATTHEW LACASSE: e AARC is an outpatient-based addiction recovery center where young people struggling with substance use issues can get extra help. It’s a day program at the Children’s Hospital of Mi igan in the Troy. We can do some special things, like medical detox. We use a therapeutic approa — Acceptance and Commitment erapy, Emotionally Focused erapy and Cognitive Behavioral erapy, among others. It’s about empowering adolescents to live the life they want to live and uphold their values.

Burns: What are the differences between treating addiction in adolescents or adults?

LaCasse: Addiction worsens as the individual ages. People’s bodies become more dependent, and they also get more ingrained in maladaptive or dysfunctional ways of living. Cat ing them early on is really important.

Burns: What type of patients are you seeing?

LaCasse: We are seeing young people, those under 18, trying to do the best they can, but struggling in certain aspects of their life. Addiction o en comes with di erent comorbidities, like depression, anxiety and family issues.

Burns: If somebody feels they need to make an appointment, what’s the best way to move forward?

LaCasse: Even if a young individual is not in a space where where they want to come to a clinic, the family is absolutely welcome. We can help the family, and then ultimately, help the youngster. Our number is 248-377-8717.

Burns: Is philanthropy playing a role in the center?

LaCasse:  e center would not be in existence today if it weren’t for e Children’s Foundation. In today’s landscape, mental health treatment gets marginalized because, to be honest, there’s not a whole lot of pro t. Philanthropy is exceptionally important in the mental health/substance abuse arena. To give you an example, at the AARC we have a s olarship fund so we don’t turn anybody away based on their ability to pay. It’s support that makes the di erence between people succeeding or not.

We have a new donor, the A.A. Van Elslander Foundation, and we are grateful for them. Lead donors enabling the center to open include the Georgie Ginopolis Endowed fund, the Jamie Daniels Foundation, supporters of e Foundation’s Derby for Kids event, Delta Dental of Mi igan and many others. We hope for continued support for the center to help these kids and their families.

Dr. Matthew LaCasse Child and Adolescent Psychiatrist at Children’s Hospital of Michigan and Clinical Director, Adolescent Addiction Recovery Center

DISTRIBUTION

ACCOUNTING

ACCOUNTING

Doeren Mayhew

Doeren Mayhew is pleased to announce the election of Vince Bechard, CPA, MST as a Shareholder in the rm’s Tax Group. With more than ten years of experience, he focuses on providing proactive federal, state and local tax planning and compliance strategies to the rm’s real estate, construction, manufacturing and auto dealer clients.

ACCOUNTING

Doeren Mayhew

Doeren Mayhew is pleased to announce the election of Matt Bigelow, CPA, MST as a Shareholder in the rm’s Tax Group. Matt leverages over 11 years of experience working alongside small- to mid-size businesses to deliver a wide-range of tax services. Specializing in passthrough entity taxation of S corporations and partnerships, Matt works with clients in various industries, including real estate, property management, manufacturing, automotive, construction, and nancial institutions.

ACCOUNTING

Doeren Mayhew

Doeren Mayhew is pleased to announce the election of Theresa Cameron, CVA, CFE as a Shareholder in the rm’s Valuation and Litigation Support Group. Theresa focuses her time assisting clients and attorneys in successfully resolving litigation and non-litigation matters. She regularly provides clients across all industries with a better understanding of their business value for purposes of family law, mergers and acquisitions, estate and gift tax and shareholder disputes.

ACCOUNTING

Doeren Mayhew

Doeren Mayhew is pleased to announce the election of Alissa Crawford, CPA as a Shareholder in the rm’s Audit practice. With over ten years of experience, she leads and supervises accounting, audit and assurance services for a variety of industries, including private equity, manufacturing, nonpro ts, bene t plans, dealerships and aerospace/defense contractors. In addition, she is regularly involved in consulting engagements and M&A transactions.

Doeren Mayhew

Doeren Mayhew is pleased to announce the election of Chris Setili, CPA, MST as a Shareholder in the rm’s Tax Group. Chris has more than 11 years of experience providing tax advisory and compliance services to closely held, multi-state, and multi-national clients. Chris specializes in partnership taxation issues, in addition to a focus on private equity services, assisting with tax due diligence and advising clients on both buy- and sell-side M&A transactions.

National Food Group

National Food Group, a national wholesale and retail food distributor, has named Jim Moore as its new President. Moore has served as a vital member of the company’s leadership team, most recently as Senior Vice President. With over 20 years of experience at National Food Group, he has been instrumental in curating the company’s culture and expanding the presence of the company nationwide. Moore will continue to lead the team toward growth and operational excellence.

ACCOUNTING

Doeren Mayhew

Doeren Mayhew is pleased to announce the election of Melissa DeRoche, CPA as a Shareholder in the rm’s Business Advisory Group. Melissa focuses her time providing controllers and small business owners of professional service, real estate and manufacturing companies with all facets of accounting, ranging from account reconciliation, nancial statements compilation and tax return preparation.

ACCOUNTING

Doeren Mayhew

Doeren Mayhew is pleased to announce the election of Megan McCandlish, CPA, MAcc as a Shareholder in the rm’s audit group. For over twelve years, Megan has specialized in performing audits, reviews and compilations to help provide clients with a clear vision of their nancial health. Megan focuses on non-pro t entity reporting and is often relied on for her extensive expertise in performing single audits.

CONSTRUCTION

Commercial Contracting Corporation

David Schultz has been promoted to Executive Vice President of Installation Services at Commercial Contracting Corporation (CCC), an international construction services company. David has been with CCC since 2000 and has 26 years of experience performing industrial equipment installation, serving multiple roles of increasing responsibility. David will manage operations, estimating, staff development, and expansion into new markets for CCC’s process equipment installation team.

FINANCIAL SERVICES

FINNEA Group

Club Car names Mita Bhavsar among its prestigious President’s Award winners for her work on the China plant operations stand-up. Notably, Ms. Bhavsar is the rst non-Club Car professional to be awarded the President’s Award. This achievement is a testament to her hard work and dedication to ful lling FINNEA Group clients’ goals and objectives.

REAL ESTATE

Broder & Sachse Real Estate

Steve Robinson joins the Broder & Sachse Real Estate team as the vice president of acquisitions & development. In this role, Steve is responsible for creating and executing a pipeline of acquisition and development opportunities for the company and investor network. Before joining Broder & Sachse Real Estate, Steve oversaw a portfolio that encompassed multifamily properties, industrial buildings, of ce spaces, and retail shops.

TELECOMMUNICATIONS

CallHarbor

CallHarbor announced that Travis Waye will begin serving as President of the company January 1, 2023. Waye has been a key member of CallHarbor’s leadership team since 2013, when he joined the company. His extensive experience and knowledge in telecom, IT and technology have been invaluable to the company in his almost 10 years there. Frank Kadaf, CallHarbor’s Founder and current President will be stepping into his new role as Chief Executive Of cer beginning January 1, 2023.

CONSTRUCTION

Commercial Contracting Corporation

Commercial Contracting Corporation (CCC) is proud to welcome Jeff Willenbrock as Director of Interiors. With over 20 years experience leading interior construction rms, Jeff will manage CCC’s carpentry and interior services, including business development, preconstruction, operations and quality. Jeff has expertise in commercial, industrial, multifamily and mixed-use construction with a focus on carpentry packages, general trades, prefabricated panels, and load-bearing high-rise buildings.

MEDIA / ENTERTAINMENT

Real Times Media

Veteran marketing executive Cathy Nedd has joined Real Times Media (RTM) as President of the Real Times Media News Group, a division of RTM’s conglomerate that oversees the organization’s most iconic nameplates, the Michigan Chronicle, Chicago Defender, Atlanta Daily World, Atlanta Tribune and the New Pittsburgh Courier. She previously served as COO and Assoc. Publisher of the Michigan Chronicle and provided digital marketing services for various clients through her agency, Cathy Nedd, LLC.

e moves haven’t been on the table long, Victor told Crain’s on Wednesday.

“We’ve always been 100 percent committed to our vision that we kept investing. It became clear that our current business model wasn’t sustainable,” Victor said. “At 50,000 square feet, the bakehouse is big. Just the utility bills are enormous. We ramped up manufacturing a lot over the years with (distribution deals with Traverse City-based Cherry Capital Foods), Sysco and Gordon Food Service, then COVID got in the way. We’re nally getting back to that. e overhead of (the bakehouse) is not reasonable for our resources. We’re going to shrink our footprint a lot.”

e asking price for the Bellevue building is $3.5 million, according to Dan Labes, executive managing director of Newmark’s Detroit o ce, who’s handling the sale.

While the bakehouse building is for sale, Avalon will operate out of a smaller, about 5,000-square-foot portion of it, according to Victor. After a sale, the bakery could continue to operate out of a portion of the space via a lease or seek a new, smaller space in a di erent location.

Inside the 5,000-square-foot Jolly Pumpkin location, Avalon will have its own space to take orders for co ee drinks and baked goods. e businesses will share a kitchen, with Avalon doing most of its baking early in the day and Jolly Pumpkin pumping out its

LUGGAGE

From Page ?

A Take OFF bag measures 20-inches long by 14-inches wide, and 8-inches deep, with four removable 360-degree spinner wheels — small enough to qualify as a personal item for many U.S. airlines.

To remove the wheels, passengers press the two yellow tabs on each wheel, and it comes o to reduce the length of the bag from 20 inches to 18 inches — allowing it to t under most seats. Upon landing, the wheels can be reattached by aligning the two yellow tabs with the openings on the wheels and pressing together until the wheel clicks back into place.

ere are competitors on the market that have retractable wheels, but in general those bags are larger than a Take OFF bag.

Before committing to his venture, Davis did his research in person. As he sat in the airport, he became aware that he had a winning business concept because he had never seen anything like it.

“Without the wheels, many of the smaller high-quality carry-on rolling bags would indeed t under the seat of the aircraft,” he explained. “ at’s when I decided to create the perfect luggage for my budget traveling needs, a bag that would not require compromising on luggage space or traveling style. With wheels o , the suitcase has carry-on capacity but is still the size of a fee-free personal item.”

Take OFF luggage is manufactured in China and is produced in the U.S. It costs Davis $60 to create a single unit. He sells them for $199 on Amazon and his website takeo uggage. com, and the bags come in ve di erent colors.

He’s applied for a utility patent and is awaiting approval, he said.

“Starting a luggage company from

pizzas and other menu items later.

Avalon and Jolly Pumpkin are not strangers. Jolly Pumpkin co-founders and co-CEOs Jon Carlson and Greg Lobdell are minority partners in Avalon and help manage the cafes in downtown Detroit and Ann Arbor. Jolly Pumpkin o cials con rmed the plans but declined to comment further.

“ ey’ve helped us take our small concept into other areas and it’s been e ective,” Victor said. “ at’s why we’ve been able to keep those two locations open. (Jolly Pumpkin) is looking to economize as well. ere’s a lot of time in the morning they don’t use their kitchen. It’s a great location with a bar, a full kitchen. We’re going to take some of the best elements of the Willis space and put them into a section of Jolly Pumpkin.”

Midtown Detroit Inc. Executive Director Sue Mosey said the Willis Street store closing is a blow to the neighborhood but she’s excited about the prospects of collaboration between two of Midtown’s popular businesses.

“ is model is one we are seeing across the district and will accelerate as a going forward model post COVID for a number of other local businesses,” Mosey said in the release. “As the market has changed in all urban districts during COVID, our local entrepreneurs who are developing new models in response are much more likely to be pro table long term, which is the most important outcome.”

Avalon has more than 100 sta ers across its operations, including cafes

in downtown Detroit and Ann Arbor and inside Meijer small format markets in Detroit and Royal Oak.

Avalon will work to transition most of its Willis Street location employees to the new Jolly Pumpkin site and all employees will have the opportunity to apply for positions throughout the company, the release states.

“I hope they all apply and want to work there,” Victor said. “I’m hopeful that when people walk in they’ll see familiar faces. It’ll be a process. Based on how things have gone for businesses the last few years, I think we’ll see more concepts like this.”

e move is bittersweet for Victor.

e Avalon owner over the summer detailed to Crain’s the opening of the Willis Street location, all the way down to how the store on its rst day of operation had plywood in place of actual doors.

“It’s sad. I’m not gonna lie. Having something like this means so much,” Victor said. “We created so much positivity and received so much positivity. Our goal was to create a hearth and we did it. It was a community coming together.

“Something that’s true is that a lot of people who love Avalon talk about the Ann Arbor and downtown locations. A lot of those people have never been to Willis Street. It’s a spirit that’s expanded outside of where we started. at spirit in the new space will be created interaction by interaction. ere’s a lot of sadness, but a lot of excitement, too.”

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

CASINOS

From Page 3

Beatty said he expects a “much brighter future” for the Greektown casino in 2023 even as recession worries sap spending.

“ e economy is certainly impacting people’s investment in entertainment to a certain degree,” he said.

Competition has also ramped up. Each casino in the state has an online betting platform (FanDuel at MotorCity, Barstool at Hollywood casino, BetMGM at MGM Grand, and 11 others at Native American properties) that bettors can bounce between with ease.

“At the moment, the larger factors that have kept our retail operations from pre-pandemic volumes have been the opening and growth of online gaming and current economic conditions,” Buckley said in an email.

Lions factor

Detroit casinos are seeing a silver (and Honolulu blue) lining. e Lions’ improbable win streak has led to a surprise boost in business, according to casino operators.

“Betting volumes and bet amounts have been up noticeably since the Lions’ recent success,” Buckley said. “In fact, many bets have been placed on the team making the playo s.”

When the Lions win, as they have in six of their last seven games, people spend more time and money downtown, especially if it’s a home game at Ford Field, Beatty said.

“Anytime a sports team wins, our business does better,” he said. “People hang around. ey don’t leave in frustration. ey’re feeling good, they’re enjoying the experience.”

Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

scratch is no easy feat,” he said. “It’s more than just the unit cost, it’s shipping large items via cargo freight, storage cost, transportation cost, shipping to customers, marketing and promotion, returns, damage units, and much more.”

Since the brand’s launch 11 months ago, more than 3,000 units have been sold. He’s currently working on di erent size bags to t the size restrictions for Frontier, Spirit and other international airlines, which require smaller dimensions.

Even with COVID lingering around the world, the luggage industry is still a $16 billion industry, according to statista.com, a distributor of market and consumer statistics.

Pam Edwartoski, president at Travel Leaders of Troy, says that traveling with cabin luggage is one of the best ways to save time and avoid extra luggage fees.

“No delays at baggage claim, you can head right to your destination,” Edwartoski said. “Having a luggage like Take OFF, helps to eliminate the

risk of lost or stolen luggage. You keep important items such as medication with you and really just pack only what you need.”

Davis holds a bachelor of science in business marketing from Oakland University. He leveraged his background to research and design the travel product while spending a year getting it ready for the market. To get Take OFF luggage launched, Davis self-funded his brand entirely. Currently, he works full time in sales and spends his evenings working on his luggage business.

“I basically work two jobs,” he said. “Sales have been growing so fast, that I may look into other forms of funding to help prevent out of stocks and to expand the brand.”

Davis’ new entrepreneur lifestyle is something that he says he is truly proud of.

“I enjoy seeing my product take o (pun intended),” he says. “At that moment, you can see all of your hard work and dedication come to fruition and it becomes rewarding.”

this RFP is available for download at this DESC website: https://www.descmiworks.com/opportunities/rfps-and-rfqs/.

Take OFF Luggage has removable wheels that turn the bag from carry-on size into a personal item. | TAKE OFF

Total gaming revenue at the three Detroit properties was on pace to be down or stagnant in 2022. | MGM GRAND DETROIT

“Her gift is designed to be part of the puzzle, a motivating puzzle,” Collins said. “ e jazz festival has to do other things to be everything we want it to be.

“It’s intended to be a big piece of the puzzle that inspires us to move forward.”

A lifetime of support

Valade supported the festival for a decade while it was run by Music Hall Center for Performing Arts, President and Artistic Director Vincent Paul said.

To save the financially distressed festival, in 2005-06 Valade and a new management team established the nonprofit Detroit Jazz Festival Foundation to run it. She chaired the nonprofit’s board for years and created the Gretchen C. Valade Endowment for the Arts to administer her $15 million commitment.

“Without Gretchen, the jazz festival probably would not exist today,” Paul said.

“She tried to keep a low profile, out of modesty, too, but so that others would continue to contribute to the jazz festival.”

Valade’s support of the festival and its year-round programming continued in recent years, with disbursements of $3 million to support it in 2019 and $1.89 million in 2020, the year of the Detroit Jazz Festival Foundation’s most recent filing with the Internal Revenue Service.

The nonprofit is operating on a $4.5 million budget rounded out with corporate sponsorships and other contributions to support the festival and year-round educational programs and performances, Collins said.

It’s had some success garnering corporate sponsorships, with companies including Rocket Mortgage, Carhartt Inc., Absopure, DTE Energy Foundation and JPMorgan Chase supporting the 2022 event.

“She truly is an angel for jazz, for Detroit, for its community and its culture,” Collins said. “She saw merit in individual artists (and) initiatives, was always interested in supporting multiple generations.”

It was not just giving away of assets, he said. “It (was) a purity of vision ... to support the arts, the artists, all those involved,” including patrons by breaking down barriers to participation by keeping the jazz festival free.

“People around the world associate Gretchen Valade with jazz and with Detroit … because she’s done so many things for so many people,” he said.

Valade’s grandfather Hamilton Carhartt founded the Dearborn-based workwear manufacturer 133 years ago. Over the years, her father, her husband and now her son have operated the business.

But Valade, the daughter of an artist, always had an interest in the arts. Her mother, also named Gretchen, was a concert pianist in the 1920s; her two sisters were painters.

Eventually, Valade found an “in” to the music business when, in 1999 at age 74, Valade founded Mack Avenue Records with Stix Hooper, a producer and musician with several gold and platinum records.

The philanthropic musical causes came along with that.

Detroit Mayor Mike Duggan said the city is a “better place because of

Gretchen and her generosity.”

“When our city’s Jazz Festival, which is the largest free public jazz festival in the world, was threatened with closure, it was Gretchen who stepped in to save it,” Duggan said in a statement Tuesday. “Her gifts have been able to create a new Jazz Center on the campus of Wayne State that bears her name. And of course, her family started Carhartt, one of Detroit’s most iconic brands, which gave her the ability to support so many worthy causes so significantly.”

Leaving a legacy

Valade supported many things quietly behind the scenes, Collins said.

During the COVID-19 pandemic, for example, through her Dirty Dog Jazz Cafe in Grosse Pointe Farms she provided meals to any musician who came in, Collins said.

Valade also donated $2 million or more over the past 15 years to Music Hall, where she was trustee emeritus, Paul said. But she didn’t just write a check. She brought in a designer and hand-picked carpeting, furnishings and mirrors for the star dressing room at the historic performance venue in downtown Detroit with its Aretha’s Jazz Cafe and multi-genre performances. At Wayne State University, she donated $9.5 million to endow the Gretchen C. Valade Jazz Center, a project a little harder to keep secret. When completed early next year, the center will include a 120seat jazz club on the first floor, a 360-seat acoustically designed performance space on the second floor, a lobby, dressing rooms and sound and lighting systems, all of which were Valade’s doing, said Collins, who is overseeing the project on her behalf. The gift is also supporting the Gretchen C. Valade Endowed Chair in Jazz at WSU, the Gretchen C. Valade Graduate Assistant in Jazz position, jazz scholarships and programming.

“When she came to understand how an endowment at a university could keep (the center) operating in perpetuity, she was very interested in that … to keep the vision alive forever,” said Collins, the Gretchen C. Valade Endowed Chair in Jazz and di-

rector of jazz studies at Wayne State.

Jazz wasn’t nurtured much in Detroit before Valade began making donations to strengthen the art form, Wayne State President M. Roy Wilson said. She wanted to make Detroit the center for jazz.

e jazz festival is one of the premier festivals of its type in the country now, and not many universities have a program dedicated to jazz, Wilson said.

“I think the foundation is there to make (Detroit) the jazz center of the country for sure,” he said.

Fads come and go, but jazz has to be supported because it is the bedrock of music theory heard in rap,

techno and every other form of music, Paul said.

“She got that,” he said of Valade.

Beyond her incredible enthusiasm for jazz, Valade’s sense of humor was a hallmark of her presence, said Wilson, who served on the Detroit Jazz Festival Foundation board with Valade.

About four years ago, WSU awarded Valade an honorary degree. As Wilson tells it, the crowd laughed when she took the stage and quipped, “‘And they said nothing good happens in your 90s!’”

Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

Subprime auto lender sued by New York, feds

AUTOMOTIVE NEWS AND BLOOMBERG

South eld-based Credit Acceptance Corp., one of the biggest subprime U.S. auto lenders, was sued by New York and a federal regulator for allegedly luring thousands of low-income individuals into una ordable high-inte rest car loans. e company allegedly deceived customers by misstating key terms on loan agreements, including the principal and interest amounts, while also failing to disclose thousands of dollars in credit charges, according to a complaint led Wednesday by New York Attorney General Letitia James and the U.S. Consumer Financial Protection Bureau.

Credit Acceptance projected “down to the penny” how much additional money it could extract from struggling borrowers through late fees, repossession, debt collection and wage garnishment, and then o ered to split projected collections with its a liated car dealers, according to the state of New York.

‘Predatory actions’

In 2021, Credit Acceptance agreed to pay $27 million to resolve a similar lawsuit by Massachusetts claiming it made deceptive loans, “harassed” borrowers, misled investors and engaged in unfair collection practices. at settlement was the largest of its kind at the time, the state said. e following year, the company settled a lawsuit with shareholders for $12 million stemming from the Massachusetts case.

CAC’s 2022 third-quarter earnings report showed an increase in auto loan volume but a big drop in net income.

e lawsuit used a February 2016 loan to borrower “Ms. B” to make its case.

After applying a $2,250 trade-in toward the deal, Ms. B borrowed $8,292.10 for a vehicle at an interest rate of 23.99 percent. She would pay $13,301.31 — the other $5,009.21 representing the cost of the credit — in $260.81 payments over the life of the 51-month loan.

However, Credit Acceptance scored Ms. B a 60.1, indicating it expected her to pay only about 60 percent of the $13,301.31, or $7,994.

Dealers are o ered about 72 percent of the amount Credit Acceptance anticipates it can collect on the loan, the lawsuit states.

“ e di erence between the total disclosed cost of the CAC-nanced transaction (minus interest) and the Dealer Compensation (as a proxy for the true amount dealers would have accepted in an all-cash purchase for a vehicle and add-on products, if applicable) constitutes a nance charge that is hidden from the borrower,” the lawsuit alleges.

Gretchen Valade (center) joined the groundbreaking for the Hilberry Gateway and Gretchen C. Valade Jazz Center at Wayne State University in 2018. | WAYNE STATE UNIVERSITY VIA FACEBOOK

Upon completion of the Hilberry Gateway Performance Complex, the former Hilberry Theatre will be renovated and renamed the Gretchen C. Valade Jazz Center, accommodating jazz and musical performances as well as other events. | WAYNE STATE UNIVERSIT

During the COVID-19 pandemic, Gretchen Valade’s Dirty Dog Jazz Cafe in Grosse Pointe provided meals to any musician who came in. DIRTY DOG JAZZ CAFE VIA FACEBOOK

“A trend we have been watching closely is that an increasing number of small and midsize businesses are now being asked to demonstrate that they have appropriate cybersecurity controls in place to meet customer compliance requirements,” Mautone wrote in an email to Crain’s. “ is most commonly a ects businesses that support larger enterprise companies, the government, healthcare or schools, but the practice is becoming more ubiquitous across all industries.”

One poll of small business owners found that half of respondents believe a cybersecurity incident will disrupt their business in the coming year. In anticipation, many are adopting a zero-trust cybersecurity policy — never trust, always verify.

Tech industry layo s

e tech industry has been booming for years, but the slowing economy has led to massive job cuts at tech companies big and small.

As of Dec. 16, more than 91,000 jobs have been lost in the U.S. sector, according to a running tally from Crunchbase News. at includes some 10,000 cuts at online retail giant Amazon.com Inc. and all the way down to earlier stage startups.

Case-in-point: Detroit-based nancial technology rm Autobooks cut nearly 40 positions from the company

in December, which previously counted nearly 140 employees. e layo s were needed to “recalibrate cost and support models to balance future growth with pro tability,” CEO Steve Robert told Crain’s.

Chris Rizik, the CEO and fund manager of Ann Arbor-based Renaissance Venture Capital, which has an investment stake in Autobooks, said there are likely to be more cuts. e last decade has made for a generally easy environment for startups to raise capital, Rizik said.

at’s likely coming to an end.

said Kenyetta Hairston-Bridges, executive vice president of economic development and investment services for the DEGC.

“ e bar is going to be higher for companies,” Rizik said.

Employee monitoring

e increase in remote work coming out of the COVID-19 pandemic has also given rise to another trend: the implementation of software for monitoring employees working from home. Such monitoring can take the form of tracking keyboard strokes to taking screenshots of an employee’s desktop — usually without the employee’s knowledge — and then using that in-

on the west side of the state in Vicksburg have received the transformational brown eld package so far.

formation to track productivity.

Such tracking is more than 50 percent greater than pre-pandemic, according to a report earlier this year from the Society of Human Resource Management.

Citing a PwC report from this year, the SHRM article notes that “95 percent of HR leaders have either implemented new methods to track and report on the productivity and performance of remote workers or plan to do so in the future.”

But the increased monitoring could come back to bite bosses, according to

ce space and 28,000 square feet of retail.

the

can make employees more inclined to break rules.

The metaverse

e science ction-like concept is still a long way away from becoming mainstream. However, metaverse-adjacent technologies such as blockchain, crypto tokens, NFTs, AR and VR, and video games, will become more accessible in 2023, according to a report by research company Gartner.

“ e metaverse may be in its early development stage, but the transition to it is expected to be as substantial as the one from analog to digital,” Gartner said in the report.

Some experts predict the metaverse will add $5 trillion to the global economy by 2030, the report stated.

ML and AI

Machine learning and arti cial intelligence technologies are not new, but they are expected to hit new records in 2023.

ML and AI will play a stronger role in data-based decision making in business, health care and environmental studies, a Forbes report forecast. And IBM has reported that the use of AI in commercial manufacturing will see a rise of 40 percent to 80 percent within three years.

Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

made.

Interview requests were sent to Ross’ Related Cos., the Ilitches’ Olympia Entertainment and the DDA on Friday. e Ilitches have already received hundreds of millions in tax incentives to build the new Little Caesars Arena on Woodward.

In all, the Ross/Ilitch team is seeking:

Hairston-Bridges said the loans will help the city's low-income residents to live downtown in a market that has been pushing rental prices substantially higher and out of reach for many.

"Individuals throughout the entire city, of all income levels, should be able to live in any neighborhood that they choose to live in, including downtown," Hairston-Bridges said.

Originally billed as a program to help developers around the state transform communities with new and repurposed buildings, the overwhelming majority of the funding to date has gone to Dan Gilbert projects in Detroit, Crain’s reported in 2020.

` A new o ce building at either 2305 Woodward Ave., or 2300 Cass Ave., depending on tenant preferences. It would have 546,000 square feet of ofce space and the Woodward locale could result in the Hockeytown Cafe property being demolished.

The Detroit Center for Innovation

` A new mixed-use building with 131,000 square feet of o ce and 18,000 square feet of retail/restaurant space at 2300 Woodward Ave. at Montcalm Street.

e Detroit Center for Innovation — a proposed second anchor for the District Detroit, with Little Caesars Arena being the rst — was originally slated to go on the Gilbert-owned former site of the half-built Wayne County Consolidated Jail project.

`

A $10.9 million DDA loan for a $216 million development of a new 20-story high-rise at 2250 Woodward Ave., with 20 percent of the units a ordable at 50 percent of Area Median Income. ere would be 287 units total. Construction would begin in the fall 2024.

` An $8.8 million loan for a $147 million residential project at 2205 Cass Ave. is would be a new 18-story tower with rst- oor retail and 261 residential units, 54 of which would be affordable at 50 percent of AMI.

` A $4.1 million loan for a $68 million redevelopment of the former Hotel Fort Wayne at 408 Temple into 131 residential units. First- oor retail is planned, and 27 of the units would be a ordable at 50 percent of AMI. is project, in an earlier form, was announced in May 2017 but never materialized.

e loans come two months after the DDA signed o new parameters for its Housing, O ce, Retail Development and Absorption Fund allowing for loans up to 40 percent of the hard construction costs for developments in the DDA area with 20 percent of their units set at various AMI levels.

e loans have a term of 34 years with a 1 percent interest rate.

In addition, the committee signed o on $15.9 million in road improvements, $5.6 million in utilities, $1.5 million in security and $8.5 million in public space funding for the area.

e DDA is obligated for up to $25 million of that, and the rest of the funding sources have yet to be determined,

Ross’ New York City-based development giant Related Cos. and the Ilitches’ Detroit-based real estate company Olympia Development of Michigan are planning to build the Detroit Center for Innovation, a University of Michigan graduate school campus which would teach things like mobility, AI, sustainability, cybersecurity,nancial technology and other elds.

at project, estimated to cost $250 million, is the centerpiece of a revived vision for a large swath of the District Detroit area that Ross and Ilitch have proposed to ll in with some $1.5 billion in new development and repurposed buildings, including residential, o ce, commercial and hotel space.

Transformational brown eld

Ross has already committed $100 million of his own money, and the state has signed o on a $100 million earmark for the project.

Ross and Ilitch are expected to seek hundreds of millions in public subsidies for the broader vision for the District Detroit through the state’s socalled “transformational brown eld” program, which allows developers to capture a variety of taxes on large-scale projects.

e precise dollar gure for that incentive is not yet known, but could be revealed Tuesday evening during the latest Community Bene ts Ordinance meeting.

Only Dan Gilbert and a developer

e program allows for developers to capture taxes generated by newly created jobs and new residents tonance projects, as well as forgo paying sales taxes on construction equipment and materials, among other things.

Gilbert’s $2.14 billion in projects got $618.1 million in incentives — about 29 percent of the total project cost.

Overall vision

Development plans are uid and can change. But the most recent vision calls for:

`

A proposed business incubator at 2115 Cass Ave., the former Loyal Order of the Moose Lodge building. at project is part of the proposed Detroit Center for Innovation, which earlier this year snagged a $100 million earmark from the state. Ross has also personally committed $100 million to that project.

`

A new 287-unit residential building with rst- oor retail at 2250 Woodward Ave. on what is now surface parking in front of Comerica Park.

`

`

A new residential building at 2205 Cass Ave., which would be part of the proposed Detroit Center for Innovation, an envisioned graduate school satellite campus for the University of Michigan west of the Fox eater.

` A redeveloped Hotel Fort Wayne at 408 Temple St., a long-envisioned project that was announced more than ve years ago as part of an earlier vision for residential space in the District Detroit area that would have brought 686 new units. is current incarnation would have 131 units, as opposed to the 163 units proposed in May 2017.

` A redevelopment of the Detroit Life Building at 2210 Park Ave. at building was previously envisioned for a $17 million conversion into 32,000 square feet of o ce space and 6,000 square feet of ground-level retail.

` A new o ce building at 2200 Woodward Ave., currently surface parking in front of Comerica Park. Executives said it would have 493,000 square feet of of-

A new 14-story hotel, which was previously announced, immediately south of Little Caesars Arena at Woodward and I-75. at project is expected to cost $190.5 million and have 290 rooms. Ross has previously identi ed it as an Equinox hotel, although executives later softened that, saying a ag has not yet been determined.

` A conversion of the Fox O ce Building at 2211 Woodward Ave. into a hotel.

e Fox eatre would not be altered.

Work would begin on the o ce building at 2200 Woodward this year, if the requested public incentives arenalized.

e District Detroit, since it was announced in July 2014, has been slow to materialize, and some of the projects announced in the more than eight years since have either not been built, remain half-built or took years longer than originally anticipated to start.

However, some new construction and redevelopment has taken place, including construction of the Wayne State University Mike Ilitch School of Business, a new o ce building at 2715 Woodward Ave. and the new Little Caesars Global Resource Center.

However, after announcing the effort in October 2019, Gilbert’s team and Ross’ team ran into development disagreements. Where Ross and Gilbert split at the jail site were fundamental development issues like building orientation, sight lines, site entrances, interconnectivity and accessibility and other issues — and how all of those impacted the remaining Gilbert land, according to a source familiar with the discussions speaking with Crain’s at the time.

Ross began searching for other locations to put the development, which is expected to cost $250 million.

By the summer of 2021, it was reported that Ross and the Ilitches were in negotiations to relocate the Detroit Center for Innovation to the District Detroit area on property west of the Fox eatre.

In December 2021, the two companies, plus state and local o cials, announced that the building would be moved to a nearly four-acre site that also includes the Loyal Order of the Moose Lodge building. e DCI is expected to be developed by Related and then donated to the university, which would not pay taxes on the property.

In May, Ross and Ilitch revealed an expanded vision for the area around the DCI, which included a host of new and redeveloped buildings — including many which had long been on Olympia’s drawing boards but which hadn’t yet come to fruition.

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

a May report in the Harvard Business Review, which found that

tracking

Ralph Wilson Foundation’s Dave Egner hints at grants to come

Eight years in to its 20-year lifespan, the Ralph C. Wilson Jr. Foundation has committed nearly $1.1 billion, exceeding the amount its late benefactor left to bene t Southeast Michigan and Western New York — and hitting about half of what it ultimately expects to grant. The rst spend-down foundation in the region has been innovating as quickly as it can in order to move on to the next impactful grants, President and CEO David Egner said. That’s still an 18- to 36-month process to understand issues and gather key players to work on them. While providing hints of grants yet to come, Egner said the foundation will begin looking at exit strategies in just a few years. He also shared the thing that makes him happiest: His adult children still want to hang out with him.

` What stands out when you think about the 1,000 grants the foundation has made to date?

Let’s start with approach. If someone is not familiar with philanthropy and was watching us early on, they would have said they’re not doing enough. They are leaking it out. We did just under $60 million in grants our rst year and held at that for at least the rst three years. The process we are taking requires us to engage community and to really dig into data and thought leadership in the areas that we fund. So instead of just being transactional in grants, we wanted to be strategic and have the work add up to something far more impactful than the individual transactions. The grant making needed to be owned by the community and the organizations working there. If the foundation owned the work, the work would only go as far as the funding.

` Any speci c grants stick out?

As I’m re ecting back on the work and the process, I think our rst sets of moves were in youth sports where we did a data analysis of how active kids were in both markets. And the results were stunning: only 13 percent of kids were getting the amount of exercise the CDC recommended on a daily basis. That’s resulted in a series of grants that is focused around Project Play that sits at the community foundations. That’s a table of decision makers that are looking at youth sports. Their investment and interest in youth sports will extend beyond (the foundation). The foundation will end up building 100 unique play spaces in Western New York and Southeast Michigan, between skate parks being built by Tony Hawk to destination parks built by Kaboom! to small pocket play spaces that are built throughout the 16 regions we cover across both regions. These were designed by kids so they are getting tremendous reach.

` Why do those grants stick out in your mind?

I think because of the community engagement process that resulted

in something fundable and the community match. Communities had to commit to maintaining, to designing. It stimulated these results that have been just stunning. My favorite playground is in Western New York in Salamanca, a very impoverished city. The playground we built there, people are driving 50 miles to take their kids to that playground. It’s the only play space of its type in the southern tier of Western New York. It has both things for young kids, including those with disabilities to a ninja obstacle course for teenagers. We’re seeing hundreds of kids that have no place to play, nding their way upwards of 50 miles to go to this playground..

` Any other grants that you think were particularly impactful? Our parks and trails work. We made that big announcement of $200 million for the centennial parks and all the connected trails in the region. But we have invested more in trails, so when it’s all said and done, that will actually be closer to $300 million. But that’s not the punchline. The punchline is that the actual infrastructure investment when you count the match will far exceed $1 billion. That’s public dollars, that’s great partnerships with both the state of New York and the state of Michigan. It’s private money that’s come in. We have typically been about a third or less of every investment. If the community owns the trails and owns the parks, they will be better maintained than if this were just the Ralph Wilson foundation paying for a trail.

` You spent a total of 26 years leading the New Economy Initiative and the Hudson-Webber Foundation, which has a permanent endowment. Why do we need both types

The perpetual life endowed foundation can take a much longer view on issues. You need that long-range, patient investment in communities. The spenddown foundations, especially those on a very narrow calendar have got to be innovative and provide stimulus quickly. We didn’t do one or two parks

and trails to see how they’d go. We dropped $15 million into them in the rst phase and about another $10 million in the second phase. We have to move fast because we are a ticking clock. Spend-down foundations have to fail fast. You’ve got to put out the concept and innovate and drive it. And if it’s going to fail, you’ve got to get to the next one.

` Anything new coming from the Wilson Foundation? We are staying in the areas we have been focused on, but we are going to drive very speci c strategies over the course of the next four years. At that point, we will begin to look at how do we exit? While some strategies will appear new, they’ll be consistent with our learning. It’s as if were on a journey and we’re taking new turns in the road. Parks and trails and youth sports and recreation won’t look a lot di erent. But our work on workforce development is leading to a set of big investments that we’ll be able to announce in 2023. Another example is we want to see more afterschool programs that

BY | SHERRI WELCH

help young people catch up from the educational loss that was experienced in COVID. Michigan’s education loss from COVID was one of the worst in the nation. You can’t make that up in

Who’s inspired you in the work you’ve

The three greatest lessons I ever learned were on my rst day on the job.

I was working for Russ Mawby at (W.K.) Kellogg (Foundation), the longest serving, large foundation CEO in the world at the time. The rst day I said, “Dr. Mawby what do I have to know to be a success in my job?” He said you only need to know three things.

“One, we don’t do nothing. We empower other people to do things. Two, we ain’t got any money.” He said put the entire corpus of this foundation on any one complicated issue, and it won’t scratch the surface. You have to be very strategic with what little money you have.

“Three, because people think you do something and because people think you control money, they’ll treat you di erently. You better remember where you came from.” He was making the statement that if you get lost in the arrogance, if you get seduced by that, you’ll lose way.

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RUMBLINGS

Van Dyke’s new business and former PR rm settle lawsuit

A LAWSUIT BETWEEN TWO Detroit-based public relations rms has ended in a settlement agreement.

A court ling last week says that the principles with VVK PR & Creative LLC, a recently formed business, reached an agreement to settle a business dispute with Van Dyke Horn LLC, now called 98Forward, the agency of which VVK PR CEO Peter Van Dyke was previously a top executive.

Terms of the settlement were not

disclosed, and executives with both parties con rmed the deal but declined further comment.

Van Dyke’s new business launched in April following the executive’s abrupt departure from Van Dyke Horn, of which he was CEO. e lawsuit was brought in late May by executives of Van Dyke Horn and accused Peter Van Dyke along with two other executives of the new VVK PR & Creative of “intentionally diverting and misappropriating trade secrets of VDH and converting assets of VDH, including clients, for his own bene t after failing to force his partner,

Marilyn Horn, to sell her interest in VDH to him for pennies.”

Days after the lawsuit was led in federal court, a judge dissolved a temporary restraining order for Peter Van Dyke’s new rm and denied a request from his former agency for a preliminary injunction, essentially allowing the new rm to continue meeting with clients.

Van Dyke Horn rebranded to 98Forward in late May, just a week after ling the lawsuit against the rm’s namesake former CEO.

Horn Van Dyke

David Egner, president and CEO of the Ralph C. Wilson Jr. Foundation

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